[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]



                          THE NEXT FARM BILL

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

                                HEARINGS

                               BEFORE THE

               SUBCOMMITTEE ON CONSERVATION AND FORESTRY;

                                AND THE

           SUBCOMMITTEE ON LIVESTOCK AND FOREIGN AGRICULTURE;

                                AND THE

        SUBCOMMITTEE ON COMMODITY EXCHANGES, ENERGY, AND CREDIT;

                                AND THE

                            SUBCOMMITTEE ON
               BIOTECHNOLOGY, HORTICULTURE, AND RESEARCH;

                                AND THE

                       SUBCOMMITTEE ON NUTRITION;

                                AND THE

                SUBCOMMITTEE ON GENERAL FARM COMMODITIES
                          AND RISK MANAGEMENT;

                                AND THE

                        COMMITTEE ON AGRICULTURE

                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED FIFTEENTH CONGRESS

                             FIRST SESSION

                               ----------                              

 FEBRUARY, 28; MARCH, 9, 16, 21, 22, 28; APRIL 4; JUNE 7, 8, 22; JULY 
                              12, 18, 2017

                               ----------                              

                            Serial No. 115-3

                               ----------                              

                                 Part 1

                               ----------   
                               
                               
                [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
                               

          Printed for the use of the Committee on Agriculture
                         agriculture.house.gov


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                        COMMITTEE ON AGRICULTURE

                  K. MICHAEL CONAWAY, Texas, Chairman

GLENN THOMPSON, Pennsylvania         COLLIN C. PETERSON, Minnesota, 
    Vice Chairman                    Ranking Minority Member
BOB GOODLATTE, Virginia,             DAVID SCOTT, Georgia
FRANK D. LUCAS, Oklahoma             JIM COSTA, California
STEVE KING, Iowa                     TIMOTHY J. WALZ, Minnesota
MIKE ROGERS, Alabama                 MARCIA L. FUDGE, Ohio
BOB GIBBS, Ohio                      JAMES P. McGOVERN, Massachusetts
AUSTIN SCOTT, Georgia                FILEMON VELA, Texas, Vice Ranking 
ERIC A. ``RICK'' CRAWFORD, Arkansas  Minority Member
SCOTT DesJARLAIS, Tennessee          MICHELLE LUJAN GRISHAM, New Mexico
VICKY HARTZLER, Missouri             ANN M. KUSTER, New Hampshire
JEFF DENHAM, California              RICHARD M. NOLAN, Minnesota
DOUG LaMALFA, California             CHERI BUSTOS, Illinois
RODNEY DAVIS, Illinois               SEAN PATRICK MALONEY, New York
TED S. YOHO, Florida                 STACEY E. PLASKETT, Virgin Islands
RICK W. ALLEN, Georgia               ALMA S. ADAMS, North Carolina
MIKE BOST, Illinois                  DWIGHT EVANS, Pennsylvania
DAVID ROUZER, North Carolina         AL LAWSON, Jr., Florida
RALPH LEE ABRAHAM, Louisiana         TOM O'HALLERAN, Arizona
TRENT KELLY, Mississippi             JIMMY PANETTA, California
JAMES COMER, Kentucky                DARREN SOTO, Florida
ROGER W. MARSHALL, Kansas            LISA BLUNT ROCHESTER, Delaware
DON BACON, Nebraska
JOHN J. FASO, New York
NEAL P. DUNN, Florida
JODEY C. ARRINGTON, Texas

                                 ______

                   Matthew S. Schertz, Staff Director

                 Anne Simmons, Minority Staff Director

                                 ______

               Subcommittee on Conservation and Forestry

                   FRANK D. LUCAS, Oklahoma, Chairman

GLENN THOMPSON, Pennsylvania         MARCIA L. FUDGE, Ohio, Ranking 
JEFF DENHAM, California              Minority Member
DOUG LaMALFA, California             TIMOTHY J. WALZ, Minnesota
RICK W. ALLEN, Georgia               ANN M. KUSTER, New Hampshire
MIKE BOST, Illinois                  RICHARD M. NOLAN, Minnesota
RALPH LEE ABRAHAM, Louisiana         TOM O'HALLERAN, Arizona
TRENT KELLY, Mississippi             FILEMON VELA, Texas

                                 ______

           Subcommittee on Livestock and Foreign Agriculture

                 DAVID ROUZER, North Carolina, Chairman

BOB GOODLATTE, Virginia              JIM COSTA, California, Ranking 
STEVE KING, Iowa                     Minority Member
SCOTT DesJARLAIS, Tennessee          FILEMON VELA, Texas
VICKY HARTZLER, Missouri             CHERI BUSTOS, Illinois
TED S. YOHO, Florida                 STACEY E. PLASKETT, Virgin Islands
TRENT KELLY, Mississippi             DWIGHT EVANS, Pennsylvania
ROGER W. MARSHALL, Kansas            ----

                                  (ii)



        Subcommittee on Commodity Exchanges, Energy, and Credit

                    AUSTIN SCOTT, Georgia, Chairman

BOB GOODLATTE, Virginia              DAVID SCOTT, Georgia, Ranking 
MIKE ROGERS, Alabama                 Minority Member
DOUG LaMALFA, California             SEAN PATRICK MALONEY, New York
RODNEY DAVIS, Illinois               ANN M. KUSTER, New Hampshire
JAMES COMER, Kentucky                STACEY E. PLASKETT, Virgin Islands
ROGER W. MARSHALL, Kansas            TOM O'HALLERAN, Arizona
JOHN J. FASO, New York               DARREN SOTO, Florida

                                 ______

       Subcommittee on Biotechnology, Horticulture, and Research

                    RODNEY DAVIS, Illinois, Chairman

BOB GIBBS, Ohio                      MICHELLE LUJAN GRISHAM, New 
JEFF DENHAM, California              Mexico, Ranking Minority Member
TED S. YOHO, Florida                 AL LAWSON, Jr., Florida
DAVID ROUZER, North Carolina         JIMMY PANETTA, California
DON BACON, Nebraska                  JIM COSTA, California
NEAL P. DUNN, Florida                JAMES P. McGOVERN, Massachusetts
JODEY C. ARRINGTON, Texas            LISA BLUNT ROCHESTER, Delaware

                                 ______

                       Subcommittee on Nutrition

                 GLENN THOMPSON, Pennsylvania, Chairman

STEVE KING, Iowa                     JAMES P. McGOVERN, Massachusetts,  
ERIC A. ``RICK'' CRAWFORD, Arkansas  Ranking Minority Member
SCOTT DesJARLAIS, Tennessee          ALMA S. ADAMS, North Carolina
VICKY HARTZLER, Missouri             DWIGHT EVANS, Pennsylvania
RODNEY DAVIS, Illinois               MARCIA L. FUDGE, Ohio
TED S. YOHO, Florida                 MICHELLE LUJAN GRISHAM, New Mexico
DAVID ROUZER, North Carolina         AL LAWSON, Jr., Florida
JAMES COMER, Kentucky                JIMMY PANETTA, California
ROGER W. MARSHALL, Kansas            DARREN SOTO, Florida
JOHN J. FASO, New York               SEAN PATRICK MALONEY, New York
JODEY C. ARRINGTON, Texas

                                 ______

      Subcommittee on General Farm Commodities and Risk Management

             ERIC A. ``RICK'' CRAWFORD, Arkansas, Chairman

FRANK D. LUCAS, Oklahoma             RICHARD M. NOLAN, Minnesota, 
MIKE ROGERS, Alabama                 Ranking Minority Member
BOB GIBBS, Ohio                      TIMOTHY J. WALZ, Minnesota
AUSTIN SCOTT, Georgia                CHERI BUSTOS, Illinois
SCOTT DesJARLAIS, Tennessee          LISA BLUNT ROCHESTER, Delaware
RICK W. ALLEN, Georgia               DAVID SCOTT, Georgia
MIKE BOST, Illinois                  SEAN PATRICK MALONEY, New York
RALPH LEE ABRAHAM, Louisiana         STACEY E. PLASKETT, Virgin Islands
DON BACON, Nebraska                  AL LAWSON, Jr., Florida
NEAL P. DUNN, Florida                TOM O'HALLERAN, Arizona
JODEY C. ARRINGTON, Texas

                                 (iii)
                                 
                                 
                                 
                             C O N T E N T S

                              ----------                              
                                                                   Page

 Tuesday, February 28, 2017--Subcommittee on Conservation and Forestry

Bost, Hon. Mike, a Representative in Congress from Illinois, 
  submitted statement on behalf of National Grain and Feed 
  Association....................................................    47
Conaway, Hon. K. Michael, a Representative in Congress from 
  Texas, opening statement.......................................     4
Fudge, Hon. Marcia L., a Representative in Congress from Ohio, 
  opening statement..............................................     3
Lucas, Hon. Frank D., a Representative in Congress from Oklahoma, 
  opening statement..............................................     1
    Prepared statement...........................................     2
Peterson, Hon. Collin C., a Representative in Congress from 
  Minnesota, opening statement...................................     5

                               Witnesses

Coffey, Chuck, Owner/Manager, Double C Cattle Company; Member, 
  National Cattlemen's Beef Association, Davis, OK...............     6
    Prepared statement...........................................     7
    Submitted question...........................................    54
Gertson, Timothy, Co-Owner/Co-Operator, G5 Farms; Member, Board 
  of Directors, USA Rice Federation, Lissie, TX..................    10
    Prepared statement...........................................    11
    Submitted questions..........................................    54
Peters, Jeremy, Chief Executive Officer, National Association of 
  Conservation Districts, Darlington, MD; on behalf of Lee 
  McDaniel, Immediate Past President, National Association of 
  Conservation Districts.........................................    15
    Prepared statement of Mr. McDaniel...........................    17
    Submitted question...........................................    55
Nomsen, David E., Vice President of Governmental Affairs, 
  Pheasants Forever, Inc., Garfield, MN..........................    21
    Prepared statement...........................................    23
    Submitted question...........................................    56
    Supplementary material.......................................    49
Piotti, Hon. John F., President, American Farmland Trust, 
  Washington, D.C................................................    26
    Prepared statement...........................................    28
    Submitted question...........................................    56
    Supplementary material.......................................    51

   Tuesday, February 28, 2017--Subcommittee on Livestock and Foreign 
                              Agriculture

Costa, Hon. Jim, a Representative in Congress from California, 
  opening statement..............................................    61
Rouzer, Hon. David, a Representative in Congress from North 
  Carolina, opening statement....................................    59
    Prepared statement...........................................    60

                               Witnesses

Williams, Ph.D., Gary W., Professor of Agricultural Economics and 
  Co-Director, Agribusiness, Food, and Consumer Economics 
  Research Center, Department of Agricultural Economics, Texas 
  A&M University, College Station, TX............................    63
    Prepared statement...........................................    65
    Supplementary information....................................   107
    Submitted question...........................................   115
Steinkamp, Hon. Joseph E., Member, Board of Directors, American 
  Soybean Association, Evansville, IN; on behalf of Coalition to 
  Promote U.S. Agriculture Exports, Agribusiness Coalition for 
  Foreign Market Development.....................................    70
    Prepared statement...........................................    71
Hamilton, Tim, Executive Director, Food Export Association of the 
  Midwest USA and Food Export USA--Northeast, Chicago, IL........    76
    Prepared statement...........................................    78
    Supplementary information....................................   113
Seng, Philip, President and Chief Executive Officer, U.S. Meat 
  Export Federation, Denver, CO..................................    80
    Prepared statement...........................................    82
Alanko, Dean, Vice President of Sales and Marketing, Allegheny 
  Wood Products, Petersburg, WV; on behalf of Hardwood Federation    84
    Prepared statement...........................................    86
Wenger, Paul J., almond producer, Wood Colony Nut Co.; 
  President,; California Farm Bureau Federation, Sacramento, CA..    88
    Prepared statement...........................................    90

 Thursday, March 9, 2017--Subcommittee on Commodity Exchanges, Energy, 
                               and Credit

Scott, Hon. Austin, a Representative in Congress from Georgia, 
  opening statement..............................................   117
    Joint submitted letter.......................................   169
    Prepared statement...........................................   119
Scott, Hon. David, a Representative in Congress from Georgia, 
  opening statement..............................................   120

                               Witnesses

Fox, Hon. Bob, Chair, Board of Commissioners, Renville County, 
  MN; Member, Board of Directors, National Association of 
  Counties, Franklin, MN.........................................   121
    Prepared statement...........................................   123
    Submitted question...........................................   408
Chastain, Dennis L., President and Chief Executive Officer, 
  Georgia Electric Membership Corporation, Tucker, GA; on behalf 
  of National Rural Electric Cooperative Association.............   127
    Prepared statement...........................................   129
    Submitted question...........................................   408
Fletcher, Steve, Manager and Operator, Washington County Water 
  Company, IL; President, National Rural Water Association, 
  Nashville, IL..................................................   131
    Prepared statement...........................................   133
    Submitted question...........................................   408
Cook, R. Craig, Chief Operations Officer, Hill Country Telephone 
  Cooperative, Inc., Ingram, TX; on behalf of NTCA--The Rural 
  Broadband Association..........................................   135
    Prepared statement...........................................   137
    Submitted question...........................................   412
Duff, John, Strategic Business Director, National Sorghum 
  Producers, Lubbock, TX.........................................   143
    Prepared statement...........................................   145
Greenwood, Hon. James C., President and Chief Executive Officer, 
  Biotechnology Innovation Organization, Washington, D.C.........   146
    Prepared statement...........................................   148
    Supplementary material.......................................   170
    Submitted questions..........................................   415

                           Submitted Material

Moore, Ron, President, American Soybean Association, submitted 
  statement......................................................   400
CoBank ACB, submitted statement..................................   402
National Biodiesel Board, submitted statement....................   404
Rural Community Assistance Partnership, submitted statement......   406

 Thursday, March 9, 2017--Subcommittee on Biotechnology, Horticulture, 
                              and Research

Davis, Hon. Rodney, a Representative in Congress from Illinois, 
  opening statement..............................................   417
    Prepared statement...........................................   418
Lujan Grisham, Hon. Michelle, a Representative in Congress from 
  New Mexico, opening statement..................................   419
    Submitted article............................................   459

                               Witnesses

Field, Jr., James, Director of Business Development, Frey Farms, 
  LLC, Keenes, IL................................................   420
    Prepared statement...........................................   422
    Supplementary material.......................................   464
Black, Jr., N. Larry, General Manager, Peace River Packing 
  Company, Ft. Meade, FL.........................................   425
    Prepared statement...........................................   426
Gilbert, Sean, General Manager, Gilbert Orchards, Inc. and 
  Sundquist Fruit, Yakima, WA....................................   428
    Prepared statement...........................................   430
Hill, Jay, Owner-Operator, Hill Farms and Wholesome Valley Farms, 
  Mesilla Park, NM...............................................   434
    Prepared statement...........................................   435
Davis, Laura, Co-Owner/Co-Operator, Long Life Farm; President, 
  Board of Directors, Northeast Organic Farming Association--
  Massachusetts Chapter, Hopkinton, MA...........................   439
    Prepared statement...........................................   441

                           Submitted Material

Wingard, Charles, Director of Field Operations, Walter P. Rawl & 
  Son, Inc., submitted statement.................................   466

Thursday, March 16, 2017--Subcommittee on Biotechnology, Horticulture, 
                              and Research

Davis, Hon. Rodney, a Representative in Congress from Illinois, 
  opening statement..............................................   471
    Prepared statement...........................................   472
Lujan Grisham, Hon. Michelle, a Representative in Congress from 
  New Mexico, opening statement..................................   473
Peterson, Hon. Collin C., a Representative in Congress from 
  Minnesota, opening statement...................................   503

                               Witnesses

Akridge, Ph.D., Jay T., Glenn W. Sample Dean of Agriculture, 
  Purdue University; Chairman, Policy Board of Directors, Board 
  of Agriculture Assembly, Association of Public and Land-grant 
  Universities, West Lafayette, IN...............................   474
    Prepared statement...........................................   476
Wilkins, Richard, Chairman, American Soybean Association; Vice 
  President, National Coalition for Food and Agricultural 
  Research, Greenwood, DE........................................   485
    Prepared statement...........................................   486
Carrington, Ph.D., James C., President, Donald Danforth Plant 
  Science Center, St. Louis, MO..................................   498
    Prepared statement...........................................   500

                           Submitted Material

Johnson, Roger, President, National Farmers Union, submitted 
  letter.........................................................   525
American Veterinary Medical Association, submitted statement.....   526

  Thursday, March 16, 2017--Subcommittee on Conservation and Forestry

Lucas, Hon. Frank D., a Representative in Congress from Oklahoma, 
  opening statement..............................................   531
    Prepared statement...........................................   532
Walz, Hon. Timothy J., a Representative in Congress from 
  Minnesota, opening statement...................................   533

                               Witnesses

Geissler, C.F., George L., Forester and Director, Forestry 
  Services Division, State of Oklahoma; Vice President, National 
  Association of State Foresters, Oklahoma City, OK..............   534
    Prepared statement...........................................   536
Benedict, Susan S., Managing Partner, Beartown Family LP; Member, 
  Tax Policy Subcommittee, National Public Affairs Committee, 
  American Forest Foundation, State College, PA..................   540
    Prepared statement...........................................   541
Neiman, Jim D., President and Chief Executive Officer, Neiman 
  Enterprises, Inc.; President, Federal Forest Resource 
  Coalition, Hulett, WY..........................................   548
    Prepared statement...........................................   550
Humphries, Rebecca A., Chief Conservation and Operations Officer, 
  National Wild Turkey Federation, Edgefield, SC.................   553
    Prepared statement...........................................   555
Harbour, Tom, National Director (Ret.), Fire and Aviation 
  Management, U.S. Forest Service, USDA; Founder, Harbour Fire 
  Consulting, Falls Church, VA...................................   558
    Prepared statement...........................................   559

                           Submitted Material

Browning, Kathryn C., Boulder, CO, submitted letter..............   579

           Tuesday, March 21, 2017--Subcommittee on Nutrition

McGovern, Hon. James P., a Representative in Congress from 
  Massachusetts, opening statement...............................   583
Thompson, Hon. Glenn, a Representative in Congress from 
  Pennsylvania, opening statement................................   581
    Prepared statement...........................................   582

                               Witnesses

Calvert, Carrie T., Director, Tax and Commodity Policy, Feeding 
  America, Washington, D.C.......................................   585
    Prepared statement...........................................   586
    Supplementary material.......................................   629
Kubik, Frank, Director, Commodity Supplemental Food Program, 
  Focus: HOPE, Detroit, MI.......................................   590
    Prepared statement...........................................   592
Tonubbee, Jerry, Director--Food Distribution Program, Choctaw 
  Nation of Oklahoma, Durant, OK.................................   595
    Prepared statement...........................................   596
Kriviski, Diane, Deputy Administrator, Supplemental Nutrition and 
  Safety Programs, Food and Nutrition Service, U.S. Department of 
  Agriculture, Alexandria, VA....................................   600
    Prepared statement...........................................   602

    Tuesday, March 21, 2017--Subcommittee on Livestock and Foreign 
                              Agriculture

Conaway, Hon. K. Michael, a Representative in Congress from 
  Texas, opening statement.......................................   678
Costa, Hon. Jim, a Representative in Congress from California, 
  opening statement..............................................   677
Peterson, Hon. Collin C., a Representative in Congress from 
  Minnesota, opening statement...................................   703
Rouzer, Hon. David, a Representative in Congress from North 
  Carolina, opening statement....................................   675
    Prepared statement...........................................   676

                               Witnesses

Uden, Craig, President, National Cattlemen's Beef Association; 
  Partner, Darr Feedlot, Inc., Johnson Lake, NE..................   679
    Prepared statement...........................................   680
Wittenburg, Carl, Chairman, National Turkey Federation, 
  Alexandria, MN.................................................   683
    Prepared statement...........................................   685
Buchholz, Bob, Representative, Executive Board for Region V, 
  American Sheep Industry Association, Eldorado, TX..............   687
    Prepared statement...........................................   688
Herring, David D., Vice President and Board Member, National Pork 
  Producers Council; Vice President, TDM Farms/Hog Slat, Inc., 
  Newton Grove, NC...............................................   692
    Prepared statement...........................................   693

                           Submitted Material

Glenn, Ph.D., Barb P., Chief Executive Officer, National 
  Association of State Departments of Agriculture, submitted 
  statement......................................................   711
Johnson, Roger, President, National Farmers Union, submitted 
  statement......................................................   713
Livestock Marketing Association, submitted statement.............   715

               Wednesday, March 22, 2017--Full Committee

Conaway, Hon. K. Michael, a Representative in Congress from 
  Texas, opening statement.......................................   717
    Prepared statement...........................................   721
Goodlatte, Hon. Bob, a Representative in Congress from Virginia, 
  opening statement..............................................   719
Lujan Grisham, Hon. Michelle, a Representative in Congress from 
  New Mexico, prepared statement.................................   723
Lucas, Hon. Frank D., a Representative in Congress from Oklahoma, 
  opening statement..............................................   719
McGovern, Hon. James P., a Representative in Congress from 
  Massachusetts, submitted letter on behalf of Ben Burkett, Board 
  President; Lisa Griffith, Acting Executive Director, National 
  Family Farm Coalition..........................................   775
Peterson, Hon. Collin C., a Representative in Congress from 
  Minnesota, opening statement...................................   718
    Submitted chart..............................................   773

                               Witnesses

Mulhern, James, President and Chief Executive Officer, National 
  Milk Producers Federation, Arlington, VA.......................   724
    Prepared statement...........................................   726
    Submitted questions..........................................   786
Dykes, D.V.M., Michael D., President and Chief Executive Officer, 
  International Dairy Foods Association, Washington, D.C.........   735
    Prepared statement...........................................   737
    Supplementary material.......................................   777

                           Submitted Material

Johnson, Roger, President, National Farmers Union, submitted 
  letter.........................................................   785

 Tuesday, March 28, 2017--Subcommittee on General Farm Commodities and 
                            Risk Management

Conaway, Hon. K. Michael, a Representative in Congress from 
  Texas, opening statement.......................................   834
Crawford, Hon. Eric A. ``Rick'', a Representative in Congress 
  from Arkansas, opening statement...............................   787
    Prepared statement...........................................   788
Nolan, Hon. Richard M., a Representative in Congress from 
  Minnesota, opening statement...................................   789
    Prepared statement...........................................   790
Peterson, Hon. Collin C., a Representative in Congress from 
  Minnesota, opening statement...................................   809

                               Witnesses

Spurlock, Wesley, President, National Corn Growers Association, 
  Stratford, TX..................................................   790
    Prepared statement...........................................   791
Moore, Ron, President, American Soybean Association, Roseville, 
  IL.............................................................   796
    Prepared statement...........................................   798
Schemm, David K., President, National Association of Wheat 
  Growers, Sharon Springs, KS....................................   801
    Prepared statement...........................................   802
Friederichs, Peter, President, National Barley Growers 
  Association, Foxhome, MN.......................................   809
    Prepared statement...........................................   811
Atkisson, Dan, Vice Chairman, National Sorghum Producers, 
  Stockton, KS...................................................   812
    Prepared statement...........................................   814

           Tuesday, March 28, 2017--Subcommittee on Nutrition

Conaway, Hon. K. Michael, a Representative in Congress from 
  Texas, submitted letter and report.............................   919
McGovern, Hon. James P., a Representative in Congress from 
  Massachusetts, opening statement...............................   845
    Submitted letter.............................................   964
Peterson, Hon. Collin C., a Representative in Congress from 
  Minnesota, opening statement...................................   896
Thompson, Hon. Glenn, a Representative in Congress from 
  Pennsylvania, opening statement................................   843
    Prepared statement...........................................   844

                               Witnesses

Dean, Stacy, Vice President for Food Assistance Policy, Center on 
  Budget and Policy Priorities, Washington, D.C..................   846
    Prepared statement...........................................   848
Sykes, Russell, Director, Center for Employment and Economic 
  Well-Being, American Public Human Services Association, 
  Washington, D.C................................................   859
    Prepared statement...........................................   861
Arthur, Joseph ``Joe'', Executive Director, Central Pennsylvania 
  Food Bank, Harrisburg, PA......................................   865
    Prepared statement...........................................   867
Protas, Josh, Vice President of Public Policy, MAZON--A Jewish 
  Response to Hunger, Washington, D.C............................   874
    Prepared statement...........................................   876
Hatcher, Jennifer, Chief Public Policy Officer and Senior Vice 
  President, Government and Public Affairs, Food Marketing 
  Institute, Arlington, VA.......................................   884
    Prepared statement...........................................   885

 Tuesday, April 4, 2017--Subcommittee on General Farm Commodities and 
                            Risk Management

Conaway, Hon. K. Michael, a Representative in Congress from 
  Texas, opening statement.......................................   972
Crawford, Hon. Eric A. ``Rick'', a Representative in Congress 
  from Arkansas, opening statement...............................   969
    Prepared statement...........................................   970
Nolan, Hon. Richard M., a Representative in Congress from 
  Minnesota, opening statement...................................   971
Peterson, Hon. Collin C., a Representative in Congress from 
  Minnesota, opening statement...................................   972

                               Witnesses

Lee, Ronnie, Chairman, National Cotton Council, Bronwood, GA.....   973
    Prepared statement...........................................   974
    Submitted question...........................................  1026
Gerard, Blake, Chairman, Board of Directors, USA Rice Farmers, 
  Cape Giarardeau, MO; on behalf of USA Rice Federation..........   978
    Prepared statement...........................................   980
    Submitted questions..........................................  1026
McMillan, Hon. Timothy E., Co-Founder and Co-Owner, Southern 
  Grace Farms, Enigma, GA; on behalf of Southern Peanut Farmers 
  Federation.....................................................   986
    Prepared statement...........................................   988
Rynning, Robert, President, U.S. Canola Association, Kennedy, MN; 
  on behalf of National Sunflower Association....................   991
    Prepared statement...........................................   993
    Submitted question...........................................  1027
Roney, Jack, Director of Economics and Policy Analysis, American 
  Sugar Alliance, Arlington, VA..................................   995
    Prepared statement...........................................   996

                           Submitted Material

Stansel, Dwight, President, Florida Peanut Federation, submitted 
  letter.........................................................  1025

 Tuesday, April 4, 2017--Subcommittee on Commodity Exchanges, Energy, 
                               and Credit

Scott, Hon. Austin, a Representative in Congress from Georgia, 
  opening statement..............................................  1029
    Prepared statement...........................................  1030
Scott, Hon. David, a Representative in Congress from Georgia, 
  opening statement..............................................  1031

                               Witnesses

Thiessen, Douglas, Chief Executive Officer, Alabama Ag Credit, 
  Montgomery, AL; on behalf of Farm Credit System................  1032
    Prepared statement...........................................  1034
Buzby, Timothy L., President and Chief Executive Officer, Federal 
  Agricultural Mortgage Corporation, Washington, D.C.............  1040
    Prepared statement...........................................  1041
Franzen, Nathan E., President, Ag Division, First Dakota National 
  Bank, Yankton, SD; on behalf of American Bankers Association...  1046
    Prepared statement...........................................  1047
Handke, Steven J., President and Chief Executive Officer, Union 
  State Bank of Everest; At-Large Director, Independent Community 
  Bankers of America, Everest, KS................................  1054
    Prepared statement...........................................  1055
Marlow, W. Scott, Executive Director, Rural Advancement 
  Foundation International--USA, Pittsboro, NC; on behalf of 
  National Sustainable Agriculture Coalition.....................  1061
    Prepared statement...........................................  1063

                           Submitted Material

Johnson, Roger, President, National Farmers Union, submitted 
  letter.........................................................  1081
Matheson, Hon. Jim, Chief Executive Officer, National Rural 
  Electric Cooperative Association, submitted letter.............  1082
Coalition of Agricultural Mediation Programs, submitted statement  1083

                Wednesday, June 7, 2017--Full Committee

Conaway, Hon. K. Michael, a Representative in Congress from 
  Texas, opening statement.......................................  1091
    Prepared statement...........................................  1093
McGovern, Hon. James P., a Representative in Congress from 
  Massachusetts, submitted press release.........................  1173
Panetta, Hon. Jimmy, a Representative in Congress from 
  California, submitted letters..................................  1174
Peterson, Hon. Collin C., a Representative in Congress from 
  Minnesota, opening statement...................................  1093

                               Witnesses

Suppes, Ronald J., dryland wheat and sorghum producer, Dighton, 
  KS; on behalf of U.S. Wheat Associates.........................  1095
    Prepared statement...........................................  1096
Schuler, Margaret, Senior Vice President, International Programs 
  Group, World Vision, Inc.--U.S., Washington, D.C...............  1099
    Prepared statement...........................................  1101
    Submitted questions..........................................  1189
Salem, Navyn, Founder and Chief Executive Officer, Edesia Inc., 
  Kingstown, RI..................................................  1113
    Prepared statement...........................................  1114
    Supplementary material.......................................  1179
Schoeneman, J.D., Brian W., Political and Legislative Director, 
  Seafarers International Union (AFL-CIO), Washington, D.C.; on 
  behalf of USA Maritime.........................................  1121
    Prepared statement...........................................  1123
    Submitted questions..........................................  1190
Jayne, Ph.D., Thomas S., Foundation Professor of Agricultural, 
  Food, and Resource Economics and Co-Director, Alliance for 
  African Partnership, Michigan State University, Kalamazoo, MI; 
  on behalf of Farm Journal Foundation...........................  1129
    Prepared statement...........................................  1130
    Supplementary material.......................................  1181

                           Submitted Material

Action Against Hunger, et al., joint submitted statement.........  1186

           Thursday, June 8, 2017--Subcommittee on Nutrition

McGovern, Hon. James P., a Representative in Congress from 
  Massachusetts, opening statement...............................  1193
Thompson, Hon. Glenn, a Representative in Congress from 
  Pennsylvania, opening statement................................  1191
    Prepared statement...........................................  1192

                               Witnesses

Boswell, Jason, Vice President for Programs, Conduent, State and 
  Local Solutions, Inc., Florham Park, NJ........................  1195
    Prepared statement...........................................  1196
Mathison, Steve, Senior Vice President of Network Relations, 
  First Data Corporation, Omaha, NE..............................  1198
    Prepared statement...........................................  1200
Glisson, J.D., Vickie Yates Brown, Secretary, Kentucky Cabinet 
  for Health and Family Services, Frankfort, KY..................  1204
    Prepared statement...........................................  1206
Aaronson, Lauren, Assistant Deputy Commissioner, Office of 
  Business Process Innovation, New York City Human Resources 
  Administration, New York, NY...................................  1210
    Prepared statement...........................................  1212
    Supplementary material.......................................  1237

                Thursday, June 22, 2017--Full Committee

Conaway, Hon. K. Michael, a Representative in Congress from 
  Texas, opening statement.......................................  1239
    Prepared statement...........................................  1240
Peterson, Hon. Collin C., a Representative in Congress from 
  Minnesota, opening statement...................................  1241

                               Witnesses

Duncan, J.D., Hon. Robert L., Chancellor, Texas Tech University 
  System, Lubbock, TX............................................  1243
    Prepared statement...........................................  1244
    Submitted questions..........................................  1316
Burns, Ph.D., Jacqueline K., Dean for Research and Director, 
  Florida Agricultural Experiment Station; Professor of 
  Horticulture, Institute of Food and Agricultural Sciences, 
  University of Florida, Gainesville, FL.........................  1249
    Prepared statement...........................................  1251
    Submitted questions..........................................  1316
Humiston, Ph.D., Hon. Glenda, Vice President, Agriculture and 
  Natural Resources; Director, Agricultural Experiment Station 
  and Cooperative Extension Service, University of California, 
  Oakland, CA....................................................  1253
    Prepared statement...........................................  1254
    Submitted questions..........................................  1317
Hill, Ph.D., Walter H., Dean, College of Agriculture, Environment 
  and Nutrition Sciences; Vice Provost for Land-Grant University 
  Affairs; Research Director, USDA Evans-Allen Research and 
  Director, George W. Carver Agricultural Experiment Station; 
  Administrator, Tuskegee University Cooperative Extension, 
  Tuskegee University, Tuskegee, AL..............................  1259
    Prepared statement...........................................  1261
    Submitted questions..........................................  1318
Tallant, Ph.D., Steven H., President, Texas A&M University-
  Kingsville, Kingsville, TX.....................................  1268
    Prepared statement...........................................  1270
    Submitted questions..........................................  1318
Billy, J.D., Carrie L., President and Chief Executive Officer, 
  American Indian Higher Education Consortium, Alexandria, VA....  1273
    Prepared statement...........................................  1275
    Submitted questions..........................................  1319

                           Submitted Material

American Society for Horticultural Science, submitted statement..  1311
National Coalition for Food and Agricultural Research, submitted 
  statement......................................................  1311
National Turfgrass Federation, submitted statement...............  1315

                Wednesday, July 12, 2017--Full Committee

Conaway, Hon. K. Michael, a Representative in Congress from 
  Texas, opening statement.......................................  1321
    Prepared statement...........................................  1322
Peterson, Hon. Collin C., a Representative in Congress from 
  Minnesota, opening statement...................................  1323

                               Witnesses

Wenger, Paul J., President, California Farm Bureau Federation, 
  Sacramento, CA.................................................  1325
    Prepared statement...........................................  1327
    Submitted question...........................................  1393
Heller, Paul, Vice President, Wonderful Citrus, Texas Division, 
  Mission, TX....................................................  1331
    Prepared statement...........................................  1333
    Submitted question...........................................  1393
Wishnatzki, Gary E., Owner and Chief Executive Officer, Wish 
  Farms, Plant City, FL..........................................  1335
    Prepared statement...........................................  1336
    Submitted question...........................................  1395
Murphy, Kevin, Chief Executive Officer, Driscoll's, Inc., 
  Watsonville, CA................................................  1339
    Prepared statement...........................................  1341
    Submitted questions..........................................  1395
LaVigne, Andrew W. ``Andy'', President and Chief Executive 
  Officer, American Seed Trade Association, Alexandria, VA.......  1343
    Prepared statement...........................................  1345
    Submitted question...........................................  1396

                           Submitted Material

Glenn, Ph.D., Barbara P., Chief Executive Officer, National 
  Association of State Departments of Agriculture, submitted 
  statement......................................................  1379
Griffin, Jack, Chief Executive Officer, Metropolis Farms, 
  submitted statement............................................  1390

           Tuesday, July 18, 2017--Subcommittee on Nutrition

McGovern, Hon. James P., a Representative in Congress from 
  Massachusetts..................................................  1398
    Submitted article............................................  1435
Thompson, Hon. Glenn, a Representative in Congress from 
  Pennsylvania...................................................  1397
    Prepared statement...........................................  1398

                               Witnesses

Holzer, Ph.D., Harry J., John LaFarge, Jr., SJ Professor of 
  Public Policy, McCourt School of Public Policy, Georgetown 
  University, Washington, D.C....................................  1400
    Prepared statement...........................................  1402
Lotzar, M.S.W., Eliyahu, Student Success Coordinator, Department 
  of Economic & Workforce Development, Onondaga Community 
  College, Syracuse, NY..........................................  1404
    Prepared statement...........................................  1406
Reynolds, Heather, President and Chief Executive Officer, 
  Catholic Charities Fort Worth, Fort Worth, TX..................  1409
    Prepared statement...........................................  1410


 
                           THE NEXT FARM BILL

                         (CONSERVATION POLICY)

                              ----------                              


                       TUESDAY, FEBRUARY 28, 2017

                  House of Representatives,
                 Subcommittee on Conservation and Forestry,
                                  Committee on Agriculture,
                                                   Washington, D.C.
    The Subcommittee met, pursuant to call, at 10:00 a.m., in 
Room 1300 of the Longworth House Office Building, Hon. Frank D. 
Lucas [Chairman of the Subcommittee] presiding.
    Members present: Representatives Lucas, Thompson, LaMalfa, 
Allen, Bost, Abraham, Kelly, Conaway (ex officio), Fudge, Walz, 
Kuster, Nolan, O'Halleran, Vela, and Peterson (ex officio).
    Staff present: John Weber, Josh Maxwell, Patricia Straughn, 
Stephanie Addison, Anne Simmons, Evan Jurkovich, and Nicole 
Scott.

 OPENING STATEMENT OF HON. FRANK D. LUCAS, A REPRESENTATIVE IN 
                     CONGRESS FROM OKLAHOMA

    The Chairman. This hearing of the Subcommittee on 
Conservation and Forestry entitled, The Next Farm Bill: 
Conservation Policy, will come to order. I almost want to say I 
am back, but that is beside the point. Let me turn myself to 
myself for an opening statement.
    Good morning, and welcome to today's hearing. For some of 
us, it is hard to believe it is already farm bill time again, 
and to some degree, it feels like we just finished hashing out 
the details of the last farm bill. But it is true that we are 
already entering the 4th year of the Agricultural Act of 2014, 
and that means we must now set about the hard work of preparing 
for the next farm bill.
    As Chairman Conaway noted at the rural economic outlook 
hearing 2 weeks ago, we are entering this farm bill 
reauthorization against a much different backdrop. Net farm 
income has been cut in half over the past 4 years, the steepest 
4 year percentage decline since the start of the Great 
Depression. As I have noted before, we write farm bills for the 
bad times, not the good times, and our nation's farmers and 
ranchers currently are struggling with that as we speak.
    While the 2014 Farm Bill has been vital in responding to 
the needs of the countryside, we revisit the farm bill and all 
farm bills roughly every 5 years to make sure that they are 
tuned to the current conditions in the countryside. To that 
end, we are starting our important aspect of this work this 
morning. Over the course of the next month, each Subcommittee 
will hold hearings focusing on the portions of the farm bill 
that fall under their respective jurisdictions. Each 
Subcommittee is going to ask stakeholders to give us their farm 
bill ideas sooner, rather than later. And as an Oklahoma State 
graduate, it is difficult for me to say that. Nonetheless, that 
is an inside joke.
    Today, we are focusing on the nation's voluntary 
conservation initiatives. These initiatives have undergone many 
changes over the past 2 decades, during which time I served as 
Chairman and Ranking Member respectfully of the Subcommittee 
with jurisdiction over the conservation title, and then as 
Chairman of the full Committee. Once again, I have the pleasure 
to serve in a familiar role as we begin this process. I take 
conservation policy very seriously. My dedication to 
conservation comes from being raised by folks who lived through 
the drought and the Dust Bowl of the 1930s, and the drought of 
the 1950s, both of which caused some of the hardest times rural 
America has ever experienced.
    As a western Oklahoma farmer, I have also seen firsthand 
the important role conservation plays in making sure that a 
Dust Bowl never happens again. While this Committee cannot 
control the weather, we can provide our farmers and ranchers 
the tools necessary to protect and conserve not only the land, 
but also their way of life.
    Congress has acknowledged this over the past 20 years by 
making significant investments in conservation policy. We 
expanded our commitment to important issues like CRP and EQIP, 
while also creating new tools like CSP to expand the use of on-
farm conservation practices. The conservation title of the 2014 
Farm Bill answered the call for meaningful deficit reduction, 
saving taxpayers $6 billion by consolidating 23 programs into 
13, further streamlining and targeting delivery to farmers, 
ranchers, and foresters.
    I am proud of the work that we have accomplished over the 
years, and I am proud of the work of the farmers, ranchers, and 
forest owners who implement these important conservation 
practices. I think the results speak for themselves. Voluntary 
conservation works.
    That said, I understand that no policy is perfect, and I 
look forward to hearing from our witnesses today about how 
these critical tools can be improved to address new natural 
resource challenges.
    Thanks to all of our witnesses who have taken time from 
their work and families to join us today. We appreciate your 
efforts and your willingness to share your thoughts on the 
future of conservation policy. I would be remiss if I didn't 
note that I am delighted to be partnered with my Ranking Member 
in this endeavor on this Committee, and Ms. Fudge, we had quite 
the set of adventures in the 2012, 2013, and 2014 Farm Bill 
process, and I look forward to working with her in every way.
    [The prepared statement of Mr. Lucas follows:]

Prepared Statement of Hon. Frank D. Lucas, a Representative in Congress 
                             from Oklahoma
    Good morning and welcome to today's hearing.
    For some of us, it's hard to believe that it's already farm bill 
time again. To some degree, it feels like we just finished hashing out 
the details of the last farm bill. But, it's true that we are already 
entering the 4th year of the Agricultural Act of 2014, and that means 
we must now set about the hard work of preparing for the next farm 
bill.
    As Chairman Conaway noted at the rural economic outlook hearing 2 
weeks ago, we are entering this farm bill reauthorization against a 
much different backdrop. Net farm income has been cut in half over the 
past 4 years, the steepest 4 year percentage decline since the start of 
the Great Depression.
    As I've noted before, we write farm bills for the bad times--not 
the good times--and our nation's farmers and ranchers are certainly 
struggling right now. While the 2014 Farm Bill has been vital in 
responding to needs in the countryside, we revisit farm bills roughly 
every 5 years to make sure they are attuned to current conditions in 
the countryside.
    To that end, we are starting an important aspect of that work this 
morning. Over the course of the next month, each Subcommittee will hold 
hearings focused on the portions of the farm bill that fall under their 
respective jurisdictions. Each Subcommittee is going to be asking 
stakeholders to give us their farm bill ideas--sooner rather than 
later.
    Today we are focusing on the nation's voluntary conservation 
initiatives. These initiatives have undergone many changes over the 
past 2 decades, during which time I served as the Chairman and Ranking 
Member, respectively, of the Subcommittee of jurisdiction for the 
conservation title and then as Chairman of the full Committee.
    Once again, I have the pleasure to serve in a familiar role to 
begin this process. I take conservation policy very seriously. My 
dedication to conservation comes from being raised by folks who lived 
through the drought and Dust Bowl of the 1930s and the drought of the 
1950s, both of which caused some of the hardest times rural America has 
ever experienced.
    As a western Oklahoma farmer, I have also seen firsthand the 
important role conservation plays in making sure that a Dust Bowl never 
happens again. While this Committee cannot control the weather, we can 
provide our farmers and ranchers the tools necessary to protect and 
conserve not only the land, but also their way of life.
    Congress has acknowledged this over the past 20 years by making 
significant investments in conservation policy. We expanded our 
commitment to important initiatives like CRP and EQIP, while also 
creating new tools like CSP to expand the use of on-farm conservation 
practices.
    The conservation title of the 2014 Farm Bill answered the call for 
meaningful deficit reduction, saving taxpayers $6 billion by 
consolidating 23 programs into 13, further streamlining and targeting 
delivery to farmers, ranchers, and foresters.
    I'm proud of the work we have accomplished over the years, and I'm 
proud of the work of the farmers, ranchers and forest owners who 
implement these important conservation practices. I think the results 
speak for themselves--voluntary conservation works.
    That said, I understand that no policy is perfect, and I look 
forward to hearing from our witnesses today about how these critical 
tools can be improved to address new natural resource challenges.
    Thanks to all of our witnesses who have taken time from your work 
and families to join us today. We appreciate your efforts and your 
willingness to share your thoughts on the future of conservation 
policy.
    I must also mention how delighted I am to be partnered with our 
Ranking Member, Ms. Fudge.
    With that, I yield to the Ranking Member for any opening remarks 
she would like to make.

    The Chairman. With that, I would like to yield to the 
Ranking Member for any opening remarks that she would like to 
make.

OPENING STATEMENT OF HON. MARCIA L. FUDGE, A REPRESENTATIVE IN 
                       CONGRESS FROM OHIO

    Ms. Fudge. Thank you very much, Mr. Chairman, and thank you 
all for being here this morning.
    I am really excited to be here today for our first 
Conservation and Forestry Subcommittee hearing, and for the 
opportunity to work with my good friend, Chairman Lucas, as we 
get to work on the next farm bill.
    Conservation programs are a staple of the farm bill, and 
play an invaluable role in preserving our agricultural 
landscapes across the country. Farmers are the original 
conservationists. Their livelihood is tied to the land, and it 
is in their best interest that their land be the healthiest, 
most productive, and most resilient it can be. Farm bill 
conservation programs help our producers accomplish just that, 
while compounding benefit after benefit to deliver cleaner air, 
cleaner water, and helping address some of our nation's most 
pressing natural resource concerns.
    The last farm bill consolidated some conservation programs 
with a goal of making the programs easier for producers to use 
and easier for NRCS to manage. I am interested to hear today 
how those changes are working, and if, indeed, they have made 
the programs easier to use and administer.
    The 2014 Farm Bill's conservation title also saved almost 
$4 billion over 10 years. This was a substantial cut initiated 
by the Committee as part of the overall farm bill savings. 
Further cuts to these programs as part of the upcoming farm 
bill would significantly hamstring the efforts to achieve our 
conservation goals.
    I am also looking forward to hearing how our tried and true 
conservation programs like EQIP, CSP, CRP, and easement 
programs are working, and how they can work better for 
producers on the ground.
    Finally, and I know some of our witnesses will touch on 
this today, I am interested to hear how the new Regional 
Conservation Partnership Program is working. This program was 
an effort to give more flexibility on the ground and leverage 
our Federal dollars to bring more non-Federal resources to our 
conservation needs.
    I want to thank the witnesses, and I especially want to 
thank my good friend, Chairman Lucas. I yield back.
    The Chairman. The gentlelady yields back. The chair notes 
that the Subcommittee is privileged and pleased that we have 
both the Chairman of the full Committee and the Ranking Member 
in attendance today.
    Mr. Chairman, Mr. Conaway, would you have any opening 
comments to make?

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

    Mr. Conaway. Just that I want to thank both yourself and 
the Ranking Member for kicking off this series of Subcommittee 
hearings. You all are the first ones to start. All the 
Subcommittees will have a series of hearings over the next 
couple months, covering their areas of jurisdiction, and I am 
looking forward to both of y'all's able leadership in this 
endeavor, and look forward to the hearing.
    With that, I yield back.
    The Chairman. The gentleman yields back. The chair 
recognizes the Ranking Member of the full Committee for any 
comments he might make.

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

    Mr. Peterson. Well thank you, Chairman Lucas and Ranking 
Member Fudge, for holding today's hearing to review 
conservation policy. We will be hearing from a great panel of 
witnesses today, and so I welcome to them to the Committee.
    At the Committee's recent hearing on farm economy, I 
expressed my intent to take a good look at the CRP program, and 
try to see if we can simplify and reform and increase the acres 
in that program. We lowered the cap on CRP in the 2014 Farm 
Bill, even though I really didn't want to do that, but we were 
loosing the acreage anyway, and if we wouldn't have lowered the 
cap, the money would disappear. We used that money to protect 
the conservation baseline, and it has helped offset some cuts 
in other programs in title II.
    But now, given what is going on around the country, it is 
time for us to figure out how to get back to 40 million CRP 
acres in this farm bill. This increase will help improve water 
quality and address the declining wildlife populations that we 
have experienced in my region of the country: big tract CRP 
worked. We boomed with pheasants, ducks, and deer and other 
wildlife because of it, but it has been diminished because of 
economics. Because of an over-emphasis on some of these carve 
outs that have been put in there to satisfy everybody's idea, 
and you know, the general sign-up has become a step-child in 
the program. That is the opposite of what needs to be done. I 
would like to see us increase the acres, but if we don't reform 
this program, I am not going to support increasing the acres. 
That is how strongly I feel about it.
    I am going to be looking for ways to make CRP less 
complicated, to make the rental rates more affordable for the 
budget, and also more competitive so that farmers aren't losing 
their land to CRP. I am also interested in steps that we can 
take to bring the program up to date by getting rid of the 
requirement that was originally put in, because the program 
originally was to get land out of production to raise prices. 
We still have in place the fact that you have to have base 
acres and program acres in order to get into the program. I 
don't think that is necessary anymore, or right. I would like 
to see us get rid of that.
    By and large, the farm bill conservation programs are 
working. As was said, we simplified some of these other 
programs in the last bill. Now, it is time for us, in my 
opinion, to take a good look at CRP and simplify that program 
as well.
    I am looking forward to today's witnesses, and thank the 
chair for allowing me to spout off, and I yield back.
    The Chairman. The gentleman is timid as always. I thank the 
Ranking Member.
    I would like to welcome our witnesses to the table. First, 
Mr. Chuck Coffey, Owner/Manager Double C Cattle Company, Davis, 
Oklahoma, on behalf of the National Cattlemen's Beef 
Association. Also, Mr. Tim Gertson, a member of the USA Rice 
Federation Board of Directors, Lissie, Texas. Mr. Jeremy 
Peters, Chief Executive Officer, National Association of 
Conservation Districts, Washington, D.C., on behalf of Mr. Lee 
McDaniel, who may be under the weather, correct, Mr. Peters? 
Mr. David Nomsen, Vice President of Governmental Affairs, 
Pheasants Forever, Garfield, Minnesota; and the Honorable John 
Piotti, President, American Farmland Trust, Washington, D.C.
    And with that, Mr. Coffey, you are recognized for 5 
minutes. We have these wondrous lights, green, yellow, red. 
Proceed, sir.

   STATEMENT OF CHUCK COFFEY, OWNER/MANAGER, DOUBLE C CATTLE 
COMPANY; MEMBER, NATIONAL CATTLEMEN'S BEEF ASSOCIATION, DAVIS, 
                               OK

    Mr. Coffey. Thank you very much, Chairman Lucas, Ranking 
Member Fudge. We sincerely appreciate your recognition of 
agriculture's important contribution to our nation's lands.
    Good morning. My name is Chuck Coffey. Ruth, my wife of 30 
years, and I operate a fifth generation cattle ranch in south 
central Oklahoma, where we own and operate over 30,000 acres of 
grassland, rangeland. I am testifying before you today 
representing the many cattle producers who each have a stake in 
protecting the environment.
    U.S. cattlemen own and manage considerably more land than 
any other segment of agriculture. In fact, we manage the net 
sum of \1/3\ of the nation's total land mass. Since our 
livelihood is made on the land, the utilization of our natural 
resources and being good stewards of the land not only makes 
good environmental sense, it is fundamental for our industry to 
remain strong. We strive to operate as environmentally friendly 
as possible, and it is through voluntary conservation programs 
that ranchers will continue to be proud partners with the 
government to reach our environmental conservation goals.
    Ranching in south central Oklahoma comes with its fair 
share of difficulties, as it does for many fellow cattlemen 
across the country. However, we have been able to keep our 
operation sustainable during those hard times by utilizing 
voluntary conservation programs and applying management 
practices that enhance our operation.
    Drought is a common problem in south central Oklahoma, and 
requires adaptability and forward thinking to maintain the 
resources we have on the ranch. In 2011 and 2012, we were 
challenged with one of the worst droughts in a generation. It 
was similar to the droughts of the 1950s and the droughts of 
the 1930s, but praise the Lord, Mr. Lucas, we didn't have a 
Dust Bowl situation due to the conservation practices that we 
have on the ground. However, we survived and remained 
sustainable because of our grazing management practices, and 
the opportunity to work with NRCS' voluntary conservation 
programs. One way we made our ranch drought resistant is by 
installing solar wells and above ground water storage systems, 
and even piping water to some critical areas, this water 
serving both the needs of livestock and wildlife that inhabit 
our lands.
    We graze our cattle with a carefully managed grazing plan, 
developed with the assistance of the NRCS. Through cooperation 
with state and local agencies, in addition to the development 
of innovative grazing strategies, we have increased perennial 
grasses on our ranch, improved ground cover, greatly reduced 
soil erosion, and ensured adequate forage for livestock and 
wildlife.
    Another key to improving the grasses on our ranch is brush 
control, which we often do in partnership with NRCS when funds 
are available. We use a variety of ways to reduce brush, 
including prescribed burns and mechanical treatment.
    Conservation programs that keep land in production and do 
not limit its use are best for both ranchers and conserving our 
nation's resources. That is why the working lands programs, in 
my opinion, works best for ranchers. One such program, CSP, the 
Conservation Stewardship Program, rewards those of us that have 
been conservationists and have spent both time and money 
improving our land, water, and wildlife habitats. CSP offers 
cattlemen the opportunity to earn payments for actively 
managing, maintaining, and expanding conservation practices.
    NRCS personnel are a tremendous resource for ranchers. In 
recent years, local NRCS personnel have been prevented from 
going to training sessions provided by the Society for Range 
Management, the Grassland Conservation Initiative meetings, and 
it has also become more difficult, in my opinion, for them to 
find time to get out of the office due to the tremendous 
amounts of paperwork that they are required to keep up with. We 
as ranchers must have well-informed NRCS personnel on the 
ground with us to move forward with these innovative 
conservation practices.
    As Congress begins to process the next farm bill, I have a 
few recommendations on how to make these programs work even 
better for producers. NRCS needs to work on streamlining the 
application process to be able to garner more participation in 
the program. CSP, for example, needs to be simplified and based 
on outcomes and adaptive management, rather than a prescribed 
set of management practices.
    The biggest point I would like you to take away from this 
hearing is that the voluntary part of the conservation program 
is what really makes it work for ranchers. If they were to 
become mandatory, the rules and regs that farmers and ranchers 
would be subjected to would make it harder for them to utilize 
the unique conservation practices that help their individual 
operations thrive.
    USDA's conservation programs have been a great asset to 
cattle producers, and it is important that these programs be 
implemented in a practical, producer-friendly, and voluntary 
manner to ensure that cattlemen can continue to responsibly 
produce the world's safest, most nutritious, and affordable 
source of protein. I appreciate the opportunity to visit with 
you today, and thank you for your time. I would welcome any 
questions moving forward. Thank you, Chairman Lucas.
    [The prepared statement of Mr. Coffey follows:]

  Prepared Statement of Chuck Coffey, Owner/Manager, Double C Cattle 
   Company; Member, National Cattlemen's Beef Association, Davis, OK
    Good morning, my name is Chuck Coffey. Ruth, my wife of 30 years, 
and I operate a fifth-generation cattle ranch in south central Oklahoma 
where we own and operate over 30,000 acres of grassland. I am a 
graduate of Texas A&M where I studied Rangeland Ecology, and proudly 
have three children who have graduated from Oklahoma State University 
with degrees in Agribusiness and Natural Resource Management and are 
now the sixth generation on the Ranch. I taught agriculture at Murray 
State College, chairing the department, until I joined the Noble 
Foundation as a Pasture and Range Consultant in 1993. I am a member of 
the National Cattlemen's Beef Association and am testifying before you 
today representing the many cattle producers and family ranchers, who 
each have a stake in protecting the environment. Thank you Chairman 
Lucas and Ranking Member Fudge for allowing me to testify today on 
voluntary conservation programs.
    U.S. cattlemen own and manage considerably more land than any other 
segment of agriculture--or any other industry for that matter. 
Cattlemen graze cattle on approximately 666.4 million acres of the 
approximately 2 billion acres of the U.S. land mass. In addition, the 
acreage used to grow hay, feed grains, and food grains add millions 
more acres of land under cattlemen's stewardship and private ownership. 
Some of the biggest challenges and threats to our industry come from 
the loss of our natural resources. The livestock industry is threatened 
daily by urban encroachment, natural disasters, and government 
overreach. Since our livelihood is made on the land, through the 
utilization of our natural resources, being good stewards of the land 
not only makes good environmental sense; it is fundamental for our 
industry to remain strong. We strive to operate as environmentally 
friendly as possible, and it is through voluntary conservation programs 
that ranchers will continue to be a proud partner with the government 
to reach our environmental conservation goals.
    I represent the fifth-generation of ranching within the Coffey 
family. As I stated earlier, we ranch on 30,000 acres of grassland 
spanning across Carter and Murray counties in south central Oklahoma. 
Our goals are very similar to many other ranchers around the country, 
be profitable, and leave the land in better condition for future 
generations. The primary way we are able to preserve the land, as well 
as our ranching heritage for future generations, is through innovative 
practices, diversification and voluntary conservation programs.
    Ranching in south central Oklahoma comes with its fair share of 
difficult times, as it does for my fellow cattlemen across the country. 
However, we have been able to keep our operation sustainable during 
those hard times, by utilizing voluntary conservation programs and 
applying management practices that enhance the operation. Drought is a 
common problem in south central Oklahoma, and it requires adaptability 
and forward thinking to maintain the resources on the ranch. In 2011 
and 2012, we were challenged with one of the worst droughts in a 
generation. Water was virtually nonexistent and wildfires were 
prevalent. But we were able to survive, and remain sustainable, because 
of our grazing management practices and the opportunity to work with 
the NRCS's voluntary conservation programs to improve our ranch and 
make our grasslands more resilient. Also key to our survival has been 
the voluntary insurance programs such as FSA's NAPP Insurance and the 
private insurance known as PRF-RI insurance provided through USDA-RMA. 
These voluntary programs were a great benefit to many producers who, 
quite frankly, would not have survived without them.
    One way we made our ranch drought-resistant is by installing solar 
wells and above ground water storage systems, and even piping water to 
some critical areas. This ensures our livestock and wildlife have 
adequate and reliable water throughout the year.
    We graze our cattle with a carefully managed grazing plan that we 
developed with the assistance of the Natural Resources Conservation 
Service (NRCS) and the National Grazing Lands Coalition (NGLC) 
utilizing their conservation planning capabilities. We have learned 
that when you utilize a flexible, planned grazing program at a 
conservative stocking rate, leave grass cover after you move out of a 
pasture, and give the rangeland adequate recovery time, you will grow 
more grass with limited rainfall. Through cooperation with state and 
local agencies, in addition to the development of innovative grazing 
strategies, we have increased perennial grasses on the ranch, improved 
ground cover, greatly reduced soil erosion due to both wind and water, 
reduced labor inputs, and ensured adequate forage for livestock and 
wildlife populations on the ranch. Our grazing strategy is a big part 
of why we've been able to keep the ranch resilient and sustainable. 
Furthermore, by implementing these programs we are able to keep 
expenses down by lowering feed, fuel, labor and equipment costs, thus 
improving the profitability of our operation.
    Another key to improving the grasses on our ranch is brush control, 
which we often do in partnership with NRCS when funds are available. We 
use a variety of ways to reduce brush including prescribed burns and 
mechanical treatment. We leave the bigger trees in to give the 
grasslands a savannah effect which also provides shade for the cattle, 
improving their welfare.
    We are strong advocates of prescribed fire on the rangeland. We try 
to mimic the fire conditions that nature historically provided the land 
prior to settlement. It is a very good tool within our tool box of land 
improvement measures. NRCS and the GLCI have provided valuable 
assistance in our burning endeavors.
    The Environmental Quality Incentive Program, or EQIP, is a cost-
share program that rewards and provides incentives to producers for 
implementing conservation practices. When wildfire came through our 
ranch in 2011, we had to rebuild miles of fencing. EQIP helped us do 
it. One of the reasons EQIP has become popular among ranchers is 
because it is a working-lands program. Conservation programs that keep 
land in production and do not limit its use are best for both the 
ranchers and conserving our resources.
    Another working lands program is the Conservation Stewardship 
Program. CSP rewards those of us that have been conservationists and 
have spent the time and money in the improving of our land, water, and 
wildlife habitats. CSP offers cattlemen the opportunity to earn 
payments for actively managing, maintaining, and expanding conservation 
activities like cover crops, rotational grazing, ecologically-based 
pest management, and buffer strips.
    NRCS personnel are a tremendous resource for ranchers. In recent 
years local NRCS personnel have been prevented from going to training 
sessions provided by the Society for Range Management and Grasslands 
Conservation Initiative meetings. It is also becoming more difficult 
for them to find time to get out of the office due to the tremendous 
amounts of paperwork they are required to keep up with. We as ranchers 
must have well informed NRCS personnel to move forward with innovative 
conservation practices. They are our first go to source of knowledge. 
It is critical we have ``boots-on-the-ground'' in conjunction with the 
voluntary programs offered.
    As Congress begins the process of developing the next farm bill, I 
have some recommendations on how to make these programs work even 
better for producers.

   First and foremost--NRCS needs to make it as simple as 
        possible for farmers and ranchers to participate in these 
        programs. Streamlining the application process will garner more 
        producer participation.

   Farmers and ranchers need greater access to programs like 
        CSP, where there is a great demand for these programs but 
        limited funding. I, and cattle ranchers around the country, 
        would like to see CSP simplified and based on outcomes and 
        adaptive management rather than a prescribed set of management 
        practices.

   The EQIP program should disclose penalty cancellation costs 
        before producers sign on the dotted line. And producers who 
        enter into an EQIP contract should have the ability to 
        periodically revise the terms of a multiple-year contract to 
        adjust for rising costs over time.

   NRCS should maintain and enhance EQIP at 60% or greater 
        allocation for livestock related applications for all 
        operations, regardless of their size.

   Reinvigorate the focus at the local ``grassroots'' level by 
        increasing the NRCS staff that work with producers and provide 
        technical assistance at the local level.

   Increase research in soil, water, plant, and wildlife 
        science so that we have an accurate and growing pool of data to 
        inform policy decisions.

    The biggest point I'd like you to take away from this hearing is 
that the ``voluntary'' part of the conservation programs is what really 
makes it work for ranchers. We've had success using some of these 
conservation programs, but just because this system works for us does 
not mean it's right for everybody. It's important that we keep these 
programs funded to safeguard their continued success, and above all 
else--these programs must stay voluntary. A one-size-fits-all approach 
that accompanies top-down regulation does not work in my industry. If 
these programs were to become mandatory, the rules and regulations that 
farmers and ranchers would be subjected to would make it harder for 
them to utilize the unique conservation practices that help their 
individual operations thrive.
    I believe that economic activity and conservation go hand in hand 
and we are always looking for new, innovative conservation programs 
that will have tangible benefits for the environment, and help to 
improve our ranching lands. USDA's conservation programs have been a 
great asset to cattle producers and it is important that these programs 
continue to be implemented in the same practical, producer friendly, 
and voluntary manner for years to come to ensure that cattlemen will 
continue to have the ability to do what we do best--produce the world's 
safest, most nutritious, abundant and affordable protein while 
operating in the most environmentally friendly way possible. Together 
we can sustain our country's natural resources and economic 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 welcome any questions you may have.

    The Chairman. Thank you, Mr. Coffey.
    Mr. Gertson, you are recognized for 5 minutes.

           STATEMENT OF TIMOTHY GERTSON, CO-OWNER/CO-
   OPERATOR, G5 FARMS; MEMBER, BOARD OF DIRECTORS, USA RICE 
                     FEDERATION, LISSIE, TX

    Mr. Gertson. Chairman Lucas, Ranking Member Fudge, and 
Members of the Subcommittee, thank you for holding this hearing 
today. I appreciate the opportunity to offer testimony on 
behalf of the USA Rice Federation. My name is Timothy Gertson, 
and I own and operate G5 Farms along with my cousin. We are 
fifth generation rice farmers, and first began farming 
independently of our parents in 2009. We farm in and around 
Lissie, Texas, a small community about an hour outside of 
Houston.
    On our farm, we normally begin planting rice March 1, and 
if you take a look at the calendar, you will see that is 
tomorrow. But here I am in a suit and tie in D.C., 1,500 miles 
from home. That is because the issue of conservation is 
critically important to me and my family.
    With my testimony today, I would like to focus on the 
importance of investments in working lands programs, 
specifically, EQIP, CSP, and the RCPP. Rice is the only 
commodity that is 100 percent irrigated, with many growers 
dependent on ground water. It is necessary to flood our fields 
during the growing season, and we have the option and 
opportunity to maintain those floods throughout the winter to 
benefit the millions of migratory water fowl passing through. 
Winter flooded rice fields provide many of the same functions 
for migrating water fowl as natural wetlands.
    The close relationship between rice and water fowl led to 
an historic partnership between USA Rice and Ducks Unlimited. 
The Rice Stewardship Partnership has unified us around our 
common goals and working lands conservation programs, and the 
theme ``What's good for rice is good for ducks.''
    Since the partnership was formed, we have worked together 
to secure $25 million through three different RCPP projects 
from NRCS to implement EQIP and CSP projects across all six 
rice growing states, and to construct a small reservoir near my 
hometown, Anita Lake, to benefit water fowl and rice farmers 
when we experience drought. USA Rice would like to see the 
continuation of RCPP as part of the next farm bill.
    CSP, and especially EQIP, are referred to by farmers as the 
workhorses of NRCS conservation programs. They are valuable 
cost-share programs that incentivize implementation of 
conservation practices that have proven benefits to the 
environment. My father and his brothers can attest, as some of 
the earliest adopters of both programs on our family operation.
    Many rice farmers operate on rented cropland. These cost-
share programs allow land renters to install conservation 
measures while footing only a portion of the costs. 
Improvements in efficiencies benefit the farmer, while the 
environmental perks benefit the landowner, simultaneously 
raising the land value.
    We heard there was a huge demand for the EQIP program when 
we got our first contract in 2010, and we soon learned why as 
the results came quickly and our input costs dropped 
significantly. We cost-shared the installation of more than 4 
miles of pipeline to replace the irrigation canals, resulting 
in up to 20 percent less water used, providing both instant 
savings and environmental benefits. What previously took 24 
hours of pumping to start just a trickle of water into my 
fields is now on demand and immediate.
    After we implemented our initial EQIP contracts, we saw the 
returns and we decided to do more of it. Due to backlogs, we 
paid for it out of pocket. NRCS conservation programs not only 
incentivize conservation, but they help farmers develop an 
appetite to continue the environmental stewardship, making 
their full value truly incalculable.
    Throughout rural America, working lands programs serve as 
economic drivers. It takes more than just a single farmer to 
complete the work needed to implement an EQIP or CSP contract, 
not to mention, the land is still in production, keeping small 
communities like mine thriving, unlike some programs like CRP 
that pay farmers not to grow a crop. More than 75 percent of 
rice farming operations in the South operate in what USDA calls 
StrikeForce counties, rural counties with more than 20 percent 
of the population below the poverty line. Small towns like mine 
rely on the agriculture industry for jobs. My operation alone 
provides jobs to the folks in my town, and the revenue 
generated from my farm is reinvested in inputs for the 
following year, and ends up in the hands of small local 
businesses. A new study by Texas A&M's Agriculture and Food 
Policy Center drives this home, showing every U.S. farmer on 
average is generating $1 million annually for their local 
economy.
    I have talked a lot about what the industry is doing, the 
benefits working lands conservation brings to local economies, 
and why these investments pay off for our taxpayers, but now I 
want to talk about the real reason I am here. I have three boys 
at home, ages 5, 3, and 1, and they all want to be farmers just 
like Dad. They want to work the same ground that my family has 
worked for the last 108 years. But without being able to 
maintain the natural resources and keep my land in production, 
there won't be anything left to hand to the sixth generation. 
That is why I am here, is to ask this Subcommittee and the full 
Agriculture Committee membership to support robust funding for 
the conservation title, and to focus that support on important 
working land investments so that my children can play a part in 
feeding this great nation.
    Thank you for your leadership, and the opportunity to offer 
testimony. I look forward to working with you and your staff, 
and to respond to any questions you may have. Thank you.
    [The prepared statement of Mr. Gertson follows:]

Prepared Statement of Timothy Gertson, Co-Owner/Co-Operator, G5 Farms; 
      Member, Board of Directors, USA Rice Federation, Lissie, TX
Introduction
    Chairman Lucas, Ranking Member Fudge, and Members of the 
Subcommittee, thank you for holding this hearing to gather input on how 
the conservation title of the Agricultural Act of 2014 is working and 
hopefully how we can improve it as we start the process of writing a 
new farm bill. I appreciate the opportunity to offer testimony on 
behalf of the USA Rice Federation.
    My name is Timothy Gertson. I own and operate G5 Farms along with 
my cousin, Daniel Gertson. We are fifth generation rice farmers and 
usually grow some corn and sorghum on the side. We first began farming 
independently from our parents in 2009 and manage land primarily in and 
around Lissie, a small community in Wharton County, Texas, about an 
hour outside of Houston.
    In Texas, we normally begin planting rice on March 1st; if you take 
a look at the calendar you will see that is tomorrow. Planting and 
harvesting are among the most stressful parts of a farmer's year. But 
here I am, sitting in a suit and tie in Washington, D.C. 1,500 miles 
from home. That is because the issue of voluntary, locally-led 
agricultural conservation is all too important for me to hand off to 
someone else.
USA Rice-Ducks Unlimited Stewardship Partnership
    Conserving our natural resources is not something we take lightly 
and for rice farmers our livelihoods depend on it. Rice is the only 
major commodity that is 100 percent irrigated with most growers still 
heavily dependent on ground water for irrigating their rice crop. 
Because of the necessity to flood our fields during the growing season, 
we have the option to maintain those floods throughout the fall and 
winter to benefit the millions of migratory waterfowl that get 40 
percent of their food source directly from our rice fields. Ducks 
dabble in the shallow water for waste grain, weed seeds, and other 
forms of food and the fields provide resting areas for migratory birds 
on the move. Winter-flooded rice fields provide many of the same 
functions for migrating waterfowl as natural wetlands.
    Without the voluntary contribution of rice farmers, these birds 
would lose all of that critical habitat which is exceedingly important 
for the survival of many species. An industry study in 2012 found that 
the estimated restoration costs of replacing flooded rice habitats with 
managed seasonal wetlands would exceed $2,200 per acre. In total, the 
replacement cost for wetlands nationwide would exceed $3.5 billion 
without domestic rice production to replicate the effects of natural 
wetlands.
    This symbiotic relationship with the waterfowl industry led into a 
historic partnership with Ducks Unlimited, called the Rice Stewardship 
Partnership. I would even go as far as to say that we could be used as 
the model for commodity and wildlife groups working together going 
forward. While we both have separate missions and methods, we have 
managed to collaborate and find common ground and develop goals for our 
Partnership, including work on the Regional Conservation Partnership 
Program (RCPP).
Regional Conservation Partnership Program Is a Success
    Our Partnership was awarded $10 million in 2015 by the USDA's 
Natural Resources Conservation Service (NRCS) to implement an RCPP 
project across the six major rice-growing states. The project directly 
funds Environmental Quality Incentives Program (EQIP) and Conservation 
Stewardship Program (CSP) contracts with rice growers. While the CSP 
portion of our project is still underway, the Partnership has been able 
to facilitate more than 200 EQIP contracts with growers throughout the 
country to further improve rice's environmental footprint.
    This year, the same Partnership was able to secure an additional 
$15 million through two new RCPP projects, further stretching the reach 
of the cost-share programs throughout the South and constructing a 
small reservoir near my hometown in Eagle Lake, Texas to benefit 
waterfowl and rice farmers when we experience the all too often 
droughts.
    It is important to us that this fiscally responsible program is 
reauthorized when you are writing the next conservation title. Our 
three projects alone have pulled together nearly 100 diverse partners 
to help implement their goals, communicate successes, and ultimately 
share the cost of investment in working lands conservation programs to 
ensure NRCS gets the most bang for their buck.
The Importance of Working Lands Programs
    CSP, and especially EQIP, are referred to by farmers as the 
``workhorses'' of NRCS conservation programs. They are valuable cost-
share programs that incentivize farmers to implement any number of 
conservation practices on our operations that have proven benefits to 
the environment. The relatively small investment made by the program 
has no doubt made our land more resilient to extreme weather events by 
reducing erosion and runoff and improving soil health. My father and 
his brothers were some of the earliest adopters of both programs. Their 
first EQIP contract was signed in 2002 and they secured a CSP contract 
through the old Conservation Security Program following its inception 
in the 2002 Farm Bill.
    EQIP is vital because it is such a straightforward program with an 
extensive list of practices that NRCS is able to assist farmers with 
implementing. EQIP's structural practices can help establish the 
equipment needed to better manage water resources, help with irrigation 
efficiency, fencing, and erosion control.
    CSP has been revised to become more like EQIP but operates with 5 
year contracts to provide more time for the extensive work to be 
completed. This program helps to target specific resources using a 
number of complimentary practices, and has been a great tool for rice 
farmers to have in our toolbox to pay for expensive long-term 
management practices.
    In the South it is not uncommon for most farmers to rent the 
majority of their cropland, we have a system that works well for us, 
usually. Many farmers do not have certainty of whether they will hold 
the lease on a piece of ground from one year to the next so it is often 
not worth the risk to invest a lot of capital into someone else's land. 
These cost-share programs are the only thing that help to bridge that 
gap, allowing land-renters to install conservation measures while 
footing only a portion of the cost. Improvements in efficiencies 
benefit the farmer while the environmental perks benefit the landowner 
by simultaneously raising the land value. Across the country, a great 
deal of EQIP and CSP contracts are carried out on rented land that 
would otherwise probably be left untouched by conservation 
improvements.
    My father taught me to be a conservationist as just a kid, and I 
was so passionate about it that I nearly took a job with NRCS on two 
separate occasions. Therefore, it came as no surprise to anyone when my 
operation secured its first EQIP contract in 2010, just a year into 
farming. We always heard there was a huge demand for the program across 
the country and we soon learned why, as the results came quickly and 
our bottom line could feel the difference. We cost-shared the 
installation of more than 4 miles of 16" underground pipeline to 
replace irrigation canals, resulting in up to 20 percent less 
irrigation water needed to grow our crop, providing both instant 
savings and environmental benefits. It previously took nearly 24 hours 
of pumping at a rate of 3,000 gallons per minute to build up in my old 
canals to start just a trickle of water into my fields. Now, with 
underground pipeline, my water supply is on demand and immediate.
    Soon after our first EQIP venture, we were able to secure an 
additional EQIP contract to begin cost-sharing irrigation land-leveling 
portions of our operation. Level land results in less water losses when 
a rice crop is flooded and that was able to provide us with an 
additional ten to twenty percent irrigation water savings. As beginning 
farmers, we were also fortunate enough to qualify for prioritized 
applications and higher cost-sharing percentages to help incentivize 
our participation.
    These programs obviously provide farmers with the resources to 
implement a lot of effective practices and there is clearly data to 
back that up. Surprisingly, their true benefits are not so visible on 
the surface. After we implemented our initial EQIP contracts, we saw 
the financial returns and the obvious preservation of natural resources 
and we decided to do more of it, this time on our own dime. I think 
these NRCS financial assistance programs not only incentivize locally 
led conservation, but they help farmers develop an appetite to continue 
the environmental stewardship, making their full value truly 
incalculable.
Working Lands Programs Are Economic Drivers
    Throughout rural America, working lands programs serve as economic 
drivers. It takes more than just one farmer to complete the work needed 
to implement an EQIP or CSP contract. Think about the outside 
technicians, engineers, and local soil and water conservation districts 
needed to help oversee the conservation planning; the scientists, the 
land movers, the equipment that needs to be purchased to implement 
these conservation practices.
    Not to mention, with working lands programs the land is still in 
production, so the economic drivers of small communities are still 
working, unlike some programs like the Conservation Reserve Program 
(CRP) that pay farmers not to grow a crop. For example, my small town 
has less than 75 residents and my operation's size ensures that at I'll 
provide jobs for at least several of those residents. The revenue 
generated from my farm is then reinvested in inputs for the following 
year and ends up in the hands of other small, local businesses. Small 
towns like mine rely on the agriculture industry for jobs and 
investment or they would disappear; when my business prospers, everyone 
around me benefits in one way or another.
    My town, however, is not unique. More than 75 percent of rice 
farming operations in the South operate in what USDA considers 
``StrikeForce counties''--rural counties with more than 20 percent of 
the population below the poverty line. These communities all rely on 
vibrant farming operations to stay alive and NRCS working lands 
programs help to shoulder the burden of high operating expenses. The 
practices I have put into place over the years have helped make my land 
more resilient to the multi-year drought we experienced a few years 
ago. These conservation practices have helped me stay in business over 
the course of this depressed farm economy having increased my 
efficiency by increasing my yields and decreasing my input costs to 
boost my margins.
    When we are not in the growing season and purchasing inputs, we are 
still growing the local economy. Like I mentioned, rice has this 
intrinsic relationship with waterfowl and the waterfowl habitats in our 
fields also serve as a perfect habitat for waterfowl hunters. The 
waterfowl hunting business brings millions of dollars to the South's 
local economies during the fall and winter months when work elsewhere 
is short. Visitors travel from all over the world to hunt in the rice 
fields and they all need lodging, food, equipment, etc.
    Again, I feel like we are doing more than our part to contribute to 
our local economies and the EQIP and CSP projects we are implementing 
help to make that all possible. A study released earlier this month by 
Texas A&M's Agricultural and Food Policy Center drives this point home, 
showing that every U.S. rice farmer is generating more than $1 million 
for their local economies on an annual basis.
    As an industry, we see these two programs targeted every year 
during the appropriations process. Their mandatory funding is cut, 
reducing the amount of work NRCS can provide in each of your Districts 
throughout the country and creating a backlog that will take years to 
catch-up to the demand that is out there. It is important to us that 
these are not only preserved but codified in a way that they are not 
always seen as low-hanging fruit when it's time to find savings.
EQIP Provision Limits Long-Term Effectiveness
    Current EQIP rules place an arbitrary 3 year limit on funding 
annual management practices. As strong stewards of the land and staunch 
advocates for migratory waterfowl, we support a change in this 
limitation for projects implemented ``purely for the benefit of 
wildlife''. This is necessary in order to sustain these beneficial 
practices and demonstrate long-term benefits. While these annual 
management practices benefit water birds, some of them ultimately 
reduce farm profitability because of their expense to the farmer. 
Therefore, producers will most likely stop implementing them if cost-
share assistance for these proven, effective annual management 
practices is terminated after 3 years.
SAM/DUNS Is a Barrier to Conservation Adoption
    Currently, farmers who want to participate in farm bill 
conservation programs have to wade through an annual registry process 
called the System for Award Management (SAM) and Data Universal 
Numbering System (DUNS), designed for transparency for multi-billion 
dollar Federal defense contractors. This complicated process to comply 
with SAM and DUNS typically ties up hours of my time and that of our 
local soil and water conservation district or NRCS office. It is 
disincentive for many us to sign-up for these important conservation 
programs. Immediately following a successful registration using SAM, my 
inbox, mailbox, and phone are flooded with solicitors who have just 
been provided my information, a serious breach of my privacy. The rice 
industry is supportive of efforts to exempt NRCS programs from 
complying with this burdensome reporting process.
Sustainability Is Necessary for Future Generations
    I have talked a lot about what the industry is doing, the benefits 
working lands conservation bring to our local economies, and why the 
investment really pays off for taxpayers, but now I want to talk about 
the real reason I am here. I have three sons under the age of 10. My 
boys want to be farmers just like dad and someday farm the same land we 
have been working for the last 108 years. But without being able to 
make a living for my family and maintain the natural resources to keep 
my land in production, there won't be anything left to hand to the 
sixth generation. That is why I am here: to ensure that this 
Subcommittee fights to maintain conservation title funding and 
important working lands program investments so that my children can 
play a part in feeding this great nation.
    I thank this Subcommittee for holding this important hearing on the 
farm bill's conservation title. And I appreciate, as a farmer, as a 
conservationist, and on behalf of the USA Rice Federation, the work you 
have done to ensure that farmers have the tools they need to implement 
conservation practices on the landscape and feed our growing 
population. While conservation may not necessarily be the most 
controversial issue in the farm bill, it is a vital part of our 
industry and a necessary investment if we want to leave our land and 
operations as a legacy for our children.
    Again, thank you for your leadership and for the opportunity to 
offer my testimony this morning. I look forward to working with you and 
your staff and will be happy to respond to any questions you might 
have.
                               Attachment

 Sustaining the Future of Rice RCPP Project Financial Breakdown July 1,
                           2015-June 30, 2016
 
 
 
         Financial Support                   Where the Money Goes
    (July 1, 2015-June 30, 2016)
            $8.3 Million
 

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

          Source: 2016 Rice Stewardship Partnership Annual Report.

    The Chairman. Thank you, Mr. Gertson.
    Mr. Peters, you are recognized for 5 minutes.

          STATEMENT OF JEREMY PETERS, CHIEF EXECUTIVE
         OFFICER, NATIONAL ASSOCIATION OF CONSERVATION
DISTRICTS, DARLINGTON, MD; ON BEHALF OF LEE McDANIEL, IMMEDIATE 
                    PAST PRESIDENT, NATIONAL
             ASSOCIATION OF CONSERVATION DISTRICTS

    Mr. Peters. Good morning, Chairman Lucas, Ranking Member 
Fudge, and Members of the Subcommittee. Thank you for the 
opportunity to testify this morning. I am Jeremy Peters, Chief 
Executive Officer for the National Association of Conservation 
Districts, standing in for our immediate past President, Lee 
McDaniel, who is unable to attend today's hearing. We 
appreciate your flexibility in allowing me to testify this 
morning.
    I have been involved with NACD since 2006, and became the 
Association's Chief Executive Officer in April of 2015. But my 
roots are in agriculture and in my family's farm in rural 
southwestern Virginia, where we continue raising cattle today.
    NACD represents America's 3,000 conservation districts, and 
the 17,000 men and women who serve on their governing boards, 
as well as their respective state and territory associations. 
Conservation districts are local units of government 
established under state law to carry out natural resource 
management programs at the local level. Conservation districts 
work with cooperating landowners and operators in all 50 
states, as well as the territories, to help manage and protect 
land and water resources on private working lands, and many 
public lands in the United States.
    Conservation districts are vital to conservation in this 
country. Working with partners at USDA, they provide on-the-
ground conservation planning, technical expertise, and 
scientific assistance to implement conservation practices 
tailored to the landowner's management goals. Conservation 
districts are also unique since they are directly involved in 
the local working group process which informs NRCS about what 
the greatest resource concerns are at the local level.
    As NACD began its farm bill evaluation process last year, 
we created a Farm Bill Task Force to guide our policy 
priorities. We first created a farm bill survey to seek input 
and opinions from our members on the last farm bill, what 
programs were working or needed improvements and where they 
wanted NACD to focus. Based upon the over 500 responses we 
received, the Task Force developed a set of principles that was 
officially adopted by NACD's Board of Directors at our annual 
meeting earlier this month, and those principles are attached 
to the written testimony that was submitted to the Committee. 
These principles focus on items like local input and the need 
for investments in farm bill conservation programs. While not 
directly authorized under the farm bill, all of the programs 
discussed in my testimony would not be as successful without 
the technical and scientific expertise provided through 
Conservation Technical Assistance, or CTA. Through the CTA 
program, landowners work with local conservation professionals, 
including conservation district employees, to develop 
individual conservation plans, ensuring producers know that 
they are implementing the best conservation practices to meet 
their individual land's resource needs, and that taxpayers are 
getting the most out of their investment.
    Successful implementation of on-the-ground conservation is 
also dependent on proper investment through the farm bill 
conservation title. The financial and technical assistance that 
farm bill dollars provide are the lifeblood of the voluntary 
conservation model. Without this funding, we would see less 
adoption of conservation practices and in turn, we would see 
fewer conservation benefits. The last farm bill reduced 
conservation spending by almost $6 billion over 10 years when 
including sequestration. While NACD and the larger agriculture 
and conservation community understood the budgetary constraints 
that Congress had to deal with when writing the last farm bill, 
the cuts to the conservation title were significant. These 
funding reductions in EQIP, CSP, CRP, and ACEP have 
dramatically limited the ability to put conservation on the 
ground. We recommend that Congress seriously look at not only 
maintaining funding for the conservation title, but we strongly 
recommend increasing it.
    Demands on the landscape and our natural resources are 
greater than ever, and in these difficult financial times for 
farmers and ranchers, it is unrealistic to think that 
landowners will take on costly conservation practices with 
fewer financial incentives and less technical assistance. That 
is why it is even more important to double down on farm bill 
conservation funding.
    While there are several programs worth discussing during my 
testimony, one I would like to focus on is the new Regional 
Conservation Partnership Program. RCPP was created to bring 
together new partners and help leverage non-Federal dollars to 
achieve greater conservation outcomes. Conservation districts 
and their close working relationships with landowners, have 
been natural partners in many of these projects. In fact, 25 
out of the 88 projects funded in the most recent round of 
awards were led by conservation districts or their state 
associations.
    As with all programs, RCPP needs to be thoroughly evaluated 
while writing the next farm bill. Even in new programs, the 
locally led aspect of the conservation delivery system is 
crucial to ensuring that conservation programs are focused on 
the greatest resource concerns in a particular area. 
Unfortunately, RCPP does not always fully take that into 
account, and the local conservation practices established by 
the local working groups. Greater emphasis on state and local 
coordination and consultation with local conservation districts 
is needed to ensure that these programs are indeed addressing 
the greatest resource concerns.
    An additional obstacle is the SAM and DUNS reporting 
requirements. Current law requires landowners who participate 
in NRCS cost-share programs to follow time consuming Federal 
reporting requirements. These requirements can act as a barrier 
to implementing conservation practices on the ground. The NACD 
does not believe farmers and ranchers were the intended 
recipient of this regulation, and thankfully, Congresswoman 
Kuster and Congressman Crawford introduced H.R. 1163, Improving 
Access to Conservation Act to fix this problem. The NACD 
encourages the Committee to ensure its passage or its inclusion 
in the farm bill.
    While there are many issues that we will discuss today, the 
bottom line is that our nation's conservation districts and the 
locally led conservation delivery system continue to be 
effective in communities all across the nation. For this to 
continue, Congress must provide robust funding and continue the 
tradition of a locally led conservation system. We cannot let 
our nation's investment in farm bill conservation programs 
continue to erode, and as this Committee begins reauthorizing 
the next farm bill, we appreciate the opportunity to provide 
our insights and expertise. We look forward to a farm bill that 
will continue to provide the ability for landowners to conserve 
our nation's soil, water, and wildlife for future generations.
    Thank you.
    [The prepared statement of Mr. McDaniel follows:]

Prepared Statement of Lee McDaniel, Immediate Past President, National 
                 Association of Conservation Districts
    Good morning, Chairman Lucas, Ranking Member Fudge, and Members of 
the Subcommittee. Thank you for the opportunity to testify this morning 
as you gather input from stakeholders on how conservation policy in the 
Agricultural Act of 2014 is performing and what improvements Congress 
should make in the next farm bill.
    I am Lee McDaniel, Past-President of the National Association of 
Conservation Districts (NACD), and I currently operate a corn, soybean, 
and alfalfa hay farm in Darlington, Maryland. I have been involved with 
conservation districts since 1997 when I first served on my local 
district board. On my own land, I implement a variety of conservation 
practices, including grassed and wooded buffers, grassed waterways, 
strip cropping, and no-till farming.
    NACD represents America's 3,000 conservation districts and the 
17,000 men and women who serve on their governing boards, as well as 
their respective state and territory associations. Conservation 
districts are local units of government established under state law to 
carry out natural resource management programs at the local level. 
Conservation districts work with cooperating landowners and operators 
in all fifty states as well as the territories to help manage and 
protect land and water resources on private working lands and many 
public lands in the United States.
    The origins of agricultural conservation date back to the Dust Bowl 
and even before with the efforts of Hugh Hammond Bennett, the father of 
U.S. soil conservation. Sadly, it took the devastating effects of the 
Dust Bowl to spur a real change in policy. As a part of this policy 
landscape shift, the Standard State Soil Conservation Districts Law was 
signed in 1937, authorizing farmers to organize local soil and water 
conservation districts. These new districts gave local farmers a voice 
in Federal programs and is widely acknowledged as one of the key 
reasons for the success of private lands conservation.
    Today, our nation's conservation delivery system reaches into 
virtually every community with technical and financial assistance that 
is targeted to local resource concerns. The voluntary-incentive based 
model that this local input supports has and continues to work to 
ensure our nation's natural resources are protected. Part of the 
voluntary conservation model's purpose is to help producers comply with 
local, state, and national regulatory requirements. However, voluntary 
conservation can take this purpose one step further by helping avoid 
the need for these regulations altogether. The general public expects 
clean air and water, healthy soils and abundant wildlife habitat. The 
Federal Government has a better chance at achieving these goals, not by 
adding additional requirements and regulations, but by encouraging 
landowners to implement good conservation practices on their land.
    Conservation districts are vital to conservation in this country. 
Working with partners at USDA, they provide on-the-ground conservation 
planning along with technical and scientific assistance to implement 
conservation practices tailored to the landowner's management goals. 
Conservation districts are also unique since they are directly involved 
in the Local Working Group process which informs NRCS about what the 
greatest resource concerns are at the local level. Local working groups 
are required to ``provide recommendations to USDA on local and state 
natural resource priorities and criteria for conservation activities 
and program.'' It also is the responsibility of the local conservation 
district to assemble the Local Working Groups, chair the group's 
meetings, identify the conservation needs of the area and ensure that 
NRCS is notified of the group's recommendations. Keeping the Local 
Working Groups as a critical component of conservation decisions at 
NRCS is an important priority for NACD.
    As NACD began its farm bill evaluation process last year, we 
created a Farm Bill Task Force to guide our policy priorities. We first 
created a farm bill survey to seek input and opinion from our members 
on the last farm bill, what programs were working or needed 
improvements and where they wanted NACD to focus. Based upon the over 
500 responses we received, the Task Force developed a set of principles 
that was officially adopted by NACD's Board of Directors at our annual 
meeting earlier this month.
    These principles focus on items like local input and the need for 
investments in farm bill conservation programs. While not directly 
authorized under the farm bill, all of the programs discussed in my 
testimony would not be as successful without the technical and 
scientific expertise provided through Conservation Technical Assistance 
(CTA). Through the CTA program, landowners work with local conservation 
professionals, including conservation district employees, to develop 
individual conservation plans ensuring producers know that they are 
implementing the best conservation practices to meet their individual 
land's resource needs and that taxpayers are getting the most out of 
their investment.
    An additional principle is to simplify the delivery of conservation 
programs. Landowners who are interested in participating in NRCS cost-
share programs face Federal reporting requirements that can be time 
consuming and hard to navigate which ultimately acts as a barrier to 
implementing conservation practices on the ground. Current law requires 
them to obtain a Data Universal Numbering System (DUNS) number and 
annually register with the Federal Government's System for Award 
Management (SAM). NACD does not believe farmers and ranchers attempting 
to do the right thing by putting conservation practices on the ground 
were the intended recipient of this regulation and thankfully 
Congresswoman Kuster and Congressman Crawford introduced legislation 2 
weeks ago to fix this problem and would encourage the Committee to 
ensure its passage or inclusion in the farm bill.
    Successful implementation of on-the-ground conservation is 
dependent on proper investment through the farm bill conservation 
title. The financial and technical assistance that farm bill dollars 
provide are the lifeblood of the voluntary conservation model. Without 
this valuable funding, we would see less uptake of conservation 
practices and in turn we would see fewer conservation benefits. In 
these difficult financial times for farmers and ranchers, it is 
unrealistic to think they will take on costly conservation practices 
with fewer financial incentives and less technical assistance.
    The Agricultural Act of 2014 consolidated conservation programs 
from 23 to 13 and reduced conservation spending by almost $6 billion 
over 10 years, including sequestration. Let's examine that number on a 
programmatic level. Funding for the Environmental Quality Incentives 
Program (EQIP), by far the most popular conservation program, had its 
authorized funding level reduced by an average of $250 million for the 
first 4 years of this farm bill, a devastating cut when added to the 
yearly reductions in the appropriations process. The Conservation 
Reserve Program (CRP), a program which was first authorized in its 
current form in 1985, had its acreage cap reduced to 24 million acres, 
a reduction of 25%. The Agricultural Conservation Easement Program 
(ACEP) will only have an annual baseline of $250 million in Fiscal Year 
18 (FY18) and beyond, a cut over 60% from pre-2013 levels. The 
Conservation Stewardship Program (CSP), the largest conservation 
program by acreage, was reduced by over 2 million acres per year.
    While regulatory reform is something many farmers and ranchers want 
to see, the general public's desire for clean air and water, healthy 
soils and abundant wildlife will not wane. That is why it is even more 
important to ``double down'' on farm bill conservation funding since 
one of the purposes of these programs is not only to comply with 
regulations but help avoid the need for them altogether. While NACD and 
the larger conservation community understood the budgetary constraints 
that Congress had to deal with while writing the last farm bill, the 
cuts to the conservation title were significant.
    Since reauthorization, conservation programs like CSP and EQIP are 
regularly cut further through the appropriations process known as 
Changes in Mandatory Program Spending (CHIMPs). In FY14-16, mandatory 
farm bill conservation spending was reduced by nearly $1 billion 
through the appropriations process alone. The bottom line is farm bill 
conservation title funding was cut in the last farm bill by 10% and it 
continues to be cut annually in the appropriations process. Demands on 
the landscape and our natural resources are greater than ever, so we 
recommend that Congress seriously look at not only maintaining funding 
for the conservation title but we strongly recommend increasing it.
    One of the new programs created in the Agricultural Act of 2014, 
was the Regional Conservation Partnership Program (RCPP). This new 
program, which combined four regionally-based programs into one larger 
program, was created to further the conservation, restoration, and 
sustainable use of soil, water, and wildlife and was designed to help 
producers meet, or even avoid the need for, natural resource 
regulations. This program helps bring together new partners and 
leverage Federal funds for large-scale conservation projects.
    Conservation districts, and their close working relationships with 
landowners, have been natural partners in many of these projects. In 
fact, in December when NRCS announced the list of 88 projects which 
were receiving funding through their third funding round, conservation 
districts and their state associations were the lead on 25 funded 
projects and were supporting partners in many more. Altogether, the 
$225 million in funding that was available during the most recent 
funding round will be leveraged with an additional $500 million from 
the private-sector successfully proving that this public-private 
partnership can work.
    As with all new programs, RCPP, needs to be thoroughly evaluated 
during this process. As previously mentioned, the locally-led aspect of 
the conservation delivery system is crucial to ensuring that farm bill 
conservation programs, including the four programs which contribute 
funding to RCPP, are being focused to meet the greatest resource 
concerns in that area. Unfortunately, RCPP does not always fully take 
into account the local conservation priorities established by the 
locally-led process and these priorities may not be considered in the 
development or funding of RCPP projects. Greater emphasis on state and 
local coordination and consultation local conservation districts is 
needed to ensure that these programs are indeed addressing the greatest 
resource concerns.
    Another program I wanted to mention during my testimony is the 
Small Watershed Rehabilitation Program. In the 1940's and 1950's, 
Congress passed laws which led to the construction of almost 12,000 
small watershed dams, many times led by the local conservation district 
in the area. These dams represent critical infrastructure in many 
communities and provide approximately $2 billion in benefits from 
improved water quality and erosion control. Yet with the original dams 
approaching 70 years old, these aging dams now also present public 
health, safety, and environmental concerns. Under Chairman Lucas' 
leadership, the Agricultural Act of 2014 provided mandatory funding of 
$250 million to ensure necessary investments in these infrastructure 
projects. The Watershed Rehab program, and the underlying Watershed 
Protection and Flood Prevention Act, continue to be a priority for the 
many conservation districts who stepped up to lead these projects.
    While there are a multitude of other issues which will undoubtedly 
be discussed during this hearing, the bottom line is that our nation's 
conservation districts and the locally-led conservation delivery system 
continue to be effective in communities all across the nation. However, 
for it continue to thrive, Congress must provide robust funding and 
continue the tradition of a locally-led conservation system. We cannot 
let our nation's investment in farm bill conservation programs continue 
to erode. As this Committee begins reauthorizing the next farm bill, 
NACD along with our nation's 3,000 conservation districts and the 
17,000 supervisors on their local boards stand ready to provide our 
insights and expertise in crafting legislation that will continue to 
provide the ability for landowners to conserve our nation's soil, 
water, wildlife and air.
                               Attachment
NACD Principles for the 2018 Farm Bill
Principle 1--The Locally-Led, Voluntary Incentive-Based Conservation 
        Model Works
    NACD strongly believes in the locally-led, voluntary, incentive-
based model for addressing natural resource concerns; not a one-size-
fits-all regulatory scheme. Farm bill conservation programs should be 
locally-led and resource driven with sufficient flexibility to direct 
funding to local priorities and concerns. Program priorities should be 
tailored to the natural resource needs of the states and local areas. 
Local Conservation District Boards, Local Working Groups, and State 
Technical Committees should help identify local needs to maximize 
conservation benefits.
Principle 2--No Further Cuts to Conservation Title Funding in the Farm 
        Bill
    Strong mandatory funding levels authorized in the farm bill are 
fundamental to not only putting conservation on the ground, but for 
dealing with, and ultimately avoiding, the need for environmental 
regulations. The conservation title (title II) took a 10% cut in 
funding in the Agricultural Act of 2014, and continues to be cut 
annually during the appropriations process. Every dollar cut from 
mandatory conservation programs leads directly to less conservation on 
the ground and only increases the natural resources concerns and the 
probability of regulatory hassles. Each farm bill conservation program 
plays a significant role in addressing natural resource concerns. From 
the importance of the Environmental Quality Incentives Program (EQIP), 
to the Small Watershed Rehabilitation Program, robust mandatory funding 
is critical. NACD believes, at a minimum, no further cuts should occur 
in the next farm bill to the conservation title, and if funds are 
available, to increase its funding.
Principle 3--Commitment to Working Lands
    Landscapes across the nation vary in their resource concerns, and 
farm bill conservation programs must continue to meet the specialized 
needs of the agricultural producers who work these lands. Given the 
projected increase in the world's population, programs must provide 
assistance to implement or maintain conservation practices on working 
lands that produce much needed food, fiber, and fuel while at the same 
time protecting our natural resources.
Principle 4--Technical Assistance and Conservation Planning Are the 
        Bedrock of the Conservation Model
    Technical Assistance and conservation planning is a critical tool 
and first step in evaluating a producer's resource needs. NRCS, along 
with conservation districts, helps agricultural producers plan and 
apply conservation practices on the land. They develop conservation 
plans; plan, design, lay out, and install conservation practices; and 
inspect completed practices for certification. Conservation Technical 
Assistance is vital to ensuring producers know that they are putting 
the best conservation practices on their ground to meet their 
individual land's resource needs.
Principle 5--Agricultural Operations Need To Be Economically Viable
    In order for the locally led, voluntary, incentive-based model to 
be successful, NACD believes agricultural operations need to have a 
strong safety net, robust marketing opportunities, and supportive farm 
policy. Without viable agricultural operations, districts will not be 
able to help install conservation practices on the ground. The farm 
bill must work for each facet of the nation's diverse agriculture 
industry.
Principle 6--Farm Bill Education and Outreach Is Necessary
    NACD believes conservation education is a necessary tool to drive 
more conservation adoption. If producers are not aware of the tools 
available to them, then the adoption of conservation practices will 
suffer. This is especially the case with beginning, socially 
disadvantaged, and limited resource farmers. NACD supports a dedicated 
funding stream within title II to advance conservation adoption and 
outreach.
Principle 7--Streamline and Simplify Conservation Programs/Application 
        Process While Reducing Administrative Burdens
    Conservation programs and the application process should both be 
simple and easy to understand. Administrative burdens that 
disincentivize program participation should be eliminated. Just one 
example of this is the SAM/DUNS reporting requirements that NRCS 
program participants must comply with. This only complicates the 
conservation delivery system by taking time away from NRCS staff and 
producers, but can actually prevent producers with the greatest 
resource needs from applying.
Principle 8--Forestry
    NACD supports a forestry title that addresses the unique 
complexities of forestry on non-industrial, private forest land and the 
effective management of Federal and state forest lands. NACD encourages 
an expansion in the ability to provide technical assistance and 
outreach to non-industrial private forest owners, especially landowners 
not currently engaged in conservation or managing their lands. NACD 
supports addressing issues identified by state forest resource 
assessments and strategies as well as state wildlife action plans and 
continue to provide the ability to make regular updates to these state-
level efforts.
Principle 9--New Approaches and New Technologies
    Working lands conservation is not a static term, but is constantly 
changing and adapting as the introduction of new technologies and 
partners occur. The farm bill should reflect this and ensure they are 
addressed. This includes addressing the natural resource concerns 
presented by urban agriculture as well as the recent increase in drone 
technologies and the adoption of precision agriculture.

    The Chairman. The gentleman's time has expired.
    The chair now recognizes for 5 minutes Mr. Nomsen.

        STATEMENT OF DAVID E. NOMSEN, VICE PRESIDENT OF
         GOVERNMENTAL AFFAIRS, PHEASANTS FOREVER, INC.,
                          GARFIELD, MN

    Mr. Nomsen. Chairman Lucas, Ranking Member Fudge, Members 
of the Subcommittee, my name is Dave Nomsen with Pheasants 
Forever. Mr. Chairman, I had the same thought when I sat down 
here this morning too as you sat down. I thought, ``I am back, 
and I am here once again to talk primarily about the 
Conservation Reserve Program this morning.'' But I do want to 
start by pointing out, there is an incredible entire suite of 
conservation programs that we work with across the country. But 
frankly, CRP has been this nation's most successful 
conservation program at USDA.
    Let's look back a little bit and start by looking at the 
period from 1990 to 2010. During that period, the CRP averaged 
about 32 or 33 million acres enrolled in the program. During 
that time period, we had an authorization for basically a 40 
million acre program. It was dinged a little bit here and 
there, it was 39.2, it was 36.4, but basically a 40 million 
acre program. And quite frankly, the program worked quite well 
at that time. We had some good old days for pheasant hunting. 
We had record pheasant harvest in a number of states, and 
frankly, we would like to return to those days, and that is why 
we are calling once again for an authorization for a 40 million 
acre program.
    We hit a bit of a train wreck starting after the 2010 
period, and actually right now, if you look at the northern 
Great Plains States, perhaps Montana, the Dakotas, Nebraska, 
Iowa, Minnesota, and Kansas, if you look at those states, they 
had 16.4 million acres of CRP in 2007. Today, they have 9.3. 
Forty-three percent of those acres are gone. That grassland has 
left the landscape, and for pheasants and other ground-nesting 
birds; obviously, grassland habitats are critical. Between that 
and then what happened with the 49th general signup results, we 
are actually saying we are at a grassland conservation crisis 
in much of this country, and we really need to establish CRP as 
the flagship program with a 40 million acre authorization.
    During that signup period, some 26,000 offers were made, 
and unfortunately because of the severely reduced cap, 21,000 
offers were rejected. Landowners from all across the country 
that wanted to do good things for soil, water, and wildlife 
conservation, they weren't allowed entrance into the program. 
Mr. Chairman, in your State of Oklahoma, you came out right at 
the national average, about 600 offers, 22 percent acceptance 
rate. Basically four out of five people were denied entrance 
into the program.
    In the flagship State of South Dakota, about 42,000 acres 
were offered. During the process, USDA accepted two offers on 
101 acres. Frankly, that just can't continue into the future, 
and it threatens the integrity and the future of the program.
    That is why one of the things I am calling for is a 
complete reevaluation, revamping of both the signup process, 
signup period. We simply have to find ways to put those larger 
tracts of grass back on that landscape that are important to 
wildlife production and for hunting. We also need to take a 
look at the other end of the process. During the last farm 
bill, we had some really, really strong report language that 
encouraged expiring CRP to be redirected into many of the other 
conservation programs. It didn't happen. We have to find a way 
to make that happen. The program will only continue if it does 
evolve and it becomes the robust, dynamic program as acres flow 
through the program, we maintain the benefits, and we go out 
and capture new acres and new involvement in the program as 
well.
    One of the ways to do that, too, is we are going to have to 
take a look at looking at the historic distribution of acres as 
part of the signup process. It just simply can't keep bouncing 
around the country here and there with a number of different 
factors. We would like to see, for example, South Dakota go 
back to about 1\1/2\ million acres in the program. That is not 
going to happen with the current system that we have in place, 
and the same thoughts apply to many of those other states that 
I spoke about earlier.
    We have a number of other priorities at Pheasants Forever 
and Quail Forever, and we are going to be looking forward to 
working with you and Members of the Committee on the easement 
programs, on working lands programs, especially the EQIP 
program where we do good things in the West. We are going to 
continue to support strong conservation policies like 
conservation compliance linked to crop insurance, like the 
SodSaver provisions to help protect native prairies. Our 
nation's sportsmen and sportswomen are really interested in 
continuing the VPA-HIP Open Fields Program to help landowners 
provide voluntary access for hunters and fishers.
    Thank you very much for the opportunity to testify this 
morning. I would be happy to take your questions.
    [The prepared statement of Mr. Nomsen follows:]

 Prepared Statement of David E. Nomsen, Vice President of Governmental 
             Affairs, Pheasants Forever, Inc., Garfield, MN
    Chairman Lucas, Ranking Member Fudge, and Members of the 
Subcommittee, my name is Dave Nomsen and I am the Vice President of 
Governmental Affairs with Pheasants Forever and Quail Forever based out 
of St. Paul, Minnesota. I am a wildlife biologist by education, served 
on the Wildlife Department faculty at South Dakota State University, 
and have since then worked on conservation policy and programs for 
nonprofit wildlife conservation organizations, growing up in north-
central Iowa and currently living in west-central Minnesota.
    I am here today representing our 735 community based Pheasants 
Forever and Quail Forever chapters; and 142,000 members and volunteers 
that work every day to promote and implement conservation programs. 
Each year our chapters complete more than 30,000 individual projects 
with farmers, ranchers and forest owners. To complement the work of our 
dedicated volunteers, we have a team of 125 Farm Bill Biologists that 
work as natural resource professionals with expertise in fields such as 
wildlife biology, forestry, range management and precision agriculture. 
They work with landowners every day to find the best voluntary based, 
conservation solutions that fit producers' needs as part of their 
agriculture operations and personal goals.
    Since 2003, these Farm Bill Biologists have worked on over 148,000 
projects with landowners covering over 5.1 million acres. These 
projects involve the establishment of quality habitat that meet the 
life cycle needs of a wide variety of wildlife, not only pheasants and 
quail, but other species such as Golden-winged warbler in Pennsylvania, 
Lesser Prairie Chickens in the Southern Great Plains and the iconic Elk 
and Sage Grouse in the West, and enhancing habitat for pollinators, 
like honey bees and Monarch butterflies throughout the country. In 
addition to wildlife benefits, all Americans benefit from improved soil 
health and water quality improvements related to wildlife conservation 
projects.
    Thank you for the opportunity to speak to you today about important 
conservation policies and program need as part of the next farm bill. 
My comments will focus on the program that is routinely referred to as 
the U.S. Department of Agriculture's most successful conservation 
program--The Conservation Reserve Program and I will briefly address 
other important priorities that we have for the next farm bill.
Conservation Reserve Program
    Originally established in 1985, the U.S. Department of 
Agriculture's (USDA) Conservation Reserve program (CRP) enables farmers 
and landowners to voluntarily enroll environmentally sensitive 
croplands and grasslands and plant it to grasses, shrubs, and trees in 
return for 10 to 15 year contracts with annual rental payments. 
Originally designed for both soil erosion and commodity supply control, 
the original CRP proved a great boon for wildlife. In fact, CRP's 
wildlife benefits were instrumental in the programs reauthorization in 
1996. That year, the CRP was reconfigured as a true resource 
conservation program benefitting soil, water, and wildlife resources 
while continuing to provide economic security to farmers and 
landowners, and supporting rural economies and communities. Other 
significant changes in 1996 strengthened CRP by allowing for mandatory 
funding and creating the CRP buffer initiative. Today's generations of 
sportsmen and sportswomen will view CRP's wildlife legacy as the ``good 
old days'' just as previous generations thought of the ``Soil Bank 
era'' of the late 1950s and 1960s. No other private lands conservation 
program has benefitted hunters more than the successful CRP.
    During the 20 year period from 1990-2010 CRP enrollment averaged 
approximately 32-33 million acres per year with an historical peak of 
36.7 million acres in 2007. During this period hunters experienced 
strong levels of bird hunting across many states. Below is the lead 
paragraph from our 2007 forecast that turned out to be an accurate 
prediction of times to come.
Pheasants Forever's 2007 Pheasant Hunting Forecast
With potential habitat losses . . . is 2007 the boom before the bust?
    Overview: All across the Midwest and Upper Midwest, signs are 
pointing to an excellent pheasant hunting season. The typical pheasant 
powerhouses--South and North Dakota, Iowa, Kansas, Minnesota, and 
Nebraska--will again top the list. Unfortunately, because of the 
potential for massive habitat losses this year and next, namely 
Conservation Reserve Program (CRP) acres under soon-to-expire 
contracts, we may soon be referring to 2007 as ``the good old days.''
Fig 1. Historical CRP Acreage Enrollment 1986-2016
CRP Acres By Year

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Landscape level forces after 2010 including record high commodity 
and land prices coupled with budget reductions led to a 2014 Farm Bill 
CRP authorization of 24 million acres and today's total enrollments 
hover just below the 24 million acre cap. Unfortunately, very dramatic 
changes resulting in loss of grasslands habitats have occurred over 
much of the country a problem that has been exacerbated by significant 
increases in cropland acreages. Additionally, the results of the 49th 
general CRP signup conducted from Dec. 1st, 2015-Feb. 26th, 2016 have 
led to what we characterize as a current ``grassland conservation 
crisis''.
Fig [2]. Acres of Grassland/Wetlands/Shrub Land Converted Crop 
        Production By County, 2008-2011
        
        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
        
          http://static.ewg.org/pdf/plowed_under.pdf.
          Calculated using the NASS-USDA Cropland Data Layer for crop 
        years 2008 (56m), 2009 (56m), 2010 (30m), & 2011 (30m).

    In 2007, seven key upland bird hunting states (MT, ND, SD, NE, KS, 
MN and IA) had 16.4 million acres of CRP. By the end of 2016, this 
region contained 9.3 million acres of CRP--a loss 7.1 million acres or 
43%.
49th General Signup
    During CRP Signup No. 49 1.8 million acres in 26,000+ offers were 
submitted. Of these 4,857 offers (18%) for 410,773 acres (22%) were 
accepted nationwide. In the core northern and central plains states 
renowned for upland bird hunting (MT, ND, SD, NE, KS, MN, and IA) 
701,060 acres in 10,983 offers were submitted. Of these 1545 offers 
(14%) for 105,745 acres (15%) were accepted. In South Dakota, the 
pheasant capitol of the world, only two offers on 101 acres were 
accepted (.0275%). These acceptance rates are by far the lowest ever 
throughout the entire history of CRP. As a result, more than 21,000 
individual offers for enrollment in CRP were denied enrollment 
nationwide with nearly 9,500 of these offers from the above key upland 
bird hunting states.
    During the first Grassland CRP sign up that took place during the 
same timeframe as CRP signup No. 49, farmers and ranchers offered over 
1 million acres, and USDA only allowed 101,000 acres to enter the 
program (10%). During the latest sign up, 986,000 acres were offered 
and 316,000 acres were accepted (32%). Currently there are about 
800,000 acres of enrollment, with most of those contracts having 
delayed start date of Oct 1st, 2017 due to current CRP cap of 24M 
acres.
    We have seen strong demand from landowners when acres are put out 
there on a more target approach. For example just last month, IA State 
Acres For Wildlife (SAFE) 50,000 acres were allocated in a little more 
than a week due to high landowner demand. In SD, allocations for 
pheasant focused SAFE projects typically last for short times as demand 
remains high.
Changing Times
    Today we're at substantially reduced commodity prices, near or 
record level commodity stocks, diminishing land values, cash rents, and 
growing concerns about low farm incomes. Some of these reasons have 
contributed to the substantial demand that we've seen for both 
continuous CRP (CCRP) and general CRP signup 49. As of the end of 
December 2016 CRP enrollment is at 23.49 million acres with a 24 
million acre cap. Upcoming expirations are minimal with 2.5 million 
acres expiring this coming September 30, 2017 and another 1.49 million 
acres on September 30, 2018.
    In our view, we're at a tipping point once again for CRP. Clearly, 
we have strong demand to call for a substantial increase in the acreage 
authorization and we recommend returning CRP to at least 40 million 
acres as part of the 2018 Farm Bill. We need CRP now to address the 
substantial demand to complete voluntary soil, water, and wildlife 
habitat improvement projects. In addition, CRP does offer substantial 
economic and income stability benefits while providing commodity price 
support benefits.
    Additionally, we recommend a complete review and overall of the CRP 
application/signup processes. The program needs to continue to evolve 
to continue as a robust and dynamic landscape level program on working 
farms and ranches. Future signups should target larger blocks of 
habitat important for wildlife production and hunting. It is the 
combination of both the general signups larger tracts of CRP and the 
corridors/buffers and targeted specialty tracts that are available 
through the CCRP that result in the ``habitat mosaic'' most beneficial 
to soil, water, and wildlife resources AND supports outdoor 
recreational opportunities including hunting. Small, rural communities 
benefit as do all residents that enjoy a high quality of life in rural 
areas.
    Future CRP should contain additional provisions to maximize 
benefits to quail. Encouraging use of early successional native covers 
in shorter-term rotations within contracts could be very beneficial.
    We need to address provisions for soon to expire CRP as well. As 
CRP contracts near expiration, we should support provisions encouraging 
longer term resource protection including permanent options for 
selected tracts. Congress should support pathways to ``move'' CRP lands 
into working farms and ranching that continue CRP's resource benefits. 
CRP can support grazing programs and wildlife with through 
comprehensive conservation management plans that provide high quality 
forage, and quality wildlife habitats.
    We also believe USDA should utilize CCRP initiatives to cover areas 
with high contract expiration rates. As these acres come out of a 
general contract and are not extended/re-enrolled, we would ask USDA to 
promote keeping field borders and environmentally sensitive/important 
lands in CCRP practices. The trend has been that when a general CRP 
contract expires, the entire field is brought back into production.
Other Conservation Program Priorities
    In addition to maintaining a strong and robust CRP as the flagship 
conservation program we support a strong Agricultural Conservation 
Easement Program (ACEP) as well as the successful Environmental Quality 
Incentives Program (EQIP). EQIP in particular has played an important 
role in our western states where we work with ranchers and other 
partners to enhance rangelands for both livestock operations and to 
benefit wildlife species like sage grouse and mule deer.
    Through EQIP and Partnerships, we are addressing some of the 
resource concerns in forested ecosystems; however another priority is 
providing wildlife benefits in CRP tree plantings, especially managing 
pine stands for quality timber production in the Southeast while 
benefiting Bobwhite Quail. We are encouraged that USDA implemented the 
$10M in cost share assistance that was introduced in the 2014 Farm 
Bill. We hope that these successes demonstrate additional resources for 
management. We also continue to support the linkage between 
conservation compliance and crop insurance. Sodsaver provisions play an 
important role in addressing native prairie conversion and should be 
continued as well.
    Last, The Voluntary Public Access and Habitat Incentive Program 
(VPA-HIP) plays a vital role in supporting recreational access for 
hunters while supporting enhancement of wildlife habitats. We support 
reauthorization of VPA-HIP at $150 million over 5 years.
    Mr. Chairman, we look forward to providing more detailed program by 
program recommendations to the Committee in the near future. We look 
forward to participating in upcoming dialogues focused on reviewing 
existing programs and procedures and to look for new efficiencies and 
saving wherever possible. We pride ourselves as part of incredible 
partnerships that work day to day to deliver important voluntary 
incentive-based conservation programs to America's farmers and 
ranchers. Thank you for the opportunity to comment and I would be 
pleased to take your questions.
Additional Resources
    2013 Multi-State Land Use Study: Prepared by Decision Innovation 
for MN, SD, IA, IL, NE, IN, and MI Farm Bureau. July, 2013. http://
www.decision-innovation.com/webres/File/docs/130715%20Multi-
State%20Land%20Use%20Report.pdf.
    Conversion of 398,223 acres if non-cropland to cropland during 2012 
crop year[.] USDA-FSA. June 26, 2013 www.fsa.usda.gov/Internet/
FSA_File/cropland_noncropland.pdf.

    The Chairman. Thank you, sir.
    The chair now recognizes Mr. Piotti for 5 minutes.

STATEMENT OF HON. JOHN F. PIOTTI, PRESIDENT, AMERICAN FARMLAND 
                    TRUST, WASHINGTON, D.C.

    Mr. Piotti. Thank you. Chairman Lucas, Ranking Member 
Fudge, Members of the Committee, my name is John Piotti and I 
am the President and CEO of American Farmland Trust, AFT. 
Though I am new to AFT, I have worked on farming issues in my 
home State of Maine for the last 25 years, much of that time as 
part of an organization that worked to protect farmland and 
support farmers. And that is how I have firsthand, on the 
ground experience with many of the programs within the farm 
bill.
    I want to thank the Committee for seeking input from 
stakeholders on the priorities for the next farm bill at this 
time.
    For 36 years, AFT has been dedicated to protecting 
America's farmland and ranchland, promoting sound farming 
practices, and keeping farmers on the land. In the United 
States, we lose the equivalent of 40 acres of farmland to 
development every hour. Replacing our farmland with homes or 
shopping centers has ripple effects for our society, from 
eroding rural towns and their traditions, to decreasing our 
ability to provide our citizens with healthy food, to losing 
wildlife populations, to habitat destruction. AFT recognizes 
that farmers and ranchers hold the solutions to many of our 
most pressing environmental problems when they implement 
voluntary conservation practices on their land. Finally, AFT is 
concerned with the decreasing number of farmers and their 
increasing age. In the time since AFT's founding, the average 
age of farmers has increased from 50 to 58 years. While the 
number of beginning farmers decreased by 20 percent in the last 
Census of Agriculture.
    The farm bill's conservation title should, and at its best, 
does address all these issues. AFT used the conservation title 
as a set of tools to address the complex needs of America's 
farmers and ranchers, while at the same time addressing public 
interest. One of AFT's goals for the upcoming farm bill is to 
ensure that we retain a full set of tools, and that we fund 
each program adequately.
    My written testimony provides detail about how the 2014 
Farm Bill voluntarily reduced spending in an effort to reduce 
future deficits. The conservation title saw a ten percent 
decrease in funding levels, or nearly $6 billion in cuts. A 
recent CBO study shows that the entire farm bill will result in 
nearly $100 billion in deficit reduction.
    My point on all this is that the farm and food community 
has already done its part, and should not be the target of 
additional cuts with the next farm bill.
    Although AFT sees great value in all of the programs in the 
conservation title, my remarks today offered here early in the 
farm bill process focus on two programs that benefit working 
lands and that AFT has strongly been involved with, and that is 
ACEP and RCPP. I will start with ACEP, the Agricultural 
Conservation Easement Program, which is the farm bill's program 
for protecting farmland, a necessary part of our nation's 
infrastructure.
    Protecting farmlands from development protects the 
foundation of our agriculture and our agriculture-related 
industries. Protecting farmland means protecting wildlife 
habitat, water tables, and carbon that is stored in our soils. 
Protecting farmland means protecting our supply of healthy 
food, and protecting farmland means protecting the way of life 
in rural America, and ensuring the next generation of farmers 
can enter the profession. Simply put, Federal investment in 
farmland protection through ACEP provides vital benefits for 
Americans today and into the future.
    Allow me to take just a minute to further explain one of 
the many benefits of ACEP, which some people may not be 
familiar with. We don't always talk about farmland protection 
playing a critical role in making land more affordable for 
farmers, both existing farmers who are looking to expand, and 
beginning farmers who are trying to enter the profession. And 
yet, in any part of this country where there are significant 
development pressures, protected farmland is often the only 
farmland that farmers can afford.
    I earlier mentioned that the number of beginning farmers 
dropped by 20 percent in the last Census of Agriculture. That 
is a national statistic. It doesn't play out in every region. 
In my home State of Maine, for instance, our story could not be 
more different. Between 2007 and 2012, the number of beginning 
farmers in Maine grew by an impressive 39 percent, and one of 
the key reasons is that Maine during this period significantly 
increased its farmland protection efforts, creating affordable 
options for entering farmers to acquire land.
    Despite the many benefits of protecting working 
agricultural lands, the funding for ACEP saw a huge decrease in 
the 2014 Farm Bill. The three components that were created in 
that farm bill to create ACEP, Wetlands Reserve, FFRP, and the 
Grassland Reserve Programs, these were funded at an average of 
$732 million a year from 2009 to 2012. Yet the average for ACEP 
for 2014 through 2018 is $405 million. Even more alarming is 
that ACEP funding drops to $250 million annually in 2018 and 
going forward.
    So listen to what I just said. We are talking about going 
from $732 million to $250 million, a huge drop. And already 
without that step, NRCS is only funding about 30 percent of the 
applicants. Think what it is going to be with the next drop in 
2018.
    Now in addition to ensuring adequate funding for ACEP, AFT 
believes there is a need to streamline the program to ease 
administrative burdens, going forward. This would save the 
Federal Government significant time and money, while making the 
process easier and more timely for a broad variety of farmers 
and ranchers.
    AFT is discussing with advocacy organizations, land 
trusts----
    The Chairman. Please summarize, Mr. Piotti.
    Mr. Piotti. Yes?
    The Chairman. Can you summarize, please, so we can get to 
questions?
    Mr. Piotti. Yes, absolutely.
    In conclusion, I just want to say the conservation title is 
vitally important, not just for farmers and ranchers, but for 
all Americans. It gives our farmers and ranchers a variety of 
tools to achieve cleaner air and water, healthier soils, more 
wildlife habitat, and to protect farmland and ranchland. While 
we all acknowledge the budget realities that the nation faces, 
we believe that adequate funding for the conservation title is 
critical at this time. Beyond this, these voluntary 
conservation programs help our nation's farmers and ranchers 
advance environmental goals without burdensome regulatory 
requirements, something that is needed today more than ever.
    I thank you for your time.
    [The prepared statement of Mr. Piotti follows:]

Prepared Statement of Hon. John F. Piotti, President, American Farmland 
                        Trust, Washington, D.C.
          American Farmland Trust is the nation's leading conservation 
        organization dedicated to protecting America's farmland and 
        ranchland, promoting sound farming practices, and keeping 
        farmers on the land. Since its founding in 1980 by a group of 
        farmers and citizens concerned about the rapid loss of farmland 
        to development, AFT has helped save millions of acres of 
        farmland from development and led the way for the adoption of 
        conservation practices on millions more.
Introduction
    Chairman Lucas, Ranking Member Fudge, and distinguished Members of 
the Subcommittee,

    My name is John Piotti and I am the President and CEO of American 
Farmland Trust (AFT). Though I am new to AFT, I have worked on farming 
issues in the state of Maine for 25 years, much of that time as part of 
a statewide organization that has protected farmland and supported 
farmers. I have first-hand, on-the-ground experience with many of the 
programs within the farm bill.
    I want to start by thanking Chairman Conaway and Ranking Member 
Peterson, as well as Subcommittee Chairman Lucas and Ranking Member 
Fudge, for seeking input from interested stakeholders on policy 
priorities for the next farm bill.
    For 36 years, AFT has been dedicated to protecting America's 
farmland and ranchland, promoting sound farming practices, and keeping 
farmers on the land. In the United States, we lose the equivalent of 40 
acres of farmland to development every hour. Replacing our farmland 
with homes or shopping centers has ripple effects for our society, from 
eroding rural towns and their traditions, to decreasing our ability to 
provide cities with fresh, local food, to losing wildlife populations 
through habitat destruction. AFT also recognizes that farmers and 
ranchers hold the solutions to many of our most pressing environmental 
problems when they implement conservation practices on their land. 
Finally, AFT is concerned with the decreasing number and increasing age 
of farmers: in the time since AFT's founding, the average age of 
farmers has risen from 50 to 58, while the number of beginning farmers 
decreased 20% between 2007 and 2012.
    The farm bill's conservation title should, and often does, address 
all these issues. AFT views the conservation title programs as a set of 
tools to address the complex needs of America's farmers and ranchers--
as well as public interests. Each program has demonstrated value to 
producers and landowners to achieve specific outcomes tailored to their 
needs. One of AFT's goals for the upcoming farm bill is to ensure that 
we retain a full set of tools, and that we fund each program 
adequately. More specifically, AFT believes the next farm bill should 
adequately fund and streamline the Agricultural Conservation Easement 
Program (ACEP) and strengthen the Regional Conservation Partnership 
Program (RCPP).
The Need for Conservation Title Funding
    First and foremost, AFT urges Committee Members to work with 
colleagues on the Budget and Appropriations Committees to ensure that 
conservation programs do not undergo additional funding cuts. The 2014 
Farm Bill marked the first time a farm bill voluntarily reduced 
spending, and it was the only reauthorization bill in that Congress 
that voluntarily offered savings. As part of this effort to reduce 
future deficits, the conservation title saw a 10% decrease in funding 
levels, or nearly $6 billion in cuts. While the 2014 Farm Bill was 
originally estimated to contribute $23 billion to deficit reduction 
over 10 years, a recent analysis by the Congressional Budget Office 
shows that the entire bill will result in nearly $100 billion in 
deficit reduction. The cuts already endured, coupled with better-than-
expected spending outcomes for the 2014 bill, show that the farm and 
food community has already done its part--and should not be the target 
for additional cuts.
    Cuts to the conservation title have many negative consequences. 
Some programs, such as the Environmental Quality Incentives Program 
(EQIP) and RCPP have expressly-stated purposes of providing 
conservation assistance to avoid regulatory requirements for farmers; 
inadequate funding stands in the way of this purpose. Further, funding 
for voluntary, incentive-based conservation ensures both environmental 
sustainability for our farms and economic sustainability for our 
farmers and ranchers. For example, not only does ACEP provide funds for 
farmers to enable them to protect their land, it also often allows them 
to reinvest in their businesses. Recent cuts to ACEP mean that the 
Natural Resources Conservation Service (NRCS) must turn away 70% of the 
farmers and ranchers who apply for funds each year.
    Although AFT sees great value in all the programs in the 
conservation title, these remarks--offered early in the farm bill 
process--focus on two programs that benefit working lands, and with 
which AFT has been strongly involved: ACEP and RCPP.
The Importance of Federal Farmland Protection: Funding and Streamlining 
        ACEP
    Farmland is a necessary part of our country's infrastructure. 
Protecting farmland from development protects the foundation of our 
agriculture and agriculture-related industries, which contribute $985 
billion to the U.S. gross domestic product (GDP). Protecting farmland 
means protecting wildlife habitat, water tables, and carbon stored in 
our soils. Protecting farmland means protecting the supply of healthy 
foods provided to our cities. Protecting farmland means protecting the 
way of life in rural America and ensuring that the next generation of 
farmers can enter the profession. Simply put, Federal investments in 
farmland protection through ACEP provide vital benefits for Americans 
today and into the future.
    Allow me to take just a minute to further explain one of the many 
benefits of ACEP, with which some people may not be familiar. We don't 
always think of farmland protection playing a critical role in making 
land more affordable for farmers, both for existing farmers who are 
looking to expand, and for beginning farmers who are trying to enter 
the profession. And yet, in any part of this nation with development 
pressures, protected farmland is often the only farmland that farmers 
can afford.
    I earlier mentioned that the number of beginning farmers dropped by 
20% in the last Census of Agriculture. But that's a national statistic; 
that doesn't play out in every region. In my home state of Maine, for 
instance, our story could not be more different: between 2007 and 2012, 
the number of beginning farmers in Maine grew by an impressive 39%! And 
one of the key reasons is that Maine during this period significantly 
increased its farmland protection efforts, creating affordable options 
for entering farmers to acquire land.
    Despite the many benefits of protecting working agricultural lands, 
the funding for ACEP saw a precipitous decrease in the 2014 Farm Bill. 
The three component programs that were combined to create ACEP 
(Wetlands Reserve Program, Farm and Ranch Lands Protection Program, and 
Grassland Reserve Program) were funded at an average total of $732 
million annually from 2009-2012. Yet the average for ACEP for 2014-2018 
is $405 million, a 32% decrease from the previous average. Even more 
alarming is that ACEP funding drops to $250 million annually in FY18 
and in future years, which is a 66% decline from the previous average. 
This decrease in funds makes it increasingly difficult for partners, 
who rely on ACEP funds to leverage state and local funding for farmland 
protection projects. AFT believes it is of utmost importance to return 
ACEP funding to historic levels.
    In addition to ensuring adequate funding for ACEP, AFT believes 
there is a need to streamline the program to ease administrative 
burdens for producers, land trusts and NRCS. This would save the 
Federal Government significant time and money, while making the process 
easier and more timely for a broad variety of farmers and ranchers, 
from Vermont to Texas, Pennsylvania to Montana, California to Michigan, 
and every state in between. AFT is discussing with other advocacy 
organizations, land trusts, and state farmland protection programs how 
ACEP might be refined to best serve the farmers and ranchers who need 
it. We look forward to working on this important issue with Members of 
this Committee and staff.
Quantifying Benefits through the Regional Conservation Partnership 
        Program
    AFT has long championed a targeted, partnership-based project 
approach to conservation to achieve landscape-scale environmental 
outcomes. RCPP is an innovative program that brings together a diverse 
array of partners with technical and scientific expertise and leverages 
private-sector dollars. RCPP projects can focus on specific natural 
resource concerns in specific geographies to magnify desired 
conservation outcomes. By 2018, NRCS and its more than 2,000 
conservation partners will have invested over $2.4 billion in high-
impact RCPP projects nationwide, with more than half of that funding 
coming from non-Federal sources.
    AFT is working with many partners to implement RCPP projects around 
the country. In Washington State, AFT and partners have helped farmers 
adopt conservation practices to improve water quality in Newaukum 
Creek. Funding has gone towards stream-side plantings to improve 
habitat, projects that help farmers better manage manure and nutrients, 
and several other conservation practices. In Illinois, AFT and partners 
are working to improve water quality in the Upper Macoupin Creek 
Watershed, which feeds into the Mississippi River and eventually the 
Gulf of Mexico. According to the Illinois Nutrient Loss Reduction 
Strategy, the Macoupin Creek watershed is one of the three highest 
phosphorus-yielding watersheds in Illinois. In addition to providing 
technical and financial assistance for soil-saving and nutrient-saving 
conservation practices, the AFT-led partnership will also address the 
need for expensive new equipment that would otherwise be a significant 
barrier to the adoption of water-quality practices. Included in this 
watershed, and eligible for support by this project, are farmers in the 
traditionally under-served African American community of Royal Lakes.
    One of the goals of RCPP was to fund projects that elect to measure 
environmental, social, and economic outcomes of the practices adopted 
within a project area. However, AFT, like other groups, have struggled 
to do so, due to the lack of guidance from NRCS on what such outcomes 
mean or which measurement methods to use. AFT believes that 
improvements to the farm bill could help NRCS and its conservation 
partners quantify the different outcomes associated with conservation 
practices, which will provide needed evidence to the public, Congress, 
farmers, and the conservation community to show that voluntary 
conservation works.
    For these reasons, AFT believes that the farm bill should, first, 
include definitions of these environmental, social, and economic 
outcomes, and second, direct the Secretary of Agriculture to provide 
guidance and reporting criteria to RCPP project partners. That would 
enable data showing the progress that RCPP and its project partners are 
having in achieving, quantifying, and reporting on these outcomes to be 
regularly reported to Congress. Having information about the actual 
outcomes of conservation practices, rather than simply reporting on the 
dollars spent, will allow agricultural and conservation organizations 
to make a stronger case for voluntary conservation going forward.
Concluding Remarks
    The conservation title is vitally important not just for farmers 
and ranchers, but for all Americans. It gives producers a variety of 
programmatic tools to achieve cleaner air and water, healthier soils, 
more wildlife habitat, and protected farmland and ranchland that 
benefit us all. The importance of conservation title funding in 
obtaining these public benefits cannot be underestimated. While we 
acknowledge the budget realities that this nation faces, we believe 
that adequate funding of the conservation title is critical to 
protecting our valuable natural resources. Beyond this, these voluntary 
conservation programs help our nation's farmers and ranchers advance 
environmental goals without burdensome regulatory requirements. We feel 
that such programs are needed now more than ever.
    Thank you again, Mr. Chairman, for the opportunity to share our 
views on these important issues. I would be happy to address any 
questions you have.
                               Attachment
Funding for Agricultural Conservation Easements Under the 2008 and 2014 
        Farm Bills
    The Agricultural Conservation Easement Program (ACEP) combined 
funding from three programs in the 2008 Farm Bill: the Wetland Reserve 
Program (WRP), the Farm and Ranch Lands Protection Program (FRPP), and 
the Grassland Protection Program (GPP). Under the 2014 Farm Bill, the 
funding level for ACEP reaches its peak in FY17 at $500 million, 
compared to the peak of $882 million in FY10. In FY18, funding is 
slated to drop precipitously to $250 million--a 66% decrease when 
compared to the average funding level under the 2008 Farm Bill.
Funding for ACEP Under 2008 and 2014 Farm Bills

 
 
 
           2008 Farm Bill                       2014 Farm Bill
 

                         [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
                                     

    The Chairman. Thank you, Mr. Piotti.
    The chair would like to remind Members that they will be 
recognized for questioning in order of seniority for Members 
who were here at the start of the hearing, and after that, 
Members will be recognized in order of arrival. I appreciate 
Members' understanding. With that, I would recognize myself for 
5 minutes.
    Mr. Coffey, clearly you are a very progressive sort of 
fellow on your ranch, utilizing resources and programs that are 
available to us. You have been in the process for a time. Could 
you describe for me the availability of the technical 
assistance that comes from NRCS, and the relevance that is to 
how you implement your conservation practices on your ranch?
    Mr. Coffey. Yes, sir. I appreciate that question.
    I have been involved with both EQIP and CSP contracts. In 
fact, I am currently under a CSP contract right now. I am into 
a renewal program with CSP. Many of the practices that we have 
used with the CSP program have including grazing management, 
which requires us to leave residual forage at 12" to 14" on an 
average of our pastures. We have added fencing for rotation 
grazing. We have added solar wells for water management. We are 
on a non-herbicide program, and so many of these conservation 
practices have made us more aware of the importance of the 
grasses that we have and leaving residual things behind for 
future use.
    The Chairman. How available is the technical assistance? 
How much of a wait do you have when you need the good folks 
from NRCS to work with you, those kind of questions? Even 
though this Committee is focused on authorizing programs, and 
our brethren on Appropriations actually fund positions at USDA, 
nonetheless, it doesn't matter how good the programs are if you 
can't implement them and you have to have people and technical 
experts to help, correct?
    Mr. Coffey. That is very true. Technical assistance is very 
hard to come by. They are inundated with paperwork, and I am 
good friends with them and have served on committees with them 
through SRM and so forth, but it is very difficult to get them 
to come out on the land to do surveys and to assist. It seems 
like they are just inundated with the paperwork. If I had to 
choose between payments for cost-share or these programs and 
technical assistance, I would honestly choose the technical 
assistance. We need more effort in that arena.
    The Chairman. This is a question for the whole panel. This 
summer, former Secretary Vilsack heard comments from young and 
beginning farmers in Iowa about their concerns in competing 
rental rates, whether the land would go to a CRP contract or be 
available to rent. Part of this Committee's responsibility is 
to preserve the soil, the water, and the air, but also to 
preserve our productive capacity, and those young people and 
beginning farmers who represent that.
    Whoever on the panel, let's touch for a moment on this 
issue about if we get CRP rates too high, do we choke off 
farmers? By the same token, if we get CRP rates too low, which 
benefits potential new farmers and expanding farmers, then we 
lose the conservation benefits. Let's touch on that for just a 
moment, that balance that I believe must be achieved. Whoever 
would care to step in, in my remaining couple of minutes.
    Mr. Nomsen. Mr. Chairman, perhaps I will start. Let me 
offer the thought that first of all, I remind you that 
initially put into the CRP program were county to county 
limitations, being sensitive to that balance between 
agriculture and CRP lands. We have struggled with many farm 
bills on the CRP rental rate issue, and typically over its 
history, the rates have typically lagged behind and we have had 
more issues with getting them competitive and raising them.
    Well, that turned a little bit with the skyrocketing land 
values, cash rents that we have seen. All of a sudden, we have 
probably got a bit of the opposite situation now. It is 
something we do need to revisit clearly, and I think there are 
ways that we can use kind of today's CRP, a little bit more of 
the targeted CRP so that we can help beginning farmers and 
ranchers out there a little bit more, just because of some of 
the practices.
    That said, I think there is a real opportunity to help 
farmers and landowners right now. It is somewhat like the 
situation in the early 1990s. It is not as dire; however, just 
because CRP is now a true resource program, soil, water, and 
wildlife, that doesn't mean that it also doesn't still have 
income security and stability benefits to it, price support, 
commodity supply control. Those are all elements of it, because 
it is a true landscape level program, and those things are 
important right now in the situation that we are in with the 
agricultural economy.
    The Chairman. Anyone else wish to touch on that? Mr. 
Coffey?
    Mr. Coffey. Thank you. Yes. I am of the opinion that I love 
the working lands programs, and if we had more boots-on-the-
ground, we may not need to focus so much on set-aside land. I 
mean, conservation involves livestock, wildlife, soil, water, 
forages, on and on, and those can be blended together in a way 
that what is good for the goose is good for the gander, so to 
speak. In my opinion, putting more funding to set-asides, such 
as CRP, may not be in the best interest of the taxpayer in this 
country.
    The Chairman. Seeing that my time has expired, I now 
recognize the gentlelady, Ms. Fudge, for her 5 minutes.
    Ms. Fudge. Thank you very much, Mr. Chairman. I would now 
yield to the Ranking Member of the full Committee.
    The Chairman. The gentlelady yields to the Ranking Member.
    Mr. Peterson. I thank the gentlelady.
    Mr. Peters and Mr. Gertson, you both mentioned the DUNS and 
SAMS situation. A few years ago I bought a little farm, and in 
a way we ought to really require every Member of this Committee 
to own a farm, because I have been now subjected to all of the 
different aspects of the farm programs, and I was in the CSP 
program, and I have a partnership with my son. We had to get 
one time the DUNS number. That was not a big deal, but then 
because we are a partnership and whatever this law was that we 
passed and guidance that was put out by OMB or whatever it was, 
and we had to have a SAMS number.
    What ended up happening, because this stuff is public 
information, I get a call from somebody in Fort Lauderdale, 
Florida, who tells me that I have to go through him and it is 
going to cost me $600 to get this SAMS number. They are 
scamming us, like they do with the IRS and so forth. Not only 
is it bad enough you have to go through this, they are actually 
scamming people because you don't need to pay anybody to get 
this. But he basically told me I had to pay them to get this 
number. Well I was only getting $700 a year out of the CSP in 
the first place, we got through that and so forth. I can't see 
any reason in the world why these farm programs are in this 
system in the first place. We have the controls at the county 
level and we know what is going on, would you agree with that, 
that we should just get rid of these impediments?
    Mr. Gertson. Absolutely, Congressman Peterson. Yes. I am 
the guy on our farm who deals with NRCS, and yes, I am one who 
has personally gotten a DUNS number and the SAM number. The 
DUNS number, yes, that was no big deal, but I get solicitations 
through my DUNS number as well. People come in and want me to 
do stuff.
    The SAM number was a complete disaster, I can tell you 
that. That was a 100 percent disaster. Not only do I get tons 
of solicitations because my information is out there, now, we 
had millions of dollars of payments held up because the NRCS 
offices weren't really even sure what to do or how to tell you 
to do it right. I have a lot of farmers around me who did their 
practices right, installed hundreds of thousands of dollars of 
dirt work and pipelines and all of this stuff, paid it, right, 
paid their bills. Now they are waiting on their cost-share and 
couldn't get it, because they didn't sign up for the SAM number 
because they didn't know or didn't know how or had to use the 
confusing website. I can tell you from experience that the SAM 
system has been a complete disaster.
    Mr. Peterson. I dropped out of CSP because of it. My 
contract came up. They changed the practices so it really 
wasn't hardly worth anything for me to go back into it. And I 
just wasn't going to go through it again, so I just dropped 
out. I think there are a lot people who have done that, am I 
right, Mr. Peters?
    Mr. Peters. That is correct. We would agree with you, and 
we, through our district, have heard countless stories similar 
to your own and to Mr. Gertson's. We see this is an impediment 
to getting good conservation on the ground for people that are 
just seeking to do the right thing. And it is a system that was 
never intended for cost-sharers----
    Mr. Peterson. It is for defense contractors.
    Mr. Peters. Correct.
    Mr. Peterson. Mr. Nomsen, your organization supports 40 
million acres, am I right?
    Mr. Nomsen. That is correct.
    Mr. Peterson. Who else supports it? I know the DNR guy in 
Minnesota is organizing all of the DNR people in that part of 
the world to support it. First, are there other folks out there 
that are on board supporting the 40 million? And second, are 
there people that are fighting you on that that you know of?
    Mr. Nomsen. The latter part of your question is the easier 
one to answer.
    As we get started here in the process, I am hopeful that 
many, many other groups will look to the CRP and the fact that 
we need a strong increase in the program. I don't know where 
the number is going to shake out for many, many groups. But to 
the earlier part of your question when you mentioned the DNR, 
one of the tools that we have available now that we have not 
had in previous farm bill discussions is we now have a national 
pheasant restoration plan that is put together by all of the 
state agencies, and in that plan, one of their goals is to 
support a 40 million acre CRP as one of the critical components 
of the national plan as well. Thank you.
    Mr. Peterson. Thank you.
    I yield back, Mr. Chairman, and thank the gentlelady for 
yielding.
    The Chairman. The gentleman's time has expired. The chair 
now recognizes the gentleman from Pennsylvania for 5 minutes.
    Mr. Thompson. Thank you, Chairman, and thank you to the 
members of the panel for your individual and your 
organizations' leadership on conservation. It is greatly 
appreciated.
    Mr. Piotti, an issue that I hear about is that there are 
some provisions in the easement program that make it more 
difficult for states like Pennsylvania, who have established 
state easement programs to participate. Can you elaborate 
further on that?
    Mr. Piotti. Sure. Thank you for that question.
    The ACEP program is a great program, but it is very much a 
one-size-fits-all program as it is currently crafted, and there 
are a number of states like Pennsylvania who have developed 
very robust state-based farmland protection programs, usually 
these statewide programs utilize ACEP funds as matching. You 
have to bring the requirements of the state program and the 
requirements of the Federal program together and make the 
project happen, and that can be daunting. And we really love to 
see some refinements of the ACEP program so that states like 
Pennsylvania who do a good job on their own might be able to 
get access to the Federal funds without jumping through quite 
so many hoops.
    Mr. Thompson. Just to follow up on that: are there any 
specific refinements that you could recommend at this point?
    Mr. Piotti. Well, we have been talking to a number of other 
groups, land trusts around the country and the like, to get 
very specific as part of this farm bill.
    I can say right now there are just issues around some of 
the specific easement language that NRCS might dictate that 
might be a little different from what a state is looking for. 
There are frequently timing issues, as you can well imagine, 
trying to get the funds from both sources to work at the right 
time for a closing in an expeditious way. There are timing 
issues. In some cases there are retirement issues. Some cases 
there are monitoring or baseline issues. And as I said, we are 
working with a group of ag land trusts around the nation to 
bring some specific information to the use of the Committee.
    Mr. Thompson. Great. I appreciate that very much.
    This question is for whomever would like to respond. Often 
environmental groups point to regulations as the only way to 
achieve conservation results. And yet, the work of NRCS has 
resulted in many, specifically through voluntary conservation. 
It has resulted in a remarkable number of Endangered Species 
Act delistings. It has cleaned up wetlands and streams and 
conserved soil. In your opinion, why does voluntary 
conservation have such a better track record, and why do 
farmers rarely get credit?
    Mr. Gertson. I guess voluntary is a big deal. You talk to 
any farmer, or rancher, for that matter, and we are pretty 
independent people, right. We don't like people intervening, 
telling us what to do. I used to work for a company as an 
engineer for a year before I farmed. I could probably never go 
work for anybody again now. I have spoiled myself. I am the 
boss, right? Voluntary conservation works well in our mindset. 
You will find almost every farmer and rancher is working hard 
to improve his land, and natural resource conservation just 
comes naturally, because that is what is required for them to 
even remain profitable. You can't farm or ranch and hand 
anything down to the next generation unless you are doing some 
sort of conservation. I don't think that will ever be an issue. 
You will always be able to have people participate, because it 
just comes natural to farmers and ranchers, their mantra is 
doing more with less. That is how we have to survive.
    Mr. Coffey. Many times, I think where the problem is, is 
that when we start talking about mandatory, it ends up being 
single species specific. It is a pheasant. It is a monarch 
butterfly. It is a quail. It is a lesser prairie chicken. And 
that becomes the focus, and we can't see the forest for the 
trees at that point, because we are staring at that one tree.
    We, as ranchers and farmers, understand the entire realm of 
conservation. We understand the water, the soils, the forages, 
the crops, whatever it might be, and that is where our focus 
is. And it is interesting how we don't do anything for the 
monarch butterfly, but seasonally every year I can ride my 
horse along a creek and just be covered up in monarch 
butterflies when they fly through. And, too often, the focus 
becomes too narrow in conservation programs.
    Mr. Thompson. It seems like voluntary conservation truly is 
kind of a landscape approach.
    Mr. Coffey. Or it could become too narrow. Yes, sir.
    Mr. Thompson. Thank you, Mr. Chairman.
    The Chairman. The gentleman's time has expired.
    The chair now recognizes the gentlelady from Ohio, Ms. 
Fudge, for 5 minutes.
    Ms. Fudge. Thank you so much, Mr. Chairman, and thank you 
all for being here. It is nice to be on a Committee where 
people think that the Federal Government does something good, 
that there are some good programs. Thank you for that. We may 
think that they are too cumbersome, and they probably are, but 
I am certainly hopeful that instead of just saying it is too 
onerous, too much paperwork, help us streamline the process. 
Because we do have some responsibility and accountability for 
tax dollars. We just can't give you money and say have a great 
day, we need for you to have some accountability. But we want 
to make the program better for you as well, so please, do tell 
us what that is.
    To Mr. Piotti and to Mr. Peters, do you believe that the 
current farm bill conservation title provides adequate funding, 
and if it takes another hit in this farm bill, what do you 
think the consequences might be?
    Mr. Piotti. As my testimony indicated, I certainly do not 
feel that there is adequate funding right now for the programs. 
The last question about voluntary compliance, has an easy 
answer because every farmer I have ever met wants to do what is 
right by the land, but there are a lot of steps that 
economically are hard to do without the support of some of 
these Federal programs. We absolutely need more.
    And what will happen if we don't get this support is we 
will not see the results on the ground that we want to see. We 
will not get the conservation impacts that we want. There will 
be impacts on water. There will be impacts on soil, and there 
will be impacts in the fairly near-term on the economic 
viability of our farms. It would both be environmentally and 
economically a bad move to not invest at the level that is 
needed.
    Ms. Fudge. Thank you. Mr. Peters?
    Mr. Peters. Thank you, Congresswoman.
    As I indicated in my testimony, we support maintaining or 
increasing funding in this next reauthorization. The need for 
that is several-fold. One, we know that across the country farm 
and ranching is down, and it is increasingly difficult for the 
cost-share investment to continue to flow forward with a low 
economy. We have to continue the investment through the Federal 
conservation programs.
    We know the landowners continue to want to do the right 
thing. We know that the pressure continues to be on the land in 
terms of water, soil, wildlife. If you look at the last farm 
bill, the conservation community, the agriculture community 
already gave a significant amount of funding. If we continue to 
cut into the programs, we are really going to be cutting into 
the bone, and we just can't afford to continue to turn 
landowners away when they are seeking tools to be able to do 
right on their land.
    Ms. Fudge. Thank you very much.
    Mr. Coffey, you have talked a couple times about NRCS's 
staff on the ground and the difficulty they have. Do you think 
that some of it might be just a morale problem because of how 
we fund it? We have continuing resolutions, we have 
sequestration, we have hiring freezes. We have all of these 
things that make it difficult. Do you think that that might be 
part of the problem with the people on the ground?
    Mr. Coffey. I certainly won't disagree with that, but those 
that I tend to know have pretty good morale. But when I visit 
with them, their lack of morale, it tends to be with the 
paperwork and it just seems to prevent them from getting out. 
They are highly educated people and they are motivated, but 
they are struggling. I don't think it is a morale issue solely.
    Ms. Fudge. Thank you.
    Mr. Peters, of course, I am from Cleveland, Ohio, right, so 
talk a little bit to me about urban farmers and what concerns 
they are facing.
    Mr. Peters. Absolutely. Thank you for the question.
    One of the items that we understand from our districts that 
urban conservationists are seeking right now is technical 
assistance, and we have been working through our districts to 
help identify those needs and to help meet those needs in the 
communities where urban agriculture is a priority.
    If you look at the landscape, the resource concerns are the 
same. We want to make sure that soil is healthy and that it is 
being prevented from erosion. We want to make sure that there 
are not unintended consequences to the water. We want to make 
sure that wildlife habitat is available. And all of those 
outcomes are achieved through sound conservation planning.
    One of the things that we have identified as a need in this 
space of urban agriculture is strong technical assistance to 
make sure that those folks that are, again, seeking to do the 
right thing on their land have the resources available to do 
so.
    Ms. Fudge. Thank you very much, and Mr. Chairman, if you 
want to sell me a part of your farm, I am in.
    The Chairman. We will invite you out to work on it first. 
With that, the gentlelady's time has expired.
    The chair now turns to the gentleman from Georgia, Mr. 
Allen, 5 minutes.
    Mr. Allen. Thank you, Mr. Chairman, and I thank all of you 
for being here today, and discussing the future of our 
conservation programs. Many of you have stated in your 
testimony, and I would have to agree that our farmers are 
really the true stewards of our land. Each and every day, our 
farmers spend their livelihoods caring for our lands and 
preserving our natural resources for the generations to come, 
and it is good to hear that we have fifth generation, and 
hopefully sixth and seventh and eighth generation farmers out 
there.
    As the son of a farmer, I understand to a great extent what 
we are talking about today, and the importance it is to the 
success of our farmers and ranchers, particularly in my home 
State of Georgia, which agriculture is the number one industry. 
Of course, we are looking toward the next farm bill and we have 
talked already today about the need to ensure that we have the 
tools and programs that will help us to potentially expand 
these programs and to make them successful.
    The best way I know to do that, because I come from the 
business world, is to look at every dollar invested and what is 
the return on that dollar. We represent the taxpayers, and the 
taxpayers expect us, and we should, use their money as an 
investment return as far as conservation practices go.
    Mr. Peters, are there any actual statistics on what for a 
dollar invested what the dollar received is from this program, 
which would help us to increase this in the next farm bill?
    Mr. Peters. I am sure there are. I don't have those 
statistics readily available with me this morning. One thing 
that bears mentioning is that historically, for the Federal 
investment through the farm bill conservation programs, there 
are years upon years worth of cost-share that have come out of 
the pockets of the farmers and ranchers and landowners that are 
participating in those programs.
    Mr. Allen. Right.
    Mr. Peters. That is a tremendous private investment that 
has leveraged those Federal funds.
    Mr. Allen. And that is important, because everybody has 
skin in the game.
    Mr. Peters. Yes, sir.
    Mr. Allen. And that is very important to our taxpayers.
    Mr. Piotti, do you have any comments?
    Mr. Piotti. Yes, I do. At the state level, and it was 
mentioned earlier that a lot of states have farmland protection 
programs that often work in companion with ACEP, and a number 
of states have done these kind of analyses. And we can compile 
some of that for you.
    I also will point out, the NCPP program, that is one of our 
better partnership programs. This has leveraged significant 
dollars outside of Federal funding, and one of the requirements 
of that program is to identify the economic benefits of what is 
occurring, and that is happening. But to be honest, it is one 
of those places where the next farm bill needs some tweaks 
because, the quantification of those outcomes is not occurring 
at a level that it could. But that program, which is working, 
we think, very well, could be elevated to a level to not only 
do great work on the ground, but begin to provide some of the 
data that you are looking for.
    [The information referred to is located on p. 51.]
    Mr. Allen. And that is what we need in providing for these 
programs.
    The other thing is, as far as from the standpoint of the 
Federal Government, is the Federal Government the best place to 
do these programs, and of course, we talked about cost-sharing. 
Everybody has skin in the game. Would we be better served to do 
this in possibly another way? Any comments on that, Mr. Peters?
    Mr. Peters. We feel like the conservation delivery system 
that is in place is effective and it does work, and that 
delivery system engages partners at the Federal, state, and the 
local level. We feel like that has borne strong outcomes over 
the years, and we feel like that is the way of the future.
    Mr. Allen. Mr. Gertson, as far as flexibility of the 
program, do you believe that the Federal Government is flexible 
enough to deal with, I know that every day the farmer wakes up 
is a different day. How are they working out?
    Mr. Gertson. Yes, I enjoy working with NRCS. They have 
worked as a good vehicle to administer programs. I share the 
same concerns as Mr. Coffey. The people are great, but quite 
often, I find that they are overwhelmed. That is the problem. I 
love working with the NRCS employees are a lot of times a lot 
like the farmers are, right, especially your field reps who 
come out and do stuff, and get along with them great. Yes, 
there are lot of times there is an information gap there. I 
will know more about programs than they do, because the 
information just hasn't disseminated down to them quick enough. 
There is definitely a possible staffing or information problem 
that could be there.
    And I wanted to touch about how the money was being 
returned?
    Mr. Allen. Investment return, yes, sir.
    Mr. Gertson. Right. Okay, our USA Rice and DU partnership, 
the RCPP program we have been running there is an excellent 
example of that. That was $25 million, and what I didn't 
mention is that there has been $25 million additional private 
dollars that have matched that for a total of $50 million, so 
that is matching every dollar that had been given into that 
program. And one other thing I would like to mention on that is 
that when you are looking at stretching a taxpayer dollar, I 
would point out, at least in my point of view, working lands 
programs go a long way, because that money isn't going to just 
the farmer. That money is going to me and then I am funneling 
it right back into the economy to pay for these practices. In 
my community, it is not uncommon to see, you have dirt moving 
sponsoring T-ball teams or our pipeline guys are sponsoring 
dinners. It is all integrated. Money that is spent in working 
lands programs, and EQIP and CSP, it multiplies and goes right 
back into the local economy.
    Mr. Allen. Thank you. That is the kind of information we 
need.
    The Chairman. The gentleman's time has expired.
    Mr. Allen. I yield back the time I don't have.
    The Chairman. The chair readily accepts it.
    The chair now recognizes the gentleman from Minnesota, Mr. 
Walz, for 5 minutes.
    Mr. Walz. Well I thank the Chairman, and I too would like 
to thank the Chairman and the Ranking Member for starting out 
this farm bill process with this hearing. For many of us in 
this room, we should feel proud of the last farm bill and the 
conservation title that was in it that was wildly heralded 
across the spectrum as being in the right direction. And now we 
come back and we improve upon those things, and being a very 
literal Minnesotan, I know that the Chairman had a big presence 
in that as he sits over this room with the big photo and will 
be there again.
    And so I would come back to this. My friends are making a 
very good point of this return on the investment, trying to 
understand the bigger picture, understanding how there are win-
win-wins involved in this and seeing a table like this, this is 
exactly where it is at.
    Over the last few years of having the privilege of being 
the co-chairman of the Sportsmen's Caucus, we took it upon 
ourselves to quantify outdoor activities, what they mean and 
what they mean for this economy. The numbers we came to are 
about $650 billion. When you take care of the environment and 
you have places for people to be able to fish or to hunt or to 
mountain bike or to take their Polaris out, where they are 
doing the things they are doing, all of those peripheral issues 
have a huge impact. To get a sense of that, that is bigger than 
the pharmaceutical and auto industry combined. And couple that 
with ag, that is the power of rural America, and it is working 
with the coalitions that are here. And I agree, where we can do 
working lands conservation, those are win-win. But we have a 
broad suite of things that we can do that fill all of those 
niches.
    So again, and I have seen this with a $900,000 investment 
in EQIP on a spring feedlot near a trout stream in southeast 
Minnesota. That trout stream now generates over $4 million in 
income to that local community from that investment, and that 
cattleman is also running more cattle on that land in a more 
responsible manner. That is a win-win-win for everybody 
involved, so I do think we approach this from that perspective 
that we can get this out of it, and we are doing things like 
CRP. They are not just taking land out of production, which we 
need to make sure that we are compensating people fairly. There 
is also a return to the economy on that.
    I wanted follow up, Mr. Nomsen. You mentioned the pheasant 
plan. I know Minnesota's pheasant plans, and yes, in full 
disclosure on this, I am very glad there are more pheasants, 
because my odds increase of getting one when we are out there. 
I had the pleasure, with Mr. Peterson, of seeing him get one as 
we both got one. They are coming back. Tell me how the 
Minnesota pheasant plan fits together with what we are doing 
federally to make sure, as they set target numbers, what are we 
going to have to do so they hit the targets?
    Mr. Nomsen. Thank you for the question, and specifically to 
the Minnesota State pheasant plan, there is a short-term goal 
of a harvest of about 450,000 birds. We have a ways to go to 
get to that. We are probably around 300,000 or so right now. 
Our estimates are that would take probably another 600,000 or 
700,000 acres of land in pheasant-friendly types of habitats. 
Not all CRP, probably a combination of CRP plus perhaps grassy 
habitats provided by small grains. If for some reason we saw an 
increase in small grain plantings in Minnesota, these are very, 
very wildlife friendly plantings. And so it is a combination of 
all of those things.
    And just to add to your discussion on economics that you 
are all having, there is no question that conservation programs 
have been incredibly successful, not only for that individual 
farmer and landowner, but frankly for all Americans. If we are 
doing CRP in Ohio or Minnesota and maybe the driver is some 
quail or a few more pheasants or monarch butterflies, that 
project is helping benefit hypoxia situations in the Gulf and 
nutrient runoff and things that all Americans find important. 
These conservation programs are vitally important to all of us.
    Mr. Walz. Mr. Nomsen, is it possible like when we have 
drought situation of the CRP, and I know we have this in 
Minnesota with the hay shortage, and we are shipping hay up 
from Texas and wherever we can get it. Is there a responsible 
way that you can have CRP land and graze that for these folk? 
Can we do that?
    Mr. Nomsen. Absolutely, and I was chatting with my 
colleague, Mr. Coffey, earlier and we were talking about what 
is good for the herd is good for the bird.
    Mr. Walz. Yes.
    Mr. Nomsen. And yes, absolutely. CRP does have a managed 
hay and grazing component to it. Frankly, the entire CRP 
management issue is one that needs to be revisited. We need to 
get the agriculture community and the producers, the 
environmental groups, conservation groups at the table to 
evaluate where it is at, how can we do a better job, and how 
can we encourage the land management in a very, very farm and 
ranch friendly way?
    Mr. Walz. I would like to work with you on it, because I 
think that is the key of making sure we have those people at 
the table, and so when it gets tough, makes it easy for them to 
get on there and graze.
    I yield back.
    The Chairman. The gentleman yields back.
    The chair now recognizes a farmer from California, Mr. 
LaMalfa, for 5 minutes.
    Mr. LaMalfa. Thank you, Mr. Chairman. My apologies for the 
multiple committee schedule today for my tardiness, but thank 
you for your recognition.
    I will jump right into it. As a rice farmer from 
California, I wanted to speak with, well, good morning, Mr. 
Gertson. Maybe I can talk to you for a moment here. As you 
know, we are medium grain growers primarily out there, and 
likewise, growers in my area have seen the program of EQIP as a 
very important tool with water saving practices. We don't need 
to save a lot of water right now in California, but it is 
always either feast or famine. It is an ongoing issue with 
water savings being a good tool, as well as shorebirds, 
waterbirds.
    And so in your statement which I am sure you made earlier, 
that the EQIP 3 year limit provision does hamper the long-term 
effectiveness of these practices for shore birds, for habitat, 
for water savings, all the other benefits that the program has 
shown for growers in my state and yours. Would you supply a 
little more detail in what changes you would see regarding 
maybe the 3 year limit provision or other areas?
    Mr. Gertson. Sure, sure. Yes, we would support extending 
the life of EQIP contracts. From a point of view from a farmer, 
conservation is for life, for us. This isn't a 3 year deal. We 
are in it for the long haul.
    Mr. LaMalfa. How many years have you been on your place?
    Mr. Gertson. I am sorry?
    Mr. LaMalfa. You are a fifth generation. How many years----
    Mr. Gertson. I am fifth generation, 108 years.
    Mr. LaMalfa. One hundred and eight, okay. We are going on 
86 years. We are raising the fifth.
    Mr. Gertson. Yes, I have the sixth coming. I have three 
boys who are coming behind me. And without conservation, we 
definitely wouldn't have been there 108 years. These programs 
are what are going to make farming and ranching available to 
the next generation. Not only are they conserving the 
environment, but it is a win-win as you guys are liking to say, 
because they are also cutting our costs, right, and with 
farming, we are always constantly having to cut back wherever 
we can. We are always having to do more with less.
    Mr. LaMalfa. Yes, sir. We are not price makers. We are 
price takers.
    Mr. Gertson. Right, exactly.
    Mr. LaMalfa. What kind of term would you see instead of 3 
years, open ended? What kind of number do you think you have 
been hearing or would actually be practical?
    Mr. Gertson. I don't know that I can answer that right off 
the cuff.
    Mr. LaMalfa. Well I am sure we will figure it out here.
    Mr. Gertson. Yes.
    Mr. LaMalfa. All right. Let me switch. Thank you, Mr. 
Gertson.
    Good morning, Mr. Coffey. I feel like Joe DiMaggio for a 
second there, if you are over 40, you will get that. You see 
from being a cattle rancher in Oklahoma, there are many 
technical fixes that Congress needs to make to EQIP to make it 
work better for farmers and ranchers. What technical problem do 
you find you are running into in ranching in the Midwest there?
    Mr. Coffey. Thank you. To begin with, the physical 
technical problem I believe is not having enough boots-on-the-
ground, not having enough trained conservationists with NRCS 
that have the time to come out and be on the ground. Now there 
are other technical----
    Mr. LaMalfa. What kind of timeline to get from maybe your 
first request or first ask to boots-in-your-field?
    Mr. Coffey. The only boot I have ever had on my place, they 
were touring it and it was a training session and we were 
training NRCS personnel. It has to have been to follow up on an 
EQIP contract to make sure that we perform according to the 
worksheet. Beyond that----
    Mr. LaMalfa. Is this based more on trust? Do you go in and 
do the forms at the NRCS office and more or less that is the 
end of the verification?
    Mr. Coffey. And then you go home, follow the worksheets, 
and accomplish the goals, yes.
    Mr. LaMalfa. And do they have a pretty big inbox that you 
are at the bottom of sometimes on their work, do you think?
    Mr. Coffey. Well I don't know how big their inbox is.
    Mr. LaMalfa. Well, you know what I am saying. Does it feel 
like it takes a while for you?
    Mr. Coffey. I just know that they are, and it may be that 
they trust me. They know me well enough so they don't feel bad 
that I am not the biggest priority in the area. I don't know 
what the answer is.
    Mr. LaMalfa. Well that is good. It is nice to have an honor 
system going.
    There is one other thing that hadn't been talked about in 
the Committee today on this topic. What would you put in there, 
since my time is running out? What has been left out, do you 
think?
    Mr. Coffey. I would look at increasing the conservation 
strategies. I would look to make them more adaptive and 
flexible by region, and then increase the accountability, both 
on the side of USDA and the producer.
    Mr. LaMalfa. It is a little rigid by region? You might have 
to one-size-fits-all amongst regions?
    Mr. Coffey. Yes, sir. Worksheets are developed in 
Washington, sent out to the State Conservationists, but if we 
had more worksheets, more things by region, we could accomplish 
more of our goals.
    Mr. LaMalfa. It is coming from Washington. Maybe we should 
put that office in like Tulsa.
    Mr. Coffey. Yes, bring it over. Yes.
    Mr. LaMalfa. I agree.
    Mr. Coffey. Davis, Oklahoma is a nice place to live right 
there in Murray County.
    Mr. LaMalfa. Thank you, Mr. Coffey.
    Mr. Coffey. Thank you.
    The Chairman. The gentleman's time has expired.
    Chair now turns to the gentlelady from New Hampshire, Ms. 
Kuster, for 5 minutes.
    Ms. Kuster. Thank you very much, Mr. Chairman, and to 
Representative Fudge and yourself, thank you for hosting this 
important discussion about conservation programs. I come from 
the Northeast, New Hampshire, where we have smaller farms than 
all of you, but the conservation programs are incredibly 
important. I just want to echo my colleagues' comments about 
the impact of the outdoor community. The conservation in New 
Hampshire also leads to a great resurgence in ag returns, and 
then our colleague from Maine spoke about this. We are very 
proud to have a five percent increase in the number of new 
farmers in New Hampshire, and we have a renewed interest in 
healthy food and organics and farmers' markets, and really a 
resurgence in being closer to our food. I appreciate all the 
work you have done.
    Our Ranking Member, Representative Peterson stole my 
thunder. Thank you to both of our witnesses, Mr. McDaniel and 
Mr. Gertson, for pointing out my legislation, H.R. 1163, 
Improving Access to Farm Conservation Act, that talks about 
this SAM-DUNS problem. I look forward to having my colleagues 
on the Committee join. It is a bipartisan bill, and we can all 
agree, the underlying law was not intended for farmers working 
with their son or their brother or sister, as it may be, and so 
we will move forward with that and try to at least alleviate 
that burden of paperwork that you have been experiencing.
    I have a bigger concern and will know more tonight, but I 
am worried about the cuts in the budget across the board. The 
President has talked about $1 trillion in infrastructure 
funding, an $800 million wall. Today and yesterday, a ten 
percent increase in defense budgets. I am concerned that these 
are the kinds of programs that are just going to get wiped off 
the map, and I am glad this is such a congenial bipartisan 
hearing, because I hope as we move forward with the farm bill, 
we will be able to keep this funding, because it is important 
both for the agriculture community, for our outdoor economy, 
for our environment, and I just wondered if any of you have any 
comments on how we can come together in a bipartisan way to 
make sure that we keep the funding for conservation programs.
    Mr. Piotti. I will offer one thought and plant the seed if 
it hasn't already been planted with you, and that is that I 
view farming and farmland as being critical infrastructure, and 
there is value in thinking about it that way. And the 
conservation programs that undergird those activities are also 
part of that infrastructure. Maybe there is an opportunity to 
turn the debate around a little, and as we are thinking about 
rural infrastructure, focusing more attention on agriculture.
    Ms. Kuster. That is creative. I like that. Thank you very 
much. That is a great idea. Any others? That is brilliant, by 
the way. If they are going to spend $1 trillion, let's make 
sure we are included.
    Mr. Nomsen. Exactly. I would like to add to that just 
briefly, in that we do need to take a hard look at return on 
investment and the discussion that we had. From my chair, the 
starting point is what are the resource needs out there? What 
do we need on the landscape, and that should be the starting 
point for the discussion. And yes, I recognize it likely is 
going to get much more challenging as we start to talk about 
money available and making sure that we prioritize and fund the 
best of the best. That is why we need to look internally at 
even all of our programs and find efficiencies and savings so 
that we can put more acres out there on the ground for farmers 
and landowners and for everyone.
    Ms. Kuster. And can you show that return-on-investment? Do 
you have that kind of analysis of the programs?
    Mr. Nomsen. We do, and I actually made a note when you had 
a discussion earlier, and one of the things that we will add to 
our testimony are some of the studies that have looked at 
individual conservation programs in terms of their efficiencies 
and what are they providing to taxpayers.
    [The information referred to is located on p. 49.]
    Ms. Kuster. I think that information would be very helpful 
for the Committee, because in a bipartisan way, we will need to 
sell this to our colleagues that this is important spending, 
and that is not going to be popular this cycle. I appreciate 
that.
    Anybody else?
    Mr. Peters. Congresswoman, I want to thank you for the 
question. I would say we have also talked a lot this morning 
about capacity at the local level, and one of the things that 
we need to make sure that we address is that as we are looking 
at the delivery of financial assistance, that there is strong 
conservation planning at the beginning of that process. Having 
a strong plan in place, making sure that the appropriate 
resource concerns are being addressed, and that the landowner 
is in the management seat in the development of that 
conservation plan will help us achieve the greatest outcomes 
with the Federal investment, both in financial assistance and 
technical assistance.
    Ms. Kuster. Thank you. My time is up, but if anybody has 
any other suggestions, we are going to need them to get this 
done and to sell it to our colleagues on the floor.
    Thanks very much.
    The Chairman. The gentlelady's time has expired. She has 
yielded back.
    Before we adjourn, I invite the Ranking Member to make any 
closing remarks that she would care to.
    Ms. Fudge. Thank you so much, Mr. Chairman, and thank you 
all for being here today. We appreciate your testimony, and 
certainly we will take it under advisement. I think that we are 
going to have a tough battle, but we are ready for the fight. 
Thank you so much.
    The Chairman. The Ranking Member yields back.
    I would just simply note to my colleagues on the Committee, 
and for that matter, the witnesses, many very important topics 
have come up today. We do face a struggle as we march forward. 
We have a great deal of uncertainty on what the funding issues 
will be, the lay of the land, but I am confident in the full 
Committee Chairman and the full Ranking Member, and I would 
note for the record, the process of trying to evaluate 
conservation takes many things into consideration. Whether it 
is issues as simple as other programs within our jurisdiction, 
like the upstream flood control dams, where you can calculate 
the amount of property and lives protected, or as in the case 
with CRP, how many tons of soil remain in place that don't 
enter the water stream, don't move downstream, don't affect 
dams and structures? There is the value of enhanced wildlife, 
whether you are a sportsman, a bird lover, with a hook or a 
bullet or a camera, so to speak, there is value in that. All of 
these things factor in. But ultimately, we have to remember in 
so many of these programs, we are talking about making 
investments that are not financially practical for an 
individual producer to make and achieve a return in a 3 to 5 to 
7 to 10 year period. We are making investments that are for a 
generation or generations or hundreds of years, and we need to 
assess that in our calculations. We are investing in the future 
forever.
    And with that, I look forward to the work of this 
Subcommittee and the work of the full Committee, and under the 
Rules of the Committee, the record for today's hearing will 
remain open for 10 calendar days to receive additional 
information and supplementary written responses from witnesses 
to any question posed by a Member.
    This hearing of the Subcommittee on Conservation and 
Forestry is adjourned.
    [Whereupon, at 11:30 a.m., the Subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]
  Submitted Statement by Hon. Mike Bost, a Representative in Congress 
    from Illinois; on Behalf of National Grain and Feed Association
    Chairman Lucas, Ranking Member Fudge, and Members of the 
Subcommittee, thank you for having conducted this hearing to receive 
input on how the conservation title of the Agricultural Act of 2014 has 
operated and gather ideas for the next farm bill's conservation title.
    This statement for the record is respectfully submitted by the 
National Grain and Feed Association (NGFA). NGFA, established in 1896, 
consists of more than 1,050 grain, feed, processing, exporting and 
other grain-related companies that operate more than 7,000 facilities. 
Its membership includes grain elevators; feed and feed ingredient 
manufacturers; biofuels companies; grain and oilseed processors and 
millers; exporters; livestock and poultry integrators; and associated 
firms that provide goods and services to the nation's grain, feed and 
processing industry. NGFA also has 34 State and Regional Affiliated 
Grain, Feed and Agribusiness Associations.
    Since enactment of the last farm bill in 2014, NGFA-member 
companies have increasingly heard from consumers of their preference 
for food raised in a sustainable and environmentally sensitive manner. 
Fortunately, Congress had the foresight to create two working-land 
programs, the Conservation Stewardship Program (CSP) and the 
Environmental Quality Incentives Program (EQIP), that assist producers 
in further enhancing conservation practices to produce grain-based 
crops in an even more sustainable fashion. CSP and EQIP allow 
agricultural producers to maintain active agricultural production on 
their land while managing conservation activities. Examples of 
conservation activities that participants can choose under CSP and EQIP 
include fertilizer optimization practices and cover crops to reduce 
erosion, improve soil organic matter, promote efficient nutrient 
cycling, fix nitrogen in the soil, suppress weeds, increase 
biodiversity and improve overall soil health. These conservation 
activities often result in more conservation practices taking hold for 
the long-term in the community and across the nation--there are 362.7 
million acres of cropland and 526.9 million acres of pastureland and 
rangeland for these programs to impact either directly or indirectly. 
The NGFA strongly believes CSP, EQIP and other working lands 
conservation programs will become increasingly important to maintaining 
the long-term health of soils and in attaining the goal of 
environmentally and sustainably producing food for a growing world 
population.
    By contrast, investing scarce conservation dollars in dramatically 
increasing the size of land-idling programs like the Conservation 
Reserve Program (CRP)--as advocated by some--risk short-changing 
working land conservation programs.
    Since 1985 when CRP was created, millions of acres of America's 
best and most productive farmland have been idled under 10 to 15 year 
CRP contracts, siphoning the economic lifeblood that emanates from 
production agriculture out of hundreds of rural communities. Many 
landowners used general CRP signups and its whole-farm enrollments as a 
retirement program. Rural businesses, including farm equipment dealers, 
input suppliers and banks, closed. So did schools. Rural populations 
plummeted.
    As can be seen in Table 1, U.S. cropland has plunged from 420.6 
million acres in 1982 to 362.7 million in 2012. The long-term economic 
well-being and competitiveness of U.S. agriculture depends upon 
retaining production on cropland that can be farmed in an 
environmentally sustainable way. The National Resources Inventory, 
which is a report published by USDA's Natural Resources Conservation 
Service (NRCS), found that only 60 percent of expired CRP land in 2007 
returned to cropland by 2012. Thus, long-term CRP contracts contribute 
to the reduction in the availability of U.S. cropland.

                                                                 Table 1: U.S. Land Use
                                                                  (in million acres)\1\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                    Other Rural
     Year        Cropland     CRP Land\2\    Developed    Pastureland    Rangeland    Forest Land      Land      Federal Land      Water        Total
--------------------------------------------------------------------------------------------------------------------------------------------------------
 
        1982          420.6            --          71.9         131.3         419.4         410.3          42.8         398.2          49.8      1,944.1
        1987          406.4          13.8          77.9         127.4         413.9         412.3          42.9         398.7          50.8      1,944.1
        1992          382.0          34.0          85.2         125.8         410.2         412.2          43.2         401.0          50.5      1,944.1
        1997          376.4          32.7          95.9         120.7         408.1         413.3          43.5         402.6          51.1      1,944.1
        2002          367.7          31.8         104.9         119.3         407.8         413.7          43.4         404.1          51.5      1,944.1
        2007          358.9          32.5         111.1         119.7         407.2         413.1          44.9         404.8          51.9      1,944.1
        2012          362.7          24.2         114.1         121.1         405.8         413.3          45.4         405.3          52.1      1,944.1
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\Source: U.S. Department of Agriculture. 2015. Summary Report: 2012 National Resources Inventory, Natural Resources Conservation Service, Washington,
  DC, and Center for Survey Statistics and Methodology, Iowa.
\2\CRP land is only CRP general sign-ups and does not include CRP continuous sign-ups.

    History has shown that South American countries and other foreign 
competitors respond to U.S. land-idling schemes by plowing up virgin 
land on more than an acre-for-acre basis, capturing export market share 
previously held by U.S. farmers and depriving rural America of the 
economic ripple effects that resonate from U.S. agricultural 
production.
    Fortunately, over the years, Congress has right-sized the CRP, 
while the U.S. Department of Agriculture has refined its Environmental 
Benefits Index to better target CRP on reducing soil erosion and 
improving water quality, although wildlife benefits were added as a 
criterion and have a disproportionately heavy weighting when USDA 
determines the scoring of acres eligible for enrollment.
    Even now as can be viewed in Table 2, NGFA has determined that 26 
percent of the 24.2 million acres that were enrolled in the CRP general 
signup as of 2012 were classified as ``prime farmland.'' Here's how 
USDA's NRCS defines ``prime farmland'': ``Land that has the best 
combination of physical and chemical characteristics for producing 
food, feed, forage, fiber and oilseed crops . . . It has the soil 
quality, growing season and moisture supply needed to produce 
economically sustained high yields of crops when treated and managed to 
acceptable farming methods.''

                                Table 2: U.S. Prime Farmland on Non-Federal Land
                                              (in million acres)\1\
----------------------------------------------------------------------------------------------------------------
                                                                                       Other Rural   Total Prime
     Year         Cropland     CRP Land\2\   Pastureland    Rangeland    Forest Land      Land        Farmland
----------------------------------------------------------------------------------------------------------------
        1982           228.2            --          35.1          18.2          42.9           5.6         330.0
        1987           223.4           3.3          34.7          17.6          43.3           5.7         328.1
        1992           214.4           9.6          35.0          17.2          43.6           5.9         325.6
        1997           210.9           9.2          34.2          17.5          44.5           6.0         322.3
        2002           206.5           8.5          34.7          17.8          45.7           6.0         319.3
        2007           202.0           8.7          35.5          17.9          46.3           6.4         316.8
        2012           202.1           6.4          36.1          17.8          46.8           6.5         315.7
----------------------------------------------------------------------------------------------------------------
\1\Source: U.S. Department of Agriculture. 2015. Summary Report: 2012 National Resources Inventory, Natural
  Resources Conservation Service, Washington, D.C., and Center for Survey Statistics and Methodology, Iowa State
  University, Ames, Iowa.
\2\CRP land is only CRP general sign-ups and does not include CRP continuous sign-ups.

    In addition, Table 3 shows that as of 2012, CRP had enrolled 15.3 
million acres of cropland within land capability classes I, II or III, 
which are the three best classes of U.S. land. The land capability 
classification is a system of grouping soils primarily based on their 
capability to produce common cultivated crops and pasture plants 
without deteriorating over a long period. Class codes I to VIII 
indicate progressively greater limitations and narrower choices for 
agriculture.

             Table 3: U.S. Land Capability Class I through Class III (Good Land) on non-Federal Land
                                              (in million acres)\1\
----------------------------------------------------------------------------------------------------------------
                                                                                                     Total Class
     Year         Cropland     CRP Land\2\   Pastureland    Rangeland    Forest Land   Other Rural  I thru Class
                                                                                          Land        III Land
----------------------------------------------------------------------------------------------------------------
        1982           345.1            --          73.3          66.0         111.7          12.3         608.4
        1987           335.7           8.3          71.6          64.0         112.6          12.5         604.7
        1992           318.7          21.8          71.3          62.5         113.0          12.8         600.0
        1997           314.6          21.0          69.0          62.4         113.8          13.0         593.8
        2002           307.5          20.3          68.9          63.0         115.5          13.0         588.2
        2007           300.6          20.8          69.6          63.1         116.1          13.9         584.3
        2012           303.0          15.3          70.5          62.8         116.6          14.2         582.5
----------------------------------------------------------------------------------------------------------------
\1\Source: U.S. Department of Agriculture. 2015. Summary Report: 2012 National Resources Inventory, Natural
  Resources Conservation Service, Washington, D.C., and Center for Survey Statistics and Methodology, Iowa State
  University, Ames, Iowa.
\2\CRP land is only CRP general sign-ups and does not include CRP continuous sign-ups.

    Table 4 displays U.S. land capability classes IV through VIII, 
which have lower capability to produce crops. NGFA believes less harm 
would be inflicted on U.S. agriculture if CRP enrollments were focused 
on land that had both an erodibility index score of 8 or higher and was 
classified within capability classes IV through VIII. NGFA also 
believes whole farms or large tracts of land within farms should not be 
enrolled in CRP. Instead enrollments should be targeted at the most 
environmentally sensitive portions of farms, such as critical fragments 
of tracts prone to erosion, serving as drainage, frequently drowning 
out or located next to streams. CRP under this new NGFA-advocated 
approach would be operated in a manner that would allow farmers to work 
in tandem with USDA to identify and enroll the portions of their farms 
that best complement environmentally sustainable agriculture. This 
surgical approach to CRP would substantially elevate the environmental 
benefits (soil health and water quality).

                     Table 4: U.S. Land Capability Class IV through VIII on non-Federal Land
                                              (in million acres)\1\
----------------------------------------------------------------------------------------------------------------
                                                                                                     Total Class
                                                                                       Other Rural     IV thru
     Year         Cropland     CRP Land\2\   Pastureland    Rangeland    Forest Land      Land       Class VIII
                                                                                                        Land
----------------------------------------------------------------------------------------------------------------
        1982            75.5            --          58.0         353.3         298.6          30.5         815.8
        1987            70.7           5.5          55.8         349.9         299.6          30.4         811.9
        1992            63.3          12.2          54.5         347.7         299.2          30.5         807.5
        1997            61.7          11.7          51.7         345.7         299.5          30.5         800.8
        2002            60.1          11.4          50.4         344.8         298.2          30.4         795.4
        2007            58.2          11.6          50.1         344.1         297.0          31.0         792.1
        2012            59.8           8.9          50.6         342.9         296.7          31.3         790.2
----------------------------------------------------------------------------------------------------------------
\1\Source: U.S. Department of Agriculture. 2015. Summary Report: 2012 National Resources Inventory, Natural
  Resources Conservation Service, Washington, D.C., and Center for Survey Statistics and Methodology, Iowa State
  University, Ames, Iowa.
\2\CRP land is only CRP general sign-ups and does not include CRP continuous sign-ups.

    In addition to currently targeting the wrong land for CRP 
enrollment, there also are indications that rental rates paid by USDA 
to enroll CRP acres in several regions of the country continue to be 
considerably higher than local farmland cash rental rates, thereby 
pitting the U.S. Government as a competitor against young and beginning 
farmers trying to enter production agriculture and remain in rural 
communities.
Conclusion
    As noted previously, NGFA strongly believes CSP, EQIP and other 
working land conservation programs are crucial for helping U.S. 
agriculture meet the challenge of preserving healthy soils and meeting 
the long-term demand for producing food in an environmentally 
sustainable manner. Conservation activities incentivized by CSP and 
EQIP often result in more conservation taking hold in communities and 
the nation. There are 362.7 million acres of cropland and 526.9 million 
acres of pastureland and rangeland for CSP and EQIP to impact either 
directly or indirectly.
    On the other hand, idling of large tracts of productive farmland in 
the Conservation Reserve Program has harmed rural economies and 
contributed to the reduction in the availability of cropland upon which 
U.S. agriculture depends.
    As it considers the next farm bill, the NGFA urges Congress to 
retain the current CRP acreage cap of 24 million acres and avoid 
repeating the mistakes of the past when CRP was used as a supply 
control program, which only encouraged greater production by America's 
foreign competitors. To achieve greater conservation, NGFA recommends 
criteria be placed on future CRP enrollments to target land that has 
both an erodibility index score of 8 or above and is classified within 
capability classes IV through VIII. NGFA also believes whole farms or 
large tracts should not be enrolled in CRP. Instead CRP enrollments 
should be targeted at the most environmentally sensitive portions of 
farms, such as critical fragments of tracts prone to erosion, serving 
as drainage, frequently drowning out or located next to streams.
    NGFA believes scarce Federal funding should be targeted at working 
land conservation programs, such as CSP and EQIP, which promote 
agricultural sustainability. Finally, NGFA requests that Congress 
carefully examine the issue of CRP rental rates, which in some cases 
are considerably higher than local farmland cash rental rates and serve 
as an economic barrier for the next generation of American farmers to 
get into production agriculture.
    The NGFA appreciates the opportunity to submit this statement for 
the hearing record, and would be pleased to respond to any questions 
Members of the Subcommittee may have.
                                 ______
                                 
Supplementary Material Submitted by David E. Nomsen, Vice President of 
             Governmental Affairs, Pheasants Forever, Inc.
Insert
          Mr. Nomsen. Exactly. I would like to add to that just 
        briefly, in that we do need to take a hard look at return on 
        investment and the discussion that we had. From my chair, the 
        starting point is what are the resource needs out there? What 
        do we need on the landscape, and that should be the starting 
        point for the discussion. And yes, I recognize it likely is 
        going to get much more challenging as we start to talk about 
        money available and making sure that we prioritize and fund the 
        best of the best. That is why we need to look internally at 
        even all of our programs and find efficiencies and savings so 
        that we can put more acres out there on the ground for farmers 
        and landowners and for everyone.
          Ms. Kuster. And can you show that return-on-investment? Do 
        you have that kind of analysis of the programs?
          Mr. Nomsen. We do, and I actually made a note when you had a 
        discussion earlier, and one of the things that we will add to 
        our testimony are some of the studies that have looked at 
        individual conservation programs in terms of their efficiencies 
        and what are they providing to taxpayers.
  Date: March 24, 2017
  To: House Committee on Agriculture, Subcommittee on Conservation and 
    Forestry
  From: Dave Nomsen, Pheasants Forever, Inc.

  Re: February 28, 2017 Hearing Addendum to Testimony

    Below is additional information submitted as an addendum to my 
testimony of February 28, 2017 including a response to Representative 
Bost regarding pollinators.* Thank you for including this in the record 
with my testimony and please feel free to contact me with any 
additional comments or questions.
---------------------------------------------------------------------------
    *The response to Hon. Mike Bost's submitted question is located on 
p. 56.
---------------------------------------------------------------------------
    Additional Statement on the Environmental Quality Incentives 
Program--We urge policymakers to expand funding for the Environmental 
Quality Incentives Program (EQIP) and to increase to 10% funds used for 
wildlife conservation practices. For example, we strongly support the 
Working lands for wildlife initiatives that we work in partnership with 
NRCS on implementing. Specifically the Sage Grouse Initiative in the 
West, Lesser Prairie Chicken Initiative in the Southern Great Plains, 
and even working on young forest initiatives to benefit the Golden 
Winged Warbler in the East. Just a few months ago, Quail were added as 
one of the priorities.
USDA--NRCS and FSA Conservation Programs
    Since the inception of various conservation programs in farm bill's 
since 1985, PF has worked with respective agencies to leverage funding 
through financial and in-kind contributions. Some of the best examples 
we have of these partnerships are with NRCS and the EQIP program, 
especially as it relates to delivery wildlife related practices. This 
includes the initiatives under the Working Lands for Wildlife. We are 
partnership with NRCS to fully leverage the Federal funding, with 
state, local and private sources. This is most evident with Three of 
NRCS WLFW initiatives Sage Grouse, Golden-winged Warbler, Lesser 
Prairie Chicken, and we will certainly be engaged range wide with the 
addition of Bobwhite Quail. Not only do our community led chapters and 
volunteers assist in implementing USDA conservation programs, our 
organization, with assistance from NRCS, have supported our Farm Bill 
Biologist program. In partnership with state/county agencies, and other 
non-government organizations, we have a team of Farm Bill Biologists 
that work as natural resource professionals with expertise in fields 
such as wildlife biology, forestry, and range management. Every day, 
they work with landowners that encompass farms, ranches and forestland 
thought out the Country, to find the best voluntary based, conservation 
solutions that fit producers' needs as part of their agriculture 
operations and personal goals.
    One of our organizations top priorities, along with many of our 
partners, are to maximize the wildlife benefits, soil health, and water 
quality through voluntary Federal, state and local conservation 
programs on as many acres of fields, farms, ranches and forestlands as 
possible.
Additional Sources of information About the Economics of Conservation 
        Programs
Economic Impacts of CRP on Rural Economies, and Wildlife Benefits of 
        Farm Bill Conservation Programs on Fish and Wildlife
    Shortly after CRP was implemented in the 1985 Farm Bill, there were 
regional concerns that the CRP negatively impacted local economies. No 
question, this is a very complex issue and we would like to highlight 
some literature for reference that suggests that, over the 30 year 
history, CRP has had little or no impact on most rural economies. In 
fact, several analyses suggest that CRP stimulated local economies 
through, keeping fa[r]mers on the land (i.e., they were not forced to 
relocate to more urban areas) increased recreational opportunities 
through hunting, improving fisheries through reducing soil erosion and 
water quality improvement, and overall providing natural resource 
benefits for all Americans. We also contend that CRP has always been a 
working lands program through the fact that most acres can be hayed 
and/or grazed through the managed haying and grazing provisions, and 
even expanded to other conservation practices/programs if the USDA 
Secretary deems necessary in an emergency situation. We offer the view 
that by keeping a robust CRP on the landscape, we can maximize crop, 
forage and fiber production, while reducing soil erosion, improving 
water/air quality and providing wildlife benefits.
    The Conservation Reserve Program--Economic Implications for Rural 
America. USDA-ERS Report: https://www.ers.usda.gov/webdocs/
publications/aer834/19569_aer834_researchbrief_1_.pdf.
    The Conservation Reserve Program--An Economic Assessment: https://
www.ers.usda.gov/webdocs/publications/aer626/50870_aer626fm.pdf.
    Bibliography--Effects of Agricultural Conservation practices on 
fish and wildlife. USDA-ARS: https://www.nal.usda.gov/waic/effects-
agricultural-conservation-practices-fish-and-wildlife.
    It is estimated that pheasant hunting alone, provides $500 million 
annually: http://nationalpheasantplan.org/national-plan/.
    Implications of a Reduced Conservation Reserve Program--The Council 
on Food, Agriculture, and Resource Economics: http://www.cfare.org/
UserFiles/file/publications/Wu-Weber_8.21%5B1%5D.pdf.
    Assessing Cost-Effectiveness of the Conservation Reserve Program 
and its Interaction with Crop Insurance: http://www.card.iastate.edu/
products/publications/synopsis/?p=1232.
    2014 Farm Bill Field Guide to Fish and Wildlife Conservation: 
https://www.fws.gov/greatersagegrouse/documents/Landowners/
2014_Farm_Bill_Guide
%20to%20Fish%20and%20Wildlife%20Conservation.pdf.
                                 ______
                                 
  Supplementary Material Submitted by Hon. John F. Piotti, President, 
                        American Farmland Trust
Insert
          Mr. Allen. . . .
          The best way I know to do that, because I come from the 
        business world, is to look at every dollar invested and what is 
        the return on that dollar. We represent the taxpayers, and the 
        taxpayers expect us, and we should, use their money as an 
        investment return as far as conservation practices go.
          Mr. Peters, are there any actual statistics on what for a 
        dollar invested what dollar received from this program, which 
        would help us to increase this in the next farm bill?
          Mr. Peters. I am sure there are. I don't have those 
        statistics readily available with me this morning. One thing 
        that bears mentioning is that historically, for the Federal 
        investment through the farm bill conservation programs, there 
        is years upon years worth of cost-share that have come out of 
        the pockets of the farmers and ranchers and landowners that are 
        participating in those programs.
          Mr. Allen. Right.
          Mr. Peters. That is a tremendous private investment that has 
        leveraged those Federal funds.
          Mr. Allen. And that is important, because everybody has skin 
        in the game.
          Mr. Peters. Yes, sir.
          Mr. Allen. And that is very important to our taxpayers.
          Mr. Piotti, do you have any comments?
          Mr. Piotti. Yes, I do. At the state level, and it was 
        mentioned earlier that a lot of states have farmland protection 
        programs that often work in companion with ACEP, and a number 
        of states have done these kind of analyses. And we can compile 
        some of that for you.
I. Benefit-Cost Analyses of Farmland Protection
The Public Benefits of Farmland Protection
    Farmland protection easements are well known for the private 
benefits that they offer to farmers, who commonly use the funds from 
selling their development rights to reinvest in their businesses, pay 
off debt, or retire. In addition, farmland protection offers many 
public benefits, including:

   Avoided taxpayer expenditures on municipal community 
        services and infrastructure given less sprawl.

   Preserved economic makeup of the community, as protected 
        farms maintain agriculture support industries and remain 
        affordable to farmers.

   Avoided urban runoff, supporting water quality.

   Protected permeable surfaces in watersheds, supporting water 
        quantity, flood control, and water purification.

   Reduced landscape fragmentation, supporting biodiversity and 
        wildlife habitat.

    There are many methods for estimating a dollar value of these 
benefits of farmland protection. The following examples, though using 
differing methodologies, both show a positive benefit-to-cost ratio for 
protected farmland.
Environmental Return on Federal Farmland Protection Funds
    A study from Lancaster County, Pennsylvania, evaluated 13 ecosystem 
service benefits on protected cropland and pastureland. These ecosystem 
services included aesthetic quality, pollination, recreation, water 
regulation, and animal habitat, among others. The dollar values were 
drawn from peer-reviewed research that used multiple methodologies 
including market pricing, cost avoidance, replacement cost, travel 
cost, hedonic values, and contingent valuation.
    The report showed the value of these services to be between $27 
million and $219 million annually, depending on the ecosystem service 
valuation used. These lands were preserved in perpetuity at a combined 
total of roughly $100 million in state and Federal funding and $13 
million in private funds from the Lancaster Farmland Trust (Schwartz & 
Kocian, 2014). Assuming the Federal input was $50 million (\1/2\ of the 
total public investment), it would take only 2 years at the very lowest 
estimate to pay back the benefits environmentally--to say nothing of 
the public economic benefits from the protection of agricultural jobs 
and businesses, the taxes paid by the farmers, the sale of farm 
products, and the agriculture-related industries supported.
Federal Farmland Protection Cost-Benefit Analysis
    On the Federal level, the Natural Resources Conservation Service 
(NRCS) (2014) produced a benefit-cost analysis of the Farm and Ranch 
Lands Protection Program (FRPP), a precursor to the present 
Agricultural Conservation Easement--Agricultural Land Easement (ACEP-
ALE) program. Instead of placing a dollar value on the ecosystem 
services provided, NRCS used a ``willingness-to-pay'' (WTP) model, 
which in effect uses survey data to calculate a value for protected 
farmland based on what urban dwellers are willing to pay to have their 
local farmland protected. The NRCS calculated the average annual WTP 
per thousand acres per household to be $1.54.
    In FY 2007, FRPP protected 54,490 acres at a cost of almost $73 
million, for an average cost of about $1,300 per acre. The benefits 
from these lands based on WTP was about $11 million in that year. 
However, the estimates of total net benefits for the FY 2007 FRPP 
baseline, taking into account the fact that these are perpetual 
easements, range from $81 million to $285 million (for a seven percent 
and three percent discount rate, respectively). These estimates both 
constitute a positive net return on the investment of Federal funds.
References
    Natural Resources Conservation Service. 2014. Final Benefit-Cost 
Analysis for the Farm and Ranch Lands Protection Program (FRPP).
    Schwartz, A., and Kocian, M. 2014. Beyond Food: The Environmental 
Benefits of Agriculture in Lancaster County, Pennsylvania. Earth 
Economics, Tacoma, WA.
II. Quantifying Conservation Benefits in the Regional Conservation 
        Partnership Program
    Two interconnected points were made by several Members during the 
Subcommittee on Conservation and Forestry hearing, The Next Farm Bill: 
Conservation Policy; first, that farmers do not often receive credit 
for their implementation of voluntary conservation methods, and second, 
that it is important to wisely invest taxpayer dollars in conservation 
programs that show measurable results and provide evidence to the 
American public that conservation programs offer a good return on 
investment.
    American Farmland Trust (AFT) believes that the new Regional 
Conservation Partnership Program (RCPP) provides a unique opportunity 
to satisfy both those points. One of the stated goals of RCPP has been 
to fund projects that elect to measure environmental, social, and 
economic outcomes of the practices adopted within a project area. These 
specific, on-the-ground outcomes would make the case that voluntary 
conservation is working and would allow farmers to receive credit for 
the public benefits they provide.
    While some studies have attempted to quantify the environmental or 
economic benefits associated with conservation, more needs to be done 
to empower RCPP partners to gather this data. Congress should encourage 
the United States Department of Agriculture Natural Resources 
Conservation Service (USDA NRCS) to define those desired outcomes, 
provide methods to measure the outcomes, and establish reporting 
criteria so success stories can make it back to NRCS and to the 
Congress.
Efforts To Quantify Environmental and Economic Benefits of Federal 
        Conservation Programs
    There are a variety of studies that attempt to quantify 
environmental or economic benefits associated with conservation 
activities such as water quality improvements in specific watersheds 
and the increases in spending on outdoor recreation and sportsmen's 
activities. However, no definitive studies exist that quantify the 
environmental and economic benefits of specific conservation programs, 
or of total Federal conservation spending.
    Until about a decade ago, Federal agricultural conservation 
programs were solely quantifying their success by counting the dollars 
spent, conservation contracts signed, and acres or units of practices 
implemented rather than on-the-ground outcomes. In 2003, the NRCS 
Conservation Effects Assessment Project (CEAP) began modeling 
simulations to estimate the environmental effects of conservation 
practices on cropland in 12 very large river basins. The latest CEAP 
report for the Western Lake Erie Basin identified $277 million in 
annual investment in conservation practices by the area farmers 
(without specificity to spending by Federal, state, or local programs) 
that are estimated to reduce annual sediment losses by 81 percent, 
nitrogen losses by 36 percent, and phosphorus losses by 75 percent.
    The United States Fish and Wildlife Service estimates that the 
Conservation Reserve Program (CRP) has helped achieve a net increase of 
two million additional ducks per year (a 30 percent increase in duck 
production) in North Dakota, South Dakota, and northeastern Montana 
since 1992 (FSA, 2013). Modeling simulation by the Food and 
Agricultural Policy Research Institute (FAPRI) estimates that CRP 
reduces nutrient losses by 565 million pounds of nitrogen and 113 
million pounds of phosphorus, compared to land that is cropped (FSA, 
2013).
    From the economic perspective, a University of Virginia study found 
that every $1 of state or Federal funding invested in agricultural best 
management practices would generate $1.56 in economic activity in that 
state (Rephann, 2010). The Chesapeake Bay Foundation (2014) estimated 
that having a clean Chesapeake Bay would provide $130 billion in 
economic benefits annually to watershed residents, in the form of air 
and water filtering, agricultural and seafood production, enhancement 
of property values, and protection from floods and hurricanes. The cost 
of implementing such a plan has been valued at $5-$6 billion dollars 
annually.
    Still other studies attempt to quantify the economic impact of 
activities related to public recreation lands, clean, healthy waters, 
and healthy wildlife populations, all of which are supported by 
agricultural conservation funding. During the hearing, Representative 
Walz of Minnesota noted the example of a $900,000 Environmental Quality 
Incentives Program (EQIP) grant on a feedlot that led to cleaner water 
in a nearby trout stream that generates $4 million for the local 
economy through recreational activities. The Congressional Sportsmen's 
Foundation (2013) estimated the country's ``sportsmen and women are an 
economic force, fueling the American economy,'' spending $90 billion in 
2011 and specifically $3 billion on the American system of conservation 
funding.
    All of these studies are important efforts to quantify 
environmental and economic benefits associated with public and private 
investments in the environment and agriculture. We need more of them.
Farmers Want To Know What Their Voluntary Conservation Efforts Are 
        Accomplishing in Their Own Backyards
    In order to more fully understand the benefits of RCPP and other 
conservation programs, we need to quantify the environmental, economic, 
and social outcomes of the conservation programs. RCPP, as an 
innovative program that brings together a diverse array of partners and 
leverages private-sector dollars to implement targeted best management 
practices, is an ideal place to start. By 2018, NRCS and its more than 
2,000 conservation partners will have invested over $2.4 billion in 
high-impact RCPP projects nationwide, with more than half of that 
funding coming from non-Federal sources.
    Other than counting the dollars spent and the practices adopted, 
farmers and the RCPP project partners want to know what environmental 
benefits their conservation activities are achieving in their project 
area. To address this issue, AFT believes that the farm bill should, 
first, include definitions of these environmental, social, and economic 
outcomes, and second, direct the Secretary of Agriculture to provide 
guidance and reporting criteria to RCPP project partners to measure 
those outcomes. AFT would be happy to visit with Members and staff of 
the House Subcommittee on Conservation to provide examples of various 
outcome definitions and measurement methods.
References
    Chesapeake Bay Foundation. 2014. Cleaning Up the Chesapeake: A 
Valuation of the Natural Benefits Gained by Implementing the Chesapeake 
Clean Water Blueprint. http://www.cbf.org/document.doc?id=2258.
    Congressional Sportsmen's Foundation. 2013. ``America's Sporting 
Heritage: Fueling the American Economy.'' http://sportsmenslink.org/
uploads/page/EIR_full_12_feb_low_res.pdf.
    Farm Services Agency (FSA). 2013. Environmental Benefits of the 
Conservation Reserve Program: United States. https://www.fsa.usda.gov/
Internet/FSA_File/us_benefits_2013.pdf.
    NRCS Conservation Effects Assessment Project (CEAP). 2016. Effects 
of Conservation Practice Adoption on Cultivated Cropland Acres in 
Western Lake Erie Basin, 2003-06 and 2012. https://www.nrcs.usda.gov/
wps/portal/nrcs/detail/national/technical/nra/ceap/pub/
?cid=nrcseprd949606.
    Rephann, T. 2010. Economic Impacts of Implementing Agricultural 
Best Management Practices to Achieve Goals Outlined in Virginia's 
Tributary Strategy. http://cbf.org/document.doc?id=467.
                                 ______
                                 
                          Submitted Questions
Response from Chuck Coffey, Owner/Manager, Double C Cattle Company; 
        Member, National Cattlemen's Beef Association
Question Submitted by Hon. Mike Bost, a Representative in Congress from 
        Illinois
    Question. As of November 2016, there have been little over 340,000 
acres enrolled in pollinator habitat since the program was established 
in 2012. In your opinion, has this program and the investments made my 
outside organizations made a meaningful difference in increasing the 
population and health of the pollinator population and are there any 
changes that you would like to see to make this program more effective?
    Answer. While it's still premature to determine the cumulative 
impact of the pollinator habitat efforts, we do know that agriculture, 
and grazing in particular, plays a critical role in conserving the 
pollinator habitat we have and establishing new habitat where we can. 
We also know that these efforts are most effective and appeal to the 
widest audience when they are truly voluntary and incentive-based. It's 
also critical to recognize the benefit of these voluntary conservation 
efforts by offering assurances to participating producers when making 
ESA listing determinations.
Response from Timothy Gertson, Co-Owner/Co-Operator, G5 Farms; Member, 
        Board of Directors, USA Rice Federation
Questions Submitted by Hon. Mike Bost, a Representative in Congress 
        from Illinois
    Question 1. You said in your testimony that when you participate in 
the EQIP program you saw immediate benefits to your bottom line. This 
return on investment then led you to implement the same conservation 
practices on more of you acres. What benefits did you see that were 
worth putting you own skin in the game and did you look at utilizing 
the Conservation Guaranteed Loan Program offered my FSA? Finally, do 
you know of any other producers who take this same approach to 
conservation efforts?
    Answer. We cost-shared the installation of more than 4 miles of 16" 
underground pipeline to replace irrigation canals, resulting in up to 
20 percent less irrigation water needed to grow our crop, providing 
both instant savings and environmental benefits. A quick calculation 
shows that since installation our new pipeline alone has saved 
somewhere between 1,000 and 2,000 ac-ft of water. This is enough water 
to fill between 500 and 1,000 Olympic-sized swimming pools. Not only 
are we saving the water, we are saving the cost of pumping it, and that 
has a big impact on my bottom line. It previously took nearly 24 hours 
of pumping at a rate of 3,000 gallons/minute to build up in my old 
canals to start just a trickle of water into my fields. Now, with 
underground pipeline, my water supply is on demand and immediate. This 
added precision to my irrigation scheduling lends itself to increased 
yields by minimizing crop stress, again helping my bottom line.
    Almost every single rice producer I know in my county and the 
surrounding counties has applied for EQIP or CSP funding. 
Unfortunately, not all of them have received it. Many farmers apply 
year after year for EQIP to help get started with their conservation 
practices only to be turned down because of lack of funding. EQIP is 
extremely competitive in our region because everyone has seen the 
benefits that these conservation practices bring to our land, water, 
wildlife, and economy.
    We have looked at FSA loan programs before, but not the 
Conservation Guaranteed Loan Program in particular. We wrote off 
talking to FSA about any loan programs several years ago because their 
process was too time consuming and it takes too long for approval. In 
my area, conservation practices have to be installed between crop 
rotations. This means there is a limited timeframe to get the practice 
installed. The weather can be hard enough to work around, I can't 
imagine having to wait on a loan approval as well.

    Question 2. Your testimony should be required reading when it comes 
to the positive impact working lands conservation programs has on local 
economies. As you point out, with working lands programs, the land is 
still in production and as a result you are able to provide jobs for 
several of the residents in your town. Generally, how would your 
ability to contribute to the local economy be impacted if there were a 
dramatic shift in policy that allowed for millions of more acres to be 
retired/idled through CRP?
    Also, with you being a young farmer, do you feel that beginning 
farmers and ranchers are competing for rental acres with CRP contracts 
that are too high? As an example, in Illinois, CRP rates in some areas 
of the state are over $300 an acre. What do you believe could be done 
to reform the rental rate?
    Answer. If millions of additional acres were to be enrolled in CRP 
I'd really be wondering where the money came from to pay for those 
contracts. Is that money that could have been spent on working lands 
programs? Something that really frustrates me is that CRP is a 
`conservation' program, but it feels like it should fit under the 
commodity title. I understand that the intent of the program is to 
provide conservation benefits, but I feel like the same goal could be 
accomplished on that land by using EQIP or CSP and keeping the land in 
production. Producers enrolled could be required to do things like 
strip till, min till, or no-till, or cover cropping to reduce erosion 
and improve water quality. I know those types of practices don't work 
perfectly in every region and for every crop. We can't no-till rice (we 
tried it when I was in high school) because you run the risk of the 
ground never drying out in the spring to be able to plant.
    Since a lot of rice seems to be grown on rented land and most 
beginning farmers rely on rented land, it's got to be an issue if 
you're surrounded by lots of open land but it's tied up in 10 year CRP 
contracts. If my landlord is considering enrolling the land I rent into 
CRP, that does not give me any certainty about the future and it's 
going to deter me from implementing any conservation whether cost-share 
or out of pocket on that land if I may not farm it next year.
    Question 3. As of November 2016, there have been little over 
340,000 acres enrolled in pollinator habitat since the program was 
established in 2012. In your opinion, has this program and the 
investments made my outside organizations made a meaningful difference 
in increasing the population and health of the pollinator population 
and are there any changes that you would like to see to make this 
program more effective?
    Answer.
Question Submitted by Hon. Ralph Lee Abraham, a Representative in 
        Congress from Louisiana
    Question. Mr. Gertson, it's great to see such a young, and positive 
rice farmer in here, I've got quite a few rice farmers in my own 
District and it's promising to see you undeterred from farming after 
the way the market's been. You say a lot of rice farmers rely on rented 
land and that's a deterrent from forking over the money to implement 
conservation practices, can you tell us a little bit more about how 
NRCS incentivizes farmers to implement practices on rented land?
Response from Jeremy Peters, Chief Executive Officer, National 
        Association of Conservation Districts; on Behalf of Lee 
        McDaniel, Immediate Past President, National Association of 
        Conservation Districts
Question Submitted by Hon. Mike Bost, a Representative in Congress from 
        Illinois
    Question. As of November 2016, there have been little over 340,000 
acres enrolled in pollinator habitat since the program was established 
in 2012. In your opinion, has this program and the investments made my 
outside organizations made a meaningful difference in increasing the 
population and health of the pollinator population and are there any 
changes that you would like to see to make this program more effective?
    Answer.
Response from David E. Nomsen, Vice President of Governmental Affairs, 
        Pheasants Forever, Inc.
Question Submitted by Hon. Mike Bost, a Representative in Congress from 
        Illinois
    Question. As of November 2016, there have been little over 340,000 
acres enrolled in pollinator habitat since the program was established 
in 2012. In your opinion, has this program and the investments made my 
outside organizations made a meaningful difference in increasing the 
population and health of the pollinator population and are there any 
changes that you would like to see to make this program more effective?
    Answer. While the leadership demonstrated by USDA in creating and 
delivering a pollinator habitat incentive is to be applauded, many of 
the pollinator benefits and national goals are well short of 
achievement. Two important national pollinator goals are striving to 
lower annual honey bee hive losses to 15% and to increase the area 
occupied by monarch butterfly on overwintering sites in Mexico to 6 
hectares. National Hive losses remain at 40 to 50% and 2017 monarch 
wintering area was estimated at 2.91 hectares. Much work remains to be 
done.
    The Conservation Reserve Program (CRP) and the suite of NRCS 
Working Lands for Wildlife Programs offers perhaps the single greatest 
opportunities to impact these national pollinator goals and subsequent 
pollinator populations. Unfortunately, too often the habitats created 
through these programs falls short of providing the high quality 
pollinator habitat needed. Examples of improvements that would 
significantly benefit pollinators and CRP program results include:

  (1)  Design seeding mixtures using more updated and appropriate 
            planting rates and design.

  (2)  Allow the use of a broader range of pollinator-friendly species 
            adapted to a geographic area.

  (3)  Increase the minimum requirements for pollinator plantings to 15 
            pollinator-friendly forb species and encourage the use of 
            highly diverse seeding mixtures.

  (4)  Implement seed establishment practices that allow a broader 
            range of establishment and management options.

  (5)  Adjustment to the current EBI to include pollinator value as a 
            criteria and placing those projects in the geography that 
            will most benefit pollinator species (honey bees, monarch 
            butterflies, etc.).

    Recommendations regarding these and other opportunities to increase 
and improve forage, CRP outcomes and habitat for pollinators through 
USDA conservation programs have been submitted by a broad coalition of 
conservation, commodity and agriculture groups through the Honey Bee 
Health Coalition.

    NRCS site with pollinator and monarch butterfly information: 
https://www.nrcs.usda.gov/wps/portal/nrcs/detail/national/
plantsanimals/pollinate/?cid=nrcseprd402207.
Response from Hon. John F. Piotti, President, American Farmland Trust
Question Submitted by Hon. Mike Bost, a Representative in Congress from 
        Illinois
    Question. As of November 2016, there have been little over 340,000 
acres enrolled in pollinator habitat since the program was established 
in 2012. In your opinion, has this program and the investments made my 
outside organizations made a meaningful difference in increasing the 
population and health of the pollinator population and are there any 
changes that you would like to see to make this program more effective?
    Answer. American Farmland Trust (AFT) has long been involved in 
efforts to improve the health and increase the population of 
pollinators through the use of integrated pest management (IPM) and 
other conservation practices, and in efforts to incorporate more 
pollinator habitat into farming operations. Wild bees and honeybees 
provide a critical service to agriculture and to natural ecosystems by 
ensuring pollination of crops and wild plants. Both types of bees 
contributed to an estimated total of 11 percent of the agricultural 
gross domestic product of the United States in 2009, equivalent to 
$14.6 billion (Koh, et al., 2016).
    Therefore, AFT applauds the efforts to enroll hundreds of thousands 
of acres in pollinator habitat through the Conservation Reserve Program 
(CRP) CP-42 Pollinator Habitat practice, although this particular 
program has not historically been an area of involvement for AFT. 
According to a recently published study, wild bee populations declined 
across 23 percent of the United States between 2008 and 2013. The study 
also identified 139 counties where low bee abundance corresponds to 
large areas of pollinator-dependent crops, accounting for nearly 40 
percent of the pollinator-dependent crop area in the country (Koh, et 
al., 2016). Additional study would be necessary to determine whether 
practices defined under CP 42 have had a broad-reaching impact in 
changing these trends since 2013. However, promoting pollinator-
friendly practices in regions where native bee population declines have 
been measured should be a priority.
    Outside of CRP, there are several USDA programs that also offer the 
opportunity to protect pollinators and their habitats. AFT is currently 
involved in a Conservation Innovation Grant (CIG) in Michigan that is 
piloting the use of Pollinator Habitat Credits on protected farms. This 
innovative approach seeks to draw in corporations and businesses that 
have established corporate sustainability programs and are searching 
for projects in which to invest corporate sustainability funds, thereby 
leveraging Federal funds with private funds. By focusing on developing 
pollinator habitat on protected farmland, this project ensures that its 
gains will not be under threat from development.

    Reference

    Koh, I., Lonsdorf, E.V., Williams, N.M., Brittain, C., Isaacs, R., 
Gibbs, J., & Ricketts, T. (2016). Modeling the status, trends, and 
impacts of wild bee abundance in the United States. Proceedings of the 
National Academy of Sciences, 113(1), 140-145.


 
                           THE NEXT FARM BILL

                   (INTERNATIONAL MARKET DEVELOPMENT)

                              ----------                              


                       TUESDAY, FEBRUARY 28, 2017

                  House of Representatives,
         Subcommittee on Livestock and Foreign Agriculture,
                                  Committee on Agriculture,
                                                   Washington, D.C.
    The Subcommittee met, pursuant to call, at 2:25 p.m., in 
Room 1300 of the Longworth House Office Building, Hon. David 
Rouzer [Chairman of the Subcommittee] presiding.
    Members present: Representatives Rouzer, DesJarlais, Kelly, 
Marshall, Costa, and Evans.
    Staff present: Bart Fischer, Caleb Crosswhite, Callie 
McAdams, Darryl Blakey, Mollie Wilken, Stephanie Addison, Liz 
Friedlander, Matthew MacKenzie, Mike Stranz, Troy Phillips, and 
Carly Reedholm.

  OPENING STATEMENT OF HON. DAVID ROUZER, A REPRESENTATIVE IN 
                  CONGRESS FROM NORTH CAROLINA

    The Chairman. This hearing of the Subcommittee on Livestock 
and Foreign Agriculture entitled, The Next Farm Bill: 
International Market Development, will come to order. Let me 
apologize for our delay in getting started, but votes take 
precedent around here, and we just arrived back from a series 
of votes.
    Before I go into my opening statement, I want to recognize 
a new Member that I see here on the Republican side, Mr. 
Marshall. Welcome to the Subcommittee. As you all know, Mr. 
Marshall is a new Member from Kansas, and it is great to have 
you here on the Subcommittee with us.
    Well, thank you all for gathering here this afternoon as 
the Committee continues its work to reauthorize the farm bill 
in advance of its expiration next fall.
    As was explained in this morning's Conservation and 
Forestry Subcommittee hearing, the plan is for each 
Subcommittee to hold at least two hearings exploring the farm 
bill programs and issues under its respective jurisdiction.
    This afternoon, we will focus on a slate of programs that, 
unfortunately, do not get much attention until they become 
targets for cuts during consideration of farm bills and various 
appropriations measures. Those are the trade promotion and 
market development programs administered by the USDA. A number 
of you here, myself included, have been through a lot of those 
fights.
    The goal today is to change that narrative, by giving a 
wide variety of organizations who receive funding from those 
programs a platform to discuss the continued need for the 
programs, and the innovative ways in which they use them to 
establish and enhance markets for U.S. products overseas.
    I also look forward to hearing from a distinguished 
economist on today's panel about the economic benefits that the 
two programs; MAP and FMD, in particular, generate within our 
own borders.
    Given the uncertainty of the future of our existing trade 
agreements, and the blatant disregard of WTO commitments by a 
handful of our global competitors, I see tremendous value in 
these effective and proven methods of gaining new access for 
U.S. goods abroad and developing those market relationships. 
These programs truly embody an America first policy.
    From improving customer trust in U.S. beef in South Korea, 
to developing export markets for ice cream in China, to putting 
our cotton exports on a more level playing field with our 
global competitors, I am impressed with the overarching 
benefits that market development funding brings to the U.S. 
agricultural industry as a whole.
    I look forward to learning more today about the success of 
the USDA programs that provide such opportunities, but I am 
certainly open to suggestions as to how to improve them, moving 
forward.
    Again, thank you all for being here.
    [The prepared statement of Mr. Rouzer follows:]

 Prepared Statement of Hon. David Rouzer, a Representative in Congress 
                          from North Carolina
    Good afternoon, and thank you all for gathering here this afternoon 
as the Committee continues its work to reauthorize the farm bill in 
advance of its expiration next fall.
    As was explained in this morning's Conservation and Forestry 
Subcommittee hearing, the plan is for each Subcommittee to hold at 
least two hearings exploring the farm bill programs and issues under 
its respective jurisdiction.
    This afternoon, we will focus on a slate of programs that, 
unfortunately, do not get much attention until they become targets for 
cuts during consideration of farm bills and appropriations measures--
the trade promotion and market development programs administered by 
USDA.
    The goal today is to change that narrative, by giving a wide 
variety of organizations who receive funding from those programs a 
platform to discuss the continued need for the programs and the 
innovative ways in which they use them to establish and enhance markets 
for U.S. products overseas.
    I also look forward to hearing from a distinguished economist on 
today's panel about the economic benefits the two largest programs--MAP 
and FMD--generate within our own borders.
    Given the uncertainty of the future of our existing trade 
agreements, and the blatant disregard of WTO commitments by a handful 
of our global competitors, I see tremendous value in these effective 
and proven methods of gaining new access for U.S. goods abroad and 
developing those market relationships. In my opinion, these programs 
truly embody an ``America first'' policy.
    From improving customer trust in U.S. beef in Korea, to developing 
export markets for ice cream in China, to putting our cotton exports on 
a more level playing field with our global competitors, I am impressed 
with the overarching benefits that market development funding brings to 
the U.S. agricultural industry as a whole.
    I look forward to learning more today about the success of the USDA 
programs that provide such opportunities, but I am certainly open to 
suggestions as to how to improve them moving forward.
    Again, thank you all for being here, and with that, I yield to the 
Ranking Member for his opening remarks.

    The Chairman. I yield to the Ranking Member, Mr. Costa, for 
his opening remarks.

   OPENING STATEMENT OF HON. JIM COSTA, A REPRESENTATIVE IN 
                    CONGRESS FROM CALIFORNIA

    Mr. Costa. Thank you very much, Mr. Chairman. And I want to 
thank the Members of the Subcommittee and our panel in advance.
    This hearing of the Livestock and Foreign Agriculture 
Subcommittee, entitled, The Next Farm Bill: International 
Market Development, is critical for so many reasons, and I will 
explain in my comments. But the fact of the matter, in my most 
sincere view, is that too often American agriculture gets taken 
for granted because we do it so well. With 2\1/2\ percent of 
our nation's population directly involved in the production and 
the processing of the food and fiber that is grown in America, 
we have allowed the rest of our population to pursue other 
goals in their life. And American farmers, ranchers, and dairy 
people are among the best producers in the world; the finest 
quality, the highest yields, the safest food that is grown 
anywhere. And we do it so well that we are able to not only 
feed our entire country, but large parts of the world.
    This context for the Subcommittee, Mr. Chairman, and as we 
begin setting the table for the next farm bill that we will all 
be actively engaged in, it is important that we not take this 
for granted; that we recognize it as a food security issue as 
we formulate the policies, and we recognize trade is an 
important part of that component. We can't consume all the 
products we produce. And so, unfortunately, trade in the last 
year or so, on both sides, has become a bit of a political 
football, some might say a pariah. It is important for the 
agriculture community to stand strong in its support for 
international market development, global trade, and the 
programs that we are going to talk about here today.
    I was proud to be one of the 28 Democrats in the House who 
voted for Trade Promotion Authority. I received a lot of grief 
for it. That is fine, because this Administration, like the 
last Administration, needs strong negotiating directions and 
parameters that they must be able to work with. The farm bill 
authorizes a few international market development programs we 
will talk about this afternoon for America's farmers, ranchers, 
dairy producers, and their products abroad. The Market Access 
Program, the Foreign Market Development Program, and the 
Technical Assistance for Specialty Crops Program all provide 
vital funding for their roles in America's agricultural 
industry.
    It makes it easier for American farmers and ranchers and 
dairy producers to market their products in foreign markets 
where it is not always a level playing field, as we know. And, 
of course, everybody seeks, wherever I go around the world, 
American products. They really like California products, and I 
market them all equally.
    I disagree though with the new Administration's 
shortsighted approach to trade. Its withdrawal from the Trans-
Pacific Partnership is going to be looked upon in the next 
several years as something we need to recognize that China is 
going to enter into that market, and I hope that we are not the 
losers as a result of that choice.
    These programs play a critical role, not only in TPP, but 
T-TIP and other negotiations. Let me give you some examples. In 
my home State of California, agricultural export values were 
$20 billion for a third consecutive year; 2015 it was $20.6 
billion. Furthermore, California's share of the total U.S. 
agricultural exports was 15.6 percent. My family and other 
families have been doing this for two, three, four generations. 
Whether you believe it or not, the fact is, nobody does it 
better. Nobody does it better than American agriculture, and 
that is the bottom line.
    In closing, I believe Ambassador Froman said it best. The 
question about trade agreements, and let's be clear about this, 
we can be critical and that is fine, and I get the politics, 
but a trade agreement only works when you have cooperation on 
both sides. It has to be a win-win. If it is a win-lose, the 
other country is not going to agree. Why would they? Why should 
they? So as Ambassador Froman said, ``The question is not 
whether we roll back the tide of globalization, but it is 
whether or not we are going to shape it or be shaped by it. 
Whether we are going to do everything we can to ensure that it 
reflects our values, or let others define the values.'' We face 
a choice: raise the bar or stay on the sidelines as other 
countries write the rules of the game. That is my view. The 
United States must lead, not be led. These programs that we 
will talk about this afternoon provide American agriculture and 
the 2.2 million farmers in the country with markets, access to 
customers all over the world who enjoy the fruits of these 
agriculturalists' labor. And it is not always a level playing 
field, and that is why these programs are so important.
    The funding ought to be maintained, and in some areas 
increased, and we will talk about that during the farm bill 
process.
    Finally, Mr. Chairman, you have been very kind with the 
time, and I would be remiss if I didn't make one other comment. 
All of us around here benefit from the wonderful people who we 
work with; our staff. We get a chance to ask the tough 
questions, and have the interaction and solve problems for our 
constituents, but if it wasn't for our staff we would be in a 
world of hurt, at least I would. And one, Mr. Donald Grady, has 
worked for over 5 years on my staff, and has done a terrific 
job on two farm bills, and I guess it was because he looked at 
a third farm bill that he was taking that admonition by, Mr. 
Greeley or someone who said, ``Go West, young man, go West,'' 
and this Georgian wants to move to California. I don't 
understand why. But I want to thank you, Donald Grady, on 
behalf of our entire staff and our entire team for the work you 
have done for myself and for the Agriculture Committee. Thank 
you very much.
    The Chairman. The chair would request that other Members 
submit their opening statements for the record so the witnesses 
may begin their testimony, and to ensure that there is ample 
time for questions.
    I would like to recognize our witnesses at the table, and 
let me introduce them very briefly.
    Dr. Gary Williams is Professor of Agricultural Economics 
and Co-Director of the Food, Agribusiness, and Consumer 
Economic Research Center at Texas A&M University. The Honorable 
Joseph Steinkamp, Director of the American Soybean Association, 
and here on behalf of the Coalition to Promote U.S. 
Agricultural Exports and the Agribusiness Coalition for Foreign 
Market Development. Mr. Tim Hamilton, Executive Director of the 
Food Export--Midwest and Food Export--Northeast, Chicago, 
Illinois. Mr. Philip Seng, President and CEO, U.S. Meat Export 
Federation in Denver, Colorado. And Mr. Dean Alanko, Vice 
President of Sales and Marketing, Allegheny Wood Products, 
Petersburg, West Virginia, here on behalf of the Hardwood 
Federation.
    And now I would like to recognize Mr. Costa to introduce 
the witness from California.
    Mr. Costa. Well, thank you again, Mr. Chairman.
    We have a distinguished panel here, and we are looking 
forward to their testimony. One of those individuals is a 
gentleman who I have known for many years. He is a leader in 
American agriculture and he is the Chair and President of the 
California State Farm Bureau, my dear friend, Mr. Paul Wenger. 
He and his family have farmed in the great San Joaquin Valley 
for generations. He is serving his fourth term as the 
California Farm Bureau President; the largest state Farm 
Bureau, I believe, in the nation, and he has served in that 
capacity with distinction. We have a lot of diversity in 
California, and sometimes Paul's job is like herding squirrels, 
but he brings a great deal of knowledge and expertise as a 
third generation almond and walnut farmer in the great 
California Central Valley, and we thank you, Paul, for being 
here.
    The Chairman. Dr. Williams, please begin when you are 
ready.

       STATEMENT OF GARY W. WILLIAMS, Ph.D., PROFESSOR OF
            AGRICULTURAL ECONOMICS AND CO-DIRECTOR,
           AGRIBUSINESS, FOOD, AND CONSUMER ECONOMICS
          RESEARCH CENTER, DEPARTMENT OF AGRICULTURAL
      ECONOMICS, TEXAS A&M UNIVERSITY, COLLEGE STATION, TX

    Dr. Williams. Well, Chairman Rouzer, Ranking Member Costa, 
Members of the Subcommittee, thank you for the opportunity to 
be here today to testify to you as you consider the next farm 
bill and international market development programs.
    Recently, we have all heard a great deal about the 
difficulties and uncertainties currently facing U.S. 
agriculture, policies that haven't worked as planned and new 
policies to consider. I am pleased to be here today to talk 
briefly about the USDA export market development programs 
which, according to recent research by my colleagues and I at 
Texas A&M University, Oregon State University, Cornell 
University, and Informa Economics, have worked consistently and 
effectively for over 50 years to bolster the profitability of 
not only production agriculture, but the broader U.S. economy 
as well.
    Total annual spending of the two primary USDA export market 
development programs; the Market Access Program, or MAP, and 
the Foreign Market Development Program, or FMD, has risen 
sharply in recent years, but only because of the growing 
contributions from the private-sector which now account for 
over 70 percent of the total. The growth in contributions from 
industry demonstrates there is strong recognition of the 
effectiveness of the MAP and FMD programs in opening, 
expanding, and maintaining export markets.
    In the recent study I mentioned, my colleagues and I 
subjected the USDA export market development programs to a 
rigorous economic analysis. Our research team devised a 
completely different and highly rigorous methodology to test 
whether the USDA export promotion programs were as effective in 
promoting U.S. agricultural exports, and as impactful on the 
U.S. economy as reported by previous studies. Frankly, I was 
skeptical of those studies, but then surprised by our own study 
results. We found that the programs, indeed, have been highly 
effective in boosting U.S. agricultural exports and export 
revenues. The study found that over their history, these 
programs have added an annual average of 15 percent to the 
value of U.S. agricultural exports, eight percent to the volume 
of U.S. agricultural exports, and nearly seven percent to the 
price of U.S. agricultural exports.
    The study also concluded that over their history, the 
programs have generated a return of $28.30 in additional export 
revenue for every dollar invested in the programs. We also 
found that the programs have contributed importantly to the 
profitability of the U.S. farm sector, benefitted the entire 
U.S. economy, and created employment up to nearly 240,000 full- 
and part-time jobs across the entire economy.
    And after we finished with that study, our team was asked 
to simulate two alternative scenarios of increased funding for 
MAP and FMD programs. In the first scenario, we doubled the MAP 
and FMD funding in each year by $46.9 million, to a total of 
$469 million over 5 years, with essentially no increase in 
cooperator contributions. In the second scenario, we again 
doubled MAP and FMD funding over 5 years, as in the first 
scenario, but this time we increased cooperative contributions 
by 50 percent, with increases of $46.9 million each year, to a 
total of $703.6 million by the end of the 5 year period.
    Under both scenarios, we found that the additional 
investments would generate high returns in additional 
agricultural export revenue, about $18 of returns per 
additional dollar invested under the first scenario, and $16 in 
the second scenario. Export gains would also be substantial 
under both scenarios; a total of $17 billion of additional 
exports under the first scenario, and $22.5 billion of 
additional exports in the second. Now, what this means is that 
an increase in investment in these two programs would pay for 
itself many times over. Gains across the farm economy would be 
equally as substantial under both scenarios.
    Importantly, the analysis demonstrated convincingly that 
the positive impacts of the programs on the farm sector would 
generate multiplier effects across the entire economy. For 
example, we found that U.S. output, or sales, would increase by 
a total of up to $53 billion in the first scenario, and $70 
billion in the second. U.S. GDP would be higher by a total of 
up to $23 billion under the first scenario, and $30 billion 
under the second. U.S. employment would increase by up to 
64,000 new jobs under that first scenario, nearly 85,000 jobs 
under the second scenario.
    Now, in conclusion, our analysis demonstrated clearly that 
the investment in the FMD and MAP programs has been, and 
continues to be, a highly successful and cost-effective means 
of strengthening the profitability and maintaining the 
viability of the U.S. farm economy. In addition, the programs 
are clearly pro-growth for the entire U.S. economy.
    I would be hard-pressed to name any other U.S. farm program 
that has been as consistently effective over such a long period 
of time in working to support our farm sector, while supporting 
the growth of the entire U.S. economy, and at the same time 
generating a high return on the investment of farmer and 
taxpayer funds.
    Thank you, Mr. Chairman. I would be glad to try to answer 
any questions.
    [The prepared statement of Dr. Williams follows:]

      Prepared Statement of Gary W. Williams, Ph.D., Professor of 
    Agricultural Economics and Co-Director, Agribusiness, Food, and 
    Consumer Economics Research Center, Department of Agricultural 
                          Economics, Texas A&M
                    University, College Station, TX
    Chairman Rouzer, Ranking Member Costa, and Members of the 
Subcommittee, thank you for the opportunity to testify today as you 
focus on the next farm bill and international market development 
programs. I am professor of Agricultural Economics and Co-Director of 
the Food, Agribusiness and Consumer Economics Research Center at Texas 
A&M University. Recently, we have all heard a great deal about the 
difficulties and uncertainties currently facing U.S. agriculture, 
policies that have not worked as planned, and new policies that need to 
be considered. I am pleased to be here today to talk briefly about the 
USDA Export Market Development Programs which have worked consistently 
and effectively over fifty years to bolster the profitability and 
viability of not only production agriculture but the broader U.S. 
economy as well, according to recent research by several of my 
colleagues at Texas A&M University, Oregon State University, Cornell 
University, Informa Economics and I (``Economic Impact of USDA Market 
Development Programs,'' available on-line at: https://www.fas.usda.gov/
sites/default/files/2016-10/2016econimpactsstudy.pdf).
    The primary components of USDA Export Promotion Programs are the 
Market Access Program (MAP) and the Foreign Market Development program 
(FMD). These two programs are public-private partnerships between USDA 
and nonprofit U.S. agricultural trade associations, farmer 
cooperatives, nonprofit state-regional trade groups and small 
businesses to conduct overseas marketing and promotional activities. 
The Foreign Agricultural Service (FAS) administers these programs 
within the USDA.
    The total annual spending under the USDA Export Market Development 
Programs has risen sharply in recent years but not because of growing 
government spending on these programs. Rather, contributions from the 
private-sector, the program cooperators, have continued to rise from 
about 50% of the total spending in the late 1990s to currently over 70% 
(Figure 1). In terms of the cost share of the funds for export market 
promotion, the private-sector contributed a record average of 240% 
percent in 2014. The growth in industry contributions demonstrates the 
strong industry recognition of the effectiveness of the MAP and FMD 
programs in opening, expanding, and maintaining export markets.
    In a recent study, my colleagues and I subjected the USDA Export 
Market Development Programs to a rigorous economic analysis to answer 
three critical questions. First, have the USDA Export Market 
Development Programs achieved their avowed objective of increasing the 
foreign demand for U.S. agricultural products and, as a result, 
supported the U.S. agricultural sector? Second, has any increase 
achieved in exports been sufficient to contribute more to the 
profitability of the agricultural sector than the cost of the programs? 
Third, have the programs contributed to the growth of the overall U.S. 
economy?
    Two previous studies concluded that the USDA Export Market 
Development Programs have been highly effective in promoting exports 
with substantial benefits to the U.S. economy. I must say that I was 
skeptical of those results. So our research team devised a completely 
different and highly rigorous methodology to test whether those export 
promotion programs were as effective in promoting U.S. agricultural 
exports and as impactful on the U.S. economy as the previous studies 
purported.
    I was personally surprised by the results of our study. In answer 
to the first two critical questions we posed at the beginning of our 
research, the study concluded that:

   USDA Export Market Development Programs have been highly 
        effective in boosting U.S. agricultural exports and export 
        revenues.

      The study found that over their history (1977-2014), USDA Export 
        Market Development Programs have added an annual average of 
        15.3% ($8.15 billion) to the value of U.S. agricultural 
        exports, 8.0% (11.5 million mt) to the volume of aggregate U.S. 
        agricultural exports, and about 6.7% ($25.07/mt) to the 
        aggregate price of U.S. agricultural exports.

   USDA Export Market Development Programs generated a high 
        benefit-to-cost ratio (BCRs) over history in line with what 
        previous studies have found.

      We calculated the undiscounted net export revenue BCR of the USDA 
        Export Market Development Programs (including both USDA 
        expenditures and cooperator contributions) to be 28.3. In other 
        words, over their history, the programs have generated a net 
        return of $28.30 in additional export revenue for every dollar 
        invested in export promotion

    In answer to the third critical question, the study concluded that 
the USDA Export Market Development Programs:

   Contribute substantially to the profitability of the U.S. 
        farm economy.

      The study concluded that the USDA export promotion programs 
        boosted annual average farm cash receipts by up to $8.7 billion 
        (2.8%), net farm income by up to $2.1 billion (3.7%), farm 
        asset value by up to $1.1 billion (0.1%), and employment in the 
        agrifood sector by up to 93,900 jobs (2.4%).

   Benefit the entire U.S. economy.

      The study also concluded that the positive impact of the USDA 
        Export Market Development Program on the agricultural sector 
        has generated multiplier effects across the entire economy like 
        the ripples you make in water after an initial splash. The 
        results show that on average over the 2002-2014 period, the 
        programs have added up to $39.3 billion in economic output, up 
        to $16.9 billion in GDP, and up to $9.8 billion in labor income 
        to the U.S. economy.

   Create jobs.

      Finally, the study also concluded that the USDA Export Market 
        Development Programs have added up to an annual average of 
        239,800 full and part-time jobs across the entire economy, 
        reducing unemployment by up to 3%.

    After concluding that study, my colleagues and I were asked to use 
the models and analytical procedures we developed to provide guidance 
on the impacts of alternative increased funding scenarios for USDA's 
Foreign Market Development Program (FMD) and Market Access Program 
(MAP) and industry export market promotion contributions on export 
revenues, the farm economy, and the overall macro economy. Two future 
funding scenarios were simulated with our models:

   Scenario 1: Government expenditures for MAP and FMD were 
        doubled over 5 years through annual increments of $46.9 million 
        to a total of $469 million (double the base year) with 
        cooperator contributions increasing approximately 10% in the 
        first year to $515.6 million and then remaining flat at that 
        level for the following 4 years.

   Scenario 2: Government expenditures for MAP and FMD were 
        again doubled over 5 years as in the first scenario but 
        cooperator contributions were increased by 50% over that period 
        through annual increases of $46.9 million for a total of $703.6 
        million by the end of the 5 year period.

    The analysis of these two future funding scenarios use the base 
starting point for MAP and FMD combined funding of $234.5 million and 
cooperator contributions of $468.7 million. The 50% increase in 
cooperator contributions in the second scenario is reasonable based on 
interviews that we conducted with MAP and FMD participants in the 
original study. All of those we interviewed indicated that they would 
expand their market promotion activities if funding for FMD and MAP 
programs was increased because of the effectiveness of their current 
activities. Some also responded that they would expand their market 
promotion offices overseas in that case.
    The analysis concluded that the additional investments under both 
scenarios would generate high benefit-cost ratios (BCRs) of $18.2 for 
every additional dollar invested in export market development under 
Scenario 1 and $16 for every additional dollar invested under Scenario 
2. In addition, as illustrated in Figure 2 and shown in Tables 1 and 2, 
the future funding analysis concluded that:

   Export gains would be substantial under both scenarios.

      The value of U.S. agricultural exports would increase by an 
        annual average of $3.4 billion and $4.5 billion under Scenarios 
        1 and 2, respectively (Figure 2). That would add up to an 
        export value gain of $17.1 billion and $22.5 billion, 
        respectively, under the two scenarios over the entire 5 year 
        period.

   Gains to the farm economy would be equally substantial under 
        both scenarios.

     Farm cash receipts would increase by an annual average 
            of up to $2.2 billion under Scenario 1 and up to $2.9 
            billion under Scenario 2. Over the entire 5 year period, 
            the farm cash receipt gain would be up to $11.1 billion 
            under Scenario 1 and $14.6 billion under Scenario 2.

     Net cash farm income would increase by an annual 
            average of up to $0.5 billion and $0.7 billion, 
            respectively under the two scenarios for a 5 year gain of 
            up to $2.7 billion and $3.5 billion under Scenarios 1 and 
            2, respectively.

     Farm asset values would increase by an annual average 
            of up to $0.29 billion and $0.4 billion and up to $1.5 
            billion (less) and $1.9 billion over the entire 5 year 
            period.

     Up to 24,200 new jobs would be added in the agrifood 
            sector under [S]cenario 1 and up to 31,900 new jobs under 
            Scenario 2.

   The overall U.S. economy would experience a substantial 
        multiplier effect from the farm economy boost under both 
        scenarios.

     U.S. output (sales) would increase by an average 
            annual of up to $10.6 billion and $14.0 billion under the 
            Scenarios 1 and 2, respectively and by a total of up to 
            $53.1 billion and $70.0 billion over the entire 5 year 
            period of analysis.

     U.S. GDP would be higher by up to $4.5 billion and 
            $6.0 billion each year on average under Scenarios 1 and 2 
            for a total of up to $22.7 billion and $30.0 billion, 
            respectively, over the entire 5 year period under the two 
            scenarios.

     U.S. labor income would be higher by up to $2.6 
            billion and $3.5 billion on average each year under 
            Scenarios 1 and 2 and by up to $13.1 billion and $17.5 
            billion over the entire 5 year period.

     U.S. employment would increase by up to 64,000 new 
            jobs under Scenario 1 and up to 84,600 new jobs under 
            Scenario 2.

    In conclusion, our critical analysis of the USDA Export Market 
Development Programs demonstrated clearly that the public-private 
partnership to promote U.S. agricultural exports under the FMD and MAP 
programs has been and continues to be a highly successful and cost-
effective means of strengthening the profitability and maintaining the 
viability of the U.S. farm economy. In addition, the USDA Export Market 
Development Programs are clearly pro-growth for the entire U.S. 
economy. The benefits of export promotion to the farm economy multiply 
through the economy adding importantly to our national output, GDP, 
labor income, and level of employment. An incremental increase of $46.5 
million annually over the next 5 years to these historically successful 
programs along with an expected 50% increase in contributions to the 
program by private-sector cooperators would return $16 dollars in 
additional export revenue for every dollar invested and generate up to 
an additional $3.5 billion in net cash farm income, $30 billion in 
additional U.S. GDP, and up to 84,600 new jobs. I would be hard-pressed 
to name any other U.S. farm program that has been as consistently 
effective over such a long period of time in working to support our 
farm economy while supporting the growth of the entire U.S. economy and 
at the same time generating a high return on the investment of farmer 
and taxpayer funds.
    Thank you, Mr. Chairman. I would be glad to try and answer any 
questions.
Figure 1: USDA Export Market Development Programs Funding,\1\ 1977-2014

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

          Source: FAS/USDA.
---------------------------------------------------------------------------
    \1\Includes government expenditures on market promotion through the 
FMD and MAP Programs and industry contributions. All data converted to 
a calendar year basis.
---------------------------------------------------------------------------
Figure 2: Simulated Annual Changes in U.S. Export Revenue Achieved 
        Under Agricultural Export Funding Scenarios 1 and 2
        
        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
        
          *10% increase in first year over baseline and then flat for 
        next 4 years.

 Table 1: General Economy Impacts of the Funding Scenario 1 Relative to the Baseline Funding Scenario, Years 1-5
----------------------------------------------------------------------------------------------------------------
                                                Less than Full Employment               Full Employment
        Variable           Flat Funding   ----------------------------------------------------------------------
                            Base Valuea         Change        Percent Change        Change        Percent Change
----------------------------------------------------------------------------------------------------------------
   Agriculture Sector     $U.S. billions    $U.S. billions           %          $U.S. billions          %
----------------------------------------------------------------------------------------------------------------
  Farm cash receipts              321.2               2.2               0.7               1.8              0.6
Net cash farm income               63.9               0.5               0.8               0.5              0.9
         Farm assets            2,161.4              0.29              0.01              0.19             0.01
                             1,000 jobs        1,000 jobs                          1,000 jobs
Employment in agrifood          3,900.4              24.2               0.6              17.2              0.4
              sectorb
----------------------------------------------------------------------------------------------------------------
 
      U.S. Economy        $U.S. billions    $U.S. billions           %          $U.S. billions          %
----------------------------------------------------------------------------------------------------------------
  U.S. Output (Gross           25,070.0              10.6              0.04               1.3            0.005
               Sales)
            U.S. GDP           14,522.5               4.5              0.03               0.8            0.006
               U.S. Labor Income9,017.0               2.6              0.03               0.3            0.004
                             1,000 jobs        1,000 jobs                         c1,000 jobs
     U.S. Employment            173,414              64.0              0.04                --               --
----------------------------------------------------------------------------------------------------------------
Note: -- = Not available as an output from this analysis.
aThe base value is for the year 2010. The ``base value'' is the average annual level of a variable in the
  absence of the promotion program. Some variables such as U.S. economic welfare and labor wage do not have a
  base value because the models only calculate the change in those variables and not a base value.
bThe base employment value is measured as actual 2010 jobs as reported in IMPLAN. In the full employment
  analysis, total U.S. employment is held fixed but labor is mobile across sectors of the economy.
cThe assumption of full employment by definition means that all labor is fully employed so that any change in
  the economy cannot impact the level of employment.


 Table 2: General Economy Impacts of the Increased Funding Scenario 2 Relative to the Baseline Funding Scenario,
                                                    Years 1-5
----------------------------------------------------------------------------------------------------------------
                                                Less than Full Employment               Full Employment
        Variable           Flat Funding   ----------------------------------------------------------------------
                            Base Valuea         Change        Percent Change        Change        Percent Change
----------------------------------------------------------------------------------------------------------------
   Agriculture Sector     $U.S. billions    $U.S. billions           %          $U.S. billions          %
----------------------------------------------------------------------------------------------------------------
  Farm cash receipts              321.2               2.9               0.9               2.3              0.7
Net cash farm income               63.9               0.7               1.1               0.7              1.1
         Farm assets            2,161.4               0.4              0.02               0.3             0.01
                             1,000 jobs        1,000 jobs                          1,000 jobs
Employment in agrifood          3,900.4              31.9               0.8              22.7              0.6
              sectorb
----------------------------------------------------------------------------------------------------------------
      U.S. Economy        $U.S. billions    $U.S. billions           %          $U.S. billions          %
----------------------------------------------------------------------------------------------------------------
  U.S. Output (Gross           25,070.0              14.0              0.06               1.7            0.007
               Sales)
            U.S. GDP           14,522.5               6.0              0.04               1.1            0.007
               U.S. Labor Income9,017.0               3.5              0.04               0.4            0.005
                             1,000 jobs        1,000 jobs                         c1,000 jobs
     U.S. Employment            173,414              84.6              0.05                --               --
----------------------------------------------------------------------------------------------------------------
Note: -- = Not available as an output from this analysis.
aThe base value is for the year 2010. The ``base value'' is the average annual level of a variable in the
  absence of the promotion program. Some variables such as U.S. economic welfare and labor wage do not have a
  base value because the models only calculate the change in those variables and not a base value.
bThe base employment value is measured as actual 2010 jobs as reported in IMPLAN. In the full employment
  analysis, total U.S. employment is held fixed but labor is mobile across sectors of the economy.
cThe assumption of full employment by definition means that all labor is fully employed so that any change in
  the economy cannot impact the level of employment.


    The Chairman. Thank you, Dr. Williams. That was impressive 
testimony, but even more impressive that you fit it in within 5 
minutes.
    Dr. Williams. I practiced it.
    The Chairman. Mr. Steinkamp.

    STATEMENT OF HON. JOSEPH E. STEINKAMP, MEMBER, BOARD OF 
  DIRECTORS, AMERICAN SOYBEAN ASSOCIATION, EVANSVILLE, IN; ON 
   BEHALF OF COALITION TO PROMOTE U.S. AGRICULTURAL EXPORTS, 
     AGRIBUSINESS COALITION FOR FOREIGN MARKET DEVELOPMENT

    Mr. Steinkamp. Good afternoon, Chairman Rouzer, Ranking 
Member Costa, and Members of the Subcommittee.
    I am Joe Steinkamp, a soybean farmer from Indiana, and 
member of the Board of Directors of the American Soybean 
Association. ASA is a trade association that represents U.S. 
soybean farmers on policy and international issues. I am 
testifying today on behalf of the Coalition to Promote U.S. 
Agricultural Exports and the Agribusiness Coalition for Foreign 
Market Development. These coalitions comprise over 75 
organizations representing farmers, ranchers, fishermen, forest 
product producers, cooperatives, small businesses, regional 
trade organizations, and State Departments of Agriculture.
    We commend you for holding this hearing to review the 
effectiveness of export promotion programs, and expanding 
exports for U.S. agricultural products.
    Agricultural export market development depends on 
longstanding, successful partnerships between not-for-profit 
U.S. agricultural trade organizations, farmer cooperatives, and 
not-for-profit state-regional trade groups, small businesses, 
and with the use of the Foreign Agricultural Service of the 
USDA. These partnerships share the cost of overseas marketing, 
promotional activity such as market research, trade shows, 
trade servicing, and retail and education programs.
    Under the Market Access Program and the Foreign Market 
Development Program, our private-sector groups contribute an 
estimated $469 million annually for international market 
development. These contributions, which are leveraged by FAS 
funding of $234.5 million, represent \2/3\ of the combined 
buying power of the two programs. My written statement provides 
numerous examples of how the export promotion efforts under MAP 
and FMD have contributed to the phenomenal growth of exports of 
soybeans and soy products. Last year we exported a record $28 
billion in soybeans, soybean oil, and soybean meal, 
representing an outstanding 62 percent of all soybean 
production.
    Similar success stories can be cited from how MAP and FMD 
have been cost-effective in helping U.S. exports of other 
agricultural commodities, including corn, wheat, rice, cotton, 
livestock, meat products, dairy, forest products, peanuts, 
seafood, and a host of horticultural products. Agricultural 
exports are one of the brightest lights in the U.S. economy, 
with a strong multiplier effect that is especially pronounced 
in rural communities. According to the USDA Economic Research 
Service, $150 billion in U.S. agricultural exports that 
occurred in 2014 produced $190 billion in economic activity, 
for a total of $340 billion of economic output. Those 
agricultural exports supported 1.1 million full-time U.S. 
civilian jobs, and importantly, 800,000 non-farm sector that 
were required to assemble and process, distribute the 
agricultural products for export. That represents 7,550 jobs 
for every $1 billion of agricultural export revenue.
    Despite the growth in U.S. agricultural exports, the 
effective level of Federal funding that reaches agricultural 
cooperators carrying out market development has steadily 
eroded. Since the 2002 Farm Bill, inflation and depreciation of 
the U.S. dollar have reduced the promotional part of MAP and 
FMD by almost 30 percent. USDA administrative expenses for 
Fiscal Year 2016 further reduced available MAP and FMD funds by 
$6.6 million. In addition, sequestration in Fiscal Year 2016 
reduced MAP funding by $13.6 million and FMD funding by $2.4 
million. The result is fewer dollars of actual programs, even 
while the benefits that these programs provide keep increasing.
    In order to bolster the U.S. international market 
development efforts, boost U.S. agricultural exports, and help 
U.S. agriculture and related businesses in rural America 
prosper, the Coalition to promote U.S. Agricultural Exports and 
the Agribusiness Coalition for Foreign Market Development 
strongly urge Congress to increase the funding of the Market 
Access Program to $400 million, and the Foreign Market 
Development Program to $69 million, with the increases phased-
in, in the next farm bill.
    Agricultural exports, for years, have been the strongest 
positive contributor to our nation's trade balance. I think 
that is worth repeating. Agricultural exports have been the 
strongest positive contributor to our nation's trade balance. 
Increasing exports is a significant tool to improve lives for 
American farmers and ranchers, while creating jobs and 
expanding the farm economy, and the larger economy as a whole, 
increasing revenues to the Treasury.
    Finally, the FMD and MAP programs have been critically 
important to that success. ASA, along with the MAP and FMD 
Coalitions, hope this hearing will strengthen our support in 
Congress to not only maintain, but to increase funding for 
agricultural export programs as well as support for the Foreign 
Agricultural Service of the USDA.
    Again, I would like to open myself up and say I would be 
glad to answer any questions the Committee may have.
    [The prepared statement of Mr. Steinkamp follows:]

    Prepared Statement of Hon. Joseph E. Steinkamp, Member, Board of
 Directors, American Soybean Association, Evansville, IN; on Behalf of
Coalition to Promote U.S. Agricultural Exports, Agribusiness Coalition 
                     for Foreign Market Development
Opening Remarks
    Good morning, Chairman Rouzer, Ranking Member Costa, and Members of 
the Subcommittee. My name is Joe Steinkamp, I am a soybean farmer from 
Evansville, Indiana. Since 2013 I have served as a Director for the 
American Soybean Association (ASA). Thank you for inviting me to 
testify before the Subcommittee today on the importance of export 
promotion programs including the Market Access Program (MAP) and the 
Foreign Market Development Program (FMD). My testimony today is on 
behalf of both the American Soybean Association as well as the 
Coalition to Promote U.S. Agricultural Exports (MAP coalition) and the 
Agribusiness Coalition for Foreign Market Development (FMD coalition).
    ASA is the national, not-for-profit organization that represents 
U.S. soybean farmers on policy and international issues. The MAP and 
FMD coalitions embody over 75 organizations representing farmers and 
ranchers, fishermen and forest product producers, cooperatives, small 
businesses, regional trade organizations and the state Departments of 
Agriculture. We appreciate the opportunity to appear before you today, 
and commend you for holding this hearing to review export promotion 
programs and their effectiveness in expanding exports of U.S. 
agricultural products.
Importance of MAP/FMD
    In order to bolster U.S. international market development efforts, 
further boost U.S. agricultural exports, and help U.S. agriculture and 
related businesses in rural America prosper, the Coalition to Promote 
U.S. Agricultural Exports and the Agribusiness Coalition for Foreign 
Market Development strongly believe that Market Access Program (MAP) 
funding should be increased to $400 million annually and Foreign Market 
Development (FMD) program funding to $69 million annually, with the 
increases phased in as part of the next farm bill.
    Agricultural exports are one of the brightest lights in the U.S. 
economy, with a strong multiplier effect that is especially pronounced 
in rural communities. According to USDA's Economic Research Service 
(ERS):

   The $150 billion in U.S. agricultural exports that occurred 
        in 2014 produced an additional $190 billion in economic 
        activity for a total of $340 billion of economic output;

   Those agricultural exports supported 1.1 million full time 
        U.S. civilian jobs, including 800,000 in the non-farm sector 
        (73 percent of the total employment effect) required to 
        assemble, process and distribute agricultural products for 
        export; [and]

   This represents 7,550 jobs for every $1 billion of 
        agricultural export revenue.

    Agricultural export market development depends on long-standing, 
successful partnerships between nonprofit U.S. agricultural trade 
associations, farmer cooperatives, nonprofit state-regional trade 
groups, small businesses, and USDA to share the costs of overseas 
marketing and promotional activities such as market research, trade 
shows, trade servicing, and retail and educational promotions.
    Under the MAP and the FMD program, administered by USDA's Foreign 
Agricultural Service (FAS), these private-sector groups contribute an 
estimated $468.7 million annually, primarily from farmer-funded check-
off programs, into international market development and promotion. In 
fact, these ``industry'' contributions, which are leveraged by public 
funds, represent more than 70 percent of the buying power of the 
programs.
    Nowhere is the importance of export promotion more evident than in 
the U.S. soybean industry. Soybeans and soybean products are our 
country's number one export commodity. Last year, we exported a 
whopping $28 billion in soybeans, soybean oil and soybean meal. This 
amount represents \1/5\ of all U.S. agricultural exports and over 62 
percent of U.S. soybean production.
    A 2016 study commissioned by the U.S. Soybean Export Council showed 
that international marketing activities conducted on behalf of U.S. 
soybean growers increased soybean exports each year by an average of 
993,600 metric tons (MT), or nearly five percent. For soybean meal and 
soybean oil, the average annual growth over that period was estimated 
to be somewhat larger at 15 percent (808,600 MT) and 24 percent 
(149,600 MT), respectively.
    This translates to $29.6 of additional export revenue per dollar 
spent on international promotion. At the producer level, that 
additional export revenue translates into a cost benefit ratio of $10.1 
in additional profit to grower per dollar spent on international 
promotion.
    This impressive export growth could not have been achieved without 
the unique government-industry partnership that characterizes the 
market development and export promotion programs administered by the 
Foreign Agricultural Service (FAS) and carried out by organizations 
representing U.S. farmers and ranchers. By any measure, the Foreign 
Market Development ``Cooperator'' Program and the Market Access Program 
have been tremendously successful and extremely cost-effective in 
helping expand U.S. exports of soybeans and other agricultural 
commodities such as corn, wheat, rice, cotton, livestock and meat 
products, dairy, forest products, peanuts, seafood, and a host of 
horticultural products. I have been asked by the Subcommittee to 
concentrate my testimony on the Foreign Market Development Cooperator 
Program and its role in expanding U.S. agricultural exports.
The Foreign Market Development (Cooperator) Program
    The Foreign Market Development (FMD) Program is a public-private 
partnership program dedicated to long-term market development of 
foreign markets for U.S. agricultural exports.
    Under the FMD program, U.S. Government funding is leveraged with 
contributions by U.S. farmers, ranchers, and agri-industry to carry out 
targeted market development activities. Activities implemented under 
the FMD program are most often focused on opening and maintaining 
foreign markets, while working on long-term changes to key constraints 
affecting a market to allow for increased U.S. exports. FMD allows U.S. 
market development organizations that represent U.S. farmers and 
ranchers (referred to as ``Cooperators'' due to the cooperative 
private-public partnership they have with FAS) to establish an on-
ground country or regional presence, identify new markets and address 
long-term foreign import constraints and export growth opportunities. 
The FMD Program provides cost-share assistance to allow market 
development cooperators to:

  1.  Conduct market research. This includes: investigating the volume 
            of in-country product to meet demand in a market; the 
            suitability/viability of in-country product; the 
            compatibility of U.S. product; variables to market success; 
            importance of exports from other competing countries; 
            history of product domestically/internationally; 
            competitiveness of U.S. product; infrastructure 
            capabilities to import U.S. products; and access to 
            importers/processors/retailers.

  2.  Carry out market analysis. This includes: determining the size of 
            a current market; potential size of the market in the 
            future if structural changes were made to allow for an 
            improved market environment; the opportunity for U.S. 
            exports and likely U.S. share; impediments to trade; 
            political situation, demographics, and economic stability 
            of the market; long-term viability of in-country demand; 
            and government accessibility and regulatory environment for 
            market access.

  3.  Implement long-term market development activities following up on 
            favorable market research and analysis. Implementation of 
            market development activities constitutes the bulk of 
            funding and activities under the FMD program. Market 
            development activities include: supporting the long-term 
            presence of people and office facilities in key markets to 
            develop sound and expanding trade relationships; providing 
            technical assistance to buyers and users of the product; 
            capacity building and education through seminars and one-
            on-one work that ensure market growth for participating 
            commodities and products; facilitating trade teams to U.S. 
            to see U.S. production standards and supply infrastructure; 
            facilitating U.S. farmer, rancher, and industry visits to 
            current and prospective markets to develop import networks 
            and product specifications to meet local market needs.

    Under the FMD program, private-sector Cooperators such as ASA, U.S. 
Wheat Associates, U.S. Grains Council, USA Rice Federation, Cotton 
Council International, National Peanut Council and others work with 
U.S. producers, exporters, and others in the industry to develop 
strategic marketing plans detailing market characteristics, constraints 
limiting U.S. exports, and proposed activities to overcome those 
constraints. These detailed marketing plans are submitted to FAS as a 
``Unified Export Strategy'' for the U.S. commodity in question. FAS 
reviews all submitted Unified Export Strategies and makes FMD funding 
allocations based on criteria included in FMD program regulations that 
include cost-share contributions by U.S. industry, capabilities and 
experience of the Cooperator in successfully developing markets and 
increasing U.S. exports, importance of the commodity in overall U.S. 
agricultural trade, and anticipated increases in U.S. exports resulting 
from the FMD funding.
Examples of How ASA Has Utilized FMD Program Cost-Share Funding To 
        Develop Foreign Markets for U.S. Soybeans and Products
    ASA became the first USDA-funded Cooperator under the FMD program 
in 1956, when we opened a foreign market development program in Tokyo, 
Japan. At that time, Japan was importing only small quantities of U.S. 
soybeans, and the Japanese had expressed concerns about the quality of 
U.S. soybeans. During our first year, ASA participated in a series of 
trade fairs and partnered with a coalition of Japanese business 
interests in conducting market development activities. Our in-country 
staff worked closely with Japanese industry leaders at all stages, from 
buyer to retailer, as well as with university and research technicians, 
and the technical and popular news media.
    Japan proved to be an ideal country to begin export promotion, 
becoming our largest foreign market in the 1970s, 1980s, and 1990s. 
Over the years ASA worked with feed millers and the Japanese swine, 
dairy, and poultry industries to educate and demonstrate the value of 
putting high-quality soybean meal made from U.S. soybeans in feed 
rations. ASA collaborated with Japanese soybean processors and 
importers to develop close and outstanding trade relations and to 
increase the quality and demand for soybean oil made from U.S. 
soybeans, both in the human utilization market as well as in the 
industrial and printing ink markets. Additionally, ASA partnered with 
the Japanese tofu, natto, and miso industries to demonstrate the 
quality of U.S. food grade soybeans and to link Japanese importers with 
U.S. exporters. Our office in Tokyo continues to service this critical 
market today, and Japan remains a top market for U.S. soybean products, 
surpassed only by China and Mexico. U.S. exports of soybeans to Japan 
today are valued at $1.3 billion.
    ASA went on to open other foreign offices and to conduct market 
development activities in other markets. From regional and country 
offices located in strategic areas, ASA International Marketing staff 
and consultants continue to implement market development activities 
with customers around the world that are increasing demand for U.S. 
soybeans and soy products today.
    But while Japan represents our first success story, China is 
perhaps our most impressive. ASA opened an office in Beijing in 1982. 
At that time China did not have a vertically-integrated animal feed 
industry, and livestock production lacked health and nutritional 
standards. China has the largest swine herd on the planet, but much of 
it was backyard-based and did not include soybean meal in diets. 
Similarly, while China produces more fresh water aquaculture fish than 
the rest of the world combined, 20 years ago none of the fish feed 
included soybean meal. Through a long-term and comprehensive program to 
demonstrate the value of soy-based feeds, ASA helped build demand for 
soybeans to the level China imports today. Since 1995, while feed use 
in China grew 140 percent, soybean meal used in animal feed rose an 
astronomical 839 percent. And we've seen the amount of soybean meal 
used in aquaculture feeds grow from zero just 20 years ago to 7 million 
metric tons this year. The value of U.S. soybean exports to China has 
grown 26 fold, from $414 million in 1996 to over $14 billion in 2016.
    Mexico is another example. With technical assistance and education 
and nutrition seminars sponsored by ASA International Marketing, Mexico 
has gained an appreciation of the benefits of soy for human 
consumption. Mexico's retailers now sell millions of liters of soy-
fruit beverages, among other products. And U.S. soy exports have grown 
over the years from virtually zero in the late 1970's to the current 
value of $2.5 billion in 2016.
    The FMD program provides cost-share assistance to ASA and our 
export arm, the U.S. Soybean Export Council, to implement activities 
that have set the stage for the growth of U.S. soybean exports. With 
the assistance of the FMD program, we have launched a large number of 
feeding and demonstration trials in key international markets. Through 
capacity-building activities such as training and on-farm consultations 
to promote improved swine and poultry practices, as well as education 
on the benefits of soy protein for human consumption, the FMD program 
has been extremely successful in helping us develop product 
specifications and the supply networks to build demand for our products 
and meet local market needs. More recently, we have engaged in market 
development activities to promote the use of soy for industrial 
products such soy ink, solvents, lubricants, and engine oils, to name 
just a few.
    These FMD funds have been leveraged with contributions by U.S. 
soybean farmers themselves through the soybean check-off, as well as 
with contributions by U.S. exporters. Today, the FMD funds ASA receives 
are leveraged with soybean farmer and industry funding on a 2-to-1 
basis--meaning that for every $1 invested in market development by the 
FMD program, U.S. soybean farmers and industry are investing $2 to more 
than match FMD funding.
Four Important Points about the FMD ``Cooperator'' Program
  1.  FMD is cost-effective. Funds are awarded on a competitive basis 
            via a comprehensive industry strategy evaluated by FAS 
            using a formula that takes into consideration export 
            potential, experience with managing export programs as well 
            as industry contributions. The process helps ensure that 
            U.S. taxpayer's money is being invested in the agricultural 
            sector and organization with the highest chance of success. 
            Every organization that participates in the FMD program 
            must contribute its industry's resources to the program. 
            Thus, U.S. Government expenditures actually leverage more 
            resources for foreign market development than American 
            agriculture would be able to accomplish with only private-
            sector funds.

  2.  The FMD program increases export of U.S. agricultural products. 
            I've highlighted just a few examples of how U.S. soybean 
            farmers have successfully utilized cost-share assistance 
            provided under the FMD program to develop long-term markets 
            and increase exports. Similar success stories can be told 
            by the U.S. corn, rice, wheat, cotton, livestock, forestry, 
            and horticultural product industries.

  3.  The FMD program helps U.S. agriculture overcome the effects of 
            foreign trade practices. U.S. agricultural exports often 
            face subsidized or otherwise unfair competition from 
            foreign products. U.S. agricultural organizations utilize 
            FMD resources to combat the multitude of challenges in the 
            international marketplace.

  4.  The FMD program helps keep U.S. agricultural exports strong, 
            which in turn supports 1.1 million American jobs. These 
            jobs were on the farm, ranch, in the forest and on the 
            water, as well as in banking, transportation, processing 
            and other related industries. Every state and local economy 
            in the U.S. has jobs that are dependent upon healthy 
            exports of U.S. agricultural products.
Need for Funding Increase
    A 2016 econometric study of export demand by Informa Economics IEG, 
working with Texas A&M University and Oregon State University 
economists, showed that between 2002 and 2014:

   a return on investment by MAP and FMD of a remarkable $24 in 
        export gains for every additional $1 spent on foreign market 
        development, consistent with results from several previous 
        studies;

   a dramatic average annual increase in farm income of $2.1 
        billion because of program activities; [and]

   creation of 239,000 new full and part-time jobs related to 
        the programs.

    Federal funding for MAP was last increased in the 2002 Farm Bill, 
reaching $200 million annually in 2006. Federal funding for the FMD 
program was last increased in the 2002 Farm Bill to $34.5 million 
annually. Since the last increases were approved, the size of the 
foreign agricultural market that those funds are meant to develop has 
more than tripled to more than $800 billion a year.
    Despite a tremendous growth in U.S. agricultural exports and 
opportunities for farmers and small businesses abroad, the real, 
effective Federal funding that reaches the agricultural cooperators 
carrying out market development work has steadily eroded even while 
international competitors continue to greatly outspend us.
    Looking just at the FY16 FAS allocation of MAP and FMD funding, the 
factors that have caused the erosion include:

   Sequestration in FY16 reduced annual available MAP funding 
        by $13.6 million and FMD funding by $2.4 million.

   USDA administrative expenses in FY16 reduced available MAP 
        and FMD program funds by $6.6 million.

   Since the 2002 Farm Bill was enacted, inflation and a 
        depreciated U.S. dollar have reduced the real, effective 
        promotional power of U.S. agricultural market development 
        programs by almost 30 percent.

    The result is fewer dollars for actual programs, even while demand 
for the benefits these programs provide increases.
    In FY17, just $173.5 of the $200 million MAP appropriation was 
allocated to the 68 nonprofit commodity organizations participating in 
the program. Just $26.6 million of the FMD appropriation was allocated 
to the 23 nonprofit commodity organizations participating in that 
program. Taking inflation into account, this means the $200.1 million 
total that FAS awarded for MAP and FMD in FY17 had an actual 
promotional power of only $140.1 million.
Other Important Considerations
   With growing global food demand, MAP and FMD participants 
        have the opportunity to service more customers who seek to buy 
        an increasing volume and variety of products. In fact, since 
        the 2002 Farm Bill, overall agricultural imports of the 
        overseas markets that U.S. exports are competing for rose by 
        more than 330 percent, from $247 billion in 2002 to $834 
        billion. This significant increase in market size, combined 
        with the diminished purchasing power of MAP and FMD funding 
        since 2002, means that our producers are not well equipped to 
        take on more aggressive foreign competition.

   New demands on MAP and FMD funding related to work on non-
        tariff trade barriers, while reflecting the collaborative work 
        that cooperators often do to supplement efforts of FAS and 
        other regulatory agencies, put greater strain on funding that 
        in the past went exclusively to market development and 
        promotion activities.

   A 2015 survey of the cooperators showed that they could 
        readily make effective use of a considerable increase in MAP 
        and FMD funding. In addition, more nonprofit producer groups 
        are establishing national organizations and are anxious to 
        apply for program funding. Greater demand will be placed on the 
        fixed program funds as more organizations become eligible to 
        apply for MAP and FMD.

   Competitors in foreign countries receive substantially more 
        public support than is provided to U.S. agricultural exporters. 
        A 2013 study showed that in 2011, competing government support 
        for agricultural exports from just 12 countries and the EU 
        Central Government (not including individual member states) was 
        $700 million per year. For comparison, the U.S. budgets 
        approximately $235 million annually in public funds through MAP 
        and FMD for agricultural export promotion and market 
        development. A 2016 study of competitive agricultural export 
        market development investments showed that the EU allocates 
        $255 million annually just to promote wine.
Conclusion
    The FMD and MAP programs are among the few tools that help American 
agriculture and American farmers remain competitive in the global 
marketplace. They are considered to be non-trade distorting or ``Green 
Box'' programs under World Trade Organization (WTO) rules.
    These cost-share market development and export promotion programs 
help keep U.S. agricultural exports strong, which in turn support over 
one million American jobs. These jobs are on U.S. farm and ranches, but 
also are in processing, transportation, financing, and other related 
industries. Every state and local economy in the U.S. has jobs that are 
dependent upon healthy exports of U.S. agricultural products.
    Agricultural exports have for years been the strongest positive 
contributor to our nation's balance of trade. Increasing exports is a 
significant tool to improve the lives of America's farmers and ranchers 
while creating jobs, improving our balance of trade, expanding the farm 
economy and larger U.S. economy, and increasing receipts to the 
Treasury. The FMD and MAP programs have been critically important to 
this success. ASA and the MAP and FMD Coalitions hope this hearing will 
strengthen the resolve of Congress to not only maintain but to increase 
the support for agricultural export promotion programs, as well as 
strong support for the Foreign Agricultural Service of USDA. I would be 
happy to answer any questions the Subcommittee may have.

    The Chairman. Thank you very much.
    Mr. Hamilton.

      STATEMENT OF TIM HAMILTON, EXECUTIVE DIRECTOR, FOOD
         EXPORT ASSOCIATION OF THE MIDWEST USA AND FOOD
               EXPORT USA--NORTHEAST, CHICAGO, IL

    Mr. Hamilton. Good afternoon, Mr. Chairman, and thank you, 
Members of the Subcommittee.
    I am Tim Hamilton. I am the Executive Director of Food 
Export--Midwest and Food Export--Northeast. These are two of 
the state regional trade groups that some of the prior 
witnesses have mentioned. We help small and medium-sized 
companies to export their products to foreign markets.
    Like our counterparts in the West and the South, we work 
with State Departments of Agriculture, using MAP funds to 
increase the number of food companies and agricultural 
companies that export, and to help those exporters increase 
their sales.
    We focus almost exclusively on helping small companies. 
Many of these firms are family-owned. They are located in both 
rural and urban locations. What they all have in common is that 
they are exporting U.S. agricultural products.
    Food and agricultural producers are challenged to find 
growth opportunities here at home. At the same time, emerging 
markets overseas offer huge growth potential. Even among the 
firms who want to export, they are uncertain how to proceed. 
Small firms are often reluctant, unsure of how do business in 
another country. With support from MAP, we provide education 
and training to help them target their best markets, and 
overcome whatever hurdles they face.
    Once export-ready, their first challenge is to find 
customers. We arrange meetings with qualified international 
buyers. We offer technical support at international trade 
shows, making sure companies are prepared with appropriate 
pricing, translations, market research, and competitor data. By 
preparing them ahead of time, we greatly improve their chances 
for success.
    During 2015, with support from the MAP, Food Export--
Midwest and Food Export--Northeast have assisted more than 
1,400 different firms. They collectively reported more than 
$1.5 billion in new export sales, and project nearly double 
that in additional sales over the next year. These companies 
reported 563 new hires over that period of time, and we 
estimate that their total overall export sales supported nearly 
12,000 jobs.
    The American Popcorn Company was founded in 1914 in Sioux 
City, Iowa, and is still a family-owned and operated company 
today. Many of their competitors have been acquired by large 
food conglomerates. The company counts their 170 employees as 
part of their extended family, some dating back to the 1930s. 
Their growers are based in Iowa, Nebraska, and South Dakota, so 
their economic impact extends across the region. A main factor 
of the company's success has been exporting. With the support 
from the Market Access Program, their Jolly Time brand popcorn 
is now sold in 35 countries around the world, and their export 
sales have grown from $2 million to $11 million, and comprise 
over ten percent of their total revenue. That growth has led to 
a ten percent increase in their number of employees, and helped 
to support the construction of a new production facility.
    In Philadelphia, the Bassetts Ice Cream Company is a fifth 
generation family business, dating back to 1861. In 2008, 
Bassetts was selling around $12,000 worth of ice cream in 
China. With help from MAP, Bassetts now generates nearly $2 
million per year annually in export sales that accounts for 25 
percent of their revenue. This export growth has led to hiring 
new staff and expansion of their production line. Purchases of 
milk and cream have grown by 25 percent, benefitting many 
Pennsylvania dairy farms. The first container of Bassetts Ice 
Cream just arrived in Korea this month, and they are having 
talks currently with buyers from the Middle East.
    In our work with international customers, we are constantly 
reminded of the extensive and increasing support that our 
competitor nations offer. A 2013 study showed that government 
support for agricultural exports from just 12 European 
countries and the EU Central Government was $700 million per 
year. For comparison, the U.S. spends $235 million on MAP and 
FMD. An additional study in 2016 showed that the EU allocates 
$255 million per year just to promote their wine exports.
    What we are doing is not enough. More than 95 percent of 
U.S. companies do not export. As our competitors ramp up their 
efforts, we need additional support. We are proposing that 
funding for MAP be increased to $400 million over the life of 
the next farm bill. I have a statement from the Coalition to 
Promote Exports that I would like to introduce for the record 
that supports that request.
    The rhetoric around trade has become complex and highly 
charged, but the simple fact is that export trade remains 
critically important to American agriculture. We need to market 
our farm products aggressively against broad foreign 
competition, and programs like MAP and the FMD are tools that 
we need to remain competitive.
    Mr. Chairman, and Members of the Subcommittee, I encourage 
you to support efforts, including MAP and FMD, that continue to 
boost America's food and ag exports, that support our farmers, 
our small businesses, and the Americans that produce these 
outstanding products.
    Thank you.
    [The prepared statement of Mr. Hamilton follows:]

  Prepared Statement of Tim Hamilton, Executive Director, Food Export
     Association of the Midwest USA and Food Export USA--Northeast,
                              Chicago, IL
    Good afternoon, Mr. Chairman. My name is Tim Hamilton, and I am 
Executive Director of Food Export--Midwest, and Food Export--Northeast. 
These are State Regional Trade Groups that offer services to help small 
and medium U.S. food and agricultural companies promote their products 
in foreign markets. We commend you, Mr. Chairman, and Members of the 
Committee, for holding this hearing and appreciate this opportunity to 
share our work.
    The organizations I represent are associations of the 22 midwestern 
and northeastern state departments of agriculture. Like our 
counterparts in the West and South, we work with our member states 
using MAP Funds to increase the number of food and agricultural 
companies that export, and to help current exporters increase the 
volume and value of their sales.
    We focus almost exclusively on helping small companies. Many of 
these firms are family owned. Most of them are food processors that use 
ag commodities as inputs which they turn into finished goods for 
export. They are located in both rural and urban locations. What they 
all have in common is that they are made from U.S. agricultural 
products.
    Food and agricultural producers are challenged to find growth 
opportunities here at home. At the same time, emerging markets overseas 
offer tremendous growth potential for these U.S. producers, if only 
companies know about these markets and how to take advantage of them.
    Even among firms who want to export, they are uncertain how to 
proceed. Small firms are often reluctant, unsure of how to do business 
in another language, another currency, another culture. With support 
from MAP, we provide education and training to help them target their 
best markets, and overcome whatever hurdles they face.
    Once export ready, their first challenge is to find customers: We 
arrange meetings with qualified international buyers. We offer 
technical support at international trade shows, making sure companies 
are prepared with appropriate pricing, translations, market research, 
competitor data, and introductions to the right foreign customers. By 
preparing them ahead of time, we significantly improve their chances 
for success.
    Like in the U.S., it is essential that exporters promote their 
products in these competitive markets. Our promotional support can help 
these firms get their products established and increase their market 
share. This support includes advertising, demonstrations, trade show 
costs, label modifications, and others. It is all made possible through 
MAP funding, and is done on a cost-share basis, with companies 
investing at least 50% of the costs.
    During 2015, with support from MAP, Food Export--Midwest and 
Northeast have assisted 1,406 different firms, most of them small 
businesses. They reported more than $1.5 billion in new export sales, 
and project nearly double that in additional sales over the next year. 
These companies reported 563 new jobs because of this program, and we 
estimate that their overall export sales support nearly 12,000 new or 
existing jobs.
American Popcorn, Sioux City, Iowa
    American Popcorn Company was founded in 1914 in Sioux Falls, IA and 
is still family owned and operated today. Many of their competitors 
have been acquired by large food conglomerates. The company counts 
their 170 employees and many multi-generational growers throughout the 
region as part of their extended family, some dating back to the 1930s. 
Their growers are based in Iowa, Nebraska and South Dakota so their 
economic impact extends across the region.
    A main factor of their success has been exporting. With support 
from the MAP, their Jolly Time brand popcorn is now sold in 35 
countries, and their export sales have grown from $2 million to $11 
million, and comprises over 10% of their total revenue.
    That growth had led to a 10% increase in their number of employees 
and helped support a new production facility. Their economic impact in 
western Iowa is significant, and they attribute their export success to 
support from the Market Access Program.
Bassetts Ice Cream, Philadelphia, PA
    Bassetts Ice Cream is a fifth-generation family business and a 
Philadelphia tradition since 1861. In 2008 Bassets was selling around 
$12,000 of their ice cream in China. With help from Food Export--
Northeast supported by MAP, Bassetts now generates $2 Million annually 
in export sales, accounting for 25% of their revenues.
    This export growth has led to hiring new staff and expansion of 
their production line. Purchases of milk and cream have grown by 25%, 
benefitting many Pennsylvania dairy farms. The first container of 
Bassetts ice cream just arrived in Korea this month and they have talks 
taking place with buyers in the UAE and other [Middle Eastern] 
countries.
    This is a prime example of the Market Access Program providing 
economic benefit for both rural and urban communities. As a small 
regional ice cream manufacturer, international sales would not be 
possible without the Market Access Program.
Schafer Fisheries, Thomson, Illinois
    Schafer Fisheries, Inc., located in Northwestern Illinois' 17th 
Congressional District, is a wholesale/retail distributor of fresh fish 
and frozen seafood. This family owned business, established in 1954, 
purchases and processes fresh fish caught by over 100 commercial 
fishermen within a 1,000 mile radius. They have broad U.S. distribution 
and now sell internationally. Schafer has used services offered through 
Food Export--Midwest and funded by MAP to grow their export sales from 
$85,000 to $2,000,000 over the past decade.
    Since they started exporting they have added six new employees and 
they are currently selling to 16 countries and considering expansion 
with a new plant. They attribute their export success to the Market 
Access Program.
U.S. Greens, Larned, KS
    U.S. Greens is a family-owned and operated manufacturing company 
that has been producing and processing greens since 1946 in Larned, KS 
in the state's 1st Congressional District. They provide premier 
nutritional powdered greens for commercial resale and production 
included alfalfa, barley grass and wheat grasses. Four years ago with 
support from the Market Access Program they began to explore 
international markets and in a short time they have gained over 
$200,000 in export sales. This growth contributed to their need for a 
new milling center Bonner Springs, KS.
    Many of the jobs that are supported by agricultural exports are 
intrinsically U.S. jobs. They cannot be outsourced overseas. They are 
tied to farm production in the U.S. The products are grown here, and 
they are processed here. If we are able to maintain our overseas 
markets, then these jobs will be held by Americans. If we lose these 
overseas markets, then we risk losing these jobs to our competitors in 
China, Europe and elsewhere.
    In our work with international customers, we are constantly 
reminded of the extensive and increasing support that our competitor 
nations offer. Our competitors receive substantially more public 
support than do U.S. farmers. A 2013 study showed that in 2011, 
competing government support for agricultural exports from just 12 
European countries and the EU Central Government was $700 million per 
year. For comparison, the U.S. budgets approximately $235 million 
annually in public funds through MAP and FMD for agricultural export 
development. A 2016 study of our competitors showed that the EU 
allocates $255 million annually just to promote wine.
    But what we are doing is not enough. More than 95% of U.S. 
companies do not export. As our competitors ramp up their efforts, we 
need additional support. U.S. food and agricultural products are 
recognized around the world for being safe, high quality and 
innovative. This is a real opportunity for our country.
    Every day, we see small U.S. companies successfully entering that 
global marketplace that they were previously unaware of, or fearful of. 
And we hear from them day after day, that most of them could not have 
done it without the support made possible from the MAP program.
    The rhetoric around trade has become complex and highly charged. 
But the simple fact is that Export trade remains critically important 
to American agriculture. We need to market our farm products 
aggressively against broad foreign competition, and export programs 
like the MAP are the tools that agriculture needs to remain 
competitive. Additional MAP resources can help us reach more firms, 
increase jobs in the U.S., become competitive overseas and maintain our 
market share.
    U.S. agriculture must be aggressive in competing overseas in order 
to maintain our industry at home. Our nation's exports of food and 
agricultural products can continue to be a major success story. This is 
not the time to cut back on these efforts. It is a chance to take 
advantage of these global opportunities, and provide the support and 
incentive that companies, including small companies, need to pursue 
these markets, build sales, and put Americans to work.
    Mr. Chairman and Members of the Committee, I encourage you to 
support efforts that continue to boost America's food and agricultural 
exports, including MAP, that support our farmers, our small businesses, 
and the Americans that produce these outstanding products. Thank you.

    The Chairman. Thank you.
    Mr. Seng.

         STATEMENT OF PHILIP SENG, PRESIDENT AND CHIEF
        EXECUTIVE OFFICER, U.S. MEAT EXPORT FEDERATION,
                           DENVER, CO

    Mr. Seng. Yes. Good afternoon. My name is Philip Seng, 
President and CEO at the U.S. Meat Export Federation (USMEF). I 
am here today to speak on behalf of the interests of the U.S. 
red meat industry.
    I would like to talk about the fact that the Market Access 
Program and the Foreign Market Development Program have worked 
very well for the U.S. Meat Export Federation to develop new 
markets, displace our worldwide competition, and defend 
American meat products' market share from aggressive 
competition throughout the world.
    The Market Access Program and its predecessor, the Target 
Export Assistance Program and the Market Promotion Program, 
have been extremely strategic and successful export tools for 
the U.S. meat industry over the last 30 years. During this 
time, the U.S. has made great advancements in market access, 
but while market access played a part in our export growth, 
market access alone does not guarantee exports. Many times we 
have seen markets open, only to be confronted by consumers who 
are skeptical about our products, or simply unaware of the 
product's safety and quality. We must dignify trade access with 
sound marketing programs, and Market Access Program's funds 
have allowed us to address these challenges. Together, access 
and marketing are a proven recipe for success in the 
international marketplace.
    Starting in Japan in the late 1980s, we have deployed 
Market Access Program funds to demonstrate the profitability 
and the quality of U.S. beef, pork, and lamb in supermarket 
shelves and restaurants throughout Japan. But, today's growing 
trade challenges are raising important new questions about how 
we maintain our export momentum, and continue to derive the 
benefits from growing exports that have accrued to farmers, 
ranchers, and allied industries.
    To provide the Committee with tangible examples of market 
development work, the U.S. Meat Export Federation has carried 
out using Market Access Program funds, I would like to quickly 
review some of these success stories. The Market Access Program 
was very significant to us as far as opening up the Japanese 
market back in 1987. That is when we first received our first 
tranche of funding. And at that time, the U.S. was a net 
importer both of beef and pork, and within 10 years we had 
basically successfully transitioned to become a net exporter of 
both beef and pork in that market.
    As the U.S. red meat industry's first American 
representative stationed overseas, I was tasked with initiating 
the commercial links between beef and pork producers and 
processors in the United States and potential Japanese buyers. 
Utilizing the Market Access Program funds, we were able to 
build these sales channels and basically dignify the 
negotiations with sound marketing programs in Japan. These 
tactics included meat cutting seminars, sometimes offering 
samples to consumers, conducting cooking classes, not really 
rocket science, but these were collectively successful in 
generating visibility for American beef and pork in that 
market. And from 1995 through 2000, approximately $32 million 
in market promotion funding was basically utilized to build 
demand for U.S. beef and pork in Japan.
    Another example of where this has been very successful is 
in South Korea. You only have to go back about 8 years to 
recognize when we were doing the KORUS negotiations for the 
free trade agreement with Korea, we had 100,000 people for 100 
days in the streets in Seoul, and the chart in my testimony 
will show that we had consumer confidence in our product that 
was less than three percent. Today it is well over 50 percent. 
And just this last year, we exceeded our good friends from 
Australia in that market as the number one supplier, as we did 
last year, as well as Japan. Really, when we take a look at 
these programs, they have been very significant for us in what 
we are trying to do.
    On a daily basis, they assess the opportunities and threats 
in the marketplace. I mean when we take a look at what we are 
trying to do in defending our market, we have to defend our 
methodology of production agriculture. Our presence in the 
markets, our offices in the markets, the people on the ground, 
the boots-on-the-ground, if you will, have been very effective 
as far as demonstrating our commitment from the U.S. meat 
industry as being a reliable supplier in the international 
marketplace.
    While the benefits of the Market Access Program and Foreign 
Market Development Program are viewed in our industry as being 
well-established, the path forward is opaque and somewhat 
ominous. Challenges have never been so plentiful, ranging from 
growing protectionism and anti-trade sentiment, to animal 
disease threats and new export competition. The U.S. industry 
has to be ever vigilant as we address these, and the only way 
we can address these issues and these challenges is through the 
Market Access Program and the FMD program.
    The other thing that we are trying to do constantly, and 
this has been 50 years, 60 years of U.S. efforts in the 
international marketplace, is to underscore our reliability as 
a U.S. supplier, that countries that are not food self-
sufficient can be food-secure through imports and depending on 
U.S. agriculture. This is something that we have to continue to 
extol because right now, some of our markets that we are 
dealing in, I was just in Mexico last week, that is being 
called into question. The fact that the United States is a 
dependable supplier of product is one of the key cornerstones 
of our trade policy.
    Also, I would be remiss if I didn't indicate the 
appreciation that I have for the Foreign Agricultural Service 
of the United States. They play a critical role around the 
world, and our communication with the cooperator program and 
with the Foreign Agricultural Service has been really a recipe 
for success for us.
    So I say make America great, like U.S. agriculture. If you 
take a look at U.S. agriculture, we have 30 years of trade 
surpluses. One farmer feeds 155 people in the world, and we are 
made up of small holders as well as large holders, it is the 
best diplomatic tool that we have. And I really support 
increases to the MAP program as well as to the FMD program, as 
my colleagues have indicated.
    Thank you.
    [The prepared statement of Mr. Seng follows:]

   Prepared Statement of Philip Seng, President and Chief Executive 
            Officer, U.S. Meat Export Federation, Denver, CO
    Good afternoon. My name is Philip Seng, President and CEO at the 
U.S. Meat Export Federation (USMEF). I am here today to speak on behalf 
of the interests of the U.S. red meat industry and to explain how we 
utilize funding from the USDA Market Access Program and the Foreign 
Market Development Program to develop new markets, displace our 
formidable, worldwide competition, and defend American meat products' 
market share from aggressive competitors.
    For our industry, the Market Access Program and its predecessors, 
the Targeted Export Assistance Program and the Market Promotion 
Program, have been extremely strategic and successful export tools over 
the last 30 years. During this time, the U.S. has entered a number of 
free trade agreements and made great advancements in market access. But 
while market access played a part in our export growth, market access 
alone does not guarantee exports. How many times have we been elated 
about newly opened markets, only to be confronted by consumers who are 
skeptical or simply unaware of our products' safety and quality? We 
must dignify trade access with sound marketing programs, and Market 
Access Program funds have allowed us to address these challenges. 
Together, access and marketing are a proven recipe for success.
    In market after market, starting in Japan in the late 1980s, we 
have deployed Market Access Program funds to demonstrate the 
profitability of featuring U.S. beef, pork and lamb on supermarket 
shelves and restaurant menus, while simultaneously building consumer 
demand and sales. But we are not alone in these efforts, and the 
international marketplace is increasingly crowded with competitors. 
Ironically, many are mimicking our strategies and tactics initiated 
under the Market Access Program. But the growing trade challenges are 
raising important new questions about how we maintain our export 
momentum and continue to derive the benefits from growing exports that 
have accrued to farmers, ranchers and the allied industries associated 
with producing and exporting red meat.
    To provide the Committee with tangible examples of market 
development work the U.S. Meat Export Federation has carried out using 
Market Access Program funds, I would like to quickly review some 
success stories before discussing my vision for the future. When Market 
Access Program funding first became available in 1987, the export side 
of our industry was in start-up mode. Exports were largely an 
afterthought, and there was little understanding in the industry of the 
meat consumption habits of any foreign market or of the growth 
potential of these markets. The U.S. was a net importer of both beef 
and pork, with pork imports nearly double our export volumes. But just 
8 years later, the U.S. had successfully transitioned to a net exporter 
of both pork and beef.
    As the U.S. red meat industry's first American representative 
stationed overseas, I was tasked with initiating commercial links 
between beef and pork producers and processors in the U.S. and 
potential Japanese buyers. Utilizing Market Access Program funds, the 
U.S. industry began to build sales channels. First, these were with 
importers, distributors, processors and food service representatives, 
then we began working with supermarket chains, such as Aeon, and 
restaurants, such as Ito Yokado. The tactics, which included meat-
cutting seminars, offering meat samples to consumers and conducting 
cooking classes, were straightforward--not rocket science--but they 
were collectively successful in generating visibility and sales of 
American beef and pork. Like the launch of any new brand, resource 
needs were substantial, and individual companies--especially the 
smaller ones that were a major part of the early marketing efforts--
were justifiably reticent to invest in what was then a risky 
undertaking. From 1995 through 2000, approximately $32.5 million in 
Market Promotion Program and Market Access Program funding was utilized 
to build demand for U.S. beef and pork in Japan. During this period, 
U.S. beef and pork exports increased by approximately $1 billion, a 30-
to-1 return.
    Another success story is the rebuilding of consumer confidence in 
U.S. beef in South Korea, which last year became a $1 billion market 
for U.S. beef exports for the very first time. At the beginning of this 
decade, only five percent of Korean consumers were confident in the 
safety of U.S. beef. Although a free trade agreement between the U.S. 
and Korea was about to be finalized, how could we possibly capitalize 
without addressing this situation? Market Access Program funding played 
a critical role in restoring faith in the safety of our product, and 
exports grew accordingly--as evidenced by this graphic:
Consumer Confidence on U.S. Beef Safety and Korea's Imports of U.S. 
        Beef
        
        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
        
          Source: USMEF-Gallup and GTA import data. www.USMEF.org.

    The basic market development template that was developed and 
utilized in Japan has been successfully utilized in other markets, 
including Korea (as noted above), Mexico, Taiwan, Hong Kong, the 
European Union and the Middle East. In addition to supporting our 
marketing work, Market Access Program and Foreign Market Development 
Program funding has also allowed us to maintain a network of foreign 
offices staffed by technical and marketing experts who serve as boots-
on-the-ground representatives of the U.S. red meat industry. On a daily 
basis, they assess the opportunities and threats in the marketplace, 
while building relationships that are vital to our ability to provide 
accurate and timely intelligence on developments in the markets. The 
U.S. Meat Export Federation's presence in the markets also has proven 
to be an extremely effective means of demonstrating the U.S. red meat 
industry's long-term commitment as a reliable supplier of beef, pork 
and lamb.
    It is important to also highlight the role the Market Access 
Program has played in jump-starting the interest and resource 
participation by our industry in the effort to expand exports. As 
success stories started to impact the bottom line of our industry--from 
ranchers to exporters and all the allied industries in between--
stakeholders began to invest. We estimate that for every dollar the 
Market Access Program invested with the U.S. Meat Export Federation, we 
are now able to generate at least $3 to $4 more from U.S. industry 
contributions and from in-market partners and customers.
    While the benefits of the Market Access Program and the Foreign 
Market Development Program are viewed in our industry as being well 
established, the path forward is opaque and some argue, ominous. 
Challenges have never been so plentiful, ranging from growing 
protectionism and anti-trade sentiment, to animal disease threats and 
the rise of new export competitors. On the latter, the U.S. industry, 
which spent the past few decades developing and displacing our 
competition, now has to devote more resources to defending our market 
position. A tremendous amount of effort has been expended by the U.S. 
Government and Market Access Program participants to build 
international confidence in our ability to be a reliable exporter of 
U.S. agriculture products, but fresh doubts are arising about our 
commitment to free and unencumbered trade.
    This comes at an inauspicious time, because in many ways, 
opportunities have never been greater. From a supply perspective, 
exports have room to grow. For U.S. beef and pork, we export just 15 
percent and 26 percent, respectively, of our annual production. On the 
demand side, new import markets are emerging that hold great potential. 
A generation ago, China was a major meat exporter, but now it has 
become the world's largest importer of both beef and pork. However, 
developing a loyal customer and consumer base for U.S. red meat in 
China will still be extremely complex and command substantial 
resources. Starting at the border, import conditions are strict; for 
example, U.S. beef is still banned from importation. Distribution 
infrastructure is still developing, and the sheer size of the potential 
consumer base is daunting. With major regional differences in eating 
habits and cuisines, marketing approaches need to be tailored to each 
particular geographical area. Most importantly, our major competitors 
in Europe, South America and Oceania are all spending heavily to build 
their own presence in the market. In some cases, they are being aided 
by favorable import conditions and low duty rates gained through free 
trade agreements. If one considers China a frontier marketplace, the 
U.S. is one of many homesteaders.
    Other emerging markets beckon, such as Indonesia, where huge 
opportunities exist for increased beef consumption. Potential also 
exists in markets that were traditionally viewed only as competitors. 
There is unfilled demand in Brazil that can be met by U.S. beef exports 
now that that market is open, and our comparative advantage in pork 
production allows us to export to countries like Australia, Guatemala 
and--possibly in the future--to African markets. And despite claims 
that markets like Japan are developed, they continue to evolve and hold 
great growth potential. For example, U.S. pork captures only a 20 
percent share of Japan's total consumption, and purchases by Japanese 
consumers of U.S. fresh chilled product reached record levels last 
year.
    Holding our own in traditional markets while also exploring new 
ones requires an increase of resources. But perhaps even more 
importantly, the Market Access Program and the Foreign Market 
Development Program funding signal the commitment of the U.S. red meat 
industry--and U.S. agriculture overall--to being a consistent and 
reliable global supplier of high-quality, safe and affordable 
foodstuffs. This Committee understands that U.S. agriculture and the 
U.S. red meat export industry have worked diligently to demonstrate to 
countries that are not 100 percent self-sufficient in food production 
that they can still be 100 percent ``food-secure'' with dependable 
import sources, especially the United States. We take very seriously 
our responsibility, not only to the hundreds of thousands of farmers 
and ranchers who are now producing ever-larger quantities of products 
for foreign customers, but also to those foreign customers themselves, 
who benefit and rely on our ability to supply them.
    Thank you for the opportunity to provide a red meat industry 
perspective on exports and to discuss the critical importance of the 
Market Access Program and the Foreign Market Development Program to our 
success in international markets.

    The Chairman. Thank you.
    Mr. Alanko.

     STATEMENT OF DEAN ALANKO, VICE PRESIDENT OF SALES AND 
              MARKETING, ALLEGHENY WOOD PRODUCTS,
        PETERSBURG, WV; ON BEHALF OF HARDWOOD FEDERATION

    Mr. Alanko. Yes, good afternoon. Thank you, Chairman 
Rouzer, Ranking Member Costa, and Members of the Subcommittee 
for inviting me to testify before you today.
    My name is Dean Alanko and I am the Vice President of Sales 
and Marketing for Allegheny Wood Products, headquartered in 
Petersburg, West Virginia.
    Allegheny Wood Products was formed in 1973, and continues 
to be a family-owned and operated company, directly employing 
over 900 people at nine sawmills, five drying facilities, one 
hardwood pellet mill, and a dimension plant. There are also 
hundreds of additional jobs created in support industries for 
our manufacturing operations, such as loggers and truckers, to 
name a few. We sell products worldwide, with export sales in 
excess of $63 million in 2016. We have shipped products to over 
28 countries.
    My focus today is on the hardwood lumber and veneer 
industries, and while not an edible, agricultural product, it 
is an important agricultural product to rural America just the 
same. The U.S. hardwood lumber industry produced more than 8.3 
billion board-feet in 2016. For some perspective, 8.3 billion 
board-feet is equivalent to about one million truckloads of 
hardwood lumber.
    The U.S. hardwood industry is not made up of large Fortune 
500 companies. It is very much a rural-based industry made up 
mostly of small and medium-sized family-owned operations. A 
great example of this highly fragmented industry is my own 
company. While we are one of the three largest manufacturers 
volume-wise of hardwood lumber, we represent less than two 
percent of total production.
    In addition to sawmillers such as myself, this industry 
also represents millions of private, non-industrial forest 
owners. Strong markets for hardwood lumber products help 
maintain strong ties between the hardwood industry and these 
private forest owners. The revenue stream resulting from 
harvesting of mature trees creates the economic incentive to 
maintain forestland as forestland.
    Many hardwood companies are heavily reliant on exports for 
their livelihood. Approximately 40 percent of all hardwood 
lumber production, and nearly 60 percent of the highest value-
added grades of hardwood are now exported, totaling $2.4 
billion in 2016. Exports of hardwood veneer totaled $280 
million in 2016, which is more than 55 percent of domestic 
production. The U.S. also enjoys a healthy trade surplus of 
$1.3 billion in hardwood lumber, up from $1.1 billion in 2015.
    It is vital that the markets remain open and continue to 
expand for these businesses and the men and women they employ. 
This is where the work of the American Hardwood Export Council, 
or AHEC, jointly funded by the Market Access Program, Foreign 
Market Development Program, and industry dues, play such an 
important role. AHEC has laid out a four-part strategy designed 
to grow overseas markets. Adequate funding from the MAP and FMD 
programs is essential to our success. With continued and 
hopefully increased funding, AHEC will do the following to 
promote U.S. hardwoods overseas. First, seek out new markets 
for hardwood products. In areas of the world where there is 
limited understanding of U.S. hardwoods, most notably inland 
China, India, and the Middle East, AHEC will continue to 
increase demand by providing technical information, trade 
servicing, and technical seminars to the importing and 
manufacturing industries overseas. Second, promote new uses and 
applications for hardwood within existing markets. In 2017, 
AHEC will continue to be actively involved in identifying and 
growing potential new market segments, such as hardwood use and 
structural applications found in high-rise building 
construction. Third, continue to extol the environmental 
credentials of U.S. hardwoods. With the introduction of illegal 
logging and trade policies across the globe, and the 
development of policies to reduce CO2 emissions, 
especially in the building sector, the need to promote the 
strong environmental benefits of U.S. hardwoods is more 
important than ever. Fourth, create networking opportunities 
for U.S. exporters. In 2017, AHEC will create a number of 
opportunities for U.S. exporters to engage with overseas 
buyers, manufacturers, and specifiers in more than 20 building, 
furniture, and design trade shows around the globe.
    Let me say again how critical exports and export markets 
are to my company, to rural communities, and to the hardwood 
industry as a whole. This industry benefits significantly from 
the MAP and FMD programs every day. It is vital MAP and FMD 
continue to be available, and that funding increase to meet the 
expanding needs of this industry. I can say without hesitation 
that without these programs, our businesses would be smaller, 
produce fewer goods, and employ less people.
    Thank you for allowing me to address the Committee. I am 
happy to respond to questions either today or in writing.
    [The prepared statement of Mr. Alanko follows:]

     Prepared Statement of Dean Alanko, Vice President of Sales and
   Marketing, Allegheny Wood Products, Petersburg, WV; on Behalf of 
                          Hardwood Federation
    Good afternoon. Thank you Chairman Rouzer, Ranking Member Costa, 
and Members of the Subcommittee for inviting me to testify before you 
today. My name is Dean Alanko and I am the Vice President of Sales & 
Marketing of Allegheny Wood Products Headquartered in Petersburg, WV. 
Allegheny Wood Products was founded in 1973 by John and Patricia Crites 
and continues to be a family owned and operated company, directly 
employing over 900 people at nine sawmills, five drying facilities one 
hardwood pellet mill, and a dimension plant. There are additional jobs 
created in support industries for our manufacturing operations . . . 
loggers, truckers, and construction workers to name a few. We sell 
products worldwide, with export sales in excess of $63 million in 2016. 
We have shipped products to over 28 countries.
    The U.S. wood products industry, including hardwood, softwood and 
paper products is an important contributor to the U.S. economy, 
accounting for approximately four percent of the total U.S. 
manufacturing GDP. Wood products companies are among the top ten 
manufacturing sector employers in 47 states, producing $210 billion in 
products annually. The industry as a whole employs nearly 900,000 
people; more than the automotive, chemicals and plastics industries. 
And most of them are in rural areas where employment opportunities can 
be limited.
    My focus today is on the hardwood lumber and veneer industries. The 
U.S. hardwood lumber industry produced more than 8.3 billion board-feet 
in 2016, a solid number for this industry, but still well below our 
1999 peak of 12.6 billion. For some perspective, that is approximately 
one million truckloads of hardwood lumber.
    The U.S. hardwood industry is not made up of big Fortune 500 
companies. It is very much a rural based industry made up of small and 
medium sized family-owned operations, on both the resources and 
manufacturing sides of the business. A great example of this highly 
fragmented industry is my own company . . . while we are one of the top 
three volume producers of U.S. hardwoods, we represent Less Than 2% of 
the total market.
    In addition to the saw-millers such as myself, this industry also 
represents millions of private, non-industrial forest owners. Strong 
markets for hardwood lumber products help maintain strong ties between 
the hardwood industry and these private forest owners. The revenue 
stream resulting from limited, selective harvesting of mature trees 
creates the economic incentive to maintain forestland as forestland.
    Many hardwood companies are heavily reliant on exports for their 
livelihood. Approximately 40% of all hardwood lumber production and 
nearly 60% of the highest value-added grades of hardwood are now 
exported, totaling $2.4 billion in 2016. Exports of hardwood veneer 
totaled $280 million in 2016, which is more than 55% of domestic 
production. The U.S. also enjoys a healthy trade surplus of $1.3 
billion in hardwood lumber, up from $1.1 billion in 2015.
    With the migration of the U.S. domestic furniture and wood products 
manufacturing industries, and less than robust new housing demand, 
international promotion has never been more important to the U.S. 
hardwood industry. The U.S. is by far the world's largest exporter of 
hardwoods, accounting for nearly \1/4\ of all global trade. U.S. 
hardwood exports have more than doubled in the past 5 years.
    For the U.S. hardwood industry, ``globalization'' is much more than 
just an abstract concept; it is a concrete reality that influences 
business decisions on a daily basis. However, globalization has meant 
not only the migration of manufacturing, but has also led to 
unprecedented growth in global purchasing power. Indeed, it has now 
become clear that much of the increased demand for hardwood products--
including finished products--is coming from outside the U.S., 
especially in the rapidly growing economies of Asia. In terms of 
promotion, therefore, it is very important that our industry recognize 
and target not only the high-volume re-export manufacturing sectors of 
today and tomorrow, but we must also identify new market opportunities 
and niches within well-established, so-called ``mature'' markets such 
as the EU. With the help of MAP and FMD, the American Hardwood Export 
Council (AHEC) programs are designed to do both, by providing a wide 
array of information to overseas importers, distributors, specifiers 
and end users of wood products.
    It is vital that markets remain open for these businesses and the 
men and women they employ. This is where the work of the American 
Hardwood Export Council, or AHEC, jointly funded by the Market Access 
Program (MAP), Foreign Market Development (FMD) program and industry 
dues plays such an important role.
    AHEC has laid out a four-part strategy designed to ``grow the pie'' 
in overseas markets for U.S. hardwood exporters. Adequate funding from 
the MAP and FMD programs is essential to our success. With continued 
and hopefully increased funding, AHEC will do the following to promote 
U.S. hardwood products to the world:

  (1)  Seek out new markets for hardwood products:

        In areas of the world where there is limited understanding of 
            U.S. hardwoods, most notably inland China, India and the 
            Middle East, AHEC will continue to increase demand by 
            providing technical information, trade servicing and 
            technical seminars to the importing and manufacturing 
            industries overseas. In more mature markets, the focus will 
            be on demonstration projects, design/architectural 
            seminars, and a targeted PR campaign.

  (2)  Promote new uses and applications for hardwood within existing 
            markets:

        In 2017 AHEC will continue to be actively involved in 
            identifying and growing potential new market segments, such 
            as hardwood use in structural applications found in high 
            rise building construction--most notably Cross-Laminated 
            Timber (CLT) engineering, or the potential for thermally-
            modified or treated hardwoods to gain a foothold in the 
            exterior applications market.

  (3)  Continue to exto[l] environmental credentials:

        With the introduction of illegal logging and trade policies 
            across the globe and the development of policies to reduce 
            CO2 emissions, especially in the building 
            sector, the need to promote the strong environmental 
            benefits of American hardwoods is more important than ever. 
            2017 marked the official launch of the American Hardwood 
            Environmental Profile (AHEP), an environmental profiling 
            tool that will combine legality information, sustainability 
            data from the U.S. Forest Service and LCA impacts from MAP-
            funded research.

  (4)  Create Networking Opportunities for U.S. Exporters:

        In 2017 AHEC will create a number of opportunities for U.S. 
            exporters to engage with overseas buyers, manufacturers and 
            specifiers in more than 20 building, furniture and design 
            trade shows around the globe. USDA funds help to offset the 
            booth costs but each U.S. company is responsible for their 
            own travel expenses creating direct industry contributions 
            to the programs. AHEC will also sponsor Conventions in 
            China and Mexico and host dozens of seminars and strategic 
            networking opportunities tied to major target market 
            industry events.

    Let me reiterate, how critical exports and export markets are to my 
company, to rural communities and to the hardwood industry as a whole. 
Companies like Allegheny Wood Products benefit significantly from the 
MAP and FMD program every day. I can say without hesitation that 
without these programs our business would be smaller, produce fewer 
goods and employ less people.
    One important concrete example of where MAP funding has proven 
absolutely critical to my company as well as the rest of our industry 
was the U.S. Illegal Logging Risk Assessment study commissioned by 
AHEC. Recent legislation to combat illegal logging in the EU, Japan and 
Australia require wood suppliers to show that that their raw material 
was legally sourced--a difficult task for a fragmented industry that 
purchases logs from millions of private landowners. The peer-reviewed 
study showed that on a national level the risk of U.S. hardwood being 
illegally harvested was negligible. This has provided reassurance to 
foreign governments and has kept open many of the world's highest-value 
markets to U.S. exporters. As a private company, it would have been 
next to impossible to produce such credible reassurance.
    Thank you for allowing me to address the Subcommittee. I am happy 
to respond to questions either today or in writing.

    The Chairman. Mr. Wenger.

 STATEMENT OF PAUL J. WENGER, ALMOND PRODUCER, WOOD COLONY NUT 
CO.; PRESIDENT, CALIFORNIA FARM BUREAU FEDERATION, SACRAMENTO, 
                               CA

    Mr. Wenger. Good afternoon. Thank you, Mr. Chairman, 
Ranking Member Costa, and Members of the Committee. I really 
appreciate the opportunity to testify on the trade title for 
the farm bill.
    I am Paul Wenger, President of the California Farm Bureau, 
third generation, and I will tell you now that I am bilingual 
and I will use the term amond and almond interchangeably. And I 
am a member of the Blue Diamond Growers.
    As the largest agricultural organization in California, the 
California Farm Bureau is a statewide, nonprofit, membership 
organization representing 53 counties that include over 28,000 
producers of more than 400 commodities. For nearly a century, 
Farm Bureau has worked to preserve, protect, and promote family 
farms and ranches.
    Like the California Farm Bureau, Blue Diamond Growers has a 
more than 100 year history of serving California almond 
farmers. Blue Diamond is a nonprofit, farmer-owned, marketing 
cooperative owned by over \1/2\ of the almond growers in 
California. It is also the world's largest processor and 
marketer of almonds.
    The almond industry is particularly relevant for today's 
hearing as over 80 percent of the world's almonds are grown in 
California, and almonds are the largest agricultural export for 
our state. Blue Diamond exports almonds and almond ingredients 
to more than 90 countries. Overall, the almond industry 
contributes $11 billion to California's economy, creating over 
100,000 jobs in the state, as well as more than 37,000 export-
related jobs.
    As discussion of the new farm bill begins, I will share the 
positive impact three of the programs in the bill's trade title 
have on California farmers and ranchers.
    I would like to begin with the Market Access Program. Its 
purpose is to expand agricultural export markets overseas. 
Agricultural exports are critical to the American economy. 
According to the USDA's Economic Research Service, in 2014 ag 
exports produced a total of $340 billion in economic output. 
Those exports supported 1.1 million full-time U.S. civilian 
jobs; approximately 800,000 of which were jobs to the non-farm 
sector. Consequently, for every $1 billion of agricultural 
export revenue, it would create 7,550 jobs.
    Many commodities in California benefit from the Market 
Access Program, including, but not limited to, dairy, 
pistachios, cherries, peaches, table grapes, pears, prunes, 
strawberries, cotton, rice, wine, citrus, and walnuts. The 
program ensures that these and other participating commodities 
can, on a cost-share basis, achieve maximum opportunity when 
developing markets overseas.
    While I could share details of each California commodity 
benefitting from the Market Access Program, as an almond 
grower, I comment today on how my cooperative, Blue Diamond, 
utilizes Market Access Program funds provided by the 2014 Farm 
Bill to improve international demand for domestically produced 
almonds. These efforts continue to offer a destination for the 
almonds I and my fellow California growers produce. They 
support U.S. jobs by improving export markets around the world.
    In my written testimony, I have included as an exhibit six 
specific success stories documenting recent examples of where 
the MAP program has been used effectively to build consumer 
demand for Blue Diamond almonds. Let me briefly highlight one 
of those to just give you a sense of how these funds are being 
utilized.
    In Canada last year, Blue Diamond used Market Access 
Program funds to partner with a large retailer to stock for the 
first time North American-labeled almond product at six of the 
chain's large supermarket locations in the greater Vancouver 
region. A 2 day in-store sampling program was conducted which 
focused on Blue Diamond's superior taste consistency, high 
quality, and nutritious attributes. During the demo week alone, 
the supermarket sold 60 percent of the initial product cases 
purchased. As sampling programs continue at this new account, 
Blue Diamond anticipates even greater purchase quantities and 
sales figures.
    As you can see, the efforts of just one Market Access 
Program participant are generating solid results. Blue Diamond 
has a successful track record of launching new and innovative 
almond products in markets around the world, leading the 
development of new sources of revenue for thousands of U.S. 
almond growers, as well as thousands of non-farm employees who 
help process and deliver our various products. MAP funds remain 
essential. Part of this strategy is for Blue Diamond to 
establish critical footholds in new markets.
    The 21st century global market remains an extremely 
challenging one. Markets do not just open, build and sustain 
themselves. Consumer awareness, acceptance, and preferences do 
not just happen. The target is a continually moving one. 
Success in establishing and growing markets for U.S. 
agricultural products is best achieved through focused and 
coordinated efforts by all parties involved to have a stake in 
achieving success. This most certainly includes the critically 
important partnership of U.S. Government and agricultural 
stakeholders.
    You can be assured that America's competitors are also 
approaching this challenge in a similar manner. One quick 
example, in 2016, the European Union allocated $255 million 
annually for the promotion of wine alone. This is more than the 
total amount that we allocate for all agricultural commodities. 
The Market Access Program is a model of innovative and 
effective government-industry relationship. The synergies 
produced through the program are compelling and well-
documented.
    In today's increasing challenging environment for America's 
farmers and ranchers, the need for expanding the program has 
never been greater. We would encourage you to look to expanding 
not only this, but sustaining the TASC, the Technical 
Assistance for Specialty Crops, at its current levels, and also 
increase FMD funding from its current levels.
    I would be more than willing to answer any questions you 
might have.
    [The prepared statement of Mr. Wenger follows:]

Prepared Statement of Paul J. Wenger, Almond Producer, Wood Colony Nut 
   Co.; President, California Farm Bureau Federation, Sacramento, CA
    Good afternoon, Mr. Chairman and Members of the Committee. Thank 
you for the opportunity to testify on the trade title of the farm bill.
    I am Paul Wenger, the President of California Farm Bureau 
Federation. I am also a third-generation almond farmer and a member of 
Blue Diamond Growers.
    The California Farm Bureau Federation is a state-wide nonprofit 
organization representing 53 counties that include over 28,000 
producers of more than 400 commodities. For nearly a century, Farm 
Bureau has worked to preserve, protect and promote family farms and 
ranches.
    Like the California Farm Bureau Federation, Blue Diamond Growers 
has a more than 100 year history of serving California almond farmers. 
Blue Diamond is a nonprofit, farmer-owned marketing cooperative owned 
by over \1/2\ of the almond growers in California. It is also the 
world's largest processor and marketer of almonds.
    The almond industry is particularly relevant for today's hearing as 
over eighty percent of the world's almonds are grown in California, and 
almonds are the largest agricultural export from the state. Blue 
Diamond exports almonds and almond ingredients to more than 90 
countries. Overall, the almond industry contributes $11 billion to 
California's economy creating over 100,000 jobs in the state, as well 
as more than 37,000 export related jobs.
    As discussion of the new farm bill begins, I will share the 
positive impact three of the programs in the bill's trade title have on 
California farmers and ranchers.
Market Access Program (MAP)
    I would like to begin with the Market Access Program. This program 
is overseen by USDA's Foreign Agricultural Service, (FAS). Its purpose 
is to expand agricultural export markets overseas. Agricultural exports 
are critical to the American economy. According to USDA's Economic 
Research Service (ERS), in 2014 agricultural exports produced a total 
of $340 billion in economic output. Those exports supported 1.1 million 
full time U.S. civilian jobs. Approximately 800,000 of the jobs were 
non-farm sector. Consequently, for every $1 billion of agricultural 
export revenue there are 7,550 jobs (https://www.ers.usda.gov/data-
products/agricultural-trade-multipliers/2014-data-overview.aspx).
    Over the years, we have seen extremely successful results from the 
Market Access Program. A recent study by Informa Economics IEG, working 
with Texas A&M University and Oregon State University economists, 
showed a return of $28 in export gains for every $1 spent on export 
promotion programs. The study also showed an average annual increase in 
farm income of $2.1 billion resulting from the Market Access Program 
activities. In addition to the high return rate and the increase in 
farm income, the program resulted in the creation of 239,000 new full 
and part-time jobs (http://www.uswheat.org/newsMeetings/emd-1a) 
[Attachment].
    Many commodities in California benefit from the Market Access 
Program, including but not limited to dairy, pistachios, cherries, 
peaches, table grapes, pears, prunes, strawberries, cotton, rice, wine, 
citrus, and walnuts. The program ensures that these and other 
participating commodities can, on a cost-share basis, achieve maximum 
opportunity when marketed overseas.
    While I could share details of each California commodity benefiting 
from the Market Access Program, as an almond grower, I will comment 
today on how Blue Diamond utilizes Market Access Program funds provided 
by the 2014 Farm Bill to improve international demand for domestically 
produced almonds. These efforts continue to offer a destination for the 
almonds I produce. They support U.S. jobs by improving U.S. economic 
output. (Please see Exhibit A for Blue Diamond Growers Market Access 
Program success stories).
    In my written testimony submission, I have included as an exhibit 
six specific success stories documenting recent examples of where the 
Market Access Program has been used effectively to build consumer 
demand and preference for Blue Diamond almonds. Let me briefly 
highlight a couple of these just to give you a sense of how these funds 
are being utilized.
    In Canada last year, Blue Diamond used Market Access Program funds 
to partner with a large retailer to stock for the first time North 
American labeled almond product at six of the chain's large supermarket 
locations in the greater Vancouver region. A 2 day in-store sampling 
program was conducted which focused on Blue Diamond's superior taste 
consistency, high quality, and nutritious attributes. During the demo 
week alone, the supermarket sold 60 percent of the initial product 
cases purchased. As sampling programs continue at this new account, 
Blue Diamond anticipates even greater purchase quantities and sales 
figures.
    In another case, during the period May-June 2016, Blue Diamond 
conducted an in-store marketing campaign for snack almonds at 960 7-
Eleven outlets in Hong Kong. This promotion targeted health conscious 
consumers seeking a nutritious and convenient snack that is ideal for 
active kids and families. Using Market Access Program funds, Blue 
Diamond supported development of creative advertising materials and 
off-shelf product positioning with acrylic racks. The promotions also 
highlighted that Blue Diamond snack almonds are a great accompaniment 
for watching summer soccer games and other popular sporting events. By 
locating Blue Diamond products off-shelf, the promotion reached new 
consumers and generated additional brand awareness and interest. This 
effort generated a significant increase in sales, achieving twice the 
average sales per month compared to the prior period.
    As you can see, the efforts of just one Market Access Program 
participant are generating solid results. Blue Diamond has a successful 
track record of launching new and innovative almond products in markets 
around the world, leading the development of new sources of revenue for 
thousands of U.S. almond growers. These funds remain an essential part 
of this strategy, supporting Blue Diamond to establish critical 
footholds in new markets. Blue Diamond will continue to rely on the 
Market Access Program funds to support successful product launches 
through strategic product campaigns.
    The 21st century global market remains an extremely challenging 
one. Markets do not open, build and sustain themselves. Consumer 
awareness, acceptance and preferences do not just happen. The target is 
a continually moving one. Success in establishing and growing markets 
for U.S. agricultural products is best achieved through focused and 
coordinated efforts by all involved parties with a stake in achieving 
success. This most certainly includes the critically important 
partnership of the U.S. Government and U.S. agricultural stakeholders. 
You can be assured that America's competitors in the global market 
place are approaching the challenge in a similar manner. For example, a 
2016 study showed that the European Union allocates $255 million 
annually for the promotion of wine alone. This is more than the total 
amount we allocate for all U.S. agricultural commodities.
    The Market Access Program is a model of innovative and effective 
government-industry partnership. The synergies produced through the 
program are compelling and well-documented. In today's increasingly 
challenging environment for America's farmers and ranchers, the need 
for expanding the program has never been greater. Currently, the 
program receives $200 million in funding. Blue Diamond is asking for an 
increase to $400 million in funding and Farm Bureau also supports an 
increase. The last increase in Market Access Program funds occurred in 
the 2002 Farm Bill reaching the current level of funding in 2006. (For 
additional success stories please see: http://www.agexportscount.com/
value-of-ag-exports/).
The Technical Assistance for Specialty Crops (TASC) Program
    Another USDA program that has significantly benefitted U.S. 
specialty crop producers, including almond growers, is the Technical 
Assistance for Specialty Crops program, or TASC. Currently funded at $9 
million annually, TASC provides grants to eligible U.S. organizations 
to address sanitary, phytosanitary, and technical barriers in targeted 
foreign countries that prohibit, constrain, or threaten market access 
for U.S. specialty crops.
    USDA's Foreign Agricultural Service reviews TASC proposals on a 
competitive basis, approving those that both meet the program's 
requirements and clearly demonstrate how the activity will address and 
resolve the identified barrier or constraint. Awards are for a maximum 
of $500,000 per year and for projects of up to 5 years. These funds 
help support such critical activities as pest and disease research, 
technical exchanges, field trials and pre-clearance programs, all with 
a view to resolve trade barriers and expand U.S. exports of specialty 
crops.
    Blue Diamond used this program for the almond industry to obtain 
technical assistance to obtain reinstatement of the Indian Government's 
previous approval of the use of Phosphine as an acceptable fumigant for 
almonds. $80,000 was approved for this and a successful result was 
obtained. This is our industry's second largest market, after Spain. 
The U.S. Census Bureau data reports that U.S. almond exports to India 
were valued at over $490 million in 2016. Last year, the California 
almond industry again utilized TASC to support exchanges with key 
Government of India officials aimed at raising awareness and 
understanding of supply channel practices, and labeling, certification, 
and export procedures.
    TASC is yet another example of how the industry-government 
partnership can be effectively leveraged to the benefit of America's 
farmers, and the U.S. economy.
Foreign Market Development Program (FMD)
    The third program is the Foreign Market Development Program (FMD). 
FMD benefits the U.S. economy and creates jobs by assisting U.S. 
farmers, processors, and exporters in developing new foreign markets 
and increasing market share in existing markets. The program focuses on 
generic U.S. commodities and lays the groundwork for commercial sales 
by establishing long-term relationships.
    These efforts under FMD might include such activities as addressing 
infrastructure constraints, modifying codes or standards, and 
identifying new end-uses for the commodity or product.
    The partnership between USDA and industry participants under the 
FMD program has proven to be an effective component in the overall 
trade development toolbox.
    In closing, agricultural exports are vital to preserving, 
protecting, and promoting California agriculture, accounting for over 
$20 billion in value out of the state's $47 billion in production. The 
trade title of the farm bill should continue to provide these essential 
trade-promoting programs.
    Thank you very much for allowing me to testify today on this very 
important subject. I will be pleased to answer any questions that you 
may have.
            Respectfully Submitted,

Paul Wenger.
                               Exhibit A
1. Blue Diamond Growers Gain Retail Distribution for Flavored Snack 
        Nuts in Canada
    In 2016, Blue Diamond used Market Access Program funds to support 
in-store sampling demonstrations at grocery retailers throughout 
Canada. As a core part of Blue Diamond's strategy in Canada, in-store 
sampling allows shoppers at major retail chains to taste Blue Diamond's 
flavored snack nut products while receiving literature and information 
about the Blue Diamond brand, as well as the premium, value-added 
almond products. This has a significant impact on convincing consumers 
to become regular almond consumers, and provides strong sales to major 
retail partners. Furthermore, Market Access Program activities in 2016 
continue to be an essential support for Blue Diamond in Canada where 
difficult price increases and limited expansion due to rising commodity 
prices proved challenging during the prior year. In-store sampling 
programs are a cost-effective activity that positively impact 
distribution and consumer awareness. In this way, Market Access Program 
funds remain vital to Blue Diamond's efforts in Canada to increase 
visibility, generate consumer trial and purchase for snack nuts, and 
maintain and expand key retail account listings.
    Blue Diamond's in-store sampling demonstrations have already 
generated good returns this year. T&T Supermarkets in Western Canada is 
a new retail account listing for Blue Diamond in 2016, where Blue 
Diamond flavored snack nuts are the first North American labeled almond 
product stocked at six of their large supermarket locations in the 
greater Vancouver region. T&T Supermarkets caters to a predominantly 
Asian customer base, representing a new opportunity for Blue Diamond to 
expand. During the last week of May, Blue Diamond conducted a 2 day in-
store sampling program at all six T&T Supermarket locations featuring 
three different flavors of Blue Diamond's signature snack almonds. 
Point of Sale (POS) materials were visible at each store, and brand 
literature highlighting Blue Diamond's superior taste consistency, high 
quality, and nutritious attributes were distributed to shoppers. During 
the demo week alone, T&T sold 60% of the initial product cases 
purchased. Since the promotion, T&T Supermarkets have purchased an 
additional 55% of product for regular sales. As sampling programs 
continue at this new account, Blue Diamond anticipates even greater 
purchase quantities and sales figures. Market Access Program funds 
remain an essential foothold for Blue Diamond in this market, where 
Blue Diamond is consistently seeking to expand market opportunities and 
reach new customer demographics. Furthermore, these activities support 
increased product recognition, ensuring good returns for all U.S. 
almond growers.
2. MAP Funds Support Blue Diamond Promotion at 7-Eleven Stores in Hong 
        Kong
    To encourage increased consumption of snack almonds during the pre-
summer period in Hong Kong, Blue Diamond conducted an in-store 
marketing campaign at 960 7-Eleven outlets from mid-May through June 
2016. The widespread convenience store promotion targeted health 
conscious consumers seeking a nutritious and convenient snack that is 
ideal for active kids and families. Using Market Access Program funds, 
Blue Diamond supported development of creative advertising materials 
and off-shelf product positioning with acrylic racks. The promotions 
also highlighted that Blue Diamond snack almonds are a great 
accompaniment for watching summer soccer games and other popular 
sporting events. By locating Blue Diamond products off-shelf, the 
promotion was able to reach new consumers and generate additional brand 
awareness and interest.
    Blue Diamond's aggressive advertising and eye-catching Point of 
Purchase materials allowed for a successful increase in sales, 
achieving twice the average sales per month compared to the prior 
period. This was despite an overall weak sales environment seen 
throughout the rest of the retail sector in Hong Kong. Market Access 
Program funds played a critical part in supporting the success of this 
promotion, ultimately enabling a key C-store retailer in the market, 7-
Eleven, to remain confident in the profitability of the Blue Diamond 
brand and products. Through Market Access Program funds, Blue Diamond 
is able to conduct targeted promotions with important retailers, 
supporting continued distribution and consumption in the market.
3. MAP Funds Support Blue Diamond Social Media Campaign in Japan
    In 2016, Blue Diamond utilized Market Access Program funds to 
support targeted social media promotions for the beverage Almond Breeze 
in Japan. Blue Diamond launched Original and Unsweetened Almond Breeze 
in Japan in 2013. In years since, Blue Diamond has conducted aggressive 
product and brand promotions necessary to establish and grow this new 
category. Moreover, Japan represents a challenging market for Almond 
Breeze to penetrate given the significant annual influx of new products 
in the beverage sector. A strong and active social media presence for 
Blue Diamond Almond Breeze in Japan is a key component of the marketing 
strategy. Social media sites including Facebook and Instagram are 
widely used by Blue Diamond's target consumers and act as a hub for 
raising brand awareness, educating on product use in recipes, directing 
users to the Blue Diamond website, and allowing consumers to interact 
and provide feedback to posted content. Blue Diamond Japan posts weekly 
updates of recipes and photos, along with messaging around healthy and 
active lifestyles to target key consumer groups.
    So far in 2016, Blue Diamond has achieved 42% aided awareness among 
social media users through this platform, with a target goal of 
achieving 50% awareness by the end of the year. Heightened awareness on 
social media continues to support strong sales. Overall, Blue Diamond 
Almond Breeze now holds around 45% market share in Japan; sales in 2015 
were up 102% for Almond Breeze over 2014; and projected sales for 
Almond Breeze over the next 5 year period are anticipated to average 
40% growth annually. Given that the brand was only introduced 3 years 
prior, Blue Diamond is making positive gains in a difficult market. 
Future promotions and social media activity that build on this momentum 
are critical to ensure long-term market success. Furthermore, Blue 
Diamond is leading the development and growth of an entire new product 
category--Almond Breeze--and providing a new source of sales and 
revenue for the U.S. almond industry. As such, the support of Market 
Access Program funding remains an important foothold for Blue Diamond 
and U.S. almonds in Japan.
4. Blue Diamond Growers Sees Increased Sales for Almond Breeze in the 
        United Kingdom
    Blue Diamond utilizes Market Access Program funds to support key 
product launches in new markets around the globe. In 2012, the United 
Kingdom (UK) was one of the first international markets where Blue 
Diamond launched their Almond Breeze product. In the few years since 
launching, Almond Breeze has achieved success as both sales and 
distribution continue to expand. In order to differentiate product, 
Blue Diamond's marketing and promotions in 2016 prominently emphasize 
that Blue Diamond is based in the U.S. and grows all their own almonds 
used to make Almond Breeze products. This message highlights Blue 
Diamond as the ``almond experts,'' and allows consumers to connect with 
the popular ``farm-to-table'' trend. This marketing message is 
communicated through a comprehensive, multimedia marketing campaign in 
the UK that includes print and online advertising, active social media 
(Instagram and Facebook), blogger partnerships, in-store 
demonstrations, and trade show participation.
    As of May 2016, sales for Almond Breeze in the UK are tracking at 
44% higher than the same month in 2015. Similarly, overall category 
growth in the UK has expanded by 47% over the last 52 weeks, indicating 
further opportunity for additional sales growth going forward. In light 
of the trending success with Original and Unsweetened Almond Breeze, 
Blue Diamond utilized Market Access Program funds to support the launch 
of the new product, Almond Breeze Barista Blend, an almond beverage 
formulated specifically for use in coffee beverages. Barista Blend 
premiered at the London Trade Show for Foodservice, a key event for the 
cafe and foodservice sector in the market. Barista Blend will continue 
to be targeted towards both the foodservice and consumer sectors. By 
launching new and innovative products in international markets, Blue 
Diamond remains committed to opening and developing new sources of 
product revenue for the entire U.S. almond industry.
5. Blue Diamond Growers Sees Early Success for Almond Breeze in Finland 
        with Support from Advertising and Blog Campaigns
    Blue Diamond launched Almond Breeze in Finland during 2015. To 
ensure a successful first year, in 2016 Blue Diamond continued to 
utilize Market Access Program funds to support print and online 
advertising, as well as important blogger partnerships. These outlets 
continue to be extremely effective in promoting Almond Breeze products 
available in the market--Original, Unsweetened, and Barista Blend. Blue 
Diamond's marketing program for Almond Breeze in Finland targets and 
appeals to female consumers aged 20+ as a nutritious, flavorful, and 
versatile almond beverage, ideal for use in coffee beverages, 
smoothies, cooking recipes, and on its own. By securing consistent 
almond product awareness and coverage through advertising and blogger 
features on popular fashion and lifestyle platforms, Blue Diamond is 
successfully reaching their target market.
    During 2016, Market Access Program funds supported the development 
and placement of half-page, color print advertisements with nine 
different Finnish fashion, fitness, and lifestyle magazines. Ads 
highlighted the health benefits of Almond Breeze Unsweetened--a 
naturally light almond beverage containing calcium, while also 
naturally free of gluten, dairy, lactose, and soy. Additionally, two of 
Finland's leading online fashion and lifestyle blog sites--Lily.fi and 
Mona's Daily Style--have each featured the newest product, Almond 
Breeze Barista Blend, in their blog content with various recipes. 
Almond Breeze Barista Blend photos and blogger reviews remain active on 
both sites. Finland has witnessed a surge in home-barista trends, so 
the timing of Blue Diamond's Almond Breeze Barista Blend launch, 
supported through coordinated print and online promotions, has provided 
Blue Diamond with ample opportunity to capture additional market share. 
In fact, Barista Blend has already expanded distribution significantly, 
covering both foodservice and the traditional grocery aisle. Sales for 
Barista Blend are now on-par with Blue Diamond's second-leading 
product, Almond Breeze Original, which is up 67% in sales and 24% in 
distribution over the year prior. Almond Breeze Unsweetened remains the 
leading Blue Diamond product in the Finnish market, with sales up 80% 
and distribution up 59% over the year prior.
6. MAP Funds Support Blue Diamond Branded Caravan Promoting Almond 
        Breeze Throughout Japan
    In June 2016, Blue Diamond utilized Market Access Program funds to 
support the Almond Breeze caravan tour promoting Almond Breeze 
throughout Japan. This marks the third year that Almond Breeze has 
utilized a branded caravan in Japan to conduct outreach to consumers. 
The branded caravan strategically visits Blue Diamond listed account 
retailer parking spaces, farmers markets, and other consumer events to 
distribute samples of Almond Breeze in smoothies, lattes, and on its 
own. Supplementary communication tools distributed include recipes, 
almond information fact sheets, and directives to visit the Almond 
Breeze Japan website and social media sites (Facebook and Instagram). 
By positioning the caravan outside of retailer and consumer food or 
shopping locations, and by demonstrating the use of Almond Breeze in 
various recipes, Blue Diamond is generating both increased awareness 
and consumer product trial. Additionally, the activity reinforces 
distribution at both listed and targeted accounts by demonstrating the 
success of Blue Diamond products at key retailers. Japan continues to 
be a large and dynamic market to penetrate, so Blue Diamond's 
consistent marketing efforts over the first 3 years there are both 
necessary and effective.
    Blue Diamond launched Original and Unsweetened Almond Breeze in 
Japan in 2013 as the first such nationally supported product in the 
market. In years since, Blue Diamond has conducted aggressive product 
and brand promotions to establish and grow this new category. The 
Japanese market is one of the most dynamic and difficult markets to 
penetrate with new beverage products, and Blue Diamond has achieved 
early success in its first 3 years: Blue Diamond Almond Breeze holds 
around 45% market share in Japan; sales for Almond Breeze during 2015 
were up 102% over 2014; and sales for Almond Breeze are projected to 
hit an average of 40% growth annually over the next 5 year period. Part 
of Blue Diamond's early success with Almond Breeze can be attributed to 
favorable consumer trends around health and wellness, particularly 
among Japan's large aging population and working-age consumers who 
continually seek nutritional or niche dietary products to fit modern 
tastes and lifestyles.
    Market Access Program funding remains critical to establishing 
Almond Breeze and expanding awareness of U.S. almond products 
throughout Japan. Through the support of these promotional activities, 
Japanese consumers are now consuming Almond Breeze on a daily basis, 
driving exports of U.S. almonds.
                               Attachment
USDA Export Promotion Programs Boost U.S. Farm Export Value by 15 
        Percent, Create Thousands of Jobs
Revised 10/11/16

    Agricultural export market development programs funded through the 
farm bill have contributed an average of $8.2 billion per year, a total 
of more than $309 billion, to farm export revenue between 1977 and 2014 
according to a new study conducted by noted land grant university 
economists.
    ``In other words, these programs have accounted for 15 percent of 
all the revenue generated by exports for U.S. agriculture over that 
time. To me, such a positive result is just stunning,'' said Dr. Gary 
Williams, Professor of Agricultural Economics and Co-Director of the 
Agribusiness, Food, and Consumer Economics Research Center at Texas A&M 
University, who led the study.
    The study examined the effectiveness of the Market Access Program 
(MAP) and the Foreign Market Development (FMD) program. They are part 
of a public-private partnership that provides competitive grants for 
export development and promotion activities to nonprofit farm and ranch 
organizations that contribute funds from check-off programs and 
industry support.
    As a result of MAP and FMD funding, average annual farm cash income 
was $2.1 billion higher, and annual average farm asset value was $1.1 
billion higher over 2002 through 2014. The programs increased total 
average annual U.S. economic output by $39.3 billion, GDP by $16.9 
billion and labor income by $9.8 billion over the same time. The study 
results also showed that the economic lift created by these programs 
directly created 239,000 new jobs, including 90,000 farm sector jobs.
    By testing what would happen if Federal MAP and FMD funding were 
eliminated, the study showed that average annual agricultural export 
revenue would be lower by $14.7 billion, with corresponding annual 
average declines in farm cash income of $2.5 billion and significant 
drops in GDP and jobs.
    ``I would say these are very successful economic development 
programs based on their impact to the farm and general U.S. economy,'' 
Dr. Williams concluded.
    The nonprofit agricultural organizations that participate in MAP 
and FMD contributed about $470 million dollars per year to the programs 
in 2014. That was more than 70 percent of total funding. The Federal 
budget for MAP has been fixed at $200 million per year since 2006 and 
FMD's $34.5 million annual budget has not changed since 2002. The 
Commodity Credit Corporation programs are administered by USDA's 
Foreign Agricultural Service (FAS), which is required to report to 
Congress periodically on program effectiveness.
    This is the third study of FAS export promotion programs since 2007 
but the first to use an export demand analysis to measure their 
effectiveness. MAP and FMD participating organizations U.S. Wheat 
Associates, USA Poultry & Egg Export Council and Pear Bureau Northwest 
sponsored the new study, which was funded by USDA FAS. Informa 
Economics assembled data to support the study, recruited the team of 
five agricultural economists from Texas A&M, Oregon State University 
and Cornell University, interviewed dozens of MAP and FMD participants 
and reported on results.
    The new study identified a return on investment from these programs 
between 1977 and 2014 of 28-to-1, which Dr. Williams considers quite 
strong and showing consistent results with the two other MAP and FMD 
studies.
    ``The average return on investment, or benefit to cost ratio, for 
27 previous industry specific export promotion studies is just under 
11-to-1,'' Dr. Williams said. ``So I was, frankly, quite surprised that 
the return was this high. The previous MAP and FMD studies showed 
returns of 25-to-1 in 2007 and 35-to-1 in 2010.''
    Informa's report concluded that no matter what type of analysis is 
used or what time period is considered, ``the results of this study and 
previous studies all demonstrate the importance and effectiveness of 
market promotion funding on exports, the farm economy and the overall 
macro economy.''

 
 
 
USDA Cost-Benefit Study Contributors:
 
    Dr. Gary Williams is Professor of Agricultural Economics and Co-
 Director of the Agribusiness, Food, and Consumer Economics Research
 Center (AFCERC) at Texas A&M University, College Station, Tex. He is
 the AFCERC chief operations officer responsible for managing the
 research program of the Center and leads AFCERC research and outreach
 projects relating to commodity and agribusiness markets and policy and
 international trade and policy. He is also an Associate Faculty Member
 of the Department of International Affairs in the Bush School of
 Government and Public Service at Texas A&M University. His areas of
 teaching and research emphases include commodity promotion programs,
 international agricultural trade and development, agricultural policy,
 and marketing and price analysis. Dr. Williams was raised in Lubbock,
 Texas and holds a Ph.D. and an M.S. degree in Agricultural Economics
 from Purdue University and a B.S. in Economics from Brigham Young
 University. Prior to joining the faculty at Texas A&M University in
 1988, he gained experience as a professor and Assistant Coordinator of
 the Meat Export Research Center at Iowa State University, Senior
 Economist at Chase Econometrics, agricultural economist for the USDA,
 and Special Assistant to the U.S. Deputy Under Secretary of Agriculture
 for International Affairs and Commodity Programs at USDA. In recent
 years, he has become particularly well known for his research on the
 economic effectiveness of commodity check-off programs, including those
 for soybeans, cotton, lamb, dairy, Florida orange juice, Texas citrus,
 Texas pecans, and others. He is also well known for his research on
 U.S. and world oilseed and oilseed product markets and the U.S.
 livestock industry including issues related to sheep and lamb markets
 and the effects of concentration in the beef packing industry. He
 recently served as Chair of a National Academy of Science Committee on
 the Status and Economic Performance of the U.S. Sheep and Lamb
 Industry. He also recently served as a member of a National Academy of
 Science Committee on the Future of Animal Science Research.
    Dr. Jeff Reimer, Associate Professor, College of Agricultural
 Sciences, Oregon State University, Corvallis, Ore. Dr. Reimer has been
 with Oregon State University since 2005. His research program concerns
 topics in international trade, the economics of food and agriculture,
 and general equilibrium modeling. Dr. Reimer teaches courses in
 agricultural price and market analysis, micro-economic theory, and
 international trade. Dr. Reimer grew up on a farm in Illinois before
 receiving a bachelor's degree from the University of Illinois and
 spending 3 years working in agricultural development in rural
 Bangladesh. After completing his doctorate in Agricultural Economics
 from Purdue University in 2003, he spent 2 years as a research
 associate at the University of Wisconsin-Madison. At Oregon State
 University he has been major advisor for ten graduate students and been
 the recipient of more than a dozen grants and contracts. He has
 published more than 30 journal articles and book chapters, including in
 the Journal of International Economics, Economic Inquiry, and the
 American Journal of Agricultural Economics.
    Dr. Rebekka M. Dudensing, Assistant Professor and Extension
 Specialist, Department of Agricultural Economics, Texas A&M University.
 Dr. Dudensing's responsibilities include the analysis of economic and
 fiscal impacts. She also studies economic responses to natural
 disasters and the roles of business and social structures in community
 economic development. She has done extensive economic impact modeling
 including IMPLAN I-O approaches. Much of her research is driven by the
 concerns of Extension clientele with objectives to find solutions to
 those local concerns and to project these issues to a wider audience
 though applied research and methodological improvements. Dr. Dudensing
 is particularly interested in the sustainability of agriculture- and
 natural resource-dependent rural communities.
    Dr. Bruce A. McCarl, University Distinguished Professor and Regents
 Professor of Agricultural Economics at Texas A&M University. He
 received his B.S. in Business Statistics at the University of Colorado
 and Ph.D. in Management Science from Pennsylvania State University. His
 recent research efforts have largely involved policy analysis (mainly
 in climate change, climate change mitigation, water economics, and
 biosecurity) as well as the proper application of quantitative methods
 to such analyses. He teaches graduate courses in applied mathematical
 programming and applied risk analysis. He was part of the 2007 Nobel
 Peace Prize winning Intergovernmental Panel on Climate Change.
    Dr. Harry M. Kaiser, Gellert Family Professor of Applied Economics
 and Management, Cornell University, Ithaca, N.Y. Dr. Kaiser teaches and
 conducts research in the areas of price analysis, marketing, and
 quantitative methods. Professor Kaiser has written 114 refereed journal
 articles, four books, 17 book chapters, over 150 research bulletins,
 and received $8 million in research grants in these areas. Since 1994,
 Professor Kaiser has been the director of the Cornell Commodity
 Promotion Research Program. Much of his research focuses on the market-
 wide economic effects of commodity advertising and promotion programs.
 Currently, Professor Kaiser and his staff annually conduct the economic
 analysis required by the U.S. Congress for the national dairy and fluid
 milk processor advertising programs.
    Joe Somers, Vice President, Informa IEG, Washington, D.C. Somers is
 responsible for economic analyses and agricultural policy consultancy
 work. He brought to Informa more than 25 years of experience with
 USDA's Foreign Agricultural Service (FAS) as a Foreign Service officer
 and has been a member of Informa's staff since 2002. While at FAS, he
 served in Brazil and Argentina and traveled on official USDA fact-
 finding trips. In Washington, D.C., he supervised and conducted world
 supply/demand and trade policy analyses for a wide range of commodities
 and managed publication of several analytic circulars. He also was
 director of research and marketing for the GIC Group, Alexandria,
 Virginia, where he was responsible for business development and
 economic and market analyses. He received his bachelor's degree in
 political science from Northeastern University, Boston and master's in
 agricultural economics from the University of Massachusetts, Amherst.
    http://www.fas.usda.gov/programs/market-access-program-map
    http://www.fas.usda.gov/programs/foreign-market-development-program-
 fmd
 


    The Chairman. Thank you, Mr. Wenger. I am glad that you 
clarified that almond can be pronounced almond or amond.
    Mr. Wenger. Yes.
    The Chairman. All this time I thought my friend and 
colleague, Jeff Denham, was just talking funny. And you can 
tell him I said that.
    Mr. Wenger. Well, they are almonds on the tree. You have to 
knock the L out of them to get them on the ground, and then 
they become amonds.
    The Chairman. I appreciate that clarification.
    The chair would like to remind Members that they will be 
recognized for questioning in order of seniority for Members 
who were here at the start of the hearing. After that, Members 
will be recognized in order of arrival. I appreciate Members' 
understanding.
    I now recognize myself for 5 minutes.
    Thank you all. That was very, very informative testimony 
from each of you. There was a common theme throughout, 
obviously, and I want to drill-down on that just a little bit 
and maybe frame the question this way.
    When you have declining Federal investment in these 
programs, or let's just say, for example, these programs get 
zeroed-out, obviously we are all going to fight against that, 
but should that be the case, talk about the impact that that 
would have. What is it about the Federal investment that 
leverages these private dollars to the degree that it does? And 
I might add, I have been very, very impressed with the amount 
of increase in the private-sector dollars put towards these 
promotion efforts. But obviously, there is a catalyst there. 
That seed money on the Federal side is so critically important. 
Drill-down on that just a little bit for us if you can, any one 
of you.
    Mr. Wenger. Maybe I will start. It is your responsibility 
to utilize wisely taxpayer dollars. It comes from a broad 
section of American taxpayers, not just in agriculture, as we 
look at the farm bill, and certainly safety net-type programs 
are very important. The uniqueness of MAP funding and FMD 
funding is well beyond the farm. Whether I as a producer am 
profitable at the end of the year, as a grower all those people 
who are on the upside side for the suppliers of my inputs, they 
have a place that I can utilize monies to pay for them, but 
more the downside, the marketing side. You think whether it is 
Blue Diamond and others, all the people from the janitors to 
the clerks, and everybody else that made the packaging, the 
shipping to the ports, the longshoremen, everybody is put to 
work. It creates an awful lot of economic activity and wealth 
for other people far beyond. I can't think of a better 
investment that isn't targeted just to one individual part of 
our social fabric, but it goes everywhere.
    And I will just give you a quick example. Port of Oakland, 
58 percent of the products, the containers going out of the 
Port of Oakland, are agriculturally generated. Of that, 70 
percent comes out of the farms and the fields in California. 
When you think about the truckers and the longshoremen, they 
are put to work because of things that you are doing with MAP 
and FMD.
    Mr. Alanko. I would like to follow up on that next.
    The Chairman. Yes, sir.
    Mr. Alanko. There are two areas that quickly come to mind 
with me in the hardwood industry. One is the technical support 
that we are given by AHEC. The American hardwood grading system 
is very technical, and it is only used on American hardwoods. 
People around the world that would utilize our hardwoods need 
to be educated not only on the grades of hardwoods and how they 
can be utilized, but on the various species that we have. We 
have over 12 species that are commercially used around the 
world.
    The other is access. As I had stated earlier, with so many 
new policies around the world, trade policies and regulations 
on illegal logging and timber being imported into places, the 
American Hardwood Export Council, the use of these funds, has 
put in place some programs that allow our wood access into 
areas that we could not come up with these programs without 
that funding.
    Mr. Seng. The area that concerns me probably the most would 
be the role of the competition in the markets. There are 25 
countries supplying pork to Japan today. There was a time where 
we were primarily the only supplier, and maybe one from Denmark 
or Canada. There are 72 countries supplying pork and beef to 
China today. The European COFFERS (Combating Fiscal Fraud and 
Empowering Regulators), you heard about wine here, but if you 
look at their subsidy equivalence for exports, it is close to 
$1.8 billion. We cannot compete if we don't have these programs 
in these markets. It is as simple as that. And they compete 
with us not only on quality of the product, et cetera, but we 
deal with the Europeans with animal welfare issues, when it 
comes to sustainability issues. There are all these other 
issues that we are dealing with as far as trying to sell our 
product, and our way of producing our agriculture.
    To me, the role of competition, the unlevel playing field, 
that is getting more unlevel as we speak, these are probably 
some of the key areas that the MAP program and the FMD program 
work. It gives us a chance.
    The other thing, if I look at just the U.S. Meat Export 
Federation, the composition of the exporting companies in our 
organization, there are maybe eight companies that are over $1 
billion as far as total size. This is a program for the small 
holders. And we have so many companies that are just family 
companies that are exporting and doing very well at it.
    This is an enabling program for us to get into new markets, 
not just the existing markets but new markets, and it has been 
very successful. So the competition is intense. Both 
competition from the private-sector and competition from 
governments who are very, and more than willing to subsidize 
their exporters in these endeavors.
    The Chairman. Pardon me. If you had to list two countries 
that are our top two competitors, those who have really amped 
up their game on this front, who would that be?
    Mr. Seng. Well, I would say right now, the European Union, 
as a result of the closure of the Russian market, has taken new 
steps as far as their entree into Asia. They have displaced the 
United States, they have displaced other competitors, the 
Canadians, et cetera, Japan, Korea, Philippines, Vietnam. They 
have 80 percent market share in Vietnam as far as pork. I would 
say also Australia has been a very formidable competitor to us 
as well. They are not open to U.S. beef at this point in time, 
after 13 years, but they compete very handsomely with us in a 
lot of these markets.
    So I would say those two countries; Australia and probably 
the European Union, are two very formidable competitors right 
now.
    The Chairman. Thank you. My time has expired.
    Mr. Costa.
    Mr. Costa. Thank you very much, Mr. Chairman. I want to 
make note that I concur with the comments you made earlier in 
terms of the challenge that we have before us as we write the 
new farm bill.
    I want to, Mr. Seng, underline the comment you just made 
because some of this debate here doesn't square with the facts. 
The European Union is doing precisely what you said, and they 
negotiate as a common market as the Union. They are not allowed 
to do bilateral agreements. And by the way, our trade with the 
European Union constitutes almost \1/2\ of the world's trade. 
We will see what happens with the UK and what terms they end up 
breaking away, if, in fact, they do, there is some debate about 
that. But the fact of the matter is that we have to recognize 
that different blocks around the world negotiate treaties on 
that basis.
    Let me just be frank with all of you. You are preaching to 
the choir here with this Subcommittee and the Agriculture 
Committee. We are going to need your efforts, your 
organizations' efforts, and all the folks you represent out 
there as we try to put this farm bill together. That is just 
the bottom line. And your testimony, obviously, substantiates 
the large degree of economic benefits that accrue, not just to 
American agriculture, but to America's entire economy. We have 
to be able to make that statement much more succinctly and 
clearer.
    Mr. Wenger, you did a good job in talking about some 
examples in California, and we have talked many times about 
this, but how do we explain in that sense to urban dwellers in 
America, when we are looking at our budget this year and we are 
looking at the farm bill, who might wonder what are the 
benefits from using taxpayer dollars to fund these programs?
    Mr. Wenger. Thank you, Mr. Costa. Just to reiterate what I 
said before, as we talk about the farm bill in general, and I 
say I am from agriculture, and they talk about subsidies and 
other things, and this has come up from time to time to folks, 
but----
    Mr. Costa. It is called a subsidy by many.
    Mr. Wenger. Pardon me?
    Mr. Costa. It is called a subsidy by many.
    Mr. Wenger. Yes, it is. And I say, well, it is interesting 
that, as I said earlier, once the almonds and the walnuts leave 
my farm, there are a lot of people put to work; people that are 
trucking, that are processing, and the folks that work in the 
different processing plants. And certainly, Blue Diamond is a 
major contributor and component of our almond industry, but 
there is a lot more, and those put an awful lot of people to 
work every single day. And so they come to work for a salary, 
and so their tax dollars, what little bit of it would go into 
this type of a program for MAP funding or to help develop under 
FMD, those are coming back to them, because if we take those 
products and market them around the world, we are helping the 
rest of the world grow richer by imports that we bring into 
here. But as we see the growing middle class around the world, 
the one thing that they want is agricultural products from the 
United States, especially the Pacific Rim, California.
    Mr. Costa. They want better nutrition, higher protein, and 
we do that well.
    In this highly competitive global marketplace that we live 
in today, where I stated in my opening comments that the trade 
is not always fair, what would be the consequences do you think 
if, in the farm bill, these programs were further reduced or 
eliminated? And you can all comment, Paul, but please, anyone.
    Dr. Williams. I can answer some of that, at least with 
numbers. We actually did that particular analysis in our study. 
We simulated what would happen, what would the world look like 
if these programs did not exist. And the answer is that we 
would lose 240,000 jobs in any particular year, we would lose 
about $39.3 billion in output in this country, $16, $17 billion 
in GDP, and labor income would drop by about $10 billion. So 
just on the economy side, it would be fairly devastating.
    Mr. Costa. Mr. Williams, would you provide that information 
to all the Members of the Subcommittee and full Committee? We 
can use that to substantiate our case and enter it into the 
record.
    Dr. Williams. Yes, sir, I would be happy to, Mr. Costa.
    [The information referred to is located on p. 107.]
    Mr. Costa. Yes. The final comment or question, I don't know 
who would like to take it on, but we can talk about the 
European Union and how they exceed our levels in terms of 
changing the level of competition, unfairly I might add. I mean 
really, what a lot of these agreements are all about is trying 
to level the playing field. Right? Level the playing field. So 
what would you suggest as we look upon the farm bill and future 
trade agreements?
    Mr. Wenger. Try to be more specific. I guess we are having 
a little trouble understanding. As far as this funding?
    Mr. Costa. Well, as far as the funding, we are going to 
have to have future trade agreements, right? I mean without 
them it becomes a leverage game, and we get retaliatory tariffs 
and then we get into a trade war, and that is my greatest fear.
    Mr. Wenger. Well, certainly, it is a fear of all of us, in 
particular in California with the various commodities we have. 
Again, we have been very supportive of TPP. NAFTA, while it has 
had its issues, it has still been a good trade agreement. 
Certainly, TPP even fixed a few of the things that needed to be 
fixed from agriculture's perspective, had TPP passed. It is 
great to be able to do bilaterals, but we all know that once 
you get two people together and now you try to bring in a 
third, how are you are going to be able to settle that, because 
everybody wants the better deal with the other one. And so in 
our view, multilateral trade agreements are better. No matter 
what, we have seen that because of some of the phytosanitary 
issues, and nontariff trade barriers that we have been able to 
use some of the TASC funds for the specialty crops to be able 
to get around some of those.
    So that is why, no matter what happens here in the next few 
months or next couple of years on trade agreements, these kind 
of funds are very, very important.
    Mr. Costa. Well, and my time has expired, Mr. Chairman, but 
you point out something that we all ought to keep in mind; the 
nontariff trade barriers are a big, big part of facilitating 
trade agreements. And that is part of the handicap that 
American agriculture too often has.
    The Chairman. The gentleman from Tennessee, Mr. DesJarlais.
    Mr. DesJarlais. Thank you, Mr. Chairman. I appreciate all 
you gentlemen being here today and giving your testimony.
    Mr. Seng, I had a few questions for you. The U.S.'s ability 
to work its way into the beef market in South Korea is 
certainly a success story about our capabilities in becoming a 
key player in foreign markets that were initially reluctant to 
importing U.S. products. Following the 2008 protest in Seoul, 
South Korea, against the importation of U.S. beef, we became 
the top supplier by 2016. These sales even exceeded $1 billion 
in 2016, which is a substantial increase over the pre-Korea 
Free Trade Agreement sales levels. How are you investing in 
market development in Korea, and how has that investment helped 
build consumer confidence in U.S. beef?
    Mr. Seng. Yes. In Korea, we work it basically from the left 
to the right, if you will. There are importers, and then we 
work through the whole food service establishments, and as far 
as Korea, we work it to the retail, and we work it right down 
to the consumers. Our programs basically are pretty profound at 
the fact that they reach from the border all the way to the 
consumer. And we recognize consumers vote every day, and that 
was one of the issues that we had in Korea, as you know, back 
in 2008. But initially in 2008, we couldn't even get an 
advertising agency to say we would want to promote U.S. beef in 
the market. They thought that was such a negative.
    And so there has been a tremendous amount of work that was 
done, and all this was done through working through the 
channels, working through very judiciously developed supply 
chains, which was done with the MAP program and FMD program and 
industry dollars that were attracted because of those programs. 
And after about 10 years of this steady persistence in the 
market, that is how we did achieve this, but it is a long pull.
    But, trade access, and this goes back to the earlier 
question, is very important, but trade access does not 
guarantee, for example, market share. Trade access does not 
help remove some of the SPS barriers that we deal with that 
surface when we are working in these markets. It doesn't 
qualify customers, it doesn't build supply chains. All these 
types of things that we are doing, you can call it soft 
marketing, if you will, but these things are really what 
dignify trade negotiations. And that was proven to us in Korea, 
we proved the same thing in Japan, and this is really the 
importance of the MAP and the FMD program is that it is that 
constant commitment to the market that is unwavering, and that 
is very important in the international marketplace.
    Mr. DesJarlais. Okay, thank you. And most U.S. beef though 
is consumed domestically. It is my understanding that Japan and 
other countries in Asia have proven to be growing premium 
markets for beef cuts that Americans find less desirable. What 
are these cuts and what are we doing to promote them in Japan 
and other Asian markets?
    Mr. Seng. Well, that is what we call the fifth quarter. 
There is a lot of work that has been done, for example, like 
beef tongue in the United States sells for three times more 
than it will in the United States. I think that is the beauty 
of the export market; every pound of meat that we export is 
sold for more in the international marketplace than it would be 
sold here. And so what we have taken as an example is Mountain 
Chain Tripe; tripe that we don't eat much in this country. It 
is valued in Japan, and we will get, again, a premium of two to 
three times what it costs in the United States.
    So we take a look at a market, and we look at the 
international marketplace like it is a mosaic, and as we look 
at different countries, what kinds of products will apply to 
these different countries. And this is the export success that 
we have is, we have a diversified portfolio, going to almost 
100 countries and maximizing the value of each cut of each item 
that goes into these various markets. And that has really been 
the success.
    So today, the average producer in the United States that is 
producing beef receives about a $275 export dividend. That is 
the premium you get from the export market. It is $60 on a 
market hog.
    Mr. DesJarlais. Okay. And finally, in our last minute here, 
China is the fastest growing beef market in the world, and we 
are missing out on a crucial market share with the current ban. 
Aside from market share programs, what are some other means 
available so that we can continue to restore international 
confidence in our beef exports to increase the likelihood China 
reopens its market to U.S. beef?
    Mr. Seng. That is a very tough question, because for 13 
years now we have been denied access to the Chinese market. I 
think that we are always trying to figure out how we can work 
with the Chinese. We are working--let's say there is the closed 
market of China, but the USMEF with our industry partners, are 
working behind the wall, if you will. We are trying to build 
clientele, we are trying to develop supply chains, we are 
trying to create a demand pool from within the market, so once 
that market does open up we are ensconced already in the 
market. That is the same kind of example we did in Japan 30 
years ago, but we think that is going to be the recipe for 
success. We have to have some demand pool from the Chinese 
themselves. And you are right, it is the fastest growing market 
in the last 10 years; last year over $1.2 billion, 1.2 million 
metric tons were exported to China.
    Mr. DesJarlais. Thank you, Mr. Seng.
    Mr. Seng. You bet.
    Mr. DesJarlais. I yield back.
    The Chairman. Thank you. I now want to move to Dwight 
Evans, a new Member from Pennsylvania. Welcome to the 
Subcommittee.
    Mr. Evans. Thank you, Mr. Chairman. Mr. Chairman, I would 
like to pick up a little bit on the question around the jobs. I 
heard that you mentioned over 240,000 jobs could be effected. 
When you say the 240,000 jobs, is that the jobs beyond the 
agricultural sector too?
    Dr. Williams. Yes. Mr. Evans, in the ag sector, and this is 
agriculture and agrifood, it is 94,000 jobs, but overall 
through the entire economy we are talking up to 240,000. Yes, 
sir.
    Mr. Evans. I also heard a question, can you speak to the 
current technical assistance provided by the Technical 
Assistance for Specialty Crops program that is being provided, 
and the benefits of an increase in this program, can you speak 
to that issue, Mr. Wenger?
    Mr. Wenger. Yes, most consider that as far as the Technical 
Assistance for Specialty Crops, probably if we could maintain 
funding there, there is not as big of a need to increase that 
funding as what we would like to see increase in MAP funding 
and FMD funding.
    Usually, when you take care of a sanitary/phytosanitary, 
nontariff trade barrier, usually it is around inspections, 
pests, and things like that, then you have solved that problem. 
It is not an ongoing issue. So from our standpoint, when you 
are looking at the challenged financial situation where you get 
the best bang for the buck, we would say MAP funding and FMD 
funding.
    Mr. Evans. I would like to go back again about the jobs. 
When you talk about the jobs, you talked about the aspect of 
terms of the dollar impact, and repeat that again in terms of 
the impact, in terms of cost aspect of what it can mean in 
loss.
    Dr. Williams. Jobs as well as the other impacts? Across the 
entire economy, this is a multiplier effect that happens. 
First, you have the impact in the ag community because there 
are more exports, right, and that generates revenue within the 
ag community. And then there is spending on input suppliers as 
well as household spending, as well as up and down the supply 
chain there is additional spending. We have more 
transportation, more transportation needs more fuel, more fuel 
means others working. So all the way along the supply chain 
that additional revenue coming in generates jobs up and down 
the supply chain. And so when I tell you there are 240,000 more 
jobs, I am talking not just in agriculture, and not only up and 
down the supply chain, but across the economy as that 
multiplies out from agriculture through everything from 
transportation to even consumer goods, because the people that 
earn money as a result of that go out and spend money for 
Christmas for toys and other things. So there is a whole 
multiplier effect throughout the whole economy. So that is 
where those jobs come from, and that is where the additional 
sales output number I told you of $39.3 billion in additional 
gross sales or output, because of that, all those additional 
sales that happen both sort of backward linkages from 
agriculture into the input industry, and forward linkages into 
the rest of the economy. And GDP, that is an additional $16.9 
billion in additional gross domestic product being generated as 
a result of that.
    So this is a phenomenon that happens not just in 
agriculture, but radiates out from agriculture through the 
economy as a result of spending, and additional spending, and 
re-spending as those dollars multiply through and generate jobs 
through the economy.
    Mr. Evans. Mr. Chairman, I yield back the balance of my 
time.
    The Chairman. Thank you.
    Mr. Marshall.
    Mr. Marshall. Yes, thank you, Mr. Chairman.
    I was invited last week to go back to the first farm bill 
ag hearing in my home state with Senator Roberts. I was 
expecting to talk about the farm bill. Probably the biggest 
feverish issue was trade though. I mean it reached a fever 
pitch that my ag producers are just, I hate to say panicked, 
but were very, very concerned.
    So I guess my first question to Dr. Williams, those finite 
resources, I am trying to figure out how much money to allocate 
towards Title I, towards crop insurance versus these programs. 
How would you help me prioritize a little bit where to place 
those monies?
    Dr. Williams. Mr. Marshall, I wouldn't presume to tell you 
how to spend my money----
    Mr. Marshall. Yes, sir.
    Dr. Williams.--but I can tell you that these particular 
programs are different in the sense that not only did they help 
support the ag economy and the rest of the economy, they also 
return money back, so there is a return on the investment. So 
these other programs, they spend and you generate some incomes 
there, but this is actually a sort of investment. I think about 
this as being an investment kind of program.
    I believe in crop insurance. It is a critical program for 
our country. I believe in the safety net programs. They are 
critical for the country. But, as an important component of all 
of that, you also have to have the trade aspect of our programs 
working, and FMD and MAP are a critical component, according to 
our research, of maintaining a viable agricultural community.
    So I wouldn't say that you need to shift money out of FMD. 
In fact, in my view, from my research and my background, we are 
spending too little. Let me tell you why. That $28 per $1 spent 
that we return back, that tells you actually that we are 
spending too little. What that says is that we are leaving $28 
out there that we are not getting for every $1 we are not 
spending. For every $1 additional we spend, we are going to get 
another $28.
    Mr. Marshall. Yes. Okay. I think there is obviously some 
saturation there eventually.
    My next question is for Mr. Seng. Mr. Seng, we don't have a 
Secretary of Agriculture confirmed, we don't have a Trade 
Ambassador confirmed, and our President says we have good trade 
agreements, he wants better, that he wants bilateral trade 
agreements. The people that are out there in the trenches that 
are in these foreign countries working for us, doing this, how 
much are they being impacted by the lack of these people in 
position, and how do you feel going to these bilateral trade 
agreements will impact agriculture and what your people do out 
there in the field?
    Mr. Seng. Right. Well, it is really hard at this point in 
time to understand exactly what direction the President is 
leading us as far as these bilateral agreements. A lot of us 
spend a lot of time, and we work with some very fine people who 
worked very hard on TPP, and we could see that there was one 
chapter on market access but there were 27 other chapters in 
TPP.
    What we are concerned about is this: And I was just in 
Mexico a week ago, and what I am picking up in Mexico both from 
the trade, from organizations, and from the government, is this 
big area of uncertainty. People don't know what is coming.
    Mr. Marshall. Right.
    Mr. Seng. And without a Secretary of Agriculture, without 
leadership on agriculture at this point in time, and I say that 
very carefully, our buyers around the world are becoming 
insecure. The hallmark of U.S. trade policy and of U.S. 
diplomatic policy has always been that we look at agriculture 
as probably the most important diplomatic tool that we have. 
And we have said for years, going back to Kika de la Garza and 
way back even before him, we have said for years that even 
though you are not self-sufficient, you can be food-secure 
because you can depend on the United States as a supplier. What 
is being called into question now is with this uncertainty, 
with what is going on especially south of the border, where 
Mexico at one point in time looked north for all the sources of 
their corn, soybeans, wheat, you name it, beef, pork, now they 
are starting to look south. And that is the government policy 
of diversification, but we are seeing the same thing when it 
comes to the private-sector. And from their standpoint, it is a 
food security issue.
    And so all of a sudden, issues that become a question of--
it is not so much whether we sell more product here or there, 
but it is a food security issue for a lot of these countries.
    Mr. Marshall. Okay.
    Mr. Seng. And this is something that we need to really take 
into consideration.
    Mr. Marshall. Okay. Border adjustment tax, is that 
impacting anybody out in the field, that conversation. Does 
anyone want to grab that one real quick? The concept of a 
border adjustment tax, is that scaring people out in the 
fields?
    Mr. Wenger. Well, it is a double-edged sword, but 
certainly, for a lot of folks, some of the criteria we have to 
produce under, I don't think they are quite so worried about 
that because with the regulations, especially in California, 
that we have to deal with today when we see that we now have an 
8 hour workday, 40 hour workweek in agriculture coming up, it 
is mindboggling. Weather doesn't dictate an 8 hour workday, 40 
hour workweek. But we see a lot of producers going to Mexico, 
and so we would be competing with that product. So I would 
think some people would probably relish the idea that there 
would be some leveling playing field for producers who go to 
Mexico, and want to bring that product in here and compete with 
domestic producers.
    The Chairman. Thank you, Mr. Marshall.
    We are going to have votes coming up here before long, so 
we are going to wrap it up here. But I want to offer an 
opportunity for Mr. Costa to make any closing remarks he may 
have, and then I have a few remarks myself.
    Mr. Costa. Well, thank you again, Mr. Chairman, Members of 
the Subcommittee. I am looking forward to this year as we 
reauthorize the farm bill. And as I said to you a moment ago, 
today's hearings begin to draw a line in the sand, but we 
certainly cannot do this by ourselves. There is going to be 
heavy lifting and a lot of these programs we understand the 
validity and the importance of, but a lot of other folks do 
not. And, therefore, we are going to insist in your help big 
time if we are going to be successful. And I will work, in a 
bipartisan way, every day I can with the Chairman of this 
Subcommittee and with my colleagues on both sides of the aisle 
to produce a farm bill in this Congress, because that is the 
goal line.
    The Chairman. Thank you, Mr. Costa.
    I want to thank all the witnesses for your testimony today. 
It has really, really been great. You have certainly helped to 
beef-up the record on this particular issue.
    And in closing, I want to share a little example. As some 
of you may know, I served in the state legislature, in the 
State Senate specifically, for two terms. I was in the Minority 
my first term, in the Majority my second term. And the second 
term in the Majority, I co-chaired what was known as the NAR 
Subcommittee, which those of you up here would know as 
Agriculture Appropriations in Washington, D.C., here on Capitol 
Hill. When I was Chairman, we included $300,000 of seed money 
for market promotion for sweet potatoes, specifically in 
Europe. And we went from roughly, I believe, $42 million 
exported to Europe, to now today with that recurring funding of 
$300,000 to $500,000, I believe the total exports are about 
$124 million or so. That is a substantial return on investment 
that is really just a microcosm or small example of the much 
bigger picture here. And so we need to do everything we can to 
ensure that these programs remain funded, and hopefully 
increase the amount of mandatory funding that we can get to 
them, because we are going to reap the results and the benefits 
many times over the investment. And so anything and everything 
that you all can do, outside groups and farmers and ranchers 
all across the country, even those who pronounce almond amond, 
we need everybody's help. And I implore you to do everything 
possible to maximize our leverage on that front.
    With that, under the Rules of the Committee, the record of 
today's hearing will remain open for 10 calendar days to 
receive additional material and supplementary written responses 
from the witness to any question posed by a Member.
    This hearing of the Subcommittee on Livestock and Foreign 
Agriculture is adjourned.
    [Whereupon, at 3:41 p.m., the Subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]
    Supplelmentary Information Submitted by Gary W. Williams, Ph.D.,
  Professor of Agricultural Economics and Co-Director, Agribusiness, 
      Food, and Consumer Economics Research Center, Department of
              Agricultural Economics, Texas A&M University
    In the hearing of the Subcommittee on Livestock and Foreign 
Agriculture on February 28 (The Next Farm Bill: International Market 
Development), Ranking Member Costa requested additional information on 
the likely consequences of eliminating or substantially reducing the 
funding for the USDA MAP and FMD programs. In response, I have attached 
the results of our analysis of the consequences of eliminating those 
programs for U.S. agricultural exports, the U.S. farm economy, and the 
overall general U.S. economy entitled: ``Economic Consequences of 
Eliminating Funding for USDA Export Market Development Programs''.
    To help respond to questions by other Subcommittee Members, I have 
attached two more files summarizing other key results from our study of 
the USDA Export Market Development Programs:

   ``Economic Consequences of Increased Funding for the USDA 
        Export Market Development Programs''[; and]

   ``Historical Benefits of USDA Export Market Development 
        Programs''.

    Please let me know if I can be of further service to the 
Subcommittee.

Dr. Williams.
Insert 1
          Dr. Williams. I can answer some of that, at least with 
        numbers. We actually did that particular analysis in our study. 
        We simulated what would happen, what would the world look like 
        if these programs did not exist. And the answer is that we 
        would lose 240,000 jobs in any particular year, we would lose 
        about $39.3 billion in output in this country, $16, $17 billion 
        in GDP, and labor income would drop by about $10 billion. So 
        just on the economy side, it would be fairly devastating.
          Mr. Costa. Mr. Williams, would you provide that information 
        to all the Members of the Subcommittee and full Committee? We 
        can use that to substantiate our case and enter it into the 
        record.
          Dr. Williams. Yes, sir, I would be happy to, Mr. Costa.
Economic Consequences of Eliminating Funding for the USDA Export Market 
        Development Programs
    U.S. economic losses that would occur from completely eliminating 
USDA Market Development Programs (FMD/MAP funding) with cooperators 
responding by cutting their funding of export promotion by 50% (see 
Tables 1 and 2)\1\ based on recent research study:\2\
---------------------------------------------------------------------------
    \1\All changes relative to flat funding over 5 years (continued 
current levels of authorized funding over 5 years).
    \2\Williams G.W., J.J. Reimer, R.M. Dudensing, B.A. McCarl, H.M. 
Kaiser, J. Somers, ``Economic Impact of USDA Market Development 
Programs,'' Informa Economics, IEG, Prepared for U.S. Wheat Associates, 
USA Poultry & Egg Export Council, Pear Bureau Northwest, and the USDA 
Foreign Agriculture Service, June 2016. Available on-line at: http://
www.agexportscount.com/developing-markets/.
---------------------------------------------------------------------------
U.S. Agricultural Export Losses
   Annual average loss of $14.7 billion (7.9%) in U.S. 
        agricultural export value.

   Loss of $235.2 billion in export value over a 15 year 
        period.
U.S. Agricultural Sector Losses\3\
---------------------------------------------------------------------------
    \3\The range of losses refers to the results from conducting the 
analysis under two alternative assumptions--full employment and less 
than full employment. The smaller losses are generally associated with 
the full employment assumption.
---------------------------------------------------------------------------
   Annual average losses:

     U.S. farm cash receipts: Between $7.0 billion (2.2%)-
            $9.9 billion (3.1%)

     U.S. net cash farm income: Between $2.4 billion 
            (3.7%)-$2.5 billion (3.8)

     U.S. farm asset value: Between $0.7 billion (0.03%)-
            $1.3 billion (0.1%).

   Losses in employment (full and part-time jobs) in the 
        agrifood sector (food product processing as well as production 
        agriculture):

     64,400 jobs (1.7%)--102,800 jobs (2.6%)
U.S. Economy Losses
   Average annual losses:

     U.S. economic output (sales): Between $3.6 billion 
            (0.01%)-$45.3 billion (0.2%)

     U.S. GDP: Between $2.6 billion (0.02%)-$19.5 billion 
            (0.1%)

     U.S. labor income: Between $0.9 billion (0.01%)-$11.3 
            billion (0.1%).

   Losses in U.S. employment (full and part-time jobs):

     Up to 278,600 full- and part-time jobs across the 
            entire economy (0.2%).

   U.S. regional annual average losses (see Table 2):

     Northeast: $2.02 billion in sales, $841.5 million in 
            GDP, and $483.1 million in labor income

     South: $8.85 billion in sales, $3.48 billion in GDP, 
            and $2.05 billion in labor income

     Midwest: $15.93 billion in sales, $6.43 billion in 
            GDP, and $3.68 billion in labor income

     West: $6.97 billion in sales, $3.25 billion in GDP, 
            and $1.97 billion in labor income

   U.S. regional average employment losses (see Table 2):

     Northeast: 10,800 jobs

     South: 64,500 jobs

     Midwest: 94,100 jobs

     West: 44,700 jobs

   Table 1: Average Annual Losses by the U.S. Farm Sector and General
    Economy from Eliminating USDA Export Market Development Fundinga
------------------------------------------------------------------------
                     Less than Full Employment       Full Employment
                    ----------------------------------------------------
       Sector           Average      Percent      Average      Percent
                      Annual Loss      Loss     Annual Loss      Loss
------------------------------------------------------------------------
 Agriculture Sector      $U.S.          %          $U.S.          %
                       billions                   billions
------------------------------------------------------------------------
Farm cash receipts            9.9          3.1          7.0          2.2
     Net cash farm            2.5          3.8          2.4          3.7
             income
       Farm assets            1.3          0.1          0.7         0.03
                       1,000 jobs                1,000 jobs
     Employment in          102.8          2.6         64.4          1.7
   agrifood sectorb
------------------------------------------------------------------------
    U.S. Economy         $U.S.          %          $U.S.          %
                       billions                   billions
------------------------------------------------------------------------
U.S. Output (Gross           45.3          0.2          3.6         0.01
             Sales)
          U.S. GDP           19.5          0.1          2.6         0.02
             U.S. Labor Incom11.3          0.1          0.9         0.01
                       1,000 jobs                1,000 jobs
  U.S. Employmentb          278.6         0.20           --           --
------------------------------------------------------------------------
Note: -- = No change since labor is always fully employed. See Note b.
aAssumes that cooperator groups respond by cutting back their funding of
  export promotion by 50%. All changes shown are averages over a 5 year
  period relative to the flat funding base value (2010) which is the
  average annual level of a variable in the absence of the promotion
  program.
bIn the full employment analysis, by definition all labor is always
  fully employed so while labor can be shifted from one industry to
  another, the total employment is not allowed to change. In the less-
  than-full-employment scenario, employment can increase as labor shifts
  among industries but also because labor can be hired from the ranks of
  the unemployed.


   Table 2: Average Annual Losses by the U.S. Farm Sector and General
   Economy from Eliminating USDA Export Market Development Funding by
                             Census Regiona
------------------------------------------------------------------------
                       Northeast      South       Midwest        West
------------------------------------------------------------------------
                                   millions of $U.S. (2010)
------------------------------------------------------------------------
     Output (Gross        2,022.8      8,845.5     15,931.6      6,969.1
             Sales)
               GDP          841.5      3,480.7      6,432.2      3,248.0
                  Labor Inco483.1      2,051.6      3,679.0      1,965.0
------------------------------------------------------------------------
                                      thousands of jobs
------------------------------------------------------------------------
        Employment           10.8         64.5         94.1         44.7
      (thousands of
              jobs)
------------------------------------------------------------------------
aAssumes that cooperator groups respond by cutting back their funding of
  export promotion by 50%. Analysis assumes less than full employment.
  Full employment is not necessarily a useful concept in a regional
  context since labor can flow from one region to another easily given a
  change in demand in some region.

Insert 2
Economic Consequences of Increased Funding for the USDA Export Market 
        Development Programs
    U.S. economic benefits that would occur from increasing funding for 
the USDA Market Development Programs (FMD/MAP funding) over a 5 year 
period under two alternative increased funding scenarios as reported in 
a recent research report\1\ are listed below.
---------------------------------------------------------------------------
    \1\Williams G.W., J.J. Reimer, R.M. Dudensing, B.A. McCarl, H.M. 
Kaiser, J. Somers, ``Economic Impact of USDA Market Development 
Programs,'' Informa Economics, IEG, Prepared for U.S. Wheat Associates, 
USA Poultry & Egg Export Council, Pear Bureau Northwest, and the USDA 
Foreign Agriculture Service, June 2016. Available on-line at: http://
www.agexportscount.com/developing-markets/.
---------------------------------------------------------------------------
    The two future funding scenarios simulated:

   Scenario 1: Government expenditures for MAP and FMD doubled 
        over 5 years through annual increments of $46.9 million to a 
        total of $469 million (double the base year) with cooperator 
        contributions increasing approximately 10% in the first year to 
        $515.6 million and then remaining flat at that level for the 
        following 4 years.

   Scenario 2: Government expenditures for MAP and FMD again 
        doubled over 5 years as in the first scenario but cooperator 
        contributions increased by 50% over that period through annual 
        increases of $46.9 million for a total of $703.6 million by the 
        end of the 5 year period.

    Economic benefits that would accrue under the two scenarios as 
illustrated in Figure 1 and shown in Tables 1 and 2:\2\
---------------------------------------------------------------------------
    \2\All changes are relative to flat funding over 5 years (continued 
current levels of authorized funding). Also, changes in text refer to 
an assumption of less than full employment. Tables 1 and 2 show the 
changes under the assumptions of both full and less-than-full 
employment.

---------------------------------------------------------------------------
   Export gains would be substantial under both scenarios.

     Average annual gain in U.S. agricultural exports: $3.4 
            billion and $4.5 billion under Scenarios 1 and 2, 
            respectively (Figure 1). Five year gain of $17.1 billion 
            and $22.5 billion, respectively, under the two scenarios.

   Returns to farmer and taxpayer dollars invested would be 
        high:

     Scenario 1: Benefit-cost ratio (BCR) of $18.2 for 
            every additional dollar invested in export market 
            development.

     Scenario 2: BCR of $16 for every additional dollar 
            invested in export market development.

   Gains to the farm economy would be equally substantial under 
        both scenarios.

     U.S. farm cash receipts: Average annual gains of up to 
            $2.2 billion under Scenario 1 and up to $2.9 billion under 
            Scenario 2. Total contribution over 5 years of up to $11.1 
            billion under Scenario 1 and $14.6 billion under Scenario 
            2.

     U.S. net cash farm income: Average annual gains of up 
            to $0.5 billion and $0.7 billion, respectively, under the 
            two scenarios. Five year gains of up to $2.7 billion and 
            $3.5 billion under the two scenarios, respectively.

     U.S. farm asset values: Average annual gains of up to 
            $0.29 billion and $0.4 billion, respectively, under the two 
            scenarios, Five year gains of up to $1.5 billion and $1.9 
            billion, respectively.

     Agrifood Sector Employment: A contribution of up to 
            24,200 new jobs under Scenario 1 and up to 31,900 new jobs 
            under Scenario 2.

   The overall U.S. economy would experience a substantial 
        multiplier effect from the farm economy boost under both 
        scenarios.

     U.S. economic output (sales): Average annual gains of 
            up to $10.6 billion and $14.0 billion under the two 
            scenarios, respectively. Five year gains of up to $53.1 
            billion and $70.0 billion under the two scenarios, 
            respectively.

     U.S. GDP: Average annual gains of up to $4.5 billion 
            and $6.0 billion under the two scenarios, respectively. 
            Five year gains of up to $22.7 billion and $30.0 billion, 
            respectively, under the two scenarios.

     U.S. labor income: Average annual gains of up to $2.6 
            billion and $3.5 billion under the two scenarios, 
            respectively. Five year gains of up to $13.1 billion and 
            $17.5 billion under the two scenarios, respectively.

     U.S. employment (full and part-time jobs): 
            Contribution of up to 64,000 new jobs under Scenario 1 and 
            up to 84,600 new jobs under Scenario 2.
Figure 1: Simulated Annual Gains in U.S. Export Revenue Achieved Under 
        USDA Export Market Development Funding Scenarios 1 and 
        2a
        
        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
        
          *10% increase in first year over baseline and then flat for 
        next 4 years.
          aChanges relative to flat funding over 5 years 
        (continued current levels of authorized funding).

  Table 1: Scenario 1--Average Annual Gains by the U.S. Farm Sector and
 General Economy from Increased USDA Export Market Development Fundinga
------------------------------------------------------------------------
                     Less than Full Employment       Full Employment
                    ----------------------------------------------------
      Variable          Average      Percent      Average      Percent
                      Annual Gain      Gain     Annual Gain      Gain
------------------------------------------------------------------------
 Agriculture Sector      $U.S.          %          $U.S.          %
                       billions                   billions
------------------------------------------------------------------------
Farm cash receipts            2.2          0.7          1.8          0.6
     Net cash farm            0.5          0.8          0.5          0.9
             income
       Farm assets           0.29         0.01         0.19         0.01
                       1,000 jobs                1,000 jobs
     Employment in           24.2          0.6         17.2          0.4
   agrifood sectorb
------------------------------------------------------------------------
    U.S. Economy         $U.S.          %          $U.S.          %
                       billions                   billions
------------------------------------------------------------------------
U.S. Output (Gross           10.6         0.04          1.3        0.005
             Sales)
          U.S. GDP            4.5         0.03          0.8        0.006
             U.S. Labor Income2.6         0.03          0.3        0.004
                       1,000 jobs                1,000 jobs
  U.S. Employmentb           64.0         0.04           --           --
------------------------------------------------------------------------
Note: -- = No change since labor is always fully employed. See Note b.
aAll changes shown are averages over a 5 year period relative to the
  flat funding base value (2010) which is the average annual level of a
  variable in the absence of the promotion program.
bIn the full employment analysis, by definition all labor is always
  fully employed so while labor can be shifted from one industry to
  another, the total employment is not allowed to change. In the less-
  than-full-employment scenario, employment can increase as labor shifts
  among industries but also because labor can be hired from the ranks of
  the unemployed.


  Table 2: Scenario 2--Average Annual Gains by the U.S. Farm Sector and
 General Economy from Increased USDA Export Market Development Fundinga
------------------------------------------------------------------------
                     Less than Full Employment       Full Employment
                    ----------------------------------------------------
      Variable          Average      Percent      Average      Percent
                      Annual Gain      Gain     Annual Gain      Gain
------------------------------------------------------------------------
 Agriculture Sector      $U.S.          %          $U.S.          %
                       billions                   billions
------------------------------------------------------------------------
Farm cash receipts            2.9          0.9          2.3          0.7
     Net cash farm            0.7          1.1          0.7          1.1
             income
       Farm assets            0.4         0.02          0.3         0.01
                       1,000 jobs                1,000 jobs
     Employment in           31.9          0.8         22.7          0.6
   agrifood sectorb
------------------------------------------------------------------------
    U.S. Economy         $U.S.          %          $U.S.          %
                       billions                   billions
------------------------------------------------------------------------
U.S. Output (Gross           14.0         0.06          1.7        0.007
             Sales)
          U.S. GDP            6.0         0.04          1.1        0.007
             U.S. Labor Income3.5         0.04          0.4        0.005
                       1,000 jobs                1,000 jobs
  U.S. Employmentb           84.6         0.05           --           --
------------------------------------------------------------------------
Note: -- = No change since labor is always fully employed. See Note b.
aAll changes shown are averages over a 5 year period relative to the
  flat funding base value (2010) which is the average annual level of a
  variable in the absence of the promotion program.
bIn the full employment analysis, by definition all labor is always
  fully employed so while labor can be shifted from one industry to
  another, the total employment is not allowed to change. In the less-
  than-full-employment scenario, employment can increase as labor shifts
  among industries but also because labor can be hired from the ranks of
  the unemployed.

Insert 3
Historical Benefits of USDA Export Market Development Programs
    The benefits of the USDA Export Market Development Programs (FMD/
MAP) over history on U.S. agricultural exports, the U.S. agricultural 
sector, and the broader U.S. economy according to a recent study\1\ are 
listed below and summarized in Tables 1 and 2:
---------------------------------------------------------------------------
    \1\Williams G.W., J.J. Reimer, R.M. Dudensing, B.A. McCarl, H.M. 
Kaiser, J. Somers, ``Economic Impact of USDA Market Development 
Programs,'' Informa Economics, IEG, Prepared for U.S. Wheat Associates, 
USA Poultry & Egg Export Council, Pear Bureau Northwest, and the USDA 
Foreign Agriculture Service, June 2016. Available on-line at: http://
www.agexportscount.com/developing-markets/.
---------------------------------------------------------------------------
U.S. Agricultural Export Benefits (1977-2014)
   Annual average addition of 15.3% ($8.15 billion) to the 
        value of U.S. agricultural exports, 8.0% (11.5 million mt) to 
        the volume of aggregate U.S. agricultural exports, and about 
        6.7% ($25.07/mt) to the aggregate price of U.S. agricultural 
        exports.

   A total of $309.7 billion in additional export revenues and 
        437 million metric tons of additional export volume over the 
        entire period.

   Net export revenue benefit-cost ratio (BCR) of 28.3. That 
        is, over their history, the programs have generated a net 
        return of $28.30 in additional export revenue for every dollar 
        invested in export promotion.
U.S. Agricultural Sector Benefits (2002-2014)
    Two scenarios were considered: (1) full employment (full) and (2) 
less than full employment (less). Benefits of the USDA Export Market 
Development Programs under the two scenarios:

   Annual average additions:

     U.S. farm cash receipts: $8.4 billion (2.7%) (full) 
            and $8.7 billion (2.8%) (less).

     U.S. net cash farm income: $1.1 billion (1.8%) (full) 
            and $2.1 billion (3.7%) (less).

     U.S. farm asset value: $1.0 billion (0.05%) (full) and 
            $1.1 billion (0.1%) (less).

   Total additions over the entire 2002-14 period:

     U.S. farm cash receipts: $109.2 billion (full) to 
            $113.1 billion (less)

     U.S. net cash farm income: $14.3 billion (full) and 
            $27.3 billion (full)

     U.S. farm asset value: $13.0 billion (full) and $14.3 
            billion (less).

   Contribution to employment (full and part-time jobs) in the 
        agrifood sector (food product processing as well as production 
        agriculture):

     93,900 (2.4%) jobs (less) and 90,000 (2.3%) jobs 
            (full)
U.S. Economy Benefits (2002-2014)
    The full employment (full) and less than full employment (less) 
scenarios considered here as well. Benefits of the USDA International 
market Development Programs under the two scenarios:

   Average annual additions of U.S. economic activity:

     U.S. economic output (sales): $7.1 billion (full) and 
            $39.3 billion (less)

     U.S. GDP: $4.4 billion (full) and $16.9 billion (less)

     U.S. labor income: $1.7 billion (full) and $9.8 
            billion (less).

   Total additions to the U.S. economy over the entire 2002-14 
        period:

     U.S. economic output (sales): $510.9 billion (full) 
            and $92.3 billion (less)

     U.S. GDP: $219.7 billion (full) and $92.3 billion 
            (full)

     U.S. labor income: $22.1 billion (full) and $127.4 
            billion (less)

   Contributions to U.S. employment (full and part-time jobs):

     Up to 239,800 full- and part-time jobs across the 
            entire economy.

     Reduction in U.S. unemployment by up to 3.0%.

   GDP contribution (average annual) by industry (Table 2):

     Service industry: $1.89 billion (full) and $7.20 
            billion (less)

     Agriculture and agribusiness: $1.47 billion (full) and 
            $5.62 billion (less)

     Wholesale and Retail trade: $0.37 billion (full) and 
            $1.40 billion (less)

     Other: $0.70 billion (full) and $2.68 billion (less)

  Table 1[a]: Average Annual Historical Gains by U.S. Agriculture Sector and General U.S. Economy from the USDA
                                  Export Market Development Programs, 2002-2014
----------------------------------------------------------------------------------------------------------------
                                         Less than Full Employment                    Full Employment
                                 -------------------------------------------------------------------------------
             Sector                 Average Annual                          Average Annual
                                         Gain           Percent Change           Gain           Percent Change
----------------------------------------------------------------------------------------------------------------
       Agriculture Sector           $U.S. billions             %            $U.S. billions             %
----------------------------------------------------------------------------------------------------------------
         Farm cash receipts                   8.4                 2.7                 8.7                 2.8
       Net cash farm income                   2.1                 3.7                 1.1                 1.8
                Farm assets                   1.1                 0.1                 1.0                0.05
                                       1,000 jobs                              1,000 jobs
Employment in agrifood sectorb               93.9                 2.4                90.0                 2.3
----------------------------------------------------------------------------------------------------------------
          U.S. Economy              $U.S. billions             %            $U.S. billions             %
----------------------------------------------------------------------------------------------------------------
  U.S. Output (Gross Sales)                  39.3                 0.2                 7.1                0.03
                   U.S. GDP                  16.9                 0.1                 4.4                0.03
                      U.S. Labor Income       9.8                 0.1                 1.7                0.02
                                       1,000 jobs                              1,000 jobs
           U.S. Employmentb                 239.8                0.14                  --                  --
----------------------------------------------------------------------------------------------------------------
Note: -- = No change since labor is always fully employed. See Note b.
aAll changes shown are annual average contributions to the historical average value over the period of 2002-
  2014.
bIn the full employment analysis, by definition all labor is always fully employed so while labor can be shifted
  from one industry to another, the total employment is not allowed to change. In the less-than-full-employment
  scenario, employment can increase as labor shifts among industries but also because labor can be hired from
  the ranks of the unemployed.


   Table 1[b]: Average Annual Historical Contributions of USDA Export Market Development Programs to the U.S.
                             Agriculture Sector and General U.S. Economy, 2002-2014
----------------------------------------------------------------------------------------------------------------
                                Base average       Less than Full Employment             Full Employment
          Variable             valuea (2002-  ------------------------------------------------------------------
                                   2014)            Change       Percent Change       Change      Percent Change
----------------------------------------------------------------------------------------------------------------
     Agriculture Sector        $U.S. billions   $U.S. billions         %          $U.S. billions         %
----------------------------------------------------------------------------------------------------------------
       Farm cash receipts             310.2              8.4              2.7              8.7              2.8
     Net cash farm income              58.0              2.1              3.7              1.1              1.8
              Farm assets           2,081.2              1.1              0.1              1.0             0.05
                                 1,000 jobs       1,000 jobs                        1,000 jobs
   Employment in agrifood           3,900.4             93.9              2.4             90.0              2.3
                   sectorb
----------------------------------------------------------------------------------------------------------------
        U.S. Economy           $U.S. billions   $U.S. billions         %          $U.S. billions         %
----------------------------------------------------------------------------------------------------------------
U.S. Output (Gross Sales)          25,070.0             39.3              0.2              7.1             0.03
                 U.S. GDP          14,785.6             16.9              0.1              4.4             0.03
                    U.S. Labor Incom9,017.0              9.8              0.1              1.7             0.02
                                 1,000 jobs       1,000 jobs                        1,000 jobs
         U.S. Employmentb        173,414.20            239.8            c0.14               --               --
----------------------------------------------------------------------------------------------------------------
Note: -- = Not available as an output from this analysis. See Note a.
aThe ``base value'' for a variable is the average annual level of that variable in the absence of the promotion
  program.
bIn the full employment analysis, by definition all labor is always fully employed so while labor can be shifted
  from one industry to another, the total employment is not allowed to change. In the less-than-full-employment
  scenario, employment can increase as labor shifts among industries but also because labor can be hired from
  the ranks of the unemployed.


   Table 2: Average Annual Historical GDP Contribution of USDA Export
            Market Development Programs by Sector, 2002-2014a
------------------------------------------------------------------------
                                 Less than full
           Sector                  employment          Full employment
------------------------------------------------------------------------
                                         $U.S. billions (2010)
------------------------------------------------------------------------
Production Agriculture and               $4.10                 $1.07
     Support Industries
       Food Processing                   $1.50                 $0.39
Other Agriculture Product                $0.02                 $0.01
             Processing
   Mining, Energy, and                   $0.80                 $0.21
              Utilities
Construction and Maintenance             $0.10                 $0.03
   Other Manufacturing                   $1.10                 $0.29
Wholesale and Retail Trade               $1.40                 $0.37
    Transportation and                   $0.60                 $0.16
            Warehousing
              Services                   $7.20                 $1.89
                             -------------------------------------------
  Total.....................            $16.90                $4.43
------------------------------------------------------------------------
aIn the full employment analysis, by definition all labor is always
  fully employed so while labor can be shifted from one industry to
  another, the total employment is not allowed to change. In the less-
  than-full-employment scenario, employment can increase as labor shifts
  among industries but also because labor can be hired from the ranks of
  the unemployed.

                                 ______
                                 
    Supplelmentary Information Submitted by Tim Hamilton, Executive 
 Director, Food Export Association of the Midwest USA and Food Export 
                             USA--Northeast
The Case for Increased Funding for USDA Foreign Agricultural Service 
        (FAS) Export Market Development Programs
January 2017

    In order to bolster U.S. international market development efforts, 
further boost U.S. agricultural exports, and help U.S. agriculture and 
related businesses in rural America prosper, the Coalition to Promote 
U.S. Agricultural Exports and the Agribusiness Coalition for Foreign 
Market Development strongly believe that Market Access Program (MAP) 
funding should be increased to $400 million annually and Foreign Market 
Development (FMD) program funding to $69 million annually, with the 
increases phased in as part of the next farm bill.
    Agricultural exports are one of the brightest lights in the U.S. 
economy, with a strong multiplier effect that is especially pronounced 
in rural communities. According to USDA's Economic Research Service 
(ERS):

   The $150 billion in U.S. agricultural exports that occurred 
        in 2014 produced an additional $190 billion in economic 
        activity for a total of $340 billion of economic output;

   Those agricultural exports supported 1.1 million full time 
        U.S. civilian jobs, including 800,000 in the non-farm sector 
        (73% of the total employment effect) required to assemble, 
        process and distribute agricultural products for exports; [and]

   This represents 7,550 jobs for every $1 billion of 
        agricultural export revenue.

    Agricultural export market development depends on long-standing, 
successful partnerships between nonprofit U.S. agricultural trade 
associations, farmer cooperatives, nonprofit state-regional trade 
groups, small businesses, and USDA to share the costs of overseas 
marketing and promotional activities such as market research, trade 
shows, trade servicing, and retail and educational promotions.
    Under the MAP and the FMD program, administered by USDA's Foreign 
Agricultural Service (FAS), these private-sector groups contribute an 
estimated $468.7 million annually, primarily from check-off programs, 
into international market development and promotion. In fact, industry 
contributions, which are leveraged by public funds, represent more than 
70% of the buying power of the programs.
Highly Successful Investments
    A 2016 econometric study of export demand by Informa Economics IEG, 
working with Texas A&M University and Oregon State University 
economists, showed that between 2002 and 2014:

   A return on investment by MAP and FMD of a remarkable $24 in 
        export gains for every additional $1 spent on foreign market 
        development, consistent with results from several previous 
        studies;

   A dramatic average annual increase in farm income of $2.1 
        billion because of program activities; [and]

   Creation of 239,000 new full and part-time jobs related to 
        the programs.

    Federal funding for MAP was last increased in the 2002 Farm Bill, 
reaching $200 million annually in 2006. Federal funding for the FMD 
program was last increased in the 2002 Farm Bill to $34.5 million 
annually. Since the last increases were approved, the size of the 
foreign agricultural market that those funds are meant to develop has 
more than tripled to more than $800 billion a year.
Diminished Buying Power at a Crucial Time for Agriculture
    Despite a tremendous growth in U.S. agricultural exports and 
opportunities for farmers and small businesses abroad, the real, 
effective Federal funding that reaches the agricultural cooperators 
carrying out market development work has steadily eroded even while 
international competitors continue to greatly outspend us.
    Looking just at the FY16 FAS allocation of MAP and FMD funding, the 
factors that have caused the erosion include:

   Sequestration in FY16 reduced annual, available MAP funding 
        by $13.6 million and FMD funding by $2.4 million.

   USDA administrative expenses in FY16 reduced available MAP 
        and FMD program funds by $6.6 million.

   Since the 2002 Farm Bill was enacted, inflation and a 
        depreciated U.S. dollar have reduced the real, effective 
        promotional power of U.S. agricultural market development 
        programs by almost 30 percent.

   FAS reserves $3.5 million for Global Broad-based Initiatives 
        (GBIs) involving multiple cooperators. While extremely valuable 
        and strongly supported by cooperators, GBIs nonetheless reduce 
        the total available MAP funding for individual cooperator 
        programs.

    The result is fewer dollars for actual programs, even while demand 
for the benefits these programs provide increases.
    In FY17, just $173.5 of the $200 million MAP appropriation was 
allocated to the 68 nonprofit commodity organizations participating in 
the program. Just $26.6 million of the FMD appropriation was allocated 
to the 23 nonprofit commodity organizations participating in the 
program. Taking inflation into account, that means the $200.1 million 
total that FAS awarded for MAP and FMD in FY17 had an actual 
promotional power of only $140.1 million.
Other Important Considerations
   With growing global food demand, MAP and FMD participants 
        have the opportunity to service more customers who seek to buy 
        an increasing volume and variety of products. In fact, since 
        the 2002 Farm Bill, overall agricultural imports of the 
        overseas markets that U.S. exports are competing for rose by 
        more than 330 percent, from $247 billion in 2002 to $834 
        billion. This significant increase in market size, combined 
        with the diminished purchasing power of MAP and FMD funding 
        since 2002, means that our producers are not well equipped to 
        take on more aggressive foreign competition.

   New demands on MAP and FMD funding related to work on non-
        tariff trade barriers, while reflecting the collaborative work 
        that cooperators often do to supplement efforts of FAS and 
        other regulatory agencies, puts greater strain on funding that 
        in the past went exclusively to market development and 
        promotion activities.

   A 2015 survey of the cooperators showed that they could 
        readily make effective use of a considerable increase in MAP 
        and FMD funding. In addition, more nonprofit producer groups 
        are establishing national organizations and are anxious to 
        apply for program funding. Greater demand will be placed on the 
        fixed program funds as more organizations become eligible to 
        apply for MAP and FMD.

   Competitors in foreign countries receive substantially more 
        public support than is provided to U.S. agricultural exporters. 
        A 2013 study showed that in 2011, competing government support 
        for agricultural exports from just 12 countries and the EU 
        Central Government (not including individual member states) was 
        $700 million per year. For comparison, the U.S. budgets 
        approximately $235 million annually in public funds through MAP 
        and FMD for agricultural export promotion and market 
        development. A 2016 study of competitive agricultural export 
        market development investments showed that the EU allocates 
        $255 million annually just to promote wine.
Greater Investment Is Needed
    Dr. Gary Williams of Texas A&M University, the lead economist of 
the 2016 study measuring the effectiveness of MAP and FMD, said the 
data indicated that additional funding for these programs would 
generate incremental positive gains. As cooperators look at how best to 
leverage limited funds, MAP and FMD are considered an excellent match 
to their industry dollars and, if increased, would likely lead to 
increased investment from industry, thus further enhancing the overall 
reach and impact of the program.
                                 ______
                                 
                           Submitted Question
Response from Gary W. Williams, Ph.D., Professor of Agricultural 
        Economics and Co-Director, Agribusiness, Food, and Consumer 
        Economics Research Center, Department of Agricultural 
        Economics, Texas A&M University*
---------------------------------------------------------------------------
    *There was no response from the witness by the time this hearing 
was published.
---------------------------------------------------------------------------
Question Submitted by Hon. Stacey E. Plaskett, a Delegate in Congress 
        from Virgin Islands
    Question. Last year, the Department of Agriculture requested a $1.5 
million appropriation for Foreign Agricultural Service staffing at the 
United States Embassy in Havana, Cuba. This was approved by the Senate 
Appropriations Committee in their bill to fund Agriculture Department 
activities over this fiscal year.
    To the knowledge of your research center, what restrictions 
currently apply to the Market Access Program and the Foreign Market 
Development Program regarding use of their funding to promote 
agricultural exports to Cuba?
    Answer.


 
                           THE NEXT FARM BILL

                (RURAL DEVELOPMENT AND ENERGY PROGRAMS)

                              ----------                              


                        THURSDAY, MARCH 9, 2017

                  House of Representatives,
   Subcommittee on Commodity Exchanges, Energy, and Credit,
                                  Committee on Agriculture,
                                                   Washington, D.C.
    The Subcommittee met, pursuant to call, at 10:00 a.m., in 
Room 1300 of the Longworth House Office Building, Hon. Austin 
Scott of Georgia [Chairman of the Subcommittee] presiding.
    Members present: Representatives Austin Scott of Georgia, 
Goodlatte, Davis, Comer, Marshal, Faso, David Scott of Georgia, 
Kuster, Plaskett, O'Halleran, Soto, and Peterson (ex officio).
    Staff present: Darryl Blakey, Emily Wong, Haley Graves, 
John Weber, Josh Maxwell, Paul Balzano, Stephanie Addison, Evan 
Jurkovich, Liz Friedlander, Troy Phillips, Faisal Siddiqui, 
John Konya, and Carly Reedholm.

  OPENING STATEMENT OF HON. AUSTIN SCOTT, A REPRESENTATIVE IN 
                     CONGRESS FROM GEORGIA

    The Chairman. Well, good morning everyone. Welcome to the 
Commodity Exchanges, Energy, and Credit Subcommittee's first 
hearing of the new Congress. Today's hearing is part of an 
ongoing series where each Subcommittee is holding at least two 
hearings to discuss the farm bill programs and issues under its 
respective jurisdiction.
    Before I go any further, I would like welcome Mr. Comer to 
his first meeting of the Subcommittee, and to the Subcommittee. 
David, were all of your people on the Subcommittee last year?
    Mr. David Scott of Georgia. No, we have two new Members, 
Mr. Chairman. And I would like to welcome our new Members who 
are on their way to our hearing. First, Tom O'Halleran from 
Arizona. He serves in Arizona's First Congressional District. 
It is good to know a little about his background. He is a 
former homicide detective, small business owner, what a 
combination, and served three terms in the Arizona House of 
Representatives and one in the Senate.
    We also have Mr. Darren Soto from Florida, District Nine. 
Serves Florida's Ninth Congressional District, which is a 
prominent citrus and cattle district. He served in the Florida 
Legislature for a decade before coming to Congress.
    And so we welcome all our new Members, and look forward to 
working with each and every one of them.
    The Chairman. I want to thank you, Ranking Member Scott, 
for again agreeing to serve in the leadership of this 
Subcommittee. I look forward to working with you again. We have 
had a good relationship for many years, long before I came to 
Congress, going back to our time together in the state 
legislature.
    Mr. David Scott of Georgia. Absolutely.
    The Chairman. We have a couple of other Members that will 
be joining us later. I know we have Representative Roger 
Marshal from Kansas' First District, and Representative John 
Faso from New York's 19th District on the Republican side.
    Today, we are going to be reviewing the rural development 
and energy programs in the 2014 Farm Bill. These programs 
support infrastructure construction, encourage capital 
formation, and help to promote economic development across 
rural America.
    It is appropriate that this is the topic of the first 
hearing in support of the next farm bill. So much of what rural 
America will be able to accomplish over the next decade will be 
tied to how well these programs work.
    Every day our young rural citizens look around them, assess 
their lives, and try to make the best choices they can about 
their future. Unfortunately, too many feel that they have more 
opportunities somewhere else, and when they leave, they leave 
behind hollowed-out communities that grow older, that become 
less adaptable, and that are unable to maintain their quality 
of life that so many of us has enjoyed.
    With today's hearing, we will begin to examine ways we can 
reverse that cycle.
    For many rural communities, rural development initiatives 
help to offset the high fixed costs of providing basic services 
like clean water, reliable electricity, and universal phone 
service. Residents of these communities simply would not be 
able to afford to live there without these key investments. 
Federal support for infrastructure remains a key part of our 
commitment to rural America. But, our commitment to rural 
America is not just about new pipes and wires. While we often 
think of progress as a new powerline, a new water treatment 
plant, or a new broadband connection, real progress is about 
expanding opportunities. We must use these programs to narrow 
the divide between rural and urban America.
    Upgrading water and energy infrastructure can improve 
quality of life, while bringing new employment opportunities. 
Building a new health center can bring new care for families. 
Installing broadband can bring new ideas to students and 
innovation to farmers and ranchers. Renewable energy 
development can create valuable markets and income 
opportunities for farmers, keeping them on the land, and viable 
domestic energy policies can create new job opportunities in 
rural communities. Providing investment capital can further 
link agricultural producers with the global economy. The jobs, 
the health care, the ideas, and the market access are the real 
measures of progress for rural America.
    For almost 90 years, USDA's Rural Development office and 
its predecessors have been working to bring opportunities to 
rural residents. As we begin work on the next farm bill, I am 
looking forward to hearing from our witnesses about how 
Congress can improve the initiatives we have in place. Rural 
development and energy programs in the farm bill will need to 
find ways to do more with less due to budget constraints. I 
look forward to the creative ideas from our witnesses about how 
we can grow opportunities and rebuild rural communities.
    [The prepared statement of Mr. Austin Scott follows:]

 Prepared Statement of Hon. Austin Scott, a Representative in Congress 
                              from Georgia
    Good morning everyone. Welcome to the Commodity Exchanges, Energy, 
and Credit Subcommittee's first hearing of the new Congress. Today's 
hearing is part of an ongoing series where each Subcommittee is holding 
at least two hearings to discuss the farm bill programs and issues 
under its respective jurisdiction.
    Before I begin, I'd like to thank Ranking Member Scott for again 
agreeing to serve with me in the leadership of this Subcommittee. I am 
looking forward to working with you again this Congress.
    In addition I want to welcome our new Members to the Subcommittee. 
On the Republican side we have: Representative James Comer from 
Kentucky's First District, Representative Roger Marshal from Kansas' 
First District, and Representative John Faso from New York's Nineteenth 
District.
    I yield to Ranking Member David Scott to introduce his new Members.
    Today, we're going to be reviewing the rural development and energy 
programs in the 2014 Farm Bill. These programs support infrastructure 
construction, encourage capital formation, and help to promote economic 
development across rural America.
    It is appropriate that this is the topic of our first hearing in 
support of the next farm bill. So much of what rural America will be 
able to accomplish over the next decade will be tied to how well these 
programs work.
    Every day our young rural citizens look around them, assess their 
lives, and try to make the best choices they can about their futures. 
Unfortunately too many feel they have more opportunities somewhere 
else, and when they leave, they leave behind hollowed-out communities 
that grow older, that become less adaptable, and that are unable to 
maintain their quality of life.
    With today's hearing, we will begin to examine ways we can reverse 
that cycle.
    For many rural communities, rural development initiatives help to 
offset the high fixed costs of providing basic services like clean 
water, reliable electricity, and universal phone service. Residents of 
these communities simply would not be able to afford to live there 
without these key investments. Federal support for infrastructure 
remains a key part of our commitment to rural America.
    But, our commitment to rural America is not just about new pipes 
and wires. While we often think of progress as a new powerline, a new 
water treatment plant, or a new broadband connection, real progress is 
about expanding opportunities. We must use these programs to narrow the 
divide between rural and urban America.
    Upgrading water and energy infrastructure can improve quality of 
life while bringing new employment opportunities. Building a new health 
center can bring new care for families. Installing broadband can bring 
new ideas to students and innovation to farmers and ranchers. Renewable 
energy development can create valuable markets and income opportunities 
for farmers, keeping them on the land, and viable domestic energy 
policies create new job opportunities in rural communities. Providing 
investment capital can further link agricultural producers with the 
global economy. The jobs, the healthcare, the ideas, and the market 
access are the real measures of progress for rural America.
    For almost 90 years, USDA's Rural Development office and its 
predecessors have been working to bring opportunities to rural 
residents. As we begin work on the next farm bill, I am looking forward 
to hearing from our witnesses about how Congress can improve on the 
initiatives we have in place.
    Rural development and energy programs in the farm bill will need to 
find ways to do more with less. I look forward to creative ideas from 
our witnesses about how we can grow opportunities and rebuild rural 
communities.
    With that, I will turn it over to our Ranking Member, Mr. David 
Scott, for any comments he would like to make.

    The Chairman. With that, I will turn it over to our Ranking 
Member, Mr. David Scott, for any comments he would like to 
make.

  OPENING STATEMENT OF HON. DAVID SCOTT, A REPRESENTATIVE IN 
                     CONGRESS FROM GEORGIA

    Mr. David Scott of Georgia. Thank you, Mr. Chairman, and 
thank you for holding this important hearing today. It is a 
very, very important topic for so many of our American 
citizens.
    And I would like to extend a warm welcome to all of our 
witnesses. They are very distinguished and knowledgeable. We 
look forward to hearing from them. And I especially want to 
send a very warm greeting to Mr. Dennis Chastain. Mr. Dennis 
Chastain is the President and the CEO of Georgia EMC, from 
Tucker, Georgia. We are delighted to have you. Welcome, and I 
look forward to your testimony.
    Mr. Chairman, rural development and energy programs that we 
are going to take a look at today are, in many respects, what I 
call the unsung heroes of the farm bill. While all of our farm 
bill programs are good and very much needed for rural America, 
these programs in rural development and energy specifically aim 
to help keep our rural economies' engines running by providing 
new opportunities, continued progress, and assisting our most 
vulnerable populations.
    And I am always amazed at the breadth of our rural 
development programs, when I look at them or hear about them 
from my constituents in Georgia. These programs; rural 
development and energy, help keep the lights on for our rural 
residents by doing four, four, very important things. First, 
they provide broadband access; second, they give our rural 
businesses and entrepreneurs access to hard-to-find capital; 
third, they help our farmers' bottom lines; and fourth, they 
help provide the essential community facilities that keep a 
community going and viable, like emergency response, schools, 
hospitals, roads, and long-term care housing. It is really 
remarkable when you think about all that we ask the Department 
of Agriculture to do, and the vision needed to make these very 
important programs work.
    Our witnesses today are going to touch on some of the most 
important rural development and energy programs that the USDA 
is administering, and how these programs are working on the 
ground. Even with the remarkable scope of these programs, it is 
very critical, Mr. Chairman, that our Committee take a hard 
look to make sure that they are working the way they are 
intended to. And hopefully we can get some feedback from our 
distinguished guests on how we can make sure the programs are 
working as they are intended to, and if there is anything that 
we can do to improve the situation, to do differently, to help 
these programs work better for the folks who use them, and help 
better accomplish priorities on the ground.
    Rural development touches every state in our country, and 
is absolutely critical to the health of our nation's economy.
    Mr. Chairman, I look forward to hearing from our witnesses 
today and delving into these challenges rural development is 
facing, and the success that we have seen.
    Thank you, Mr. Chairman.
    The Chairman. Thank you, Ranking Member Scott.
    I also have a letter from Farm Credit that I understand 
that you would like to submit on behalf of both of us, and 
without objection, we will accept that letter.
    Mr. David Scott of Georgia. Yes, I do.
    [The letter referred to is located on p. 169.]
    Mr. David Scott of Georgia. Here it is.
    The Chairman. Thank you.
    The chair would request that other Members submit their 
opening statements for the record so the witnesses may begin 
their testimony, and to ensure that there is ample time for 
questions.
    The witnesses for panel one, one, I would like to welcome 
you to the table, the Honorable Bob Fox, Chair of Renville 
County Board of Commissioners, Franklin, Minnesota, on behalf 
of the National Association of Counties. Mr. Dennis Chastain, 
President and CEO of Georgia EMC, Tucker, Georgia, on behalf of 
the National Rural Electric Cooperative Association. Mr. Steve 
Fletcher, Manager and Operator, Washington County Water 
Company, Nashville, Illinois, on behalf of the National Rural 
Water Association. Mr. Craig Cook, Chief Operating Officer, 
Hill Country Telephone Cooperative, Inc., Ingram, Texas, on 
behalf of NTCA--The Rural Broadband Association. Mr. John Duff, 
Strategic Business Director, National Sorghum Producers, 
Lubbock, Texas. The Honorable Jim Greenwood, CEO, Biotechnology 
Innovation Organization, Washington, D.C.
    Congressman Greenwood, welcome back to Washington.
    Chairman Fox, please begin when you are ready.

           STATEMENT OF HON. BOB FOX, CHAIR, BOARD OF
COMMISSIONERS, RENVILLE COUNTY, MN; MEMBER, BOARD OF DIRECTORS, 
         NATIONAL ASSOCIATION OF COUNTIES, FRANKLIN, MN

    Mr. Fox. Chairman Scott, Ranking Member Scott, and Members 
of the Subcommittee, thank you for the opportunity to join you 
today.
    My name is Bob Fox, and I serve on the Board of County 
Commissioners for Renville County, Minnesota, and I am also 
here today representing the National Association of Counties.
    Renville County is located 90 miles west of Minneapolis, 
with a population of almost 16,000. As a key member of 
intergovernmental partnership, counties are responsible for 
making significant investments in our nation's essential 
infrastructure, maintaining our nation's justice and public 
safety, and investing in community health systems.
    Every day, county leaders make decisions to influence both 
local and national prosperity, while shaping the quality of 
life in America. Counties play a pivotal role in rural economic 
development, but face increasing challenges to provide critical 
programs and services to American families. Despite the 
critical role our counties play in our nation's economy, too 
many Americans in rural areas are not sharing in our nation's 
economic growth. Rural America is still feeling the effects of 
the Great Recession. Like many rural counties around the 
country, our farm-based economy in Renville County has suffered 
a long economic downturn. After 9 years of decline, we lost 
close to ten percent of our jobs we had in 2002. Today, many 
rural counties are experiencing a strain on local funding 
options due to declining populations, stemming from aging, out-
migration, and job loss. Ongoing population losses reduce tax 
base which has a direct effect on our ability to fund and 
finance programs and services. Additionally, 42 states impose 
some type of limitation on the counties to increase property 
taxes, restricting our ability to raise revenue.
    Rural counties are also experiencing a rising cost of 
construction. In Renville County, our ag industry requires a 10 
ton road system to allow five-axel semi-trailer trucks to move 
crops to market. In 2004, it cost less than $300,000 to build a 
1 mile, 10 ton road. Today, the cost for that same road is $1 
million per road mile.
    With these challenges in mind, we have specific 
recommendations on how to use the next farm bill to ensure the 
vitality of our under-served counties, while positioning rural 
America to compete in an ever-expanding global market.
    First, the entire Rural Development portfolio is critical 
for ensuring long-term economic competitiveness of our rural 
counties and nation at large. USDA's Rural Utilities Service 
invests billions to help counties to provide safe water, high-
speed broadband Internet, while programs like Rural Business 
Development Grant Program, and Intermediary Relending Program 
under the Rural Business--Cooperative Service provides grants 
and competitive direct loans to counties to help expand small 
businesses and business facilities.
    And under the Rural Housing Service, which brings me to my 
second point, the Community Facilities Direct Loan and Grant 
Program is an essential tool for counties to address the unique 
needs of rural communities. The Community Facilities Program 
provides counties with flexible, affordable funding, and 
financing to help develop essential community facilities. We 
use these funds to purchase, construct, improve essential 
facilities like hospitals, childcare centers, assisted living 
facilities. Additionally, these funds can be used to purchase 
equipment and pay for project expenses.
    In my county, our aging critical access hospital was unable 
to meet the increasing demand for outpatient care. Through the 
Community Facilities Program, in 2015, Renville County was able 
to build the Renville County Medical Center, a 65,000\2\ 
facility, which includes 18 exam rooms, 16 inpatient suites, 
outpatient and specialty clinics, and a telemedicine suite. 
This investment through the Community Facilities Program helped 
to change our overall outlook on the health of our community 
and economy.
    Last, the Strategic Economic and Community Development 
Program incentivizes regional collaboration, and should remain 
a priority in the new farm bill. This program allows USDA to 
direct investments toward projects that support strategic, 
economic development plans across multi-jurisdictional areas. 
Thus, rural counties are now able to increase the likelihood of 
funding key economic development projects through regional 
collaboration. This program is a positive step for our nation's 
rural counties and should continue to be a priority in our next 
farm bill.
    In closing, counties need a strong Federal, 
intergovernmental partner, and a robust rural development title 
in the next farm bill to help serve America's rural 
communities. Your support for these programs will not only 
ensure the vitality of under-served counties, but also position 
rural America to compete in a global market.
    Thank you, Mr. Chairman, and Members of the Committee for 
the opportunity to testify today, and I look forward to your 
questions.
    [The prepared statement of Mr. Fox follows:]

  Prepared Statement of Hon. Bob Fox, Chair, Board of Commissioners, 
 Renville County, MN; Member, Board of Directors, National Association 
                       of Counties, Franklin, MN
    Chairman Scott, Ranking Member Scott, and Members of the 
Subcommittee, thank you for the opportunity to join you today to 
discuss the challenges and opportunities counties face in delivering 
critical programs and services to rural communities and the pivotal 
role the next farm bill will play in helping to address development in 
rural America.
    My name is Bob Fox and I have served on the Board of County 
Commissioners for Renville County, Minnesota since 2002. I am also here 
today representing the National Association of Counties (NACo) where I 
serve on the NACo Board of Directors, the Agriculture and Rural Affairs 
Policy Steering Committee and Rural Action Caucus. I live on a fourth-
generation farm that has been in my family for over 100 years.
    Renville County is a very rural county located 90 miles west of 
Minneapolis with a population of almost 16,000 residents. Renville 
County has a diverse agricultural economy--producing corn, soybeans, 
edible beans, peas, sweet corn, and sugar beets. On our southern border 
we also have the Minnesota River Valley and some of the oldest granite 
deposits in North America.
    Founded in 1935, NACo is the only national organization that 
represents our nation's 3,069 counties. NACo brings together county 
officials from across the country to advocate with a collective voice 
on national policy, exchange ideas and build new leadership skills, 
pursue transformational county solutions, enrich the public's 
understanding of county government and exercise exemplary leadership in 
public service.
About Counties
    As key intergovernmental partners with the states and Federal 
Government, counties are responsible for delivering a broad array of 
programs and services that provide a foundation for prosperous 
communities with strong and stable economies. To achieve this 
foundation, counties make significant investments in our nation's 
essential infrastructure; maintain our nation's justice and public 
safety system; and invest in community health systems, including 
hospitals, nursing homes, public health, mental health and substance 
abuse programs.
    Transportation and infrastructure are core public-sector 
responsibilities and the driving force for connecting communities and 
strengthening our economy. Counties are the single largest stakeholder 
in our nation's transportation infrastructure system--owning and 
maintaining over 45 percent of our nation's roads and 40 percent of our 
nation's bridges. Collectively, counties annually invest over $550 
billion in our nation's essential infrastructure including more than 
$100 billion each year on roads, bridges, transit and water systems.
    Counties are also responsible for the health and well-being of our 
communities. We invest over $83 billion each year to support over 1,900 
public health departments, nearly 1,000 county-owned hospitals, 900 
nursing homes and 750 behavioral health authorities.
    Additionally, counties play a major role in two main areas of 
justice and public safety: emergency response and preparedness and the 
criminal justice system. Each year, counties invest almost $93 billion 
for justice and public safety services including the operation of 3,041 
police and sheriff departments and 2,785 jails.\1\
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    \1\http://www.naco.org/counties-matter.
---------------------------------------------------------------------------
    The decisions that county leaders make every day influence both 
local and national prosperity while shaping how communities grow and 
contribute to Americans' quality of life.
    Today, I would like to discuss some of the primary challenges for 
counties to fund and finance rural economic development projects and 
highlight how Congress can help us tackle these challenges. Throughout 
my testimony today, I will underscore two main points for the Committee 
to consider as you begin work on the next farm bill. These points 
include:

   Counties play a pivotal role in rural economic development 
        but face increasing challenges to provide critical programs and 
        services to America's families.

   The farm bill is imperative to ensuring the vitality of our 
        under-served communities, but also positioning rural America to 
        compete in an ever-expanding global economy.

    The farm bill is a major priority for all our nation's counties--
rural and urban alike. As the governing authority over the U.S. 
Department of Agriculture, the farm bill is critical for counties who 
are responsible for delivering and administering vital services to many 
of our nation's under-served families. From clean water and broadband 
infrastructure to nutrition assistance and energy conservation--the 
farm bill helps all of America's counties provide a strong foundation 
for a better tomorrow.
    While the farm bill has an impact on the daily lives of all 
Americans, it is particularly important for our nation's rural 
families. Roughly \2/3\ of the nation's 3,069 counties are considered 
rural with a combined population of 60 million. Rural counties are 
responsible for the vast majority of food, energy, and environmental 
benefits for the rest of the country. Additionally, rural communities 
are the source of nearly 90 percent of renewable water resources, and 
home to important service sector and manufacturing hubs.
Counties Play a Pivotal Role in Rural Economic Development But Face 
        Increasing Challenges To Provide Critical Programs and Services 
        to America's Families
    Despite the critical role rural counties play in our nation's 
economy, too many Americans in rural areas are not sharing in our 
nation's economic growth.

    To help provide a national perspective on how county economies are 
faring from year to year, NACo releases County Economies,\2\ an annual 
report examining economic recovery and growth patterns across the 
nation's 3,069 county economies. The report is developed from an 
analysis of data from Woods and Poole Economics and focuses on the 
annual changes in four economic performance indicators in each county: 
economic output (GDP), employment, unemployment rates and home prices.
---------------------------------------------------------------------------
    \2\http://www.naco.org/resources/county-economies-2016-widespread-
recovery-slower-growth.
---------------------------------------------------------------------------
    According to our analysis, Rural America is still feeling the 
effects of the Great Recession. After a decade, almost \1/2\ of small 
county economies have yet to return to pre-recession jobs levels 
compared to only 13 percent of large county economies. My own county 
economy, Renville County, Minnesota, has yet to recover all the jobs 
lost during the last recession. Like many rural counties around the 
country, our farm-based economy has suffered a long economic downturn. 
After 9 years of decline, we lost close to ten percent of the jobs we 
had in 2002.
    Economic growth is also slowing down across rural counties. The 
overwhelming majority of rural county economies added jobs at a slower 
pace in 2016 relative to 2015. In my home state of Minnesota, job 
growth accelerated in only seven percent of county economies last year.
    Last, Americans are feeling it in their pocketbooks as well. Wages 
in most rural county economies are growing slower than last year.\3\
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    \3\http://www.naco.org/resources/county-economies-2016-widespread-
recovery-slower-growth.

    Rural counties also face numerous challenges that strain local 
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funding options.

    Today, many rural counties are experiencing declining populations 
due both to aging and out-migration. Ongoing population losses reduce 
our tax base, which has a direct effect on our ability to fund and 
finance programs and services within our communities.
    Local property taxes remain the major source of revenue for 
counties. Thus, trends in property values can significantly impact 
county revenues and expenditures.
    Additionally, 42 states impose some type of limitation on counties' 
ability to increase property taxes, further exacerbating the situation. 
Only 12 states authorize counties to collect their own local gas taxes, 
which are limited to a maximum rate in most cases and often require 
additional citizen and/or state approvals for implementation.
    These hurdles significantly impact counties' ability to effectively 
raise additional revenue to pay for services and infrastructure. Due to 
these state and focal funding constraints, rural counties depend on a 
strong state and Federal partnership to deliver critical investments to 
help bolster our local and national economy.

    Rural counties are also experiencing rising costs of construction 
projects.

    In addition to numerous limitations on local revenue sources, 
counties are facing rising costs for infrastructure projects. Based on 
the American Road and Transportation Builders Association's highway 
construction price index, the cost of construction, materials and labor 
for highway and bridge projects increased 44 percent between 2000 and 
2013, outpacing the 35 percent increase in general inflation.
    In my county, we own and maintain 711 road miles and 218 bridges 
which are critical to not only our local communities, but to our 
overall economy and our shipment of goods to market. This critical 
infrastructure has become more expensive to repair and upgrade. Over 
the next 7 years, Renville County has over 50 bridges that will require 
additional maintenance costing the county an estimated $12 million. Our 
county requires a 10 ton road system to allow for the five-ax[le] semi-
trailer trucks to move crops to market. To support the necessary 
investments in our ailing infrastructure, in 2012, we made the 
difficult decision to raise property taxes and to bond for the needed 
improvements.
    Our greatest challenge is ensuring that we can build and maintain a 
safe, robust and efficient infrastructure system that allows Renville 
County and Minnesota to remain competitive in an increasingly global 
marketplace.

    The farm bill is imperative to ensuring the vitality of our under-
served counties, but also positioning rural America to compete in an 
ever-expanding global economy.

    Unfortunately, rural counties today face many challenges that 
further diminish our ability to deliver critical infrastructure and 
economic development projects. As we look ahead to the next farm bill, 
it is imperative that we strengthen the U.S. Department of 
Agriculture's (USDA) Rural Development programs and streamline the 
application process while providing the flexibility for local 
governments to leverage funding and financing to fit the unique needs 
of our nation's rural communities. Therefore, there are three main 
points I would like to make as the Committee develops a comprehensive 
rural development title as part of the next farm bill.
    First, the overall USDA Rural Development portfolio of programs 
should continue to help to ensure the long-term economic 
competitiveness of our rural counties and the nation at-large. The 
continued commitment to our nation's rural communities through USDA's 
Rural Development Programs help strengthen the intergovernmental 
partnership and our shared goals of promoting economic prosperity and 
opportunity across the country.
    In 2016, USDA's Rural Utilities Service (RUS) invested more than 
$13.9 billion to help counties provide safe water to over 19.5 million 
residents and brought high-speed broadband Internet to over six million 
new users.\4\
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    \4\https://www.rd.usda.gov/files/USDARDProgressReport2016.pdf.
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    Under the Rural Business--Cooperative Service (RBS), USDA created 
more than 791,000 jobs through rural business grants and loans in 2016. 
Since FY 2009, RBS has invested more than $11.5 billion--including $1.2 
billion in Fiscal Year 2016 alone--to support rural businesses. The RBS 
helps provide capital, technical support and educational opportunities 
to spur growth in the rural workforce.\5\
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    \5\https://www.rd.usda.gov/files/USDARDProgressReport2016.pdf.
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    Programs like the Rural Business Development Grant Program and the 
Intermediary Relending Program promote rural economic growth by 
providing grants and competitive direct loans to counties to help start 
or expand small businesses and business facilities.
    USDA's Rural Housing Service (RHS) helps counties obtain grants, 
loans and loan guarantees for multi-family housing, child care centers, 
emergency and first-responders stations, schools and hospitals. Since 
2009, RHS has helped approximately 1.2 million rural Americans buy, 
refinance or repair their homes and invested more than $12 billion in 
essential community projects.\6\
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    \6\https://www.rd.usda.gov/files/USDARDProgressReport2016.pdf.
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    Second, the Community Facilities Direct Loan and Grant Program--
under RHS--should continue to serve as an essential tool for counties 
to fund and finance critical programs and services to fit the unique 
needs of rural communities. Through the Community Facilities program, 
rural counties are provided flexible and affordable funding and 
financing to help develop essential community facilities. These funds 
can be used to purchase, construct or improve essential facilities like 
hospitals, child care, assisted living facilities, courthouses and 
transitional housing. Additionally, these funds can be used to purchase 
equipment and pay for related project expenses. This program is 
relevant to rural communities with less than 20,000 residents per the 
latest U.S. Census Data.
    The Community Facilities Program uses a combination of grants, 
direct loans and guaranteed loans to help fund and finance critical 
infrastructure projects in rural counties. Applications for funds are 
graded on a point system using a combination of population and median 
household income levels.
    For direct loans under the Community Facilities Program, the 
interest rates are set by USDA Rural Development--typically around 2.3 
percent--and remain fixed for the entire term of the loan. 
Additionally, loan amortization terms must not exceed the ``useful life 
of the facility,'' the applicant's authority, or 40 years--whichever is 
less.
    Additionally, applicants must be unable to finance the project from 
their own resources or through commercial credit at reasonable rates 
and terms. This is an important distinction to make as the Community 
Facilities Program is oftentimes the only option for rural communities 
in need of providing critical programs or services that are otherwise 
out of the fiscal reach of the county.
    In 2016 alone, the Community Facilities Program invested 
approximately $2.5 billion in 1,354 community infrastructure projects 
to help serve approximately 26.4 million rural residents including over 
$875 million in 134 rural health care facilities, and over $862 million 
for 257 rural education infrastructure projects.
    Since 2008, the Community Facilities Program has invested over $648 
million in Minnesota to support over 430 essential community facilities 
serving 1.95 million residents.
    In my county, increased demand for outpatient care required more 
preventative and diagnostic care spaces. Unfortunately, our aging 
critical access hospital was unable to meet the increasing demands of 
our county's healthcare needs.
    Through the Community Facilities program, in 2015 Renville County 
was able to build the Renville County Hospital and Clinic Medial 
Center--a 65,000\2\ facility which includes 18 exam rooms and a 
procedure room in the ambulatory clinic; 16 inpatient suites; lab, 
radiology, therapy, outpatient and specialty clinics; two operating 
rooms and an educational center. The program provided a direct loan of 
$18.9 million and a guaranteed loan of $4.7 million to help replace a 
county-owned critical access hospital.
    As a result of this funding, the new facility has driven our 
physician recruitment efforts over the past 3 years at Renville County 
Hospital and Clinic. New physicians are being drawn to work at a state-
of-the-art medical center which has been critical in meeting the 
increasing demands on patient care services.
    The USDA Community Facilities Program has helped change our overall 
outlook on the health of our community and economy. USDA has long been 
considered a trusted partner to Renville County. This familiarity and 
willingness to work together served as a catalyst to launch the 
development of our new Renville County Hospital and Clinics medical 
center.
    Third, the Strategic Economic and Community Development program 
should remain a priority in the new farm bill for incentivizing 
regional collaboration. Commonly referred to as the ``regional 
language,'' Section 6025 of the 2014 Farm Bill created the Strategic 
Economic and Community Development (SECD) program which allows USDA 
Rural Development to direct investments towards projects that support 
strategic economic and community development plans across multi-
jurisdictional areas.
    Through the new provision, individual projects can receive 
additional priority funding points by meeting a few criteria that 
demonstrate its role as part of a larger regional economic development 
plan. Thus, rural counties are now able to increase the likelihood of 
funding key economic development projects through regional 
collaboration.
    The SECD Program created a ten percent set-aside under four Rural 
Development programs across the entire agency to help support the new 
provision. These programs included the Community Facilities Program 
under RHS, the Water and Waste Disposal Program under RUS, and both the 
Rural Business Development Grants Program, and the Business & Industry 
Guaranteed Loans Program under RBS.
    In 2016, 114 applicants were given the ``Regional Development 
Priority'' consideration for a combined total of over $85 million in 
funding and financing.\7\
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    \7\https://www.rd.usda.gov/files/USDARDProgressReport2016.pdf.
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    Rural counties can no longer plan inside a silo. We must look to 
our regional partners to identify and leverage our collective assets to 
ensure the long-term vitality and stability of our local economy. 
Through the SECD Program, counties are able to invest in local economic 
development efforts that serve as a foundation for future investments 
to help better promote our regional assets. This program is a positive 
step for our nation's rural counties and should continue to be part of 
the rural development title as you begin developing our next farm bill.
    In closing, counties need a strong Federal intergovernmental 
partner--and a robust rural development title in the next farm bill--to 
help deliver critical programs and services to America's rural 
communities. USDA rural development programs--like Community Facilities 
and the Strategic Economic and Community Development program--help 
counties make essential investments in rural communities which 
subsequently strengthen both the local and national economy. Your 
support for these programs will not only ensure the vitality of our 
under-served counties, but also position rural America to compete in an 
ever-expanding global market.
    Thank you, Mr. Chairman and Members of the Committee for the 
opportunity to testify today and I look forward to your questions.

    The Chairman. Mr. Fox, you did an exceptionally good job. 
Four minutes and 19 second on that timer up there works just 
right, if the rest of you can do the exact same thing, it would 
be perfect.
    Thank you, Mr. Fox. Mr. Chastain.

STATEMENT OF DENNIS L. CHASTAIN, PRESIDENT AND CHIEF EXECUTIVE 
 OFFICER, GEORGIA ELECTRIC MEMBERSHIP CORPORATION, TUCKER, GA; 
  ON BEHALF OF NATIONAL RURAL ELECTRIC COOPERATIVE ASSOCIATION

    Mr. Chastain. Thank you, Chairman Scott, and Ranking Member 
Scott, for inviting me to testify today. It is an honor to be 
here to help lay the groundwork for the next farm bill. And I 
am proud that two fellow Georgians are in leadership positions 
that have influence over a bill that is vitally important to 
the electric cooperatives in Georgia and across the nation.
    I am the President and CEO of Georgia EMC. Georgia EMC is 
the trade association that represents the 41 not-for-profit 
electric distribution cooperatives in the State of Georgia, as 
well as our state's power generation and transmission 
cooperatives. Collectively, Georgia's 41 EMCs serve about \1/2\ 
the population of Georgia, over 75 percent of the land area of 
Georgia, and we employ over 5,000 Georgians in our operations.
    I am here today not only representing the electric 
cooperatives in Georgia, but I am also here representing the 
National Rural Electric Cooperative Association that represents 
all of America's electric cooperatives.
    While our first business priority is to deliver reliable, 
affordable electricity to our members, our purpose is much 
greater than that. We exist to benefit the communities we 
serve. We are more than just poles, wires, transformers, and 
electrons. Electric cooperatives are the engines that drive 
economic opportunity across the heartland and rural areas of 
America. That is why the farm bill is essential for electric 
cooperatives, for Georgia, and for the nation. The farm bill 
contains important rural development tools that support our 
efforts to strengthen our communities, and I would like to talk 
about just a few.
    Since 1936, loans from the REA, now the Rural Utilities 
Service at USDA, have helped build, expand, and improve the 
infrastructure across rural America necessary to deliver power, 
clean water, and other critical services. That public-private 
partnership has been, in my opinion, the greatest single rural 
economic development program of the 20th century. It made farms 
more productive and rural life more desirable. Rural 
electrification attracted new business to rural areas, brought 
modern medicine where it couldn't reach before, and improved 
the overall quality of life in rural America. That fundamental 
task of improving the lives of our nation's rural citizens is 
as important now as it has ever been.
    The RUS depends on the yearly appropriations from the 
Agriculture Appropriations bill. We are grateful that Chairman 
Conaway and Ranking Member Peterson have consistently led a 
bipartisan letter with several hundred other Congressional 
signatures to appropriators advocating for robust RUS funding.
    Part of our support comes from the fact that we are such a 
good investment for the Federal Government. The President's 
budget request for 2017 estimates that the Federal Government 
could earn up to $300 million in net revenue from RUS loans in 
this year alone. We thank you for your past support of RUS, and 
ask that you please continue to provide that support.
    In addition to investing in the electric cooperative 
network, the fees paid on RUS loans are used to fund Rural 
Economic Development Loans and Grants, known as the REDL&G 
Program. In Georgia and around the country, this program has 
helped expand businesses, renovate hospitals, and improve 
essential infrastructure in rural communities. We believe the 
REDL&G Program is a valuable tool in offsetting population 
flight and job losses in rural Georgia and around the country.
    For years, electric cooperatives across the country have 
provided information and advice to consumers to help them use 
electricity more efficiently and cost-effectively. The Rural 
Energy Savings Program Act included in the last farm bill was 
modeled in part on a program at Habersham EMC in northeast 
Georgia. This unique program that allows co-op homeowners to 
finance energy efficiency upgrades in their homes, and then pay 
those loans back on their monthly power bills. The efficiency 
gains resulted in a net savings to the consumer.
    We encourage you to maintain the Rural Energy Savings 
Program and the Energy Efficiency and Conservation Loan 
Program. We believe these programs can help others around the 
country replicate Georgia's successes in saving energy and 
saving our member owners money.
    Just as with other types of infrastructure, rural America 
can't be competitive without access to high-speed broadband 
service. Some electric co-ops around the country are interested 
in helping connect rural customers to those services. While we 
are not a silver bullet by any means, we understand these rural 
communities, want to see them succeed, and know that adequate 
broadband service is a key to their future competitiveness in 
our modern global economy. As Congress contemplates 
telecommunication and infrastructure policies in the farm bill 
and other legislative packages, we believe that all potential 
providers, including electric cooperatives, should be eligible 
for programs designed to bridge the digital divide.
    Electric cooperatives enjoy a productive partnership with 
the Federal Government and with the communities we serve to 
promote the health of rural America. We look forward to 
continuing to work with you towards that important goal.
    Thank you, and I am happy to answer any questions you may 
have.
    [The prepared statement of Mr. Chastain follows:]

Prepared Statement of Dennis L. Chastain, President and Chief Executive 
Officer, Georgia Electric Membership Corporation, Tucker, GA; on Behalf 
           of National Rural Electric Cooperative Association
    Thank you, Chairman Scott and Ranking Member Scott, for inviting me 
to testify. It's an honor to be here today to help lay the groundwork 
for the next farm bill. I'm proud that two fellow Georgians have such 
influence over a bill that is so important to electric cooperatives.
    My name is Dennis Chastain. I am the current President and CEO of 
the Georgia Electric Membership Corporation, but I've worked for 
electric co-ops for 30 years in a variety of economic development 
roles. I am here today representing Georgia EMCs and the National Rural 
Electric Cooperative Association.
    Georgia EMC is a statewide trade association representing the 
state's 41 EMCs, Oglethorpe Power Corporation, Georgia Transmission 
Corporation, and Georgia System Operations Corporation. Altogether, 
customer-owned EMCs provide electric power and related services to over 
4.5 million people in Georgia--nearly \1/2\ the population--across 73 
percent of the state's land area. And we employ over 5000 people.
    While our first business priority is to deliver reliable, 
affordable electricity to our members, our purpose is much greater than 
that. We exist to benefit the communities we serve. We are more than 
just a poles, wires, and electrons company. Our broader purpose is to 
provide the power that empowers our communities to thrive. We are much 
more than just small electric utilities--we are the engines that drive 
economic opportunity across the heartland and rural areas everywhere.
    Co-ops have been supporting rural America for almost 80 years, and 
in many ways that job is more important now than it ever has been. 
Rural areas still grow most of the food, generate most of the power, 
and manufacture most of the goods that this country consumes. When 
rural areas suffer, electric cooperatives suffer and, more importantly, 
the country as a whole suffers. That is why the farm bill is essential 
for co-ops, for Georgia, and for the country. The farm bill contains 
important rural development tools that support our efforts to 
strengthen our communities.
    I'd like to start by asking you to think broadly about what rural 
economic development is. There were few greater developments in our 
country's history than the electrification of rural America. It made 
farms more productive and rural life more desirable. It allowed kids to 
go to school, attracted new business, and brought in modern medicine 
where it couldn't reach before.
    While the lights came on nearly 80 years ago, rural development is 
just as essential in 2017. For example, in some areas of the country, 
we are today with Internet access where we were with electricity at the 
beginning of the last century. Without access to high speed Internet, 
rural America won't be able to compete. I would also argue that efforts 
to modernize the grid and improve energy efficiency are important for 
rural development because they make life more affordable, secure and 
convenient for the people who live there. In all these cases, electric 
cooperatives will continue to play instrumental and innovative roles in 
keeping rural America vibrant in the 21st century.
Rural Utilities Service (RUS)
    In the early 1900's, as urban areas began to electrify, rural areas 
lagged behind. Eventually, farmers and ranchers in remote areas took 
the initiative to form electric cooperatives and did the work 
themselves. As a Georgian, I have to note that it was at Warm Springs, 
in my home state, that President Franklin Roosevelt saw firsthand the 
access and cost challenges faced by rural electricity consumers and 
recognized the important role of the electric cooperative. That's why, 
on May 11, 1935, he signed an executive order creating the Rural 
Electrification Administration and supported subsequent legislation to 
formalize the partnership that allowed electric cooperatives to access 
affordable credit from the Federal Government to finance that 
infrastructure.
    In the past 80 years, a lot has changed, but the same fundamental 
challenge still exists--how to affordably connect those few customers 
in high cost rural areas. What was then called the Rural 
Electrification Administration is now the Rural Utilities Service and 
it's as relevant today as it was back then. REA and RUS loans have 
helped build, expand and improve the infrastructure across rural 
America necessary to deliver power, clean water, and other necessities. 
It has been the most successful public-private infrastructure 
investment program in the history of the country.
    RUS loans help electric co-ops reduce costs and improve reliability 
for our members by financing basic maintenance like replacing poles and 
wires. But it also helps us fund projects to make our systems more 
modern, efficient, and secure.
    RUS depends on a yearly appropriation from the Agriculture 
Appropriations bill. We are grateful that Chairman Conaway and Ranking 
Member Peterson have consistently led a bipartisan letter with several 
hundred signatures to appropriators advocating for robust RUS funding. 
Part of our support comes from the fact that we are such a good 
investment for the Federal Government. The President's Budget request 
for 2017 estimated that the Federal Government could earn up to $300 
million in net revenue from RUS loans. We thank you for your past 
support of RUS, and ask that you please continue to provide that 
support.
    We also ask that you support policies that allow us to use RUS 
loans to address a broad set of co-op needs--whether for generation, 
transmission and distribution of baseload power, for integration of 
renewables, for making environmental upgrades to existing generation, 
or for adopting new technologies that make the grid ``smarter.''
    Just as the times have changed and the needs of rural America have 
changed, so too has the RUS loan program. We have appreciated working 
with the Committee over the years to help make the program more 
streamlined and efficient, and we look forward to exploring new ways to 
continue to improve the program. Modernizing the RUS loan program is 
good for borrowers (electric co-ops) and taxpayers. The RUS annually 
reviews and approves billions of dollars of loans, and finding ways to 
more efficiently process those loans reduces burdens on taxpayers while 
meeting borrowers' needs more quickly as well.
Guaranteed Underwriter Program
    Another important financing option available to electric 
cooperatives is loans from cooperative banks. Cooperative lenders add 
healthy competition to the marketplace. The farm bill contains a 
provision that allows those loans to be guaranteed by RUS for 
cooperative business purposes. We encourage the Committee to continue 
that policy.
    In addition to investing in the electric cooperative network, the 
fees paid on Guaranteed Underwriter Loans can be used to fund Rural 
Economic Development Loans and Grants--known as the REDL&G program.
Rural Economic Development Loans and Grants (REDL&G)
    Under the REDL&G program, USDA provides zero-interest loans to 
utilities (including electric co-ops), which, in turn, pass the funds 
through to local businesses and other groups that create jobs in rural 
areas. This positive cycle of business development can strengthen both 
the co-op and the local communities by helping stabilize populations 
and the co-op's customer base.
    Since 2011, Georgia co-ops have conducted around $6 million in 
REDL&G projects. Included among those projects are the renovation of a 
hospital and the construction of a new cattle feed operation to support 
local agribusiness. We believe the REDL&G program is a valuable tool in 
offsetting population flight and job losses in rural Georgia and around 
the country.
Energy Efficiency
    For years, electric co-ops across the country have provided 
information and advice to consumers to help them use electricity more 
efficiently and cost-effectively. The wide range of assistance includes 
rebates for energy-efficient appliances, switching to more energy 
efficient light bulbs and time of day rates to encourage off-peak 
usage.
    The Rural Energy Savings Program Act included in the last farm bill 
was modeled in part on the How$mart program at Habersham EMC in 
Georgia. This is a unique program that allows co-op homeowners to 
finance energy efficiency upgrades in their homes then pay back those 
loans on their monthly bills. The efficiency gains result in a net 
savings for the customer.
    We encourage you to maintain the Rural Energy Savings Program and 
the Energy Efficiency and Conservation Loan Program. We believe these 
programs can help others replicate Georgia's successes around the 
country to save energy and save our owners money.
Broadband
    Just as with other types of infrastructure, rural America cannot be 
competitive without access to high speed broadband service. Many 
comparisons are drawn between the lack of access to robust broadband 
service today and the need for electrification in rural areas 80 years 
ago--with the urban areas of the country well-served, and rural areas 
being left behind. Some electric co-ops around the country are leading 
the way in connecting rural customers to high speed broadband. While 
we're not a silver bullet, we understand these communities and want to 
see them succeed. As Congress contemplates telecommunication and 
infrastructure policies in the farm bill and in other legislative 
packages, we believe that all potential providers including electric 
cooperatives should be eligible for programs designed to bridge the 
digital divide.
Conclusion
    We are a healthy nation because we have vibrant, bustling urban 
cities and because we have verdant, productive rural areas. 
Unfortunately, whether it's infrastructure or jobs or access to health 
care, it seems that too often rural America gets the short end of the 
stick. The farm bill is important legislation that helps to address 
some of those disparities.
    Electric Cooperatives enjoy a productive partnership with the 
Federal Government and with the communities we serve to promote the 
health of rural America. We look forward to continuing to work with you 
toward that important goal. I'm happy to answer any of your questions.

    The Chairman. Thank you.
    Mr. Fletcher.

 STATEMENT OF STEVE FLETCHER, MANAGER AND OPERATOR, WASHINGTON 
   COUNTY WATER COMPANY, IL; PRESIDENT; NATIONAL RURAL WATER 
                   ASSOCIATION, NASHVILLE, IL

    Mr. Fletcher. Chairman Scott, Ranking Member Scott, 
Congressman Davis from my home state, and Members of the 
Subcommittee, it is an honor to testify before you on the USDA 
Water and Waste Water Programs, and the associated technical 
assistance that directly benefits small and rural communities.
    I am Steve Fletcher, and I have the honor to serve as 
President of the National Rural Water Association. NRWA is a 
water utility organization with over 31,000 members. Please 
note, 94 percent of community water systems in the U.S. serve 
rural communities under 10,000 in population.
    I am also the manager and operator of the Washington County 
Water Company. This water utility started with the Farmers Home 
Administration loan and grant in 1979, with only 700 customers. 
We have received additional financing from rural development to 
expand and upgrade our utility 12 times. Currently, we serve 
4,600 customers in parts of southern counties. We simply could 
not afford to debt service a commercial credit loan with the 
income of our customers.
    We currently sell treated water to several small towns that 
made the decision to discontinue operating their treatment 
plants because they couldn't afford to staff, maintain, and 
upgrade the utility.
    We also operate and conduct all required testing for most 
of these systems. We do this at our cost because they are our 
neighbors.
    I make these points to further highlight the fact that 
without affordable financing and the direct assistance provided 
by the Rural Development, and entities like NRWA, many small 
and rural communities simply couldn't afford to provide basic 
clean, safe, and affordable water and waste water services for 
their residents. This story is not uncommon throughout rural 
America.
    People take it for granted that their water is always safe 
and uninterrupted. This infrastructure, or what I call the 
invisible infrastructure, is not just about digging holes and 
putting pipes in the ground, these investments have many direct 
and indirect benefits. They provide jobs, many times increase 
the tax base for new business or housing development, they are 
a catalyst for economic and community growth.
    Mr. Chairman, as you draft the rural development title in 
the new farm bill, we would like to focus on four issues. 
First, the majority of rural communities in the nation have 
relied on Rural Development for affordable financing and 
technical assistance to provide essential water and waste water 
services, and to overcome the lack of population density. As 
previously mentioned, many rural areas lack the financial 
capability and technical expertise to debt service commercial 
credit. The grant portion makes assistance possible for lower-
income residents and communities. With the current backlog of 
$2.5 billion, the demand for these Rural Development water and 
waste water loans and grants is evident.
    Second, the Rural Development Circuit Rider Program. Since 
1980, circuit riders have provided on-site technical assistance 
to small communities in all states to ensure that facilities 
operate at the highest level possible for public health 
protection. We currently have 117 full-time circuit riders in 
the field in all 50 states, and 85 of these circuit riders have 
over 25 years of experience. This assistance actually saves 
money, and protects the community and the government's 
investments by ensuring that efficient and sustainable 
practices are followed. I must also emphasize the direct, on-
the-ground, 24/7 disaster assistance we provide. We are on the 
frontline of responding to disasters in all 50 states. Chairman 
Scott and Ranking Member Scott, a recent example of this is 
when Georgia Rural Water Association worked with over 50 
systems in southwest Georgia immediately after a tornado struck 
south Georgia on Sunday, January 22, to help respond to the 
devastation.
    Third, the Waste Water Technical Assistance Program. This 
initiative provides on-the-ground technical assistance directly 
to communities for waste water treatment facilities. Assistance 
includes design and upgrade recommendations, daily operation 
and maintenance advice, permit renewals, and helping these 
systems meet compliance requirements from state and Federal 
programs.
    Fourth, as President Trump has emphasized, a robust bill is 
needed to address the aging infrastructure in our nation. NRWA 
supports the President's goal to increase infrastructure 
investments, and requests funding to be directed to our rural 
communities, including providing resources to the existing 
tried and true rural development programs.
    We at the National Rural Water Association also share the 
mission and vision of our rural development partner; a mission 
to serve, regardless of income or location, every rural 
community in need.
    Thank you, Chairman Scott and Ranking Member Scott, for 
allowing me to testify.
    [The prepared statement of Mr. Fletcher follows:]

Prepared Statement of Steve Fletcher, Manager and Operator, Washington 
County Water Company, IL; President; National Rural Water Association, 
                             Nashville, IL
    Chairman Scott, Ranking Member Scott, and Members of the 
Subcommittee. It is an honor to testify before you on the Department of 
Agriculture's (USDA) Water and Waste Water programs and the associated 
technical assistance that directly benefit small and rural communities. 
I am proud of the work of this Committee and specifically the Rural 
Development programs that have lifted up the quality of life for so 
many of the residents in my home State of Illinois and throughout this 
nation. Thank you.
    I am Steve Fletcher and I have the honor to serve as the President 
of the National Rural Water Association. The National Rural Water 
Association (NRWA) is a water utility organization with over 31,000 
members. Our member communities have the very important public 
responsibility of complying with all applicable regulations and for 
supplying the public with safe drinking water and sanitation every 
second of every day. Most all water supplies in the U.S. are small; 94% 
of the country's 51,651 drinking water supplies serve communities with 
fewer than 10,000 persons, and 80% of the country's 16,255 wastewater 
supplies serve fewer than 10,000 persons.
    I am also the Manager and Operator of the Washington County Water 
Company. This water utility started with a Farmers Home Administration 
loan and grant in 1979 with only 700 customers. This community worked 
for years to bring running water to their residents. Since inception, 
the Washington County Water Company has received additional financing 
from Rural Development to expand and upgrade our utility. Currently, we 
serve 4,600 customers in seven counties. This rural utility, like the 
overwhelming majority in the Rural Utilities Service (RUS) portfolio, 
have never been late on a payment. This would not have been possible 
without the direct assistance from the Department of Agriculture's loan 
and grant program. We simply could not afford to debt service a 
commercial credit loan with the income of our customers.
    We currently sell treated water to several small towns that made 
the decision to discontinue operating their drinking water treatment 
systems because they couldn't afford to staff, maintain and upgrade 
their utility to meet U.S. Environmental Protection Agency (EPA) 
standards. We currently provide staff to sewer treatment utilities for 
two small towns that don't have the resources to properly operate and 
maintain those facilities. We also send staff to several other small 
towns to operate and conduct all required testing for their drinking 
water systems. As previously mentioned, many of these small towns do 
not possess the capacity to adequately operate their systems without 
this direct on-site assistance. We provide these services at our cost 
for a simple reason, they are our neighbors.
    I make these points to further highlight the fact that without 
affordable financing and the direct assistance provided by Rural 
Development and entities like NRWA, many small and rural communities 
simply couldn't afford to provide the basic service of clean, safe and 
affordable water and waste water service for their residents.
    As I travel around the nation in my current role as the President 
of NRWA, I learn that my story is not uncommon throughout our rural 
communities. The grant portion coupled with the direct on-site 
technical assistance makes these systems affordable and sustainable for 
their communities. These investments have paid dividends for 70 years 
in the small and rural communities across this nation.
    The Rural Development mission area has a wide and holistic approach 
necessary to enhance and protect the health and vitality of Rural 
America. We look at these USDA investments, especially in 
infrastructure, and witness their impact on the quality of life for 
these rural communities. People take it for granted that their water is 
always safe and uninterrupted. This infrastructure or what I call the 
``invisible infrastructure'' is not just about digging holes and 
putting pipes in the ground. These investments have many direct and 
indirect benefits; they provide jobs, many times increase the tax base 
from new business or housing development; they are a catalyst for 
economic and community growth while at the same time enhancing and 
maintaining the health and environment for the residents. In many 
cases, new businesses would not entertain locating in an area without 
water and wastewater services. We all drink the water we produce and I 
would offer that we are the first line of defense for the water quality 
that our customers use in their daily lives, especially hospitals and 
doctors' offices.
    Mr. Chairman, as you draft the Rural Development title in the new 
farm bill, we would like you to focus on six issues under the Rural 
Development mission area.
    First, the RUS Water and Waste Water Loan and Grant programs. The 
majority of the rural communities in the nation have relied on Rural 
Development (and the predecessor agency, Farmers Home Administration) 
for affordable financing and technical assistance to provide these 
essential services. As previously mentioned, many remote rural areas 
lack the financial capability and technical expertise to debt-service 
commercial credit. The grant portion makes this assistance possible for 
lower-income residents and communities. The Water and Waste Water loan 
and grant program work in unison. In FY 2016, the RUS average loan 
grant ratio was 66% loan and 34% grant. Some will suggest that grant 
money is not needed and the community should just finance the project 
with 100% loan. This is simply not the case. My point is that the 
grants are carefully administered by RUS as an investment in order to 
make this vital service affordable and not over burden lower-income 
communities and customers.
    Rural Development is unique that all their customers are rural. In 
FY 2016, 85% of the projects served populations of 5,000 or less and 
70% of all projects served populations of 2,500 or less. The average 
family income was $36,178 with an average monthly water bill of $47.72 
and sewer bill of $48.05. In FY 2016, 582 projects were funded with 
loans and grants that totaled $1.5 billion in direct RUS assistance. 
With a current backlog of $2.5 billion derived from 995 applications, 
the demand for these Rural Development programs is evident.
    Many projects take years of personal investments from the local 
leaders and community. Everyone on the system is paying the same amount 
for their water or sewer bill, the retiree, the fireman, the local 
Mayor, everyone is treated the same. The local ownership and operation 
is another source of pride for the community.
    Second, the Rural Development Circuit Rider Program. Since 1980, 
Circuit Riders have provided on-site technical assistance to small 
communities in all states for water infrastructure development, 
environmental compliance, training, certification, operations, 
management, rates, disaster response, training, energy audits, 
financial management and governance; all necessary to ensure that 
facilities operate at the highest level possible for public health 
protection. We currently have 117 full-time Circuit Riders in the field 
in all 50 states. Currently, over 85 or 72% have over 25 years' 
experience in the industry. Many of these seasoned field employees 
could find higher paying jobs and ones that did not require extensive 
travel, but they are driven and receive great personal satisfaction 
from their work.
    This assistance actually saves money and protects the community and 
government's investments by ensuring that efficient and sustainable 
practices are followed. The low delinquency and default rate for this 
program is directly linked to the technical assistance provided to 
these utilities.
    I must also emphasize the direct on-the-ground disaster assistance 
we provide. The Circuit Riders are on call 24 hours a day, 365 days a 
year. A disaster for our customers is anytime they turn on the faucet 
and they have no water. That is a disaster for this customer and we are 
sensitive to that issue and respond immediately. I am referring to 
natural disasters like the floods in South Carolina, Hurricanes Hermine 
and Matthew in Florida, the recent tornadoes in Georgia, Oklahoma, 
Mississippi and Arkansas. We are on the front line when these events 
occur. State associations provide equipment and personnel across state 
lines to provide immediate disaster relief. NRWA, through our 
experienced state affiliates, conducts annual emergency response 
training to prepare for these events.
    Chairman Scott, and Ranking Member Scott, the Georgia Rural Water 
Association contacted and worked with over 50 systems in southwest 
Georgia immediately after the tornados struck South Georgia on Sunday, 
January 22nd, to respond to the devastation.
    These seasoned employees have long standing relationships and trust 
built within the communities they serve. The on-site or hands-on 
assistance is required to address complex issues and build that trust.
    Third, the Waste Water Technical Assistance program. This 
initiative provides on-the- ground technical assistance directly to 
communities for waste water treatment facilities. Assistance includes 
design and upgrade recommendations, daily operation and maintenance 
advice, assisting with permit renewals and helping these systems meet 
compliance requirements from state and Federal regulations.
    Fourth, the Rural Development field structure. Rural Development 
offers a holistic approach for the economic vitality of a rural 
community whether it is water or waste water infrastructure, broadband, 
business loans or grants or essential community facilities; the field 
structure is a vital tool to deliver these programs. I have witnessed 
the restructuring and reduction of employees and offices in Rural 
Development in 2011 and 2012 that reduced the field structure by over 
1,000 staff. Unfortunately, Rural Development lost numerous senior 
staff with expertise in water, business and housing. I would caution 
reducing this field presence further. Rural Development is still 
training and filling key positions to deliver these programs. Rural 
Development has used technology to help bridge this gap. RD Apply, a 
new easy to use online application has been employed and used by many 
of our currents members. The Circuit Riders also use this application 
to directly assist their customers. As you are aware, Rural Development 
is also moving ahead on ePER, an electronic preliminary engineering 
report that should save communities money and time. I know it is 
difficult in this budget climate but any efforts to preserve or enhance 
this field structure will make a difference in serving remote rural 
areas, especially ones that experience pervasive poverty.
    Fifth, future infrastructure funding. As President Trump has 
emphasized, a robust bill is needed to address the aging infrastructure 
in our nation. NRWA supports the President in this endeavor. We request 
your assistance to ensure any national water infrastructure proposal 
would include funding to address the specific needs for our rural 
communities, including providing resources through the existing Rural 
Development programs to adequately serve rural communities.
    Sixth, the RUS eligible population limit. I close with an 
additional suggestion for the Committee. The current underlying 
statutory authority for the Rural Development Water and Waste Water 
programs is set at the 10,000 population limit. The Secretary has 
little flexibility or waiver authority to address communities that have 
grown or slightly exceed that limit. In the past, Congress was able to 
list these communities within a general provision contained in the 
annual appropriations bills. With the changing demographics in Rural 
America, we believe that providing the Secretary flexibility to assist 
these communities would be beneficial. If a community can demonstrate 
economic hardship, rural character and the need for RUS assistance, 
that community should be considered. Funding priority could still 
remain with the existing applicants from lower-income communities under 
the existing 10,000 population ceiling.
    Additionally, the Water and Waste Water Guaranteed Loan program is 
vastly underutilized. For FY 2016, only four loans were made that 
totaled $7,118,000. Increasing the population ceiling for this program 
to 20,000 will help these larger rural communities, especially ones 
with more resources and capacity necessary to debt service market rate 
loans.
    We at the National Rural Water Association also share the mission 
and vision of our Rural Development partner; a mission to serve, 
regardless of income or location, every rural community in need. Like 
Rural Development, we want to ensure no community in Rural America is 
left behind. No community can grow and improve without the sustaining 
resources of water and wastewater services. With your continued support 
and leadership, we will continue to prosper.
    Thank you, Chairman Scott and Ranking Member Scott for allowing me 
to testify and I would be happy to answers any questions that you may 
have at this time.

    The Chairman. Thank you, Mr. Fletcher.
    Mr. Cook.

          STATEMENT OF R. CRAIG COOK, CHIEF OPERATIONS
OFFICER, HILL COUNTRY TELEPHONE COOPERATIVE, INC., INGRAM, TX; 
       ON BEHALF OF NTCA--THE RURAL BROADBAND ASSOCIATION

    Mr. Cook. Good morning, Chairman Scott, Ranking Member 
Scott, and Members of the Subcommittee. Thank you for inviting 
me to testify before you today on the farm bill and the 
importance of advanced telecommunication services to rural 
development.
    My name is Craig Cook, I am here on behalf of Hill Country 
Telephone Cooperative in Ingram, Texas, and NTCA--The Rural 
Broadband Association, which represents about 850 of the 1,000 
or so rural telecom providers in the U.S.
    As many of Subcommittee Members are aware, because small 
rural telcos serve your districts, we provide broadband and 
other advanced telecom services to the most rural areas of the 
U.S., including substantial agriculture and energy producing 
regions.
    The immense economic, health care, education, and public 
safety benefits of high-speed broadband are well known by now. 
A recent study revealed that rural telecom investment 
contributed $24.1 billion to the U.S. economy in 2015, and 
supported approximately 70,000 jobs.
    Broadband helped solve the problem of distance by opening 
up new education and job opportunities in rural America, and 
connects rural veterans and others with healthcare 
professionals, helping rural businesses tap into global 
markets, and, of course, helps farmers and ranchers use the 
Internet to analyze livestock and crop data with modern 
precision agriculture tools.
    Rural areas are unique. While they need broadband to 
compete, and our nation needs rural broadband so everyone can 
share in what rural America offers, the vast distances and low 
density of rural areas undermine the business case for the 
enormous capital and operational cost of deploying networks. A 
small rural broadband provider can't walk into a typical bank 
and expect financing for a network that measures payback over a 
period of decades, not years.
    USDA's RUS telecom loan portfolio provides up-front capital 
for deploying rural telecom networks. RUS brings years of 
experience and familiarity with the telecom industry, and rural 
areas gain from financing networks through its telecom 
infrastructure and broadband loan programs, both of which 
provide loans paid back with interest to the benefit of the 
U.S. taxpayer. Similarly, the Community Connect Grant Program 
serves the most rural areas, where a loan may not make sense.
    We urge the Subcommittee to continue its support for these 
programs, and refrain from making extensive changes that might 
lead to more uncertainty.
    At Hill Country, we have appreciated having a dedicated and 
experienced partner like RUS, and just last year finished 
upgrading 20 percent of our network so that more of our 
customers have access to 25 Mbps and higher broadband speeds. 
And this is a project that wouldn't have been possible this 
soon without capital from RUS.
    As a compliment to up-front financing like that available 
through RUS, the High-Cost Universal Service Fund Program, the 
USF, is essential to enable the business case for delivering 
broadband in rural areas. The USF helps keep consumer rates 
affordable on networks once they are built, and sustains 
operation of those networks.
    Over the past 10 years, the USF High-Cost Fund has 
undergone extensive reforms to orient the program towards 
supporting broadband networks. As a result, small telcos now 
receive support for offering broadband-only services, thanks to 
help of dozens of Members of Congress, including Members of 
this Subcommittee.
    Though we have made progress on USF reform, the High-Cost 
Program has been under the same effective cap since 2011, and 
lacks sufficient resources to make the reforms actually 
meaningful to consumers. This USF budget issue must be 
addressed or rural consumers will pay much more for broadband 
than urban Americans, and rural consumers will experience much 
slower speeds.
    This unfortunate reality violates the statutory mandate for 
reasonably comparable rates and services in rural and urban 
America. I raise this budget concern because USF justifies the 
business case for rural broadband by keeping rates affordable.
    More consumers are using more data-intensive broadband 
applications with each passing year. This enormous consumer 
demand cannot be met with short-term broadband solutions that 
may soon need replacing due to insufficient capacity. The 
resources of RUS and USDA are most efficiently and effectively 
invested in future-proof networks that will be readily upgraded 
over time to meet consumer demands. And we must take steps to 
ensure that facilities financed by USDA or supported by USF are 
not overbuilt by another carrier deploying a network financed 
or supported by a different program.
    The provision of rural broadband service is an important 
job that the rural industry is committed to, and we appreciate 
Congress taking time to understand how rural areas remain 
served through the provision of necessary resources.
    It is an honor to be with you today, and I welcome any 
questions you may have from me. Thank you.
    [The prepared statement of Mr. Cook follows]

  Prepared Statement of R. Craig Cook, Chief Operations Officer, Hill
Country Telephone Cooperative, Inc., Ingram, TX; on Behalf of NTCA--The 
                      Rural Broadband Association
Introduction
    Chairman Scott, Ranking Member Scott, and Members of the 
Subcommittee, thank you for this opportunity to testify about rural 
development, broadband, and the 2018 Farm Bill. I am Craig Cook, Chief 
Operations Officer at Hill Country Telephone Cooperative. My remarks 
today are on behalf of Hill Country, as well as NTCA--The Rural 
Broadband Association, which represents approximately 850 rural 
community-based carriers in 45 states that offer advanced 
communications services throughout the most sparsely-populated areas of 
the nation.
Rural Telecom Industry Innovation
    Small, rural telecom providers like Hill Country connect rural 
Americans with the world--making every effort to deploy advanced 
networks that respond to consumer and business demands for cutting-
edge, innovative services. Fixed and mobile broadband, video, and voice 
are among the many services that rural Americans can access thanks to 
our industry's commitment to serving sparsely populated areas. The 
rural telecom industry has always been innovative--leading the way in 
converting to digital switched systems, providing wireless options to 
their hardest to reach customers, enabling distance learning and tele-
health applications, and where possible deploying future-proof all-
fiber systems.
Hill Country Telephone
    I have been part of the industry for nearly 30 years, spending the 
last 2 years at Hill Country. My experience has focused on telecom 
regulation and public policy, technical operations, engineering 
services, and business development. In addition to having worked for 
consulting firms and smaller rural service providers, I've also had the 
opportunity to work for larger service providers such as GTE. Hill 
Country is a local telecommunications provider with 111 employees 
serving a 2,900\2\ mile area--an area larger than the state of Delaware 
with only 4.4 subscribers per square mile. But, 22 percent of our 
customers reside in just 3\2\ miles, while the remaining 78 percent 
reside in the other 2,897\2\ miles--so the population density of the 
more rural areas is only 3.4 customers per square mile. We provide 
12,700 total connections to wireline voice, high-speed broadband, and 
video services over a network that employs a mix of fiber and copper 
facilities. In actual network terms, we have deployed 3,842 copper 
route miles and 1,699 fiber route miles.
    Our sparsely-populated service territory does not make an 
attractive business case for Wall Street and will not support multiple 
providers making the substantial capital investments needed to serve 
such a large area. For Hill Country, like many other NTCA members that 
serve agricultural communities and other rural areas, the challenges of 
distance and density hit close to home.
Rural Telecom and Economic Development
    Broadband-capable networks are critical to helping rural 
communities overcome these challenges. Our networks allow agricultural 
producers and other rural businesses to communicate with suppliers and 
sell to new markets, they enable education of our children on par with 
opportunities in urban areas, and they make our communities attractive 
destinations for people and businesses to relocate. In rural America, 
that translates into economic development that produces jobs, not only 
in agriculture, energy and other industries with a strong rural 
presence, but in the healthcare sector, and just about any other retail 
industry that requires broadband to operate.
Importance of USDA Financing
    As this Committee deliberates the upcoming farm bill 
reauthorization, please be mindful that access to capital for rural 
broadband projects is limited. Smaller broadband providers like Hill 
Country and other NTCA members have only a few options for financing 
network construction. Small rural broadband providers cannot walk into 
large commercial banks to obtain financing for a network that will 
serve a small number of people over a large area, with the payback 
measured in decades rather than years.
    Cost-effective Rural Utilities Service (RUS) loans offered through 
the U.S. Department of Agriculture (USDA) are therefore an essential 
resource for small providers that serve rural America. Apart from RUS, 
only a few committed, mission-driven lenders like CoBank and the Rural 
Telecommunications Finance Cooperative (RTFC) typically provide 
financing to enable small rural providers to build networks in their 
communities. As a complement to financing, universal service funding 
(USF) then helps to justify the business case for such construction. 
The ongoing High Cost USF support ensures that consumers can afford the 
services offered over the financed networks now and in the future.
The State of Rural Broadband Deployment Progress
Consumer Demand, Fiber, and Future-Proof Networks
    Hill Country Telephone and other NTCA members have made remarkable 
progress in deploying advanced networks in their communities. A survey 
of NTCA members conducted last year found that 49 percent of 
respondents' customers are served via fiber-to-the-home (FTTH), up 20 
percent from 2013. Twenty-nine percent of customers are served via 
copper loops, 15 percent cable modem, six percent fiber-to-the-node 
(FTTN), 0.5 percent fixed wireless, and 0.1 percent satellite.\1\
---------------------------------------------------------------------------
    \1\NTCA 2015 Broadband/Internet Availability Survey Report (2016), 
NTCA--The Rural Broadband Association, Arlington, VA.
---------------------------------------------------------------------------
    The growth in fiber deployment is remarkable given the regulatory 
instability of recent years, with USF reforms and budget shortfalls 
having challenged the business case for many deployments or undermined 
the sustainability of networks already in place. Nonetheless, policies 
that encourage sustainable future-proof networks--such as fiber--will 
be most efficient in responding to consumer demand over the lives of 
those networks, particularly when compared to short-term strategies 
that focus on getting lower-speed broadband deployed quickly only to 
find that consumer demands outpace the capabilities of such low-speed 
networks in a few short years.
    Due in no small part to increased fiber deployment, rural customers 
have access to faster broadband speeds. Per last year's survey, 85 
percent of NTCA members' customers can purchase broadband at speeds of 
10 Mbps or higher. Seventy-one percent can now access speeds above 25 
Mbps.
    Eighty-two percent of Hill Country's customers have access to 10 
Mbps service. The remaining 18 percent of customers are served by long 
local loops that provide 1 to 6 Mbps service. We work with those 
customers on an individual basis to find solutions to their broadband 
needs. We anticipate that twenty-five percent of our customers will 
have access to FTTH in the next 2 years. Seven percent are currently 
part of a fiber build and will have access to FTTH by the end of 2017. 
We have deep fiber penetration throughout our service territory that 
allows us to provide more than the 10 Mbps to much of our customer 
base.
    And our customers are demanding more and more speed. In 2016, we 
saw nearly 1,000 customers move from the basic 10 Mbps speed to a 
higher-tier package. Due to this demand, we continue to employ new 
technology in our FTTN and copper networks to meet demand, but also 
continue to deploy fiber. Our vision is to reach our entire territory 
with FTTH. The speed and sustainability of deployment, however, will 
depend on both reasonable access to capital to finance construction and 
the availability of USF support to make sure consumer rates on these 
rural networks, once upgraded, are not astronomical and unaffordable.
Unique Rural Challenges
    Deploying networks across wide swaths of rural Texas is not easy. 
We face the need to cross hundreds or thousands of miles where the 
population is sparse, and to deal with all kinds of terrain. We must 
also address environmental and historical permitting concerns that can 
delay projects and increase their already high costs. Then, where fiber 
has already been built, we must maintain it over those thousands of 
miles and ensure customers can use it--that means technicians who 
travel all over our territory and customer service representatives 
trained to deal with questions about router and device configurations 
in ways that were unimaginable when we were just a ``telephone 
company.''
    And even the best networks in rural markets are dependent upon 
``middle mile'' or long-haul connections to Internet gateways dozens or 
hundreds of miles away in large cities. Reaching those distant 
locations is expensive as well, and as our customers' bandwidth demands 
increase, so too does the cost of ensuring sufficient capacity on those 
long-haul fiber routes that connect rural America to the rest of the 
world.
More Work to Do
    And many parts of rural America, including many locations in our 
serving area, still need fiber or other robust facilities. Fifteen 
percent of NTCA member customers don't have access to even 10/1 
broadband. In a country where the Federal Communications Commission 
(FCC) has indicated that 90 percent of Americans already have 
affordable access to 25/3 Mbps service and many urban consumers and 
businesses benefit from 100 Mbps or Gigabit speeds, broadband access in 
rural America remains far behind urban areas despite the best efforts, 
innovation, and entrepreneurial spirit of companies like Hill Country 
and other NTCA members.
    Particularly when one considers that even where networks are 
available many rural Americans pay far more for broadband than urban 
consumers due to insufficient USF funding, it becomes apparent that the 
job of connecting rural America--and, just as importantly, sustaining 
those connections--is far from complete. The rural broadband industry 
has a great story of success but also much more work to do.
The Role of Rural Utilities Service Funding
The Strength of RUS Experience
    Deploying a communications network in a rural area requires a large 
capital outlay due to the challenges of distance and terrain. The 
number of rural network users (as compared with more densely-populated 
urban areas) is too small to pay the costs of deployment and ongoing 
operations through customer charges. USDA's Rural Utilities Service 
plays a crucial role in addressing these rural broadband challenges 
through its telecommunications programs that finance network upgrades 
and deployment in rural areas.
    Since the early 1990s, the RUS telecom programs have financed 
advanced network plant at a net profit for taxpayers and helped deploy 
state-of-the-art networks to rural Americans left behind by providers 
unable or unwilling to serve low-population-density markets. With rare 
exception, RUS, CoBank and RTFC are the primary lenders that small 
rural providers can turn to for outside financing. Not only does RUS 
help rural America remain connected, its Broadband Loan & Guarantees 
program and traditional Telecommunication Infrastructure Loan & 
Guarantees program make loans that must be paid back with interest--
creating a win/win situation for rural broadband consumers and American 
taxpayers.
Hill Country's Partnership with RUS
    Hill Country is well aware of the benefits of working with an 
experienced rural telecom lender like RUS, having received an RUS 
Broadband Infrastructure Program (BIP) grant/loan that helped upgrade 
20% of our network connections, enabling broadband deployment to a much 
larger geographic area in a much more timely manner than otherwise 
would have been possible in the face of typical capital constraints. 
The RUS financing package facilitated deployment of a 148 mile fiber 
backbone designed to dramatically reduce subscriber loop length, 
enabling 25 Mbps broadband access for many unserved and under-served 
subscribers. Hill Country met all original project objectives and even 
added an additional 26 miles of fiber backbone while maintaining the 
overall project budget--exceeding what we originally set out to 
accomplish in some of our most rural and challenging service areas. RUS 
was a key partner in this endeavor, building upon a history of helping 
small providers meet similar challenges of distance and population 
density across the country for decades.
Farm Bill Considerations
    The Farm Bill Broadband Loans & Loan Guarantees program was first 
authorized in the 2002 Farm Bill, and each subsequent farm bill has 
made extensive reforms with the goal of greater program accountability, 
efficiency, and effectiveness. Two rounds of program reforms in less 
than 15 years--the first of which was significantly delayed by the ARRA 
BIP program's use of the Broadband Loan Program mechanism--means that 
the Broadband Loan Program has been almost continuously ``under 
construction'' since its inception, rendering the program inaccessible 
to borrowers for long periods of time. While the program isn't perfect, 
it may be helpful to simply let borrowers use the Broadband Loan 
Program in current form and become familiar with it for a few years 
before undertaking another extensive reform effort.
    The Community Connect grant program is a useful complement to the 
other RUS telecom programs with its focus on the niche of supporting 
deployment in some of the most difficult areas to reach and serve. 
Community Connect rounds out the RUS telecom portfolio. Rural providers 
would welcome more resources for the RUS telecom portfolio, but would 
oppose cutting all funds for one program to increase the size of 
another, as the last Administration proposed to zero out Broadband 
Loans in favor of Community Connect in its FY17 budget.
    NTCA urges the Committee to continue to support the RUS Broadband 
Loan program that is subjected to the farm bill reauthorization process 
at or above current funding levels as you formulate recommendations. 
Furthermore, we urge the Committee to continue its long history of 
support for the Telecommunications Infrastructure and Community Connect 
programs that are also vital to the ongoing deployment and maintenance 
of advanced communications infrastructure throughout rural America.
    The Broadband Opportunity Council (BOC), which includes USDA as a 
member, released a report in September 2015 that recommended 
authorizing more USDA programs to make grants and loans for broadband 
infrastructure. The BOC's January 2017 progress report affirmed this 
recommendation. While more resources for rural broadband deployment are 
needed, involving more government entities and programs in broadband 
financing should be undertaken cautiously to avoid duplicating efforts 
and undermining a coherent, cohesive approach to financing and then 
sustaining rural broadband networks.
    Along these lines, we understand that it is current RUS policy to 
avoid duplication of effort when financing broadband-capable 
infrastructure, and we encourage the Committee to consider enshrining 
this principle in law--that is, Congress should codify a prohibition on 
USDA financing new fiber or other broadband-capable infrastructure 
through any RUS or other USDA program where an existing network 
deployed by a different carrier was also financed through a RUS or 
other USDA program. This non-duplication provision should apply to all 
USDA programs, and should also extend to preclude overbuilding of other 
carriers' networks that receive USF High-Cost support as administered 
by the FCC. It would be an utter waste of public resources if any USDA 
resources (regardless of the program) go to finance the construction of 
fiber or other communications network facilities in areas where another 
USDA program or the FCC's USF program has already enabled the 
deployment and operation of a network by another operator.
    Finally, various permitting regulations present significant 
obstacles to broadband deployment--indeed, the project financed by the 
RUS grant/loan to Hill Country was delayed for about a year as we 
waited on completion of different reviews. While permits serve an 
important public purpose, we'd encourage streamlining Federal approval 
processes to the extent possible, and to the extent that RUS can help 
in standardizing processes with land-managing and property-managing 
agencies and in improving timelines for historical preservation 
coordination, that would be a significant help in speeding and reducing 
the costs of deployment. Better, more coordinated sequencing of 
environmental reviews and approvals is also important, so that 
companies that are applying for financing do not need to expend 
substantial resources and staff time up-front in pursuit of loans that 
might not even be approved (which is a real deterrent to applications) 
or for environmental showings that might only need to be repeated in a 
few years once later phases of construction begin. Along these lines 
and as a related matter, we also support permitting reforms as proposed 
in Sen[.] Thune's MOBILE NOW Act or as adopted and applied to larger 
projects in the FAST Act.
The Complementary Role of the FCC'S Universal Service Fund Programs
RUS Financing and USF Support Work in Concert
    RUS lending programs finance the substantial up-front costs of 
network deployment. By contrast, the USF High Cost Fund helps make the 
business case for construction and sustains ongoing operations at 
affordable rates. More specifically, USF by law aims to ensure 
``reasonably comparable'' services are available at ``reasonably 
comparable'' rates. Not to be confused or conflated, RUS capital and 
ongoing USF support serve distinctly important, but complementary 
rather than redundant, purposes in furthering rural broadband 
deployment. The availability of USF--the ability to make sure that 
consumers can actually afford to buy services on the networks once 
built--is so essential to the RUS telecom loan calculus that 
uncertainty in the Federal USF program in recent years has hindered 
some of the success, momentum, and economic development enabled by the 
RUS telecommunications programs.
USF Reform and the Under-Funded High Cost Program
    NTCA has made significant efforts to seek some restoration of 
regulatory certainty to the USF programs in the wake of reform debates 
that stretched nearly a decade. In March 2016, the FCC adopted reforms 
to the USF mechanisms that defined options for telcos to elect either a 
``model-based'' USF support mechanism that would provide carriers with 
additional support in exchange for incremental broadband buildout 
obligations or a reformed ``non-model'' USF support mechanism that 
would provide support to enable more affordable broadband rates for 
rural consumers and businesses.
    Unfortunately, even as the March 2016 order resolved some long-
running debates and took several important steps to more directly 
orient the high-cost USF program toward broadband, the order did not 
address a fundamental concern--the lack of sufficient funding under a 
budget that effectively provides telcos with less revenue today than 
they had prior to reforms adopted in 2011. And in the wake of reforms, 
it has become increasingly apparent that USF programs are 
insufficiently funded as many rural consumers face the prospect of 
paying hundreds of dollars per month for standalone broadband services.
The New A-CAM Cost Model Option
    To be clear, the FCC thankfully did provide additional funding in 
the March 2016 order--$200 million per year--to help facilitate the 
``model option'' as part of the reforms described above. These funds 
will certainly help enable the expansion of broadband in areas where it 
is lacking today. But demand for model support far exceeded supply, 
confirming the insufficiency of a USF High Cost budget that was 
otherwise held constant at 2010 support levels. In fact, even with the 
additional $200 million in support, USF funding for the model remains 
approximately $110 million per year short of demand, meaning that tens 
of thousands of rural consumers will see lower speeds or no broadband 
at all--precisely what the reforms were intended to alleviate. NTCA and 
many other stakeholders are urging the FCC to provide full funding to 
enable the business case for greater expansion of broadband.
The Non-Model USF Support Option
    A new cost model for distributing USF support that lacks sufficient 
funding is only part of the story. The reforms to the ``non-model'' USF 
mechanisms also did not address the underlying problem of insufficient 
funding. Due to the USF High Cost budget that has been flat for years, 
the non-model mechanisms look to be under-funded in the amount of at 
least $140 million this year (and perhaps much more over time). As a 
result, the budget control adopted to cap the High Cost Fund will cut 
an estimated ten percent of USF support this year on average for 
companies like Hill Country--cutting recovery of costs that we have 
already incurred in deploying networks and delivering services to 
consumers. Moreover, the budget control can and will vary from period 
to period, undercutting the kind of predictability that is called for 
by law and needed when evaluating future investments.
    Providing rural broadband won't leave a company with a cash 
surplus, so the unpredictability and impact of the budget control 
mechanism hits close to home. Hill Country's USF support was reduced by 
approximately five percent in the last few months of 2016 and some 
estimates indicate that the budget control could increase to perhaps 
ten percent this year. This will translate into higher broadband prices 
for consumers, because the only place we can turn to recover those 
costs are our consumers. RUS programs are impacted in turn, because the 
unpredictable nature of the level of the budget control hinders our 
ability to plan for future investments in broadband networks.
    Thus, as NTCA summarized in a recent filing with the FCC, ``while 
much effort may have gone into rebuilding `the engine' of non-model USF 
reforms, the ongoing lack of `gasoline in that engine' (in the form of 
sufficient budget resources) risks rendering its operation inefficient 
at best and utterly ineffective at worst.'' This budget crisis--
captured in the form of the new budget control mechanism--will deter 
customer purchases of standalone broadband and ultimately undermine 
further deployment, as small telcos will need to factor estimated 
support reductions into future planning efforts and scale back 
investments.
Right-Sized USF Budget Key to RUS Success
    Just as RUS will need sufficient resources to help rural America 
remain competitive, remedying this USF budget concern will be key to 
the sustained delivery of affordable, high-quality broadband to 
consumers that this Committee and many other Members of Congress hope 
to see in rural America. At a time when the focus is increasingly on 
deploying better infrastructure faster, the imposition of this budget 
cap at 2010 levels translates to a contrary result of lower-speed 
broadband to fewer locations at higher rates. The FCC has taken steps 
to finally adopt and implement reforms as discussed above, but there is 
still much more work to be done to make sure the reforms and programs 
work as intended and that these cornerstones of access to capital 
(especially RUS financing) and USF can once again operate in concert.
Rural Broadband Benefits the Entire U.S. Economy
    Investing in rural broadband has far-reaching effects for both 
urban and rural America, creating efficiencies in health care, 
education, agriculture, energy, and commerce, and enhancing quality of 
life of citizens across the country. A report released in April 2016 by 
the Hudson Institute in conjunction with the Foundation for Rural 
Service found that investment by rural broadband companies contributed 
$24.1 billion to the economies of the states in which they operated in 
2015.\2\ Of this amount, $17.2 billion was the direct byproduct of the 
rural broadband companies' own operations while $6.9 billion was 
attributable to the follow-on impact of their operations. In Texas, the 
direct economic impact of rural telecommunications was over $1.3 
billion with indirect impacts of nearly $720 million.
---------------------------------------------------------------------------
    \2\``The Economic Impact of Rural Broadband'' (2016), The Hudson 
Institute, Washington, D.C.
---------------------------------------------------------------------------
Rural Telecom a Boon to Urban Economies
    The Hudson study also confirmed that while small telcos like Hill 
Country produce a range of telecommunications services in rural areas, 
much of the benefit goes to the urban areas where the vendors, 
suppliers, and construction firms that rural telcos use are based. Only 
$8.2 billion, or 34 percent of the $24.1 billion final economic demand 
generated by rural telecom companies accrues to rural areas--the other 
66 percent or $15.9 billion accrues to the benefit of urban areas.
    Additionally, the report found that the rural broadband industry 
supported nearly 70,000 jobs nationwide in 2015, including more than 
6,300 jobs in Texas, both through direct employment and indirect 
employment from the purchases of goods and services generated. Jobs 
supported by economic activity created by rural broadband companies are 
shared between rural and urban areas, with 46 percent in rural areas 
and 54 percent in urban areas.
Immense Benefits for Rural Consumers and Communities
    The direct and indirect economic impact of the investments and 
operations of rural telecom providers don't tell the whole story. The 
broader socioeconomic benefits of broadband for users cannot be 
ignored. A Cornell University study, for example, found that rural 
counties with the highest levels of broadband adoption have the highest 
levels of income and education, and lower levels of unemployment and 
poverty.\3\ A recent Pew Study further finds that among those Americans 
who have looked for work in the last 2 years, 79 percent used online 
resources in their most recent job search and 34% say these online 
resources were the most important tool available to them.\4\
---------------------------------------------------------------------------
    \3\``Broadband's Contribution to Economic Health in Rural Areas'' 
(2015), Community & Regional Development Institute, Cornell University.
    \4\``Searching for Work in the Digital Era'' (2015), Pew Research 
Center, Washington, D.C.
---------------------------------------------------------------------------
    Access to healthcare is a critical issue for rural areas as well, 
where the lack of physicians, specialists, and diagnostic tools 
normally found in urban medical centers creates challenges for both 
patients and medical staff. Telemedicine applications help bridge the 
divide in rural America, enabling real-time patient consultations and 
remote monitoring, as well as specialized services such as tele-
psychiatry. One study found that doctors in rural emergency rooms are 
more likely to alter their diagnosis and their patient's course of 
treatment after consulting with a specialist via a live, interactive 
videoconference.\5\
---------------------------------------------------------------------------
    \5\``Telemedicine Consultations and Medication Errors in Rural 
Emergency Departments'' (2013), Center for Healthcare Policy and 
Research and Department of Pediatrics, University of California Davis.
---------------------------------------------------------------------------
    There is also a shortage of teachers in many areas of rural America 
and those public school districts rely on high-speed connectivity to 
deliver interactive-video instruction for foreign language, science and 
music classes. For example, students in rural Minnesota can attend 
online music classes offered through the MacPhail Center for Music in 
Minneapolis.\6\ Broadband networks also enable farmers and ranchers to 
use the Internet to analyze weather data, manage nutrient application, 
map their crop yields, and adjust planting for the next season with 
modern precision agriculture tools, and gain access to new markets. 
Farmers are relying heavily on both wireless and wireline broadband 
technologies, resulting in monthly data usage of 30 to 40 Gigabytes.\7\
---------------------------------------------------------------------------
    \6\``Bringing Broadband to Rural Minnesota'' (2016), Center for 
Rural Policy and Development, Mankato, MN.
    \7\``Farmers Harvest Gigabytes with Broadband and Wireless 
Technology'' (2016), CoBank Rural Infrastructure Briefings.
---------------------------------------------------------------------------
    Retail e-commerce has benefited tremendously from sales in rural 
America as well, where consumers may lack access to local retail 
outlets, but through the availability of rural broadband networks, can 
access a variety of shopping options. According to the Hudson 
Institute, rural consumers generated $9.2 billion in online sales in 
2015 and if all rural Americans had access to broadband networks, the 
authors estimate that Internet sales would be $1 billion higher.\8\
---------------------------------------------------------------------------
    \8\``The Economic Impact of Rural Broadband'' (2016), The Hudson 
Institute, Washington, D.C.
---------------------------------------------------------------------------
Conclusion
    Robust broadband must be available, affordable, and sustainable for 
rural America to realize the economic, healthcare, education, and 
public safety benefits that advanced connectivity offers. Small, rural 
telecom providers and lenders such as RUS must have regulatory 
certainty before they can justify greater investments in the networks 
of the future, and providers like Hill Country need sufficient ongoing 
USF support to avoid the prospect of charging rural consumers tens or 
hundreds of dollars more per month to recover the costs of operating in 
such rural and remote locations. And deploying broadband is only \1/2\ 
the battle--rural areas must remain served at reasonable rates if they 
are to remain competitive.
    Thus, the broader mission of universal service--and the economic 
benefits it delivers locally and to the nation as a whole--requires the 
resourcefulness and entrepreneurship of small businesses like Hill 
Country, access to capital from programs like those offered by RUS, and 
the availability of sufficient and predictable ongoing cost recovery 
mechanisms like the USF program so that rural consumers and businesses 
can indeed obtain services that are reasonably comparable in price and 
quality to those available in urban America.

    The Chairman. Thank you, Mr. Cook.
    Mr. Duff.

 STATEMENT OF JOHN DUFF, STRATEGIC BUSINESS DIRECTOR, NATIONAL 
                 SORGHUM PRODUCERS, LUBBOCK, TX

    Mr. Duff. Chairman Scott, Ranking Member Scott, on behalf 
of National Sorghum Producers, I would like to thank the 
Committee on Agriculture and this Subcommittee for the 
opportunity to submit testimony on the next U.S. farm bill, and 
implications for sorghum in renewable energy.
    My name is John Duff. I serve as Strategic Business 
Director for NSP, where I focus primarily on farm policy 
analysis, and work with sorghum-based renewable energy 
producers on policy and regulatory issues.
    NSP represents U.S. sorghum farmers nationwide, and our 
mission is to increase their profitability by ensuring sound 
approaches to legislation and regulation. NSP greatly 
appreciates the work put forth by this Subcommittee in 
preparation for the next farm bill, and looks forward to 
working with its Members to craft this vital farm policy.
    My testimony, in particular, will focus on implications for 
sorghum in renewable energy.
    The High Plains produces the largest volume of sorghum, but 
the crop is also grown from Georgia to California, and south 
Texas to South Dakota. In 2016, 480 million bushels of sorghum 
were produced in the U.S., with Kansas and Texas contributing 
approximately 80 percent of this total. Sorghum uses \1/3\ less 
water than corn, and tolerates heat much better than comparable 
crops. These characteristics make it particularly well suited 
for the semiarid High Plains where ground water declines 
threaten local economies, often underpinned by renewable energy 
or ethanol producers. Ethanol producers typically consume about 
\1/3\ of the U.S. sorghum crop, and are on track to use 125 
million bushels in 2017.
    Since the 2008 Farm Bill was enacted, the U.S. renewable 
energy industry has seen both incredible opportunities and 
tremendous challenges. As with any new industry, many companies 
have experienced only limited success, and setbacks have 
sometimes seemed more common than growth. Through this decade 
of change, sorghum has proven to be a constant for first-
generation and next-generation renewable energy producers. The 
advantages are clear. Sorghum is a source of starch, sugar, and 
cellulose all in a single crop. Its agronomic needs are well 
known to U.S. farmers, and it is supported by a deeply 
experienced seed industry, with roots in the 1950s upper Texas 
Panhandle, where 85 percent of the world's sorghum seed is 
still produced. Simply put, unlike other renewable energy 
feedstocks, sorghum was built to last and is here to stay.
    The 2008 Farm Bill recognized this potential and set up a 
structure to reward ethanol producers for taking a risk on 
feedstock such as sorghum. NSP firmly believes the resulting 
incentives enabled ethanol producers to become the foundation 
of the domestic sorghum market, with over $60 million being 
used to bolster sorghum demand through the Advanced Biofuel 
Payment Program. NSP strongly urges the Committee to continue 
and strengthen this program through a more transparent payment 
calculation process, and an addition of provisions that will 
incentivize its new processes designed to increase overall 
energy production.
    As technology has evolved, so too have energy title needs. 
While many programs authorized by the 2002 and 2008 Farm Bills 
provided much-needed support during a time when little was 
known about the commercial viability of many renewable energy 
technologies, today's environment is significantly different. 
Therefore, we strongly urge the Committee to consider combining 
and updating programs to better suit the needs of the current 
renewable energy industry. In summary, the next energy title 
must focus more on incentivizing greater energy production by 
proven market participants, than on de-risking unproven 
technology development.
    NSP believes sorghum will be a key part of our continuing 
move toward greater energy independence. The Department of 
Energy agrees, and has committed over $70 million to sorghum 
research since 2015. The Department refers to sorghum as a 
model feedstock, in large part because of the diverse nature of 
the crop. Sorghum is a starch, sugar, and cellulose source all 
in a single crop, and growth in the area of renewable energy 
will benefit all U.S. sorghum farmers and ultimately all of 
American agriculture.
    Thank you, and I welcome any questions.
    [The prepared statement of Mr. Duff follows:]

Prepared Statement of John Duff, Strategic Business Director, National 
                     Sorghum Producers, Lubbock, TX
Introduction
    On behalf of National Sorghum Producers, I would like to thank the 
House Committee on Agriculture for the opportunity to submit testimony 
on the next U.S. farm bill and implications for sorghum in renewable 
energy.
    My name is John Duff. I serve as Strategic Business Director for 
NSP, where I focus primarily on farm policy analysis and work with 
sorghum-based renewable energy producers on policy and regulatory 
issues. NSP represents U.S. sorghum farmers nationwide, and our mission 
is to increase their profitability by ensuring sound approaches to 
legislation and regulation. NSP greatly appreciates the work put forth 
by the Committee in preparation for the next farm bill and looks 
forward to working with its Members to craft this vital farm policy. My 
testimony, in particular, will focus on implications for sorghum in 
renewable energy.
Industry Overview
    The High Plains produces the largest volume of sorghum, but the 
crop is also grown from Georgia to California and south Texas to South 
Dakota. In 2016, 480 million bushels of sorghum were produced in the 
U.S., with Kansas and Texas contributing approximately 80 percent of 
this total. Sorghum uses \1/3\ less water than corn and tolerates heat 
much better than comparable crops. These characteristics make it well-
suited for the semi-arid High Plains, where groundwater declines 
threaten local economies often underpinned by renewable energy or 
ethanol producers. Ethanol producers typically consume about \1/3\ of 
U.S. sorghum production and are on track to use 125 million bushels in 
2017.
Expand Opportunities for Renewable Energy Producers Using Sorghum
    Since the 2008 Farm Bill was enacted, the U.S. renewable energy 
industry has seen both incredible opportunities and tremendous 
challenges. As with any new industry many companies have experienced 
only limited success, and setbacks have sometimes seemed more common 
than growth. Through this decade of change, sorghum has proven to be a 
constant for first generation and next generation renewable energy 
producers. The advantages are clear: Sorghum is a source of starch, 
sugar and cellulose all in a single crop; its agronomic needs are well-
known to U.S. farmers; and it is supported by a seed industry with 
roots in the 1950s upper Texas Panhandle, where 85 percent of the 
world's sorghum seed is still produced. Simply put, unlike other 
renewable energy feedstocks, sorghum was built to last and is here to 
stay.
    The 2008 Farm Bill recognized this potential and set up a structure 
to reward ethanol producers for taking risks on feedstocks such as 
sorghum. NSP firmly believes the resulting incentives enabled ethanol 
producers to become the foundation of the domestic sorghum market with 
over $60 million being used to bolster sorghum demand through the 
advanced biofuel payment program. NSP strongly urges the Committee to 
continue and strengthen the program through a more transparent payment 
calculation process and an addition of provisions that will incentivize 
new processes designed to increase overall energy production.
    As technology has evolved so too have energy title needs. While 
many programs authorized by the 2002 and 2008 Farm Bills provided much 
needed support during a time when little was known about the commercial 
viability of many renewable energy technologies, today's environment is 
significantly different. Therefore, we strongly encourage the Committee 
to consider combining and updating programs to better suit the needs of 
the current renewable energy industry. In summary, the next energy 
title must focus more on incentivizing greater energy production by 
proven market participants than on de-risking unproven technology 
development.
    NSP believes sorghum will be a key part of our continuing move 
toward greater energy independence. The Department of Energy agrees and 
has committed over $70 million to sorghum research since 2015. The 
Department refers to sorghum as a model feedstock in large part because 
of the diverse nature of the crop: Sorghum is a starch, sugar and 
cellulose source all in a single crop, and growth in the area of 
renewable energy will benefit all U.S. sorghum farmers and ultimately 
all of American Agriculture.

    The Chairman. Mr. Greenwood.

   STATEMENT OF HON. JAMES C. GREENWOOD, PRESIDENT AND CHIEF 
   EXECUTIVE OFFICER, BIOTECHNOLOGY INNOVATION ORGANIZATION, 
                        WASHINGTON, D.C.

    Mr. Greenwood. Chairman Scott, Ranking Member Scott, and 
other distinguished Members of the Subcommittee, good morning. 
Thank you for the invitation to testify today as we look ahead 
to the next farm bill, and the strategies to support our 
farmers and our local businesses.
    Twelve years ago, after serving for 12 years in Congress, I 
left a safe seat here in the House to lead the world's largest 
trade association representing biotechnology companies. I would 
like to note that I left undefeated and unindicted, by the way. 
I did this because I believed deeply in the biotechnology 
industry, and in our ability to affordably fuel, feed, and heal 
this country and, indeed, the world.
    Mr. Chairman, congratulations on your selection to lead 
this Committee, and Mr. Ranking Member, welcome back.
    I had the opportunity to be a Subcommittee Chairman during 
my service on the Energy and Commerce Committee, under Speaker 
Gingrich. These leadership posts don't always bring the 
cameras, which isn't necessarily a bad thing these days, but 
they do bring the opportunity to enact your ideas and to make a 
real difference for the people who put you here.
    I know Georgia's farmers are in good hands. I don't think 
it is a coincidence that this Subcommittee and the USDA are now 
led by public servants from a state that is on the cutting edge 
of modern agriculture.
    Georgia generates more than $8 billion a year in biobased 
industrial activity. Only one state in the Union produces more, 
and nationally, Georgia is ranked fourth in the number of 
direct biobased industry jobs, with more than 80,000.
    One of Georgia's most iconic companies, Coca-Cola, has 
utilized the farm bill's energy title to become one of the 
largest bioplastics end-users in the country. Their new bottle, 
introduced in 2009, is made 30 percent from plants. To date, 
Coca-Cola has produced more than 40 billion plant bottles. And 
the PlantBottleTM technology is now being used in 
polyester car interiors and souvenir cups, and Coca-Cola is 
building new manufacturing facilities and creating made-in-the-
USA jobs through its plant PET technology collaborative.
    That is just one example from one farm bill energy 
initiative, USDA's BioPreferred Program, but actually, there 
are 71 companies in Georgia benefitting from this program, from 
biobased flooring companies in Dalton, to the world's leading 
producer of pine chemicals in Savannah.
    In my written statement, and in BIO's report that I have 
submitted for the record, I highlight companies from every 
state that are developing new technologies and products with 
support from each of the farm bill energy title programs. We 
should build on these programs and go forward, not backward.
    If you would have asked me during my time in Congress what 
is the only thing a Member can do for his constituents more 
valuable than create jobs, I might have said create new 
American industries full of high-paying jobs; jobs that will 
help preserve our natural environment for our children and our 
grandchildren. That is exactly the future we are building, and 
the energy title of this farm bill is a big reason why.
    According to USDA, the biobased industry contributes $393 
billion to the U.S. economy annually, and supports 4.2 million 
jobs, and the bioeconomy is adding hundreds of thousands more 
jobs a year. The renewable fuel sector adds another 850,000 
jobs, and $185 billion in annual economic output, and $46 
billion in wages for our farmers, our workers, and our workers 
according to an analysis from Fuels America. These numbers 
would be a fraction of their current size without the energy 
title. The programs, in toto, provide what all investors say 
they need; a long-term, stable policy environment to help them 
make investment decisions. That stability is especially 
important in these tough times for our rural producers. We know 
America's farmers today are facing severe economic pressures, 
commodity prices are down, and so are net farm incomes. They 
dropped 15 percent last year, and the USDA forecasts another 
nine percent drop this year. The farm bill's energy programs 
are an instrumental tool to help farmers weather this storm and 
bounce back stronger. The demand for biomass gives farmers a 
value-added product they can grow to offset low commodity 
prices.
    McKinsey and Company estimates $\1/4\ trillion in annual 
global sales of biobased products. Here in the United States, 
we have the people, the universities, the technology, and the 
vision to lead the world in bio-processes and products. 
Biofuels, renewable chemicals, and biobased products diversity 
demand for crops and crop residues. Just as modern oil 
refineries take a crude oil feedstock and produce many value-
added products, biorefineries take renewable feedstocks and do 
the same. And the growing demand for employees to build and 
operate these new biorefineries is another way we are 
revitalizing rural communities.
    This is the future. The choice we make in the farm bill is 
whether or not we are going to lead it. In addition to boosting 
farmer incomes, creating jobs, and revitalizing U.S. 
manufacturing, the biobased economy is helping to offset the 
impact OPEC has on our oil prices. In 2014, biobased products 
replaced nearly 7 million barrels of oil. In 2015, renewable 
fuels displaced an amount of gasoline equivalent to 527 million 
barrels of crude. In other words, our industry saved us roughly 
the volume of oil imported annually from Saudi Arabia and 
Kuwait combined. BIO is proud to be a founding member of the Ag 
Energy Coalition of trade groups, companies, and organizations 
representing thousands of farmers and businesses across the 
country. We are committed to developing all of the above 
approach to supporting renewables, energy efficiency, and farm 
and forest resources. To me, the economic case alone for these 
new technologies is so strong and compelling that it warrants 
the continuation and growth of this title, even if one did not 
share my conviction that they are also critical to the health 
of our planet.
    Mr. Chairman, I look forward to working with this Committee 
as we plot a course to capture and capitalize on this growing 
market to harvest and manufacture sustainability. And thank you 
for allowing me to use the time that the other witnesses left 
on the table.
    [The prepared statement of Mr. Greenwood follows:]

   Prepared Statement of Hon. James C. Greenwood, President and Chief
 Executive Officer, Biotechnology Innovation Organization, Washington, 
                                  D.C.
Introduction
    The Biotechnology Innovation Organization (BIO) is the world's 
largest trade association representing biotechnology companies, 
academic institutions, state biotechnology centers and related 
organizations across the United States and in more than 30 other 
nations. BIO members are involved in the research and development of 
innovative healthcare, agricultural, industrial and environmental 
biotechnology products. Our members are working every day to solve the 
greatest challenges facing society--whether it is finding a cure for 
cancer, protecting the public against bio-terror threats, feeding 
hungry people nutritious food, or generating renewable fuels, renewable 
chemicals and biobased products. We support public policies, including 
government funding for key agencies and programs that unleash our 
members' scientific innovation potential and grow the bioeconomy. BIO 
also is one of the founding members of the Agriculture Energy (Ag 
Energy) Coalition, a coalition of trade groups, companies, and 
organizations representing thousands of farmers and businesses across 
the United States who are developing an ``all-of-the-above'' approach 
to renewable energy, energy efficiency, and farm and forest resources.
    Within its broad membership, BIO's member companies are developing 
new agricultural and low-carbon feedstocks, industrial enzymes, and 
biological catalysts for the conversion of biomass into advanced 
biofuels, alternative jet fuels, renewable chemicals, and biobased 
products. Utilizing the power of industrial biotechnology, companies 
across the country are creating a robust biobased economy. Biobased 
production encompasses a complex value chain, from agriculture through 
the manufacture of consumer goods, that provides an alternative to the 
petroleum-based value chain and that brings environmental, economic and 
other benefits. The biobased economy can generate new markets for 
agricultural producers, boost innovation in domestic manufacturing, and 
stimulate sustainable economic growth. These companies are developing 
plant biotechnologies that improve crop insect resistance, enhance crop 
herbicide tolerance, and facilitate the use of more environmentally 
sustainable farming practices. In animal agriculture, biotechnology is 
used to genetically engineer animals to improve their suitability for 
pharmaceutical, agricultural, and industrial applications.
    The biobased economy and industrial biotechnology already 
contribute to millions of jobs and hundreds of millions of dollars in 
annual economic activity. And we are poised for accelerated growth in 
the 21st century. The farm bill energy title can unleash this potential 
growth, creating tens of thousands of more jobs in rural America and 
promoting billions of dollars of additional economic activity.
Revitalizing Rural Economies
    Much has changed since Congress passed the current farm bill, the 
Agricultural Act of 2014.\1\ As [T]he Wall Street Journal noted last 
month, American farmers and rural communities are hurting economically. 
A multiyear slump in prices for corn, wheat and other farm commodities 
brought on by a world-wide glut of grain is pushing many farmers into 
debt. Net farm income dropped 15 percent to about $68 billion last 
year, the lowest since 2009,\2\ according to the Agriculture 
Department. It is expected drop another nine percent in 2017,\3\ 
extending the steepest slide since the Great Depression into a fourth 
year. As incomes drop, the number of farms continues to decline; there 
are now fewer than two million farms in America.
---------------------------------------------------------------------------
    \1\H.R. 2642, 113th Cong., Pub. L. 113-79 https://www.congress.gov/
113/plaws/publ79/PLAW-113publ79.pdf (2014) (enacted).
    \2\Dow Jones & Company, Inc. All Rights Reserved. (Feb. 10, 2017). 
Trade Punishment for Trump Voters. The Wall Street Journal. https://
www.wsj.com/articles/trade-punishment-for-trump-voters-1486686758.
    \3\Newman, J., & McGroarty, P. (Feb. 8, 2017). The Next American 
Farm Bust Is Upon Us. The Wall Street Journal. https://www.wsj.com/
articles/the-next-american-farm-bust-is-upon-us-1486572488.
---------------------------------------------------------------------------
    Federal lawmakers have worked over many years to craft policies in 
the farm bill that minimize farm household income fluctuations caused 
by volatility associated with agricultural production.\4\ As Members of 
the Committee begin their work on the development of the next farm 
bill, they should keep in mind that policies supporting and growing the 
21st century biobased economy can help reverse the economic trends 
farmers and rural communities are currently facing. Chief among these 
policies is the farm bill energy title, which creates high-value 
careers and new income streams for American farmers, accelerates the 
commercialization of new technologies and products derived from 
agricultural products, and supports construction of biorefinery 
manufacturing facilities in rural communities. Conventional and 
advanced biofuels, renewable chemicals, and biobased products made with 
industrial biotechnology are helping diversify demand for crops and 
crop residues. Just as modern oil refineries take a crude oil feedstock 
and produce many value-added products, biorefineries will take 
renewable feedstocks and make multiple products in the not-too-distant 
future.
---------------------------------------------------------------------------
    \4\Good, K. (Feb. 28, 2017). USDA Report Examines Farm Household 
Income Volatility. Farm Policy News. https://
farmpolicynews.illinois.edu/2017/02/usda-report-examines-farm-
household-income-volatility/.
---------------------------------------------------------------------------
The Value of the Biobased Economy
    During the 3 years of deliberations that led to the 2014 Farm Bill, 
BIO and the Ag Energy Coalition advocated for a robust energy title 
with mandatory funding to incentivize development and growth of the 
biobased economy. Within Title IX of the last farm bill, the energy 
title received $881 million in mandatory funds in 2014, representing 
less than one percent of the overall farm bill budget. This small 
amount of funding yields big results for the overall economy. According 
to the U.S. Department of Agriculture (USDA), the number of jobs 
contributed to the U.S. economy by the biobased products industry in 
2014 was 4.2 million, up from 4.0 million in 2013. In addition to the 
direct jobs created by the industry, the biobased economy generates a 
jobs multiplier of 2.76, meaning for every 1,000 biobased products 
jobs, 1,760 more jobs are supported in the United States.\5\ This 
industry contributed $393 billion to the U.S. economy in 2014, up from 
$369 billion in 2013.
---------------------------------------------------------------------------
    \5\Golden, J., Handfield, R., Daystar, J., & McConnell, E. (Oct. 
2016). USDA: An Economic Impact Analysis of the U.S. Biobased Product 
Industry. https://www.biopreferred.gov/BPResources/files/
BiobasedProductsEconomicAnalysis2016.pdf .
---------------------------------------------------------------------------
    This broad economic impact comes from biorefineries that are 
commercializing a range of technology solutions to produce commodity 
and specialty renewable chemicals as well as advanced biofuels. 
Industrial biotechnology companies are pursuing renewable chemicals and 
biobased materials because they can be commercialized at smaller scale 
and they promise environmental benefits, stable costs, and novel 
properties in comparison to fossil fuel-derived chemicals. Competition 
to produce platform renewable chemicals provides manufacturers 
assurance of a steadily available, high-quality supply of renewable 
chemicals for consumer product applications.
    These facilities are being built in rural communities near biomass 
resources. The demand for biomass helps agriculture producers by giving 
them a value-added product they can grow to offset low commodity 
prices. The demand for employees to build and operate these 
biorefineries helps to revitalize rural communities.
    Development of these biorefineries can bring long-term economic 
development to rural communities through the predicted rapid expansion 
of renewable chemical production in the near future. McKinsey & Co. 
estimates that there were $252 billion in global sales of biobased 
products in 2012, with biofuels and plant extracts comprising more than 
\1/2\. Sales of renewable chemicals represented nine percent of the 
$2.820 billion in worldwide chemical sales in 2012. By 2020, McKinsey 
expects biobased products to make up 11 percent of the $3.401 billion 
global chemical market. Sales of biobased products would reach $375 to 
$441 billion by 2020, with a compound annual growth rate of eight 
percent over the preceding decade.\6\
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    \6\Biotechnology Innovation Organization (BIO). Advancing the 
Biobased Economy: Renewable Chemical Biorefinery Commercialization, 
Progress, and Market Opportunities, 2016 and Beyond. https://
www.bio.org/sites/default/files/
BIO_Advancing_the_Biobased_Economy_2016.pdf.
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    Gains in productivity associated with biotech crops also help grow 
the American agricultural trade surplus because so many biotech crop 
harvests are dedicated to foreign markets. In Fiscal Year 2015, U.S. 
agricultural exports totaled more than $143 billion, contributing to a 
$27.5 billion agricultural trade surplus. This is in part due to 
biotechnology, which has contributed to a strong and steady growth in 
the U.S. agricultural export market, particularly for corn and 
soybeans. It is noteworthy that, according to the White House National 
Bioeconomy Blueprint, published in 2012, U.S. revenues from biotech 
crops totaled more than $75 billion. The investments by companies in 
research, development and commercialization of these crops have 
generated good jobs all across our country.
    In addition to boosting farmer incomes, creating jobs, and 
revitalizing U.S. manufacturing, the biobased economy is lessening our 
dependence on foreign sources of petroleum. While the U.S. has 
benefited in recent years from increased production of domestic oil and 
gas, we are still unnecessarily impacted by the global price of oil and 
those who control it. One need look no further than OPEC's conscious 
decision 2 years ago to try to squeeze U.S. producers out of the 
market, followed by OPEC's cut in production last fall. OPEC's actions 
caused a ten percent increase in oil prices in 1 day, and prices 
continued to climb to an 18 month high within a month. Biobased 
products and renewable fuels are helping to offset the impact OPEC has 
on our energy prices. In 2014 biobased products replaced about 6.8 
million barrels of oil, while in 2015, renewable fuels displaced an 
amount of gasoline equivalent to 527 million barrels of crude oil. 
That's roughly the volume of oil imported annually from Saudi Arabia 
and Kuwait combined.\7\
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    \7\Urbanchuk, J. (Feb. 2016). ABF Economics: Contribution of the 
Ethanol Industry to the Economy of the United States in 2015. http://
ethanolrfa.org/wp-content/uploads/2016/02/Ethanol-Economic-Impact-for-
2015.pdf.
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    Whether the growth and benefits from this industry occur in the 
United States will depend on supportive policies to help grow the 21st 
century biobased economy. The 2014 Farm Bill energy title programs 
spurred the development of this industry. To ensure the biobased 
industry continues to expand in the United States, Congress must 
improve upon the existing Title IX programs and provide mandatory 
funding. This will help innovative U.S. companies continue to 
commercialize advanced biotech processes. Putting homegrown 
technologies to work converting domestic crops and residues to value-
added products can create high-quality rural jobs, spur economic 
growth, and improve environmental health.
    What follows are the existing programs contained within Title IX of 
the 2014 Farm Bill, how the programs work, the jobs, facilities, and 
products these programs have helped develop, and how BIO believes these 
programs can be improved in the next farm bill.
Farm Bill Energy Title Programs
   Section 9002 Biobased Markets Program, known as the 
        BioPreferred' Program.

   Section 9003 Biorefinery, Renewable Chemical, and Biobased 
        Product Assistance Program (BAP).

   Section 9005 Bioenergy Program for Advanced Biofuels.

   Section 9007 Rural Energy for America Program (REAP).

   Section 9008 Biomass Research and Development (BRDI).

   Section 9010 Biomass Crop Assistance Program (BCAP).
Section 9002, the Biobased Market Program, or the 
        BioPreferred' Program
    Managed by USDA, the goal of the BioPreferred program is to 
increase the purchase and use of biobased products from agricultural 
feedstocks. The BioPreferred' Program was created by the 
2002 Farm Bill and reauthorized and expanded as part of the 
Agricultural Act of 2014 (the 2014 Farm Bill). The program's purpose is 
to spur economic development, create new jobs and provide new markets 
for farm commodities. The increased development, purchase, and use of 
biobased products reduces our nation's reliance on petroleum, increases 
the use of renewable agricultural resources, and mitigates adverse 
environmental and health impacts.\8\
---------------------------------------------------------------------------
    \8\USDA. What Is Biopreferred? https://www.biopreferred.gov/
BioPreferred/faces/pages/AboutBioPreferred.xhtml.
---------------------------------------------------------------------------
    BioPreferred' Program is transforming the marketplace 
for biobased products through two initiatives: purchasing requirements 
for Federal agencies and their contractors; and voluntary product 
certification and labeling. Federal law, the Federal Acquisition 
Regulation, and Presidential Executive Orders direct all Federal 
agencies and their contractors to purchase biobased products in 
categories identified by USDA through the BioPreferred' 
Program. To date, over 14,000 biobased products in 97 product 
categories (e.g., cleaners, carpet, lubricants, paints) listed in the 
BioPreferred' Catalog qualify for mandatory Federal 
purchasing. In Fiscal Year 2017, Federal agencies have committed to 
include biobased product purchasing requirements in 84,433 contracts 
totaling $453,150,168.
    The BioPreferred' Program also drives growth of the 
bioeconomy by helping drive consumer recognition of biobased products. 
USDA is making it easier for consumers to identify biobased products 
with the USDA Certified Biobased Product label. There are currently 
more than 2,700 voluntarily labeled products: 1,700 of them are 
consumer goods, 400 are renewable chemicals, and 600 are industrial 
products.
    Brand owners such as Procter and Gamble (P&G) on their Tide bottle; 
General Mills on their cereal boxes; Unilever on their detergents; and 
The Coca-Cola Company on their PlantBottleTM packaging, all 
use USDA's label to show consumers the biobased content in their 
products. Eventually, P&G intends to use only recycled or renewable 
materials to make and package its consumer products. Wal-Mart has set 
goals to sell only products that use renewable energy and produce zero 
wastes. The BioPreferred' Program helps create this market 
pull for renewable chemicals and biobased products and creates a 
uniform process for companies interested in these technologies.
Recommendations for the Next Farm Bill
    USDA should establish within the BioPreferred' Program's 
voluntary labeling and procurement system a campaign to increase public 
awareness and acceptance of renewable chemicals and biobased products. 
The BioPreferred program also should develop an annual report both 
auditing and tracking USDA's voluntary Certified Renewable Chemicals 
and Biobased Product labeling program and showing procurement and sales 
of biobased products by Federal agencies and their contractor's.
    Additionally, USDA could work with United States Department of 
Commerce in developing North American Industry Classification System 
(NAICS) codes that identify renewable chemical and biobased product 
manufacturers. USDA should explore combining its certified renewable 
chemicals and biobased products labeling program with the Environmental 
Protection Agency's Safer Choice label, providing consumers the ability 
to identify products that are both certified biobased and safer for 
human health and the environment.
    Finally, we ask Congress to consider increasing mandatory funding 
for this program to $10 million annually.
Section 9003 Biorefinery, Renewable Chemical, and Biobased Product 
        Assistance Program
    The Biorefinery, Renewable Chemical, and Biobased Product 
Manufacturing Assistance Program (BAP), also known as the Section 9003 
Program, provides loan guarantees to assist in the construction of 
advanced biofuels biorefineries. Consistent with BIO's past advocacy, 
it was expanded to include renewable chemicals and biobased products 
manufacturing facilities in the 2014 Farm Bill.\9\
---------------------------------------------------------------------------
    \9\USDA. Biorefinery, Renewable Chemical, and Biobased Product 
Manufacturing Assistance Program. https://www.rd.usda.gov/files/fact-
sheet/RD-FactSheet-RBS_Biorefinery.pdf.
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    This loan guarantee program enables manufacturers to access capital 
for large-scale projects in rural communities. Without the loan 
guarantee program, new innovative companies might never be able to pool 
sufficient capital to commence development of a project in a rural 
community with a small population. Section 9003 has enabled companies 
to put steel in the ground for first-of-a-kind biorefineries. These 
biorefineries are proven job and economic growth drivers for rural 
communities.
Sapphire--Columbus, New Mexico
    In 2011, under this program, USDA provided Sapphire Energy a $54.5 
million loan guarantee to build a refined algal oil commercial 
facility. Sapphire's ``Green Crude Farm'' in Columbus, NM, is an 
example of how USDA funding and partnerships with the private sector 
are helping to support the development of biorefineries. About a 4 hour 
drive south of Albuquerque, roughly 1,700 Columbus residents live at 
the southern edge of New Mexico and the United States. In the desert 
scrub outside of Columbus the plant opened in May 2012 to produce 
renewable algal oil. According to the company, more than 600 jobs were 
created during the first phase of construction at the facility and 
during operations the plant employs approximately 30 people.\10\ After 
Sapphire received additional equity from private investors, it repaid 
the remaining balance on its USDA-backed loan in 2013. The plant is 
current being brought fully online to produce algae for human and 
animal nutritional products. It is a measured and effective approach to 
becoming a permanent form of nutritional oils and protein for the 
world.\11\
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    \10\Bio-Based World News. (Aug. 10, 2016). $250m USDA funding pool 
to help bio-based chemicals and products seeks applications. https://
www.biobasedworldnews.com/250m-usda-funding-pool-to-help-bio-based-
chemicals-and-products-seeks-applications.
    \11\Sapphire Energy, Inc. Algae Farm. (2015). http://
www.sapphireenergy.com/locations/green-crude-farm.html.
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Fulcrum Sierra Biofuels--Storey County, Nevada
    Section 9003 is supporting development of the exciting field of 
alternative jet fuels. In 2014, USDA closed on a loan guarantee to 
Fulcrum Sierra Biofuels, LLC, to build a biorefinery to produce jet 
fuel from municipal solid waste in Storey County, Nevada, approximately 
20 miles east of Reno. Fulcrum will produce synthesis gas from 147,000 
tons of municipal solid waste and catalytically convert it to synthetic 
paraffinic kerosene/jet fuel through a proprietary technology. The 
plant will be the first of what the company expects to be several bio-
jet fuel plants throughout the country. At the same time as USDA made 
its loan guarantee, Cathay Pacific Airways announced investment in 
Fulcrum Bioenergy and negotiated a long-term supply agreement for 375 
million gallons of sustainable aviation fuel over 10 years. This would 
represent about two percent of the airline's annual fuel 
consumption.\12\
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    \12\USDA. Fletcher, J. (Press Release No. 0195.14). USDA Announces 
Loan Guarantee to Help Innovative Company Turn Waste Into Renewable Jet 
Fuel. https://www.usda.gov/wps/portal/usda/usdamediafb?contentid=2014/
09/0195.xml.
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Biosynthetic Technologies--Texas
    With Section 9003 expanded in 2014 to make renewable chemicals and 
biobased products manufacturing facilities eligible to participate in 
the program, Irvine, California-based, Biosynthetic Technologies, LLC, 
received conditional approval from USDA for its loan guarantee 
application. Biosynthetic Technologies is working with a rural lender 
to finance the construction of a full-scale commercial manufacturing 
plant in Houston that will produce 20 million gallons a year of its 
oil-based ingredient for high-performance motor oils, industrial 
lubricant products, and cosmetic ingredients. These biobased oils have 
higher viscosity, thermal stability, and flash point than traditional 
petroleum motor oils as well as existing synthetics. This new project 
will create manufacturing jobs in the United States, strengthen the 
agricultural sector, and help create environmentally friendlier 
products that perform better.\13\
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    \13\Business Wire. (Feb. 01, 2016). USDA Reserves Over $100 Million 
in Loan Guarantee Funding for Biosynthetic Technologies. http://
www.businesswire.com/news/home/20160201005258/en/USDA-Reserves-100-
Million-Loan-Guarantee-Funding.
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Recommendations for the Next Farm Bill
    The 2014 Farm Bill extended loan guarantee eligibility to renewable 
chemicals and biobased products makers. However, due to a drafting 
error when reconciling the differences between the House and Senate 
versions of the 2014 Farm Bill, language was inadvertently deleted that 
would have allowed stand-alone renewable chemical facilities to fully 
participate in the program. Under USDA's current regulations, all 
biorefinery projects must produce an advanced biofuel, even if the main 
purpose of the project is to create renewable chemicals. As a result, a 
number of renewable chemical producers are ineligible because it is too 
costly or impractical for them to retrofit their processes to produce a 
biofuel, in addition to a renewable chemical.
    BIO urges the Committee to amend the language in Section 9003 to 
ensure stand-alone renewable chemical facilities are eligible in the 
next farm bill. BIO also requests the Committee work with USDA to 
ensure timely implementation of the new rules that will come as a 
result of the next farm bill to ensure USDA makes funding available in 
a timely manner. Maintaining mandatory funding for this program is 
crucial for its success in enabling companies to secure the financing 
they need to commercialize biorefinery projects.
Section 9005 Bioenergy Program for Advanced Biofuels
    This program encourages production of advanced biofuels, other than 
corn starch ethanol. The policy goal is to create long-term, sustained 
increases in advanced biofuels production. Under the last farm bill, 
awards totaling $8.8 million were made through Rural Development to 
biofuels producers, based on the amount of advanced biofuels produced 
from renewable biomass. Feedstocks incentivized by this program include 
crop residue, food and yard waste, vegetable oil and animal fat. The 
program has promoted the development of wood pellets, biodiesel, 
advanced and cellulosic ethanol, and biogas.\14\
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    \14\USDA. Advanced Biofuel Payment Program. https://
www.rd.usda.gov/files/RD_AdvBiofuelsChart_2016.pdf.
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    The return on investment (ROI) for new technologies, including 
advanced biofuels, are important to driving investor interest. Many 
advanced biofuels are still utilizing brand new technologies and 
plants, so there is much to learn and improve. Initial investment costs 
for these technologies and plants will improve with time, practice, 
learning, and ultimately additional plants. Efficiencies across the 
value chain--including biomass harvest and storage, engineering 
improvements, construction learnings and regulatory approvals--must be 
made in order to improve the economic outlook and certainty for the 
ROI. Section 9005 funding helps investors in these new technologies 
with the requisite ROI needed to proceed with constructing a new plant 
or expanding capacity at an existing facility. Without Section 9005 
mandatory funding, companies working on advanced biofuel technologies 
have one less tool to support innovation and commercialization of the 
cleanest fuels in the world. Current USDA and DOE funding programs help 
advanced biofuels succeed; the industry cannot afford to be without one 
of these programs.
Recommendations for the Next Farm Bill
    It is critical the Committee maintain robust mandatory funding for 
Section 9005 to help grow and expand the advanced biofuels industry 
nationwide.
Section 9007 Rural Energy for America Program (REAP)
    REAP has been a remarkably popular, successful, and constructive 
program that supports every state and region and renewable energy and 
energy efficiency technology. REAP provides benefits to the full 
agricultural value chain, from producers to coops, to biotechnology and 
clean technology companies operating across rural America. Nearly 
13,000 projects in all 50 states have received awards since the 2008 
Farm Bill, leveraging more than $3 billion in private investment. REAP 
is one of agriculture's best ways of improving the nation's energy 
infrastructure and resiliency.
    The program has been instrumental in helping deploy biogas systems 
throughout the rural economy allowing agricultural producers, through 
the use of digesters, to make products from waste streams--manure and 
crop residues--that would otherwise be viewed as an environmental 
challenge. Farmers can now take these wastes streams and make on-farm 
energy, nutrient-rich soil amendments, fertilizers, a renewable 
replacement for natural gas, and even feedstocks for renewable 
chemicals and bioplastics. The sale of all these products helps protect 
the agricultural producer from uneven commodity prices.
    REAP improves profit margins for farmers, ranchers, and rural small 
businesses by cutting energy costs with modern energy efficiency and 
renewable energy technologies. With REAP, businesses become more 
efficient, resilient to energy market changes, and more energy 
independent. Growing economic opportunities with proven energy 
technologies excites rural citizens and communities and helps keep 
younger generations in rural areas and in farming.
Recommendations for the Next Farm Bill
    The program has been oversubscribed year after year; it should be 
expanded both in terms of funding and scope in the next farm bill. For 
example, REAP should be modified to make clear that varying 
biomaterials projects are fully eligible for funding. In addition, BIO 
and the Ag Energy Coalition would like to see improvements so that 
under-served technologies like small-scale wind generation and biogas 
are better served.
Section 9008 Biomass Research and Development (BRDI)
    The Biomass Research and Development Initiative (BRDI)\15\ seeks to 
foster significant commercial production of biofuels, biobased energy 
innovations, development of biobased feedstocks, and biobased products 
and processes, including cost-competitive cellulosic ethanol. To this 
end the program provides competitive funding in the form of grants, 
contracts, and financial assistance for research, development, and 
demonstration of technologies and processes. Eligibility is limited to 
institutions of higher learning, national laboratories, Federal or 
state research agencies, private-sector entities, and nonprofit 
organizations.\16\
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    \15\USDA. (Feb. 26, 2015). Biomass Research and Development 
Initiative (BRDI) https://nifa.usda.gov/funding-opportunity/biomass-
research-and-development-initiative-brdi.
    \16\USDA CRS Report. https://www.everycrsreport.com/reports/
R43416.html#fn31.
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    This program has afforded researchers across the country 
opportunities to explore new techniques and feedstocks that will enable 
the biotech industry to build facilities nationwide and create a true 
biobased economy. Whether it is examining on-farm biomass processing in 
Kentucky or co-treatment for low-cost fermentation of cellulosic 
biomass in New Hampshire, this program is key to unlocking the 
technical challenges of deploying these technologies nationwide.\17\
---------------------------------------------------------------------------
    \17\USDA NIFA Current Research Information System. http://
cris.nifa.usda.gov/cgi-bin/starfinder/
0?path=fastlink1.txt&id=anon&pass=&search=(gc=BRDI%20OR%20GC=RDFD)&for
mat=WEBTITLESG.
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Recommendations for the Next Farm Bill
    It is critical the Committee maintain robust funding for BRDI. Cuts 
in the appropriations process have led to smaller grants, limiting the 
diversity of projects.
Section 9010 Biomass Crop Assistance Program (BCAP)
    The Biomass Crop Assistance Program (BCAP) provides financial 
assistance to owners and operators of agricultural and non-industrial 
private forest land who wish to establish, produce, and deliver biomass 
feedstocks.\18\ BCAP provides two categories of assistance: matching 
payments and establishment and annual payments.
---------------------------------------------------------------------------
    \18\USDA BCAP. https://www.fsa.usda.gov/programs-and-services/
energy-programs/BCAP/.
---------------------------------------------------------------------------
    In fashioning the 2014 Farm Bill, Congress made a number of changes 
to BCAP. Standing out among the changes was a cap on the program's 
mandatory authorization level. The 2014 Farm Bill imposed for the first 
time a $25 million cap per year in mandatory funding for FY 2014 
through FY 2018.
    This cap was due at least in part to concerns that arose in the 
early years after BCAP was authorized--for example, that it could 
heighten competition over eligible woody biomass, thus raising the 
price of that material to the detriment of traditional users, such as 
nurseries and others, and that the byproduct of paper production, 
``black liquor,'' could qualify for Collection, Harvest, Storage, and 
Transportation (CHST) matching payments. Such concerns have been 
addressed or have become less acute.\19\
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    \19\CRS R41296 Biomass Crop Assistance Program (BCAP): Status and 
Issues. Jan. 12, 2015. https://www.everycrsreport.com/reports/
R41296.html.
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    Despite the initial challenges of developing and implementing BCAP, 
this remains a crucial program for developing the feedstocks necessary 
for the biobased economy. The program's regionally appropriate biomass 
feedstocks are key to the development of sustainable systems for 
biofuels, renewable chemicals, and biobased products.
    BCAP has incentivized nearly 1,000 growers and landowners farming 
nearly 49,000 acres to establish and produce dedicated, non-food energy 
crops for delivery to energy conversion facilities.\20\ In 2014 and 
2015, USDA approved 209 contracts for matching payments of $15.8 
million toward the collection or harvest of approximately 300,000 dry 
tons of forest residues from National Forest Service and Bureau of Land 
Management public lands. Forest residues are removed for the reduction 
or containment of disease or insect infestation and reduction of fire 
threat.\21\
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    \20\Biomass Crop Assistance Program (BCAP) Qualified Biomass 
Conversion Facilities (BCF's) FY 2017. https://www.fsa.usda.gov/Assets/
USDA-FSA-Public/usdafiles/Energy/BCAP%20Fa
cility%20Listing%20FY2017.pdf.
    \21\USDA Resumes Incentives to Grow the Bioeconomy and Improve 
Forest Health. https://www.fsa.usda.gov/news-room/news-releases/2016/
nr_20161110_rel_185.
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    In 2016, $1 million was allocated toward the sign-up of 1,000 acres 
of Miscanthus in project area 5 in Ohio and Pennsylvania\22\ and of 
shrub willow for project area 10 in New York.23-24
---------------------------------------------------------------------------
    \22\Biomass Crop Assistance Program--Project Areas Numbers 2 
through 5 Implemented in Arkansas, Missouri, Ohio and Pennsylvania 
County Locations for New Giant Miscanthus Biomass Producers. https://
www.fsa.usda.gov/Internet/FSA_File/bcap_areas2_5_2011.pdf.
    \23\Biomass Crop Assistance Program--Project Area Number 10. 
https://www.fsa.usda.gov/Assets/USDA-FSA-Public/usdafiles/Energy/BCAP/
bcap_proj10.pdf.
    \24\USDA: Feedstocks and the AJF Supply Chain the Broad Pict[ur]e, 
Harry Baumes, Sep. 14, 2016. https://energy.gov/sites/prod/files/2016/
09/f33/baumes_alternative_aviation_fuel_work
shop.pdf.
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    In the Miscanthus project, BCAP was critical in helping Aloterra 
establish 5,000 acres of a perennial grass on cropland that was sitting 
idle and underutilized in Northeast Ohio and Northwest Pennsylvania. 
BCAP enabled local farmers to wait 3 years before earning income from a 
harvest of this new perennial grass. Aloterra then leveraged the 
program to bring an additional $20 million in private funds to build 
two manufacturing facilities in Ashtabula County, Ohio. This region has 
been heavily impacted by the opioid epidemic and manufacturing job 
losses and badly needs good paying manufacturing jobs. Because of BCAP, 
Aloterra has now created over 60 full-time jobs in the region and 
brought a new cash crop to poor farmland that was idle. BCAP drives a 
very powerful economic combination of farming and rural manufacturing. 
Aloterra is now operating the only facility in North America turning 
grass into food service packaging, and it is looking to expand this 
model to several more states.\25\
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    \25\Miscanthus: Cultivating a Brighter Future. http://
www.aloterrallc.com/.
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    In northern New York State, the BCAP project has led to the 
commercialization of shrub willow grown for as a source of renewable 
energy. Eight landowners are now taking part. All of the willow biomass 
grown will be used to produce renewable energy at facilities owned by 
ReEnergy Holdings LLC in northern New York. The purchase of willow to 
generate renewable energy will inject about $3 million into the local 
economy over the course of the project.\26\
---------------------------------------------------------------------------
    \26\Extension BCAP Helps Commercialize Shrub Willow for Bioenergy 
in Northern New York. Apr. 20, 2016. http://articles.extension.org/
pages/71099/bcap-helps-commercialize-shrub-willow-for-bioenergy-in-
northern-new-york.
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Recommendations for the Next Farm Bill
    BCAP has the potential to be a huge benefit to the development of 
the biobased economy and to agricultural producers looking for 
additional income streams. We would encourage the Committee to provide 
the program robust funding in the next farm bill. The key impediment to 
BCAP's success has been the continual reduction of mandatory funds by 
appropriators and delays by USDA in implementing the program.
    We also would encourage the Committee to explore how BCAP can be 
better utilized to improve forest health through reductions of 
hazardous fuels. BIO supports expanding the eligibility of BCAP to 
include energy sorghums (sweet sorghum, biogas and biomass sorghums) 
and eligibility of energy sorghum for all of the payments once they are 
restructured. Introduction of a parallel payment structure for annual 
crops that remunerates for annual planting and annual retrieval is also 
necessary for annual crops like sorghum. Rather than dividing payments 
into establishment, maintenance and retrieval, a structure appropriate 
for forestry and perennial crops.
Conclusion
    Farm Bill energy title programs have been incredibly successful in 
incentivizing the biobased economy. Because of the research, loans, and 
grants provided by these programs, industrial biotechnology companies 
are developing new feedstocks, industrial enzymes, and biological 
catalysts for the conversion of biomass for the production of advanced 
biofuels, alternative jet fuels, renewable chemicals, and biobased 
products.
    The industry is on the cusp of creating a robust biobased economy 
through U.S. biobased production. This encompasses a value chain from 
agriculture through the manufacture of consumer goods that provides a 
cost-competitive alternative to petroleum's value chain and brings 
environmental, economic and other benefits. This generates new markets 
for agricultural producers, boosts innovation in domestic manufacturing 
and exports, and stimulates sustainable economic growth. In turn, 
because the inputs and technologies are domestically developed, this 
sector will boost the incomes of America's farmers, revitalize rural 
communities, create high-skilled jobs in the manufacturing sector, and 
provide sustainable employment.
    BIO and the Ag Energy Coalition are ready to serve as a resource to 
the Committee in developing the energy title and look forward to 
working with you during reauthorization of the farm bill.
                               Appendices
    Editor's note: Due to the size of the appendices referenced, they 
have been relocated to the end of the published hearing for Thursday, 
March 9, 2017 for the Subcommittee on Commodity Exchanges, Energy, and 
Credit, and are located on p. 170.

    The Chairman. Congressman Greenwood, like most Members, you 
never understood what the red light was for. That holds true 
today. Thank you for your testimony.
    I would like to remind Members that they will be recognized 
for questioning in order of seniority for Members who were here 
at the start of the hearing. After that, Members will be 
recognized in order of arrival. I appreciate the Members' 
understanding.
    I now recognize myself for 5 minutes.
    Commissioner Fox, an increase in rural opportunities and 
narrowing the rural-urban divide is an essential purpose of 
rural development programs. What should this Committee consider 
as metrics to judge if we have been successful or not on that 
effort?
    Mr. Fox. Well, the Committee has to look at the SECD 
Program (Strategic Economic and Community Development), which 
was part of the 2014 Farm Bill. I mean that program was the 
first time that we could go through multi-jurisdictional areas, 
where counties could work together on economic development, you 
could leverage, I think that is very important as we move 
forward.
    I just think that in rural America we can't afford to build 
silos, we need to partner. And as an intergovernmental partner, 
we need to partner with the Federal and the state to make 
things happen in rural America.
    The Chairman. Thank you.
    Mr. Cook, in your testimony, you proposed a non-duplication 
rule. I understand the value of this rule, preventing the 
government from supporting the same service twice, and ensuring 
borrowers have revenue to pay back their loans, but your rule 
raises questions for me about what we do for rural residents 
who are being served by Internet services that are inadequate 
by today's standard, but built with RUS loan dollars that are 
still being paid back.
    Mr. Cook. Well, thank you.
    The Chairman. Can we allow a potential competitor to take 
out a loan to build out technically better services, or are 
those residents resigned to the slow lane for the duration of 
the loans that underwrote the system?
    Mr. Cook. Thank you, Mr. Chairman. I certainly understand 
that issue, and believe that one of the things that NTCA 
believes, first and foremost, and certainly its member 
companies like Hill Country, is that our utmost concern is 
serving our end-user customers in rural America. Certainly, in 
cases where there is an existing provider who has an RUS loan, 
from the standpoint of assuring that the money is used 
efficiently and effectively, and that there is not duplication 
of support, we certainly believe it is wise that we are 
spending taxpayer dollars to the most efficient way possible. 
At the same time, as I said, we believe that the consumer 
should be our utmost concern.
    I think that in cases where there is another provider 
wishing to provide support or service in an area that is 
currently served by an existing RUS borrower, there should be a 
process in place whereby that existing borrower can at least 
prove-up their ability to provide service. And if it becomes 
apparent that they are not doing what they are supposed to be, 
and not abiding by their loan covenants, then we would agree 
with you that another provider should at least be considered in 
those cases.
    The Chairman. Yes. Thank you.
    Mr. Chastain, I know that the National Rural Electric 
Cooperative Association members have been grappling with these 
concerns too. I would invite you to weigh on that issue as 
well.
    Mr. Chastain. Well, I think what Mr. Cook said makes a lot 
of sense. There are cases out there where, unfortunately, there 
are some incumbent providers who do have RUS loans, who are not 
providing adequate service. We have examples of that in several 
places in Georgia. As a matter of fact, as you and Ranking 
Member Scott are aware, the state legislature put in a rural 
broadband study committee, chaired by Senator Steve Gooch and 
Representative Don Parsons, specifically to address that issue 
in rural Georgia.
    What he said is correct. Either the incumbent providers who 
have taken the money either need to be given the chance to step 
up to the plate and prove that they can provide the adequate 
service, but if they are not, there should be opportunities for 
others who can come in to be able to provide that service.
    Our view in Georgia is that rural broadband is absolutely 
quickly becoming a critical piece of infrastructure for rural 
communities. Rural communities, as you well know, have a lot of 
challenges already, and not having access to rural broadband is 
just one further kind of brick on their wagon, so to speak.
    The Chairman. Thank you.
    Mr. Duff, as we evaluate energy programs, how have they 
made meaningful impacts on our rural economies, and do you 
believe that these investments build self-sufficient 
infrastructure to drive long-term economic activity? And if you 
could be brief, I am down to about 20 seconds.
    Mr. Duff. Yes, I will. Thanks for the opportunity to 
comment.
    The best example of the rural development impacts with the 
energy title from the 2008 and 2014 Farm Bills would be Section 
9005, the Advanced Biofuel Payment Program. As I said, it has 
been a $60 million impact to ethanol plants in Kansas and 
Texas, in order to incentivize greater use of feedstocks, like 
sorghum, and that really had a direct impact on the buying 
power of those facilities in local economies, particular where 
groundwater declines are really threatening the way of life and 
the way of farming in the High Plains.
     I think that the opportunity that that has created for 
feedstocks like sorghum in areas where the need is there has 
had a very significant impact.
    The Chairman. Thank you for that.
    I now recognize my colleague from Georgia, the Ranking 
Member, Mr. David Scott, for 5 minutes.
    Mr. David Scott of Georgia. Thank you very much.
    Mr. Chastain, you in your testimony brought up an 
interesting comparison between electricity and broadband. And 
let me first ask you, to your knowledge, there is no American 
home today that is not connected with electricity. Am I safe in 
saying that?
    Mr. Chastain. Yes, sir, that is correct.
    Mr. David Scott of Georgia. And am I safe in saying it 
nearly took us 80 years to accomplish that task?
    Mr. Chastain. Yes, sir.
    Mr. David Scott of Georgia. I can vouch for that. I was 
born in a rural area, and you can't get much more rural than 
Aynor, South Carolina, in Horry County. We didn't have 
electricity or running water, any of that, so I can relate.
    Now, how do we compare that to broadband in terms of, we 
know how important electricity was, but as we move now into 
this high technology area, how do you compare that with the 
need for broadband? Are not both at the same level?
    Mr. Chastain. Yes, it is hard to compare, it is almost in 
many ways an apples and oranges comparison, but there are some 
similarities. We are obviously a very technology-driven 
society, especially the younger members of our society. We all 
probably have a cell phone or smartphone in our pockets.
    Mr. David Scott of Georgia. Yes.
    Mr. Chastain. And not just for quality of life, but for 
business applications in rural America, broadband is going to 
be increasingly important.
    I worked most of my career in economic development trying 
to recruit industry into rural Georgia, and it is a challenge 
when there is inadequate broadband to get companies who work on 
a global platform to be able to locate in some of these 
communities. Even mom-and-pop entrepreneurial operations, 
sometimes it makes it hard for them to compete. That is where 
the comparison is similar, and that I do believe it is 
something that we are going to have to look at as a nation as a 
priority for infrastructure improvement to rural broadband. The 
challenges Mr. Cook outlined very well, it is a Herculean 
effort when it comes to financing these programs. My opinion 
is, it is going to take some massive Federal programs to help 
provide people the opportunity to do that.
    Mr. David Scott of Georgia. Good. Thank you very much.
    Now, Mr. Cook, I want to go to you. You mentioned in your 
testimony this comparison in speed between rural America and 
urban America. Could you refine that a bit? Exactly what are 
you talking about there, how serious it is, and how can we 
address this?
    Mr. Cook. Thank you for the question. Yes, the 
Communications Act, going back to 1934 and then updated in the 
Telecommunications Act of 1996, in Section 254 it talks about 
universal service. It is very clear that we as 
telecommunications companies have been given a mandate that we 
are to provide reasonably comparable services at reasonably 
comparable rates. In other words, trying to equalize what is 
available in rural America, as compared to what is available in 
urban America. And that is something that the small telecos 
that are represented by NTCA work very hard at every day, is 
trying to make sure that rural America has the same level of 
service that is available in urban----
    Mr. David Scott of Georgia. And how far are we from that? 
Are we there now or what do we need to do more of to make sure 
that rural America and urban America are on the same level of 
broadband capacity?
    Mr. Cook. That is a great question. I believe about 80 
percent, maybe a little bit more than 80 percent of the NTCA 
member companies have deployed broadband services, and most of 
those are between 80 and 85 percent deployed 10/1. We are in 
good shape. We are certainly not through. We are working very 
hard.
    One of the things that we are really dealing with is an 
insufficient USF fund.
    Mr. David Scott of Georgia. Yes.
    Mr. Cook. While we have seen increases to the E-Rate 
Program and Lifeline over the last 7 years, we have been capped 
on the USF fund. So that has definitely been an obstacle.
    Mr. David Scott of Georgia. Okay. Thank you very much. My 
time is running out, but, Mr. Greenwood, I have to get to you 
because you have served in and out. You have served here with 
us, and now you are out dealing with the reality. Could you 
share with us what exactly we in Congress can do better and 
more of to help the rural communities in acquiring this equal 
balance between urban America, and do you believe that we are 
doing enough in adequate funding or do we need to do more?
    Mr. Greenwood. Well, thank you for the question, 
Congressman.
    First off, I would say that the energy title in the last 
farm bill was about $881 million, and I would certainly 
encourage you to improve upon that if possible. I know that is 
a tough prospective, given the many competing interests for the 
budget this year, but these programs are working, and they are 
working well.
    The second suggestion I would make, when it comes to the 
RFS, is to do exactly nothing, to leave it as it is.
    Mr. David Scott of Georgia. Yes.
    Mr. Greenwood. This program was created in 2007, and has 
been serving the country very well. We have been able to use 
renewable fuels that, as I have said in my testimony, replace 
enough energy to substitute for all the oil we get from Saudi 
Arabia and Kuwait, it is better for the environment, it creates 
jobs in the rural economy. And what is necessary is stability. 
The investors invested in this program and in these plants on 
the basis of a promise that Congress made when it passed the 
law originally. Now, there is a lot of controversy around the 
RFS, but my admonition in answer to your question would be to 
let that program complete its course as originally intended.
    Mr. David Scott of Georgia. Thank you very much.
    Thank you, Mr. Chairman.
    The Chairman. The chair now recognizes Mr. Comer, from 
Kentucky, for 5 minutes.
    Mr. Comer. Thank you, Mr. Chairman.
    My first question is for Mr. Cook. Do you know exactly, or 
roughly, what percentage of rural America does not have 
broadband access?
    Mr. Cook. Mr. Comer, I can certainly get back to you with 
that specific information. As I mentioned a little bit earlier, 
I can speak for the NTCA member companies and tell you that in 
terms of 10/1 broadband availability we are about 85 percent 
deployed. Now, certainly, some areas have much greater than 
that. We have a lot of member companies that are providing gig 
service. We have a number that are providing the new FCC goal 
of 25 meg down-speeds and 3 meg up-speed. We are doing quite 
well in terms of some of the price cap areas. Larger companies 
that historically have not done as great a job as the small 
companies. That figure I don't have for you today, but 
definitely there is probably more of an issue in those areas 
where they have historically been served by the larger 
carriers.
    Mr. Comer. Right. Is there something that could be done in 
this Congress, aside from more funding, for example, 
deregulation, is there something that can be done to provide 
more broadband capabilities in the rural areas?
    Mr. Cook. Yes. That is a great question. Certainly, our top 
issue really is the insufficiency of the current USF fund, 
where the small companies right now are capped at about $2 
billion annually. And again, we have seen increases in other 
funds that are part of USF; namely, the E-Rate Program and 
Lifeline Program, and we are in support of that, but at the 
same time we are the underpinning of supporting those services. 
And so we really believe that is the main issue is addressing 
the insufficiency of the fund.
    Mr. Comer. When I was in the Kentucky Legislature, this was 
an issue, and some of the big companies would come in and say 
if we would deregulate, that would get things going and help 
the development of broadband. It really, to my knowledge, 
hasn't happened yet, and I was just wondering because if there 
were ever a time to deregulate, the 115th Congress would be the 
window of opportunity to do that, if that is an option. When I 
was traveling the First Congressional District, which is a 
very, very rural district, campaigning and talking to people, 
obviously, about what can be done to improve the economy, every 
rural community in my districts, like the rural communities 
that you all represent, many of the best and brightest young 
people, when they graduate from high school, go off to college 
and for whatever reason don't come back, primarily because they 
don't oftentimes have the same opportunities. And when asking 
the local leaders and the job creators what can be done in 
Congress, more broadband, and investing in that type of 
infrastructure would help rural communities attract better 
jobs, next-generation-type jobs that would attract people and 
create badly needed jobs in these rural communities.
    I am going to switch to Mr. Fox. What do you think are the 
best things that can be done in these rural communities to 
attract good-paying jobs that would retain our best and 
brightest young people in these rural communities, like where I 
am from, that often don't come back home when they go off to 
college?
    Mr. Fox. Chairman Scott, Representative, thank you for the 
question. I think broadband is top on that list.
    Mr. Comer. Yes.
    Mr. Fox. You send a young son or daughter off to college, 
and they are used to great speeds, and do 4 years of college, 
they are not coming back to speeds of 5/5, or 5/2, and that is 
what I have on my farm.
    Economic development and jobs always comes down to 
infrastructure. Every time that I have a business that looks to 
expand, or a new business is looking to come into our area, 
there are three questions. One is roads. Do you have roads able 
to bring trucks in? The second one would be freight. What have 
you got for railroads? And the third one, and those three 
questions will interchange, but what is the speed of your 
broadband.
    Mr. Comer. Right.
    Mr. Fox. And if you can't take care of those three issues, 
they are not coming and there are going to be no jobs. A few 
years ago where we had local people working on a broadband 
project, one of the facts that just startled me was a nursing 
home administrator, and their people could put someone in an 
ambulance, take them to a hospital 25 miles away, and the 
ambulance could beat the records over the Internet service 
because their Internet service was that slow.
    Mr. Comer. Yes.
    Mr. Fox. Broadband, with the guaranteed loans, because if 
you look at most of the projects, they have a problem in that 
3, 4, 5 year time frame. Once they get past 4 or 5 years, they 
are pretty good, but if they can have some way to get a 
guaranteed loan to help them through that, that is amazing.
    Mr. Comer. Okay.
    Thank you, Mr. Chairman.
    The Chairman. The chair now recognizes Ms. Kuster, for 5 
minutes.
    Ms. Kuster. Thank you, Chairman Scott. I appreciate this 
hearing on rural development.
    I am from New Hampshire, and we spend a lot of our time 
working in this space, rural development, and I was 
particularly pleased in the 2014 Farm Bill, I had the 
opportunity to offer an amendment that would support our rural 
community colleges. Previously, community colleges had not been 
included under the USDA farm bill rural development programs. 
And we were able to open a whole new college campus in Lebanon, 
New Hampshire, that will provide up to 500 students with access 
to education in a rural community. And we did that through a 
$1.6 million loan awarded by USDA Rural Development. It is 
critically important, and infrastructure, and I agree with all 
the witnesses about trying to bring young people back, or keep 
people. We have an expression in New Hampshire, stay, work, 
play, and we are trying to convince our young people to be 
there.
    I want to direct my question to Mr. Cook, because I am 
particularly focused in on telecommunications, which is a big 
problem for us throughout the state. I actually recently had a 
forum with realtors, and in the southern part of the state near 
Massachusetts, it is not far from a pretty populated area, but 
they are unable to sell homes, $200,000, $300,000, $400,000 
homes, because there is no broadband connection to the home.
    I wanted to ask you, Mr. Cook, talked about the Broadband 
Loan Program as being largely inaccessible because of program 
reforms. Can you expand on this, what do you mean by 
inaccessible, is USDA turning down applications, and how can 
the program be improved, and do we need to make any changes to 
the Universal Service Fund, or how should we go about this? 
Because in the next farm bill I want to make sure that we make 
it very easy to expand and get over that maybe 3 to 4 year hump 
that Mr. Fox has referred to.
    Mr. Cook. Thank you for the question. Yes, USF and the RUS 
Programs are really closely tied, and so the meaning behind 
that statement was really meant to address the issue that, 
since the national broadband plan was announced back in late 
2009, we have had much uncertainty introduced into the rural 
telecom industry. There has been a lot of uncertainty about 
what recovery companies would be able to get from the USF fund, 
concerns about interior designer-carrier compensation, frankly, 
just a lot of unknowns about what the revenue streams would 
look like for rural companies.
    As a result of that, we have seen a number of companies 
over, again, probably the last 7 years not take advantage of 
RUS programs as they used to, just because of this uncertainty. 
That is certainly something that we would appreciate your 
assistance with, going forward, and making sure that the USF 
fund is sufficient. Also in terms of helping us try to 
streamline some of the regulatory hurdles that we face today, 
especially with respect to permitting. We have an appreciation 
for the rules that RUS employs when it is looking to give us 
grants and loans. At the same time, there are some process 
improvements that can probably take place. I know with our 
particular loan grant program at Hill Country, that we were 
fortunate enough to work with RUS on, we lost about a year 
period of time in deploying our network because of environment 
permits that we were able to conduct the environments, but at 
the same time it took a very long time to get those approvals 
from RUS. And at the same time, we had certain departments 
within RUS saying that they were going to rescind our money 
because we hadn't yet spent it, and other areas within RUS 
saying that we couldn't spend the money because the 
environmentals, we had done too many, or that that hadn't been 
completely approved at that point. From a process standpoint 
that is something that we would appreciate your assistance 
with.
    Ms. Kuster. Well, I hope I can ask all of the witnesses to 
offer your practical suggestions to the Committee, and I know 
the bipartisan nature of the Members of this Subcommittee, and 
we will be working on this section of the farm bill, and we 
want to make sure we get it right so that we can improve access 
to broadband communication throughout rural America. So thanks 
very much.
    I yield back.
    The Chairman. Thank you, ma'am.
    The chair now recognizes one of our new Members, Mr. Faso, 
from New York.
    Mr. Faso. Thank you, Mr. Chairman. It is a pleasure to have 
the witnesses here today, and I appreciate all of their coming. 
And, Congressman Greenwood, welcome to the Committee here 
today.
    I wanted to focus on rural water. And, Mr. Fletcher, the 
New York Rural Water Association, Patricia Scalera and folks 
that have worked in rural water are people that I have worked 
with for many years in my prior tenure in the New York State 
Legislature. And I noticed in your testimony you suggest 
raising the cap. I think that you said raising the cap on water 
projects and waste water programs to $20,000. If we did that, 
would that affect the backlog, and would it impermissibly 
increase the difficulty that some very small communities have 
in getting access to these programs, because rural water on the 
Circuit Rider Program, from my experience, have been terrific?
    Mr. Fletcher. Thank you for the question.
    Funding priority should still be given to smaller rural and 
lower-income communities. Every state is provided a specific 
allotment for the loan and grant program. If any state would 
have obligated their funds to small rural utilities and had a 
balance left, at that point then we could look at helping 
slightly higher-populated communities that demonstrate a need 
for the financing, but also is still rural in character.
    Taylorville, where Congressman Davis hails from, and that 
is where our state rural water office is, their population is 
about 11,000, and with the current cap they are not eligible 
for that funding.
    Mr. Faso. Yes.
    Mr. Fletcher. I think that would help these slightly larger 
communities have access to the loan and grant program if funds 
are available.
    Mr. Faso. Well, thank you very much. I appreciate that.
    And I am also going to be giving some testimony to the 
Appropriations Committee later today. There is one of their 
subcommittees on the Circuit Rider Program and, for instance, 
on how important that is to the rural areas in my district. I 
know sometimes when you are from New York State, people think 
Manhattan. Well, upstate New York is a very rural area, in need 
of much economic assistance.
    And I wanted to turn also to Commissioner Fox. I noted in 
your testimony you mentioned the Community Facilities Program 
that was used to help, through loan and grant, construct a 
hospital in your county. And I was wondering if you could just 
elaborate for the Committee a bit on the ease with which you 
were able to secure that assistance through that program, and 
any suggestions or recommendations you might have about it, 
because I have a very similar situation in a portion of my 
district as well.
    Mr. Fox. Chairman Scott, Representative, thank you for the 
question.
    Our Administration would say that it went quite well. Yes, 
there is a process, but there has to be a process when being 
fiscally responsible. We used $18.9 million, I believe, and it 
was all loans, we had no grants. We had local money that we put 
in, and our hospital foundation raised over $1 million to go 
into the project. But it is a process that goes through. It is 
the staff, and Rural Development staff in Minnesota, they are 
great people. They are great people to work with, they help 
through different programs, whether it is that one or the 
reprogram. But it is a process, and you have to meet, go to the 
table and be a partner at the table, and they will help you 
through it, and it is a great process.
    Mr. Faso. Thank you.
    And last for Mr. Cook, broadband has been discussed here. 
It is a big issue. We have the Middleburgh Phone Company in 
Schoharie County, which I don't know if they are a member of 
your association, but they have been very active in providing 
expanded broadband coverage. I am just wondering, from your 
vantage point and from your experience, is there a 
technological leapfrogging that will allow us, through wireless 
technology, to be able to accommodate much of the need that we 
have for broadband in rural communities? I just wondered about 
your perspective on this, because I do see this now being 
heavily advertised by some of the companies in suburban New 
York City, just south of my district, and I was wondering about 
your perspective on that.
    Mr. Cook. Yes, that is a great question. It is something 
that we are constantly looking at is new technologies, ways 
that we can more efficiently deploy broadband services, provide 
faster speeds. One of the things that was included in my 
testimony was this term future-proof, and really what we are 
talking about there is not only providing the best available 
service for the consumer today, but also providing long-term 
solutions. When you look at the growth of broadband, and now 
nationally you are looking at a median broadband speed of about 
41 meg that is generally available across the nation. When you 
look at the potential growth of that year over year of about 28 
percent, it is not long before you realize that we are going to 
be at gig-level services that customers are going to be 
demanding.
    So in terms of technology, right now, it really appears 
that fiber is the best solution in most cases. And in terms of 
wireless technology, certainly, there are some fixed wireless 
technologies that we are using, and that other companies are 
deploying, satellite is another example, in very remote areas 
where that could be a solution. But in terms of trying to make 
sure that we are doing the best thing for the consumer today 
and in the near-term, but also what is most economical, so that 
we are not having to go back and re-engineer the network and 
pay for the same deployment again in just a few short matter of 
years in order to keep up with capacity, we are really kind of 
leaning towards fiber at this point.
    Mr. Faso. Thank you.
    The Chairman. Thank you. The chair now recognizes Mr. Soto, 
from Florida, for 5 minutes.
    Mr. Soto. [Audio malfunction in hearing room.] funds--thank 
you, haven't gotten their share of Federal funds and felt left 
behind. And so I appreciate the Chairman and Ranking Member 
focusing on this.
    In Florida I have seen everything from cowboys use cell 
phones to communicate with each other, to WiFi and sensors 
being used to determine when to harvest a crop. Technology is 
very integrated in our agriculture in Florida.
    And so I was wondering, with the lack of adequate broadband 
and other communication infrastructure, if Mr. Cook or Mr. 
Chastain can discuss what the current potential production loss 
we have would be from the lack of these sorts of resources.
    Mr. Cook. Well, I will address it from the standpoint of 
reasonable comparable rates and service that we talked about 
before. That is something that comes up a lot in discussions 
about deploying broadband in rural America and the cost of 
doing that. One of the things too that we hear a lot at the 
state level is this general thought about urban areas 
subsidizing rural areas. And, in fact, I would argue that you 
can make that same argument in reverse, that rural areas in 
many ways are subsidizing urban areas. And we don't see a farm 
in downtown Minneapolis, you don't have a dairy farm in 
downtown Dallas. Rural areas are extremely important, and 
providing them the same level of service that is available in 
urban areas is critically important, not only for the success 
of those rural areas, and enabling those rural areas to compete 
in a global economy, but also ensuring that urban areas are 
well served by the rural areas. So it is a symbiotic 
relationship.
    To address more specifically your question in terms of cost 
and availability, economically that is a great question. I 
don't know if we have any specific facts about what that means 
to the economy, but, obviously, it is very critical, especially 
when you look at food supplies and the growing population 
globally. It is expected by 2050 to be a 9.6 billion 
population, and it is estimated that food production, in order 
to keep up with that growing population, would need to improve 
by 50 percent. And so a lot of that additional food production 
will be supported by broadband applications, enabling farmers 
to work more efficiently using IoT (Internet of Things)-type 
technologies.
    Mr. Soto. And on to my second question, it is to Mr. 
Greenwood. You had mentioned about renewable energy, in Florida 
we use bagasse, which is a byproduct of sugar to provide energy 
for several towns in Florida. What areas do you think are 
succeeding in using biofuel or other renewables across our 
country, and what areas have a lot of potential but really 
could use additional help to get them over the top?
    Mr. Greenwood. Well, thank you for the question. The 
beautiful thing about renewable fuels is that the feedstocks 
are multiple. You mentioned biogas, right now there are 
projects that USDA is considering that use for feedstocks the 
following: vegetable waste, manure, algal biomass, nonedible 
distillers, corn oil, soy oil, canola oil, almond, walnut 
shells, and woody biomass, waste oils, high oleic soybean oil, 
switchgrass sorghum, macadamia nutshells, and woody biomass. It 
is basically a question of the science of it, and I am not a 
scientist, basically, plants have evolved: if you look at corn, 
for instance, corn evolved so that the seeds are highly 
soluble, so that is how they germinate. But the cornstalks and 
the leaves, and all of the kinds of the materials I just cited, 
are cellulosic, and they evolved for rigidity and structure. 
And so the challenge has always been how chemically, and using 
other products, can we extract the energy from that cellulosic 
material that is otherwise frequently gone to waste and has no 
economic value. And so the biotechnology industry develops 
enzymes and other products that allow us to break that down, 
and including solid waste materials, and turn it into usable 
energy.
    Does that respond to your question, sir?
    Mr. Soto. Yes. And just to correct the record, I was 
referring to bagasse, which is a byproduct of the sugar 
industry and used, rather than biogas. But thank you for 
answering my question. I appreciate it.
    Mr. Greenwood. Right.
    Thank you, Mr. Chairman.
    The Chairman. The chair now recognizes Mr. Davis, for 5 
minutes.
    Mr. Davis. Thank you, Mr. Chairman.
    The hard part about serving on two different committees 
sometimes is you have hearings at the exact same time. Forgive 
me if I am redundant on any of the issues that I bring up.
    But I would like to continue what my colleague, Mr. Soto, 
was briefly mentioning, and especially with your response, I 
would like to welcome one of our former colleagues, Mr. 
Greenwood, here, and my friend. Obviously, where I come from in 
Illinois, ethanol RFS is a major issue. As we move forward, you 
mentioned cellulosic opportunities, what is the status right 
now of moving ahead on more cellulosic opportunities to make 
our homegrown fuels more secure?
    Mr. Greenwood. Sure. Well, cellulosic ethanol is in 
production at a commercial scale in multiple locations around 
the country. The problem is that the uncertainty caused by the 
RFS renewable volume obligations in 2014, 2015, and 2016 during 
the Obama Administration, cost advanced cellulosic biofuels 
industry over $22 billion in lost investment, much of which has 
gone overseas.
    I did say earlier that the most important thing Congress 
needs to do is nothing, to leave the RFS alone and fulfill the 
promise that Congress made to investors originally in 2005, and 
expanded in 2007, that if they brought private capital to the 
table, Congress would leave a stable policy in place for more 
than 15 years. Second would be to maintain the farm bill energy 
title. In particular, Section 9003, the Bio-Refinery Assistance 
Program, and the Biomass Crop Assistance Program, or BCAP, to 
help advance biofuel producers to secure the capital necessary 
to build a biorefinery and assist farmers to produce the 
feedstocks necessary for these facilities.
    The Administration needs to deny the petition to change the 
point of obligation under the law, keeping the 2015 RVO in 
place, and set the 2018 RVO according to the law. We need to 
bring these dollars back to the U.S., and policy stability is 
the only way to make that happen.
    Mr. Davis. Well, I couldn't agree more, Jim. I appreciate 
your comments there.
    One other quick question. The USDA has operated the BIP 
Program over the last few years, and they have worked with 
states to deploy distribution infrastructure, and as a result 
we now have over 600 locations in 28 states throughout the 
U.S., offering more opportunities for homegrown fuels for sale. 
Can you offer your opinion on that program and how successful 
it has been so far?
    Mr. Greenwood. Well, the Biofuel Infrastructure Program as 
referred to, BIP, has been a critical aid to retailers moving 
higher blends of biofuels to the market. This is creating 
critical space in the transportation fuel market for advanced 
and cellulosic biofuels. The program is succeeding in helping 
gas stations put infrastructure in place to deliver higher 
volumes of biofuels.
    As you mentioned, there are now 650 stations selling E15 in 
28 states, 409 of these are BIP participants. It is expected to 
be over 1,200 locations by year-end, and a vast majority of 
these pumps also are selling E85. Major retailers selling or 
committed to selling E15 include Sheetz, Come and Go, 
Thorntons, Racetrack, Mineco, Murphy, USA, Mapco, Family 
Express, Senex, and Protect Fuels. And this is going beyond the 
Corn Belt, Florida, Georgia, North Carolina, and Texas are in 
the top six states of pumps being deployed.
    These retailers are making these investments because E15 
sells 3 to 10 below regular gasoline, helping to bring in 
more consumers.
    I would like to add that E10 is approved and recommended 
for all small and off-road engines. The distribution and use of 
E15 is not mandatory, and it is not approved for use in small 
engines like boats or lawnmowers. With E15 for sale at over 600 
locations in 28 states, there has not been a single verified 
report of E15 misfueling and engine damage.
    Infrastructure investments are critical as we continue to 
deploy higher demands of ethanol across the country, which is 
also why we have the funding for the farm bill energy title as 
important as it is for building out this industry.
    Mr. Davis. Thank you. Thank you.
    And, Mr. Fletcher, welcome from the great State of 
Illinois. I know I don't represent the Nashville area, but I 
appreciate what you have done. Actually, in my previous 
position, I had a chance to work with your water company. And I 
hear right before I got here you mentioned my hometown of 
Taylorville, so I can't not ask you, give us anything that you 
might not have been asked yet that you want to make sure that 
the Committee understands that is important to rural water 
systems in Illinois, please go ahead.
    Mr. Fletcher. Thank you, Congressman.
    I think pressing rural needs in Illinois, and also the 
other rural communities in all the states, is the funding 
through the Rural Development Waste Water Loan and Grant 
Program. Rural Development has been working for 7 years with 
this program. And I am sure you are aware that the last two 
farm bills were able to fund hundreds of projects in less than 
90 days. At that point, after the RD projects were done, it 
erased the backlog for water and waste water projects in the 
United States. And at this time, we have a $2.5 billion backlog 
just after a few years after the RD program. I would give 
priority to aging and deteriorating systems that are determined 
to be beyond their useful life, or ones with the greatest 
public health needs.
    Second, our Circuit Rider Program that the Congressman from 
New York mentioned a few minutes ago, that assistance to small 
rural communities is essential to make sure that the water is 
safe for everybody to drink, and they comply with all the 
Federal regulations. I appreciate everything that you all do 
for rural water.
    Mr. Davis. Thank you.
    Mr. Fletcher. Thank you.
    Mr. Davis. Thanks for being here.
    The Chairman. Before we adjourn, I would invite my Ranking 
Member, Mr. David Scott, from my home state, to make any 
closing remarks that he may have.
    Mr. David Scott of Georgia. Sure. Well, thank you, Mr. 
Chairman. I appreciate that.
    And first of all, let me commend you for pulling together 
this very, very important and very informative cast of these 
six persons to testify before us this morning. Their testimony 
was very accurate, it was thorough, and very helpful to us. And 
I just want you all to go away from this meeting knowing that 
this Subcommittee stands with you shoulder to shoulder to make 
sure we provide you with the adequate funding that you need, 
and let the people of America know that they get a return 
benefit. Mr. Chastain, you mentioned $300 million that has been 
brought back, and the roles that you play.
    Thank you, Mr. Chairman. And we look forward to taking care 
of your interests in the upcoming farm bill.
    The Chairman. Gentlemen, I want to thank you for taking 
time to come up here on behalf of the people that you 
represent; the same people that we represent. And I want to 
commit to you that this Subcommittee, and on behalf of the big 
Chairman of the full Committee, will be working hand-in-hand 
with you to make sure that you have the resources that you need 
in the next farm bill to help those that both of us represent 
in America. Again, thank you for coming to Washington and 
testifying on behalf of our constituents.
    Under the Rules of the Committee, the record of today's 
hearing will remain open for 10 calendar days to receive 
additional materials and supplementary written responses from 
the witnesses to any questions posed by a Member.
    This hearing of the Subcommittee on Commodity Exchanges, 
Energy, and Credit is adjourned.
    [Whereupon, at 11:26 a.m., the Subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]
  Submitted Letter by Hon. Austin Scott, a Representative in Congress 
 from Georgia and Hon. David Scott, a Representative in Congress from 
                                Georgia
February 22, 2017

  Hon. Donald J. Trump,
  President,
  United States of America.

    Dear Mr. President:

    On behalf of our respective organizations, which collectively 
represent U.S. agricultural producers, rural businesses, rural 
communities, and rural families, we are writing to ask your support for 
rebuilding infrastructure in rural America.
    We were very pleased to hear your comments about the importance of 
rebuilding U.S. infrastructure. Those of us in rural communities have 
seen our 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 your 
Administration's comprehensive infrastructure renewal efforts.
    American agriculture truly feeds the world and creates millions of 
jobs for U.S. workers. 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 if we are to continue efficiently getting our agricultural 
products to market. For example, \1/4\ 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 
are in need of modernization. In addition, though, 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.
    As you take office and begin addressing the nation's infrastructure 
needs, we hope you will provide leadership to ensure that rural 
America's needs are addressed. We stand ready to work with you and your 
Administration to begin this important initiative.
            Respectfully,


 
 
 
Agribusiness             Michigan Bean Shippers   Oklahoma Agribusiness
 Association of Iowa                               Retailers Association
Agribusiness Council of  Michigan Electric        Oklahoma Agricultural
 Indiana                  Cooperative              Cooperative Council
                          Association
Agricultural and Food    Michigan Soybean         Oklahoma Association
 Transporters             Association              of Electric
 Conference                                        Cooperatives
Agricultural Retailers   Midwest Shippers         Oklahoma Soybean
 Association              Association              Association
Agriculture &            Minnesota AgriGrowth     Oklahoma Wheat Growers
 Commodities              Council                  Association
 Transportation
 Coalition
Alabama Rural Electric   Minnesota Corn Growers   Oregon Potato
 Association of           Association              Commission
 Cooperatives
Alaska Power             Minnesota Farmers Union  Oregon Wheat Growers
 Association                                       League
Alliance for I-69 Texas  Minnesota Grain and      Panhandle Peanut
                          Feed Association         Growers Association
Almond Alliance of       Minnesota Milk           Pennsylvania Farm
 California               Producers Association    Bureau
American Association of  Minnesota Pork           Pennsylvania Rural
 Crop Insurers            Producers Association    Electric Association
American Cotton          Mississippi Association  Pennsylvania State
 Shippers Association     of Cooperatives          Association of
American Dairy           Mississippi Soybean       Township Supervisors
 Coalition                Association
American Farm Bureau     Missouri Corn Growers    Rocky Mountain
 Federation               Association              Agribusiness
                                                   Association
American Feed Industry   Missouri Soybean         Rural and Agriculture
 Association              Association              Council of America
American Horse Council   Montana Electric         Rural Coalition/
                          Cooperatives'            Coalicion Rural
                          Association
American Sheep Industry  Montana Grain Growers    Rural Development
 Association              Association              Leadership Network
American Society of      National Association of  SE Minnesota Grain and
 Farm Managers and        Resource Conservation    Feed Dealers
 Rural Appraisers         and Development         Select Milk Producers,
                          Councils                 Inc.
American Soybean         National Association of  South Carolina
 Association              State Departments of     Fertilizer and
Arkansas Electric         Agriculture              AgriChemical
 Cooperatives                                      Association
Arkansas Soybean         National Association of  South Carolina Peach
 Association              Towns and Townships      Council
Association of           National Association of  South Dakota
 Equipment                Wheat Growers            Association of
 Manufacturers                                     Cooperatives
Association of Illinois  National Barley Growers  South Dakota Corn
 Electric Cooperatives    Association              Growers Association
Association of           National Black Growers   South Dakota Rural
 Louisiana Electric       Council                  Electric Association
 Cooperatives
Association of Missouri  National Cooperative     South Dakota Soybean
 Electric Cooperatives    Business Association     Association
Bongards Premium Cheese  National Corn Growers    Southern Peanut
                          Association              Farmers Federation
California Association   National Cotton Council  Southwest Council of
 of Winegrape Growers                              Agribusiness
Colorado Rural Electric  National Council of      Soy Transportation
 Association              Farmer Cooperatives      Coalition
Cooperative Network      National Family Farm     State Agriculture and
                          Coalition                Rural Leaders
Corn Refiners            National Farmers Union   Tennessee Electric
 Association                                       Cooperative
                                                   Association
Crop Insurance           National Grain and Feed  Tennessee Soybean
 Professionals            Association              Association
 Association
Empire State Potato      National Grange          Texas Ag Industries
 Growers, Inc.                                     Association
Empire State Water Well  National Ground Water    Texas Elective
 Drillers' Association    Association              Cooperatives
Equipment Dealers        National Latino Farmers  Texas Grain and Feed
 Association              & Ranchers Trade         Association
Farm Credit Council       Association             Texas Vegetation
                                                   Management
                                                   Association
Farmer Mac               National Milk Producers  The Electric
                          Federation               Cooperatives of South
                                                   Carolina
Farmworker Association   National Oilseed         U.S. Canola
 of Florida, Inc.         Processors Association   Association
Federation of Southern   National Pork Producers  U.S. Dry Bean Council
 Cooperatives Rural       Council                 U.S. Forage Export
 Training and Research   National Potato Council   Council
 Center
First District           National Rural Economic  U.S. Poultry and Egg
 Association              Developers Association   Association
Florida Electric         National Rural Electric  United Egg Producers
 Cooperatives             Cooperative
 Association              Association
Georgia Electric         National Rural Water     United Fresh Produce
 Membership Corporation   Association              Association
Golden State Power       National Sorghum         USA Dry Pea and Lentil
 Cooperative              Producers                Council
Grain and Feed           National Sunflower       USA Rice
 Association of           Association
 Illinois
Great Plains Canola      Nebraska Corn Growers    Utah Rural Electric
 Association              Association              Association
I-14/Gulf Coast          Nebraska Grain and Feed  Virginia Agribusiness
 Strategic Highway        Association              Council
 Coalition
Idaho Consumer-Owned     Nebraska Rural Electric  Virginia Beef Industry
 Utilities Association    Association              Council
Idaho Grain Producers    Nebraska Soybean         Virginia Cattlemen's
 Association              Association              Association
Illinois Corn Growers    Nevada Rural Electric    Virginia Cooperative
 Association              Association              Council
Illinois Fertilizer and  New Mexico Rural         Virginia Farm Bureau
 Chemical Association     Electric Cooperative
                          Association
Illinois Soybean         New York Corn and        Virginia FFA
 Association              Soybean Association      Association
Indiana Corn Growers     New York State           Virginia Horse Council
 Association              Agribusiness
                          Associations
Indiana Electric         New York State           Virginia Poultry
 Cooperatives             Vegetable Growers        Federation
                          Association
Indiana Soybean          North American Millers'  Virginia State
 Alliance                 Association              Dairymen's
                                                   Association
Institute for            North Carolina Electric  Virginia
 Agriculture and Trade    Cooperatives             Telecommunications
 Policy                                            Industry Association
Iowa Association of      North Carolina Ground    Virginia Water Well
 Electric Cooperatives    Water Association        Association
Iowa Corn Growers        North Carolina Small     Virginia, Maryland &
 Association              Grain Growers            Delaware Association
Iowa Institute for        Association              of Electric
 Cooperatives            North Dakota              Cooperatives
Iowa Soybean              Association of Rural    Washington Association
 Association              Electric Cooperatives    of Wheat Growers
Kansas Association of    North Dakota Corn        Washington State
 Wheat Growers            Growers Association      Potato Commission
Kansas Cooperative       North Dakota Grain       Water Systems Council
 Council                  Dealers Association
Kansas Electric          North Dakota Soybean     Water Well Trust
 Cooperatives             Growers Association
Kansas Grain and Feed    Northeast Agribusiness   West Virginia Farm
 Association              and Feed Alliance        Bureau
Kansas Soybean           Northeast Association    West Virginia FFA and
 Association              of Electric              Agricultural
                          Cooperatives             Education
Kentucky Association of  Northeast Cooperative    West Virginia Poultry
 Electric Cooperatives    Council                  Association
Kentucky Corn Growers    NTCA--The Rural          Western Peanut Growers
 Association              Broadband Association    Association
Kentucky Soybean         Ohio Agribusiness        Wisconsin Agri-
 Association              Association              business Association
Louisiana Association    Ohio Corn and Wheat      Wisconsin Corn Growers
 of Cooperatives          Growers                  Association
Louisiana Ground Water   Ohio Dairy Producers     Wisconsin Soybean
 Association              Association              Association
Maryland Grain           Ohio Farm Bureau         Women Involved in Farm
 Producers Association    Federation               Economics
Michigan Agri-Business   Ohio Pork Council        WTA--Advocates for
 Association                                       Rural Broadband
Ohio Rural Electric      Ohio Soybean             Wyoming Rural Electric
 Cooperatives             Association              Association
 

CC:

Hon. Mitch McConnell,
Hon. Charles Schumer,
Hon. Paul Ryan,
Hon. Nancy Pelosi.
                                 ______
                                 
Supplementary Material Submitted by Hon. James C. Greenwood, President 
   and Chief Executive Officer, Biotechnology Innovation Organization
                               Appendices
    Editor's note: Due to the size of the appendices submitted for the 
Thursday, March 9, 2017 Subcommittee on Commodity Exchanges, Energy, 
and Credit published hearing they have been relocated here.
                               appendix a
Advancing the Biobased Economy: Renewable Chemical Biorefinery 
        Commercialization Progress, and Market Opportunities, 2016 and 
        Beyond
 2016 Biotechnology Innovation Organization 
(BIO)
1201 Maryland Ave. SW
Suite 900
Washington, D.C. 20024
Introduction
    A review of operating biorefineries displays a range of technology 
solutions undergoing commercial development--beyond just advanced 
biofuels--to produce commodity and specialty renewable chemicals. 
Industrial biotechnology companies are pursuing renewable chemicals and 
biobased materials because they can be commercialized at smaller scale, 
as well as promise environmental benefits, stable costs and novel 
properties in comparison to fossil fuel-derived chemicals. Competition 
to produce platform renewable chemicals provides manufacturers 
assurance of a steadily available, high-quality supply of renewable 
chemicals for consumer product applications.
    Analysts predict a rapid expansion of renewable chemical production 
in the near future based on planned capacity expansion or new 
construction. McKinsey & Co. estimates that there were $252 billion 
(=204 billion) in sales of biobased products in 2012, with biofuels and 
plant extracts comprising more than \1/2\. Sales of renewable chemicals 
represented nine percent of the $2,820 billion (=2,281 billion) in 
worldwide chemical sales in 2012. By 2020, McKinsey expects biobased 
products to make up 11 percent of the $3,401 billion (=3,130 billion) 
global chemical market. Sales of biobased products would reach $375-
$441 billion (=345-=406 billion) by 2020, with a compound annual growth 
rate of eight percent over the preceding decade. Worldwide sales of 
chemicals are expected to grow at four percent annually, overall. While 
biofuels and plant extracts continue to comprise \1/2\ of the projected 
sales of biobased products in 2020, McKinsey expects the highest growth 
rates in sales of new biopolymers and renewable chemicals, biocatalysts 
for industrial processes and biologic medicines, as well as biofuels.
    Supportive polices will help grow the 21st century biobased 
economy. The Renewable Fuel Standard (RFS), for instance, not only 
helped stimulate innovation in biofuels, but also opened discussions 
and policy development in renewable chemicals and biobased products. 
The 2014 Farm Bill (The Agriculture Act of 2014) extended loan 
guarantee eligibility to renewable chemicals and biobased products 
producers, through Section 9003, the Biorefinery, Renewable Chemical, 
and Biobased Manufacturing Assistance Program.
    Other policy drivers include draft legislation, introduced in both 
Federal chambers, creating tax incentives for production of or 
investment in qualifying renewable chemicals. Spurred by the Federal 
legislation, Iowa and Minnesota announced enactment of state-level 
production tax credits for renewable chemicals that will speed capital 
investment availability and commercialization. Additionally, draft 
legislation introduced in the 114th Congress--the Master Limited 
Partnerships Parity Act (MLP)--proposes to extend tax benefits 
currently available only to the oil and gas industry to renewable 
chemicals and biofuels producers. If enacted, the legislation will 
provide renewable chemical producers access to low-cost capital and 
attract investors and lower corporate stock tax liabilities.
    Enactment of the Frank R. Lautenberg Chemical Safety for the 21st 
Century Act, updating and revising the Toxic Substances Control Act 
(TSCA), has favorable provisions for Class 2 renewable chemical 
manufacturers who use renewable feedstocks. The new law could minimize 
costly pre-commercial reviews, if the renewable chemical has already 
been produced from fossil fuel feedstocks.
Background
    The Economist magazine's Technology Quarterly edition for December 
2015 heralded a ``golden age'' of material science, highlighting recent 
developments in inorganic chemistry. The magazine utilized the 
``materials genome'' as a metaphor for the pace of pre-commercial 
innovation in the field. The industrial biotechnology sector should 
welcome the analogy, especially as its list of commercial successes 
grows. The industrial biotech sector has reached a stage where first-
of-a-kind biorefineries are paving the way for rapid commercialization 
of new applications.
    The National Science and Technology Council's Subcommittee on 
Advanced Manufacturing, in an April 2016 report, titled Advanced 
Manufacturing: A Snapshot of Priority Technology Areas Across the 
Federal Government, identifies engineering biology and advanced 
bioproducts manufacturing as technology areas of emerging priority. The 
report estimates the size of the U.S. biobased economy at roughly $350 
billion annually, citing a National Research Council roadmap to 
accelerate advanced chemical manufacturing through industrial 
biotechnology.
    To document the progress and illustrate the growing potential for 
biobased production of renewable chemicals, the Biotechnology 
Innovation Organization's (BIO) Industrial and Environmental Section 
has compiled a new body of data on established biorefineries. The data 
includes descriptions of the technologies along with common 
applications and measures of the market potential. And since the 
renewable chemical sector seeks a level playing field in government 
support and regulatory policies, the data includes the demographic and 
economic impact of each biorefinery.
    Biobased production holds many potential benefits for consumers, 
including cleaner, more efficient manufacturing processes that 
incorporate renewable ingredients in everyday products found in the 
home. Delivering these benefits requires continued growth of the sector 
to ensure that product manufacturers have a reliable, sustainable, and 
scalable supply of renewable chemicals.
Renewable Chemical Processes at Demonstration and Pilot Scale
    Coca-Cola, H.J. Heinz, Nike Inc., Ford Motors and Procter & Gamble 
are cooperatively working to accelerate the development of 100 percent 
renewable polyethylene terephthalate (PET), a common plastic used in 
packaging materials such as bottles, footwear, apparels and automobile 
fabrics. Coca-Cola currently markets PlantBottleTM with 
renewable ethylene glycol, which makes up as much as 30 percent of the 
plastic bottle. Coca-Cola Company has partnered with Virent, Gevo and 
Avantium and, similarly, Suntory Holdings has partnered with Anellotech 
to develop renewable para-xylene to replace petroleum terephthalic 
acid. These strategic partnerships have demonstrated the feasibility of 
a 100 percent renewable PET bottle.
    A potential alternative to PET is polyethylene furanoate (PEF). 
Avantium has commercialized 100 percent biobased PEF resin, which is 
made from the company's patented biobased 2,5 furandicarboxylic acid 
(FDCA) combined with plant-based monoethylene glycol (MEG). Avantium is 
currently producing FDCA at a 40 metric ton per year pilot plant in 
Geleen, Netherlands. Avantium plans to start commercial production of 
FDCA and PEF at 50,000 ton per year plant in 2017 and announced its 
intention to establish a joint venture with BASF in the production and 
marketing of FDCA.
    A few companies have focused efforts on producing C5 and C6 sugars 
as a feedstock for other companies to produce biofuels and renewable 
chemicals. Renmatix is operating a demonstration-scale Feedstock 
Processing Facility in Rome, New York, to supply its Integrated 
Plantrose Complex, based in Atlanta, where it converts the processed 
woody biomass to cellulosic sugars. Sweetwater Energy is securing 
financing to build a biorefinery at Mountain Iron, Minnesota, which 
will convert 51,000 tons of timber to sugars and lignin. Sweetwater has 
also leased space at Eastman Business Park in Rochester, New York, to 
produce alcohols from cellulosic sugars. Similarly, American Process 
has developed GreenPower+ process technology, which produces low-cost, 
mixed cellulosic sugars from biomass.
    Several companies are currently piloting production of adipic acid, 
which is a precursor to nylon and can be used in coatings and 
detergents. Rennovia is currently operating a pilot project at the 
Johnson Matthey Process Technologies R&D Center in Stockton, England, 
converting biobased glucaric acid to adipic acid. Verdezyne is 
operating a pilot production facility in Carlsbad, California. And, 
BioAmber has formed a partnership with Celexion to produce adipic acid 
from succinic acid. Genomatica of Carlsbad, California, began efforts 
in 2014 to commercialize biobased production of adipic acid and other 
nylon intermediates.
    At least one company has commercialized production of 
polyhydroxyalkanoate (PHA), a polymer that can be blended into various 
plastic applications. Metabolix's current range of Mirel PHA 
copolymers are produced by fermentation, using specially engineered 
microorganisms that bioaccumulate the inert polymer. The PHA is co-
polymerized with PVC to make a stronger and more flexible plastic. 
Metabolix uses contract manufacturing to produce Mirel; the company's 
partners are currently ramping up pilot production to run at nameplate 
capacity for 2016.
    Two companies, Cargill and Novozymes, have partnered since 2008 to 
demonstrate biobased production of 3-hydroxypropionic acid (3-HPA), 
which is a precursor to acrylic acid. Acrylic acid is polymerized and 
used as an absorbent in diapers and hygiene products as well as in 
coatings, adhesives, carpets, and fabrics. The traditional 
petrochemical process for 3-HPA synthesis is achieved through the 
oxidation of propylene, a product of crude oil refining. Under the 
partnership, Cargill is operating a pilot scale production plant 
fermenting 3-HPA and converting it to acrylic acid. Cargill acquired 
Colorado based OPX Biotechnologies and its proprietary fermentation-
based process for 3-HPA.
Renewable Chemical Commercialization Successes
    One of the earliest renewable chemicals to be successfully 
commercialized is 1,3-propanediol (1,3-PDOTM), a chemical 
building block for nylon and emollients used in cosmetics, coolant and 
fibers for the production of high-end carpets. DuPont Tate & Lyle has 
operated a 63,500 metric ton per year biorefinery in Loudon, Tennessee, 
since late 2006. The company markets the diol for industrial uses as 
Susterra' propanediol.
    One biobased process has been commercialized and another process is 
being scaled up to produce propylene glycol (1,2-propanediol), which 
can be used as a building block for saturated and unsaturated 
polyesters, a humectant or a food preservative. ADM began production of 
propylene glycol in March 2011 at a 100,000 metric ton per year 
facility in Decatur, Illinois, that uses glycerin as a feedstock in a 
catalytic process. More recently, Metabolic Explorer and UPM have 
formed a joint venture to demonstrate monopropylene glycol via 
fermentation of sugar at a facility in Clermont-Ferrand, France.
    Another of the earliest renewable chemicals to be commercialized is 
polylactic acid (PLA), which was truly a tipping point for renewable 
chemicals. PLA is commonly used in food wrap and utensils and can be 
made into textile fibers. Since 2003 Nature-Works has produced PLA at a 
facility in Blair, Nebraska, with name plate capacity of 300 million 
pounds (140,000 metric tons). NatureWorks markets the product as Ingeor 
biopolymer. Corbion more recently announced that it will build a 
biobased PLA plant with an annual capacity of 75 kilotons and expand by 
25 kilotons per year its existing lactide plant in Rayong Province, 
Thailand.
    Several companies have commercialized biobased routes to succinic 
acid, a building block chemical that replaces petroleum-based maleic 
anhydride in polyesters, alkyd resins, polyurethanes, plasticizers and 
solvents. Companies that are currently producing succinic acid include 
Myriant, which is operating a 13,600 metric ton per year facility in 
Lake Providence, Louisiana. BioAmber piloted its biobased process for 
succinic acid at a 3,000 metric ton facility in Pomacle, France, and is 
now producing 17,000 metric tons per year in Sarnia, Ontario, Canada. 
Reverdia, a joint venture between DSM and Roquette, has built a 10,000 
metric ton per year facility in Cassano Spinola, Italy. And Succinity, 
a joint venture between BASF and Corbion, is due to start up a 25,000 
metric ton per year facility in Barcelona, Spain.
    One company has commercialized a biobased route to 1,4-butanediol 
(BDO), which is a building block in the production of tetrahydrofuran 
(THF), which is an intermediate for spandex and other performance 
polymers, and polybutylene terephthalate (PBT) resins, which are used 
for engineering plastics. BASF has licensed direct fermentation 
technology developed by Genomatica and secured rights to commercially 
produce up to 75,000 metric tons per year of renewable 1,4-BDO. To 
date, BASF reports producing volumes for its downstream customers to 
test and at a purity comparable to petrochemical-based 1,4-BDO for use 
in commercial applications. BASF is also producing and offering 
polytetrahydrofuran (PolyTHF) made from renewable 1,4-BDO.
    Multiple competitors are also commercializing biobased routes to 
iso-butanol and n-butanol. Iso-butanol can be used as an oxygenate and 
octane-enhancing fuel additive while n-butanol is used as a solvent and 
intermediate in paints, coatings, printing inks, adhesives, sealants, 
textiles and plastics. In addition, iso-butanol can be cyclized to 
para-xylene, the precursor to terephthalic acid; Gevo is 
commercializing a process based on this chemistry. Green Biologics, 
which focuses on n-butanol for chemical markets, is currently refitting 
a 21 million gallon ethanol plant in Little Falls, Minnesota, with 
plans to begin commercial production of n-butanol and acetone during 
2016. Butamax has completed phase 1 of its retrofit of a 50 million 
gallon ethanol plant in Lamberton, Minnesota, and projects completion 
of phase 2 for production of iso-butanol in 2016. The company in early 
2016 petitioned the U.S. Environmental Protection Agency (EPA) to 
approve its production and feedstock technology for iso-butanol as an 
advanced renewable fuel. Gevo retrofitted an ethanol biorefinery in 
Luverne, Minnesota, and is targeting production of up to 1 million 
gallons of iso-butanol and 17 million gallons of ethanol in 2016. The 
facility is registered with EPA as Agri-Energy LLC to produce renewable 
fuels. Intrexon, located in the San Francisco Bay Area, began operation 
of a pilot plant to produce iso-butanol in early 2016.
    Multiple companies have researched and developed biobased 
production routes for isoprene, which when polymerized is used in 
synthetic rubber applications for footwear, mechanical instruments, 
medical appliances, sporting goods, and most extensively as 
polyisoprene in rubber tires. But only one company is currently 
producing commercial quantities. Using its bacterial fermentation 
platform, GlycosBio has built its first commercial facility in southern 
Malaysia to supply the Southeast Asian region with up to 40,000 tons of 
bioisoprene annually. DuPont Industrial Biosciences and Goodyear 
developed a fermentation process for gas-phase capture of isoprene, and 
have demonstrated a prototype tire using the bioisoprene monomer. 
Ajinomoto has already successfully manufactured bioisoprene at a 
laboratory scale using a fermentation process, and Bridgestone has 
successfully produced polyisoprene rubber using the material. Michelin 
is also working with Amyris Biotechnologies to develop liquid-phase 
bio-isoprene using farnesene--a 15 carbon isoprenoid--as a building 
block. Amyris has begun commercialization of this new, renewable 
isoprene. Zeon, Yokohama Rubber, and RIKEN, Japan's national R&D 
agency, expect to commercialize a process for synthesizing isoprene 
from biomass in 2020. Aemetis now owns Zymetis' proprietary aerobic 
marine organisms, (Saccharophagus degradans 2-40) that will enable the 
company to produce bio-isoprene and other renewable chemicals.
    One company, Itaconix Corporation, has commercialized fermentation 
technology, using Aspergillus, to produce itaconic acid, a building 
block for adhesives and sealants, finishing agents, paint and coating 
additives, detergents and cleaners, absorbents and dispersants. 
Itaconic acid can replace banned chemical phosphates in detergents. 
Itaconix operates a large-scale production facility in Stratham, New 
Hampshire, marketing a growing line of itaconic acid applications and 
polyitaconic acid. Itaconix recently announced its acquisition through 
merger by UK based Revolymer plc, a specialty chemical company.
    Another company has commercialized a biobased process for aliphatic 
diacids, a building block for polyurethanes and polyamides. Elevance 
Renewable Sciences is producing InherentTM C18 diacid, also 
known as octadecanedioic diacid (ODDA) at a biorefinery in Gresik, 
Indonesia, using the company's proprietary olefin metathesis 
technology.
    And at least one company is producing commercial quantities of 
levulinic acid, a renewable specialty chemical building block for 
coatings, flavors/fragrances, polymers, detergents. Traditional 
petrochemical process of producing levulinic acid is from maleic 
anhydride; this process is expensive, limiting its use to low-volume 
applications such as fragrances and food additives. At larger, lower-
cost production volumes, levulinic acid can replace bisphenol A (BPA) 
as a plasticizer. GFBiochemicals is currently expanding levulinic acid 
production capacity, from 2,000 to 8,000 metric tons by 2017, at a 
facility in Caserta, Italy.
Market Potential for Renewable Chemicals
    A number of recent studies provide estimates of the current value 
of renewable chemical production, which overall represent a small 
percentage of the worldwide chemical market. Production is expected to 
grow most rapidly in Asia in response to the region's demand for 
products, supply of biomass raw material and favorable policies. Future 
value is dependent on the price of competing fossil-based chemicals, 
the price of oil, and a somewhat unpredictable policy environment.
    Robert Carlson, writing in Nature Biotechnology in 2016, estimates 
that the U.S. industrial biotechnology industry revenues reached $105 
billion at a growth annual rate of 12 percent, and renewable chemicals 
contributed $66 billion.
    A report by the U.S.-based Biomass Research and Development Board 
estimates that the U.S. share of the biobased economy is approximately 
$50 billion (=46.9 billion). More than \1/4\ million U.S. workers are 
employed in the industry.
    The nova-Institute of Germany more recently examined the biobased 
polymer segment of the industry, which represented about $12.8 billion 
(=10 billion) or five percent of biobased product sales in 2013. 
Production capacity for biobased polymers is growing at a 20 percent 
compound annual growth rate, with 3.5 million metric tons produced in 
2011 and 5.1 million metric tons in 2013. The nova-Institute projects 
production capacity to reach 17 million metric tons by 2020. Biobased 
polymers currently represent a two percent share of the overall 256 
million metric ton market for polymers (up from 1.5 percent of the 235 
million metric ton market in 2011). By 2020, the 17 million metric tons 
of biobased polymers are expected to represent four percent of a 400 
million metric ton market. The strongest growth in market demand for 
biobased polymers will be in food packaging and utensils, according to 
the nova-Institute. Production capacity for biobased polyethylene 
terephthalate (PET) is projected to grow from 600,000 metric tons in 
2013 to 7 million metric tons in 2020, leading the group of polymers. 
Based on planned capacity, nova-Institute projects similar expansion in 
production of biobased polyhydroxyalkanoates (PHA), and strong growth 
in production of polylactic acid (PLA) and biobased polyurethanes 
(PUR).
    Lux Research based in Boston has also projected growth in the 
renewable chemical market through 2018. Their estimate includes the 
biobased polymer sector as well as intermediates--such as biobased 
succinic acid or adipic acid--and renewable specialty chemicals--such 
as farnesene or terpenes. Based on announced capacity construction, Lux 
expects biobased production capacity for intermediate chemicals to 
reach 2.9 million metric tons in 2018, reflecting an 11 percent 
compound annual growth rate; specialty chemical capacity is perhaps a 
quarter the size of the intermediate market. Lux Research projects 
leveling off of production capacity for polymers, due to the low prices 
of oil and natural gas. But renewable specialty chemicals continue to 
represent a profitable market opportunity.
Potential Advantages for Consumer Product Applications
    Renewable chemicals have been recognized for more than a decade as 
having environmental, economic, and performance advantages when 
compared to fossil fuel-based chemicals. Biotech routes to chemical 
production are inherently consistent with the principles of green 
chemistry.
    In 2004, the U.S. Department of Energy (DOE) published a report, 
Top Value-Added Chemicals from Biomass, acknowledging that biobased 
processes are often faster and more energy efficient production routes 
than petrochemical processes. Reduction of time and energy inputs 
potentially can be translated into cost reductions, providing 
manufacturers an economic benefit. Further, renewable chemical 
production processes use raw material resources more efficiently and 
have less environmental impact overall than petrochemical production. 
The improvement potentially can save manufacturers material handling 
and regulatory compliance costs. Additionally, biomass is less volatile 
in price than fossil resources, which have characteristic boom and bust 
production cycles. Long-term stability in prices for renewable 
chemicals provide product manufacturers the ability to plan production 
well in advance and provides hedging.
    A few years later, in 2007, the U.S. Environmental Protection 
Agency (EPA) published a report, Bioengineering for Pollution 
Prevention, recognizing that industrial biotechnology used in biobased 
processes and in renewable chemical production can reduce carbon 
emissions via many of the same attributes recognized by DOE--namely, 
improved process efficiency, the displacement of fossil fuels and 
petroleum-based materials, and the creation of closed loop industrial 
systems that eliminate waste. EPA recognized that these innate 
characteristics of biotech and biobased processes prevent waste and 
reduce derivatives, which closely match the principles of green 
chemistry. Since the introduction of EPA's Presidential Green Chemistry 
Challenge in 1996, \1/3\ of all awards have gone to industrial 
biotechnology or biobased processes. Consumer demand for 
environmentally conscious products continues to rise.
    More recently, in April 2016, the White House Office of Science and 
Technology Policy released a report on Advanced Manufacturing: A 
Snapshot of Priority Technology Areas Across the Federal Government. 
This roadmap emphasizes that growth of the biobased economy is 
dependent on advanced biobased manufacturing and engineering biology. 
According to the roadmap, synthetic biology foundries hosted by Federal 
Government efforts will promote the commercial development of new 
renewable chemicals via faster and cheaper methodologies that use 
appropriate design of microorganisms.
    Most producers of renewable chemicals can demonstrate comparable 
performance as drop-in replacements for petroleum-based chemicals. A 
few applications demonstrate improved performance. To cite one example, 
Avantium's PEF has superior properties to PET in drink bottle 
applications, including a higher barrier to oxygen, carbon dioxide and 
water. These properties can extend product shelf life and reduce 
production costs for beverage producers. PEF's carbon footprint is 50-
70 percent lower compared to PET.
Conclusion
    Consumer product manufacturers have indicated that they are eager 
to use renewable chemicals in formulations in order to meet consumer 
demand for environmentally preferable products. The main challenge 
producers have cited for adoption of renewable chemicals is their 
ability to secure reliable, competitive supplies for large-scale 
product applications. Providing sufficiently large-scale supplies of 
drop-in renewable chemicals for some applications may require multiple 
manufacturers who adhere to common standards for chemical purity and 
quality.
    Some renewable chemicals--such as succinic acid and PLA--are 
already being produced commercially by multiple, competing companies 
and could potentially have commodity applications. A few additional 
renewable chemicals--such as butanol and isoprene--are approaching the 
same status. Several other renewable chemicals are being produced at 
commercial levels by a single company--such as 1,3-propanediol, 
propylene glycol and some diacids--with production tailored to niche 
product markets.
    Many additional companies are scaling up and demonstrating new 
renewable chemical technologies. And in some cases, there are multiple 
companies competing to reach commercial scale. Forming partnerships 
with consumer product manufacturers or larger mid-market chemical 
producers--who can provide off-take agreements or capital investment in 
some form--is a common strategy for emerging companies commercializing 
new renewable chemicals. Ensuring that consumers receive the 
environmental, economic and performance benefits of renewable chemicals 
requires an integrated effort across this entire production value 
chain.
Agrivida
Medford, MA
Number of employees: 40
Agrivida, Inc. Is Delivering The Next Generation Of Enzyme Solutions.

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          Above: Agrivida founder Michael Raab and U.S. Secretary of 
        Energy Steven Chu, Medford, MA.
Biorefinery Classification: Commercial Plant
Key Facts
   Feedstock: Grain, lignocellulosic biomass and sugar

   Agrivida's GraINzyme technology is an expression platform 
        for making recombinant or synthetic proteins in grain and other 
        plant tissues. Using GraINzyme' technology, Agrivida 
        is commercializing a series of enzyme and protein products that 
        are produced and delivered in grain. These initial products 
        target the animal nutrition industry and improve feed 
        conversion, yields, and the efficiency of food production.
Partnerships and Financing
    In 2014, Agrivida entered a trait development collaboration with 
Precision BioSciences to use Directed Nuclease EditorTM 
(DNE) technology. In 2015, Agrivida completed a $23 million Series D 
financing led by Cultivian Sandbox Ventures, joined by an affiliate of 
Maschhoff Family Foods, ARCH Venture Partners, Middleland Capital and 
existing investors Kleiner Perkins Caufield & Byers, DAG Ventures, 
Bright Capital Partners, Gentry Venture Partners, Northgate Capital, 
Prairie Gold and private investors.
    About: Agrivida is developing and commercializing solutions that 
are the next evolutionary step in animal nutrition, using the plant as 
a factory to produce and deliver highly differentiated agricultural and 
nutritional products.
    Product applications: Animal health and nutrition; grain, food and 
feed processing; first and second generation biofuels and biobased 
chemicals; industrial enzymes for a variety of industries.
    Potential market size: Animal nutrition enzymes represent an $850 
million market. With increased food demand, sales of animal feed 
enzymes are expected to exceed $1.8 billion by 2020.
    Technology: Agrivida's INzyme' technology is a 
biological ``off-on'' switch engineered into enzymes to control their 
activity. Enzymes can be engineered with self-splicing peptides, called 
inteins, and produced in grain, green plants, fermentation microbes, or 
other hosts in a ``dormant'' form, where they accumulate in high 
concentrations. The enzymes are reactivated ``on command'' using a 
selected, controlled change in temperature or pH at a precise time, 
maximizing their value in the process or application.

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American Process
Atlanta, GA
Number of employees: 100
American Process Is Commercializing GreenPower+ For Ethanol.

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          Above: AVAP Demonstration Plant, Thomaston, GA.
Biorefinery Classification: Demonstration Plant
Key Facts
   Thomaston, GA Integrated demonstration plant forGreenPower+, 
        AVAP and Bioplus

   Alpena, MI Demonstration pre-commercial GreenPower+ plant--
        succesfully completed demonstration--currently furloughed

   Feedstock: Any woody or agricultural residue biomass
Partnerships and Financing
    American Process is privately owned by a joint venture of GranBio 
and TRLLC. API has formed partnerships with Green Tech America and 
Valmet. American Process sponsors biorefinery research consortiums at 
the Empire State Paper Research Institute, North Carolina State 
University, and TEKES, Finnish Funding Agency for Technology and 
Innovation. It directly commissions biorefinery research projects at 
Georgia Institute of Technology, University of Maine, and Michigan 
Technological University.
    About: American Process Inc. (API) specializes in the development, 
demonstration and commercialization of GreenPower+, AVAP and Bioplus 
technologies for the commercial production of cellulosic ethanol, 
cellulosic sugars and nanocellulose from biomass.
    Product applications: Cellulosic ethanol, cellulosic sugars, 
nanocellulose.
    Potential market size: Transparency Market Research reports that 
the global biofuels market was valued at $168.18 billion in 2016 and is 
projected to reach $246.52 billion by 2024.
    Technology: GreenPower+ is a patented technology suite for 
producing low-cost mixed cellulosic sugars from biomass hemicelluloses 
and cellulose in co-production mode. These sugars are fermented to 
ethanol. AVAP technology produces low-cost clean cellulosic sugars 
from biomass cellulose--and ethanol from the hemicelluloses--in a 
stand-alone facility. Bioplus technology produces highly functional, 
hydrophilic and hydrophobic nanocellulose fibrils or crystals, in gel 
or dried form.

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Amyris
Emeryville, CA
Number of employees: 400
Amyris, Inc. Is Producing Farnesene.

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          Above: Brotas, Sao Paulo, Brazil Plant.
Biorefinery Classification: Commercial Plant
Key Facts
   Brotas, Sao Paulo, Brazil

   1.2 million liters

   Feedstock: Sugarcane juice
Partnerships and Financing
    With Total--Amyris launched in 2010 an ongoing research and 
development collaboration to accelerate the deployment of farnesene for 
the production of renewable jet fuel. In 2014, following regulatory 
approvals, Amryis began to commercialize its renewable jet fuel.
    With Firmenich--Amryis developed a technology to produce 
sustainable, cost-effective ingredients for the flavors and fragrances 
(F&F) industry and have successfully produced its first fragrance oil.
    About: Amyris delivers high-performance renewable products across a 
wide range of consumer and industry segments. Our products offer 
customers a way to reduce environmental impact with No Compromise in 
performance or availability.
    Product applications: Flavors, fragrances, cosmetics, detergents, 
fuels, lubricants, performance materials and biopharmaceuticals.
    Potential market size: The personal care business represented $25 
million of 2015 revenue and is expected to contribute $40 million of 
2016 revenue. Amyris expects existing collaboration and supply 
agreements to generate over $200 million in revenue through 2020 from 
the company's flavors and fragrances partners.
    Technology: Through synthetic biology, Amyris is able to engineer 
the metabolic pathways of sugar, so that it can design microbes, 
primarily yeast, and use them as living factories in fermentation 
processes to convert plant-sourced sugars into target molecules. Amryis 
uses proprietary high-throughput processes to create and test thousands 
of yeast strains a day in order to choose those yeast strains that are 
most efficient and scalable for industrial production.

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Anellotech
Pearl River, NY
Number of employees: 23
Anellotech, Inc. Is Producing Benzene, Toluene And Xylenes.

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          Above: Anellotech's TCat-8TM development and 
        testing unit for converting biomass to BTX.
Biorefinery Classification: Pilot Plant
Key Facts
   Pearl River, NY

   Feedstock: Biomass (wood, corn stover, sugarcane bagasse) 
        and other non-food agricultural products

   Anellotech's new, fully-integrated development and testing 
        facility (TCat-8TM) is currently under construction 
        and will be operational in 2016. This continuous unit will 
        confirm the viability and suitability of the process for scale-
        up and generate data needed to design commercial Bio-TCat 
        plants. The TCat-8 unit was jointly designed by Anellotech and 
        its R&D partner IFP Energies nouvelles (IFPEN) and will use a 
        novel catalyst under joint development by Anellotech and 
        Johnson Matthey.
Partnerships and Financing
    IFP Energies nouvelles (IFPEN) is our process development and 
scale-up partner. Johnson Matthey is our catalyst development and 
commercial catalyst supply partner. Axens is our partner for 
industrialization, commercialization, global licensing and technical 
support. In November 2015, Anellotech Inc. announced an equity 
investment of $7 million from a new, strategic investor.
    About: Anellotech is a green innovation and technology company 
developing an efficient process for producing biobased aromatic 
chemicals (BTX) from non-food biomass. We use proprietary thermal 
catalytic biomass conversion (Bio-TCatTM) technology to 
provide sustainable chemical building blocks as an alternative to 
identical fossil-derived counterparts.
    Product applications: Polyester, (polyethylene terephthalate or 
PET), polystyrene, polyurethane, nylon, styrene butyl rubber (SBR), 
acrylonitrile butadiene styrene (ABS) and other polymers, which are 
used to produce beverage bottles, clothing, carpeting, automotive 
components, and a broad range of other household and industrial 
products.
    Potential market size: The global market for benzene, toluene and 
xylenes was approximately $130 billion in 2014.
    Technology: Through Bio-TCatTM technology, non-food 
biomass is rapidly heated in a fluid-bed reactor and the resulting 
gases are immediately converted into hydrocarbons by a proprietary, 
recirculating zeolite catalyst. Biobased BTX, which is identical to 
petroleum-derived counterparts, can be further purified, separated and 
converted into a broad range of plastics using existing commercial 
technologies and industry infrastructure.

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BASF Corporation
Florham Park, NJ
Number of employees: 17,471 in North America

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          Above: Grain processing facility.
Biorefinery Classification: Commercial Plant
Key Facts
   In addition to its own manufacturing facilities, BASF 
        secures contract manufacturing relationships with qualified 
        third parties possessing sufficient fermentation capacity to 
        meet commercial production requirements.

      For example, BASF has an important partnership with Fermic, which 
        operates a U.S. FDA cGMP approved fermentation and synthesis 
        facility and has a large fermentation plant in a suburb of 
        Mexico City.
        
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    About: BASF Enzymes LLC is a wholly owned subsidiary of BASF 
Corporation located in San Diego, CA. It is a recognized pioneer in the 
development and commercialization of high-performance enzymes for use 
in industrial processes.
    Our interdisciplinary, international research and development teams 
work at several BASF sites: Ludwigshafen (Germany), Tarrytown (New 
York, United States) and San Diego (California, United States).
    Product applications: BASF sells enzymes developed using its unique 
patented R&D capabilities, harnessing the power of nature to satisfy 
the needs of the global market. Key markets are: human and animal 
health and nutrition, home care, grain processing, oilfield solutions, 
and pulp and paper.
    Technology: Genetic expression libraries are constructed and 
quickly screened using automated and high-throu[gh]put robotic 
technologies. BASF uses patented, state-of-the-art gene evolution 
capabilities--suite of DirectEvolution' technologies--that 
make possible rapid optimization of proteins at the DNA level.
    White Biotechnology develops and refines methods to use 
microorganisms, enzymes and cells to produce chemical and biochemical 
products. For thousands of years, people have been harnessing natural 
chemical processes to produce food, medicines and other products. 
Today, rapid technological progress in the life sciences is leading to 
innovative ways to use nature's variety for completely new 
applications.
    BASF White Biotechnology uses natural synthesis techniques to 
develop products such as vitamins, food and feed supplements, chiral 
compounds, and pharmaceutical and agricultural intermediates. These 
techniques can increase efficiency and reduce raw materials, energy 
requirements and carbon emissions as compared to conventional chemical 
processes.
BioBased Technologies LLC
Rogers, AR
Number of employees: 15
BBT Strives To Reduce The Use Of Nonrenewable Ingredients By 
Integrating Renewable Ingredients.
Biorefinery Classification: Commercial Plant
Key Facts
   Fountain Inn, SC

   Dalton, GA Laboratory

   Feedstock: Soybean oil

   100 percent Woman-owned small business.

   Collaborates with customers to create sustainable products 
        that reduce costs while adding value.

   Multiple U.S. and international patents.

   Ample manufacturing capacity with room for growth.

   Agrol is cost competitive compared to other traditional 
        polyols.

   We enable sustainability . . . through partnerships.
Partnerships and Financing
    Agrol and Agrol Diamond have been approved to use the U.S. 
Department of Agriculture certified biobased product label. The label 
indicates that the products have been independently certified to meet 
USDA BioPreferredTM program standards for biobased content.
    About: BioBased Technologies is an innovative leader in renewable 
chemistry and the maker of Agrol, a line of USDA Certified Biobased 
polyols. Agrol polyols are made from farm-grown plants and are 
suitable for all polyurethane applications as a substitute for 
petrochemicals in the making of products.
    Product applications: Agrol, commercialized in 2005, is used in 
lubricants, building products, furniture, bedding, automotive foams and 
parts, adhesives, agricultural products, carpet backings, industrial 
coatings and printing inks.
    Technology: Agrol polyols have a high bio-content and are made 
from plant-based ingredients, including soy and cashew nuts. Using a 
patented oxidation process, Agrol' can be used in various 
polyurethane applications with properties ranging from semi-flexible to 
semi-rigid. Qualities such as low acid number, mild odor and light 
color make Agrol' polyols ideal replacements for petroleum-
based polyols. Custom blends are also available.

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BIO-CAT/BIO-CAT Microbials
Troy, VA; Shakopee, MN
Number of employees: 15
BIO-CAT/BIO-CAT Microbials Is Producing Enzymes.

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          Above: Shakopee, MN Plant.
Biorefinery Classification: Commercial Plant
Key Facts
   Shakopee, MN
Partnerships and Financing
    BIO-CAT launched in 1988. BIO-CAT purchased AMS in 2004 and renamed 
it BIO-CAT Microbials. Facilities were updated, new fermentation 
equipment was purchased and larger blenders were added.
    About: BIO-CAT offers a wide range of products, from single enzymes 
to multi-enzyme blends. BIO-CAT Microbials is an innovator in the field 
of biological solutions for a broad range of emerging and existing 
markets and industries.
    Product applications: Detergent and other cleaning products, animal 
nutrition and aquaculture, food and beverage ingredients, dietary 
supplements, septic and drain care, waste treatment.
    Potential market size: The potential market for industrial enzymes 
is 6.2 billion by 2020 according to Markets and Markets.
    Technology: Enzymes can be produced from animal, bacterial, fungal, 
yeast and plant sources. They can be Kosher, Halal, and GRAS or 
industrial grade. They come in dry and liquid form.
    Bacillus is a specific type (genus) of bacteria which grow 
aerobically (with oxygen) and to some extent anaerobically (without 
oxygen) and forms spores.
Bioresource International
Research Triangle Park, NC
Number of employees: 17
Bioresource International, Inc Is Producing Enzymes.
Biorefinery Classification: Pilot Plant
Key Facts
   Research Triangle Park, NC

   Feedstock: Poultry waste
Partnerships and Financing
    BRI has signed a marketing agreement with Jubilant Life Sciences, 
an integrated pharmaceutical and life sciences company, for marketing 
and distribution of selected feed enzyme products in South Asia. BRI 
has signed an agreement with ilender Corp. for the distribution and 
marketing of selected feed enzyme products in Latin American countries.
    About: A global biotechnology company specializing in the research, 
development and manufacture of enzyme feed additives that help poultry 
and swine producers optimize animal nutrition.
    Product applications: Versazyme has become the leading protease in 
the global animal nutrition market. Valkerase is an enzyme that 
improves the processing of feathers and the quality of feather meal. 
BRI's newest product, XylamaxTM, is an intrinsically thermo-
stable xylanase that delivers consistent all-around performance in 
nutrient release and absorption, total energy availability, and feed 
conversion rate. To quickly test animal feed on site to confirm the 
presence of Xylamax, the company has developed XylaQuickTM, 
a qualitative in-feed calorimetric kit.
    Potential market size: Animal nutrition enzymes represent an $850 
million market. With increased food demand, sales of animal feed 
enzymes are expected to exceed $1.8 billion by 2020.
    Technology: Dr. Shih's 1980s research and development of a 
thermophillic digester to generate power from poultry waste led to his 
discovery of keratinase, an enzyme that digests the keratin protein 
found in feathers. Further research proved that keratinase could also 
improve digestibility of animal feed.
Biosynthetic Technologies
Irvine, CA
Number of employees: 10
Biosynthetic Technologies Is Producing Biosynthetic Base Oil.



          Above: Baton Rouge, LA Plant.
Biorefinery Classification: Demonstration Plant
Key Facts
   Baton Rouge, LA

   Feedstock: Organic fatty acids found in plant oils
Partnerships and Financing
    Biosynthetic Technologies holds exclusive rights to patented USDA 
technology that converts fatty acids found in plant and animal oils 
into high-performance synthetic oils. Biosynthetic Technologies is 
funded in part by multiple Financial Times Global 500 companies. For 
more information, visit Biosynthetic.com.
    About: Biosynthetic Technologies (BT) manufacturers a renewable 
high-performance lubricant base oil that exceeds the toughest 
performance standards, even in challenging applications like motor oil. 
BT has received ILSAC GF-5 certification on both SAE 5W-20 and 5W-30 
grade passenger car motor oil formulations using its Biosynthetic Base 
Oil. These formulations have also been certified by the American 
Petroleum Institute (API) to exceed the requirements of the most recent 
service category issued by API's Lubricants Group, the API SN 
``Resourcing Conserving'' designation.
    Product applications: Passenger car motor oil (PCMO); Marine 
lubricants; Small engine oil (2T/4T); Hydraulic fluid; Wind turbine; 
Refrigeration/compressor oil; Food-grade lubricant grease; Dielectric 
(transformer) fluid; Metalworking fluid; Gear oil; Bar and chain oil; 
General purpose lubricant; Plastics.
    Potential market size: 1 billion gallons per year.
    Technology: Biosynthetic Technologies (BT) manufactures a 
revolutionary new class of biobased synthetic molecules that are made 
from organic fatty acids found in plant oils.



Blue Marble Biomaterials
Missoula, MT
Number of employees: 80
Blue Marble Biomaterials Is Producing Specialty Chemicals--Sulfur 
Compounds, Thioesters, Esters, Specialty Offerings, Extract & Oils.



          Above: Bitterroot Valley of Montana Plant.
Biorefinery Classification: Pilot Plant
Key Fact
   Bitterroot Valley of Montana

   Feedstock: Organic material (biomass): food co-products, 
        spent brewery grain, spent coffee and tea, algae, milfoil, 
        agricultural silage, wood chip
Partnerships and Financing
    In the fall of 2010, Blue Marble was awarded the Regional Woody 
Biomass Utilization Grant by Montana's Department of Natural Resources 
and Conservation. Innovate Montana is a public-private partnership, led 
by the Governor's Office of Economic Development working in 
collaboration with Montana's business community. Their goal is to 
highlight innovative businesses like Blue Marble Biomaterials that are 
advancing the state's economy by creating quality jobs.
    About: Our mission is to replace petroleum-based chemicals with 
fully sustainable, zero carbon specialty chemicals.
    Product applications: Natural flavours and fragrances.
    Potential market size: In 2014, the world's ten largest specialty 
chemicals segments accounted for 61 percent of the market, reported 
IHS. Markets and Markets projects that specialty chemicals will reach 
$470 billion by 2020.
    Technology: Patented processes utilize plant material and managed 
ecosystems of bacteria to produce complex chemical compounds. We refine 
our compounds using green chemistry processes. Its proprietary AGATE 
system uses cellulosic, lignin, and protein based biomass to produce 
target products. Uses non-GMO polyculture fermentation and extraction.
    Blue Marble is working with researchers at the University of 
Montana to develop natural algal products using patent-pending algae 
strains, growth systems, and extraction technologies.


Calysta
Menlo Park, CA
Number of employees: 50
Calysta Is Developing FeedKind Protein, Alcohols, Esters, Oxides And 
Olefins.


          Above: FeedKind.
Biorefinery Classification: Commercial Plant
Key Facts
   Menlo Park, CA

   Feedstock: Methane

   In January 2016, Calysta received a conditional award of up 
        to 2.8 million Exceptional Regional Growth Fund 
        (eGRF) grant subject to due diligence from the UK Government to 
        develop a Market Introduction Facility in northern England to 
        develop a production process for FeedKind' protein. 
        FeedKind is approved for sale in the European Union. In June 
        2014, Calysta announced it has successfully fermented methane 
        into lactic acid, under a research collaboration with 
        NatureWorks. Lactic acid is the building block for NatureWorks 
        Ingeo lactide intermediates and polymers.
Partnerships and Financing
    In February 2016, Calysta announced $30 million in Series C funding 
with Cargill, the Municipal Employee Retirement System (MERS) of 
Michigan and Old Westbury Global Real Assets Fund LLC. In January 2015, 
Calysta completed of a Series B financing round totaling $10 million, 
led by Walden Riverwood Ventures, a venture firm focused on investing 
in core technology companies globally, and Aqua-Spark, a Netherlands-
based firm focused on sustainable aquaculture investments.
    About: Calysta creates high-value nutrition products and industrial 
materials by converting energy-rich methane into sustainable building 
blocks for life.
    Product applications: Fish and livestock nutrition products, 
industrial materials and consumer products. FeedKind' 
protein is a natural, safe, non-GMO, sustainable fish feed ingredient 
to reduce the global aquaculture industry's use of fishmeal.
    Potential market size: Specialty.
    Technology: Calysta is converting novel feedstocks to high value 
sustainable products using synthetic biology. Calysta is developing 
Biological Gas-to-Chemicals' and Biological Gas-to-
Liquids' platforms and Biological Gas to FeedTM 
and Biological Gas to FuelTM fermentation platforms. These 
platforms create valuable cost and performance advantages over current 
gas conversion processes without competing for food, land or water. 
FeedKind' is produced using methanotrophs, natural organisms 
that consume methane from multiple sources, including anaerobic 
digestion and municipal solid waste, as their energy source.


    Biobased products are made from renewable biomass, oils or other 
carbon waste streams, including waste stack gases. Renewable chemicals 
are the building blocks for biobased products.
Cellana, LLC
Kailia-Kona, HI
Number of employees: 20+
Cellana, LLC Is Producing Algae Oils, Proteins/Carbohydrates And 
Biomass.


          Above: Kailua-Kona, HI Plant.
Biorefinery Classification: Demonstration Plant
Key Facts
   Kailua-Kona, HI

   12+ tons per year, current capacity

   Feedstock: Algae
Partnerships and Financing
    Cellana has rec[ei]ved multiple large grants from the U.S. 
Departments of Energy (DOE) and Agriculture (USDA). Cellana has entered 
into a commercial-scale off-take agreement with Neste, the world's 
leading supplier of renewable diesel and jet fuel, for Cellana's 
ReNewTM Fuel biocrude oil for fuel applications.
    About: Cellana is a leading developer of algae-based bioproducts 
for sustainable nutrition and energy applications.
    Product applications: Algae-based bioproducts such as Omega-3 
nutritional oils, Aquaculture/animal feeds, human foods and fuels.
    Potential market size: $4 billion Omega-3 oils, $9 billion 
aquaculture feeds, $1 trillion fuels/chemicals, $100 million whole 
algae products for aquaculture hatcheries, cosmetics, & functional 
foods.
    Technology: Cellana's patented production system, called 
ALDUOTM, is unique in that it couples large-scale 
photobioreactors (PBRs) with open ponds in a two-stage process. Open 
ponds, which are very cost-effective, have historically been limited by 
contamination from undesirable algae strains (weeds) or grazer 
organisms (pests). PBRs are generally unable to produce algae at an 
acceptable cost for commodity applications. ALDUOTM 
minimizes the footprint of PBRs & maximizes the footprint of the open 
ponds, in order to minimize overall cost & minimize risk of 
contamination. By operating the PBRs in semi-continuous mode to provide 
inoculum for the open ponds, which are operated in batch mode, Cellana 
has successfully grown more than ten strains of algae at commercial 
yields w[i]thout pesticides or herbicides.


The Coca-Cola Company
Atlanta, GA
Number of system employees: >700,000
The Coca-Cola Company Produces PlantBottleTM Packaging, The 
First-Ever Fully Recyclable Pet Plastic Beverage Bottle Made Partially 
From Plants.
Biorefinery Classification: Commercial Plant
Key Facts
   Feedstock: Sugarcane
Partnerships and Financing
    In June 2012, Coca-Cola, Ford, Heinz, Nike and Procter & Gamble 
formed the Plant PET Technology Collaborative to accelerate development 
of products made entirely from plants. The PlantBottleTM 
technology has also been applied beyond beverage bottles. Coca-Cola now 
has developed partnerships with the Ford Motor Company to use the 
PlantBottleTM technology for polyester car interiors, and 
SeaWorld' Parks & Entertainment (as well as other theme 
parks and zoos), to introduce a refillable souvenir cup made with 
PlantBottle technology.
    About: The Coca-Cola Company is the world's largest beverage 
company, refreshing consumers with more than 500 sparkling and still 
brands and more than 3,800 beverage choices.
    Product applications: PET packaging and materials.
    Potential market size: PlantBottleTM packaging accounts 
for 30 percent of the company's packaging volume in North America and 
eight percent globally, some seven billion bottles annually, making The 
Coca-Cola Company a large bioplastics end-user.
    Technology: Coca-Cola introduced PlantBottleTM 
Technology in 2009 as the first recyclable PET plastic bottle made 
partially from plants. Since then, more than 40 billion 
PlantBottleTM packages have reached the market in over 40 
countries, saving more than 845,000 barrels of oil. The company's goal 
is to adopt the PlantBottleTM packaging (which consists of 
30 percent plant-based material) for all of its new PET plastic bottles 
in the future. To achieve this objective, Coca-Cola is partnering with 
other companies to expand technology and build manufacturing facilities 
around the world.


Corbion
Amsterdam, Netherlands
Number of employees: 1,673
Corbion Is Producing Lactide Monomers And Polymers, 2,5-
Furandicarboxylic Acid, And Succinic Acid.


          Above: Blair Manufacturing Facility, Blair, NE.
Biorefinery Classification: Commercial Plant
U.S. Production Facilities
   Blair Manufacturing Facility, Blair, NE

   Dolton Manufacturing Facility, Dolton, IL

   East Rutherford Manufacturing Facility, East Rutherford, NJ

   Grandview Manufacturing Facility, Grandview, MO

   Totowa Manufacturing Facility, Totowa, NJ

   Tucker Manufacturing Facility, Tucker, GA
Partnerships and Financing
    In 2011, Corbion signed a partnership agreement with Perstorp; and 
in 2015 jointly announced development of a new lactide 
(PURALACT' B3) caprolactone co-polymer (CapaTM) 
for use in hot melt adhesive applications.
    In 2013, Corbion and BASF established the 50/50 joint venture, 
Succinity GmbH, to produce high-quality succinic acid based on 
renewable resources.
    In 2015, Corbion and MedinCell established a 50/50 joint venture, 
CM Biomaterials, to supply biobased copolymers for controlled-release 
drug delivery. The joint venture will sell the co-polymers to MedinCell 
partners who license the MedinCell technology (BEPOTM).
    About: Corbion is the global market leader in lactic acid, lactic 
acid derivatives, and lactides, and a leading company in emulsifiers, 
functional enzyme blends, minerals, and vitamins.
    Product applications: The company delivers high performance 
biobased products made from renewable resources and applied in global 
markets such as bakery, meat, home and personal care, packaging, 
pharmaceuticals and medical devices, automotive, coatings and 
adhesives. Its products have a differentiating functionality in all 
kinds of consumer products worldwide.
    Potential market size for bioplastics: Global bioplastics 
production capacity is set to increase from around 1.7 million tonnes 
in 2014 to approximately 7.8 million tonnes in 2019, according to 
Institute for Bioplastics and Biocomposites.
    Technology: Corbion has an established technology platform based on 
over 80 years of fermentation experience. Corbion leads the way in 
lactic acid as well as in cutting-edge emulsification technology and 
functional blending capability. Drawing on the deep rooted application 
and market knowledge that has been built up over decades, Corbion works 
hand in hand with our customers to make our technology work for them.
    With the construction of a 75 kiloton per year PLA plant in Rayong 
Province, Thailand, Corbion is moving one step in the value chain.


The Dow Chemical Co.
Midland, MI
Number of employees: 49,495
The Dow Chemical Company Is Producing Ethanol, Plasticizers, Polyols.
Biorefinery Classification: Commercial Plant
Key Facts
   U.S. Gulf Coast

   Feedstock: Soy

   DOW's Santa Vitoria, Minas Gerais, Brazil integrated 
        alcohol-chemical complex uses sugarcane as a renewable 
        feedstock for the production of ethanol. The mill has the 
        capacity to convert 2.7 million tons of sugarcane into 240,000 
        cubic meters of hydrous fuel ethanol per harvest year.
Partnerships and Financing
    BioVinylTM flexible vinyl compounds incorporate 
phthalate-free DOW ECOLIBRIUMTM Bio-Based Plasticizers, 
which are manufactured using plant byproducts by Dow Electrical and 
Telecommunications, a business unit of The Dow Chemical Company. Under 
a Joint Collaboration Agreement, Teknor Apex has the exclusive right to 
market in North America flexible vinyl compounds containing DOW 
ECOLIBRIUMTM Bio-Based Plasticizers in consumer and 
industrial products, automotive components, certain medical devices, 
and certain wire and cable uses.
    About: The Dow Chemical Company is a diversified, worldwide, 
manufacturer and supplier of products, used primarily as raw materials 
in the manufacture of customer products and services.
    Product applications: Flexible packaging, hygiene and medical 
markets, adhesives and sealants.
    Potential market size: The global market for adhesives and sealants 
is expected to reach $43,195.5 million by 2020, according to a 2014 
study by Grand View Research, Inc.
    Technology: RENUVATM Renewable Resource Technology 
breaks down natural oil and functionalizes it, then uses a distinct 
process to polymerize the molecules into designed polyols with control 
of functionality and molecular weight for greater quality and 
consistency.
DuPont
Wilmington, DE
DuPont Is Developing Platforms For Biofuels, Food Ingredients, 
Materials And Chemicals.


          Above: DuPont Cellulosic Ethanol, Nevada, IA.
Biorefinery Classification: Commercial Plant
Key Facts
   DuPont Cellulosic Ethanol Nevada, IA

   30 million gallons per year

   Feedstock: Corn stover


Partnerships
    In 2016, DuPont and Archer Daniels Midland announced a method for 
producing furan dicarboxylic methyl ester (FDME) from fructose. One of 
the first polymers under development utilizing FDME is polytrimethylene 
furandicarboxylate (PTF).
    About: DuPont has been bringing world-class science and engineering 
to the global marketplace in the form of innovative products, 
materials, and services since 1802.
    Product applications: Animal nutrition, food, detergents, textiles, 
carpets, personal care, biobased materials and biofuels.
    Technology: DuPont integrates proven strengths in chemistry, 
materials science and engineering with cutting-edge biology, augmenting 
or replacing chemical transformations with biological ones. DuPont's 
biobased materials reduce the use of petroleum while improving 
performance. DuPont is leading the world in meeting growing biofuel 
needs.
    By adding modern science and knowledge to nature's own material, 
DuPontTM Danisco' food enzymes bring added value 
and previously unattainable functionalities to many food products. They 
help extend shelf life, optimize production, add texture, ensure 
quality consistency and reduce costs--gains that in turn enable 
customers to reduce water use, energy consumption and waste. 
POWERFlex', an enzyme solution developed for tortilla 
baking, reduces the stickiness of dough and gives tortillas long-
lasting freshness and improved flexibility. Enzymes also support health 
and wellness by promoting the digestion of milk lactose, starch, 
proteins, fats and oils.
    DuPont offers a wide range of liquefaction, saccharification and 
isomerization products to customers in the wet milling industry, backed 
by our applications laboratories in the U.S., China and Europe. 
Experienced DuPont professionals provide technical support to optimize 
the production of HFCS, high dextrose and high maltose syrups. This 
enzyme technology also contributes to energy, water and chemical 
reduction by increasing dry solids, reducing process temperatures and 
pH adjustments and improving filtration efficiencies.
DuPOnt Tate & Lyle Bio PRODUCTS
Loudon, TN
DuPont Tate & Lyle Bio Products Is Producing 1,3 Propanediol.


          Above: Loudon, TN plant.
Biorefinery Classification: Commercial Plant
Key Facts
   The global headquarters and production facility for DuPont 
        Tate & Lyle Bio Products is located in Loudon, TN.

   The plant started production in 2006 and has a current 
        capacity of 140 million pounds per year.

   Feedstock: Glucose from corn wet milling operation.
Partnerships and Financing
    DuPont Tate & Lyle Bio Products is a joint venture between DuPont, 
a global science company, and Tate & Lyle, a world-leading renewable 
food and industrial ingredients company. DuPont and Tate & Lyle jointly 
funded the plant with total investment of $100 million.
Awards
    2003 EPA Presidential Green Chemistry
    2007 ACS Heroes of Chemistry
    2009 ACS-BIOT Industrial Biotechnology
    2010 State of Tennessee Governor's Award for Trade Excellence
    About: DuPont Tate & Lyle Bio Products provides natural and 
renewably sourced ingredients that enhance product performance.
    Product applications: 100 percent biobased 1,3 propanediol is used 
to produce fiber grade polyester polymer for residential and commercial 
carpets, apparel and automotive mats and carpets. In addition the 
Zemea' brand of 1,3 propanediol is found in cosmetics, 
personal care, food, flavors, laundry, cleaning and pharmaceutical 
products. The Susterra' brand is targeted for industrial 
applications such as heat transfer fluids, deicing, polyurethanes, 
paints, coatings and inks.
    Technology: Under exact temperatures and conditions, a patented 
microorganism functions as a bio-catalyst, converting sugar into 1,3 
propanediol. The deactivated microorganism is separated from the broth, 
along with unfermented sugars, salts and water. The material is then 
refined to remove any trace quantities of water and other byproducts. 
The resu[lt]ing product is highly purified 1,3 propanediol ready for 
commer[ci]al use.


          Copyright  2016 DuPont Tate & Lyle Bio 
        Products. All rights reserved. Zemea', 
        Susterra' and the Circle Logo are registered 
        trademarks of DuPont Tate & Lyle Bio Products Company, LLC.
EcoSynthetix
Burlington, ON, Canada
Number of employees: 50
EcoSynthetix Is Producing Ecosphere' Biopolymers And 
Ecomer' Biomonomers.


          Above: Eco[S]ynthetix, Burlington, Ontario.
Biorefinery Classification: Commercial Plant
Key Facts
   Centre of Innovation, Burlington, Ontario, Canada. 
        Production sites in Tennessee and The Netherlands.
        
        
Partnerships and Financing
    The company has established a number of academic and government 
funding partnerships to support its research and development 
activities. EcoSynthetix is a public company trading on the Toronto 
Stock Exchange (TSX: ECO). For further details, visit us at 
ecosynthetix.com.
    About: EcoSynthetix is a renewable chemicals company specializing 
in biobased materials used as inputs in a wide range of end products. 
Our commercial biobased products exhibit similar performance 
characteristics compared to non-renewable products that they replace, 
often at reduced total systems cost.
    Product applications: Binders and modifiers for key global markets, 
including: paper & paperboard, building and construction, personal 
care, and others.
    Potential market size: $60 billion of synthetic polymers.
    Technology: EcoMer' is the flagship product family of 
functional engineered biopolymers that are patented and exclusively 
available from EcoSynthetix. These products represent a class of highly 
efficient binders derived from renewable materials which can cost-
effectively displace traditional synthetic binders in a number of 
significant market applications, including coated paper and paperboard, 
building products such as wood composites and insulation, and others.


Edeniq
Visalia, CA
Number of employees: 30
Edeniq Is Producing Cellulosic Sugars.


          Above: Visalia, CA Plant.
Biorefinery Classification: Pilot Plant
Key Facts
   Visalia, CA

   Feedstock: Corn stover, sugarcane bagasse

   The PATHWAY Platform has been licensed for commercial 
        production of cellulosic biofuel from corn kernel fiber. Edeniq 
        has announced commercial licenses for its PATHWAY Platform with 
        Pacific Ethanol, Flint Hills Resources, Siouxland Energy, and 
        Aemetis.

   Edeniq is partnering with Usina Vale to build a 
        demonstration plant at Usina Vale's sugar mill in Brazil to 
        convert sugarcane bagasse to cellulosic ethanol
Partnerships and Financing
    Department of Energy program funded $20 million of Edeniq's $25 
million cellulosic ethanol pilot plant; with nearly $4 million from the 
California Energy Commission (CEC).
    Edeniq is a privately held company. Edeniq and Aemetis have 
announced a planned merger to close in the third quarter 2016.
    About: Edeniq is a biorefining and cellulosic technology company. 
Edeniq delivers integrated process innovations that unlock sugars.
    Product applications: Technology to produce cellulosic ethanol from 
corn kernel fiber at existing ethanol plants using Edeniq's 
CellunatorTM pretreatment and cellulases.
    Technology: Edeniq combines a mechanical pretreatment (Cellunator) 
process with enzymatic hydrolysis to efficiently and cost-effectively 
break down structural plant materials into cellulosic sugars. Edeniq's 
PATHWAY Platform integrates enzymes with the Cellunator and 
SmartFlowTM Technology for water and lignin recovery to 
allow for conversion of corn kernel fiber into cellulosic sugars and 
ethanol. PATHWAY produces up to 2.5 percent cellulosic ethanol; a 
15,000 gallon per year plant could produce 375 gallons per year of 
cellulosic ethanol.


Elevance Renewable Sciences
Woodridge, IL
Number of employees: 100
Elevance Renewable Sciences, Inc Is Producing Ethylene.


          Above: Woodridge, IL Plant.
Biorefinery Classification: Commercial Plant
Key Facts
   Woodridge, IL

   Feedstock: Plant-based oils like soybean, canola, palm, 
        mustard and jatropha or algae
Partnerships and Financing
    Elevance has a collaboration with Genting Plantations Berhad 
through Genting Integrated Biorefinery Sdn Bhd (GIB). The collaboration 
will build a 240,000 megaton (MT) biorefinery in the Palm Oil 
Industrial Cluster (POIC) in Lahad Datu, Sabah, Malaysia. Versalis, the 
chemical subsidiary of Eni, has licensed Elevance technology to build a 
biorefinery at Porto Maghera, Italy.
    Elevance and Wilmar International Limited formed a joint venture 
that operates a world-scale biorefinery in Gresik, Indonesia, based on 
Elevance's technology. The commercial-scale manufacturing facility 
capacity is 180,000 MT per year.
    About: Elevance is a high-growth company that creates novel 
specialty chemicals from renewable feedstocks by using a proprietary, 
Nobel Prize-winning technology called olefin metathesis. With olefin 
metathesis, Elevance helps enable its customers to deliver everyday 
products that exceed the performance of existing products while leaving 
a smaller environmental footprint.
    Product applications: Personal care, detergents, cleaners, 
polymers, lubricants and oilfield chemicals.
    Potential market size: The outputs from Elevance's production 
process are relevant to markets valued well in excess of $200 billion. 
The specialty chemicals market is estimated at $176 billion. The 
oleochemical market was $38 billion in 2010. The intermediate olefin 
market was $7 billion in 2008.
    Technology: Olefin metathesis chemistry, a groundbreaking catalyst 
technology, allows carbon atoms in natural oils to ``swap'' places, 
enabling new chemical compounds and manufacturing processes.


Evolva
Reinach, Switzerland
Number of employees: 116
Evolva Is Producing High-Value Specialty Ingredients.


          Above: Evolva fermenter.
Biorefinery Classification: Commercial Plant
Key Fact
   Feedstock: Baker's yeast
Partnerships and Financing
    The partners in the BioPreDyn project are developing software tools 
to facilitate metabolic engineering by the use of computer-based cell 
models. The PROMYS project has a duration of 4 years and a total EU 
funding of =7.2 million (CHF 8.9 million), of which Evolva's share is 
9.8 percent. The PROMYS project is part of the European Commission's 
7th Framework Programme for Research (``FP7''). Evolva's role in the 
project will be to construct a yeast that is able to produce high 
yields of a taste modulating ingredient.
    About: Evolva is a pioneer and global leader in sustainable, 
fermentation-based approaches to ingredients for health, wellness and 
nutrition.
    Product applications: Evolva's products include stevia, 
resveratrol, vanillin, nootkatone and saffron
    Potential market size: $91.2 billion by 2020, according to Markets 
and Markets.
    Technology: We have an array of technologies that allow us to 
rapidly insert and express tens to hundreds of genes in billions of 
individual yeast cells in a highly combinatorial fashion. This allows 
us to explore large numbers of gene combinations and hence find those 
gene combinations that are necessary to biosynthesise a given 
ingredient. Funded by the Innovative Medicines Initiative, The CHEM 21 
project (Chemical Manufacturing Methods for the 21st Century 
Pharmaceutical Industries) brings together six pharmaceutical 
companies, five SMEs and research groups eight other universities from 
the UK and Europe.


ForeLight
Chicago, IL
Number of employees: 6
ForeLight Is Producing Algae Biomass.


          Above: Algae bioreactor with IllumesisTM lighting.
Biorefinery Classification: Pilot Plant
Key Facts
   Chicago, IL

   Feedstock: Algae

   ForeLight's production facility is located in the University 
        Technology Park on the Chicago campus of the Illinois Institute 
        of Technology (IIT).
Partnerships and Financing
    Privately held.
    About: ForeLight's advanced artificial light bioreactor enables 
unparalleled control over the growth of algae, cyanobacteria and other 
photosynthetic organisms, offering a stable, cost-effective solution to 
the biomass production needs of the life sciences, material sciences 
and biological research & diagnostics fields.
    Product applications: Fore[L]ight, Inc. provides fluorescent 
biomarkers. ForeLight's patented IllumesisTM lighting and 
growth platform is accelerating the potential application of indoor 
agriculture/aquaculture for the food, beverage, nutraceutical, cosmetic 
and other industries.
    Technology: Allophycocyanin (APC) is a highly soluble fluorescent 
phycobiliprotein isolated from the cyanobacteria Arthrospira platensis. 
R-Phycoerythrin (R-PE).
Genomatica
San Diego, CA
Number of employees: 100
Genomatica, Inc. Is Producing 1,4-Butanediol, Butadiene, 
Hexamethylenediamine, Caprolactam And Adipic Acid.


          Above: Adria, Italy Plant.
Biorefinery Classification: Commercial Plant
Key Facts
   Adria, Italy

   30 kilotons per year

   Feedstock: Strategic relationships with Tate & Lyle for 
        dextrose sugar, M&G for sugars from cellulosic biomass, and 
        Waste Management for C1s.

   Genomatica and DuPont Tate & Lyle Bio Products Company, LLC 
        (DT&L) produced more than 5 million pounds (over 2,000 metric 
        tons) of BDO by direct fermentation using conventional sugars 
        as feedstock in 2012.
Partnerships and Financing
    Under a joint venture agreement, Novamont is converting an existing 
facility in Adria, Italy to use Genomatica's BDO process to produce 
approximately 40 million pounds of BDO per year. In April 2013, 
Versalis and Genomatica announced an agreement to create a joint 
venture for butadiene. In December 2013, Braskem and Genomatica 
announced a joint development agreement for butadiene. Braskem 
anticipates funding Genomatica's development work; will allocate 
Braskem R&D resources; and fund the construction of pilot and 
demonstration-scale plants.
    About: Genomatica delivers new manufacturing processes that enable 
its partners to produce the world's most widely-used chemicals from 
alternative feedstocks, with better economics and greater 
sustainability than petroleum-based processes.
    Product applications: BDO is used in plastics, solvents, electronic 
chemicals and elastic fibers for the packaging, automotive, textile, 
and sports and leisure industries. Butadiene is a key raw material for 
tires, engineering polymers and latex products.
    Potential market size: The 1,4-Butanediol market will be worth 
$8.96 billion by 2019. Hexamethylenediamine, caprolactam and adipic 
acid have a total market of over $18 billion per year.
    Technology: Guided by a genome-scale metabolic model, we engineered 
the E. coli host to enhance anaerobic operation of the oxidative 
tricarboxylic acid cycle. The organism produced BDO from glucose, 
xylose, sucrose and biomass sugar streams.


Gevo
Englewood, CO
Number of employees: 91
Gevo Is Producing Isobutanol, Ethanol And High-Value Animal Feed.


          Above: Luverne, MN Plant.
Biorefinery Classification: Commercial Plant
Key Facts
   Luverne, MN

   20 billion gallons per year

   Feedstock: Corn

   Gevo currently operates a biorefinery in Silsbee, Texas, in 
        collaboration with South Hampton Resources Inc., to produce 
        renewable jet fuel, octane, and ingredients for plastics like 
        polyester.
Partnerships and Financing
    Gevo has a marquee list of partners including The Coca-Cola 
Company, Toray Industries Inc. and Total SA, among others.
    About: Gevo' is a leading renewable chemicals and 
advanced biofuels company. We are developing biobased alternatives to 
petroleum-based products using a combination of synthetic biology and 
chemistry.
    Product applications: Isobutanol has broad market applications as a 
solvent and a gasoline blendstock that can help refiners meet their 
renewable fuel and clean air obligations.
    Potential market size: The global isobutanol market is expected to 
reach $1.18 billion by 2022. The feed additives is projected to reach 
$21.8 billion by 2020.
    Technology: Gevo's proprietary integrated fermentation technology 
platform (GIFT'), which has been designed to produce low-
cost renewable isobutanol, consists of two elements: A proprietary 
yeast biocatalyst, which converts sugars derived from multiple 
renewable feedstocks into isobutanol, and a proprietary separation unit 
which is designed to bolt onto existing ethanol facilities.


GFBiochemicals
Milan, Italy
Number of employees: 50
GFBiochemicals Americas Is Producing Levulinic Acid Derivatives, Like 
Esters And Ketals.


          Above: Golden Valley, MN Plant.
Biorefinery Classification: Demonstration Plant
Key Facts
   Golden Valley, MN

   Caserta, Italy

   3 million lbs per year

   Commercial under development, potentially at Laskin Energy 
        Park in Hoyt Lakes, MN.
Partnerships and Financing
    GFBiochemicals is owned by private investors.
    About: GFBiochemicals is the main producer of levulinic acid at 
commercial scale directly from biomass.
    Product applications: Pharma, personal care, flavors and 
fragrances, resins and coatings, cleaners, plasticizers, nylon, fuel 
additives.
    Potential market size: $40 billion annually.
    Technology: Thanks to its proprietary technology, levulinic acid is 
produced through a one-step process directly from a wide range of 
cellulosic feedstock and GFBiochemicals offers a combination of high 
product yields, high productivity, concentrated process streams and 
efficient recovery. Produced at an industrial scale levulinic acid is 
cost competitive and can also successfully address many performance-
related issues attributed to petroleum-based chemicals and materials. 
Levulinic acid was recognized by the U.S. Department of Energy as one 
of the top biobased platform chemicals of the future.


Green Biologics
Ashland, VA.
Number of employees: 78 (in U.S. operations)
Green Biologics Is Producing 100 Percent Biobased, Renewable N-Butanol 
And Acetone.


          Above: Little Falls, MN P[la]nt.
Biorefinery Classification: Commercial Plant
Key Facts
   Little Falls, MN 30,000 tonnes per yearFeedstock: Corn

   Emmetsburg, IA. 40,000 liter demonstration
Partnerships and Financing
    GBL was founded in Oxford, England in 2003 and moved to its current 
location in Milton Park near Abingdon in 2005. On January 1, 2012, GBL 
merged with ButylfuelTM Inc., a Gahanna, Ohio company 
founded in 1991.
    GBL has raised well over $100 million in equity financing from 
investors and venture capital firms including Sofinnova Partners, Swire 
Pacific Limited, Capricorn Venture Partners, Oxford Capital Partners, 
ConVergInce Holdings, the Carbon Trust and Morningside Group.
    Additional venture debt financing was provided by Tennenbaum 
Capital Partners (TCP). In 2014, GBL received a $500,000 grant from the 
Minnesota Agricultural Department to support the engineering for 
repurpose of their advanced fermentation facility in Little Falls, MN. 
www.greenbiologics.com.
    About: Green Biologics Ltd (GBL) is developing and commercializing 
technologies to produce renewable chemicals that reduce GHG emissions, 
create rural jobs and deliver a sustainable value chain for a global 
green economy.
    Product applications: n-Butanol is used in paints and coatings, and 
as an intermediate in the production of household, institutional, and 
industrial products as well as plasticizers, esters and amines. Acetone 
is used extensively as a solvent in paints, coatings, adhesives, inks, 
plastics and polymers, personal care and food applications.
    Potential market size: The global market for n-butanol was 
estimated at 3,802.5 kilotons in 2012. According to Markets to Markets 
consultancy, the global n-butanol market is expected to reach $9.4 
billion by 2018, with year-over-year growth exceeding 4.4 percent.
    Technology: We use microbial engineering and synthetic biology 
tools to continually expand our robust library of Clostridium microbial 
strains, which are used as biocatalysts as part of our Advanced 
Fermentation Process (AFP)TM.


Heliae
Gilbert, AZ
Number of employees: 130
Heliae Is Currently Producing High-Value Products Derived From 
Microalgae. Heliae Produces Supplement Grade Astaxanthin And A Number 
Of Agricultural Products At Commercial Scale.


          Above: Gilbert, AZ Plant.
Biorefinery Classification: Commercial Plant
Key Facts
   Gilbert, AZ

   1 billion gallon per year

   Feedstock: Microalgae and other underdeveloped biological 
        platforms

   Heliae offers technology and facility development services, 
        contract research and manufacture, and maintains a robust 
        pipeline of materials and human/animal health products.

    In an effort to support the growth of algae as a sustainable 
resource, Heliae provides a full range of facility development services 
around the world. Such projects may range in scope, scale and 
production potential.
Partnerships and Financing
    Heliae led a joint venture--named Alvita Corp.--with Japan-based 
Sincere Corporation, a waste management and recycling company, in the 
development of a commercial algae production facility in Saga City, 
Japan. Construction of the facility began in 2015 and Alvita's 
astaxanthin product is targeted for market in Japan by the end of 2016. 
Heliae continues research partnerships with Schott glass, Evodos 
Separation Technology, and a number of universities and companies.
    Heliae is privately held.
    About: Heliae' is a platform technology company using 
sunlight and low-cost carbon feedstocks to produce a wide range of 
high-value products from microalgae and similar emerging biological 
systems, with a long term vision of producing a sustainable source of 
high-quality, low-cost protein, materials, and related products.
    Product applications: Human and animal health, agriculture, 
aquaculture, materials and technology services.
    Potential market size: The current market value of commercially 
used carotenoids (such as astaxanthin) is estimated at nearly $1.5 
billion (2014) and is projected to reach $1.8 billion in 2019 at a CAGR 
of 3.9 percent. The soil treatment market is valued at $24.1 billion 
and is estimated to grow at a CAGR of 8.5 percent through 2020. The 
biological products in agriculture market was estimated at $3 billion 
in 2013 with a 3 year CAGR of 15 percent. Nutritional chemicals for the 
animal health market are estimated to reach nearly $4 billion in 2016, 
with a CAGR between 3.2 and 4 percent. By 2020, the aquaculture feed 
market is expected to reach $381.9 million. The global biomaterials 
market is forecast to grow to an estimated $130.57 billion by 2020 at a 
CAGR of 16 percent.
    Technology: While experts in phototrophic microalgae production, 
Heliae's mixotrophic algae production platform sets it apart from the 
industry. Mixotrophy is a hybrid of known phototrophic and 
heterotrophic models, which decreases capital costs, improves 
contamination control and increases productivity and product 
optionality.
Itaconix
Stratham, NH
Number of employees: 15
Itaconix Corporation Produces A Growing Line Of Novel Polymers That 
Ut[i]lize The Unique Functionality Of Itaconic Acid To Meet Customer 
Needs For Safer Chemicals.
Biorefinery Classification: Commercial Plant
Key Facts
   Stratham, NH

   In 2009, we established a large-scale production facility.

   Feedstock: Corn
Partnerships and Financing
    In 2009, Itaconix, in partnership with the University of Maine and 
UMass Lowell, received a $1.8 million research grant from the U.S. 
Department of Energy and U.S. Department of Agriculture through the 
Joint Biomass Research and Development Initiative.
    In 2014, Itaconix received a Phase II SBIR grant from the National 
Science Foundation for the development of biobased latex resins.
    In 2015, Itaconix signed a collaboration agreement with a leading 
chemical company for the development and worldwide marketing of certain 
Itaconix polymers.
    About: Itaconix Corporation is a biobased specialty chemicals 
company developing highly functional polymers from itaconic acid that 
achieve three essential objectives--safety, performance and 
sustainability.
    Product applications: Itaconix' DSPT for hard water 
conditioning in consumer, agricultural, and industrial uses; 
Itaconix' VELASOFTTM for skin/hair conditioning 
in shampoos and skin products; Itaconix' XDPT for dispersing 
minerals; Itaconix' ZINADORTM for odor 
neutralization; Itaconix' TSIT for anti-scaling; 
Itaconix' CHTT for spotting/filming prevention in automatic 
dishwashing; Itaconix' BIOBINDTM for binding in 
coatings and adhesives; Itaconix' SAP for adsorption in 
diapers and feminine care.
    Potential market size: The estimated U.S. market for current 
Itaconix products is $16 billion.
    Technology: Itaconix's PURITACTM technology platform 
covers processes, compositions, and applications for polymers of 
itaconic acid. Itaconic acid is produced by fermentation with 
Aspergillus terreus using carbohydrates such as corn. The initial 
technology was developed by Dr. Yvon Durant, the company's CTO and co-
founder, while at the University of New Hampshire.
Joule Unlimited
Bedford, MA
Joule Unlimited Is Producing Ethanol, Diesel.


          Above: Hobbs, NM plant.
Biorefinery Classification: Demonstration Plant
Key Facts
   Hobbs, NM

   Feedstock: CO2, sunlight
Partnerships and Financing
    Joule is privately held and has raised approximately $200 million 
in funding to date. The company was founded within Flagship 
VentureLabsTM.
    About: Joule has pioneered a CO2-to-fuel production 
platform, effectively reversing combustion through the use of solar 
energy. The company's platform applies engineered catalysts to 
continuously convert waste CO2 directly into renewable fuels 
such as ethanol or hydrocarbons, for diesel, jet fuel and gasoline.
    Product applications: Fuel.
    Potential market size: Over $1 trillion.
    Technology: Each module of the SolarConverter system contains 
Joule's tailored catalysts (a modified cyanobacterium), non-potable 
water and micronutrients. Waste CO2 is pumped in from an 
industrial emitter or pipeline. The CO2 keeps the catalysts 
in motion, maximizing their exposure to sunlight to drive 
photosynthesis. Charged from the sunlight, the catalysts consume the 
CO2 and continuously produce and secrete the fuel or 
chemical molecules into the liquid medium. The medium circulates 
through a separator that filters the end product, which is sent to a 
central plant for final separation and storage. The process occurs 
continuously for numerous weeks before the module is flushed and 
reinoculated on a staggered basis.
LanzaTech
Chicago, IL
Number of employees: 140
LanzaTech Is Producing Ethanol, 2,3-Butanediol, 1,3-Butadiene, Acetic 
Acid, Isopropanol, And Isobutylene.
Biorefinery Classification: Commercial Plant
Key Facts
   LanzaTech Freedom Pines Biorefinery, Soperton, GA

   Feedstock: Biomass (including MSW) synthesis gas, industrial 
        waste gases, biogas
        
        
Partnerships and Financing
    Led by Mitsui & Co., in 2014, the $112 million Series D round 
included new investors New Zealand Superannuation Fund, Siemens Venture 
Capital, CICC Growth Capital Fund I, L.P. and Khosla Ventures, Qiming 
Venture Partners, K1W1 and the Malaysian Life Sciences Capital Fund. 
LanzaTech has global partnerships across multiple sectors and along the 
supply chain, from steel, chemicals, aviation and banking.
    About: LanzaTech's biological carbon recycling technology opens up 
new resources for making low-carbon chemicals and fuels. LanzaTech 
presents a `carbon smart' future where you can choose where the carbon 
in your products comes from.
    Product applications: Styrene-butadiene rubber, plastics, textiles, 
resins, polyeurethane, adhesives, solvents, coatings, paints, fuels, 
de-icers, cosmetics, pharmaceuticals, personal care, and food.
    Potential market size: The global butadiene market is over 12 
million megatons per year (MTA). The global acetic acid market is 16 
million MTA. The global IPA market is 2 million MTA, with a value of 
$2.5-$3.5 billion.
    Technology: Using microbes (Clostridium autoethanogenum) that 
ferment gases (rather than sugars), carbon-rich waste gases and 
residues are transformed into useful liquid commodities.


Manus Bio
Cambridge, MA
Number of employees: 10
Manus Bio's First Chassis Produces Terpenoids.


          Above: Cambridge, MA lab.
Biorefinery Classification: Pilot Plant
Key Facts
   Feedstock: Glucose and glycerol
Partnerships and Financing
    $25 million in non-dilutive funding from early adopting customers, 
NSF SBIR Phase I grant ($150,000) in January 2013, NSF STTR Phase I 
grant ($225,000) in June 2014, NSF SBIR Phase I grant ($225,000) in 
June 2016.
    About: Manus Bio recreates plant processes in microorganisms to 
produce natural ingredients through fermentation. Manus Bio's microbial 
platform has been optimized to convert inexpensive sugar sources into 
rare and expensive products, providing a low-cost, sustainable, and 
environmentally friendly source for many ingredients used in our daily 
lives.
    Product applications: Flavors, fragrances, food ingredients, 
sweeteners [nutraceuticals], cosmetic actives, biopesticides, 
agrochemicals, and pharmaceuticals.
    Potential market size: Flavors and fragrances ($2 billion), 
sweeteners ($2 billion), biopesticides ($4 billion), nutraceuticals 
($1.5 billion), cosmetic actives ($2.2 billion), agrochemicals ($100 
billion), and pharmaceuticals ($60 billion).
    Technology: Manus Bio merges three core disciplines--metabolic 
engineering, protein engineering, and systems biology--in order to 
quickly and efficiently generate microbes that produce a variety of 
plant-based ingredients. The patented microbial platform has been 
optimized for high yield of a common precursor pathway, thus making it 
simple to pursue new products. The use of modular, reconfigurable, and 
plug-and-play tools and components further shortens the path to 
commercialization for new ingredients. In essence, Manus Bio has 
created an efficient BioAssemblyLineTM for the low-cost and 
sustainable production of an array of high value natural products.


Matrix Genetics
Seattle, WA
Number of employees: 29
Matrix Genetics Is Producing Enhanced Products From Spirulina.
Biorefinery Classification: Pilot Plant
Key Facts
   South Lake area near Seattle, WA

   Feedstock: Cyanobacteria
Partnerships and Financing
    Matrix has announced two partnerships, one with a multinational 
energy company for biofuels research and one with Proterro in the area 
of enhanced nutrition. Avista Development is the venture arm of Avista 
Corp., an energy company involved in the production, transmission and 
distribution of energy as well as other energy-related businesses.
    About: Matrix Genetics, LLC is a biotechnology company focused on 
producing high value products from algae. Our state-of-the-art, 
synthetic biology platform is the most cost-efficient method to create 
customized organisms with a range of traits to meet the needs of the 
fuel, food and feed industries.
    Product applications: Pigments, feed enzymes, vaccines, fuels.
    Potential market size: Matrix is pursuing multiple markets, from 
the $100 million blue pigment market to the billion dollar feed enzyme 
market.
    Technology: Matrix has developed world-class capabilities in 
directing carbon flux in algae to products of interest, including 
pigments, proteins, oils, anti-oxidants and specialty chemicals. Matrix 
is also the first to develop tools to precisely modify the genome of 
Spirulina, one of the few algae grown commercially at large scale. 
Spirulina has Generally Recognized as Safe (GRAS) status, allowing 
quick access to product opportunities in the food, beverage and 
enhanced nutrition categories. This ability to engineer strains to 
produce products of interest is the basis of the Company's technology 
and differentiates us from our competitors.


MBI
Lansing, MI
Number of employees: 11
MBI International Is Commercializing Afex (Ammonia Fiber Expansion), A 
Transformational Biotechnology That Sustainably Expands Our Capacity To 
Supply Both Food And Energy While Improving Economic Resilience For 
Rural Communities Around The World.


          Above: AFEX Pilot Plant, Lansing, MI.
Biorefinery Classification: Pilot Plant
Key Facts
   AFEX Pilot Plant

   Lansing, MI

   Feedstock: Corn stover, wheat straw, rice straw, switchgrass
Partnerships and Financing
    MBI and MSU have been collaborating under a strategic framework 
through which MBI serves as a technology development and 
commercialization partner for promising biobased technologies.
    About: Established in 1981, MBI is closely affiliated with Michigan 
State University (MSU) and a wholly owned subsidiary of the MSU 
Foundation. MBI serves as a biotech hub, a technology development and 
commercialization partner for promising biobased technologies.
    Technology: MBI is also licensing patented technologies for the 
production of biobased fumaric and succinic acid.


Meredian Bioplastics
Bainbridge, GA
Number of employees: 70
Meredian Is Producing NodaxTM Medium-Chainlength 
Polyhydroxyalkanoates (MCL-PHA).
Biorefinery Classification: Demonstration Plant
Key Facts
   Bainbridge, GA

   20,000 liters

   Feedstock: Fatty acid feedstocks

   In late March, 2014, Tate & Lyle validated the replication 
        of the proprietary process.
Partnerships and Financing
    Working in partnership with sister companies Danimer Scientific and 
AgroCrush, Meredian creates bioplastic feedstock from cold pressed 
canola oil. U.S. Government loan programs for businesses, such as those 
offered by the USDA--Rural Development and the U.S. Department of 
Treasury--New Market Tax Credit programs.
    About: Meredian Bioplastics, a subsidiary of Meredian Holdings 
Group, makes commercial grade PHA using world-class production systems, 
offering a scalable, durable, and cost effective material that reduces 
manufacturing dependence on non-renewable, diminishing resources.
    Product applications: In March, 2014, NODAXTM received 
FDA approval for food contact applications. The PHA produced at MHG is 
also Vincotte Certified to biodegrade within 12 to 18 weeks in six 
different mediums including anaerobic, soil, freshwater, marine, 
industrial and home composting.
    Potential market size: PHA market consumption will grow from an 
estimated 10,000 megatons (MT) in 2013 to 34,000 MT by 2018, with a 
CAGR of 27.7 percent from 2013 to 2018.
    Technology: Meredian purchased the intellectual property that forms 
the basis of its bioplastic technology from Procter & Gamble in 2007, 
and has continued to improve the patent portfolio with key 
international and North American patents.


Metabolix
Woburn, MA
Number of employees: 70
Metabolix, Inc Is Producing Polyhydroxyalkanoate Polymers (PHAs).


          Above: PHA coploymer material.
Biorefinery Classification: Commercial Plant
Key Facts
   Contract production

   50,000 pounds per month

   Feedstock: Industrial sugars
Partnerships and Financing
    Metabolix is working with customers across a range of applications 
for specialty PHA applications. We are targeting PHA to improve 
performance and/or reduce costs in material systems such as PVC and 
PLA, and in applications requ[i]ring improved performance, biocontent, 
biodegradability and other attributes where PHAs can provide unique 
[functional] benefits.
    About: Metabolix, Inc. is an innovation-driven specialty materials 
company focused on delivering high-performance biopolymer solutions to 
customers in the plastics industry.
    Product applications: Developmental film grades based on amorphous-
PHA (a-PHA) modified PLA. PHA additives in PVC systems improve 
permanence in durable applications. Biobased paper coatings based on 
PHA possess excellent barrier properties to water and grease and are 
compatible with the re-pulping operations typically used to recycle 
paper and corrugated cardboard. Plastic microbeads with PHA biopolymer 
materials that are biobased and marine degradable.
    Potential market size: According to the Freedonia Group, the total 
additives market for PVC is approximately 7 million metric tons per 
annum. The property modifier and process aid segment of the current 
global PVC market is approximately 3.5 billion pounds and an aggregate 
market value of approximately $6 billion annually.
    Technology: Metabolix has developed proprietary microbial strains 
to produce target PHA co-polymers. We have also developed fermentation 
technology and a novel recovery process to recover high purity 
specialty PHA biopolymers.


Micromidas
Sacramento, CA
Number of employees: 31
Micromidas Is Producing Furans.


          Above: Sacramento, CA Plant.
Biorefinery Classification: Pilot Plant
Key Facts
   Sacramento, CA

   500 kilograms per day

   Feedstock: Waste paper, cardboard, wood chips
Partnerships and Financing
    Micromidas has raised $40 million to date.
    About: Micromidas is building a chemical platform to produce both 
existing and new furanic and aromatic chemicals, polymers and resins 
using a wide variety of cellulosic biomass and carbohydrates, including 
wood and wood refuse, pulp and paper sludge, corn, corn byproducts, 
corn stover, sugarcane bagasse, empty palm fruit bunches and other 
glucan sources.
    Product applications: Furans are readily derivatized to produce 
monomers, plasticizers, or renewable (but chemically identical) 
variants of commodity chemicals such as paraxylene.
    Potential market size: Globally, 35 million metric tons of 
paraxylene are consumed each year, mostly used to make polyester for 
fabric. It is a $50 billion global market.
    Technology: The Micromidas process is a non-fermentation, non-
gasification, chemical-only process that selectively produces a furan 
intermediate from any feedstock containing cellulose or hemicellulose.


Modular Genetics
Woburn, MA
Number of employees: 6
Modular Genetics, Inc Is Producing An Acyl Glutamate Surfactant.


          Above: Biorefinery, Bacillus strain, electronic circuit, 
        flasks (clockwise from top left).
Biorefinery Classification: Pilot Plant
Key Fact
   Feedstock: Sugar from corn or woody material
Partnerships and Financing
    Modular Genetics has shown that its surfactant can be produced from 
sugar derived from rice hulls--a byproduct of rice production. This 
technology was funded through the NSF Small Business Innovation 
Research Program. Unilever is testing the new surfactants.
    About: Modular Genetics, Inc. is a sustainable chemistry company 
utilizing advanced technology in synthetic biology to produce specialty 
chemicals that are cost competitive, provide superior performance and 
are environmentally friendly.
    Product applications: Detergents, wetting agents, emulsifiers and 
foaming agents.
    Potential market size: The global surfactants market is estimated 
to register a CAGR of 5.4 percent by volume and 5.8 percent by value 
from 2014 to 2019. The global surfactants market is projected to reach 
22,802 kilotons by volume and $40,286 million by 2019.
    Technology: Modular Genetics, Inc.'s automated gene engineering 
system, CombiGenixTM, can synthesize, modify and recombine 
genes to create novel recombinant DNA molecules by the thousands. By 
linking CombiGenixTM to sophisticated, proprietary protein 
design tools and high-throughput screening, Modular has created an 
automated platform for the evolution of proteins with enhanced 
functions. Modular has engineered Bacillus subtilis strains to convert 
cellulosic sugar into a surfactant consisting of a fatty acid linked to 
an amino acid.


Myriant Corporation
Quincy, MA
Number of employees: 150
Myriant Corporation Is Producing Succinic Acid (1,4-Butanedioic Acid), 
Acrylic Acid, Lactic Acid, Muconic Acid, And Fumaric Acid.


          Above: Lake Providence, LA Plant.
Biorefinery Classification: Commercial Plant
Key Facts
   Lake Providence, LA

   30 million pounds of bio-succinic acid

   Feedstock: Sorghum grain and sorghum grits

   With our partner ThyssenKrupp Uhde, we successfully scaled 
        and achieved commercial production of bio-succinic acid at 
        Uhde's biotech commercial validation facility in Leuna, 
        Germany.
Partnerships and Financing
    Myriant is a subsidiary of PTT Global Chemical Public Company 
Limited, Thailand's largest and Asia's eighth largest chemical company. 
Our Lake Providence Commercial Facility is partially funded through a 
$50 million cost sharing award from the United States Department of 
Energy (DOE), and a $25 million Business and Industry (B&I) Loan 
Guarantee from the United States Department of Agriculture (USDA). 
Myriant has partnered with Johnson Matthey--Davy Technologies (JM Davy) 
to demonstrate that our bio-succinic acid can be utilized in JM Davy's 
process as a direct replacement for maleic anhydride.
    About: Myriant is a global leader innovating and commercializing 
biobased chemical intermediates.
    Product applications: Plastics, textile fibers, coatings. 
Myrifilm' Zero-VOC Coalescing Solvent.
    Potential market size: Succinic acid represents a $7.1 billion 
market.
    Technology: Myriant uses a single-step, anaerobic fermentation 
process that enables higher productivity and yield than other bio-
production processes. Our team of scientists and researchers 
accomplishes this by developing proprietary biocatalysts--
microorganisms, including E. coli, bacillus, streptomyces, 
corynbacterium, and yeast, with altered metabolic pathways--designed to 
produce our target bio-chemicals from a variety of feedstocks.
NatureWorks, LLC
Minnetonka, MN
Number of employees: 130
NatureWorks, LLC Is Producing Polylactic Acid (PLA).


          Above: Blair, NE Plant.
Biorefinery Classification: Commercial Plant
Key Facts
   Blair, NE

   300 million pounds (150,000 metric tons) of Ingeo biopolymer

   Feedstock: Corn
Partnerships and Financing
    NatureWorks is an independent company invested in by Cargill and 
PTT Global Chemical, who recently announced a $150 million investment 
in NatureWorks.
    About: NatureWorks is the first to offer a family of commercially 
available biopolymers derived from 100 percent annually renewable 
resources with cost and performance that compete with petroleum-based 
packaging materials and fibers.
    Product applications: Polymer--food service, packaging, textiles, 
apparel, durable goods. Ingeo bioplastic
    Potential market size: According to a report by Markets and 
Markets, by 2020 the Lactic Acid Market will be worth $3.82 billion and 
the Polylactic Acid Market will be worth $5.16 billion.
    Technology: Microorganisms convert the sugar into lactic acid 
through fermentation. A two-step process transforms the lactic acid 
molecules into rings of lactide. The lactide ring opens and links 
together to form a long chain of polylactide polymer. This is the 
process of polymerization.
Neol Bio
Granada, Spain
Number of employees: 35
Neol Bio Is Producing Tailor-Made MicroBIOil, Oleochemicals.


          Above: Neol Bio's Pilot Plant.
Biorefinery Classification: Demonstration Plant
Key Facts
   Aoiz, Navarra, Spain, Center for Second Generation Biofuels 
        (CB2G) of CENER, the Spanish National Renewable Energy Centre.

   Neol Bio has developed the process and the microorganisms to 
        produce high-value, tailor-made oils in its R&D centers in 
        Granada, Spain, and validated on a large scale at demonstration 
        plants.
Partnerships and Financing
    Neol Bio is a company listed at the Spanish Alternative Market.
    About: Neol Bio develops economically viable bioprocesses, reducing 
the use of chemical contaminates and assessing agricultural and 
industrial waste, thus using advanced techniques in molecular biology, 
bioprocess engineering and industrial microbiology.
    Product applications: Very long chain fatty acids (arachidonic, 
erucic, gondoic and nervonic) have a wide industrial use in cosmetics, 
lubricants and as additives for plastics.
    Potential market size: The global market for oleochemicals is 
valued at around $30,000 million per year with an estimated annual 
growth of six percent.
    Technology: MicroBiOilTM is a platform to produce high 
added value oils and microbial derived oleochemicals from renewable 
sources. MicrobiOilTM facilitates the production of oils 
through sustainable processes, using industrial byproducts (such as 
crude glycerin) or organic residues (such as wheat straw or sugarcane 
bagasse).
    All processes and micro-organisms used have been fully developed by 
Neol Bio and are protected by world-wide patents.


Newlight Technologies
Costa Mesa, CA
Newlight Technologies Is Using Greenhouse Gas To Produce 
AircarbonTM Polyhydroxyalkanoate (PHA) Thermoplastic.


          Above: Newlight California Facility.
Biorefinery Classification: Commercial Plant
Key Facts
   Feedstock: Air and captured methane-based farm carbon 
        emissions.
Partnerships and Financing
    In June 2016, Newlight signed a 20 year master off-take agreement 
with Vinmar International, Ltd.
    Under the terms of the off-take agreement, Vinmar will initially 
purchase and Newlight will sell 1 billion pounds of AirCarbon PHA, 
including 100 percent of AirCarbon PHA from Newlight's planned 50 
million pound per year production facility for 20 years. The contract 
will also cover 100 percent of the output from a 300 million pound per 
year AirCarbon production facility and a 600 million pound per year 
AirCarbon production facility for a total of up to 19 billion pounds 
over 20 years.
    In October 2016, Newlight signed a supply, collaboration, and 
production license with IKEA, wherein IKEA will use Newlight's 
AirCarbon technology to produce up to 10 billion pounds of AirCarbon 
for use in IKEA home furnishings.
    About: Newlight is a sustainable materials company dedicated to 
using carbon sequestration technology to produce clean, high-
performance materials that reduce cost, maintain or improve 
performance, and capture carbon on a market-driven basis.
    Product applications: AirCarbonTM can be used in 
extrusion, blown film, cast film, thermoforming, fiber spinning, and 
injection molding applications, replacing fossil-fuel based 
polypropylene, polyethylene, ABS, polystyrene, and TPU.
    Technology: First, concentrated greenhouse gas emissions such as 
biogas are directed into Newlight's patented conversion reactor. Next, 
those carbon emissions are combined with air and Newlight's 
biocatalyst, which pulls oxygen out of air and carbon and hydrogen out 
of methane. Finally, carbon, oxygen, and hydrogen are re-assembled to 
form a long chain thermopolymer.


Novomer
Waltham, MA
Number of employees: 50
Novomer Has Two Technology Platforms And Is Producing Acrylic Acid, 
Other C3 And C4 Drop-In Chemicals And Converge' 
Polypropylene Carbonate (PPC) Polyols.


          Above: Houston, TX Plant.
Biorefinery Classification: Commercial Plant
Key Facts
   Houston, TX

   2,000 megatons per year

   Feedstock: Waste CO2. propylene oxide, waste CO 
        and ethylene oxide

   Novomer has scaled up the production of Converge polyols 
        using a contract manufacturer in Houston, Texas.
Partnerships and Financing
    Novomer has numerous industry partnerships and a broad array of 
financial and strategic investors. The company received a 3 year $25 
million U.S. Department of Energy Award in 2010. The DOE Advanced 
Manufacturing Office awarded the company an additional $5 million 
grant. Novomer rec[ei]ved $400,000 from the NSF to make CO2 
based polymers and $475,000 from NYSERDA to support development of a 
continuous production process for CO2 polyols.
    About: Novomer is a leading materials company commercializing a 
family of low-cost, high-performance, sustainable polymers and 
chemicals.
    Product applications: Rigid and flexible foams, coatings, 
adhesives, sealants, elastomers, diapers, paints and high-performance 
plastics.
    Potential market size: Novomer estimates these product markets 
represent more than $40 billion per year.
    Technology: Novomer is commercializing two platforms, one that uses 
waste CO2 as a raw material to produce a family of polyols 
for use in polyurethane applications and another that uses waste CO to 
produce C3 and C4 drop-in chemicals (acrylic acid). The foundation for 
these platforms results from catalyst research completed at Cornell 
University. The CO2 technology platform combines waste 
CO2 with commodity Epoxides (currently Propylene Oxide (PO)) 
to form a family of novel polymers that contain up to 50 percent by 
weight CO2.


Novozymes, NA
Franklinton, NC
Number of employees: 1,326
At Novozymes It Begins With Enzymes And Microorganisms.


          Above: Franklinton, NC Plant.
Biorefinery Classification: Commercial Plant
Key Facts
   Milwaukee, WI (Production, Marketing, Sales since 2011)

   Franklinton, NC (Production, Administration since 1979)

   Houston, TX (Production, Marketing, Sales since 2012)

   Davis, CA (R&D since 1992)

   Ottawa, Canada (Production, Marketing, Sales since 2013)

   Salem, VA (R&D, Production since 2001)

   Watertown, SD (Production, Marketing, Sales since 2013)

   Saskatoon, Canada (R&D, Marketing, Manufacturing since 2007)

   San Francisco, CA (R&D since 2013)

   Blair, NE (Production since 2009)
Product Launches 2015
  Pulp and paper xylanase
  Novozymes Secura'
  Protease for automatic dishwashing
  Novozymes Liquozyme' LpH
  Novozymes Extenda'
  Novozymes Avantec' Amp

    About: Rethink Tomorrow: Novozymes is the world leader in 
biological solutions. Together with customers, partners and the global 
community, we improve industrial performance while preserving the 
planet's resources and helping build better lives. As the world's 
largest provider of enzyme and microbial technologies, our 
bioinnovation enables higher agricultural yields, low-temperature 
washing, energy-efficient production, renewable fuel and many other 
benefits that we rely on today and in the future.
    Technology: Enzymes are proteins that act as catalysts. When one 
substance needs to be transformed into another, nature uses enzymes to 
speed up the process. Our customers use enzymes as catalysts in the 
manufacture of a wide variety of products, including ethanol, sugar, 
beer and bread, where the enzymes are not part of the end product. 
Enzymes are also used directly in products such as laundry detergents, 
where they help remove stains and enable low-temperature washing.
    Like enzymes, many microorganisms have natural properties that can 
be put to use in a variety of processes. In our strategic BioAg 
Alliance, Novozymes is working on microorganisms that will give the 
world's farmers a new biological toolkit for increasing yields and 
protecting crops.


Nucelis, LLC
San Diego, CA
Number of employees: 20
Nucelis LLC Is Producing Squalane, Ergosterol, Vitamin D2.


          Above: San Diego, CA Plant.
Biorefinery Classification: Pilot Plant
Key Facts
   San Diego, CA

   400 liters of fermentation capacity

   Feedstock: Sugar
Partnerships and Financing
    Cibus Global, Ltd., a cutting-edge technology firm and leader in 
the area of gene editing, acquired Nucelis LLC in January 2014. 
Nucelis, which had been established as an independent entity in 
December 2010, is now an independent operating unit of Cibus.
    About: Nucelis, LLC is a leading metabolic engineering company 
leveraging its proprietary precision gene editing technology and 
integrated fermentation development platform (RTDSTM), to 
develop and deliver premium, biobased and sustainable specialty 
products for the personal care, food ingredients, and flavor and 
fragrance markets.
    Product applications: Squalane is a high value, clear oil compound 
used in cosmetics, pharmaceuticals, and specialty lubricants. 
Ergosterol is a provitamin to vitamin D2. Vitamin 
D2 has a variety of applications as a food supplement.
    Potential market size: The squalene and squalane market is expected 
to grow to $177.06 million at a CAGR of 10.3 percent in terms of value 
from 2014 to 2019.
    Technology: Nucelis has leveraged the versatility of its Rapid 
Trait Development System (RTDSTM) platform for the 
production of its lead product, Vitamin D2. Nucelis' Vitamin 
D2 represents a non-animal source with unmatched purity and 
performance, at price points that make it the obvious source for all 
Vitamin D2-based formulations. Nucelis Vitamin D2 
is currently for sale, with commercial samples available upon request. 
In addition, Nucelis is commercializing a high purity squalane product, 
and a unique formulation of squalene and natural oils for use in 
personal care products.
    One key feature of the RTDS platform is its flexibility in 
optimizing any existing fermentation-based production process. Nucelis 
can customize a solution for all partners seeking to improve production 
efficiencies. For those partners who participate in GM-sensitive 
markets, Nucelis can engineer valuable improvements while maintaining 
the non-GM status of the production strain. The impact is a clear path 
to improved process productivity and increased economic value.
Phycal
Highland Heights, OH
Number of employees: 50
Phycal Is Producing Algal Oil.


          Above: Wahiawa and Kalaeloa, HI Plant.
Biorefinery Classification: Pilot Plant
Key Facts
   St. Louis, MO research facility

   Feedstock: Algae
Partnerships and Financing
    The Department of Energy has awarded Phycal more than $27.2 million 
in Federal funding for the further exportation of algae based biofuel. 
As part of its program to promote beneficial reuse of carbon dioxide, 
the Department of Energy awards companies funding to create green 
solutions to carbon dioxide problems.
    About: Phycal, Inc. is developing an integrated system for 
producing renewable biofuels and their co-products from algae. The 
biofuels include renewable ``green'' drop-in jet fuel and diesel, 
straight vegetable oil, fuel oil blends (e.g., for industrial boilers), 
and others. Co-products could include proteins, methane, hydrogen, 
animal or human nutritional products, and others.
    Product applications: Fuels.
    Potential market size: $99 billion in 2014.
    Technology: HeteroboostTM is an algae ``feedlot'' that 
uses mature algae from the open ponds and increases lipid content by 
introducing fixed carbon in a closed system, such as inedible sugar and 
glycerol, which dramatically increases algal productivity.


Phytonix
Asheville, NC
Number of employees: <10
Phytonix Corporation Is Producing N-Butanol.


          Above: Black Mountain, NC lab.
Biorefinery Classification: Pilot Plant
Key Facts
   Black Mountain, NC

   Feedstock: Carbon dioxide
Partnerships and Financing
    Phytonix has several strategic partnerships, including: Uppsala 
University (Sweden) and South Dakota State University.
    About: Phytonix Corporation (``Phytonix'' or ``Px'') is an 
industrial biotechnology company producing sustainable chemicals 
directly from carbon dioxide. Phytonix's objective is to be the global 
leader in bio-safe, direct solar chemicals and fuel production 
utilizing carbon dioxide as the sole feedstock and energy from the Sun.
    Product applications: Industrial chemical market and fuels.
    Potential market size: Biobutanol is a valuable industrial chemical 
intermediate with a existing $10 billion global market growing at 13 
percent CAGR.
    Technology: Phytonix has developed engineered cyanobacterial 
species that secrete n-butanol in a significantly carbon-negative, 
photosynthetic process. Phytonix commercial facilities will be a 
modular and scalable system consisting of soft-sided vessels called 
phytoconvertersTM, where the cyanobacteria will grow.
POET
Sioux Falls, SD
Number of employees: 1,500
POET Is Producing InvizTM Zein And VoilaTM Corn 
Oil.


          Above: Project Liberty, Emmetsburg, IA.
Biorefinery Classification: Commercial Plant
Key Facts
   POET Footprint: 27 corn ethanol biorefineries, one 
        cellulosic ethanol biorefinery

   Total capacity: 1.7 billion gallons per year

   Feedstock: Corn, corn stover


Partnerships and Financing
    In partnership with Royal DSM of the Netherlands, POET-DSM Advanced 
Biofuels opened a commercial-scale ethanol plant in Emmetsburg, Iowa--
dubbed ``Project LIBERTY''--in September of 2014. Project LIBERTY's 
feedstock is corn crop residue--cobs, leaves, husk and some stalk.
    About: POET, one of the world's largest ethanol producers, is a 
leader in biorefining through its efficient, vertically integrated 
approach to production.
    Product applications: Films, packaging, adhesives, edible coatings 
and glazes, plastics, rubber, asphalt paving additives, and high-energy 
additive to feed rations.
    Technology: Our patented raw starch hydrolysis process, named BPX, 
converts starch to sugar with a proprietary blend of enzymes, while 
other ethanol producers use a jet cooker to break down starch with 
heat. BPX reduces energy use in the plant by eight to 15 percent and 
increases yield by 0.10 to 0.15 gallons per bushel. After years of 
development, we brought the process to commercial scale production in 
2004 and it is now deployed in all of our biorefineries.
Proterro
Bronxville, NY
Proterro, Inc Is Producing Industrial And Food Grade Sugars, Organic 
Acids And Amino Acids.


          Above: Orlando, FL Plant.
Biorefinery Classification: Pilot Plant
Key Facts
   Orlando, FL

   Feedstock: CO2, sunlight, water and nutrients
Partnerships and Financing
    Proterro was founded in 2008 and is backed by Battelle Ventures, 
Braemar Energy Ventures, Cultivian Sandbox Ventures and Middleland 
Capital.
    About: Proterro is a biotechnology company that converts waste 
CO2 into valuable products under license agreements with our 
partners. Our technology utilizes cyanobacteria in a patented, fully 
integrated production system to produce cost-competitive products for 
partners in the global food, feed, and energy industries.
    Product applications: Fermentation to fuels and other chemicals; 
food and nutritional ingredients.
    Potential market size: $44 billion.
    Technology: Proterro's patented two-step technology platform 
provides maximum flexibility in creating products that are tailored to 
our partners' needs. We modify cyanobacteria to produce molecules 
designed to our partner's specifications. Then we efficiently produce 
high-yield organisms in a unique solid state bioreactor.
Provivi
Santa Monica, CA
Number of employees: 8
Provivi, Inc Is Producing Olefins.
Biorefinery Classification: Pilot Plant
Key Fact
   Santa Monica, CA
Partnerships and Financing
    Provivi was founded in 2013 based on biocatalysis technology 
developed at the California Institute of Technology (Caltech) which has 
since become a licensor, shareholder, and research collaborator.
    In September 2014, Provivi signed an enzyme distribution agreement 
with Strem Chemicals, Inc., a manufacturer of specialty chemicals for 
research and development, granting Strem distribution rights for 
research quantities of Provivi's carbene/nitrene transferase enzymes 
that will feature in the new C/N Transferase Screening Kit.
    About: We are developing biopesticides for agriculture, commercial, 
household, and public health pest management.
    Product applications: Chiral pesticides.
    Potential market size: The global agrochemical market is predicted 
to reach $223 billion in 2015.
    Technology: Included in our arsenal of biocatalyts are ones that 
catalyze the transfer of carbenes, nitrenes, and oxenes to olefins and 
carbon-hydrogen bonds, thus installing important functional groups 
(e.g., cyclopropanes, amines, alcohols, epoxides, sulfoxides, 
sulfoximines, and ethers) that feature in various chiral pesticides. 
For example, we have developed the most active catalyst ever reported 
for olefin cyclopropanation, a key reaction in the synthesis of a 
variety of pesticides. Provivi has an exclusive license from Caltech 
for this technology platform.
PureVision Technology
Fort Lupton, CO
PureVision Technology Is Producing Cellulosic Sugar.


          Above: Hemp feedstock at Ft. Lupton, CO Plant.
Biorefinery Classification: Pilot Plant
Key Facts
   Ft. Lupton, CO

   Half-ton per day

   Feedstock: Hemp
Partnerships and Financing
    PureVision Technology LLC is targeting to raise $10 million in an 
A-round equity financing during 2015. Use of proceeds include working 
capital to advance and complete three pre-commercialization programs 
(corn stover, wheat straw and industrial hemp), intellectual property 
development, patent filings, and pre-development costs to support 
PureVision's first commercial demonstration biorefinery. A-Round 
investors are entitled to a preferred return on their investment.
    About: PureVision Technology is a biorefining R&D company 
developing and licensing technology packages for the lowest cost 
production of sugars, lignin and pulp from diverse non-food biomass to 
industries manufacturing biobased products.
    Product applications: Fermentation to fuels and other chemicals
    Potential market size: TechNavio's analysts forecast the global 
cellulosic ethanol market to grow at a CAGR of 53.3 percent over the 
period 2013-2018.
    Technology: PureVision's latest technology breakthrough rapidly 
converts diverse cellulosic biomass into fermentable sugars in less 
than 1 hour without the use of enzymes or concentrated acids. The 
company's rapid hydrolysis technique has the flexibility of producing 
separated or mixed concentrated sugars. Experimental proof-of-concept 
of the company's rapid hydrolysis chemistry has been completed 
successfully at the Ft. Lupton laboratories.
Renewable Energy Group, Inc. REG Life Sciences, LLC
Ames, IA; South San Francisco, CA
Number of REGI employees: >700
REG Life Sciences LLC Is Developing High-Value Fatty Acid Derivatives.


          Above: REG Life Sciences Biorefinery. Okeechobee, FL.
Biorefinery Classification: Demonstration Plant
Key Facts
   REG Life Sciences Biorefinery. Okeechobee, FL

   Feedstock: Corn sugars, crude glycerin, cane sugars and 
        biomass hydrolysate
Partnerships And Financing
    REG Life Sciences has partnered with ExxonMobil for the development 
of cellulosic sugars as a fermentation feedstock for biofuel 
production.
    About: REG Life Sciences is a wholly-owned subsidiary of Renewable 
Energy Group established in 2014 to harness the power of industrial 
biotechnology to produce renewable chemicals, fuels and other products.
    Product applications: Fragrances, polymers, and surfactants.
    Potential market size: The global market for natural fatty acids 
reached $18.3 billion in 2014 and is expected to grow at a compound 
annual growth rate of 7.1 percent to $25.7 billion for 2014-2019. The 
global market for fragrances was worth roughly $11 billion in 2015. 
Sales of polymers reached $112 billion in 2015 in the U.S., up three 
percent from 2014. The global market for surfactants was $25-$30 
billion in 2015, with a volume of around 15 million megatons, expected 
to grow at a CAGR of approximately five percent through 2020 to $32-$40 
billion.
    Technology: Combining the natural efficiency of microbial fatty 
acid metabolism with novel engineered biosynthetic pathways, REG Life 
Sciences engineers industrial microorganisms to selectively convert 
renewable feedstocks to target end-product compounds. These products 
range from difficult-to-produce ``drop in'' and value-add replacement 
compounds to completely new structures with diverse chemical 
functionalities and applications. The flexibility of the platform 
technology and ability to design, construct, and evaluate processes 
efficiently from lab to commercial scale has enabled a growing pipeline 
of renewable chemical products.
Renmatix
King of Prussia, PA
Number of employees: 85
Renmatix Is Producing Cellulosic Sugars, Omno Polymers And Crystalline 
Cellulose


          Above: Integrated Plantrose Complex (IPC), Kennesaw GA.
Biorefinery Classification: Demonstration Plant
Key Facts
   Integrated Plantrose Complex (IPC), Kennesaw, GA

   3 dry tons of biomass to sugar per day

   Feedstock: Woody biomass, agricultural residues, energy 
        crops, municipal solid waste, and additional plant material

   Renmatix acquired a 56,000\2\ manufacturing facility in 
        Rome, NY. The new Feedstock Processing Facility (FPF) opened on 
        April 20, 2015, as the third U.S. location for Renmatix. This 
        move creates a secure supply for Renmatix and its development 
        partners at the IPC in Kennesaw, GA, where the second step in 
        production of Plantro' sugars is performed.
Partnerships and Financing
    Renmatix has publicly disclosed joint development agreements with 
BASF, UPM, and Total. As announced in 2015, Total will utilize 
Renmatix's proprietary Plantrose process with specific feedstocks to 
extract sugar for use in production of biobased products of strategic 
interest to Total. Existing Renmatix investors, including BASF and 
Kleiner Perkins Caufield & Byers, joined Total in the initial tranche 
of a Series D fundraise.
    About: Renmatix's proprietary Plantrose' Process 
pioneers the use of supercritical hydrolysis to break down non-food 
biomass quickly, using no significant consumables.
    Product applications: Fermentation or catalytic conversion to 
biochemicals and biofuels or direct utilization of coproducts as 
produced.
    Potential market size: TechNavio's analysts forecast the global 
cellulosic ethanol market to grow at a CAGR of 53.3 percent over the 
period 2013-2018.
    Technology: The water-based Plantrose' Process consists 
of two core steps. The first is fractionation of biomass and separation 
of the remaining solids, which contain cellulose and lignin. The second 
is cellulose hydrolysis of the pretreated solids under elevated 
conditions utilizing supercritical water, or water at higher 
temperatures and pressures, as the primary solvent. The company won the 
20th Annual Presidential Green Chemistry award in 2015 for its work in 
harnessing water as a new solution to the difficult problem of 
economically extracting cellulosic sugar from biomass.


Rennovia
Santa Clara, CA
Number of employees: 50
Rennovia, Inc.'s First Targets Are Glucaric Acid, Adipic Acid, 1,6-
Hexanediol, Hexamethylenediamine (HMD).


          Above: Stockton, England Plant.
Biorefinery Classification: Demonstration Plant
Key Facts
   Stockton, England

   Feedstock: Sugars

   In July 2015, Johnson Matthey Process Technologies and 
        Rennovia announced the on time start-up of the first phase of 
        an integrated mini-plant for production of glucaric acid from 
        glucose, using jointly developed technology. Construction of 
        the second phase or production of adipic acid from glucaric 
        acid is ongoing.

      Operation of the mini-plant will provide the engin[ee]ring data 
        for the design of commercial scale manufacturing plants. The 
        miniplant is located at the Johnson Matthey Process 
        Technologies R&D Center in Stockton, England.
Partnerships and Financing
    Rennovia strategic partners and investors include Archer Daniels 
Midland (ADM)--the No. 1 global corn processor, leading sugar feedstock 
supplier and established manufacturer of bio based ADM Evolution 
ChemicalsTM--and Johnson Matthey--a $10 billion global 
catalyst and process technology and catalyst development partner and 
commercial cata[ly]st supplier for the Rennovia glucaric and adipic 
acid process.
    About: Rennovia Inc. is a specialty chemical company focused on 
breakthrough catalysts and processes for the cost-advantaged production 
of chemicals from renewable feedstocks.
    Product applications: Nylon-6,6, polyurethanes, and specialty 
chemicals.
    Potential market size: Nylon-6,6 engineering polymers and fibers 
markets are approximately 2.5 million metric tons (5.5 billion pounds) 
per year, predicted to grow at three to four percent CAGR to 2022. 
Global polyurethane markets for adipic acid, HMD, and 1,6-HDO total 
approximately 900,000 metric tons (2 billion pounds) per year, 
predicted to grow at about four to five percent CAGR to 2020. 
Additional addressable markets for glucaric acid are predicted to be 
greater than 350,000 metric tons (770 million pounds) per year.
    Technology: Rennovia employs its high-throughput catalyst synthesis 
and screening technology infrastructure to identify new heterogeneous 
catalysts for cost advantaged production of biobased specialty 
chemicals:
Rennovia's Glucaric and Adipic Acid Production from Glucose


Rennovia's 1,6-HDO and HMD production from Glucose


Reverdia
Geleen, Netherlands
Number of employees: 40
Reverdia Is Producing Sustainable Succinic Acid.


          Above: Cassano Spinola, Italy Plant.
Biorefinery Classification: Commercial Plant
Key Facts
   Cassano Spinola, Italy

   10,000 tonnes per year

   Feedstock: Glucose
Partnerships and Financing
    Business Model: Reverdia captures value though product sales and 
technology licensing.
    Reverdia is a joint venture between Royal DSM, the global Life 
Sciences and Materials Sciences company, and Roquette Freres, the 
global starch and starch-derivatives company. Reverdia has many 
[partnerships] in place, including: (i) distributor partnerships with 
Helm and Omnia, (ii) codevelopment partnerships with Proviron and 
Covestro, (iii) consortia like BioSuccInnovate. Many other partnerships 
exist but have not been published in the public domain.
    About: Reverdia is dedicated to be the global leader in the market 
for sustainable succinic acid, focusing on market development by 
establishing partnerships with direct and indirect customers, building 
on customer needs and Reverdia's strengths.
    Product applications: Bio-polymers (e.g., Polybutylene succinate, 
PBS), polyurethanes, coatings.
    Potential market size: The global market for succinic acid is 
expected to grow from 0 kilotons in 2015 to 700 kilotons in 2025 and 
will be mainly driven by bio-succinic acid for new biobased polymer and 
material applications.
    Technology: Reverdia uses low pH yeast technology rather than 
bacteria to produce biobased succinic acid.
    Reverdia's low pH yeast fermentation process has best-in-class 
carbon performance as demonstrated by the published cradle-to-gate LCA 
by the University of Utrecht.


Rivertop Renewables
Missoula, MT
Number of employees: 33
Rivertop Renewables, Inc Is Producing Sodium Glucarate.


          Above: Rivertop's production facility at DTI, Danville, VA.
Biorefinery Classification: Commercial Plant
Key Facts
   Rivertop's production facility at DTI, Danville, VA

   9 million dry pounds [18 million pounds wet] of sodium 
        glucarate.

   Feedstock: Sugars, sugar and alcohols

   Commercial production at DTI: Riose' detergent 
        builder, a sugar-derived chelant that meets high performance 
        standards and enables lower total formulation cost for 
        dishwasher and laundry detergents. WaterlineTM 
        corrosion inhibitors and descaling agents designed to be high-
        performing, low-cost alternatives to phosphates for water 
        treatment. Headwaters' biodegradable inhibitors that 
        enable highway departments to reduce the costly corrosive 
        impacts of de-icing brines to roads, bridges and vehicles.
Partnerships and Financing
    About: Merging proven science with renewable resources, Rivertop is 
improving the performance, sustainability and cost of end-products with 
innovative, new-to-market solutions.
    Product applications: Chelants and corrosion inhibitors for 
consumer products (like detergents) and industrial uses (water 
treatment & road deicing).
    Potential market size: $50 billion. $9 billion for detergent 
ingredients. $2.8 billion for cooling towers.
    Technology: Rivertop's oxidation platform utilizes all of the 
carbon atoms from the glucose feedstock and adds oxygen weight, 
resulting in more pounds of product than feedstock input. This improved 
process enables the mass production of versatile, high-value renewable 
chemicals, including sodium salts of glucaric acid. The technology was 
first developed at the University of Montana.


Royal DSM
Heerlen, Netherlands
Number of employees: 25,000
Royal DSM Is Mastering Microbes And Enzymes To Create Sustainable 
Solutions.
Biorefinery Classification: Demonstration Plant
Key Facts
   DSM Biotechnology Center, Delft, Netherlands, and Shanghai, 
        China

   Feedstock: Biomass
Partnerships and Financing
    In January 2012, DSM announced the POET-DSM Advanced Biofuels, LLC, 
joint venture with U.S.-based POET to commercially demonstrate and 
license cellulosic ethanol derived from corn crop residue.
    In May 2011, DSM and the French company Roquette Freres formed the 
Reverdia joint venture to build a commercial scale plant for the 
production of biobased succinic acid, the first non-fossil feedstock 
derived chemical building block for a broad range of applications, from 
packaging to footwear.
    About: Royal DSM is a global science-based company active in 
health, nutrition and materials. By connecting its unique 
competenc[i]es in life sciences and materials sciences, DSM is driving 
economic prosperity, environmental progress and social advances to 
create sustainable value for all stakeholders simultaneously.
    Product applications: Biofuels, food and nutrition, advanced 
materials.
    Technology: DSM uses its biological sciences competenc[i]es to 
find, make, and apply microbes and enzymes to create more sustainable 
processes, ingredients and building blocks for new products. These 
competenc[i]es specifically help to engineer and characterize enzymes 
and microbial strains in detail up to the molecular level; to assess 
their performance under application conditions; and to develop data and 
computation-driven model systems for building efficient ``design-build-
test-learn'' engineering cycles.
Sapphire Energy
San Diego, CA
Number of employees: 150
Sapphire Energy Is Producing Algae Nutritional Oils.


          Above: Las Cruces, NM Plant.
Biorefinery Classification: Demonstration Plant
Key Facts
   100 acre algae farm; modules at strategic global sites

   Feedstock: Algae
Partnerships and Financing
    Sapphire Energy is supported by a world-class syndicate of 
investors, including a recent funding round from a Chinese investor and 
previous investments from ARCH Venture Partners; The Wellcome Trust; 
Cascade Investment, LLC; Venrock; and Monsanto. Sapphire has 
relationships with a variety of academic and industrial partners for 
commericalization such as MATRIC (Mid-Atlantic Technology, Research and 
Innovation Center) in West Virginia.
    About: Sapphire's world-leading technology uses sunlight, 
CO2, seawater, non-arable land, nutrients, and novel strains 
of algae in outdoor ponds to produce biomass for processing into a 
range of consumer products. Sapphire's clean technology is presently 
undergoing expansion to a variety of global sites ideally suited for 
highproductivity and maximal environmental sustainability.
    Product applications: Fuel, feed, food, dietary supplements and 
pharmaceuticals.
    Potential market size: Varies by market.
    Technology: Developed at the University of California, San Diego.
    
    
Senomyx
San Diego, CA
Number of employees: 90
Senomyx, Inc Is Producing Complimyx' Brand Of Flavor 
Ingredients, Which Include Sweetmyx, Savorymyx', And 
Bittermyx' Offerings.


          Above: San Diego, CA Plant.
Biorefinery Classification: Commercial Plant
Key Facts
   San Diego, CA

   Senomyx flavors and flavor boosters are produced in 
        accredited food manufacturing facilities using the highest 
        quality ingredients.
Partnerships and Financing
    PepsiCo funds research to identify and develop novel sweet taste 
ingredients, including both boosters and natural sweeteners. PepsiCo 
has exclusive licensed rights in non-alcoholic beverages on a worldwide 
basis during the research funding period. Firmenich has collaborated 
with Senomyx and continues to provide research funding in the area of 
sweet taste for use in food products on a global basis. Ajinomoto, Co., 
Inc. currently markets products in several Asian markets that contain a 
Senomyx savory ingredient. Nestle has commercialized a Senomyx flavor 
ingredient in Southeast Asia.
    About: Senomyx is using proprietary taste science technologies to 
discover, develop, and commercialize new flavor ingredients that 
havebenefits for consumers and consumer products manufacturers.
    Product applications: Flavoring.
    Potential market size: The global flavor and fragrance market is 
rising with an annual growth rate from five to six percent valued at an 
estimated $23.9 billion in 2013.
    Technology: With an advanced understanding of human taste bud 
science, precise screening platforms and taste testing, Senomyx has 
developed a process that mimics the natural function of the taste bud 
and enables discovery of new flavors that boost the taste of sweeteners 
and other flavors in foods and allow for the reduction of sugar and 
high fructose corn syrup.
Sirrus, Inc.
Loveland, OH
Number of employees: 15
Sirrus Is Commercializing 1,1-Disubstituted Alkene Monomers.
Biorefinery Classification: Demonstration Plant
Key Facts
   Loveland, OH

   5 kilogram per hour

   Feedstock: Malonic acid, formaldehyde
Partnerships and Financing
    Sirrus has announced agreements with Elmer's Products, Inc. and Sun 
Chemical. Additionally, Sirrus has four additional unannounced 
partnerships drawing on Sirrus' unique technology to provide benefits 
in coating and adhesive application. Sirrus has raised more than $35 
million from blue chip investors including Braemar Energy Ventures and 
Arsenal Ventures and strategic investors including General Motors 
Venture and Mitsui Ventures.
    About: Sirrus advances manufacturing technology through chemistry 
relating to the synthesis, stabilization, activation and formulation of 
a unique and reactive class of monomers commonly known as methylene 
malonates.
    Product applications: Adhesives, sealants, coatings and resins.
    Potential market size: The global demand for reactive intermediates 
is valued at greater than $1 billion, with formulated reactive 
intermediates valued at >$200 billion.
    Technology: Sirrus has developed a novel intermediate chemical 
platform based on 1,1-disubstituted alkene monomers that will allow 
many current manufacturing processes to be completed faster with less 
energy and reduced solvent. Chemilian products have one alkene group 
with the potential to have a wide variety of substituent terminal or 
functional groups that can be used to make tunable molecular weight 
polymers. Forza products contain multiple alkene groups allowing cross-
linking for the development of polymers exhibiting high strength as 
well as thermal and chemical resistance.


Solegear
Vancouver, BC, Canada
Number of employees: 12
Solegear Is Producing Proprietary Bioplastic Materials: 
Polysole' & Traverse'.


          Above: Vancouver, BC Plant.
Biorefinery Classification: Commercial Plant
Key Facts
   Vancouver, BC

   Feedstock: Sugarcane, non-food grade corn, and/or sugarbeets

   Commercialization-focused business model:

     Proprietary Formulation--value we can build on.

     Collaborative R&D--benefit from the highest expertise.

     Outsourced supply chain and tolled manufacturing--
            lowers costs, increases flexibility.

     Pull-based sales and inventory--customer demand drives 
            development.
Partnerships and Financing
    Solegear works in partnership with major brands, retail customers 
and innovative plastic manufacturers. Partnerships include r-pac 
international, Columbia Plastics, Ex-Tech Plastics and TEQ.
    Since going public in 2015, the Company has raised over $3.5 
million in equity and receives ongoing research funding from the 
Government of Canada.
    About: Solegear is an advanced materials firm that develops, 
produces and distributes high-performance bioplastics--plastics made 
from plants, not petroleum.
    Product applications: Consumer goods and packaging.
    Potential market size: $35 billion.
    Technology: Green Chemistry--Proprietary biopolymer with maximum 
biobased content and no hazardous chemicals.


Succinity GmbH
Dusseldorf, Germany
Succinity GmbH Is Producing Succinic Acid.


          Above: Montmelo, Spain Plant.
Biorefinery Classification: Commercial Plant
Key Facts
   Montmelo, Spain

   10,000 metric tons

   Feedstock: Glycerol, glucose, sucrose

   The plant is located at the Corbion Purac Montmelo site.
Partnerships and Financing
    BASF and Corbion Purac have been conducting research on biobased 
succinic acid under a joint development agreement since 2009, before 
registering Succinity GmbH in August 2013.
    Projected market growth will be driven partially by legislative 
initiatives and partially by brand owners reacting to changed consumer 
needs with differentiated products that focus on improved ecological 
footprints.
    About: Succinity is a joint venture between BASF and Corbion Purac 
for the production and commercialization of biobased succinic acid with 
the name Succinity'.
    Product applications: Bio-polymers (e.g., Polybutylene succinate 
[PBS]), polyurethanes, coatings.
    Potential market size: The global market for succinic acid was 
around 40 kilotons in 2015 and is expected to grow with >10 percent 
CAGR in the coming years.
    Technology: Feedstock is fermented based on the bacterium [B]asfia 
succiniciproducens. Basfia has a naturally high yield for the 
production of succinic acid and allows the flexible usage of various 
feedstocks, such as glycerol and C5/C6 sugars. Using an innovative 
closed-loop downstream process, Succinity Gmbh is able to produce high-
quality biobased succinic acid efficiently, without major waste 
streams. The result is a highly pure product that is an attractive 
alternative to petrochemically derived succinic acid and an attractive 
raw material for several applications, such as bioplastics.


Sweetwater Energy
Rochester, NY
Number of employees: 29
Sweetwater Energy Is Producing Cellulosic Sugar.


          Above: Rochester, NY Plant.
Biorefinery Classification: Demonstration Plant
Key Facts
   Rochester, NY

   2 megaton feedstock input per day

   Feedstock: Mixed hardwoods

   The company's first commercial facility will be constructed 
        in Northern Minnesota and will produce hardwood-derived 
        cellulosic sugar and clean lignin that will then be fully 
        processed into final market-ready products: 4.1 million gallons 
        of industrial alcohol, 550,000 gallons of subfuel grade 
        alcohol, and over 6,000 metric tons of industrial activated 
        carbon. Sweetwater's wood-based industrial alcohol and 
        activated carbon compete directly on price with the incumbent 
        feedstocks.
Partnerships and Financing
    Sweetwater has received a $30 million loan guarantee and incentives 
package from the State of Minnesota for our first commercial project 
(total project CAPEX of $54 million) and is currently actively in their 
Series B to raise an additional $100 million to cover the remaining 
capital for the first two commercial facilities.
    About: Sweetwater Energy owns ground-breaking, patented technology 
that will be economically disruptive for the chemicals, fuels and 
advanced materials industries.
    Product applications: Biochemicals, biofuels, bioplastics and 
advanced packaging and construction materials.
    Potential market size: $105 billion.
    Technology: Sweetwater's technology efficiently processes low-cost, 
sustainable biomass, such as wood and agricultural residues, into two 
platform products: highly fermentable cellulosic sugar and clean lignin 
fiber. Sweetwater's technology converts 95 percent of available sugar 
in biomass feedstocks, including all C5 and C6 sugars. The technology 
that we now own significantly outperforms each of the previous systems 
that we thoroughly tested in terms of sugar yield, inhibitor profile, 
ethanol yield, clean lignin that can actually be processed into 
something beyond fuel. Further, our highly scalable hardware has been 
reliably proven in heavy industrial duty in multiple industries 
worldwide.


Syngulon
Liege, Belgium
Number of employees: 3
Syngulon Is Developing Bacteriocin Technology.
Biorefinery Classification: Pilot Plant
Partnerships and Financing
    Syngulon is a start-up, founded in 2013, incubated by Walloon 
incubator for engineering sciences (WSL). Syngulon is part of a Horizon 
2020 consortium financed by the EU on the industrial applications of 
the microalgae.
    About: Syngulon is developing original genetic technologies to 
improve the efficiency of microorganisms (also called microrefineries) 
involved in industrial bioproduction.
    Product applications: Green chemical production organisms.
    Technology: A pressing concern with microbial systems is that re-
engineered microbes may escape and produce undesirable effects on the 
environment. To address this biosafety issue, multiple mechanisms for 
constraining microbial replication and horizontal gene transfer have 
been proposed, including the use of host-construct dependencies such as 
selection using toxin-antitoxin pairs, conditional plasmid replication 
or the requirement for a specific metabolite for bacterial function. A 
need for efficient genetic firewall design is presented including new 
selection genetic circuit using bacteriocins gene platform. Syngulon 
proposes an innovative genetic firewall to boost fermentation.


Synthetic Genomics
La Jolla, CA
Number of employees: >200
Synthetic Genomics, Inc Serves Three Distinct End Markets: Research, 
Bioproduction, And Applied Products.
Biorefinery Classification: Pilot Plant
Key Facts
   SGI's Research offerings, commercialized through its 
        subsidiary SGI-DNA, are revolutionizing biotechnology with 
        next-generation genomic solutions, including the world's first 
        DNA printer.

   Bioproduction expertise extends across various production 
        hosts: phototrophic, heterotrophic, viral, mammalian and fully 
        synthetic.

   Applied Products include vaccines, biologics and 
        therapeutics, human nutrition, biofuels and biobased chemicals, 
        crops.
Partnerships and Financing
    SGI develops its applied products, typically in strategic 
partnerships with leading global organizations, across a variety of 
industries. Examples include algae based biofuels (with ExxonMobil), 
sustainable crops (with Monsanto), nutritional supplements (with ADM to 
commercialize Omega-3 DHA oil from algae), vaccines (with 
GlaxoSmithKline and Sequiris), non-GMO food proteins, and 
transplantable organs (with United Therapeutics).
    About: Synthetic Genomics (SGI) is a leader in the field of 
synthetic biology, an emerging science that is at the intersection of 
biology and engineering, requiring the integration of evolutionary, 
molecular, and systems biology, biophysics, machine learning, and 
genetic engineering. SGI utilizes its foundational intellectual 
property in this rapidly evolving field in combination with expertise 
in core disciplines such as bio-discovery, -informatics, and -
processing, software engineering, analytical chemistry, fermentation, 
and advanced cell engineering, to design and build biological systems 
to solve global sustainability challenges.
    Technology: Synthetic Genomics combines advanced genomics 
capabilities, such as Gibson Assembly Method, and proprietary microbial 
cell lines obtained through worldwide discovery to develop biobased, 
consumer friendly products that are sustainable and economically 
advantaged.


TerraVia
South San Francisco, CA
Number of employees: 200
TerraVia Holdings, Inc Is Producing Algae-Based Oils And Ingredients.


          Above: Solazyme Bunge Renewable Oils, Sao Pa[u]lo State, 
        Brazil.
Biorefinery Classification: Commercial Plant
Key Facts
   Peoria, Illinois and Sao Pa[u]lo State, Brazil

   Feedstock: Dextrose and sucrose

   Solazyme Bunge Renewable Oils began commercial production in 
        Brazil in May 2014. The facility has some of the world's 
        largest aerobic fermenters and a nameplate capacity of 100,000 
        metric tons of oil per year.
Partnerships and Financing
    TerraVia formed a joint venture with Bunge Limited in 2012 that 
established the production facility as well as multiple jointly funded 
developed programs. In 2015, they expanded the JV to commercialize 
algae-based oils and ingredients globally. TerraVia also has a history 
of collaboration with Unilever in order to produce sustainable oils for 
personal care products. In 2016, the two companies announced a 
multiyear supply agreement for algae-based oils.
    About: TerraViaTM is a next-generation food, nutrition 
and specialty ingredients company that harnesses the power of algae, 
the mother of all plants and [E]arth's original superfood, to deliver 
much needed innovation and sustainable solutions to the food industry.
    Product applications: Food, aquaculture, animal nutrition and 
personal care.
    Potential market size: Signed $200 million multi-year deal with 
Unilever for algae-based oils in 2016.
    Technology: TerraVia's algae-based platform is transforming our 
food system by bringing together better nutrition and great taste, 
along with economic and environmental sustainability. The company has 
spent over a decade unlocking the power of algae to find and develop 
vital food, nutrition, and specialty ingredients: healthy oils and 
fats, proteins, fibers and micronutrients. The company also 
manufactures a range of specialty personal care ingredients for key 
strategic partners.
Verdezyne
Carlsbad, CA
Number of employees: 65
Verdezyne, Inc Is Developing Technology To Produce Dodecanedioic Acid 
(DDDA), Adipic Acid, Sebacic Acid.


          Above: Carlsbad, CA Plant.
Biorefinery Classification: Commercial Plant
Key Facts
   Malaysia

   30 million pounds per year of diacids

   Feedstock: Fatty acids isolated from soy, palm kernel, 
        coconut and other plant-based oils

   Drop in renewable replacements for petrochemicals
Partnerships and Financing
    Verdezyne has raised $66 million in equity capital, plus MYR $250 
million in project finance to fund construction of a plant in Bio-
XCell's premier biotechnology and ecosystem park in southern Malaysia. 
With construction scheduled to commence in 2016, the plant will be 
capable of producing approximately 30 million pounds of diacids per 
year.
    About: Verdezyne is a privately owned industrial biotechnology 
company that is leveraging the power of biology to produce chemicals 
from renewable, non-food sources.
    Product applications: Nylon or other polymers for use in a variety 
of applications including: engineering resins, automotive parts, 
athletic apparel, carpeting and toothbrush bristles.
    Potential market size: DDDA for nylon 6,12, is a $200 million per 
year market growing 5.4 percent annually. Sebacic acid for nylon 6,10 
is a $400 million per year market growing 5.5 percent annually. Adipic 
acid for nylon 6,6 and thermoplastic polyurethanes is a $6 billion 
annual market growing 4.6 percent annually.
    Technology: Verdezyne has developed a proprietary platform that 
uses engineered yeast to metabolize multiple non-food-based renewable 
feedstocks and isolate a number of widely-used, high-value chemicals. 
The industrially robust production yeast used has two chromosome copies 
(diploid), which provides the stability of genetic redundancy compared 
with bacterial systems which have one chromosome (haploid).


Virent
Madison, WI
Number of employees: 37
Virent Is Producing Direct Replacement Fuels And Chemicals.


          Above: Madison, WI Plant.
Biorefinery Classification: Demonstration Plant
Key Facts
   Madison, WI

   10,000 gallons per year

   Feedstock: Beet sugars

   Several products have been produced at demonstration scale 
        and validated with industrial leaders including renewable 
        gasoline, jet fuel and diesel fuel; bio-paraxylene for 
        polyester beverage packaging and fibers.
Partnerships and Financing
    Partnerships with Cargill, Royal Dutch Shell, Honda, Tesoro, and 
Coca-Cola Company. In 2011, Virent received up to $13.4 million from 
the Department of Energy to convert corn stover to jet fuel.
    About: Using patented catalytic chemistry, Virent converts soluble 
biomass-derived sugars into products identical to those made with 
petroleum, including gasoline, diesel, jet fuel, and chemicals used for 
plastics and fibers.
    Product applications: Fuels, aromatic chemicals.
    Technology: Virent's BioForming' process provides a true 
biorefinery capable of producing multiple products from various 
feedstocks using heterogeneous catalysts common to the petroleum and 
catalyst industry. Virent's products are drop-in equivalents to their 
petroleum counterparts, but with a significantly reduced carbon 
footprint. The Virent catalytic process is similar to processes in the 
refining and petrochemical industry and is more readily scalable than 
other types of biobased technologies. The flexible product slate allows 
for optimization in response to shifting market opportunities between 
fuels and chemicals production. Virent's process can work with a 
variety of feedstocks including ethanol, sugars, and lignocellulosic 
materials from wood, corn and bagasse.
xF Technologies
Albuquerque, NM
Number of employees: 16
xF Technologies Is Producing Furoates.


Biorefinery Classification: Pilot Plant
Key Facts
   Albuquerque, NM

   10,000 gallons/year

   Feedstock: Biomass feedstock agnostic (compatible with 
        cellulosic biomass, sugars and starches). Alcohol feedstock 
        flexible (process utilizes ethanol, methanol, butanol, diols, 
        polyols, etc.).
Partnerships and Financing
    xF is seeking customers interested in testing and commercially 
utilizing its products.
    xF is a venture backed company interested in strategic investment 
or additional venture capital.
    About: xF Technologies Inc. is a renewable products company thathas 
developed a proprietary process to convert biomass into 
novelpetrochemical replacements.
    Product applications: Solvents, anti-microbial inhibition agents, 
plasticizers for polymers and bioplastics, fragrance carriers for 
personal care, coalescing aids for coatings; gasoline and diesel 
oxygenates.
    Potential market size: The global solvents market has been 
estimated to be worth $35 billion according to a 2014 report by Markets 
and Markets.
    Technology: xF Technologies has created a chemical platform that 
combines a biomass derived intermediary with an alcohol or a diol to 
create a broad range of high value renewable chemicals. It is a two-
step, low cost thermochemical process that first generates a sugar 
derivative called CMF (5-chloromethyl furfural) followed by a catalytic 
step to convert the CMF into a finished product. In the first step, 
hydrochloric acid (HCl) is used to break down the feedstock into C6 
sugars that are subsequently converted into CMF. This reaction occurs 
via a non-catalytic proprietary process that operates at about 100 C 
and 7 atm of pressure.


ZeaChem
Lakewood, CO
Number of employees: 26
ZeaChem Is Producing Acetic Acid, Ethyl Acetate, Ethanol.


          Above: Boardman, OR Plant.
Biorefinery Classification: Demonstration Plant
Key Facts
   Boardman, OR

   1,500 megatons per year (MTPY) of acids from 5,000 dry MTPY 
        of ligno cellulosic woody biomass or 20,000 MTPY acids from 
        132,000 MTPY of sugarbeets

   Feedstock: Feedstock flexible. Lignocellulosic feedstocks 
        demonstrated to date include hardwoods, softwoods, wheat straw, 
        corn stover, sugarcane bagasse, rye grass, banagrass, and 
        sugarbeet pulp. Advanced feedstocks demonstrated to date 
        include sugarbeet and corn syrup.

   ZeaChem's commercialization plan includes an expansion of 
        the existing assets to enable commercial volume production at 
        the same location.
Partnerships and Financing
    Privately funded. Investors include Firelake Capital Management, 
PrairieGold Ventures, Sustainable Conversion Ventures, and Leaf 
Resources Limited. ZeaChem currently operates its demonstration 
biorefinery as a technology institute. Third parties who come and work 
at the demo plant are able to accelerate scale up of their technology 
at a fraction of the cost to building a new plant.
    About: ZeaChem Inc. develops biorefineries capable of producing 
advanced chemicals and fuels, using its own proprietary technology as 
well as that of its partners.
    Product applications: ZeaChem's two and three carbon based products 
are the chemical building blocks in many applications including paints, 
solvents, PET, pharmaceuticals, food preservatives, and absorbents.
    Potential market size: $1 trillion.
    Technology: ZeaChem's C2 Platform uses a combination of 
fermentation and conventional chemical synthesis pathways to produce 
acetic acid, acetate esters, and ethanol. Its C3 Platform changes the 
microorganism used for fermentation, resulting in a slate of analogous 
three-carbon products such as propionic acid, propionate esters, 
propanol, propylene, and propylene derivatives.



                Appendix A. Renewable Chemical Companies
------------------------------------------------------------------------
              Company                              Product
------------------------------------------------------------------------
AB Enzymes GmbH                     Enzymes
ADM                                 Citric Acid; Ethanol; 2,5-
                                     Furandicarboxylic Acid (FDCA);
                                     Glycerin; Lecithin; Polyols;
                                     Propylene Glycol (1,2-propanediol);
                                     Sorbitol; Soy Methyl Ester;
                                     Starches; Sugars; Vegetable Oils
                                     (Canola, Cottonseed, Linseed,
                                     Soybean); Xanthan; Waxes
Advanced Biocatalytics Corporation  Surfactants
Agrivida, Inc.                      Enzymes
Ajinomoto                           Amino Acids; Isoprene
Akzo Nobel                          Acetic Acid; Acetone; n-Butanol;
                                     Epichlorohydrin; Fatty Acids
American Process                    Cellulosic Sugar; Nanocellulose
Amyris, Inc.                        Farnesene; Isoprene
Anellotech, Inc.                    Benzene; Toluene; Xylene
Arbiom                              Glucose; Lignin; Xylose
Arkema                              Fatty Acids and Esters; Polyamides;
                                     Polyphthtalamide (PPA)
Arzeda                              1,3-Butadiene; Enzymes; Levulinic
                                     Acid
Ava Biochem                         2,5-Furandicarboxylic Acid (FDCA); 5-
                                     Hyroxymethylfurfural (5-HMF)
Avantium                            Alkoxymethyl-Furfural;
                                     Furandicarboxylic Acid (FDCA);
                                     Methyl Levulinate; Mono-Ethylene-
                                     Glycol (MEG)
Barentzymes                         Enzymes
BASF Enzymes LLC                    1,4-Butanediol (1,4-BDO); Enzymes;
                                     Polytetrahydrofuran (PolyTHF)
Bioamber                            Adipic Acid; 1,4-Butanediol (1,4-
                                     BDO); Succinic Acid
Biobased Technologies               Polyols
Biobtx                              Terephthalic Acid
BIO-CAT/BIO-CAT Microbial           Enzymes
Biocatalysts                        Enzymes
BIO-ON                              Polyhydroxyalkonate (PHA)
Bioresource International, Inc.     Enzymes
Biosynthetic Technologies           Biosynthetic Oils
Blue Marble Biomaterials            Acetic Acid; Acrylic Acid; Butyric
                                     Acid; Caproic Acid; Butyl Butyrate;
                                     Dimethyl Sulfide; Ethyl Butyrate;
                                     Ethyl Thioacetate; Ethyl
                                     Thiobutyrate; Ethyl Thiopropionate;
                                     Lactic Acid; 3-Mercapto-Butanone; 3-
                                     Mercapto-Pentanone; 5-Methyl
                                     Furfuryl Mercaptan; Methyl
                                     Thioacetate; Methyl Thiobutyrate;
                                     Propionic Acid; S-Propyl Acetate;
                                     Propyl Butyrate; Propyl Hexanoate;
                                     Propyl Propionate; Propyl
                                     Thioacetate; Thiobutyric Acid;
                                     Thiopropionic Acid; Thioacetic Acid
Borregaard                          Ethanol; Cellulosic Sugars; Lignin
Braskem                             Butadiene; Ethanol; Ethylene;
                                     Isoprene; Propylene; Polyethylene;
                                     Polypropylene
Calysta                             Lactic Acid; Methane
Cargill                             Citric Acid; Ethanol; Glucaric Acid;
                                     Glycerin; 3-Hydroxypropionic Acid;
                                     Isoprene; Lactic Acid; Itaconic
                                     Acid; Lecithins; Maltodextrins;
                                     Palm Oils; Polyols; Sorbitol;
                                     Sugars; Starches; Triglycerides;
                                     Xanthan Gum
Cathay Industrial Biotechnology     DC11 (Undecanedioic Acid); DC12
                                     (Dodecanedioic Acid); DC13
                                     (Brassylic Acid); DC14
                                     (Tetradecanedioic Acid); DC15
                                     (Pentadecanedioic Acid); DC16
                                     (Hexadecanedioic Acid); 1,5-
                                     Pentamethylene Diamine
Celanese                            Cellulose Diacetate
C-Lecta                             Enzymes
Cellana LLC                         Biodiesel; Omega-3-Oils
Cellucomp                           Cellulose Nano-Fibers
Codexis                             Enzymes
Cool Planet Energy Systems          Biocarbon; Hydrocarbon
Corbion                             2,5-Furandicarboxylic Acid (FDCA);
                                     Lactic Acid; Polylactic Acid (PLA);
                                     Succinic Acid
Covestro                            Pentmethylene Diisocyanate;
                                     Waterborne Polyurethanes
Croda                               Ethylene Oxide; Non-ionic
                                     Surfactants
Deinove                             Carotenoids; Muconic Acid
DuPont                              Enzymes; 2,5-Furandicarboxlic Acid
                                     (FDCA); Isoprene; Polyesters
DuPont Tate & Lyle Bioproducts      1,3 Propanediol
Earth Energy Renewables             Fatty Acids (C2-C8)
Eastman Chemical Company            Cellulose Acetate; Cellulose Acetate
                                     Butyrate; Cellulose Acetate
                                     Propionate; n-Butanol
Ecosynthetix                        Starch Vinyl Emulsions; Starch-Vinyl
                                     Polymers
Edeniq                              Cellulosic Sugars
Elevance Renewable Sciences, Inc.   Ethylene; C10+ Hydrocarbons from
                                     Olefin Metathesis; Esters from
                                     Olefin Metathesis
Emery Oleochemicals                 Aliphatic Esters; Polyols
Enerkem                             Ethanol; Methanol
Epygen                              Enzymes
Evolva                              Nootkatone; Resveratrol; Saffron;
                                     Stevia; Vanillin
Evonik                              Amino Acids; Enzymes
Forelight                           Astaxanthin; Omega-3s; Phycocyanin
Genomatica, Inc.                    Adipic Acid; Butadiene; 1,4-
                                     Butanediol (BDO); Caprolactam;
                                     Hexamethylenediamine
Gevo                                iso-Butanol; Butene; Ethanol;
                                     Isooctane; p-Xylene
GFBiochemicals                      Levulinic Acid
Global Bioenergies                  Butadiene; Isobutene; Propylene
Glycosbio                           Isoprene; Lactic Acid; Omega 3 Fatty
                                     Acid; Triglycerides
Grain Processing Corporation        Corn Syrup; Maltodextrins; Starches
Green Biologics                     Acetone; n-Butanol
Green Life CAN, LLC                 Polyalphaolefins; Polyolesters
Greenlight Biosciences              Fatty Acids; Pyrimidines; Ribose
Heliae                              Astaxanthin; Proteins
Ingredion                           Corn Oil and Proteins; Dextrose;
                                     Maltodextrins; Polyols; Starches
Intrexon                            1,4-Butanediol; iso-Butanol;
                                     Farnesene; Isoprene
Invista                             Adipic Acid; Adiponitrile (ADN); 1,3-
                                     Butadiene; 2,3-Butanediol (BDO);
                                     Polyamide (Nylon 6,6)
Itaconix Corporation                Itaconic Acid; Polymers of Itaconic
                                     Acid
Joule Unlimited                     Diesel; Ethanol
Kiverdi                             Citrus Oil; Omega-7 Oils; Sugars
Kraton Performance Polymers         Fatty Acids; Pine Oils; Pine Pitch;
 (Arizona Chemical)                  Rosin Acids; Sulphate Turpentine;
                                     Tall Oil
LanzaTech                           Acetic Acid; 1,3-Butadiene; iso-
                                     Butylene; 2,3-Butanediol, Ethanol;
                                     iso-Propanol
Leaf Resources LTD                  Cellulosic Sugars
Logos Technologies                  Rhamnolipids
Lygos                               Malonic Acid
Mango Materials                     Polyhydroxyalkonate (PHA)
Manus Biosynthesis                  Terpenoids
Matrix Genetics                     Spirulina Derived Products
MBI International                   Fumaric Acid; Succinic Acid
Mercurius Biorefining               Ethyl Formate; Ethyl Levulinate;
                                     Formic Acid; Furfural
Meredian Bioplastics                Medium Chain Length
                                     Polyhydroxyalkanoates (MCL-PHA)
Metabolic Explorer                  Glycolic Acid; L-Methionine; 1,2
                                     Propanediol; 1,3 Propanediol
Metabolix, Inc.                     Acrylic Acid; Gamma-Butyrolactone;
                                     Butanediol; Polyhydroxyalkanoates
                                     (PHAS)
Micromidas                          Aromatics; Furanics
Modern Meadows, Inc.                Collagen
Modular Genetics, Inc.              Acyl Glutamate Surfactant
Myriant Corporation                 Acrylic Acid; Fumaric Acid; Lactic
                                     Acid; Muconic Acid; Succinc Acid
NatureWorks, LLC                    Polylactic Acid (PLA)
Neol Biosolutions SA                Arachidonic Acid; Erucic Acid;
                                     Gondoic Acid, Nervonic Acid
Neste                               Isoalkanes; Propane; Vegetable Oils
Newlight Technologies               Polyhydroxyalkanoates (PHA)
Novomer                             Acrylic Acid; Butanediol;
                                     Polypropylene Carbonate Polyols;
                                     Succinic Acid
Novozymes                           Enzymes
Nucelis LLC                         Squalane; Ergosterol; Vitamin D
Oakbio Inc.                         n-Butanol; Polyhydroxyalkanoate
                                     (PHA)
Photanol                            Erythritol
Phycal                              Algae Oils; Biodiesel
Phytonix Corporation                n-Butanol
Plaxica                             Lactic acid
Poet                                Cellulosic Ethanol; Corn Oil
                                     Byproducts; Sugar
Praj Matrix                         Lignin; Pentose and Hexose Sugars
Proterro, Inc.                      Amino Acids; Sugars
Provivi, Inc.                       Olefin Chiral Pesticides
PTT Global Chemical (PTTGC)         Butanediol; Lactic Acid; Polylactic
                                     Acid; Succinic Acid,
PureVision Technology               Cellulosic Sugar
Renewable Energy Group, REG Life    Fatty Acids
 Sciences LLC
Renmatix                            Cellulosic Sugars
Rennovia                            Adipic Acid; Glucaric Acid; 1,6-
                                     Hexanediol; Hexamethylenediamine
Reverdia                            Succinic Acid
Rivertop Renewables, Inc.           Sodium Glucarate
RHO Renewables, Inc.                Trans-Cinnamic Acid;
                                     Methylcyclohexane; 3-Methylanisole;
                                     Styrene; Toluene; p-Xylene
Roquette                            Gluconic Acid; Isosorbide;
                                     Isosorbide Polymers; Sodium
                                     Gluconate; Starch; Succinic Acid;
                                     Proteins
Royal DSM                           Alkyd Resins; Cellulosic Ethanol;
                                     Carotenoids; Enzymes; Polyamides;
                                     Polyester Elastomer (Castor Oil
                                     Based); Succinic Acid
Sabic                               Polyethylene (PE); Polypropylene
                                     (PP)
Sapphire Energy                     Algae Nutritional Oils
Senomyx, Inc.                       Artificial Flavors
Sirrus                              1,1-Disubstituted Alkene Monomers
Solegear                            Polylactic Acid (PLA)
Solix Algredients                   Astaxanthin
Solvay                              Acetone; n-Butanol; Cellulose
                                     Acetate; Epichlorohydrin; Glycerin;
                                     Guar Gum; Surfactants; Vanillin
Stora Enso                          Lignin; Sugars
Succinity GmbH                      Succinic Acid
Sweetwater Energy                   Cellulosic Sugars
Sylvatex                            Micro-emulsion Additive for Inverse
                                     Micelles
Synthezyme                          Enzymes; (omega) Hydroxy Fatty
                                     Acids; Polyesters; Surfactants
Swissaustral Biotech SA             Enzymes; Microbial Biobank
Tate & Lyle                         Corn Syrup, Starch, and Oil; Citric
                                     Acid and Other Acids; Distiller
                                     Grain; Ethanol, Gluten; Waxy Corn
The Coca-Cola                       Polyethylene Terephthalate (PET)
The Dow Chemical Company            Ethanol; Plasticizers; Polyols
Terravia                            Algae Oils for Specialty
                                     Applications
United Catalyst, LLC                Sugars from Cellulose Hydrolyzing
                                     Imprinted Polymers (CHIPs)
Verdezyne, Inc.                     Adipic Acid; Dodecanedioic Acid
                                     (DDDA); Sebacic Acid
Virent                              Aromatic Mixtures; Benzene; p-Xylene
White Dog Labs                      Acetone; iso-Butanol; n-Butanol;
                                     Butyrate; iso-Propanol
xF Technologies                     5-Chloromethyl Furfural; Furoate
                                     Esters
Zeachem                             Acetic Acid; Ethanol; Ethyl Acetate;
                                     Ethylene Glycol
Zuchem                              Mannitol; Monosaccharides;
                                     Oligosaccharides for Pharmaceutical
                                     and Nutritional; Xylitol
------------------------------------------------------------------------


           Appendix B. Strain Development Technology Companies
------------------------------------------------------------------------
              Company                              Product
------------------------------------------------------------------------
Aequor Inc.                         Engineered Marine Microbe for
                                     Antifouling and Antibiofilm
Caribou Bioscience                  Precision Cell Engineering
Chain Biotechnology LTD             Develops Microbial Hosts (chassis)
                                     for Engineering Anaerobic Bacteria
DNA2.0                              Gene Synthesis--Tools Provider
Enevolv, Inc.                       Engineers Microbes: Bacteria, Yeast,
                                     Algae
GEN9                                Gene Synthesis
Ginkgo Bioworks                     Engineers Microorganisms
Greenlight Biosciences              Cell-Free Bioprocessing Technology
Molecular Assemblies                DNA Synthesis
Muse Biotechnologies Inc.           Strain Engineering
Oligos Biotech                      Engineering Fungus
Pareto Biotechnologies              Polyketide Pathways
Syngulon                            Bacteriocin Engineering
Synpromics                          Synthetic Promoters for Gene
                                     Expression
Synthetic Genomics                  Advanced Genomics--Microbial Cell
                                     Lines; DHA Omega-3; Astaxanthin
Teselagen                           Combinatorial Gene Design and
                                     Editing
Twist Bioscience                    Gene Synthesis on Silicon
Zymergen                            Strain Improvement
------------------------------------------------------------------------


         BIO Industrial & Environmental Section Member Companies
 
 
 
Aequor, Inc.,            Epygen Labs FZ LLC,      Poet, LLC, Sioux
 Oceanside, CA            Dubai, United Arab       Falls, SD
Agrivida, Inc.,           Emirates                POET-DSM Advanced
 Medford, MA             Genencor A Danisco       Biofuels LLC, Elgin,
Amyris, Inc.,             Division, Palo Alto,     IL
 Emeryville, CA           CA                      Praj Matrix--The
Anellotech, Inc., Pearl  Evolva, Allschwil,        Innovation Center,
 River, NY                Switzerland              Pune, Maharashtra,
Arzeda, Seattle, WA                                India
BASF Corp., Florham      Genomatica, Inc., San    Primordial Genetics
 Park, NJ                 Diego, CA                Inc., San Diego, CA
Bayer Corporation,       GranBio, Sao Paulo,      ProteoNic BV, Leiden,
 Tarrytown, NY            Brazil                   Netherlands
Biobased Technologies,  Green Biologics,         Proterro, Inc., Ewing,
 LLC, Rogers, AR          Gahanna, OH              NJ
BioFiber Solutions       Green Life Can LLC, Las  Renmatix, King Of
 International, Inc.,     Vegas, NV                Prussia, PA
 Seal Beach, CA          Heliae, Gilbert, AZ      Rennovia, Inc., Santa
                                                   Clara, CA
Biosynthetic             Intrexon Corp.,          Reverdia, Geleen,
 Technologies, Irvine,    Germantown, MD           Netherlands
 CA
Calysta, Menlo Park, CA  Itaconix Corp.,          RHO Renewables, Inc.,
                          Stratham, NH             Oakland, CA
Cellana LLC, Kailua      LanzaTech, Skokie, IL    Sapphire Energy, Inc.,
 Kona, HI                                          San Diego, CA
ChemDiv, Inc., San       Matrix Genetics,         Succinity Gmbh,
 Diego, CA                Seattle, WA              Dusseldorf, Germany
Corbion, Amsterdam,      MBI International,       Syngulon, Gosselies,
 Netherlands              Lansing, MI              Belgium
DEINOVE, Grabels,        Metabolix, Inc.,         Synthetic Genomics,
 France                   Cambridge, MA            Inc., La Jolla, CA
DNA2.0, Newark, CA       Modular Genetics, Inc.,  TerraVia, South San
                          Woburn, MA               Francisco, CA
DSM, NV, Heerlen,        Monsanto Co., Saint      The Coca-Cola Co.,
 Netherlands              Louis, MO                Atlanta, GA
DuPont Corp.,            Muse Biotechnologies,    The Dow Chemical Co.,
 Wilmington, DE           Inc., Boulder, CO        Midland, MI
Earth Energy             NatureWorks, LLC,        Verdezyne, Inc.,
 Renewables, LLC,         Minnetonka, MN           Carlsbad, CA
 Bryan, TX
Elevance Renewable       NexSteppe, South San     xF Technologies,
 Sciences, Inc.,          Francisco, CA            Albuquerque, NM
 Woodridge, IL           Novozymes, Bagsvaerd,    ZeaChem, Inc.,
                          Denmark                  Lakewood, CO
Enevolv, Inc.,           Nucelis LLC, San Diego,  Phytonix Corp., Black
 Cambridge, MA            CA                       Mountain, NC
 


         BIO Industrial & Environmental Section Governing Board
 
 
 
Alan Shaw, Ph.D., I&E    Neil Goldsmith, Chief    Stephan B. Tanda,
 Section Chair,           Executive Officer,       Managing Board, Royal
 President & Chief        Evolva                   DSM
 Executive Officer,
 Calysta
Tjerk de Ruiter--I&E     Jennifer Holmgren,       Jamie Levine, Chief
 Section, Vice Chair,     Ph.D., Chief Executive   Executive Officer,
 Chief Executive          Officer, Lanzatech       Sapphire Energy, Inc.
 Officer, Corbion
John Melo, President &   Joseph Shaulson,         Roger Wyse, Ph.D.,
 Chief Executive          President & Chief        (non-voting) Founder,
 Officer, Amyris, Inc.    Executive Officer,       Spruce Capital
                          Metabolix, Inc.          Partners
Markus Pompejus, Ph.D.,  Adam Monroe, President,  Jonathan S. Wolfson,
 VP White                 Novozymes, Americas      Chief Executive
 Biotechnology,           Regions, Novozymes       Officer, TerraVia
 Research North America
 BASF Corporation
Mark Jones, Ph.D.,       Anna Rath, President &   Miki Knutzen, Global
 Executive External       Chief Executive          Program Director,
 Strategy &               Officer, Nexsteppe,      PlantBottle, The Coca
 Communications           Inc.                     Cola Company
 Director, Dow Chemical
 Company
Eli Ben Shoshan,         Doug Berven, Vice
 Director--Strategy,      President, Corporate
 Business Development,    Affairs, Poet, LLC
 Mergers &
 Acquisitions, DuPont
 Industrial Biosciences
 

                               appendix b
The Biobased Economy: Measuring Growth and Impacts
March 2017

   Industrial biotechnology empowers the biobased economy, 
        enhances a broad variety of industries and creates potential 
        for new products.

   The biobased economy is poised for accelerated growth, with 
        an abundance of cost-competitive feedstocks, commercial success 
        of pioneer products, and ongoing investment in innovative 
        research.

   The United States could capture a fair share of projected 
        worldwide growth of the biobased economy with effective state 
        and Federal policy support.

    By utilizing the power of industrial biotechnology companies around 
the globe are creating a robust biobased economy. In the biobased 
economy, companies use microbial systems, fermentation and other clean 
tech methods to manufacture sustainable products from agricultural 
biomass, municipal waste and other low-carbon feedstocks. Biobased 
production encompasses a value chain from agriculture through the 
manufacture of consumer goods that provides an alternative to 
petroleum's value chain and brings environmental, economic and other 
benefits. The biobased economy can generate new markets for 
agricultural producers, boost innovation in domestic manufacturing, and 
stimulate sustainable economic growth. The biobased economy and 
industrial biotechnology are poised for accelerated growth in the 21st 
century; Federal and state policies can unleash this growth by 
identifying and supporting all segments of the value chain.
    Industrial biotechnology--which is at the center of the biobased 
economy, as shown in Figure 1 below--generates economic opportunity, 
investment and employment in:

   agriculture, especially through the development of new crops 
        and new uses for crop residues and waste;

   biorefining of food and feed ingredients for the grocery 
        manufacturing industry;

   biofuel production;

   renewable chemical and biobased polymer production, which 
        impacts cosmetics, textiles, personal care and other consumer 
        product sectors;

   bioprocesses used in pharmaceutical and other manufacturing;

   nutritional ingredients as well as flavors and fragrances; 
        and

   enzymes, which are used in household cleaners, laundry 
        detergents, and food processing.
Figure 1: The Biobased Economy


    Industrial biotechnology is sometimes viewed as a subset of the 
petrochemical industry, since industrial biotech processes are more 
sustainable and can be paired with or replace traditional chemical 
processes in the production of a final product. But industrial 
biotechnology impacts many different industries and creates potential 
for new products and materials that are not possible or cost-efficient 
with traditional chemistry.
    An increasing number of studies and market analyses measure the 
economic impact of the industrial biotechnology sector and the biobased 
economy. Rob Carlson of Biodesic, Inc., estimates that the industrial 
biotechnology sector generated more than $105 billion in direct revenue 
in 2012.\1\ Carlson draws his estimate from a review of the total 
revenue for the biofuels, renewable chemicals, enzymes and biobased 
polymers industries, controlling for the costs of the non-biotech 
sectors. He also notes that the overall economic impact from this 
direct revenue is likely to be ten to 15 percent larger.
---------------------------------------------------------------------------
    \1\Carlson, R. Estimating the biotech sector's contribution to the 
U.S. economy. Nature Biotechnology, 34, 247-255, (2016). doi:10.1038/
nbt.3491.
---------------------------------------------------------------------------
    USDA's BioPreferred' Program commissioned a report to 
Congress and a follow up study of the economic impact associated with 
the roughly 20,000 biobased products recognized by the program. The 
analyses include agriculture and forest products that are not directly 
impacted by industrial biotechnology, but exclude biofuels, food 
ingredients and bioprocess applications that are not part of the 
program. The resulting studies found that between 2013 and 2014, the 
industry's direct revenue grew from $125.75 billion to $127 billion. 
The total economic impact of U.S. biobased production grew from $369 
billion to $393 billion.\2\ Because biofuels and food ingredients are 
excluded, the economic impact of the entire industrial biotechnology 
sector is significantly larger.
---------------------------------------------------------------------------
    \2\Golden, J.S., Handfield, R.B., Daystar, J., and McConnell, T.E. 
An Economic Impact Analysis of the U.S. Biobased Products Industry. 
Washington, D.C.: USDA BioPreferred Program, 2016.
---------------------------------------------------------------------------
    Figure 2 below maps a selection of projections and estimates of the 
economic impact of industrial biotechnology from industry analysts and 
market watchers. While each study may include or exclude different 
parts of the biobased economy, all analysts agree that the overall 
global industry and the various subsectors--biofuels, renewable 
chemicals, enzymes and biobased polymers--are poised for accelerated 
growth during the first \1/2\ of the 21st century.
Figure 2: Biobased Economy and Sector Projections


    Worldwide production of biobased products--including biofuels, 
renewable chemicals, and biobased polymers--is projected to grow from 
approximately $203.3 billion in 2015 to $400 billion by 2020 and $487 
billion by 2024.\3\ The United States is well-positioned to capture a 
large share of that projected growth, due to investments made today in 
first-of-a-kind production capacity, innovative research and 
development, as well as employment and training of U.S. workers.
---------------------------------------------------------------------------
    \3\Grand View Research. ``White Biotechnology Market Analysis By 
Product (Biofuels, Biomaterials, Biochemicals, Industrial Enzymes), By 
Application (Bioenergy, Food & Feed Additives, Pharmaceutical 
ingredients, Personal Care & Household Products) And Segment Forecasts 
To 2024.'' San Francisco: October, 2016. McKinsey & Co. ``Bio-based 
chemicals are gradually gaining their share of the global chemicals 
market.'' Boston: Feb. 2016.
---------------------------------------------------------------------------
    Similar to assessments of the chemical industry, projections of 
future growth in industrial biotechnology and biobased manufacturing 
are built on the abundance and favorable costs of renewable feedstocks, 
the successful commercialization of pioneer products, and new 
investments in production capacity. In contrast to traditional 
industries, though, expectations for industrial biotechnology's future 
potential are heightened by the exponential growth in discovery of 
biological processes. The intensifying pace of research and development 
in biotechnology, new developments in synthetic biology and gene 
editing, and recent experience in engineering commercial scale 
industrial biotech processes augment projections for accelerated 
economic growth in the field.

          Between 2010 and 2015, investors pumped nearly $9.2 billion 
        into the industrial biotechnology sector.

    Between 2010 and 2015, investors pumped nearly $9.2 billion into 
the industrial biotechnology sector, primarily in renewable chemicals 
and biobased polymers. The funding came from a variety of sources, 
including private equity and some public investment. But the majority 
of the investment and financing--$5.3 billion (57 percent)--came from 
venture capital.\4\ Venture capital investments primarily target 
research and development of new technologies, and synthetic biology 
startups have garnered the largest share in recent years.
---------------------------------------------------------------------------
    \4\Oh, V. ``Show Me the Money: Where is Venture Capital Placing 
Bets in Bio-based?'' Boston: Lux Research, Dec. 5, 2016.
---------------------------------------------------------------------------
    Another significant source of investment came from partnerships and 
private equity investments to launch new commercial-scale industrial 
biotech processes. BioAmber is operating a commercial scale facility in 
Sarnia, Ontario, Canada to produce biobased succinic acid, which is a 
building block for polyesters used in fabrics. Myriant is operating a 
similar facility in Louisiana. Green Biologics has started production 
in Minnesota of n-butanol, which is a solvent used in many consumer 
product. Novamont is producing biodegradable plastics at scale in 
Italy. New partnerships include Genomatica's with BASF to produce 
butanediol, which can be used in polyesters and cosmetics; Avantium's 
with Coca-Cola to produce polyethylene furoanate for plastic drink 
bottles; and Novvi's with Chevron to produce biobased lubricants for 
automotive applications.\5\ The commercial success of pioneer renewable 
chemical producers encouraged these additional equity investments.
---------------------------------------------------------------------------
    \5\Molchanov, P. ``Clean Tech Primer 2017.'' St. Petersburg, FL: 
Raymond James & Assc. January 2017.
---------------------------------------------------------------------------
    Continued growth of the biobased economy will benefit rural America 
by creating new markets for biomass. The U.S. farm sector continues to 
increase crop productivity--achieving higher yields with relatively 
fewer inputs--even as crop prices decline. The U.S. Department of 
Energy has conducted regular analyses of agricultural, forestry, waste, 
and algal biomass, determining that there is a cost-competitive supply 
sufficient to displace 30 percent of U.S. petroleum consumption.\6\ The 
abundance of price advantaged feedstocks makes the biobased product 
sector an attractive investment opportunity. It can also help to 
support farm sector earnings, which have been falling with lower 
commodity prices.\7\
---------------------------------------------------------------------------
    \6\U.S. Department of Energy. 2016. 2016 Billion-Ton Report: 
Advancing Domestic Resources for a Thriving Bioeconomy, Volume 1: 
Economic Availability of Feedstocks. M.H. Langholtz, B.J. Stokes, and 
L.M. Eaton (Leads), ORNL/TM-2016/160. Oak Ridge National Laboratory, 
Oak Ridge, TN. 448p. doi: 10.2172/1271651.
    \7\USDA Economic Research Service. 2017 Farm Sector Income 
Forecast. Feb. 9, 2017. https://www.ers.usda.gov/topics/farm-economy/
farm-sector-income-finances/farm-sector-income-forecast/.
---------------------------------------------------------------------------
Figure 3: Job Multipliers for Various Sectors of Industrial 
        Biotechnology
        
        
    In addition to added value for farm production, the biobased 
economy can generate spillover employment opportunities in engineering, 
construction and transportation. According to the USDA 
BioPreferred' Program report mentioned above, there are 1.53 
million U.S. workers directly employed in the biobased product industry 
as of 2014. The industry also creates employment in other industries, 
such as transportation and feedstock supply, as illustrated in Figure 
3. Every direct job in the biobased product industry creates 1.76 jobs 
in other industries. In a separate study specifically of the biotech 
industry, TEConomy calculates that every direct bioscience industry job 
creates 5.5 additional jobs elsewhere in the economy. For workers in 
the agricultural feedstock and chemicals sector of the biotech 
industry, which includes biofuel producers, the multiplier is as high 
as 18.4 additional jobs for every direct job.\8\
---------------------------------------------------------------------------
    \8\TEConomy/BIO. The Value of Bioscience Innovation in Growing Jobs 
and Improving Quality of Life. Washington, D.C.: Biotechnology 
Innovation Organization, 2016.
---------------------------------------------------------------------------
    The biobased economy is poised for ongoing growth, building on the 
success of pioneering commercial-scale industrial biotech projects. The 
potential for growth has attracted billions in venture capital, 
strategic investments and partnerships. The United States is well-
positioned--with abundant biomass resources and innovative research and 
development in industrial biotechnology--to capture a favorable share 
of future biobased economy growth and employment. Effective state and 
Federal policy is needed to unleash continued investment and growth.
    Among the most important Federal policies supporting the biobased 
economy are those in the farm bill's energy title. Since 2002, the 
quinquennial farm bill has included energy programs that have 
effectively supported development of new markets for agriculture and 
capital formation for rural communities. As Congress Members begin work 
on the next farm bill, they should strengthen these effective programs 
and provide mandatory funding. The BioPreferred' program, as 
mentioned, has helped the U.S. agriculture sector generate $393 billion 
in economic activity and 4.22 million jobs. The Biorefinery, Renewable 
Chemical, and Biobased Product Manufacturing Assistance Program ensures 
that institutional lenders serving rural communities have sufficient 
capital to back large-scale biorefineries. This program will enable 
banks to join the venture capital and equity investments in industrial 
biotechnology and renewable chemical production, which will revitalize 
U.S. manufacturing, create jobs and improve U.S. economic 
competitiveness. Congress should create a clear path forward for farm 
bill energy programs to enable U.S. technology producers to unleash 
innovation and ensure rural communities share in economic growth.
                               appendix c
An Economic Impact Analysis of the U.S. Biobased Products Industry


2016
Acknowledgments
    The U.S. Department of Agriculture (USDA) BioPreferred' 
Program commissioned this report. The conclusions and recommendations 
are those of the authors and have not been endorsed by the USDA. We 
wish to thank Ms. Marie Wheat, Industry Economist and Ms. Kate Lewis, 
BioPreferred Program Analyst, for their guidance and insights. We also 
appreciate the assistance, editing, and oversight of Amec Foster 
Wheeler Environment & Infrastructure, Inc.--prime contractor and 
specifically the support of Mr. Charles Hester, Ms. Elizabeth Lewis, 
Ms. Jennifer Chu, Ms. Beatrice Smith, and Ms. Caroline Tapscott from 
the Durham, NC office. Dr. Art Werner was a great asset as well, and we 
are grateful for his help.
    We also wish to thank the dedicated students at the Duke Center for 
Sustainability & Commerce:

 
 
 
 Ms. Schuyler     Ms. Shuvya       Ms. Katherine
 DeBree                   Arakali                  Hurrell
 Ms. Maurita      Ms. Amanda       Ms. Devon
 Denley                   Gibson                   Bonney
 Ms. Lili Pita
 

    In addition, the authors are grateful to the following 
organizations for providing guidance and insights, without which this 
report would not have been possible:

 
 
 
 American         Eastman          North
 Chemical Society         Chemical Company         Carolina
                                                   Biotechnology Center
 American         Enviva           Patagonia,
 Cleaning Institute                                Inc.
 Agricultural     Ford Motor       Penford
 Utilization Research     Company                  Products Co.
 Institute (AURI)         Green            POET, LLC
                          Biologics Ltd.
 BASF             General Motors   Procter &
 Corporation              Company                  Gamble
 Bayer AG         IO               Seventh
                          Sustainability           Generation, Inc.
 BioAmber, Inc.   Johnson and      Society of
                          Johnson                  the Plastics Industry
 BioFiber         Lanzatech        Tecnon
 Solutions                                         OrbiChem
 International
 Biotechnology    Lenovo           Tetsis
 Innovation
 Organization
 The Bureau of    Lux Research,    Tyton
 Labor Statistics of      Inc.                     BioEnergy Systems
 the U.S. Department of   Michigan         United
 Labor                    Biotechnology            Soybean Board
                          Institute
 The Coca-Cola    Myriant          U.S. Forest
 Company                  Corporation              Service
 ConVergInce      NatureWorks      Verdezyne,
 Advisers                 LLC                      Inc.
 Cotton           Nike             Walmart
 Incorporated                                      Stores, Inc.
 Deere &          Novozymes        Yulex
 Company                                           Corporation
 Dow Chemical     DuPont
 Company
 

    We appreciate Ms. Beatrice Smith creating the maps using 
ArcGIS' software by Esri. ArcGIS' and 
ArcMapTM are the intellectual property of Esri and are used 
herein under license. Copyright  Esri. All 
rights reserved. For more information about Esri' software, 
please visit www.esri.com.
About the Authors
  Jay S. Golden
  Contact: [email protected]


    Dr. Jay Golden is Director of the Duke Center for Sustainability & 
Commerce and a faculty member in the Division of Earth & Ocean Sciences 
at the Nicholas School of the Environment; Dr. Golden has a secondary 
appointment in Civil & Environmental Engineering at the Pratt School of 
Engineering at Duke University.
    His research covers sustainable systems and production consumption 
systems of Earth resources using systems and lifecycle modeling. 
Current areas of focus include risks and resiliency resulting from 
increased industrialization of terrestrial-based resources, rapid 
urbanization, and the interactions with environmental, economic, and 
social drivers. Dr. Golden received his Ph.D. in Engineering from the 
University of Cambridge, and his Master's degree in Environmental 
Engineering and Sustainable Development from a joint program of the 
Massachusetts Institute of Technology and the University of Cambridge. 
He also holds a Professional Mastery of Project Management Certificate 
from Stanford University, an MLE in Higher Education from Harvard, and 
has a B.A. degree in Management.
    In 2009, Dr. Golden was presented the Faculty Pioneer Award by the 
Aspen Institute for his leadership in the field of sustainability 
education & research, and he was named by Ethisphere as one of the 100 
Most Influential People in Business Ethics. He was appointed to the UN 
Lifecycle Management Task Force, and he was named an AT&T Industrial 
Ecology Fellow. Dr. Golden founded and co-directed the Sustainability 
Consortium and consults for companies around the world.

  Robert Handfield
  Contact: [email protected]


    Dr. Robert Handfield is the Bank of America University 
Distinguished Professor of Supply Chain Management at North Carolina 
State University and Director of the Supply Chain Resource Cooperative. 
He also serves as Faculty Lead for the Manufacturing Analytics Group 
within the International Institute of Analytics, and he is on the 
Faculty for the Operations Research Curriculum at N.C. State 
University.
    Dr. Handfield is the Consulting Editor of the Journal of Operations 
Management, one of the leading journals in the field of supply chain 
management, and he has written several books on supply chain 
management. In 2013, he led a global study on Global Logistics Trends 
and Strategies for BVL International and wrote a report entitled 
`Future Buy: The Future of Procurement,' which was published by KPMG.
    He has published extensively on sustainable supply chain management 
in the Journal of Supply Management, Business Strategy and the 
Environment, and the European Journal of Operations Research. In 2013, 
he also conducted studies on global supply chain sustainability with 
the German nonprofit logistics organization, BVL International, and he 
received funding in 1998 from the National Science Foundation to study 
Environmentally-Friendly Manufacturing.

  Jesse Daystar
  Contact: [email protected]


    Dr. Jesse Daystar is the Assistant Director at the Duke Center for 
Sustainability & Commerce at Duke University. Dr. Daystar has a Ph.D. 
and M.S. in Forest Biomaterials as well as a B.S. in Chemical and 
Biomolecular Engineering and a B.S. in Pulp & Paper Engineering from 
North Carolina State University. Dr. Daystar leads research and 
consulting in aspects of product sustainability, biomaterials, 
biochemicals, and bioenergy focused on identifying environmental 
tradeoffs, environmental and technical risks, and environmental 
impacts. This research and consulting has produced publications, 
sustainability and chemical engineering tools, and certifications for 
clients including Eastman Chemical, Cotton Incorporated, the USDA, and 
the DOE.
    Drawing on skills in Life Cycle Assessment, sustainability 
strategy, chemical engineering, paper and pulp engineering, and supply 
chain logistics & strategy, Daystar develops sustainability solutions 
through pragmatic research and applied industrial solutions. His 
experience includes sustainable chemical process development and 
efficiency management program development with the National Council for 
Air and Stream Improvement, Mead WestVaco, Pesco-Beam Environmental 
Solutions, and Kemira Chemical.

  Brandon Morrison
  Contact: [email protected]


    Dr. Brandon Morrison earned his Ph.D. in Earth and Ocean Sciences 
from the Nicholas School of the Environment at Duke University. His 
dissertation research examined the sustainability implications of the 
industrialization of the Earth's resources. He utilized lifecycle-
modeling techniques in order to analyze the environmental impacts of 
utilizing biological feedstocks for energy production.
    Dr. Morrison graduated from Franklin & Marshall College with his 
B.S. in Environmental Science and earned his Master of Environmental 
Management degree from Duke University.

  Eric McConnell
  Contact: [email protected]


    Dr. Eric McConnell is an Assistant Professor in the Department of 
Forest Biomaterials, College of Natural Resources, at North Carolina 
State University. Dr. McConnell is also a Wood Products Specialist with 
the North Carolina Cooperative Extension Service. He received his B.S. 
in Forest Management from Louisiana Tech University and his Masters and 
Ph.D. degrees from Mississippi State University in Forest Products and 
Forest Resources respectively.
    Dr. McConnell's research has focused on input-output modeling of 
the forest products industry, timber, and lumber price trends, and the 
typologies of production forestry clientele. His Extension program 
provides information to clientele and stakeholders regarding wood 
technology, wood products sustainability criteria, economic impacts, 
and industrial trends. Dr. McConnell's professional service includes 
contributing to the Forest Products Society, the Society of American 
Foresters, and the Society of Wood Science and Technology.
Table of Contents
    Acknowledgements
    About the Authors
    Executive Summary
    Glossary of Terms

    I. Introduction

          A. The USDA BioPreferred' Program
          B. About this Report

    II. Industry Overview

          A. Overview of the Changes from 2013 to 2014
          B. Factors Shaping the Biobased Products Industry
          C. Biobased Products Industry Growth Forecast

                  C1. Case Study: NatureWorks
                  C2. Case Study: BASF
                  C3. Case Study: Eastman Chemical Company
                  C4. Case Study: DuPontTM
                  C5. Case Study: The Coca-Cola Company
                  C6. Case Study: POET
                  C7. Case Study: Verdezyne
                  C8. Case Study: Green Biologics

    III. State Overviews

          A. State Incentives and Policies
          B. State Statistics
          C. National and State Facts Sheets

                  C1. Case Study: Michigan Biotechnology Institute
                  C2. Case Study: Agricultural Utilization Research 
                Institute (AURI)

    IV. Environmental Benefits

          A. Economic Input-Output LCA
          B. Objectives and Methodology
          C. Results Overview
          D. Limitations

    V. Recommendations
    List of Figures

          Figure 1: Key Findings of the U.S. Biobased Products Industry 
        in 2014
          Figure 2: Total Employment and Value-Added to the U.S. 
        Economy from the Biobased Products Industry in 2014
          Figure 3: Direct Jobs Contributed by the Biobased Products 
        Industry in Each State and the District of Columbia in 2013
          Figure 4: Direct Value-Added Contribution in Each State by 
        the Biobased Products Industry in 2013
          Figure 5: Total Employment and Value-Added to the U.S. 
        Economy from the Biobased Products Industry in 2014
          Figure 6: Key Findings of the U.S. Biobased Products Industry 
        in 2014
          Figure 7: Crude Oil and Natural Gas Price Volatility
          Figure 8: Direct Jobs Contributed by the Biobased Products 
        Industry in Each State and the District of Columbia in 2013
          Figure 9: Direct Value-Added Contribution in Each State by 
        the Biobased Products Industry in 2013
          Figure 10: Gasoline Use Avoided by Biobased Products 
        Manufactured in the United States
          Figure 11: Greenhouse Gas Emissions Avoided by Biobased 
        Products Manufactured the United States

    List of Tables

          Table 1: Top 10 States for Direct Jobs in the Biobased 
        Products Industry in 2013
          Table 2: Top 10 States for Direct Value-Added in the Biobased 
        Products Industry in 2013
          Table 3: Overview of State Policies and Incentives for 
        Biobased Products Development
          Table 4: Top 10 States for Direct Jobs in the Biobased 
        Products Industry in 2013
          Table 5: Top 10 States for Direct Value-Added in the Biobased 
        Products Industry in 2013

    List of Appendices

          Appendix A: The Economic Input-Output Model (IMPLAN)
          Appendix B: Products Participating in the 
        BioPreferred' Program by Category--2016
          Appendix C: States Ranked by Direct Jobs in the Biobased 
        Products Industry--2013
          Appendix D: States Ranked by Direct Value-Added by the 
        Biobased Products Industry--2013
          Appendix E: Number of Companies Participating in the 
        BioPreferred Program, Direct Jobs, and Direct Value-Added in 
        Each State (Alphabetical)
Executive Summary
    This report was prepared for the U. S. Department of Agriculture 
(USDA) BioPreferred' Program as a follow-up to the 2015 
report to the Congress of the United States mandated in Section 9002 of 
the 2014 Farm Bill (the Agricultural Act of 2014; P.L. 113-79).\1\ The 
conclusions and recommendations in this report are those of the 
authors, and have not been endorsed by USDA. The report seeks to 
provide information on the following contributions of the biobased 
products industry in the United States:
---------------------------------------------------------------------------
    \1\Golden, J.S., Handfield, R.B., Daystar, J., and McConnell, T.E., 
An Economic Impact Analysis of the U.S. Biobased Products Industry: A 
Report to the Congress of the United States of America, A Joint 
Publication of the Duke Center for Sustainability & Commerce and the 
Supply Chain Resource Cooperative at North Carolina State University, 
2015.

  (i)  Changes in value-added and jobs between 2013 and 2014 for the 
---------------------------------------------------------------------------
            national biobased products industry;

  (ii)  The value-added and jobs contributed by the biobased products 
            industry for all 50 states and the District of Columbia in 
            2013;

  (iii)  Changes and updates to the domestic biobased products 
            industry, including case studies of advances and 
            innovations;

  (iv)  The quantity of petroleum displaced by biobased products; [and]

  (v)  Policy recommendations.

    Established by the Farm Security and Rural Investment Act of 2002 
(2002 Farm Bill) and strengthened by the Food, Conservation, and Energy 
Act of 2008 (2008 Farm Bill) and the Agriculture Act of 2014 (H.R. 2642 
2014 Farm Bill), the USDA BioPreferred Program is charged with 
transforming the marketplace for biobased products and creating jobs in 
rural America. The Program's mandatory Federal purchasing initiative 
and voluntary labeling initiative have quickly made it one of the most 
respected and trusted drivers in today's biobased product marketplace. 
Private and government purchasers now look to the USDA BioPreferred 
Program to ensure that their purchases are biobased. Beginning in 2005 
with its first designations of six product categories, the Program has 
now designated 97 product categories representing approximately 14,200 
products on the market today. With the Federal Government spending 
about $450 billion annually on goods and services, there is an 
incredible opportunity to increase the sale and use of biobased 
products as required by Federal law. Executive Order 13693, Planning 
for Federal Sustainability in the Next Decade, increases Federal agency 
accountability for achieving biobased purchasing requirements.\2\
---------------------------------------------------------------------------
    \2\The President, ``Executive Order 13693--Planning for Federal 
Sustainability in the Next Decade'', Federal Register, accessed April 
2015, https://www.federalregister.gov/articles/2015/03/25/2015-07016/
planning-for-federal-sustainability-in-the-next-decade.
---------------------------------------------------------------------------
    Although there have been several studies on the contributions of 
the biobased products industry to the European and global economies, 
this report is the first to examine and quantify the effects of the 
U.S. biobased products industry on each state and the District of 
Columbia. The report provides a snapshot of available information and a 
platform upon which to build future efforts as more structured 
reporting and tracking mechanisms are developed.
    As detailed in this report and similar to the 2015 report, we 
undertook an updated approach to gathering information on the biobased 
products industry. A broad spectrum of government, industry, and trade 
association representatives involved in the biobased products industry 
were interviewed in order to gain a better understanding of the 
challenges and the future growth potential for biobased products. Data 
were collected from government agencies and published literature on the 
biobased products industry. We also conducted extensive economic 
modeling using IMPLAN modeling software, which was initially developed 
by the U.S. Forest Service to analyze and trace spending through the 
U.S. economy and to measure the cumulative effects of that spending on 
the U.S. economy. The IMPLAN model tracks how dollars spent in one 
sector of the economy result in increased spending in other sectors of 
the economy because of those dollars, creating waves of economic 
activity (the ``economic multiplier'' effect). IMPLAN uses national 
industry data and county-level economic data to generate a series of 
multipliers, which, in turn, estimate the total implications of 
economic activity as direct, indirect, and induced effects. The 
spillover effect can be calculated from these results by adding the 
indirect and induced effects. A contribution analysis was conducted to 
assess the effects of specific biobased sectors of the U.S. economy.
    The seven major sectors chosen here to represent the biobased 
products industry's contribution to the U.S. economy are:

   Agriculture and Forestry.

   Biorefining.

   Biobased Chemicals.

   Enzymes.

   Bioplastic Bottles and Packaging.

   Forest Products.

   Textiles.

    The USDA's definition of biobased products excludes the energy, 
livestock, food, feed, and pharmaceutical industries, so they have been 
excluded from this report as well.
    Figure 1 shows that the total contribution of the biobased products 
industry to the U.S. economy in 2014 was $393 billion in value-added 
and 4.223 million jobs. Every 1,000 jobs in the biobased industry 
supported 1,760 additional jobs in other parts of the economy. Figure 2 
shows these numbers broken down into direct effects and spillover 
effects. The 1.528 million jobs directly supported by the biobased 
industry supported 2.695 million indirect and induced jobs. Similarly, 
the $127 billion in value-added from sales by the biobased products 
industry generated another $266 billion in indirect and induced sales.
Figure 1: Key Findings of the U.S. Biobased Products Industry in 2014


Figure 2: Total Employment and Value-Added to the U.S. Economy from the 
        Biobased Products Industry in 2014
        
        
    In the 2015 report, we highlighted states with particularly high 
concentrations of activity in the biobased products industry using 
location quotients (relative comparisons of direct jobs in each state 
to the national average for the biobased products industry). In this 
2016 report, Section III provides fact sheets that detail jobs and 
value-added contribution by the biobased products industry for all 50 
states and the District of Columbia. Figure 3 shows the direct number 
of jobs supported by the biobased products industry for each state and 
the District of Columbia in 2013. The direct number of jobs by state is 
also listed in Appendix C. Table 1 lists the ten states with the most 
direct jobs in the biobased products industry. Similarly, Figure 4 
shows the direct value-added by the biobased products industry in each 
state and the District of Columbia, while Table 2 lists the ten states 
with the highest direct value-added by the biobased products industry.
Figure 3: Direct Jobs Contributed by the Biobased Products Industry in 
        Each State and the District of Columbia in 2013\3\
---------------------------------------------------------------------------
    \3\Esri, TomTom, Department of Commerce, Census Bureau, U.S. 
Department of Agriculture (USDA), National Agricultural Statistics 
Service (NASS). ``USA States'' Basemap. ArcGIS Online, accessed 3/3/16, 
http://www.arcgis.com/home/item.html?id=1a6cae723af14f9cae228
b133aebc620.



Table 1. Top 10 States for Direct Jobs in the Biobased Products Industry
                                 in 2013
------------------------------------------------------------------------
          Rank                 State Direct                Jobs
------------------------------------------------------------------------
                1               California                  145,080
                2           North Carolina                   90,040
                3                    Texas                   88,680
                4                  Georgia                   80,520
                5             Pennsylvania                   71,360
                6                Wisconsin                   68,250
                7                     Ohio                   52,930
                8                 New York                   52,300
                9                  Alabama                   49,650
               10                  Florida                   47,690
------------------------------------------------------------------------

Figure 4: Direct Value-Added Contribution in Each State by the Biobased 
        Products Industry in 2013\4\
---------------------------------------------------------------------------
    \4\Esri, TomTom, Department of Commerce, Census Bureau, U.S. 
Department of Agriculture (USDA), National Agricultural Statistics 
Service (NASS). ``USA States'' Basemap. ArcGIS Online, accessed 3/3/16, 
http://www.arcgis.com/home/item.html?id=1a6cae723af14f9cae228
b133aebc620.



 Table 2. Top 10 States for Direct Value-Added to the Biobased Products
                            Industry in 2013
------------------------------------------------------------------------
          Rank                    State             Direct Value-Added
------------------------------------------------------------------------
                1               California           $9,862,930,000
                2                  Georgia           $8,237,608,000
                3                    Texas           $6,828,425,000
                4             Pennsylvania           $6,522,151,000
                5           North Carolina           $6,437,140,000
                6                Wisconsin           $6,252,403,000
                7                  Alabama           $4,977,941,000
                8                Tennessee           $4,429,804,000
                9                     Ohio           $4,276,668,000
               10           South Carolina           $4,227,162,000
------------------------------------------------------------------------

    The original report sought to answer six questions:

  (i)  The quantity of biobased products sold

    While there is no database that tracks the quantity of biobased 
products sold, the USDA BioPreferred Program's database currently 
includes over 20,000 biobased products. This database contains a 
limited number of forest products or traditional textile fiber 
products, as these products were only included in the Program recently. 
Therefore, we estimate that the actual number of biobased products on 
the market is dramatically higher than the number in the BioPreferred 
Program's database. In terms of jobs and value-added contributed, the 
forest products sector alone more than doubles the estimates for the 
remainder of the biobased products industry. Thus, 40,000 would be a 
conservative estimate of the total number of existing biobased 
products. The data required to estimate the total number of individual 
``units'' of biobased products that have been sold are not available. 
However, the total value-added from direct sales of biobased products 
in 2014 was estimated to be $127 billion (Figure 2).

  (ii)  The value of biobased products

    The total value-added contribution to the U.S. economy from 
biobased products was $393 billion in 2014, the most recent year for 
which data are available (Figure 2).

  (iii)  The quantity of jobs contributed

    The biobased products industry directly supported 1.53 million jobs 
in 2014 and through spillover effects, supported 4.22 million total 
jobs throughout the economy in the United States (Figure 2).

  (iv)  The quantity of petroleum displaced

    The use of biobased products reduces the consumption of petroleum 
equivalents by two primary mechanisms. First, chemical feedstocks from 
biorefineries have replaced a significant portion of the chemical 
feedstocks that traditionally originate from crude oil refineries. 
Biorefineries currently produce an estimated 150 million gallons of raw 
materials per year that are used to manufacture biobased products. 
Second, biobased materials are increasingly being used as substitutes 
for petroleum-based materials, which have been used extensively for 
many years. An example of this petroleum displacement by a biobased 
material is the use of natural fibers in packing and insulating 
materials as an alternative to synthetic foams, such as Styrofoam. In 
this report, the research team utilized newly available data and 
scientific literature which, when modeled, estimate petroleum 
displacement of up to 6.8 million barrels in 2014.

  (v)  Other environmental benefits

    While only limited lifecycle analyses of the production of biobased 
products have been conducted, the key environmental benefits of 
manufacturing and using biobased products are (1) reducing the use of 
fossil fuels and (2) reducing the associated greenhouse gas (GHG) 
emissions. The previous paragraph presents an estimate of the petroleum 
displacement associated with the biobased products industry. We also 
estimated the GHG emission reductions associated with the production of 
biobased products as alternatives to petroleum-based products. This 
number was not calculated for the 2015 report and is presented here for 
the first time. A literature review showed that there are a wide range 
of GHG reductions resulting from the use of biobased products as an 
alternative to petroleum-based products. Using the upper range of GHG 
emissions reductions potential, the analysis indicates that up to 10 
million metric tons of CO2 equivalents may have been reduced 
in 2014. Given the increasing interest in and use of biobased products, 
it is essential to conduct additional analyses of their potential 
impacts on water quality, water use, land use and other environmental 
impact categories.

  (vi)  Areas in which the use or manufacturing of biobased products 
            could be more effectively used, including identifying any 
            technical and economic obstacles and recommending how those 
            obstacles can be overcome

    A wide range of both near-term and long-term opportunities exists 
that the government and biobased products industry members can pursue 
to advance the biobased products industry. Congress should continue to 
advance the biobased products industry for National Security and 
Domestic Industrial Strength by enacting a short-term production tax 
credit, investment tax credits, and master limited partnerships for 
biobased product manufacturers to help level the playing field with 
petroleum-based products. Congress should also direct the U.S. 
Department of Commerce to work with USDA to develop NAICS codes that 
describe companies in the biobased products industry. Suggested avenues 
for promoting the biobased products industry also include funding the 
USDA BioPreferred Program at the levels similar to its counterparts to 
increase the visibility of the USDA Certified Biobased Product label, 
and expansion of other related USDA programs. Additionally, members of 
the biobased products industry should work together to solve the 
challenges facing their industry.
    As noted above, in addition to collecting data from published 
sources and collecting government statistics, we interviewed 
organizations in the biobased products industry to understand the 
dynamics, drivers, and challenges that will affect the continued growth 
of the industry. We conducted the interviews with personnel in the 
following organizations, institutes, and companies:

 
 
 
 Agricultural     Eastman          Patagonia,
 Utilization Research     Chemical Company         Inc.
 Institute                Enviva           Penford
                                                   Products
 American         Ford Motor       POET, LLC
 Cleaning Institute       Company
 American         Green            Procter &
 Chemical Society         Biologics Ltd.           Gamble
 BASF             General Motors   Seventh
 Corporation              Company                  Generation, Inc.
 Bayer AG         Johnson and      Society of
                          Johnson                  the Plastics Industry
 BioAmber, Inc.   Lanzatech        Tecnon
                                                   OrbiChem
 BioFiber         Lenovo           Tetsis
 Solutions
 International
 Biotechnology    Lux Research,    Tyton
 Innovation               Inc.                     BioEnergy Systems
 Organization
 The Bureau of    Michigan         United
 Labor Statistics of      Biotechnology            Soybean Board
 the U.S. Department of   Institute                U.S. Forest
 Labor                    Myriant          Service
                          Corporation
 The Coca-Cola    NatureWorks      Verdezyne,
 Company                  LLC                      Inc.
 ConVergInce      Nike             Walmart
 Advisers                                          Stores, Inc.
 Cotton           North Carolina   Yulex
 Incorporated             Biotechnology Center     Corporation
 Deere &          Novozymes
 Company
 Dow Chemical     DuPont
 Company
 

    The report includes case studies of the development, manufacture, 
and use of biobased products by the following organizations:

 
 
 
 NatureWorks      DuPont           Green
 LLC                                               Biologics Ltd.
 BASF             The Coca-Cola    Agricultural
 Corporation              Company                  Utilization Research
 Eastman          POET LLC         Institute
 Chemical Company
 Michigan         Verdezyne,
 Biotechnology            Inc.
 Institute
 

Glossary of Terms
    Biobased: Related to or based on natural, renewable, or living 
sources.
    Biobased chemical: A chemical derived or synthesized in whole or in 
part from biological materials.
    Biobased content: The amount of new or renewable organic carbon in 
a material or product as a percent of the material or product's total 
organic carbon. The standard method ASTM D6866 is used to determine 
this amount.
    Biobased product: A product determined by USDA to be a commercial 
or industrial product (other than food, feed, or fuel) that is:

  (1)  Composed, in whole or in significant part, of biological 
            products, including renewable domestic agricultural 
            materials and forestry materials; or

  (2)  An intermediate ingredient or feedstock.

    Biobased products industry: Any industry engaged in the processing 
and manufacturing goods from biological products, renewable resources, 
domestic or agricultural or forestry material. The USDA excludes food, 
feed, and fuel when referring to the biobased products industry.
    Bioeconomy: The global industrial transition of sustainably 
utilizing renewable aquatic and terrestrial resources into energy, 
intermediates, and final products for economic, environmental, social, 
and national security benefits.
    Biomass: Material derived from recently living organisms, which 
includes plants, animals, and their byproducts. For example, manure, 
garden waste, and crop residues are all sources of biomass. It is a 
renewable energy source based on the carbon cycle, unlike other natural 
resources, such as petroleum, coal, and nuclear fuels.\5\
---------------------------------------------------------------------------
    \5\Khan, F.A., Biotechnology Fundamentals: Second Edition, (Boca 
Raton: CRC Press, 2015), 336.
---------------------------------------------------------------------------
    Biobased plastics: Plastics derived from renewable biomass sources, 
such as vegetable oil and cornstarch. In contrast to conventional 
plastics that utilize petroleum-based products as raw material, 
biobased plastics utilize biomass, which can be regenerated, as their 
raw material.
    Biobased polymers: Polymers produced by living organisms that form 
long chains by the interlinking of repeating chemical blocks. Common 
biobased polymers in nature are cellulose in the cell walls of plants 
and polysaccharides such as starch and glycogen.
    Biorefining: Process of production of heat, electricity, fuel, or 
chemicals from biomass. For example, production of transportation fuel 
such as ethanol or diesel from natural sources, such as vegetable oil 
and sugarcane.
    Byproduct: Substance, other than the principal product, generated 
because of creating a biofuel. For example, a byproduct of biodiesel 
production is glycerin and a byproduct of ethanol production is 
distiller's dried grains with solubles.
    Cellulose: Fiber contained in the leaves, stems, and stalks of 
plants and trees. Cellulose is the most abundant organic compound on 
[E]arth.\6\
---------------------------------------------------------------------------
    \6\The Biofuels Handbook, ed. J.G. Speight (London: RSC Publishing, 
2011), 524.
---------------------------------------------------------------------------
    Contribution analysis: The economic effect of an existing sector, 
or group of sectors, within an economy. The results define to what 
extent the economy is influenced by the sector(s) of interest.
    Co-product: Product that is jointly produced with another product, 
which has a value or use by itself. For example, paraffin wax is a co-
product during the refining of crude oil to derive petroleum products.
    Direct effects: Effects generated by the industry of interest 
through employment, value-added, and industrial output to meet final 
demands.
    EIO-LCA: Economic input-output life cycle assessments quantify the 
environmental impact of a sector of the economy.
    Emissions: Gases and particles that are released into the air or 
emitted by various sources.\7\
---------------------------------------------------------------------------
    \7\U.S. Environmental Protection Agency (EPA), ``Air Pollution 
Emissions Overview'', U.S. EPA, accessed June 2016, https://
www3.epa.gov/airquality/emissns.html.
---------------------------------------------------------------------------
    Employment: Considered in this report as full and part-time jobs in 
a sector.
    Enzyme: A protein that catalyzes or increases the rate at which 
chemical reactions occur in living organisms.\8\
---------------------------------------------------------------------------
    \8\Alberts B, Johnson A, Lewis J, et al., Molecular Biology of the 
Cell (New York: Garland Science, 2002), http://www.ncbi.nlm.nih.gov/
books/NBK26911/#A466.
---------------------------------------------------------------------------
    Ethanol: Produced from fermenting any biomass that contains a high 
amount of carbohydrates. It is typically made from starches and sugars 
but advanced generation technologies allow it to be made from cellulose 
and hemicellulose.\9\
---------------------------------------------------------------------------
    \9\International Energy Agency (IEA), ``Glossary'', IEA, accessed 
May 2016, http://www.iea.org/aboutus/glossary/e/.
---------------------------------------------------------------------------
    Forestry materials: Materials derived from the practice of forestry 
or the management of growing timber.\10\
---------------------------------------------------------------------------
    \10\U.S. Government Publishing Office (GPO) Electronic Code of 
Federal Regulations (e-CFR), Title 7 CFR part 3201.2, e-CFR, accessed 
June 2016, http://www.ecfr.gov/cgi-bin/text-
idx?SID=c2eba5045067ce569f1d820d6d77b694&mc=true&node=se7.15.3201_12&rgn
=div8.
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    Genetically Modified Organism (GMO): An organism (i.e., plants, 
animals, or microorganisms) whose genetic material (DNA) has been 
altered in a way that does not occur by mating or natural 
recombination.\11\
---------------------------------------------------------------------------
    \11\World Health Organization, ``Food Safety'', World Health 
Organization, accessed June 2016, http://www.who.int/foodsafety/areas--
work/food-technology/faq-genetically-modified-food/en/.
---------------------------------------------------------------------------
    IMPLAN: Originally developed by the U.S. Forest Service and 
currently owned and operated by IMPLAN Group LLC (Huntersville, NC). 
The IMPLAN database and software system can be used to measure the 
economic effects of a given change or event in a region.
    Indirect effects: The result of all sales by the industry of 
interest's supply chain.
    Induced effects: The changes produced from the purchasing of goods 
and services by households because of changes in employment and/or 
production levels.
    Intermediate ingredient or feedstock: A material or compound that 
has undergone processing (including thermal, chemical, biological, or a 
significant amount of mechanical processing), excluding harvesting 
operations. It is subsequently used to make a more complex compound or 
product.\10\
    Location Quotient: The measure of the concentration of an industry 
in a state, relative to the national average concentration of that 
industry.
    NAICS: Acronym for the North American Industry Classification 
System. A classification system for grouping businesses by similarity 
of production process.
    Output: An industry's gross sales, which includes sales to other 
sectors (where the output is used by that sector as input) and those to 
final demand.
    PET: Polyethylene terephthalate.
    PLA: Polylactic acid.
    Production Tax Credit (PTC): A tax credit that provides a company 
with financial support based on their production. PTCs can be offered 
by the Federal Government or a state government, and can be refundable, 
partially refundable, or nonrefundable.
    Qualified biobased product: A product that is eligible for the 
BioPreferred' Program's mandatory Federal purchasing 
initiative because it meets the definition and minimum biobased content 
criteria for one or more of the 97 product categories designated for 
this initiative.
    Renewable chemical: A monomer, polymer, plastic, formulated 
product, or chemical substance produced from renewable biomass.
    Sector: Unique field of firms that is a portion of the U.S. economy 
defined by NAICS.
    Spillover: Used in the economic modeling in this report to define 
Employment and Value-Added resulting collectively from indirect and 
induced activities.
    Subsector: Field of firms that produce a specialized product.
    Total effect: The sum of the effects of all sales generated by all 
sectors, supply chains, and influence of employees spending within the 
study region. The sum of the direct, indirect, and induced effects.
    Type I multiplier: The sum of direct effect plus indirect effect 
divided by the direct effect.
    Type Social Accounting Matrix (SAM) multiplier: The Type SAM 
multiplier considers portions of value-added to be both endogenous and 
exogenous to a study region. It is the sum of the direct, indirect, and 
induced effects divided by the direct effect. Type SAM multipliers are 
generally the preferred multipliers used in input-output analysis.
    USDA Certified Biobased Product: A biobased product that meets the 
BioPreferred' Program's criteria to display the USDA 
Certified Biobased Product certification mark.
    Value-Added: Composed of labor income, which includes employee 
compensation and sole proprietor (self-employed) income, other property 
type income (OPI), and taxes on production and imports, less subsidies 
(TOPI).

   OPI in IMPLAN includes corporate profits, capital 
        consumption allowance, payments for rent, dividends, royalties, 
        and interest income.

   TOPI primarily consist of sales and excise taxes paid by 
        individuals to businesses through normal operations.

   A sector's value-added is its contribution to the study 
        area's Gross Regional Product.
I. Introduction


A. The USDA BioPreferred' Program
    The USDA BioPreferred Program is charged with transforming the 
marketplace for biobased products and creating jobs in rural America. 
It was established by the Farm Security and Rural Investment Act of 
2002 (2002 Farm Bill) and strengthened by the Food, Conservation, and 
Energy Act of 2008 (2008 Farm Bill), and the Agriculture Act of 2014 
(H.R. 2642 2014 Farm Bill). The Program's mandatory Federal purchasing 
initiative and voluntary USDA Certified Biobased Product label have 
quickly made it one of the most respected and trusted drivers in 
today's biobased marketplace. Visit www.BioPreferred.gov for more 
information.
Strategic Goals
    The mission of the BioPreferred Program is to facilitate the 
development and expansion of markets for biobased products. To 
accomplish this mission, the Program has two broad strategic goals: (1) 
to advance the markets for biobased products and (2) to increase the 
purchase of biobased products government-wide. As of June 2016, there 
were approximately 20,000 products in the BioPreferred Program's 
database.
Mandatory Federal Purchasing
    Private and public purchasers now look to the USDA BioPreferred 
Program to ensure that their purchases are biobased. Beginning in 2005 
with its first designations of six product categories, the Program has 
now designated 97 product categories that include approximately 14,200 
products that are in the mandatory Federal purchasing initiative. The 
Program offers purchasers of biobased products an independent 
assessment of the product's biobased content using a universal 
standard.\12\ By providing a central product registry through its 
online catalog, accessible at www.BioPreferred.gov, the BioPreferred 
Program enables purchasers to find and compare products, such as 
cleaners, lubricants, and building materials, from all participating 
manufacturers. This encourages manufacturers to compete to provide 
products with higher biobased content.
---------------------------------------------------------------------------
    \12\American Society for Testing and Materials (ASTM) 
International, ``ASTM D6866-16. Standard Test Methods for Determining 
the Biobased Content of Solid, Liquid, and Gaseous Samples Using 
Radiocarbon Analysis,'' ASTM International, accessed April 2015, http:/
/www.astm.org/Standards/D6866.htm.


Voluntary Consumer Label
    In February 2011, USDA introduced the BioPreferred Program's 
voluntary label to the consumer market. To date, more than 2,700 
products have been authorized to display the USDA Certified Biobased 
Product label, and the number of applications continues to increase. 
With a web-based application process, the BioPreferred Program makes it 
simple for manufacturers to apply for the label and track their 
applications. The Program's partnership with ASTM International ensures 
quality control and consistent results.
Executive Order 13693, Planning for Federal Sustainability in the Next 
        Decade
    With the Federal Government spending about $450 billion annually on 
goods and services, there is an extraordinary opportunity to increase 
the sale and use of biobased products as required by Federal law. 
Executive Order 13693, ``Planning for Federal Sustainability in the 
Next Decade''\13\ increases Federal agencies' accountability for 
purchasing biobased products in each of the 97 designated product 
categories. Federal agencies are directed to establish annual targets 
for the number of contracts awarded that include biobased products in 
these categories. The dollar value of biobased products is required to 
be reported under those contracts. Federal agencies are also directed 
to ensure that contractors submit timely annual reports of their 
biobased purchases.
---------------------------------------------------------------------------
    \13\The President, ``Executive Order 13693--Planning for Federal 
Sustainability in the Next Decade'', Federal Register web site, 
accessed April 2015, https://www.federalregister.gov/articles/2015/03/
25/2015-07016/planning-for-federal-sustainability-in-the-next-decade.
---------------------------------------------------------------------------
B. About this Report
    To date, the availability of data quantifying the biobased products 
industry in the United States has been very limited. Consistent with 
the 2015 report, a three-pronged approach to gather information was 
taken for this report. A broad spectrum of representatives of 
government, industry, and trade associations involved in the biobased 
products industry were interviewed to understand the challenges and 
future growth potential for biobased products. Information was also 
collected from government agencies and published literature on biobased 
products. IMPLAN's economic databases were used to analyze and trace 
spending through the U.S. economy and measure the cumulative effects of 
that spending.\14\
---------------------------------------------------------------------------
    \14\IMPLAN, ``IMPLAN'' Computer Software, IMPLAN Group LLC, http://
www.implan.com.
---------------------------------------------------------------------------
    IMPLAN is an economic impact modeling system that uses input-output 
analysis to quantify the economic activities of an industry in a given 
region. Impacts or contributions to the region are expressed in terms 
of dollars added to the economy and the number of jobs produced. IMPLAN 
models are ready-made using benchmark data from various government 
sources and non-survey techniques to create regional input-output 
tables. The time and money savings advantages provided by non-survey 
techniques must be balanced with the limitation of introducing 
potential error into local accounts. The inaccuracies of individual 
cells, though, do not necessarily compromise the overall holistic 
portrait a regional table can provide of an economy's interactions. 
Users do have the ability to override any presented data when locally 
collected information is deemed superior.
    When examining the economic contributions of an industry, IMPLAN 
generates four types of indicators:

   Direct effects: effects of all sales (dollars or jobs) 
        generated by a sector.

   Indirect effects: effects of all sales by the supply chain 
        for the industry of interest.

   Induced effects: A change in dollars or jobs within the 
        study region that represents the influence of the value chain 
        employees' spending wages in other sectors to buy goods and 
        services.

   Total effect: the sum of the direct plus spillover (indirect 
        effect and induced effect).

    A Type Social Accounting Matrix (SAM) multiplier was used in 
determining the overall monetary contribution or jobs supported by an 
industry sector. The Type SAM multiplier accounts for the direct, 
indirect, and induced effects on employment and value-added. Appendix A 
describes the IMPLAN modeling framework in detail.
    The greatest limitation of the findings in this report relates to 
the percentages of biobased sectors within the larger economic sectors, 
such as biobased chemicals within the chemical industry. To provide 
conservative estimates of the biobased products sectors, we 
consistently utilized percentages at the lower end of the ranges we 
modeled. As discussed in the recommendations section, the authors of 
this report strongly emphasize the need to develop specific industrial 
sector (North American Industry Classification System/NAICS) codes so 
that the biobased products industry's activities can be tracked more 
effectively and accurately.
    This report is intended to serve as a platform for greater 
understanding and tracking of the progress of the bioeconomy in the 
United States.
    Section II provides an updated overview of the industry based on a 
search of the literature and interviews of industrial members, 
governmental agency personnel, members of non-governmental 
organizations (NGOs), and academics during 2015 and 2016. Also in 
Section II, there are case studies of eight companies that are engaged 
in different parts of the biobased products industry.
    Section III begins with an overview of the state initiatives and 
policies that support the development of the biobased products industry 
at the state level. The most substantial new element of our report is 
the inclusion of in-depth analyses and economic modeling of all 50 
states and the District of Columbia regarding their activities related 
to the biobased products industry. Section III provides this state-by-
state value-added contributions and jobs associated with the biobased 
products industry. There are also two case studies of organizations 
active in the biobased products industry at the state level.
    Environmental considerations related to the biobased products 
industry are discussed in Section IV, where an overview of the GHG 
reduction benefits derived from the utilization of biological 
feedstocks in lieu of non-renewable feedstocks is provided.
    Section V of this report explores various recommendations put 
forward to expand the domestic biobased products industry.
    Appendix A describes the economic modeling framework using IMPLAN. 
Appendix B lists the product categories used by the BioPreferred 
Program to classify biobased products as well as the number of products 
grouped in each category. Appendix C ranks states by the number of 
direct jobs contributed by the biobased products industry. Appendix D 
ranks states by the direct value-added contribution from the biobased 
products industry. Appendix E contains an alphabetical listing of the 
states with their direct jobs, direct value-added contribution, and 
number of companies participating in the BioPreferred Program.
II. Industry Overview
    This section provides an overview of the biobased products industry 
from 2013 to 2014. There is first a focus on some of the key metrics 
used for measuring the biobased products industry--jobs and value-added 
contribution. This is followed by a discussion of some of the biggest 
factors influencing the biobased products industry. The focus then 
shifts to the future with a forecast of where the biobased products 
industry is headed. This section closes with case studies of eight 
companies at the forefront of the biobased products industry.
A. Overview of the Changes from 2013 to 2014
    Figure 5 shows the contributions of the biobased products industry 
to employment and GDP in the United States in 2014. When compared to 
the 2013 results (presented in the previous study),\15\ the direct 
value-added contribution of the biobased products industry grew by 0.2 
percent. Year to year percent changes in direct value-added were 
measured using Producer Price Index for all commodities to account for 
inflation. The direct jobs contribution to the U.S. economy from the 
biobased products industry grew 0.5 percent from 2013 to 2014. Figure 6 
shows the growth in total jobs and total value-added to the biobased 
products industry from 2013 to 2014.
---------------------------------------------------------------------------
    \15\Golden, J.S., Handfield, R.B., Daystar, J., and McConnell, 
T.E., An Economic Impact Analysis of the U.S. Biobased Products 
Industry: A Report to the Congress of the United States of America, A 
Joint Publication of the Duke Center for Sustainability & Commerce and 
the Supply Chain Resource Cooperative at North Carolina State 
University, 2015.
---------------------------------------------------------------------------
Figure 5: Total Employment and Value-Added to the U.S. Economy by the 
        Biobased Products Industry in 2014
        
        
Figure 6: Key Findings of the U.S. Biobased Products Industry in 2014


    The biobased products industry experienced steady growth from 2013 
to 2014. The growth in the direct value-added was smaller than the 
growth in the total value-added. This contributions-based total value-
added growth is predicated on the strengthening of inter-industry 
linkages between the biobased products industry and other parts of the 
U.S. economy.
    The steady growth of the biobased products industry is particularly 
impressive given that the price of oil dropped to roughly \1/2\ its 
January 2014 price by December 2014. Many biobased products are in 
direct competition with petroleum-based products. One would expect that 
as the price of oil decreased and petroleum-based products became 
relatively cheaper, the biobased products industry would see a decrease 
in demand for the products that compete with petroleum-based products. 
The growth in the biobased products industry proves that the industry 
is robust and diverse enough to grow even in the face of a sharp 
decrease in oil prices. It is likely that the biobased products 
industry will experience even greater growth when the cycle of low oil 
prices turns around.
    Interviews conducted for this report indicate that pricing pressure 
from petroleum-based products resulted in challenges to profitability, 
but, in spite of that, revenue and jobs increased and the biobased 
products industry expanded.
    It is apparent that growth is occurring increasingly in specialty 
sectors (see the Eastman Chemical Company case study for an example). 
The methodology used to create this report involved scaling the outputs 
from IMPLAN using estimates of the biobased portion of each sector from 
the 2015 study. This limited the ability to measure the growth of 
specialty sectors. For example, the 2015 study estimated that 0.28 
percent of all plastic bottles and packaging produced in the U.S. was 
made with biobased materials. The focus of this study was to provide a 
state-by-state analysis of the biobased products industry, so the 
authors kept the original 0.28 percent estimate for this report. It is 
very reasonable to assume however, that the biobased products share of 
the plastic bottles and packaging market increased from 2013 to 2014, 
so using the 0.28 percent estimate provides conservative growth 
estimates. It is inappropriate to draw conclusions from the biobased 
products industry growth rate without recognizing that the market share 
of biobased products may be increasing, which is not reflected in the 
growth rate presented in the report. Including the change in the 
percentage of biobased products' market share would provide additional 
granularity that would enable a more meaningful analysis and 
understanding of the shifts in specific sectors of the biobased 
products industry.
B. Factors Shaping the Biobased Products Industry
    The key factors that influence the biobased products industry are 
identified below. These factors reflect a challenging environment for 
the biobased products industry, but they also include several 
encouraging signs that suggest the industry is poised to grow in the 
next decade.
1. Oil Prices
    Figure 7 shows the volatility in oil and natural gas prices over 
the past 16 years. When the price of oil is high, we expect the demand 
to increase for biobased chemicals that can be used as replacements for 
petroleum because they become relatively cheaper. The highly cyclical 
nature of oil prices suggests that prices have reached a low and are 
beginning to increase again The price was in the $40 to $50 per barrel 
range in the summer of 2016. As oil prices increase, the barriers to 
biobased ethanol producers using first- and second-generation 
feedstocks will decrease. Currently, producers are struggling to 
survive with the existing profit margins and they are receiving very 
low payments for their products, regardless of whether the products are 
used as additives or as fuels. This has made the business environment 
very challenging.
Figure 7: Crude Oil and Natural Gas Price Volatility


          U.S. Energy Information Administration (EIA) a, ``Natural 
        Gas: Henry Hub Natural Gas Spot Price'', U.S. EIA, accessed 6/
        6/16, https://www.eia.gov/dnav/ng/hist/rngwhhdm.htm.
          U.S. EIA b. ``U.S. Crude Oil First Purchase Price'', U.S. 
        EIA, accessed 6/6/16, https://www.eia.gov/dnav/pet/hist/
        LeafHandler.ashx?n=pet&s=f000
        000__3&f=m.

    Low margins tend to diminish investment in future business, so it 
is more important than ever to take a long-term view of this 
technology. Government incentives seeking to encourage investments in 
these technologies are critically important at this time because it is 
virtually certain that the outlook for these technologies will be more 
favorable from the long-term perspective.
    As oil prices increase, large companies are increasingly focused on 
making more investments in the biobased chemicals sector and enhancing 
their production capacity in this sector. This is evident in the on-
going mergers of Dow Chemical and DuPont to produce a division focused 
on biobased technologies, as well as other investment strategies in the 
works at BASF, Bayer AG, Eastman Chemical Company, and other leaders in 
the chemical industry.
    We project that oil prices will not remain low for an extended 
period. The expected increases in oil prices will have a positive 
impact on the biobased products industry because often, the overall 
investments made in petrochemical plants and in biobased product 
development come from the same companies and investors. Even though 
many view the two industries as competitors, there are strong ties 
between them.
    Investors, as well as the public, sometimes think that biobased 
products cost more than their petroleum-based counterparts do. Several 
third-party studies have been conducted, and the results support the 
contention that biobased products sequester carbon and have more 
favorable LCAs than non-biobased products. In fact, a 2015 Argonne 
National Laboratory report indicated that all biobased products they 
research that have a fossil-based counterpart exhibited reduced cradle-
to-grave GHG emissions reductions ranging from 27% to 86%.\16\ 
Additionally, life cycle assessment models that incorporate biogenic 
carbon storage show even higher environmental performance.\17\ Our 
interviews suggest that industry executives are beginning to understand 
how efficient the chemical transition from sugar to plastic is, and 
these processes should become cost competitive when they are scaled up. 
However, to achieve this, biobased product producers must collaborate 
with investors who have a long-term view and who will invest in 
efficient facilities and eventually find their functional fit in the 
marketplace.
---------------------------------------------------------------------------
    \16\Dunn, J., Adom, F., Han, J., and Snyder, S. ``A Life Cycle 
analysis of Bioproducts and Their Conventional Counterparts in 
GREETTM'', Argonne National Laboratory, last updated 9/30/
15, https://greet.es.anl.gov/publication-bioproducts-lca.
    \17\Pawelzik, P., Carus, M., Hotchkiss, J., Narayan, R., Selke, S., 
Wellisch, M., Weiss, M., and Patel, M.K. ``Critical aspects in the life 
cycle assessment (LCA) of bio-based materials--Reviewing methodologies 
and deriving recommendations'', Resources, Conservation and Recycling 
73 (2013): 211-228.
---------------------------------------------------------------------------
2. Second-Generation Biobased Feedstocks
    First-generation feedstocks are the easiest to utilize and the most 
common. They are derived from food components such as vegetable oil, 
sugars, grains, and animal fats. Second generation feedstocks are from 
non-food biomass: waste, woody or highly cellulosic sources, and 
agricultural byproducts, which are referred to as lignocellulosic 
biomass.
    One of the key insights gained from our interviews indicated that 
the level of investment for second-generation biofuels and feedstocks 
has diminished significantly. Many of the company representatives with 
whom we spoke have been working to reduce the cost of a commercially 
viable plant, but the slow start of the second-generation technologies 
has resulted in less capital available for investments in equipment.
    A second reason for the slow start of production using second-
generation feedstocks is the global uncertainty regarding the projected 
demand for second-generation fuels. Few of the industries that use 
these fuels expect demand to increase enough to influence the adoption 
of biobased products. There is a need to develop a better understanding 
of the potential and real impacts of government policies on the 
biobased industry, especially on biobased chemicals. As the numbers of 
collaborations and co-development activities continue to increase, it 
is apparent that the stimuli for these activities are investments and 
the perceived success of second-generation technologies that produce 
biofuels. However, rather than investing in a new facility, it may be 
more practical to use existing systems for the production and 
collection of feedstocks rather than developing new systems. After 
years of effort, there are also indications that other feedstocks, such 
as algae, are becoming more practical for higher value chemicals.\18\
---------------------------------------------------------------------------
    \18\Savage, S., ``Replacing Petro-chemicals With Bio-Based 
Alternatives. Can We Do It?'', Forbes, last modified 4/23/16, http://
www.forbes.com/sites/stevensavage/2016/04/23/replacing-petro-chemicals-
with-bio-based-alternatives-can-we-do-it/#6218f036378a.
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    Our discussions with the manufacturers of several major brands 
suggest that they prefer using first-generation feedstocks because 
there is no efficient pathway and supply chain for cellulosics. Taking 
the woody stems of plants and trying to convert them into carbon sugar 
costs a lot more and takes more effort than using first-generation 
feedstocks. Sugar is the most efficient feedstock in terms of the 
acreage required to grow product biobased feedstocks, and, until this 
changes, there is uncertain growth in second-generation feedstocks.
3. New Applications for Enzymes
    Enzymes are used in detergents in the textile sector to break down 
proteins, starches, and fatty stains in the finishing of fabrics. 
Enzymes also are used in several other industrial sectors, such as pulp 
and paper. An innovation in the enzymes sector is the use of symbiotic 
microorganisms to improve the yields of agricultural products.
    Generally, the enzymes sector is undergoing stable, moderate growth 
driven by various businesses, including manufacturers of household care 
products and laundry detergents. Enzyme companies traditionally 
acquired very large accounts in end-use packaged goods, which allowed 
them to make investments in innovations with a specific application in 
mind. However, now enzymes are being used to improve biobased products 
and companies are seeking to collaborate with smaller, more nimble 
companies to drive new product innovation.
    One of the differentiators of the enzyme sector is that, even with 
low revenue growth, returns are improved by optimizing production based 
on biological efficiencies as well as capital investments, such as 
purchasing new fermenters. Enzyme companies can select organisms that 
have better biological efficiencies and can improve them over time 
through genetic engineering. The ability to improve without capital 
upgrades is an important characteristic of the enzyme sector, but may 
not provide advantages over chemical plant and petroleum refinery 
processes, which can also be improved with new catalysts or alterations 
to operational conditions, without major capital expenditures.
4. Federal Government Purchasing
    One key to stimulating growth and participation in the biobased 
products industry is a reliable and robust purchasing commitment from 
the Federal Government. The USDA BioPreferred' Program, 
which includes procurement preferences within the Federal Government 
and voluntary labeling, provides a key way to inform the public. The 
Program has been remarkably successful, despite a funding setback when 
the 2008 Farm Bill expired. Interest in the Program from companies 
producing biobased products is growing and the number of products 
participating in the Program is increasing. The entire Federal 
Government should follow the example set by USDA and ensure that 
biobased products are given preference whenever possible in the 
procurement process.
    There is a general lack of awareness from the public regarding 
biobased products, as is the case in some parts of the Federal 
Government outside USDA. Non-fuel biobased products are virtually 
unknown to the people along the supply chain, including wholesale and 
retail distributors, Federal Strategic Sourcing Initiative contract 
holders (sellers), Federal buyers, and most importantly, American 
consumers. Awareness in the private sector is of particular importance 
because purchasing biobased products is a matter of choice. If the 
Federal Government becomes a reliable customer, these products will be 
produced and distributed efficiently, demand will be met, and the 
industry will thrive. If manufacturers assume the risk of producing 
biobased products in response to the requirements of the Federal 
Government, the government, in turn, should support these products and 
help ``jump start'' this industry. One executive noted that the non-
fuel biobased products industry is in the early stages of evolution, 
and as such, products in this industry are ``custom made'' for the 
Federal Government. That executive believes that, in light of this, 
these types of products should be supported by the government.
    Our interviews also led us to believe that the Federal Government's 
ability to gain traction in the acquisition community relative to the 
purchase of biobased products and services is in a nascent stage. This 
is not due to any lack of effort on the part of the USDA; rather, it is 
due to a lack of widespread awareness within the General Services 
Administration and Federal agencies, including the Department of 
Defense (DOD) regarding the availability and use of biobased products.
    One company executive remarked that, while the USDA Certified 
Biobased Product label is important, he/she believes it is not 
providing the level of market benefit and impact at the consumer level 
that it was believed would emerge. Furthermore, from this executive's 
perspective, the extent to which DOD mandated purchasing of biobased 
products is driving demand for these products within the traditional 
chemical industry is not clear.
    Another executive emphasized that there is a lack of top-down 
Federal policy on using biobased products, which makes it difficult for 
industry leaders to commit to long-term investment, given that there is 
no indication that investment will be supported. According to this 
executive, there is a lot of support for biofuels, but there has not 
been an equal level of support for biobased materials until recently. 
For example, legislation has been written around biofuels, creating 
investment tax credits for biofuels, but not for biobased products. 
Thus, without investment from a big firm, there is no assurance that 
biobased products will be supported. This executive believes that a 
solid value proposition is essential to access the capital needed in 
order for the biobased industry to grow.
5. Biobased Product Innovation and the Need to Consider Supply Chain 
        Impacts
    To innovate in the biobased products industry, companies must 
consider the factors that affect supply chain integration and consider 
incentives to build in the United States. Petrochemical supply chains 
are highly integrated and the pathways for plastics are already 
reasonably well established and understood. However, the biobased 
chemicals supply chain is a combination of the chemical and 
biotechnology fields. The creation of an efficient supply chain 
requires investment and education, both within the industry and the 
consumer base. Many of these supply chain challenges are related to 
reaching a revenue break-even point that will support investments in 
the infrastructure that must be built for this emerging industry.
    Education within the industry is essential to help biotechnology 
scientists understand the dynamics of the chemical industry. The people 
who run some of the new start-up biobased companies have no experience 
in the traditional petrochemical industry. Many rely on consultants and 
market studies to make their decisions and they do so without 
understanding the nature of the overall chemical sector supply chain. 
Some individuals point to the fact that there is a huge end market but 
they neglect to emphasize that 70 percent of that market is already 
captive to downstream conversion processes. When chemical companies 
decide which chemical to produce, they already have downstream 
applications in mind, ensure that the products they produce are cost 
effective, and can beat out competitors.
    However, when a new product is introduced into the biobased 
chemicals sector, there is sometimes less of a clear downstream 
application in mind and sustainable options are not always immediately 
accepted into the supply chain. The decision to introduce a biobased 
chemical product is often made without understanding the macro-level 
issues in the chemical market, such as understanding the end users' 
technical specifications, volume requirements, environmental and 
regulatory requirements, and controlled-substance issues. This lack of 
understanding can cause otherwise highly innovative companies to fail.
    To prevent the recurrence of this situation, companies producing 
biobased chemicals should hire people from the both the chemical and 
biotechnology fields. Comprehensive knowledge and consideration of the 
factors involved in operating a business in the chemical sector helps 
insure profitability.
6. Emerging Education
    Education is emerging to address food versus fuel and GMO 
misconceptions. Many of the organizations interviewed for this report 
noted that the food versus fuel debate remains an inhibitor to market 
growth, based on consumers' misperceptions concerning this issue. In 
addition, many consumers will not buy products that are derived from 
GMOs. Many biobased products fall into this category, as it is 
difficult to trace whether the feedstocks used to make the biobased 
products come from GMO or non-GMO sources, and even in cases where the 
feedstocks can be traced, the distribution and processing and of the 
feedstocks frequently mixes GMO and non-GMO feedstocks.
    The origin of this debate goes back to the 1990s, when some NGOs 
were fighting against the push of companies selling genetically 
modified crops into European markets. Some NGOs campaigned against 
GMOs, and as a result, many consumers became sensitized to genetically 
modified ingredients. Even when biobased companies purchase non-GMO 
corn to send to the mills that provide them with sugar, many of the 
mills are part of a larger biorefinery campus, which makes it 
impossible to segregate non-GMO feedstocks. Although many European 
brands accept the idea that offsets, such as wind power, used by these 
facilities are enough to cancel out the use of GMOs, many North 
American retailers and manufacturers do not feel that these offsets are 
enough to cancel-out the use of GMOs.
    In fact, many large European brands point to the fact that 
sugarcane and corn are the most efficient plants to use for biobased 
products and second-generation feedstocks, such as wood stems, take a 
lot more effort and are much more costly to utilize. Second generation 
feedstocks have encountered limited growth in the market, but there are 
concerns that the release of GHGs globally may cancel the benefits of 
our domestic renewables policy. The link between the use of domestic 
crops for biobased products rather than as a food source has almost no 
correlation with the changes in the patterns of land use worldwide; 
nevertheless, it is a concern that some people express in the ``food 
versus fuel'' debate. In actuality, the United States is using fewer 
acres for corn than it did 10 years ago, but the public perception is 
that a higher percentage of corn being used to make ethanol means there 
is less land available for food production, which simply is not true.
7. Production Credits and Financing Incentives
    Investments by large chemical companies are focused on biobased 
chemicals facilities, but production credits and financing incentives 
are needed to create U.S.-based facilities. After a somewhat rocky 
start following the expiration of funding from the 2008 Farm Bill, the 
BioPreferred Program had a good level of support in the 2014 Farm Bill. 
The administrative regulatory rules are well developed, particularly 
for the Biorefinery Assistance Program. Previously, this rule was 
strictly for advanced biofuels, whereas the current iteration expanded 
the program to include biobased products and renewable chemicals. This 
has led to the development of a framework for assessing the biobased 
products economy. However, this framework also requires that the public 
and private sectors be made aware of the fact that biobased products 
are not in stand-alone facilities; rather, they are part of a large 
supply chain that begins with biorefineries. In the past, if a 
biorefinery produced anything other than biofuels, it did not qualify 
for farm bill benefits, but this has changed.
    The Biomass Crop Assistance Program (BCAP) is an extremely 
important part of the farm bill. For members of the farming community 
to grow cellulosic, non-food crops, they need assurance that they can 
make money by doing so. Some biomass crops require a planting lead-time 
of 1 to 5 years, and this program now provides an assured market with 
mandatory funding.
    Cellulosic ethanol was the initial focus of the BCAP, but the first 
wave of cellulosic technologies were disappointing. The second-
generation cellulosic biofuels have a PTC that expires on December 31, 
2016, but currently, they are receiving a tax credit. There is a 
possibility that a PTC linked to a flexible format based on the 
specific business plan would be very beneficial. This is currently in 
the works for the biofuels and renewable chemicals sectors. This tax 
credit is available to the oil and gas industry through Master Limited 
Partnerships (MLPs) and the credit is related to how business partners 
and business liabilities are defined. MLPs may be made available to 
renewable energy companies.
    The Environmental Protection Agency (EPA) is developing general 
frameworks for carbon accounting. Currently, carbon accounting with low 
carbon fuel standards does not treat biobased carbon feedstocks as 
neutral; however, many in the biobased industry believe they should be. 
This long-term iterative framework could take years to resolve. Those 
in the industry hope that the framework will incorporate a credit for 
biobased feedstocks that are converted into biobased chemicals.
    Many of the investments in the biobased products industry are being 
made by large chemical companies, and these companies are going through 
many mergers and acquisitions. These companies include Bayer/Monsanto, 
National Chemicals (China)/Syngenta, and Dow/DuPont. These mega-mergers 
will result in companies that will have many more resources to invest 
in biobased products and that have a longer capitalization timeline.
    However, there are major challenges for emerging companies that are 
often small start-ups without significant capital. Without a partner to 
provide the required financial resources, it may be difficult to 
interest investors in a 5 year planning horizon. The length of time 
required to develop a product is a function of the available 
infrastructure and the fact that the biobased products industry and the 
biofuels industry are closely connected. Currently, there is a lack of 
infrastructure for the value chain that extends from biofuels to 
biobased products, and biobased products do not have a public policy 
driving the front end of the value chain. This is an enormous roadblock 
to growth in the biobased economy.
    Another legislative challenge has to do with EPA's regulations that 
are in place to standardize fuel. The regulations were intended to 
assure people that their vehicles would run properly when they buy 
fuel. The central focus of EPA's regulations in this area has been to 
standardize fuels with the intent of reducing emissions. However, EPA's 
standardization effort is focused primarily on gas derived from 
petrochemical sources rather than renewable sources. The assumption is 
that any biobased fuels that are added to fossil fuels must comply with 
the standards for fossil fuels. This has created a challenge for 
biobased fuels, making it more difficult to use them in flex-fuel 
vehicles, which are designed to operate primarily with 15 percent 
ethanol in the fuel mixture, imposing a cap on the growth of the 
market. The current challenge is how to go about getting approval for a 
higher level of renewable fuels for all vehicles. Various companies, 
including POET, are working on these problems with the automotive 
industry. The next-generation fuel for vehicles must meet these 
regulatory constraints because, currently, they are impeding the growth 
of the renewables market.
    The biopolymer sector has experienced tremendous technology 
development over the last decade, with the United States leading these 
advancements. However, for production capacity, the sector is still in 
its nascent stage. The opportunity and the danger for the United States 
is whether the construction of biopolymer plants over the next 5 to 10 
years and the full range of their associated facilities and jobs will 
predominantly be located in the United States or elsewhere, where 
feedstocks and the cost of production can be cheaper. For example, 
companies identified as the ``hot leaders'' in the biobased products 
industry, such as Verdezyne, are building facilities in Malaysia, 
because of the vision and financial support of the country's 
government. It is clear that certain governments and emerging economies 
are offering incentives to convince companies to invest there in an 
effort to ensure their country's long-term, sustainable growth. 
Southeast Asia, Europe, and Brazil are establishing regional hubs of 
industrial biobased products. Good examples of companies facing this 
issue are Verdezyne and Green Biologics, both of which have pursued a 
dual approach of sourcing outside and inside the United States based on 
local government support.
    The businesses that will survive most easily in the biobased 
products industry are those that emerge from creatively designed 
collaborations. This means carefully selecting a pathway, carefully 
assessing and minimizing the risks associated with that pathway, and 
appointing leaders who are creative, smart, and spend money wisely, as 
they go forward. This is the basic path forward for this industry, all 
the way from feedstock suppliers and treatment technologies, to 
downstream building block technologies and sustainable materials that 
are converted into higher value chemicals. Partners along the end-to-
end supply chain will need to work together to design these supply 
chains, with a given end product in mind, and the total end-to-end cost 
to serve the customer must be used to drive cost targets for those 
enterprises along the way. This may involve larger companies 
collaborating with smaller companies that have new and innovative 
ideas.
    One example of successful use of PTCs is in Iowa. Iowa also has 
identified biobased products as a targeted growth industry for the 
state and has advocated for a biobased production credit to be 
established.\19\
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    \19\Willett, B. and Hrdlicka, J., ``The Case for a Renewable 
Biochemical Production Tax Credit'', Iowa Biotechnology Association, 
2016.
---------------------------------------------------------------------------
    Interviews suggest that a renewable chemical PTC would be 
fundamental to the ultimate location decision in or outside Iowa for 
new projects. Iowa has invested more in biobased manufacturing capital 
assets than any other state. The state invested $61 million in the 
ethanol industry. This money will be returned to the state though taxes 
and increased economic activity. The payback from income taxes alone 
would take just 2 years. The payback period is only 1 year if we assume 
that eight percent of the economic activity is returned in taxes.\20\
---------------------------------------------------------------------------
    \20\Cultivation Corridor, ``Biobased Chemicals: The Iowa 
Opportunity,'' Cultivation Corridor, last updated 1/14/16, http://
www.cultivationcorridor.org/assets/pdf/Iowa-Biobased-Chemicals-Full-
Report.pdf.
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    The success of the biobased products industry depends on its 
ability to function at a large enough scale to be competitive with the 
petrochemical industry. Being competitive does not require that 
biobased products industry be the size of the petrochemical industry, 
but it cannot simply be a series of small plants scattered around a 
landscape. Moreover, many of the chemicals produced through 
fermentation that go into biobased products happen to be competing in 
commodity markets. Producers should think clearly about focusing on 
specialty markets, with products that have unique performance 
characteristics, based on conversion of biobased commodity chemicals 
into specialized chemicals through chemical synthesis. Specialty 
biobased chemicals can be produced in this manner at a total cost of 
production that is lower than the variable cost of production of 
petrochemically derived chemicals, which allows them to grow and 
compete.
    An executive interviewed argued that producers of biobased products 
must adapt to the market they are in, and to do this, they must 
understand their product on every level. This executive continued, 
adding that it is important to understand the performance of the 
molecules that make up a product and how they blend with other 
ingredients; it is important to be able to target the right 
applications through innovation and understand the commercial impacts 
of a product. According to this executive, having a deep understanding 
of their products allows biobased producers to be more adaptable than 
big commodity players.
    Our interviews regarding PTCs also lead us to believe that short-
term incentives are sorely needed. Several companies with U.S.-
developed biobased technologies are looking for locations to build new 
facilities. Some countries provide incentives to build these types of 
facilities, but incentives for them are absent in the United States. 
Given the intense international competition at this historic point, the 
companies we interviewed are exploring all global options for expansion 
projects, which includes taking into account political leadership and 
market push and pull policies.
    Investment in the biobased products industry remains strong. 
However, continued growth can be bolstered by the development of a 
strong end user market as well as growth in production credits to help 
launch the industry.
C. Biobased Products Industry Growth Forecast
    A recent forecast stated the following: ``One of the bright spots 
in American manufacturing is the petrochemical industry, which produces 
chemicals used to make everything from car tires to fertilizer to 
fabrics. According to the American Chemistry Council (ACC), chemical 
companies have committed $153 billion in new investment in production 
in the United States over the next decade.''\21\ Given the growth in 
the petrochemical investment sector as a whole, it is also likely that 
some growth will be seen in the biobased chemical sector investment as 
part of overall increased investment in the chemicals sector. Indeed, 
interviews we conducted with university centers that focus on piloting 
new biobased chemical technologies indicated that the university 
centers are seeing strong demand for their services, an indicator of 
the increasing number of emergent technologies, especially in the pilot 
stage. (See the MBI case study in section III.) The ACC estimates that 
growth in the chemicals sector will create more than 800,000 permanent 
jobs, paying an average salary of over $69,400 and generating more than 
$322 billion in annual economic output.
---------------------------------------------------------------------------
    \21\Hoium, T., ``4 Reasons Why Falling Oil Prices Are Worse Than 
You Think'', The Motley Fool, last modified 12/5/15, http://
www.fool.com/investing/general/2015/12/05/4-reasons-why-falling-oil-
prices-are-worse-than-yo.aspx.
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    However, if the price of oil stays low for an extended period, 
projects may be delayed or cancelled, which would result in fewer 
manufacturing jobs being supported in the U.S. In addition, the number 
of gas field jobs would decrease, because less natural gas is needed 
for domestic manufacturing.
    Despite the current low price of oil, we project that the biobased 
products industry in the United States will exhibit steady growth over 
the next 5 years. The rationale for this projection is the following 
trends evident in our interviews:

   The major focus of the leaders in the biobased products 
        industry is on innovation and differentiation of products.

   Oil prices are increasing, which will make biobased products 
        more competitive.

   There will continue to be growth in enzyme-related 
        industries.

   Federal purchasing policies are becoming more focused on 
        biobased products.

   A wave of emerging innovations is targeting the biobased 
        products industry.

   Investments by large chemical companies are focused on 
        biobased chemical facilities.

    We also identified several steps that must be taken to overcome 
factors that challenge the growth of the biobased products industry:

   Production tax credits (PTCs) must be extended beyond 
        biofuels to include biobased products.

   Further legislation is required to support the biobased 
        products industry.

   Financial incentives are needed to promote the construction 
        and operation of more U.S.-based facilities.

   States need to provide resources to support the growth of 
        the biobased products industry, which is very important because 
        currently there are insufficient pilot plants to foster 
        innovation.

   Further efforts to integrate the biobased products 
        industry's supply chain are needed.

   Increased education is needed to help address the ``food 
        versus fuel'' myth and the ``no-genetically modified organisms 
        (GMOs)'' faction, leading to increased understanding of and 
        growth in the biobased products industry.
C1. Case Study: NatureWorks


          Ingeo-based products by Natur-tec.

    NatureWorks began as a joint venture between Cargill (a large 
private agricultural products company) and Dow (a chemical, plastic, 
and agricultural products company). Cargill had done a lot of 
development work on high-end products using biological feedstocks and 
expressed interest in forming a company focused on creating a 
carbohydrate products economy. The Cargill-Dow joint venture included a 
154,000 ton facility in Nebraska to transform carbon sugars 
(cornstarch) into lactic acid, which is a key building block for 
biobased products. The lactic acid produced on an industrial scale was 
used as a monomer to produce several different polymers, including 20 
different grades of plastic.
    One product, polylactide (IngeoTM), is used primarily by 
the packaging markets. The product has properties similar to PET and is 
a clear plastic that is used in drinking bottles, plates and cups, 
flexible film packaging, computer housings, baby wipes, apparel, covers 
for cellphones, and many other products. Ingeo produces 75 percent less 
GHGs and uses 50 percent less non-renewable energy than traditional 
plastics, such as PET and polystyrene (PS).
    Identifying the right applications for Ingeo was a challenge. 
NatureWorks' Director of Public Affairs, Steve Davies, explained that 
NatureWorks understands that there is not a green premium for biobased 
products, so a product's performance must be superior to what is 
already on the market. Mr. Davies went on to say that after about 10 
years of studying the properties of Ingeo, NatureWorks now knows where 
the material works well and where it does not.
    For example, NatureWorks determined not to use Ingeo to make 
plastic bottles because the material is technically ``breathable'', and 
the water it contains can evaporate. However, it is excellent for 
packaging leafy greens, as Ingeo allows a longer shelf life for the 
product.
    Mr. Davies also emphasized that understanding the fundamentals and 
cost of what one is selling is important. There is a wide spectrum of 
biobased plastics, from hard (PET) to soft (polyethylene for trash 
bags), and everything in between. It is also important to look at the 
ratio of the pounds of sugar required to produce a pound of plastic. 
For PLA, 1.25 pounds of sugar produces 1 pound of plastic. Biobased PET 
requires a ratio of 3 pounds of sugar to 1 pound of plastic. Mr. Davies 
explained that there is constantly a need to make tradeoffs and 
consider the cost-effectiveness and characteristics of one plastic 
versus another, as PLA is better for some applications, while PET is 
better for others. Mr. Davies argued that materials must be cost-
effective, and this point is often lost in discussion.
    NatureWorks works with hundreds of partners that produce biobased 
products. They are also expanding, and a petrochemical company based in 
Thailand has invested as an equity partner, due to their large export 
of cane sugar. There are plans to build a new biorefining facility in 
Thailand near the source of feedstocks, as well as plans to expand the 
Nebraska facility due to the increasing demand.
    There is significant interest in certain product sectors, including 
replacing PET clamshell packaging, using Ingeo for packaging yogurt at 
Danone, and in other food-packaging areas. Ingeo is cost neutral, but 
it performs better and has a smaller carbon footprint, and this has 
become a winning combination for many manufacturers.
    Another important element of food packaging is where the packaging 
ends up. Many people discard packaging and do not consider what happens 
to it after that. What if all of the food packaging could be composted? 
The ``killer value proposition'' is to render the entire value stream 
compostable by using PLA-based food packaging. Packaging for food 
products is one of the biggest opportunities on the horizon for 
NatureWorks, but there are enormous barriers. The conventional plastics 
industry may never be replaced, and other than milk jugs and water 
bottles, most plastics are not recycled.
    Mr. Davies noted the importance of the Three Ps: Performing the 
right function at the right price and meeting the customer's 
preference, in that order. If a product is performing better than the 
alternative and it is priced competitively, then it follows that 
consumers will prefer it.
C2. Case Study: BASF


          Source: BASF. Three BASF scientists in laboratory in 
        Tarrytown, New York.

    Biotechnology is a key component of the German chemical company 
BASF. It has the potential to manufacture products more efficiently 
than conventional chemical processes and it can produce new products 
inaccessible using conventional synthesis approaches. BASF uses 
biobased-based methods of fermentation and biocatalysis to manufacture 
various products, such as chiral compounds, enzymes, and specialty 
ingredients for the personal care industry.
    In February 2012, BASF opened a new biotechnology and microbiology 
research center in Tarrytown, New York. In the new laboratory, 
scientists from a number of disciplines, including material scientists, 
biologists, polymer scientists, molecular biologists, and chemists, are 
working together to develop more efficient biotechnological production 
processes.
    These researchers are also working to develop new antimicrobial 
products for medical technology, hygiene, and health care. The use of 
metabolic engineering, targeted metabolism modification, can enhance 
the efficiency of the microorganisms that are used in these production 
processes.
    In 2013, BASF acquired Verenium, an enzyme company based in San 
Diego, CA. Using proprietary and patented genomic technologies, 
Verenium extracts microbial DNA directly from collected samples to 
avoid growing microbes in a laboratory. Then, Verenium mines its 
collection of microbial genes, which number in the billions, using 
high-throughput screening technologies designed to identify unique 
enzymes as candidate products. In making these investments, BASF 
demonstrated its unmitigated belief in the strength of the biobased 
products industry. Now, BASF is working to integrate the Verenium 
technology into its business portfolio.
    For example, BASF produces a biobased product known as 
polytetrahydrofuran 1000 (PolyTHF), which is used in outerwear, 
sportswear, and swimsuits. PolyTHF mainly is used as a chemical 
building block for thermoplastic polyurethane, which is used to make 
parts of ski boots and skates, shoe soles, and instrument panel `skin' 
for automotive applications. It also is used to make hoses, films, and 
sheathing for cables and as a component of thermoplastic polyether 
esters and polyether amides. Other applications include cast 
elastomers, which are used, for example, in the production of wheels 
for skateboards and inline skates.
    PolyTHF is derived from 1,4-butanediol (BDO), which BASF produces 
under license from Genomatica.\22\ Although it is biobased, it is a bit 
more expensive than petroleum-based BDO. Cost of materials is a key 
issue that BASF always must consider. It is very important to evaluate 
customers' and brand owners' opinions of biobased products versus 
conventional products, particularly when the biobased products may be 
marginally less cost effective.
---------------------------------------------------------------------------
    \22\BASF, ``BASF now offers bio-based PolyTHF'', BASF, last updated 
3/5/15, https://www.basf.com/en/company/news-and-media/news-releases/
2015/03/p-15-163.html.
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    BASF is committed to biobased feedstocks, and to this end, in 2015, 
BASF expanded the scope of its license agreement with Genomatica. Using 
Genomatica's patented process, BASF produces BDO from renewable 
feedstocks in a large production facility. Under the expanded license 
agreement, BASF can produce up to 75,000 tons of renewable BDO per 
year, while Genomatica will continue to advance its patented process 
technology. Today, BASF produces more BDO than any other company, and 
it has the capability of producing this product in multiple locations. 
BDO is a versatile monomer, which can be used in the manufacture of 
many other chemicals. As such, BASF views BDO as an increasingly 
important product in its portfolio.\23\
---------------------------------------------------------------------------
    \23\BASF, ``BASF and Genomatica expand license agreement for 1,4-
butanediol (BDO) from renewable feedstock'', BASF, last updated 9/24/
15, https://www.basf.com/eg/en/company/news-and-media/news-releases/
2015/09/p-15-347.html.
---------------------------------------------------------------------------
    BASF recognizes that a core unknown underlying the future of the 
biobased products industry is customers' perceptions. BASF's goal is to 
produce products to sell to customers in the most economical and 
sustainable way possible. The Company has invested in extended LCAs for 
many of its technologies, which involves exploring the various 
technological pathways to produce any given product. For some products, 
there are clearly huge advantages for chemical processes over 
fermentation. New chemical and fermentation processes are being 
developed, and these studies will continue.
    Markus Pompejus, Vice President of Research, noted that 
biotechnology is the only pathway for certain products, especially 
those that involve enzymes. BASF invests in research to examine 
internal pathways for the production of chemicals in integrated 
production facilities rather than in isolated facilities, which allows 
it to produce at a more efficient scale in its major production sites 
in Europe and China.
    BASF does not let the low price of oil detract the company from its 
long-term view. Mr. Pompejus pointed out that technology in isolation 
is not a strategy. According to Mr. Pompejus, a strategy involves 
questions concerning the best ways to produce products, i.e., ways that 
are economically and environmentally optimal, and this involves 
evaluating barriers and tradeoffs. One of the most important issues in 
this industry is the lack of ability to predict the decisions that the 
government will make. Legislation that varies depending on who is in 
Congress can cause disruptions in long-term strategies. Predictability 
in legislation is a factor that supports the long-term approach to 
investments in biobased technology.
    BASF is committed to collaborating with universities and small 
companies to conduct research. Mr. Pompejus emphasized that biobased is 
not about taking a wait-and-see attitude. He went on to explain that 
BASF has made a strong R&D commitment to industrial biotech with the 
full understanding that there is not a premium just because a product 
is sustainable and that these materials must be produced at the same 
cost level as non-biobased materials, or, alternatively, provide an 
extra form of value. Mr. Pompejus observed that there is no chemical 
that is a ``pure'' drop-in, as there are always performance 
differences. A monomer produced by fermentation is not a drop-in for a 
petroleum-derived material, as there always will be downstream 
processes that must adapt when the switch is made from a chemical raw 
material to a fermented chemical. The downstream impacts must always be 
considered. This is true even for a 99 percent pure chemical produced 
in two different ways. The minor side effects on the downstream process 
may cause it to perform in a somewhat different way.
    Mr. Pompejus added that sometimes the process has to be changed, 
and familiarity with the whole supply chain allows BASF to do that 
internally.
C3. Case Study: Eastman Chemical Company


    Using cellulose from wood pulp or cotton linters, Eastman Kodak 
developed cellulose nitrate, which was used in the film that launched 
the movie entertainment industry. An unfortunate property of cellulose 
nitrate film was that the heat from the projector's lamp often ignited 
it. This led to the development of cellulose acetate film, also known 
as ``safety film'', which became the industry standard by 1948. Because 
cellulose acetate film degraded over time, polyester film began to 
replace it in 1970. Polyesters, which are composed of mixed esters, 
also are used for filter media and coatings, with the latter producing 
a very clear, mirror-like image. The Eastman Kodak Company was the 
major producer of film for cameras prior to the digital camera era, 
when digital cameras virtually eliminated the Kodak film brand. The 
management of the Company understands how technology and the 
competitive ecosystem can change an entire industry in a very short 
period. In 1994, Eastman Chemical split off from the original Eastman 
Kodak Company.
    Today, Eastman Chemical is one of the largest producers of 
cellulose acetate, which is used in a wide variety of applications, 
including pharmaceuticals, adhesives, automotive products, coatings, 
polishes, and food packaging.
    Dr. Stewart Witzeman, an organic chemist who has been at Eastman 
for more than 30 years, noted that, to be successful, biotechnology 
requires a focus on techno-chemical analyses and on the ability to 
involve the multiple factors that impact innovation decisions. Eastman 
has made a specific strategic decision to focus on specialty materials 
rather than commodities. To support this decision, the Company 
established a group to develop innovation models that can balance the 
price of a barrel of oil versus corn and gas prices, capital costs, and 
feedstock prices. The models also consider the total lifecycle of 
feedstocks and products in relation to customers' needs.
    Because Eastman is the only producer of mixed cellulose esters, the 
team focuses on how additional investments can drive the right market 
outcomes. For example, Eastman shut down its butanol facility when it 
became clear that the Company could not compete with the production of 
this chemical through petrochemical pathways. Strategically, it also 
was clear that adding butanol capacity was not consistent with the 
Company's direction in focusing on specialty materials.
    The Company continues to drive innovation related to biobased 
products around a line of products focused on enzymatic analysis, some 
of which are biobased. For example, its GEMTM technology is 
focusing on the ingredients of sustainably manufactured cosmetic 
products. The Company's web site states ``Sustainability . . . is 
embedded in everything we do. It's about balance.''\24\ Guided by the 
U.S. EPA's ``Twelve Principles of Green Chemistry'', GEMTM 
technology uses enzymes and closely controlled manufacturing conditions 
to eliminate high temperatures, strong acids, and unwanted byproducts, 
while using less energy than conventional manufacturing processes.\25\ 
Eastman's adhesives also include many natural products, such as its 
rosin resins, derived from the sap in tree stumps.
---------------------------------------------------------------------------
    \24\Eastman, ``Sustainability: Embedded in everything we do'', 
Eastman, accessed May 2016, http://www.eastman.com/Company/
About_Eastman/Our_Stories/Pages/Embedding_Sustain
ability.aspx.
    \25\Eastman, ``Eastman GEMTM technology'', Eastman, accessed May 
2016, http://www.eastman.com/Company/GreenProcess/Pages/
Overview.aspx?utm_source=GEM%20Tech
nology%20landing%20page&utm_medium=GEM%20Technology%20landing%20page& 
utm_campaign=GEM%20Technology%20landing%20page.
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    In all of these cases, biobased feedstocks contribute to the 
improved performance of these products. Dr. Witzeman emphasized that 
Eastman focuses on superior performance at a competitive price and 
pointed to chemicals, such as PLA, that have had some performance 
problems over the years. He noted that many start-ups are able to 
identify a biobased material, but struggle with articulating the market 
application. Dr. Witzeman went on to say that having an innovation 
without a clear value proposition from the outset is a recipe for 
failure.
    To overcome this problem, Dr. Witzeman asserted that companies 
should not focus on innovations that are an adjacency or a minor 
adjustment to a current product or material. Rather, to be truly 
groundbreaking, companies must begin with market analysis at a macro 
level: understand the competition and the pain points that exist in the 
market. They can then begin to determine what is required to solve 
those pain points and explore that with customers. Based on customer 
feedback, companies can then decide if they have something that is 
worth pursuing.
C4. Case Study: DuPontTM


    DuPont has a long history of research and innovation in the 
biobased products industry and is focusing on the innovative 
manufacturing of products made from biobased feedstocks. Its most 
successful product to date, Sorona', was developed as a 
polymer and is currently used extensively in the carpet and apparel 
sectors. The Company also has invested in research on emerging 
technologies using plant-based feedstocks to produce new products.
    A Global Marketing Manager of Biomaterials from DuPont commented on 
some of the leading challenges facing the biobased products industry: 
From my perspective, one of the things that the commercial biobased 
industry as a whole is challenged with is the idea of getting consumers 
to recognize and pay for the value that sustainability offers them and 
society overall. The default for most consumers is to think short-term 
and buy the product that is the least expensive to do the job without 
regard to its longer-term impact on the environment. One of the ideas I 
believe we have to embrace is that sustainability and our need to make 
conscious consumer choices about living sustainably will become an 
increasingly bigger part of our daily lives. But to economically 
compete in a sustainable world, we need to have higher performing 
products, allowing companies to extract value for that differentiated 
performance while using renewably-sourced feedstocks to achieve these 
product attributes. We want to do the right thing, but a higher level 
of awareness and value recognition is needed in the consumer base.
    Another challenge to the biobased products industry concerns 
starch-based versus plant-based feedstocks. Plant-based feedstocks, 
such as agricultural waste or purposefully grown crops, can be used for 
biobased products, but because the supply chain and technologies for 
these feedstocks are still not well developed, the costs are still 
excessive. Therefore, the industry must continue to build on the 
success of the grain-based and starch-based agricultural inputs that 
already provide significant advantages in terms of GHG reductions, 
economic benefits to rural economies, and reducing our reliance on 
fossil fuels.
    DuPont aims to create sustainable solutions for the masses, not 
just for those who can afford to pay a green premium. They believe that 
biobased product technology should be designed to benefit the greatest 
number of people. DuPont has a strong research program that is focused 
on developing other value-added polymers based on biotechnology and 
renewable feedstocks.
    According to our interview, this means extending the amount of 
renewable feedstocks that can be produced sustainably by using biomass 
consisting of the residual, non-food parts of current food crops, as 
well as other non-food crops. These types of feedstocks also include 
industrial waste like woodchips and the skins and pulp from fruit 
pressing.\26\ This, in turn, will require greater collaboration between 
entities to co-develop new technologies that are the products of two 
different complementary capabilities.
---------------------------------------------------------------------------
    \26\Inderwildi, O.R. and King, D.A., ``Quo vadis biofuels?'', 
Energy & Environmental Science 2, no. 4, (2009): 343-346, doi: 10.1039/
B822951C.
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    A good example is the case of Sorona' (produced from 
Bio-PDOTM manufactured by DuPont Tate & Lyle). This product 
is sold primarily for fiber applications, including apparel, 
residential carpets and rugs, commercial carpets, and automotive 
carpets, mats, and interiors.\27\ The research into Bio-
PDOTM began with the realization by Tim Gierke, Research 
Manager at DuPont Central Research & Development, that 1,3-propanediol 
(PDO) has three carbons and that three-carbon and six-carbon forms are 
prolific in nature. A team of DuPont scientists and engineers 
collaborated with polymer experts to discuss the possibility of 
producing PDO using biological processes. This led to a research 
project that lasted over a decade and that eventually resulted in a 
biological process that could produce the quantities of PDO required 
for a commercially viable product.
---------------------------------------------------------------------------
    \27\DuPont, ``The Manufacturing Process of Bio-PDOTM and 
Bio-Based Fibers'', DuPont, accessed 6/2/16, http://www.dupont.com/
products-and-services/fabrics-fibers-nonwovens/fibers/brands/dupont-
sorona/articles/how-dupont-sorona-is-made.html.
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    Next, DuPont scientists partnered with scientists from Genencor, an 
industrial biotech company that later was acquired by DuPont, to 
develop an organism that could use the glucose from cornstarch to 
produce PDO. They also developed a proprietary fermentation process 
that included meticulous cleaning and distillation to produce a pure 
form of Bio-PDOTM.
    Then, a commercial scale, $100 million dollar Bio-PDOTM 
plant was built in Loudon, TN, as a joint venture between DuPont and 
Tate & Lyle. Today, railcars full of corn arrive at the Tate & Lyle wet 
mill where glucose is produced from cornstarch and pumped from the wet 
mill to the Bio-PDOTM production facility, where 
microorganisms are added to the glucose. Five nine-story-tall 
fermenters are filled with glucose that contains the organisms. The 
organisms excrete Bio-PDOTM, forming a broth that is 
separated and distilled, producing 99.97 percent pure Bio-
PDOTM. The remaining 0.03 percent is primarily water. The 
Bio-PDOTM is loaded into rail cars and shipped to customers 
who use it to make a variety of products.
    One of these products is Sorona'. Carpeting made with 
Sorona' offers durability that is equal to or better than 
nylon carpeting, and it provides crush resistance and resilience. In 
addition, carpeting made with Sorona' is naturally 
permanently stain-resistant: the resistance is built into the fibers 
and does not diminish with time or use as occurs with topical 
treatments. Apparel made with Sorona' has exceptional 
softness, strength, quick drying time, and stretch and recovery 
characteristics. As a result, the sales of this product have increased 
in the various markets every year since its introduction.
    There are several important points that should be emphasized 
evident in this case study:

   The timeline for product development was about 10 years, 
        which is longer than most. This is clearly indicative of the 
        need for longer-term planning horizons, because biotechnology 
        research often requires multiple iterations to produce 
        compounds with the required characteristics, and then, the 
        required process technology must be developed.

   DuPont found it important to envision and consider the end-
        to-end supply chain for a new product to be commercialized. 
        Tate & Lyle had a technology that was suitable for the 
        development of Bio-PDOTM that DuPont could use. If 
        it had been necessary for DuPont to initiate the development of 
        a new technology for this purpose, the project would have had a 
        lower probability of success.

   From commercial and marketing perspectives, the performance 
        characteristics of Sorona' carpet and apparel are 
        unique, in that the product outperforms PET or nylon products 
        based on several attributes in these categories. 
        Sorona' continues to gain market share in 
        competition with these products, and it has sustained its 
        performance advantages over them.

    These issues form an important set of ``lessons learned'' that 
researchers and manufacturers of biobased products should consider. 
Some of the key questions for executives to consider include the 
following:

  1.  From a market standpoint, does the technology serve a specific 
            market need? What volume can be produced? Specialty 
            products are certainly attractive since niche markets tend 
            to have higher margins. However, companies should also 
            consider the broader market and ask (1) whether their 
            technology can address a larger, broader market and (2) 
            what it will take that larger market to use their 
            technology.

  2.  What complications will be involved in setting up the supply 
            chain for the technology? What does the capital footprint 
            look like for this technology? Is there a drop-in solution 
            that exists within a current asset, and, if so, can a 
            partnership or joint venture be established to utilize this 
            capacity? This can make the difference between a $20 to $30 
            million capital investment to expand a facility and the 
            $350 million typically required to build a new plant.

  3.  If the capital assets result in an acquisition, is the 
            acquisition complementary to what the company already has 
            in its portfolio. If so, would it help diversify the 
            company and result in improving what the company already 
            has?

  4.  Is the sustainable product using truly renewable materials? 
            Often, this issue is overlooked, and it requires an 
            understanding of many complicated issues. For instance, 
            will it fall into the perceived ``food versus fuel'' issue, 
            is the site itself sustainable, and how does it participate 
            in the renewable materials cycle?

    These issues require significant strategic insight and discussion 
during product development and scientific research targeting processes. 
A holistic approach is required, and all factors, such as markets, 
supply chains, and sustainability requirements, that come into play as 
the scenario for a new biomaterial evolve must be considered.
    Recently, DuPont announced an intended merger with Dow with a 
subsequent plan to split into three separate companies. This activity 
will result in a large ``specialty'' company that has a significant 
interest in the biobased products industry. Future technology platforms 
include emerging biomaterials for various markets, such as paper and 
personal care, and fibers to replace existing products with biobased 
products.
C5. Case Study: The Coca-Cola Company


    When Coca-Cola set out be more sustainable, it recognized from the 
outset that the entire end-to-end lifecycle of a beverage bottle had to 
be considered. Biobased feedstocks are used to make the 
PlantBottleTM packaging, and on the back end, when the 
consumer is through with it, the bottle can be recycled or repurposed. 
This can help keep the CO2 the biobased feedstocks removed 
from the atmosphere sequestered inside these products, rather than 
released back into the atmosphere.
    Coca-Cola's PlantBottleTM is made from 30 percent plant-
based materials and 70 percent traditional, petroleum-based materials. 
Because the end product is still PET plastic, the 
PlantBottleTM package delivers the same performance as PET 
plastic bottles made from fossil fuels (e.g., shelf life, 
recyclability, weight, chemical composition, appearance), but it 
reduces potential CO2 emissions. PET plastic is made up of 
two components: MEG (mono-ethylene glycol), which makes up 30 percent 
of the PET by weight and is made from plants, and PTA (purified 
terephthalic acid), which makes up the other 70 percent.
    Coca-Cola is exploring the development of furanic building blocks 
from plant-based sugars, under the name YXY. These furanics building 
blocks are the basis of next-generation, plant-based plastics and 
chemicals. Avantium, the company producing these furanic compounds, is 
focusing its efforts on using the YXY technology as a catalytic process 
to convert sugars to 2,5-furandicarboxylic acid (FDCA), a biobased 
alternative to terephthalic acid (TA). FDCA can be used to produce the 
polyester polyethylene-furanoate (PEF), a 100 percent biobased material 
that could replace PET in large markets, such as bottles, fibers, and 
film. Coca-Cola is working with Avantium, Danone, Gevo, and Virent to 
support the scale-up of Avantium's plant-based PEF. Virent's chemical 
allows the remaining 70 percent of the bottle to be plant-based.
    PlantBottleTM packaging is available to consumers in 
more than 40 countries and, to date, the Company has produced over 40 
billion bottles. This is a large, critical mass of PET that is used in 
a number of leading brands, such as Simply Orange, Minute Maid, Gold 
Peak Tea, Dasani, and SmartWater. Biobased PET is predominantly used 
for the packaging of carbonated soft drinks, which accounted for more 
than 75 percent of the market in 2013. The increasing consumption of 
beverages in the emerging markets of Brazil, Russia, India, China, and 
South America are expected to drive the growth of the biobased PET 
market. Coca-Cola has committed to promoting the use of biobased PET in 
packaging, which is expected to have a major impact on market growth in 
the near future.\28\ The feedstock for PlantBottleTM 
packaging is sugarcane from Brazil, and it is moving toward cost parity 
with PET derived from crude oil. Coca-Cola sees a pathway for 
PlantBottleTM technology to emerge as the dominant PET 
option in the end, especially since oil prices are expected to 
increase.
---------------------------------------------------------------------------
    \28\Grand View Research, ``Bio-Based Polyethylene Terephthalate 
(PET) Market By Application (Packaging (Bottles), Technical, Consumer 
Goods), And Segment Forecasts To 2020 Is Expected To Reach 5,800 kilo 
tons By 2020'', last updated 12/1/14, https://globenewswire.com/news-
release/2014/12/01/687467/10110349/en/Bio-Based-Polyethylene-
Terephthalate-PET-Market-By-Application-Packaging-Bottles-Technical-
Consumer-Goods-And-Segment-Forecasts-To-2020-Is-Expected-To-Reach-5-
800-kilo-tons-By-2020.html.
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    Coca-Cola's has an on-going effort to take the 70 percent non-
renewably-sourced portion of the bottle, and move it towards a 100 
percent biobased resin. The Company is slowly making headway towards 
this goal.
    There are three driving forces behind Coca-Cola's decision to 
create and use the 100 percent PlantBottleTM package.

  1.  Sustainability and carbon capture. The response from consumers 
            was overwhelmingly positive concerning 
            PlantBottleTM packaging. The Company has also 
            made significant strides in better communicating the 
            technology used to create the PlantBottleTM to 
            its consumers, distributors, and partners.

  2.  Cost and line-of-sight around competitive elements. This came 
            about as the cane sugar feedstocks in Brazil proved to be 
            cost-competitive. Coca-Cola also needed to prove that the 
            sugarcane was being grown on arable land, was not competing 
            for land or water with other crops, and that the byproducts 
            from sugar extraction were not being wasted.

  3.  Top-line growth and brand differentiation. 
            PlantBottleTM packaging has become a core 
            element differentiating Coca-Cola beverages, especially 
            with consumers' growing focus on sustainability. Coca-Cola 
            has collaborated with the World Wildlife Fund to form a 
            consortium that includes brands, such as Nestle, Danone, 
            Unilever, Ford, P&G, Nike, and others, to set guidelines 
            and industry standards that prevent others from jumping in 
            with green washing claims or creating confusion.

    Michael Knutzen, Global Program Director for 
PlantBottleTM, indicated that Coca-Cola is the largest 
biobased PET buyer. According to Mr. Knutzen, Coca-Cola views itself as 
a catalyst for the industry to increase use of renewable materials, and 
it is working with its partners to do so. Mr. Knutzen went on to say 
that Coca-Cola is sharing their technology with other companies so they 
can all benefit from the PET supply chain that Coca-Cola is creating.
    Mr. Knutzen remarked that one of the benefits Coca-Cola would like 
to see is for the polymer sector to enjoy the same benefits that the 
Renewable Fuel Standard (RFS) provides to biofuels. It is easier to 
incorporate ethanol into biofuels than to make plastic out of ethanol. 
Furthermore, fuel companies tend to have limited partnerships that 
provide tax benefits, while buyers of renewable plastics are not 
eligible for the same benefits.
C6. Case Study: POET


    POET stared when Jeff Broin and his family bought a foreclosed 
ethanol plant in Scotland, South Dakota. POET has since grown from a 
single, small refinery into one of the largest producers of ethanol and 
other biorefined products in the world. The success of the first 
enabled POET to operate more than 25 production plants and form a 
vertically integrated business system with several business entities. 
In addition to biofuels, POET produces a variety of products, including 
Dakota Gold distiller's grains, VoilaTM corn oil, and 
INVIZTM zein. The Company is also focusing on the 
development of natural, renewable food sources and alternatives to 
petrochemicals. The Company has ``an integrated business model that 
combines technology development with expertise in construction, 
operations, risk management, and marketing''.\29\
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    \29\POET, ``Company At a Glance'', POET, accessed August 2016, 
http://www.poet.com/at-a-glance.
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    POET is also on the forefront of encouraging the switch to a 
bioeconomy. The RFS has largely pushed the United States toward 
blending renewable fuel with transportation fuel. To diversify, the 
Company has moved into animal feed, which is another emerging market 
due to the trend towards higher protein diets. POET is also working on 
developing cellulosic ethanol, with a ramp up of a 25 million gallon 
cellulosic plant. It is working to use corn to power its cellulosic 
operations, and feeding an adjacent corn ethanol plant with leftover 
raw materials.
    POET has patented a unique technology using a raw starch hydrolysis 
process, called BPX, which converts starch to sugar with a proprietary 
blend of enzymes, whereas other ethanol producers use a jet cooker to 
break down starch with heat. BPX reduces the energy requirement in the 
plant by eight to 15 percent and increases the yield by 0.10 to 0.15 
gallon per bushel. After years of development, the process was ramped 
up to commercial-scale production in 2004, and it is currently used in 
all of POET's biorefineries. The EPA recognizes BPX as an advanced corn 
ethanol technology under the second RFS regulations.
    POET is working on the branding of their products. The American 
Petroleum Institute's (API's) press releases beginning in the mid-2000s 
were initially supportive of the RFS and of biofuels in general. 
However, as the production of biofuels has increased and has become 
more of a competitive threat, the petroleum industry has become less 
supportive. To educate the public and change this perception, POET has 
focused on three key messages related to biofuels and biobased 
products: biofuels are clean burning, based on renewable materials, and 
emit fewer toxic compounds than gasoline. The Company also recognizes 
that additional work is required to support public views concerning 
GMOs and to counter false conjectures related to the food versus fuel 
debate. One Company executive noted that the biobased products and 
biofuels industries have the potential to replace the petroleum 
industry, and loosely supported conjectures could hamper this 
potential. Rigor and focus are needed on these issues and the academic 
community can play a big role in this regard. The POET executive 
believes that rigorous analytical study on this subject will show the 
actual environmental impacts of both sources of fuel. The API must face 
the facts that there will be more fuel-efficient vehicles on the roads 
and that there will be increased competition from renewable fuels. 
While the Corporate Average Fuel Economy (CAFE) standards cannot be 
changed, surpassing the competition is always an option. When this 
option is exercised, there should be strong efforts to ensure that the 
public receives the right message.
C7. Case Study: Verdezyne


    Verdezyne is a global manufacturer of industrial chemicals that has 
developed technology for producing a range of chemical intermediates 
via fermentation of renewable feedstocks, primarily byproducts of fatty 
acids. The Company has developed a proprietary platform for engineering 
yeast to metabolize multiple non-food-based renewable feedstocks and 
produce a number of widely used, high-value chemicals.
    Verdezyne's first commercial plant in southern Malaysia is expected 
to produce its first commercial product, biobased dodecanedioic acid 
(DDDA), by the end of 2017. DDDA is a valuable intermediate used to 
produce high performance nylon 6,12; polyester resins; adhesives; and 
powder coatings. DDDA is used in many other applications as well, 
including, polyester polyols, adhesives, corrosion inhibitors, and 
coatings. Verdezyne uses a yeast platform to produce DDDA from low-
cost, plant-oil feedstocks. DDDA is traditionally produced from 
butadiene using a multi-step petrochemical-based process.
    Recently, Verdezyne was awarded the Bloomberg New Energy Pioneer 
Award as one of the 50 Hottest Companies in the Advanced Bioeconomy. 
The candidates were assessed using the following three criteria: 
potential scale, innovation, and momentum. Verdezyne also recently 
received the 2016 Small Business Award at the Presidential Green 
Chemistry Challenge Awards.
    Jenna Ngian, who joined Verdezyne in January 2015 as Vice President 
of Global Sales and Supply Chain, has over 25 years of experience in 
sales, marketing, product management, supply chain management, 
operations, and business process reengineering for leading chemical 
companies, including DuPont and INVISTA. Prior to joining Verdezyne, 
she was leading product management at Genomatica, where she worked to 
create brand reputation and brought supply chain expertise to the 
commercialization of the Genomatica's products. Her experience working 
in the traditional chemical industry was important for moving into the 
field of biobased products.
    Ms. Ngian's perspective is based on her work at both traditional 
chemical companies and biobased chemical companies. One very important 
key difference between the two is financing. According to Ms. Ngian, 
financing is more than just an important issue--it is the biggest 
issue. The financing options available to a company can differ 
depending on the company's size. Most large chemical companies self-
fund their expansions and other needs from equity or debt since they 
have relatively good access to financial markets, but smaller biotech 
companies must depend on funds from their external partners. Because 
the technology development cycle usually takes a long time, venture 
capital or development partners often become impatient, and many 
companies deplete their available resources before they reach the proof 
of technology or commercialization stages. Ms. Ngian believes that the 
government needs to play a bigger part in developing this industry, as 
do many other countries in the world except the United States. The 
implication is that the U.S. Government should be more like the 
governments of other countries who have played bigger roles in 
developing this sector.
    The field of biotechnology is rapidly changing due to many 
different factors. First, the productivity of sequencing and synthesis 
has increased at an exponential rate. The cost of genome sequencing in 
2001 was $100 million per sequence. By 2007, it was $10 million and in 
2016, it is $1,000, which is only 0.01 percent of what it was 9 years 
ago. By 2020, it is expected to decrease to a penny. The cost of 
synthesis also has decreased to less than 0.6 percent of its base cost 
15 years ago.\30\ The biotechnology field is very different from other 
traditional members of the chemical sector, a fact that has made 
Verdezyne's strategy successful.
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    \30\Timetoast, ``History of Biotechnology'', Timetoast, accessed 7/
25/16, https://www.timetoast.com/timelines/history-of-biotechnology--3.
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    The second major change can be observed by studying the history of 
biotechnology. After the structure of DNA was discovered in 1953, the 
development of many other genome-related discoveries followed, such as 
gene expression, sequencing, and cloning. Decades later, these 
developments provided the basis for significant technologies the 
biobased industry now uses. Advancements in tools, methodologies, and 
digital technology have also aided in progressing this field. For 
example, at the onset of World War II, the United States and its allies 
lost access to the natural rubber supply from Southeast Asia. To 
prevent vulnerability due to the loss of this important material, the 
U.S. Government provided support for multiple large rubber companies 
working together to find a solution. With the sponsorship of the U.S. 
Government, the companies were able to pool their technologies, 
intelligence, and resources to produce general-purpose synthetic rubber 
at a commercial scale.\31\
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    \31\American Chemical Society, ``U.S. Synthetic Rubber Program'', 
American Chemical Society, accessed 7/25/16, http://www.acs.org/
content/acs/en/education/whatischemistry/landmarks/
syntheticrubber.html.
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    This situation shows how biobased technologies emerged from a 
direct shortage in the market. Today, we are faced with a similar need: 
support for biobased product manufacturing, which should receive 
greater investment support from the government; the need, in this case, 
is driven by climate change and the need for sustainable materials.
    The third major change is the environmental movement, which began 
in the 1970s with the first Earth Day, the Clean Air Act, the Clean 
Water Act, and others. The movement was further spurred by social and 
environmental issues, including climate change, food security, and 
major pollution events. However, business-led sustainability platforms 
did not gain popularity until the mid-2000s. The launch of the Global 
Social Compliance Programme in 2006 emphasized that social and 
environmental sustainability must be a collaborative effort among 
companies to drive positive change and that business efficiency along 
the supply chain is essential. More recently, the concept of corporate 
responsibility is driving a much greater focus on reducing the carbon 
footprint, using renewable materials, and conducting product LCAs.
    The rapid decreases in the cost of biotechnology; the speed of 
commercially available tools, processes, and technologies that are much 
more efficient than before; and the increasing awareness of social and 
environmental concerns indicate the speed at which the biotechnology 
world is changing. As a result, massive growth in this field is 
expected over the next 10 years. However, some short-term barriers are 
already apparent.
    A barrier that stands in the way of progress is the lack of an 
established supply chain. The petrochemical supply chain is well 
established, with pipelines, storage facilities, and dedicated refining 
facilities that were created along with the supporting regulatory and 
legal infrastructure. Instead, the biobased chemicals sector must deal 
with the daunting challenge of combining two long-established, separate 
supply chains: the agriculture and chemical supply chains.
    Verdezyne is an excellent example of how a chemical company 
executive can make a difference in a new biobased chemicals company by 
addressing the issues associated with the integration of supply chains. 
The Company targeted many different nylons, such as nylon 6,6 and nylon 
6,10, and nylon 6,12, which impart high functionality, stability, and 
resistance. Premium nylons command a higher price, and are used in 
coatings, adhesives, and in automotive products, such as fuel hoses.
    The decision to build the production facility in Malaysia was based 
partly on funding sources. In 2005, the Malaysian Government 
established the National Biotechnology Policy (NBP) that sought to turn 
the biotechnology field into one of the key economic drivers in the 
nation with the goal of contributing five percent of the nation's GDP 
by 2020. The Malaysian Biotechnology Corporation (BiotechCorp) was 
given the responsibility for executing the objectives of the NBP. As 
such, it provided financial assistance and developmental services to 
facilitate and accelerate the growth of biobased companies. It also 
sought to create a conducive environment for promoting international 
investments in the biobased industry in Malaysia. These initiatives 
offered Verdezyne significant tax incentives, funding as much as the 
equivalent of $60 million U.S. dollars at favorable interest rates and 
access to plentiful sources of sugarcane feedstocks. Some individuals 
feel the U.S. Government should provide similar incentives to drive a 
similar level of support for building the required infrastructure to 
support the domestic development and application of technology within 
U.S. borders.
    Verdezyne's product is identical to DDDA derived from 
petrochemicals. It is a ``drop in'' like many others, but it has been 
recognized in the industry as having the highest quality and the lowest 
color, which may or may not generate a small premium in the market 
price. Ms. Ngian noted that while Verdezyne has identified a niche 
market where there are not many DDDA players, Verdezyne always strives 
to be competitive.
C8. Case Study: Green Biologics


    Green Biologics grew out of two different companies that eventually 
came together to become what it is today. Edward Green, an ethanol 
fermentation expert, founded Green Biologics in England in 2003 to 
advance technologies for the production of renewable chemicals and 
biofuels, such as butanol. In an article for Chemical & Engineering 
News, Green Biologics' Chief Technology Officer, Tim Davies recalled 
that there was a lot of buzz around biofuels and funding for research 
at that time. Green Biologics thought higher alcohols might be useful, 
so they began applying methods of biology, metabolic engineering, 
biochemistry, fermentation, and process engineering to reinvent the 
acetone-butanol-ethanol (ABE) fermentation process.\32\
---------------------------------------------------------------------------
    \32\Bomgardner, M. M, ``Green Biologics Pursues A Biobased Meeting 
Of The Minds'', Chemical & Engineering News, last updated 6/25/15, 
http://cen.acs.org/articles/93/i26/Green-Biologics-Pursues-Biobased-
Meeting.html?h=816950987.
---------------------------------------------------------------------------
    Green Biologics later began working with existing ABE plants in 
China, allowing the plants to use a strain of a butanol-producing 
microbe called Clostridium from its library of modified microbes to 
advance their existing processes. Mr. Joel Stone, who is the former 
President of Green Biologics' U.S. operations, remarked that Green 
Biologics was able to leverage the capability of the Chinese plants 
while using their own, more efficient organism. This, coupled with 
design capability for distillations systems designed in collaboration 
with the Chinese, resulted in a technology operating at commercial 
scale and generated sales for Green Biologics.
    As Green Biologics grew its presence in Europe and Asia, an Ohio-
based company called Butylfuel was formed by David E. Ramey and Thomas 
Grote. Like Green Biologics, Butylfuel's focus was on creating 
renewable chemicals and biofuels, and the company built a 40,000 L 
pilot fermentation plant to do so. In 2012, Green Biologics and 
Butylfuel merged, extending the company's operational presence to the 
United States. The newly merged Green Biologics shifted its emphasis to 
renewable chemicals, which, according to Mr. Stone, was because butanol 
as a chemical had a sizable market, and Green Biologics anticipated 
that there would be biobased demand.\33\
---------------------------------------------------------------------------
    \33\Bomgardner, M. M, ``Green Biologics Pursues A Biobased Meeting 
Of The Minds'', Chemical & Engineering News, last updated 6/25/15, 
http://cen.acs.org/articles/93/i26/Green-Biologics-Pursues-Biobased-
Meeting.html?h=816950987.
---------------------------------------------------------------------------
    With the new company, the executives began efforts to de-risk their 
processes and eliminate duplication of effort across strain 
development, technology development, and other areas. As they continued 
to build the demonstration plant in the United States, it became clear 
that the economics of the ethanol market were not looking positive, and 
there were many distressed ethanol plants. This led to the idea that, 
after the demonstration plant was constructed, it would be best to 
avoid investing in a new plant, but to invest in and convert a 
distressed-asset plant instead.
    Thus, Green Biologics found a smaller scale plant in Minnesota that 
would not work as an ethanol plant--because it did not have the scale 
of 100 million gallons a year, but it could produce 20 million gallons 
a year, which was ideally suited for what Green Biologics needed. The 
capital expense was reasonable, and, from an engineering standpoint, it 
was scalable to move from a demonstration plant to a commercial plant. 
A ``creative deal'' was negotiated, whereby Green Biologics entered 
into an agreement with a purchase option, using a monthly fee for up to 
1 year, and an exercise option to close on the price of the facility in 
12 months. This allowed the Company to ``prove out'' the technology 
moving from a demonstration plant. The deal was supported further by a 
grant from the State of Minnesota's Agricultural Department, which 
helped with the initial engineering work required for the plant. From a 
``de-risking'' standpoint, this allowed the capital costs to be 
validated and effectively financed. Green Biologics exercised its 
option and took possession of the facility in December 2014. This led 
to additional engineering work, and, despite the incredibly difficult 
financial investment climate for biobased products in 2015, Green 
Biologics was able to raise over $76 million in funds in 2015. Squire 
Pacific was brought in as a new venture capital investor.
    Several lessons from this experience are worth noting. Green 
Biologics started as a butyl fuel company, believing that it could 
successfully license the technology. It eventually moved to specialty 
line, butanol, which occurred through close collaboration, a frugal 
investment strategy, partnering between two companies with a similar 
set of leadership strategies, and a slow, but steady, scale-up from the 
bench, pilot, and demonstration phases to a full, commercial plan. This 
was achieved by spending a lot less than the hundreds of millions of 
dollars that other companies had spent.
III. State Overviews
A. State Incentives and Policies
    In 2012, the Obama Administration announced The National Bioeconomy 
Blueprint, which outlined steps that agencies would undertake to drive 
the advancement of the bioeconomy.\34\ The Federal Government sees 
enormous potential in the nation's abundant natural resources, capacity 
for emerging and advanced technologies, entrepreneurial spirit.\35\ To 
realize both the immense potential of the bioeconomy and the important 
role that policy plays in championing the process, one can look to the 
emergent wood pellet subsector within the southeastern United States.
---------------------------------------------------------------------------
    \34\White House, ``National Bioeconomy Blueprint'', White House, 
last updated April 2012, https://www.whitehouse.gov/sites/default/
files/microsites/ostp/national_bioeconomy_blueprint_april_2012.pdf.
    \35\Biomass Research and Development Board, ``Federal Activities 
Report On The Bioeconomy,'' Biomass Research and Development Board, 
last updated February 2016, http://biomassboard.gov/pdfs/
farb_2_18_16.pdf.
---------------------------------------------------------------------------
    The success of the wood pellet subsector illustrates the importance 
of regulatory support. The Renewable Energy and Energy Efficiency 
Export initiative, supported by President Barack Obama, was created, in 
part, to improve U.S. export competitiveness in renewable energy. In 
2010, the United States exported $128 million worth of wood pellets in 
response to the demand for a source of renewable energy.\36\ In 2014, 
this figure grew to over $500 million, as growth was facilitated by the 
USDA Market Access Program's commitment to identifying and growing 
additional market opportunities for wood pellet exports in the European 
Union.\37\ The same support for the broader biobased products industry 
must be demonstrated on a state level for the industry to maximize its 
potential.
---------------------------------------------------------------------------
    \36\White House, ``National Bioeconomy Blueprint'', White House, 
last updated April 2012, https://www.whitehouse.gov/sites/default/
files/microsites/ostp/national_bioeconomy_blueprint
_april_2012.pdf.
    \37\Lowenthal-Savy, D, ``UK's renewable energy targets drive 
increases in U.S. wood pellet exports'', U.S. EIA, last updated 4/22/
15, http://www.eia.gov/todayinenergy/detail.cfm?id=20912.
---------------------------------------------------------------------------
    A few states have specific policies in place to further the 
advancement of the bioeconomy and specifically the biobased products 
industry, as shown in Table 3. While this report does not include 
economic data on biofuels, we include biofuel incentives as examples of 
what could be done for biobased products, and to indicate movement by 
states towards increasing the utilization of biological feedstocks for 
industrial purposes in the United States.

              Table 3. Overview of State Policies and Incentives for Biobased Products Development
----------------------------------------------------------------------------------------------------------------
                                                                    Production                      Procurement
                  Tax Credit(s)   Tax  Exemption       Loans          Payment        Grant(s)         Program
----------------------------------------------------------------------------------------------------------------
         Iowa                X
Massachusetts                                                                                                X
     Michigan                                                X
    Minnesota                                                                X
       Oregon                X
     Virginia                X               X                                               X
   Washington                X
    Wisconsin                X
----------------------------------------------------------------------------------------------------------------

Iowa
    In April 2016, the Iowa Legislature passed the Biorenewable 
Chemical Tax Credit Program, a revenue-neutral tax incentive and 
economic development package that allocates $100 million in tax credits 
over 10 years to be applied to the manufacturing of 40 key building 
block chemicals. For each pound of biobased chemicals produced in a 
given year, a company can receive a $0.05 tax credit. Financial 
incentives are annually capped at $500,000 for companies 5 years and 
older, and $1,000,000 for companies less than 5 years old. The program, 
which represents the strongest existing incentive package for the 
global biobased chemical industry, was designed and implemented to 
attract national biobased chemical companies and new businesses to the 
state.\38\
---------------------------------------------------------------------------
    \38\Cultivation Corridor, ``Biorenewable Chemicals: The Iowa 
Advantage'', Cultivation Corridor, accessed 6/1/16, http://
www.cultivationcorridor.org/biochem/.
---------------------------------------------------------------------------
    The production of higher-value basic chemical compounds, which can 
utilize the co-products of existing corn and soybean manufacturing 
facilities, is a fast growing segment of the biobased products 
industry, representing a significant change for Iowa to develop a 
cluster of biobased chemical companies.\39\ The hope is that the Iowa 
Biorenewable Chemical Tax Credit Program will achieve the same success 
as the tax credits of the Iowa ethanol industry, which produces a 
quarter of the ethanol in the United States. An analysis of the Iowa 
ethanol industry indicated that 32 percent of the industry is located 
in Iowa because of the support given by the state. Furthermore, since 
2006, tax credits in excess of $61 Million have been provided in 
support of the state's 38 ethanol plants. Total capital spending on 
these plants has been nearly $4.5 billion, meaning that tax support 
equaled just 1.3 percent of the total capital spending.\40\
---------------------------------------------------------------------------
    \39\Iowa Economic Development, ``Renewable Chemical Production Tax 
Credit Program'', Iowa Economic Development, accessed 6/1/16, http://
www.iowaeconomicdevelopment.com/userdocs/documents/ieda/
RenewChemTaxCredit_042016.pdf.
    \40\Cultivation Corridor, ``Biobased Chemicals: The Iowa 
Opportunity,'' Cultivation Corridor, last updated 1/14/16, http://
www.cultivationcorridor.org/assets/pdf/Iowa-Biobased-Chemicals-Full-
Report.pdf.
---------------------------------------------------------------------------
Massachusetts
    Massachusetts offers an Environmentally Preferable Products (EPP) 
Procurement Program, which aims to help the Commonwealth use its 
purchasing power to reduce both the environmental and public health 
impacts of state government, in addition to stimulating market demand 
for environmentally preferable products and services.\41\ As part of 
the Procurement Program, the state provides an Environmentally 
Preferable Products and Services Guide that assists buyers in finding 
products, services, and vendors. Since its inception in 1995, the 
program has increased spending on EPPs from roughly $5 million to an 
estimated $400 million. Furthermore, Massachusetts works to identify 
locally sourced products that are grown, harvested, and processed 
within the state. Certified products are provided a ``Commonwealth 
Quality'' brand designation by the Massachusetts Department of 
Agricultural Resources, which works to provide a guarantee that such 
products are grown and harvested within the state, utilizing production 
practices that adhere to a set of criteria and environmental 
standards.\42\
---------------------------------------------------------------------------
    \41\E Commonwealth of Massachusetts Executive Office for 
Administration and Finance, ``Environmentally Preferable Products (EPP) 
Procurement Program,'' Mass.Gov, accessed 6/14/16, http://www.mass.gov/
anf/budget-taxes-and-procurement/procurement-info-and-res/procurement-
prog-and-serv/epp-procurement-prog/.
    \42\Massachusetts Department of Agricultural Resources (MDAR), 
Commonwealth Quality, MDAR, accessed 6/14/16, http://thecqp.com/
index.html.
---------------------------------------------------------------------------
Michigan
    In Michigan, the Department of Agriculture & Rural Development, in 
conjunction with the Michigan Economic Development Corporation, offers 
a variety of programs intended to help support the financing and growth 
of agricultural processing and support industries within the state.\43\
---------------------------------------------------------------------------
    \43\Michigan Economic Development Corporation, ``Agribusiness 
Financing Programs,'' Michigan Economic Development Corporation, 
accessed 6/1/16, http://www.michiganbusiness.org/cm/files/fact-sheets/
agribusinessfinancingprograms.pdf?rnd=1464620718277.
---------------------------------------------------------------------------
Minnesota
    In 2015, the Minnesota legislature established the Bioincentive 
Program, which is intended to make Minnesota an excellent destination 
for commercial-scale advanced biofuel and biobased chemical plants. The 
program provides production payments to encourage commercial-scale 
production of advanced biofuels, biobased chemicals, and thermal energy 
production from agricultural, forestry, or solid waste sources.\44\
---------------------------------------------------------------------------
    \44\Minnesota Department of Agriculture, ``Bioincentive Program'', 
Minnesota Department of Agriculture, accessed 6/1/16, http://
www.mda.state.mn.us/grants/agri/bioincentive.aspx.
---------------------------------------------------------------------------
    For companies to take advantage of the Renewable Chemical 
Production Incentive Program, chemicals must be at least 51 percent 
biobased. Manufacturing facilities must also (a) be located within 
Minnesota, (b) source 80 percent of their raw materials from Minnesota, 
and (c) produce a minimum of 750,000 pounds of chemicals per quarter to 
enter the program and for each quarter in which a reimbursement claim 
is made. Production payments range from $0.03 per pound of chemical 
produced from sugar, cellulosic sugar, or starch, to $0.06 per pound of 
chemical produced from cellulosic biomass.\45\
---------------------------------------------------------------------------
    \45\Minnesota Department of Agriculture, ``Bioincentive Program'', 
Minnesota Department of Agriculture, accessed 6/1/16, http://
www.mda.state.mn.us/grants/agri/bioincentive.aspx.
---------------------------------------------------------------------------
    The producer payment incentive program, in addition to volumetric 
fuel blending requirements, was previously championed by Minnesota to 
build a strong first-generation ethanol industry.\46\ Over the course 
of a decade, the State of Minnesota provided over $450 million to help 
construct 21 corn ethanol plants within the state, which jointly 
contribute over $5 billion annually to the Minnesota economy.\47\ As 
opposed to alternative financial programs, the inherent advantage of a 
producer payment program is that payments are only made for actual 
production of eligible products, thereby negating the risks inherent in 
grants or loans.
---------------------------------------------------------------------------
    \46\Bioeconomy Coalition of Minnesota, ``Bioeconomy Production 
Incentive Program Created in Minnesota'', Bioeconomy Coalition of 
Minnesota, accessed 6/1/16, http://mnbioeconomy.org.
    \47\Bilek, A. and Jordan, B. ``2015 Minnesota Legislative Session 
Recap: Bioeconomy Edition'', Great Plains Institute, last updated 7/6/
15, http://www.betterenergy.org/blog/2015-minnesota-legislative-
session-recap-bioeconomy-edition.
---------------------------------------------------------------------------
Oregon
    Oregon provides tax credits for the production, collection, and 
transportation of biomass resources that are utilized for energy 
production.\48\ To be eligible for the tax credits, the biomass 
material must be (a) sourced from within the state and (b) utilized as 
biofuel, or used in the production of biofuel in Oregon.
---------------------------------------------------------------------------
    \48\Business Oregon, ``Renewable Energy'', Business Oregon, 
accessed 6/1/16, http://www.oregon4biz.com/Oregon-Business/Tax-
Incentives/Renewable-Energy.
---------------------------------------------------------------------------
Virginia
    Virginia offers incentives, such as tax incentives, grants, and 
investment programs, for emerging life science technologies and 
companies within the state.\49\
---------------------------------------------------------------------------
    \49\Virginia Biotechnology Association, ``Incentives for Bioscience 
Research, Commercialization and Investment in the Commonwealth'', 
Virginia Biotechnology Association, accessed 6/1/16, https://
www.vabio.org/?page=incentives.
---------------------------------------------------------------------------
Washington
    Washington has passed a House Bill that restored preferential 
timber industry business and occupation tax rates for manufacturers of 
biocomposite surface products, in addition to existing incentives for 
timber harvesting and manufacturing/processing activities. Washington 
also offers a reduced tax rate for manufacturing wood biomass fuel.\50\
---------------------------------------------------------------------------
    \50\Washington State Department of Revenue, ``Incentive Programs: 
Deferrals, Exemptions, and Credits,'' Washington State Department of 
Revenue, accessed 6/1/16, http://dor.wa.gov/content/findtaxesandrates/
taxincentives/incentiveprograms.aspx/.
---------------------------------------------------------------------------
Wisconsin
    Wisconsin creates a competitive advantage within its state by 
offering a ``Manufacturing and Agriculture Credit'', which serves to 
virtually eliminate the tax on income for both manufacturing and 
agricultural activities occurring within the state.\51\
---------------------------------------------------------------------------
    \51\Wisconsin Department of Revenue, ``Wisconsin Manufacturing and 
Agriculture Credit'', Wisconsin Department of Revenue Retrieved, last 
updated 9/8/15, https://www.revenue.wi.gov/taxpro/fact/manufandagr.pdf.
---------------------------------------------------------------------------
B. State Statistics
    Figure 8 shows the number of biobased products industry jobs per 
1,000 people in each state in 2013. Table 4 shows the direct jobs 
contributed at the state level for the top ten states. Similarly, 
Figure 9 shows the value-added by the biobased products industry in 
each state, and Table 5 shows the top ten states by value-added 
contribution in the biobased products industry.
Figure 8: Direct Jobs Contributed by the Biobased Products Industry in 
        Each State and the District of Columbia in 2013\52\
---------------------------------------------------------------------------
    \52\Esri, TomTom, Department of Commerce, Census Bureau, U.S. 
Department of Agriculture (USDA), National Agricultural Statistics 
Service (NASS). ``USA States'' Basemap. ArcGIS Online, accessed 3/3/16, 
http://www.arcgis.com/home/item.html?id=1a6cae723af14f9cae228
b133aebc620.
---------------------------------------------------------------------------
Jobs per State, 2013



                Table 4. Top 10 States for Direct Jobs in the Biobased Products Industry in 2013
----------------------------------------------------------------------------------------------------------------
           Rank                                  State                                Direct Value-Added
----------------------------------------------------------------------------------------------------------------
                 1                                        California                               145,080
                 2                                    North Carolina                                90,040
                 3                                             Texas                                88,680
                 4                                           Georgia                                80,520
                 5                                      Pennsylvania                                71,360
                 6                                         Wisconsin                                68,250
                 7                                              Ohio                                52,930
                 8                                          New York                                52,300
                 9                                           Alabama                                49,650
                10                                           Florida                                47,690
----------------------------------------------------------------------------------------------------------------

Figure 9: Direct Value-Added Contribution in Each State by the Biobased 
        Products Industry in 2013\53\
---------------------------------------------------------------------------
    \53\Esri, TomTom, Department of Commerce, Census Bureau, U.S. 
Department of Agriculture (USDA), National Agricultural Statistics 
Service (NASS). ``USA States'' Basemap. ArcGIS Online, accessed 3/3/16, 
http://www.arcgis.com/home/item.html?id=1a6cae723af14f9cae228
b133aebc620.
---------------------------------------------------------------------------
Billions of U.S. Dollars per State, 2013



             Table 5. Top 10 States for Direct Value-Added to the Biobased Products Industry in 2013
----------------------------------------------------------------------------------------------------------------
           Rank                                  State                                Direct Value-Added
----------------------------------------------------------------------------------------------------------------
                 1                                        California                        $9,862,930,000
                 2                                           Georgia                        $8,237,608,000
                 3                                             Texas                        $6,828,425,000
                 4                                      Pennsylvania                        $6,522,151,000
                 5                                    North Carolina                        $6,437,140,000
                 6                                         Wisconsin                        $6,252,403,000
                 7                                           Alabama                        $4,977,941,000
                 8                                         Tennessee                        $4,429,804,000
                 9                                              Ohio                        $4,276,668,000
                10                                    South Carolina                        $4,227,162,000
----------------------------------------------------------------------------------------------------------------

C. National and State Facts Sheets
    A major addition in this report from the 2015 report is a detailed 
analysis of all 50 states and the District of Columbia. This report 
contains a single page for each state. Each fact sheet offers a 
snapshot of companies and associations that are active in the biobased 
products industry overall within the state, and information about the 
USDA's Rural Development office in that state. They also include the 
direct and total economic contributions of the biobased products 
industry in terms of value-added contribution and jobs supported. Each 
of the biobased products industry's seven major sectors' direct jobs 
and value-added are also provided. The numbers presented for each 
sector are limited to direct jobs for comparison of the biobased 
products industry size between states.
    The national ranking by direct jobs and direct value-added for each 
state are also provided in Appendix C (direct jobs) and Appendix D 
(direct value-added). An alphabetical listing of the states with the 
number of direct jobs and value-added are in Appendix E.
    This section closes with two case studies of organizations 
supporting the growth of the biobased products industry at the state 
level and beyond.
United States
Companies per State, 2016


          Number of Companies participating in the BioPreferred Program 
        (June 2016).\54\
---------------------------------------------------------------------------
    \54\Esri, TomTom, Department of Commerce, Census Bureau, U.S. 
Department of Agriculture (USDA), National Agricultural Statistics 
Service (NASS). ``USA States'' Basemap. ArcGIS Online, accessed 3/3/16, 
http://www.arcgis.com/home/item.html?id=1a6cae723af14f9cae228
b133aebc620.


      Agriculture and Forestry
        Direct Jobs: 263,500
        Direct Value-Added: $15.8 B


      Biobased Chemicals
        Direct Jobs: 17,690
        Direct Value-Added: $5.0 B


      Biorefining
        Direct Jobs: 570
        Direct Value-Added: $155.0 M


      Enzymes
        Direct Jobs: 3,000
        Direct Value-Added: $873.8 M


      Forest Products
        Direct Jobs: 1,059,660
        Direct Value-Added: $93.3 B


      Textiles
        Direct Jobs: 164,370
        Direct Value-Added: $9.6 B


      Packaging
        Direct Jobs: 1,200
        Direct Value-Added: $11.4 M
Alabama


  Total Jobs: 102,850
  Direct Jobs: 49,650
  Total Value-Added: $9.010 Billion
  Direct Value-Added: $4.978 Billion

    The total jobs or value-added is the sum of the direct, indirect, 
and induced effects.

------------------------------------------------------------------------
                                                           Direct Value-
                 Sector                    Direct Jobs         Added
------------------------------------------------------------------------
              Agriculture & Forestry            10,740          $776.5M
                  Biobased Chemicals               260           $82.6M
                         Biorefining               <50             <$5M
                             Enzymes                50           $14.2M
                     Forest Products            33,420            $3.9B
                            Textiles             5,840          $266.0M
      Bioplastic Bottles & Packaging               <50             <$5M
------------------------------------------------------------------------

                                                          
                                                          
    14 Alabama companies currently participate in the BioPreferred 
Program.
Example Biobased Product Firms
Agriculture & Forestry
    Jasper Lumber Company (Jasper, AL; jasperlumber.com): Jasper Lumber 
Company has manufactured quality southern pine lumber for more than 25 
years, offering a wide range of wood products. The company is the only 
lumber manufacturer in the southeast U.S. to hold certifications from 
both the Forest Stewardship Council and the Sustainable Forestry 
Initiative.
Biobased Chemicals
    Alpha CLP (Winfield, AL; alphaclp.com): Alpha CLP manufactures a 
biobased, non-gumming firearm cleaner, lubricant, and protectant. The 
finished product is 99 percent biobased, utilizing vegetable oils 
during the production process.
    Renewable Oil International, LLC (Florence, AL; renewableoil.com): 
Renewable Oil International is dedicated to developing and 
commercializing an advanced biomass distillation process based on fast 
pyrolysis technology. The objective is to cost effectively fractionate 
wood and other types of biomass into high-value products.
USDA Rural Development Alabama Office
  Ronald Davis, State Director (www.rd.usda.gov/al)
  4121 Carmichael Road, Suite 601, Montgomery, AL 36106-3683
  Phone: (334) 279-3402
Alaska


  Total Jobs: 1,980
  Direct Jobs: 1,420
  Total Value-Added: $120 Million
  Direct Value-Added: $67 Million

    The total jobs or value-added is the sum of the direct, indirect, 
and induced effects.

------------------------------------------------------------------------
                                                           Direct Value-
                 Sector                    Direct Jobs         Added
------------------------------------------------------------------------
              Agriculture & Forestry               640           $46.8M
                  Biobased Chemicals               <50             <$5M
                         Biorefining               <50             <$5M
                             Enzymes               <50             <$5M
                     Forest Products               670           $17.8M
                            Textiles               110             <$5M
      Bioplastic Bottles & Packaging               <50             <$5M
------------------------------------------------------------------------

                                                          
                                                          
    5 Alaska companies currently participate in the BioPreferred 
Program.
Example Biobased Product Firms
Agriculture & Forestry
    Denali Organics, LLC (Chugiak, AK; denaliorganics.com): Denali 
Organics provides organic liquid fertilizer products, made with catfish 
byproducts and proprietary digestive enzymes. These fertilizers can be 
blended to meet a customer's specific requirements.
Biobased Chemicals
    Polyseal Insulation (Palmer, AK; polysealinsulation.com): Polyseal 
Insulation offers a range of services including insulation, spray foam, 
roofing foam, and advanced coatings. Their Green Cellulose Insulation 
product is non-toxic and manufactured from at least 80 percent 
recovered, post-consumer paper fiber.
Forest Products
    Tongass Forest Enterprises (Ketchikan, AK; 
akforestenterprises.com): Tongass Forest Enterprises specializes in 
producing custom wood building products. The company uses the byproduct 
from these products to produce wood pellets, as well.
USDA Rural Development Alaska Office
  Jim Nordlund, State Director (www.rd.usda.gov/ak)
  800 West Evergreen, Suite 201, Palmer, AK 99645-6539
  Phone: (907) 761-7705
Arizona


  Total Jobs: 27,730
  Direct Jobs: 14,790
  Total Value-Added: $1.968 Billion
  Direct Value-Added: $912 Million

    The total jobs or value-added is the sum of the direct, indirect, 
and induced effects.

------------------------------------------------------------------------
                                                           Direct Value-
                 Sector                    Direct Jobs         Added
------------------------------------------------------------------------
              Agriculture & Forestry             3,510          $268.6M
                  Biobased Chemicals               120           $33.2M
                         Biorefining               <50             <$5M
                             Enzymes               <50             <$5M
                     Forest Products            10,360          $582.8M
                            Textiles               830           $29.5M
      Bioplastic Bottles & Packaging               <50             <$5M
------------------------------------------------------------------------

                                                          
                                                          
    30 Arizona companies currently participate in the BioPreferred 
Program.
Example Biobased Product Firms
Agriculture & Forestry
    Yulex (Phoenix, Arizona; yulex.com): Yulex manufactures 100 percent 
plant-based rubber. As the first commercial enterprise to produce 
biobased natural rubber latex in North America, Yulex, now collaborates 
with consumer, industrial, and medical market leaders to co-develop a 
variety of products.
Biobased Chemicals
    GEMTEK (Phoenix, AZ; gemtek.com/): GEMTEK is dedicated to providing 
high performance cleaners, lubricants, solvents, and specialty 
chemicals derived from renewable plant-based resources.
    Eco Safety Products, LLC (Phoenix, AZ; ecosafetyproducts.com): Eco 
Safety Products manufactures high-performance paints, stains, finishes, 
and chemicals that utilize sustainable biobased technology.
USDA Rural Development Arizona Office
  Ernie Wetherbee, Acting State Director (www.rd.usda.gov/az)
  230 North First Avenue, Suite 206, Phoenix, AZ 85003-1706
  Phone: (602) 280-8701
Arkansas


  Total Jobs: 64,590
  Direct Jobs: 31,400
  Total Value-Added: $5.903 Billion
  Direct Value-Added: $3.165 Billion

    The total jobs or value-added is the sum of the direct, indirect, 
and induced effects.

------------------------------------------------------------------------
                                                           Direct Value-
                 Sector                    Direct Jobs         Added
------------------------------------------------------------------------
              Agriculture & Forestry             7,330          $512.9M
                  Biobased Chemicals               190           $58.0M
                         Biorefining               <50             <$5M
                             Enzymes                50            $8.2M
                     Forest Products            23,330            $2.6B
                            Textiles               860           $40.6M
      Bioplastic Bottles & Packaging               <50             <$5M
------------------------------------------------------------------------

                                                          
                                                          
    12 Arkansas companies currently participate in the BioPreferred 
Program.
Example Biobased Product Firms
Agriculture & Forestry
    Anthony Forest Products Company (El Dorado, AR; Urbana AR; 
anthonyforest.com): Anthony Forest Products operates a southern pine 
lumber producing mill in Urbana, and an engineered wood laminating 
plant in El Dorado. Some of the company's fastest growth has been in 
the engineered wood products sector.
Biobased Chemicals
    AgSeal LLC (Harrison, AR; agseal.com): AgSeal services the growing 
needs of poultry and agriculture markets for energy saving retrofitting 
of facilities and structures. The company's foam sealants and 
insulation are biobased and made especially for poultry and 
agricultural applications.
    Biobased Technologies (Springdale, AR; biobased.net): Biobased 
Technologies manufactures a high bio-carbon soy polyol, Agrol, which 
can replace some petroleum polyols. Agrol is used in a variety of 
products, including lubricants, furniture, adhesives, inks, and 
agricultural products.
USDA Rural Development Arkansas Office
  Lawrence McCullough, State Director (www.rd.usda.gov/ar)
  700 West Capitol Avenue, Room 3416, Little Rock, AR 72201-3225
  Phone: (501) 301-3200
California


  Total Jobs: 265,530
  Direct Jobs: 145,080
  Total Value-Added: $21.577 Billion
  Direct Value-Added: $9.863 Billion

    The total jobs or value-added is the sum of the direct, indirect, 
and induced effects.

------------------------------------------------------------------------
                                                           Direct Value-
                 Sector                    Direct Jobs         Added
------------------------------------------------------------------------
              Agriculture & Forestry            42,310            $2.4B
                  Biobased Chemicals             1,250          $324.4M
                         Biorefining               <50            $7.3M
                             Enzymes               170           $42.9M
                     Forest Products            71,340            $5.7B
                            Textiles            31,090            $1.5B
      Bioplastic Bottles & Packaging                90            $7.5M
------------------------------------------------------------------------

                                                          
                                                          
    262 California companies currently participate in the BioPreferred 
Program.
Example Biobased Product Firms
Biobased Chemicals
    TerraVia (San Francisco, CA; solazyme.com): TerraVia, formerly 
Solazyme, has refined its efforts to focus on manufacturing algae oil 
for the food and personal care industries for use in products that 
include cooking oils, protein powders, and face lotions.
    Verdezyne (Carlsbad, CA; verdezyne.com): Verdezyne leverages the 
power of biology to produce chemicals from renewable, non-food sources. 
Verdezyne's feedstocks are derived from the byproducts of vegetable oil 
production.
Bioplastic Bottles & Packaging
    BeGreen Packaging LLC (Santa Barbara, CA; begreenpackaging.com): Be 
Green Packaging designs, manufactures, and distributes the only non-GMO 
Product Verified, tree-free, and compostable packaging for the food and 
consumer packaging industries. Renewable plant fibers are utilized to 
produce both consumer and food packaging products.
USDA Rural Development California Office
  Janice Waddell, State Director (www.rd.usda.gov/ca)
  430 G Street, #4169, Davis, CA 95616-4169
  Phone: (530) 792-5800
Colorado


  Total Jobs: 21,840
  Direct Jobs: 11,500
  Total Value-Added: $1.526 Billion
  Direct Value-Added: $635 Million

    The total jobs or value-added is the sum of the direct, indirect, 
and induced effects.

------------------------------------------------------------------------
                                                           Direct Value-
                 Sector                    Direct Jobs         Added
------------------------------------------------------------------------
              Agriculture & Forestry             1,710           $54.9M
                  Biobased Chemicals               110           $31.9M
                         Biorefining               <50             <$5M
                             Enzymes               <50             <$5M
                     Forest Products             8,510          $476.6M
                            Textiles             1,200           $72.4M
      Bioplastic Bottles & Packaging               <50             <$5M
------------------------------------------------------------------------

                                                          
                                                          
    60 Colorado companies currently participate in the BioPreferred 
Program.
Example Biobased Product Firms
Agriculture & Forestry
    Natracare LLC (Greeley, CO; natracare.com): Natracare LLC 
manufactures feminine hygiene products using responsibly sourced, 
biobased materials. Natracare's products are compostable and made to 
limit the user's exposure to chemicals such as chlorine, plastic, 
pesticides, and petroleum derivatives.
Forest Products
    Sustainable Flooring (Boulder, CO; sustainableflooring.com): 
Sustainable Flooring offers various flooring and walls products, 
designed for both residential and commercial applications. In addition 
to wood, the company utilizes bamboo and cork in the manufacturing 
process.
Bioplastic Bottles & Packaging
    Eco-Products (Boulder, CO; ecoproducts.com): Eco-Products offers a 
full selection of disposable products, including plates, cups, 
containers, and silverware. All products are produced from recycled 
content or renewable resources (e.g., corn, sugarcane, plant starch).
USDA Rural Development Colorado Office
  Trudy Kareus, State Director (www.rd.usda.gov/co)
  Denver Federal Center, Building 56, Room 2300, PO Box 25426, Denver, 
    CO 80225-0426
  Phone: (720) 544-2904
Connecticut


  Total Jobs: 18,750
  Direct Jobs: 8,970
  Total Value-Added: $1.905 Billion
  Direct Value-Added: $846 Million

    The total jobs or value-added is the sum of the direct, indirect, 
and induced effects.

------------------------------------------------------------------------
                                                           Direct Value-
                 Sector                    Direct Jobs         Added
------------------------------------------------------------------------
              Agriculture & Forestry               680           $19.2M
                  Biobased Chemicals               190           $47.0M
                         Biorefining               <50             <$5M
                             Enzymes               <50            $5.4M
                     Forest Products             7,200          $670.0M
                            Textiles               910          $109.5M
      Bioplastic Bottles & Packaging               <50             <$5M
------------------------------------------------------------------------

                                                          
                                                          
    24 Connecticut companies currently participate in the BioPreferred 
Program.
Example Biobased Product Firms
Biobased Chemicals
    Citrasolv (Ridgefield, CT; citrasolv.com): Citrasolv produces a 
line of [E]arth-and-people-friendly cleaning supplies that are derived 
from renewable resources. Citra Solv Concentrate, a multipurpose 
cleaning product, is 95 percent biobased.
    New Polymer Systems INC (New Canaan, CT; newpolymersystems.com): 
New Polymer Systems has patents pending on processes that yield 
lightweight, hydrophobic lignocellulosic fillers, the core component of 
their NeroPlast branded products. NeroPlast can be utilized in a host 
of applications, including car parts, decking, pallets, and roofing and 
is a USDA Certified Biobased Product with 100 percent biobased content.
Bioplastic Bottles & Packaging
    Green Valley Packaging (Danielson, CT; vegware.us): Green Valley 
Packaging is a key distributor of the Vegware brand of eco-packaging 
products in the food service sector. Feedstock inputs include sugarcane 
bagasse and corn starch.
USDA Rural Development Connecticut Office
  Scott Soares, State Director (www.rd.usda.gov/ct)
  451 West Street, Amherst, MA 01002-2999
  Phone: (413) 253-4300
Delaware


  Total Jobs: 4,170
  Direct Jobs: 2,140
  Total Value-Added: $5,501 Million
  Direct Value-Added: $347 Million

    The total jobs or value-added is the sum of the direct, indirect, 
and induced effects.

------------------------------------------------------------------------
                                                           Direct Value-
                 Sector                    Direct Jobs         Added
------------------------------------------------------------------------
              Agriculture & Forestry               160             <$5M
                  Biobased Chemicals                60           $32.1M
                         Biorefining               <50             <$5M
                             Enzymes               <50            $8.9M
                     Forest Products             1,580          $290.7M
                            Textiles               330           $17.9M
      Bioplastic Bottles & Packaging               <50             <$5M
------------------------------------------------------------------------

                                                          
                                                          
    5 Delaware companies currently participate in the BioPreferred 
Program.
Example Biobased Product Firms
Biobased Chemicals
    DuPont Industrial Biosciences (Wilmington, DE; dupont.com): DuPont 
is a global leader in the development of renewably sourced biobased 
materials. By utilizing glucose as the basis for Bio-PDO, a biobased 
monomer, DuPont created an ingredient a biobased fiber, Sorona, which 
is used in a variety of everyday products.
    Ensyn Corporation (Wilmington, DE; ensyn.com): Ensyn is a producer 
of advanced, drop-in cellulosic biofuel, produced from wood biomass and 
agricultural residues. Much of their biofuel production has been 
dedicated to the production of renewable chemicals and heating fuels 
for the specialty chemicals industry.
    The Chemours Company (Wilmington, DE; chemours.com): Teflon, a 
brand of The Chemours Company, manufactures EcoElite, the first 
renewably sourced, non-fluorinated fabric treatment designed for 
durable water repellency. The product contains 60 percent renewable 
content.
USDA Rural Development Delaware Office
  Bill McGowan, State Director (www.rd.usda.gov/de)
  1221 College Park Drive, Suite 200, Dover, DE 19904
  Phone: (302) 857-3580
Washington, D.C.


  Total Jobs: 280
  Direct Jobs: 220
  Total Value-Added: $26 Million
  Direct Value-Added: $18 Million

    The total jobs or value-added is the sum of the direct, indirect, 
and induced effects.

------------------------------------------------------------------------
                                                           Direct Value-
                 Sector                    Direct Jobs         Added
------------------------------------------------------------------------
              Agriculture & Forestry               <50             <$5M
                  Biobased Chemicals               <50             <$5M
                         Biorefining               <50             <$5M
                             Enzymes               <50             <$5M
                     Forest Products               180           $16.7M
                            Textiles               <50             <$5M
      Bioplastic Bottles & Packaging               <50             <$5M
------------------------------------------------------------------------

                                                          
                                                          
    3 Washington, D.C. companies currently participate in the 
BioPreferred Program.
Example Biobased Product Firms
Forest Products
    Kwai (Washington, D.C.; kwaihome.com): Kwai produces handcrafted 
materials utilizing fronds from areca palm trees. Finished materials 
are 100 percent biobased, and fully biodegradable.
Bioplastic Bottles & Packaging
    TemperPack Technologies (Washington, D.C.; temperpack.com): 
TemperPack seeks to replace petrochemical-based packaging with more 
sustainable forms of packaging, utilizing renewable jute fiber as a 
feedstock. Additional feedstocks include post-consumer recycled plastic 
and paper.
USDA Rural Development Washington, D.C. Office
  U.S. Department of Agriculture (usda.gov/)
  1400 Independence Ave., S.W.
  Washington, D.C. 20250
  Information Hotline: (202) 720-2791
Florida


  Total Jobs: 98,460
  Direct Jobs: 47,690
  Total Value-Added: $7.805 Billion
  Direct Value-Added: $3.738 Billion

    The total jobs or value-added is the sum of the direct, indirect, 
and induced effects.

------------------------------------------------------------------------
                                                           Direct Value-
                 Sector                    Direct Jobs         Added
------------------------------------------------------------------------
              Agriculture & Forestry            14,800          $721.0M
                  Biobased Chemicals               410           $79.2M
                         Biorefining               <50             <$5M
                             Enzymes               <50             <$5M
                     Forest Products            28,850            $2.8B
                            Textiles             3,950          $170.9M
      Bioplastic Bottles & Packaging               <50             <$5M
------------------------------------------------------------------------

                                                          
                                                          
    118 Florida companies currently participate in the BioPreferred 
Program.
Example Biobased Product Firms
Biobased Chemicals
    Arizona Chemical (Panama City, FL; Pensacola, FL; 
arizonachemical.com): Arizona Chemical is the world's leading producer 
and biorefiner of pine chemicals. The company provides innovative, 
biobased chemical solutions to multiple industry sectors, including 
adhesives, roads and construction, tires, and coatings. Approximately 
85 percent of the company's raw materials are made from renewable 
sources.
    BioBag Americas, Inc. (Palm Harbor, FL; biobagusa.com): BioBag 
produces bags and plastic films derived from renewable agriculture 
feedstocks, including cornstarch and vegetable oils. Compostable 
products span both retail and commercial applications.
    Naturally Green Products LLC (Seminole, FL; naturally-
greenproducts.com): Naturally Green offers the most comprehensive line 
of USDA BioPreferred cleaning and floor care products. Product 
offerings include bathroom cleaners, dishwashing products, 
disinfectants, floor and carpet clearness, laundry products, and hand 
soaps and sanitizers.
USDA Rural Development Florida Office
  Richard Machek, State Director (www.rd.usda.gov/fl)
  Post Office Box 147010, 4440 NW 25th Place, Gainesville, FL 32614-
    7010
  Phone: (352) 338-3402
Georgia


  Total Jobs: 178,110
  Direct Jobs: 80,520
  Total Value-Added: $16.365 Billion
  Direct Value-Added: $8.238 Billion

    The total jobs or value-added is the sum of the direct, indirect, 
and induced effects.

------------------------------------------------------------------------
                                                           Direct Value-
                 Sector                    Direct Jobs         Added
------------------------------------------------------------------------
              Agriculture & Forestry            17,940            $1.5B
                  Biobased Chemicals               620          $168.9M
                         Biorefining               <50             <$5M
                             Enzymes                70           $14.9M
                     Forest Products            41,970            $5.1B
                            Textiles            21,020            $1.6B
      Bioplastic Bottles & Packaging               <50             <$5M
------------------------------------------------------------------------

                                                          
                                                          
    71 Georgia companies currently participate in the BioPreferred 
Program.
Example Biobased Product Firms
Biobased Chemicals
    Arizona Chemical (Savannah, GA; arizonachemical.com): Arizona 
Chemical is the world's leading producer and biorefiner of pine 
chemicals. The company provides innovative, biobased chemical solutions 
to multiple industry sectors, including adhesives, roads and 
construction, tires, and coatings.
Forest Products
    U.S. Floors (Dalton, GA; usfloorsllc.com): U.S. Floors is the 
leading producer of sustainable, biobased flooring, produced from cork, 
bamboo, and FSC Certified hardwood. U.S. Floors is currently the only 
producer of cork and bamboo flooring with manufacturing facilities in 
the U.S.
Bioplastic Bottles & Packaging
    The Coca-Cola Company (Atlanta, GA; coca-colacompany.com): In 2009, 
the Coca-Cola Company unveiled the first-ever fully recyclable PET 
plastic beverage bottle made from plants. In 2012, the Company 
announced the formation of the Plant PET Technology Collaborative, a 
strategic initiative aimed at developing 100 percent biobased PET.
USDA Rural Development Georgia Office
  Jill Stuckey, State Director (www.rd.usda.gov/ga)
  Stephens Federal Building, 355 E. Hancock Avenue, Stop 300, Athens, 
    GA 30601-2768
  Phone: (706) 546-2162
Hawaii


  Total Jobs: 2,840
  Direct Jobs: 1,930
  Total Value-Added: $138 Million
  Direct Value-Added: $66 Million

    The total jobs or value-added is the sum of the direct, indirect, 
and induced effects.

------------------------------------------------------------------------
                                                           Direct Value-
                 Sector                    Direct Jobs         Added
------------------------------------------------------------------------
              Agriculture & Forestry               420            $9.4M
                  Biobased Chemicals               <50             <$5M
                         Biorefining               <50             <$5M
                             Enzymes                50             <$5M
                     Forest Products             1,040           $40.1M
                            Textiles               460           $15.1M
      Bioplastic Bottles & Packaging               <50             <$5M
------------------------------------------------------------------------

                                                          
                                                          
    8 Hawaii companies currently participate in the BioPreferred 
Program.
Example Biobased Product Firms
Agriculture & Forestry
    Hawaiian Earth Products, Ltd. (Kapolei, HI; 
menehunemagichawaii.com): Hawaiian Earth Products makes products that 
use waste from yard trimmings, such as compost and potting mix. After 
being collected as waste from several cities in Hawaii, these trimmings 
are converted into useful products, rather than being sent to a 
landfill.
Biobased Chemicals
    Malie Organics (Kalaheo, HI; malie.com): Malie offers a range of 
personal care and beauty products, all produced from natural and 
organic feedstocks. Product ingredients are all sustainably grown and 
harvested.
Forest Products
    Honsador Lumber LLC (Kapolei, HI; honsador.com): Honsador is 
Hawaii's largest lumber supplier. In addition to lumber and plywood, 
the company offers an array of finished products, including cabinetry, 
doors, and windows.
USDA Rural Development Hawaii Office
  Chris Kanazawa, State Director (www.rd.usda.gov/hi)
  Federal Building, Room 311, 154 Waianuenue Avenue, Hilo, HI 96720
  Phone: (808) 933-8380
Idaho


  Total Jobs: 25,660
  Direct Jobs: 12,250
  Total Value-Added: $1.724 Billion
  Direct Value-Added: $886 Million

    The total jobs or value-added is the sum of the direct, indirect, 
and induced effects.

------------------------------------------------------------------------
                                                           Direct Value-
                 Sector                    Direct Jobs         Added
------------------------------------------------------------------------
              Agriculture & Forestry             3,350           $213.3
                  Biobased Chemicals                60            $9.1M
                         Biorefining               <50            $5.7M
                             Enzymes               <50             <$5M
                     Forest Products             9,440          $647.8M
                            Textiles               390           $11.3M
      Bioplastic Bottles & Packaging               <50             <$5M
------------------------------------------------------------------------

                                                          
                                                          
    13 Idaho companies currently participate in the BioPreferred 
Program.
Example Biobased Product Firms
Agriculture & Forestry
    Eagle Forest Products (Eagle, ID; eaglefp.net): Eagle Forest 
Products offers a wide variety of lumber and wood products. The company 
provides lumber to a number of industries, including flooring, 
construction, music, and landscaping.
    Idaho Forest Group, LLC (Coeur d'Alene, ID; idahoforestgroup.com): 
The Idaho Forest Group, one of America's largest lumber producers, 
grows, harvests, manufactures, and distributes sustainable wood. In 
addition to lumber, available products include oriented strand board, 
paper and packaging materials, wood pellets, wood chips, and bark for 
power production.
Biobased Chemicals
    Pro-Tek Chemicals (Glenns Ferry, ID; protekchemical.com): Pro-Tek 
manufactures more than ten biobased cleaning products that are readily 
biodegradable. Product offerings include cleaners, scrubs, polishes, 
and enzymes.
USDA Rural Development Idaho Office
  Wallace Hedrick, State Director (www.rd.usda.gov/id)
  9713 West Barnes Drive, Suite A1, Boise, ID 83709
  Phone: (208) 378-5600
Illinois


  Total Jobs: 90,930
  Direct Jobs: 39,940
  Total Value-Added: $8.385 Billion
  Direct Value-Added: $3.543 Billion

    The total jobs or value-added is the sum of the direct, indirect, 
and induced effects.

------------------------------------------------------------------------
                                                           Direct Value-
                 Sector                    Direct Jobs         Added
------------------------------------------------------------------------
              Agriculture & Forestry             1,950           $63.0M
                  Biobased Chemicals             1,000          $235.0M
                         Biorefining               130           $48.2M
                             Enzymes               130          $222.2M
                     Forest Products            34,380            $3.1B
                            Textiles             3,100          $157.6M
      Bioplastic Bottles & Packaging                80            $9.2M
------------------------------------------------------------------------

                                                          
                                                          
    123 Illinois companies currently participate in the BioPreferred 
Program.
Example Biobased Product Firms
Biobased Chemicals
    ADM (Chicago, IL; adm.com): ADM is one of the world's largest 
agricultural processors, manufacturing a variety of food, animal feed, 
energy, and industrial products, which include those for construction, 
packaging, personal care, pulp and paper, and plastic. Oilseeds and 
corn are the company's primary feedstocks.
    Elevance Renewable Sciences, Inc. (Woodridge, IL; elevance.com): 
Elevance Renewable Sciences is a specialty chemical company that 
creates chemicals from renewable feedstocks. Market uses include 
personal care products, detergents and cleaners, engineered polymers, 
lubricants, and other specialty chemical markets.
    LanzaTech (Skokie, IL; lanzatech.com): LanzaTech's bioprocessing 
platform provides an economically robust route to carbon capture and 
re-use. The company's novel gas-to-liquid technology is the only 
process that converts waste gases (carbon monoxide and carbon dioxide) 
to fuels and chemicals.
USDA Rural Development Illinois Office
  Colleen Callahan, State Director (www.rd.usda.gov/il)
  2118 West Park Court, Suite A, Champaign, IL 61821
  Phone: 217-403-6200
Indiana


  Total Jobs: 85,530
  Direct Jobs: 46,050
  Total Value-Added: $5.820 Billion
  Direct Value-Added: $2.843 Billion

    The total jobs or value-added is the sum of the direct, indirect, 
and induced effects.

------------------------------------------------------------------------
                                                           Direct Value-
                 Sector                    Direct Jobs         Added
------------------------------------------------------------------------
              Agriculture & Forestry             1,850           $63.9M
                  Biobased Chemicals               490          $157.5M
                         Biorefining               <50           $11.4M
                             Enzymes                60           $12.8M
                     Forest Products            41,740            $2.5B
                            Textiles             1,980           $95.2M
      Bioplastic Bottles & Packaging                70            $5.4M
------------------------------------------------------------------------

                                                          
                                                          
    28 Indiana companies currently participate in the BioPreferred 
Program.
Example Biobased Product Firms
Biobased Chemicals
    Toni Natural Products Co. LLC (Sunman, IN; toninatural.com): Toni 
Natural offers an assortment of products that contain 100 percent 
natural plant- and mineral-based compounds. These products include 
cleaning products, laundry detergents, fabric softeners, dishwashing 
liquid, soaps, shampoos, and lotions.
    Trellis Bioplastics (Seymour, IN; trellisbioplastic.com): Trellis 
Bioplastics creates a wide range of bioplastic resins and consumer 
products, replacing upwards of 95 percent of the petroleum content used 
in traditional plastics. Starch-based feedstocks are currently used in 
manufacturing processes, with plans to expand feedstock use to include 
algae, distillery byproducts, wheat chaff, and rice hulls.
Enzymes
    Enzyme Solutions Inc. (Garrett, IN; enzymesolutions.com): Enzyme 
Solutions is a leader in ``green'' cleaning technology, manufacturing 
both enzymes and enzyme products. Manufacturing, testing, formulation, 
and bottling are all conducted in Indiana.
USDA Rural Development Indiana Office
  Philip Lehmkuhler, State Director (www.rd.usda.gov/in)
  5975 Lakeside Boulevard, Indianapolis, IN 46278
  Phone: (317) 290-3100 ext.4
Iowa


  Total Jobs: 37,430
  Direct Jobs: 20,110
  Total Value-Added: $3.022 Billion
  Direct Value-Added: $1.735 Billion

    The total jobs or value-added is the sum of the direct, indirect, 
and induced effects.

------------------------------------------------------------------------
                                                           Direct Value-
                 Sector                    Direct Jobs         Added
------------------------------------------------------------------------
              Agriculture & Forestry             1,400           $51.7M
                  Biobased Chemicals               230          $123.1M
                         Biorefining                80           $22.3M
                             Enzymes               140           $65.3M
                     Forest Products            17,620            $1.5B
                            Textiles               750           $45.1M
      Bioplastic Bottles & Packaging               <50             <$5M
------------------------------------------------------------------------

                                                          
                                                          
    79 Iowa companies currently participate in the BioPreferred 
Program.
Example Biobased Product Firms
Biobased Chemicals
    Avello Bioenergy (Ames, IA; avellobioenergy.com): In collaborating 
with Iowa State University, Avello is commercializing proprietary 
technology that provides quality, low-cost, profitable feedstocks for 
producing bulk chemicals, specialty chemicals, lignin based chemicals, 
adhesives, and flavors and fragrances.
    Corn Oil ONE (Pleasant Hill, IA; cornoilone.com): Corn Oil ONE 
refines crude corn oil, thereby eliminating free fatty acids, moisture, 
and waxes. The refined corn oil product delivers the same advantages as 
soybean oil, making it available as an alternative feedstock for 
oleochemical and biobased industries.
    Renewable Energy Group, Inc. (Ames, IA; regfuel.com): Renewable 
Energy Group is a leading North American advanced biofuels producer and 
developer of renewable chemicals. The company's growing industrial 
biotechnology business manufactures sustainable chemical products using 
renewable feedstocks such as corn, sugarcane, and cellulosic sugars.
USDA Rural Development Iowa Office
  William Joseph Menner, State Director (www.rd.usda.gov/ia)
  Federal Building, Room 873, 210 Walnut Street, Des Moines, IA 50309
  Phone: (515) 284-4663
Kansas


  Total Jobs: 17,070
  Direct Jobs: 9,080
  Total Value-Added: $1.129 Billion
  Direct Value-Added: $504 Million

    The total jobs or value-added is the sum of the direct, indirect, 
and induced effects.

------------------------------------------------------------------------
                                                           Direct Value-
                 Sector                    Direct Jobs         Added
------------------------------------------------------------------------
              Agriculture & Forestry               910           $44.2M
                  Biobased Chemicals               140           $56.5M
                         Biorefining               <50             <$5M
                             Enzymes                60           $13.4M
                     Forest Products             6,890          $367.3M
                            Textiles             1,070           $35.9M
      Bioplastic Bottles & Packaging               <50             <$5M
------------------------------------------------------------------------

                                                          
                                                          
    27 Kansas companies currently participate in the BioPreferred 
Program.
Example Biobased Product Firms
Biobased Chemicals
    Corbion (Lenexa, KS; corbion.com): Corbion is the global market 
leader in lactic acid, lactic acid derivatives, and lactides. Product 
offerings include bioplastics, biochemical, and biomedical products.
    Nowa Technology, Inc. (Prairie Village, KS; nowatechnology.com): 
Nowa Technology, Inc. uses solids extracted from wastewater treatment 
sludge to create useful products, including fertilizer. The Nowa 
Technology process efficiently creates useful products from a source 
that would otherwise be undesirable waste.
    LC Bioplastics (Wichita, KS; lcbioplastics.com): LC Bioplastics 
manufactures a range of bioplastic resins and additives, including a 
line of ready-to-use finished goods such as custom film and bag 
products. Biohybrid resins, which are a blend of renewable 
thermoplastic materials and traditional polyolefins, increase the 
renewable content of a product by up to 50 percent in comparison to 
traditional packaging.
USDA Rural Development Kansas Office
  Patricia Clark, State Director (www.rd.usda.gov/ks)
  1303 SW First American Place, Suite 100, Topeka, KS 66604-4040
  Phone: (785) 271-2700
Kentucky


  Total Jobs: 53,190
  Direct Jobs: 27,290
  Total Value-Added: $4.037 Billion
  Direct Value-Added: $2.128 Billion

    The total jobs or value-added is the sum of the direct, indirect, 
and induced effects.

------------------------------------------------------------------------
                                                           Direct Value-
                 Sector                    Direct Jobs         Added
------------------------------------------------------------------------
              Agriculture & Forestry             3,110           $98.3M
                  Biobased Chemicals               450           $11.9M
                         Biorefining               <50             <$5M
                             Enzymes                50           $11.3M
                     Forest Products            21,960            $1.8B
                            Textiles             1,780           $76.5M
      Bioplastic Bottles & Packaging               <50             <$5M
------------------------------------------------------------------------

                                                          
                                                          
    12 Kentucky companies currently participate in the BioPreferred 
Program.
Example Biobased Product Firms
Biobased Chemicals
    Owensboro Grain Company (Owensboro, KY; owensborograin.com): 
Owensboro Grain Company manufacturers an array of products from 
soybeans, including protein meal and hull pellets for animal feeds, 
crude and degummed oil, lecithin, and various blends of refined 
vegetable oils for human consumption, biodiesel, and glycerin.
    RyDol Lubricants (Shelbyville, KY; rydol.com): RyDol manufactures 
and distributes specialty high-performance, biodegradable lubricants, 
solvents, and degreasers. Products contain soybean oil, grease, and 
methyl esters as base fluids.
    Soy Technologies, LLC (Nicholasville, KY; soytek.com): Soy 
Technologies is a specialty chemical manufacturer that develops 
renewable, biobased chemicals. Available products include biobased 
solvents and emulsions, personal care products, paint thinners, and 
additional specialty products.
USDA Rural Development Kentucky Office
  Thomas G. Fern, State Director (www.rd.usda.gov/ky)
  771 Corporate Drive, Suite 200, Lexington, KY 40503
  Phone: (859) 224-7300
Louisiana


  Total Jobs: 49,070
  Direct Jobs: 22,440
  Total Value-Added: $4.906 Billion
  Direct Value-Added: $2.649 Billion

    The total jobs or value-added is the sum of the direct, indirect, 
and induced effects.

------------------------------------------------------------------------
                                                           Direct Value-
                 Sector                    Direct Jobs         Added
------------------------------------------------------------------------
              Agriculture & Forestry             6,670          $451.0M
                  Biobased Chemicals               330          $151.8M
                         Biorefining               <50            $8.1M
                             Enzymes                70           $27.9M
                     Forest Products            14,810            $2.0B
                            Textiles               780           $26.7M
      Bioplastic Bottles & Packaging               <50             <$5M
------------------------------------------------------------------------

                                                          
                                                          
    7 Louisiana companies currently participate in the BioPreferred 
Program.
Example Biobased Product Firms
Biobased Chemicals
    Biosynthetic Technologies (Baton Rouge, LA; biosynthetic.com): 
Biosynthetic Technologies manufactures biobased synthetic molecules 
produced from organic fatty acids found in plant oils. Biosynthetic 
oils have numerous applications in the lubricant, chemical, and 
cosmetics industries. In conjunction with Albemarle, a specialty 
chemical company, the company operates a demonstration plant in 
Louisiana.
    Myriant (Lake Providence, LA; myriant.com): Myriant developed a 
proprietary platform for the production of biobased chemical 
intermediates, which can be seamlessly integrated into existing 
chemical production processes in order to provide a wide range of 
consumer applications. A variety of feedstocks is utilized in the 
production process.
    Giant Cleaning Systems, Inc. (Duson, LA; 
giantcleaningproducts.com): Giant Cleaning Systems manufactures a 
variety of industrial cleaners, including drill rigs, printing 
industry, and aircraft cleaners. Many of these products contain 
biobased materials.
USDA Rural Development Louisiana Office
  Clarence Hawkins, State Director (www.rd.usda.gov/la)
  3727 Government Street, Alexandria, LA 71302
  Phone: (318) 473-7920
Maine


  Total Jobs: 46,950
  Direct Jobs: 20,500
  Total Value-Added: $3.574 Billion
  Direct Value-Added: $1.600 Billion

    The total jobs or value-added is the sum of the direct, indirect, 
and induced effects.

------------------------------------------------------------------------
                                                           Direct Value-
                 Sector                    Direct Jobs         Added
------------------------------------------------------------------------
              Agriculture & Forestry             6,020          $268.7M
                  Biobased Chemicals               <50             <$5M
                         Biorefining               <50             <$5M
                             Enzymes               <50             <$5M
                     Forest Products            13,390            $1.3B
                            Textiles             1,040           $47.1M
      Bioplastic Bottles & Packaging               <50             <$5M
------------------------------------------------------------------------

                                                          
                                                          
    14 Maine companies currently participate in the BioPreferred 
Program.
Example Biobased Product Firms
Biobased Chemicals
    Genesan LLC (Gorham, ME; cleaneasier.com): Genesan is a leading 
source of high-performance, ecological, and biotechnological cleaning 
products in the U.S. Collaborating with Pollet, a world leader in 
developing and manufacturing biobased cleaning solutions, over 54 
percent of Genesan SKUs are classified as biobased and derived from 
natural sources.
Textiles
    Biovation II, LLC (Boothbay, ME; biovation.com): Biovation 
manufactures non-woven material consisting of natural, or naturally 
derived, fibers. The material is manufactured using a sustainable 
biopolymer, polylactic acid.
    Grow-Tech, LLC (South Portland, ME; grow-tech.com): Grow-Tech 
manufactures BioStrate, a biobased non-woven textile used by aquaponics 
and hydroponics farms to grow lettuce, microgreens, and tomatoes.
USDA Rural Development Maine Office
  Virginia Manuel, State Director (www.rd.usda.gov/me)
  967 Illinois Avenue Suite 4, Bangor, ME 04401-2767
  Phone: (207) 990-9160
Maryland


  Total Jobs: 18,150
  Direct Jobs: 9,570
  Total Value-Added: $1.613 Billion
  Direct Value-Added: $801 Million

    The total jobs or value-added is the sum of the direct, indirect, 
and induced effects.

------------------------------------------------------------------------
                                                           Direct Value-
                 Sector                    Direct Jobs         Added
------------------------------------------------------------------------
              Agriculture & Forestry             1,050           $40.7M
                  Biobased Chemicals               170           $73.0M
                         Biorefining               <50             <$5M
                             Enzymes                60            $52.8
                     Forest Products             7,030          $546.8M
                            Textiles             1,310            $85.7
      Bioplastic Bottles & Packaging               <50             <$5M
------------------------------------------------------------------------

                                                          
                                                          
    24 Maryland companies currently participate in the BioPreferred 
Program.
Example Biobased Product Firms
Forest Products
    American Wood Fibers (Columbia, MD; awf.com): American Wood Fibers 
is a leader in the field of specialty forestry products. The company 
offers an array of products for people, pets, and livestock, all 
produced from wood shavings and wood flour. Industrial fiber 
applications include adhesives, absorbents, papers, and plastics.
    Enviva Partners, LP (Bethesda, MD; envivabiomass.com): Enviva is 
the world's largest producer of wood pellets, owning and operating six 
plants within the southeastern U.S. Pellets are produced using 
sustainable practices that protect Southern forests.
    Wicanders (Hanover, MD; wicanders.com/us): Wicanders developed 
Corktech, a technology that provides exclusive properties for floors 
and wall coverings made from cork.
USDA Rural Development Maryland Office
  Bill McGowan, State Director (www.rd.usda.gov/md)
  1221 College Park Drive, Suite 200, Dover, DE 19904
  Phone: (302) 857-3580
Massachusetts


  Total Jobs: 40,350
  Direct Jobs: 19,140
  Total Value-Added: $3.613 Billion
  Direct Value-Added: $1.417 Billion

    The total jobs or value-added is the sum of the direct, indirect, 
and induced effects.

------------------------------------------------------------------------
                                                           Direct Value-
                 Sector                    Direct Jobs         Added
------------------------------------------------------------------------
              Agriculture & Forestry             1,460           $43.7M
                  Biobased Chemicals               340           $79.8M
                         Biorefining               <50             <$5M
                             Enzymes               <50           $14.7M
                     Forest Products            14,160            $1.1B
                            Textiles             3,280          $184.3M
      Bioplastic Bottles & Packaging               <50             <$5M
------------------------------------------------------------------------

                                                          
                                                          
    49 Massachusetts companies currently participate in the 
BioPreferred Program.
Example Biobased Product Firms
Agriculture & Forestry
    Bum Boosa Bamboo Products (Mashpee, MA; bumboosa.com): Bum Boosa 
produces biodegradable, eco-friendly bamboo products, which can be 
adopted as an alternative to products produced from tree-pulp and many 
types of plastic used in fiber production.
Biobased Chemicals
    Metabolix, Inc. (Cambridge, MA; metabolix.com): Metabolix is an 
advanced biomaterials company, focused on delivering sustainable 
solutions to the plastics industry. Metabolix produces biobased 
polymers utilizing renewable carbon-based feedstock.
    Myriant (Quincy, MA; myriant.com): Myriant manufactures a broad 
pipeline of biobased chemicals, including bio-succinic acid and its 
derivatives, in addition to other biobased chemical intermediates that 
perform equal to, or better than, petroleum-based chemicals. Grain 
sorghum and other cellulosic feedstocks are used in the production 
processes.
USDA Rural Development Massachusetts Office
  Scott Soares, State Director (www.rd.usda.gov/ma)
  451 West Street, Amherst, MA 01002-2999
  Phone: (413) 253-4300
Michigan


  Total Jobs: 81,820
  Direct Jobs: 37,790
  Total Value-Added: $6.426 Billion
  Direct Value-Added: $2.882 Billion

    The total jobs or value-added is the sum of the direct, indirect, 
and induced effects.

------------------------------------------------------------------------
                                                           Direct Value-
                 Sector                    Direct Jobs         Added
------------------------------------------------------------------------
              Agriculture & Forestry             5,210          $243.2M
                  Biobased Chemicals               950          $169.8M
                         Biorefining               <50             <$5M
                             Enzymes               <50             <$5M
                     Forest Products            30,090            $2.4B
                            Textiles             1,880          $117.1M
      Bioplastic Bottles & Packaging                70            $5.5M
------------------------------------------------------------------------

                                                          
                                                          
    52 Michigan companies currently participate in the BioPreferred 
Program.
Example Biobased Product Firms
Biobased Chemicals
    Lear Corporation (Southfield, MI; lear.com): Lear Corporation 
produces SoyFoam, derived from soybean oil, for automotive interior 
applications on North American Ford and other customer vehicles.
    KTM Industries, Inc. (Lansing, MI; ktmindustries.com/
products.html): KTM Industries develops, manufactures, and markets new 
technologies that incorporate bioplastics. One of the company's 
products is Green Cell, a starch-based biodegradable foam.
Biorefining
    Hydro Safe, Inc. (Dewitt, MI; hydrosafe.com): Hydro Safe products 
use vegetable-based oils as base fluids for a number of market 
products, including hydraulic oils, cleaners, and lubricants.
Bioplastic Bottles & Packaging
    Green Cell Foam (Lansing, MI; greencellfoam.com): Green Cell Foam 
produces a unique natural packaging material, produced from high-grade, 
non-GMO cornstarch.
USDA Rural Development Michigan Office
  James Turner, State Director (www.rd.usda.gov/mi)
  3001 Coolidge Road, Suite 200, East Lansing, MI 48823
  Phone: (517) 324-5190
Minnesota


  Total Jobs: 81,670
  Direct Jobs: 35,850
  Total Value-Added: $7.371 Billion
  Direct Value-Added: $3.392 Billion

    The total jobs or value-added is the sum of the direct, indirect, 
and induced effects.

------------------------------------------------------------------------
                                                           Direct Value-
                 Sector                    Direct Jobs         Added
------------------------------------------------------------------------
              Agriculture & Forestry             3,280          $146.9M
                  Biobased Chemicals               270           $74.1M
                         Biorefining               <50            $6.3M
                             Enzymes                50           $10.5M
                     Forest Products            28,880            $3.1B
                            Textiles             1,730           $81.6M
      Bioplastic Bottles & Packaging               <50             <$5M
------------------------------------------------------------------------

                                                          
                                                          
    92 Minnesota companies currently participate in the BioPreferred 
Program.
Example Biobased Product Firms
Biobased Chemicals
    BioAmber (Plymouth, MN; bio-amber.com): BioAmber manufactures 
succinic acid, which can be used to create of a number of consumer 
products, including polyurethanes, artificial leathers, cosmetics and 
personal care products, plastics, and dyes and pigments.
    Cargill (Minneapolis, MN; cargill.com): Cargill offers a variety of 
biobased products, suitable for a number of industrial applications and 
markets.
    NatureWorks, LLC (Minnetonka, MN; natureworksllc.com): NatureWorks 
is dedicated to driving environmental progress through developing the 
global market for biobased plastics and fibers. Industry partnerships 
include service ware, home textiles, food packaging, and apparel.
    StarchTech, Inc. (Minneapolis, MN; starchtech.com): StarchTech is a 
global manufacturer of cornstarch-based loose fill packaging material 
produced from ReNew Resin.
USDA Rural Development Minnesota Office
  Mary Colleen Landkamer, State Director (www.rd.usda.gov/mn)
  375 Jackson Street, Suite 410, St. Paul, MN 55101-1853
  Phone: (651) 602-7800
Mississippi


  Total Jobs: 68,760
  Direct Jobs: 40,350
  Total Value-Added: $4.730 Billion
  Direct Value-Added: $2.692 Billion

    The total jobs or value-added is the sum of the direct, indirect, 
and induced effects.

------------------------------------------------------------------------
                                                           Direct Value-
                 Sector                    Direct Jobs         Added
------------------------------------------------------------------------
              Agriculture & Forestry             9,330          $610.9M
                  Biobased Chemicals               170           $44.9M
                         Biorefining               <50             <$5M
                             Enzymes               <50             <$5M
                     Forest Products            29,400            $1.9B
                            Textiles             1,470           $84.0M
      Bioplastic Bottles & Packaging               <50             <$5M
------------------------------------------------------------------------

                                                          
                                                          
    16 Mississippi companies currently participate in the BioPreferred 
Program.
Example Biobased Product Firms
Agriculture & Forestry
    SpillEater (Flora, MS; spilleater.com): SpillEater manufactures 
natural, biobased spill absorbents, produced from cotton plants. 
Absorbents are available for a number of classifications, including 
all-purpose, oil, acid, and bodily fluid. Market segments include 
retail, transportation, manufacturing, and government.
Biobased Chemicals
    ALGIX (Meridian, MS; algix.com): A subsidiary of ALGIX, Solaplast 
harnesses the potential of algae to produce biobased plastics for the 
replacement of traditional, petroleum-based plastics. Algae is sourced 
from areas that have historically had algae problems, enhancing the 
waterway.
Forest Products
    Magnolia Forest Products, Inc. (Terry, MS; magnoliaforest.com): 
Founded in 1976, Magnolia Forest Products is a national supplier of 
quality, low-cost wood products, including wooden pallet parts, 
plywood, particleboard, oriented strand board, and furniture parts.
USDA Rural Development Mississippi Office
  Trina George, State Director (www.rd.usda.gov/ms)
  Federal Building, Suite 831, 100 West Capitol Street, Jackson, MS 
    39269
  Phone: (601) 965-4316
Missouri


  Total Jobs: 54,760
  Direct Jobs: 27,290
  Total Value-Added: $4.693 Billion
  Direct Value-Added: $2.506 Billion

    The total jobs or value-added is the sum of the direct, indirect, 
and induced effects.

------------------------------------------------------------------------
                                                           Direct Value-
                 Sector                    Direct Jobs         Added
------------------------------------------------------------------------
              Agriculture & Forestry             4,460          $266.5M
                  Biobased Chemicals               450          $127.7M
                         Biorefining               <50             <$5M
                             Enzymes               130           $28.6M
                     Forest Products            20,850            $2.1B
                            Textiles             1,780           $75.3M
      Bioplastic Bottles & Packaging               <50             <$5M
------------------------------------------------------------------------

                                                          
                                                          
    50 Missouri companies currently participate in the BioPreferred 
Program.
Example Biobased Product Firms
Biobased Chemicals
    Gateway Foam Insulators (Warrenton, MO; gatewayfoam.com): Gateway 
Foam Insulators produces a soy-based spray foam insulation, BioBased 
501, which exhibits the same air sealing capabilities as low-density 
polyurethanes, and is produced using soybean oil.
    Soya Systems (Saint Louis, MO; soya.com): Soya Systems Products are 
the first shampoos and conditions in the world to contain hydrolyzed 
soya protein.
Bioplastic Bottles & Packaging
    Biodegradable Food Service LLC (Richland, MO; earth-to-go.com): 
Biodegradable Food Service produces over 82 biobased, single-use food 
service products, in addition to eco-friendly lid options. Feedstock 
inputs include bamboo fibers, cornstarch, potato starch, as well as 
additional vegetable starches.
USDA Rural Development Missouri Office
  Anita ``Janie'' Dunning, State Director (www.rd.usda.gov/mo)
  601 Business Loop 70 West, Parkade Center, Suite 235, Columbia, MO 
    65203
  Phone: (573) 876-0976
Montana


  Total Jobs: 11,350
  Direct Jobs: 6,340
  Total Value-Added: $674 Million
  Direct Value-Added: $3,334 Million

    The total jobs or value-added is the sum of the direct, indirect, 
and induced effects.

------------------------------------------------------------------------
                                                           Direct Value-
                 Sector                    Direct Jobs         Added
------------------------------------------------------------------------
              Agriculture & Forestry             1,860           $75.0M
                  Biobased Chemicals               <50             <$5M
                         Biorefining               <50             <$5M
                             Enzymes               <50             <$5M
                     Forest Products             4,280          $250.8M
                            Textiles               190            $5.6M
      Bioplastic Bottles & Packaging               <50             <$5M
------------------------------------------------------------------------

                                                          
                                                          
    10 Montana companies currently participate in the BioPreferred 
Program.
Example Biobased Product Firms
Biobased Chemicals
    Blue Marble Biomaterials (Missoula, MT; bluemarblebio.com): Blue 
Marble Biomaterials manufactures complex chemical compounds using 
refined green chemistry processes. Organic biomass material, including 
food co-products, spent brewery grain, and wood chips, is utilized in 
the production of chemical products.
    Botanie Soap Inc. (Missoula, MT; botaniesoap.com): Botanie Soap 
manufactures all-natural soap, utilizing basic organic ingredients. The 
company's base oil blend includes combinations of certified organic 
coconut, palm fruit, sunflower, and safflower oils.
Forest Products
    Bitteroot Valley Forest Products (Missoula, MT; bvfpmontana.com): 
Bitteroot Valley Forest Products provides a large range of specialty 
wood products, including logs, timber, siding, and wood shavings. The 
company works to incorporate beetle-kill and standing dead wood in some 
of their product lines.
USDA Rural Development Montana Office
  John Walsh, State Director (www.rd.usda.gov/mt)
  2229 Boot Hill Court, Bozeman, MT 59715
  Phone: (406) 585-2580
Nebraska


  Total Jobs: 11,890
  Direct Jobs: 6,020
  Total Value-Added: $895 Million
  Direct Value-Added: $426 Million

    The total jobs or value-added is the sum of the direct, indirect, 
and induced effects.

------------------------------------------------------------------------
                                                           Direct Value-
                 Sector                    Direct Jobs         Added
------------------------------------------------------------------------
              Agriculture & Forestry               830           $30.5M
                  Biobased Chemicals               130            $56.8
                         Biorefining               <50             <$5M
                             Enzymes               120           $46.3M
                     Forest Products             4,650          $307.8M
                            Textiles               <50             <$5M
      Bioplastic Bottles & Packaging               360           $18.8M
------------------------------------------------------------------------

                                                          
                                                          
    23 Nebraska companies currently participate in the BioPreferred 
Program.
Example Biobased Product Firms
Biobased Chemicals
    The Clean Environment Company (Laurel, NE; cleanenvironmentco.com): 
The Clean Environment Company manufactures a variety of cleaning 
products produced from naturally derived, renewable ingredients. 
Product offerings include cleaners, solvents, and detergents.
    Laurel BioComposite, LLC (Laurel, NE; laurelbiocomposite.com): 
Laurel BioComposite manufactures Bio-Res powder and pellets using 
distiller's grain. The powder and pellets can be blended with 
thermoplastics and thermosets in a variety of manufacturing 
applications, replacing petroleum-based resins at inclusion rates up to 
40 percent in final products.
    NatureWorks, LLC (Blair, NE; natureworksllc.com): NatureWorks is 
dedicated to driving environmental progress through developing the 
global market for biobased plastics and fibers. NatureWorks's 
manufacturing facility is located in Blair, Nebraska.
USDA Rural Development Nebraska Office
  Maxine B. Moul, State Director (www.rd.usda.gov/ne)
  Federal Building, Suite 308, 100 Centennial Mall North, Lincoln, NE 
    68508-3859
  Phone: (402) 437-5551
Nevada


  Total Jobs: 7,130
  Direct Jobs: 3,840
  Total Value-Added: $515 Million
  Direct Value-Added: $229 Million

    The total jobs or value-added is the sum of the direct, indirect, 
and induced effects.

------------------------------------------------------------------------
                                                           Direct Value-
                 Sector                    Direct Jobs         Added
------------------------------------------------------------------------
              Agriculture & Forestry               300            $6.3M
                  Biobased Chemicals               <50            $5.5M
                         Biorefining               <50             <$5M
                             Enzymes               <50             <$5M
                     Forest Products             3,110          $193.9M
                            Textiles               390           $22.4M
      Bioplastic Bottles & Packaging               <50             <$5M
------------------------------------------------------------------------

                                                          
                                                          
    14 Nevada companies currently participate in the BioPreferred 
Program.
Example Biobased Product Firms
Biobased Chemicals
    Aervoe Industries Inc. (Gardnerville, NV; aervoe.com): Aervoe 
Industries manufactures paints, cleaners, lubricants, and other 
industrial products and aims to meet strict environmental requirements 
and specifications. Several products made by Aervoe Industries contain 
biobased materials.
    Bio Pac Inc. (Incline Village, NV; bio-pac.com): Bio Pac produces 
an assortment of biodegradable cleaning products. Available offerings 
include dishwashing products, laundry products, household cleaning 
supplies, and hand and body wash. All products are void of petroleum 
distillates, dyes, perfumes, and chlorine.
Enzymes
    Bio-Pure Products Inc. (Minden, NV; biopureproducts.com): Bio-Pure 
Products provides microbiology-based on-site organic waste management 
solutions for many industries. All products intend to replace dangerous 
chemicals with a unique combination of living microbes and enzymes, 
which together act to break down and digest organic waste.
USDA Rural Development Nevada Office
  Sarah Jose Mersereau-Adler, State Director (www.rd.usda.gov/nv)
  1390 South Curry Street, Carson City, NV 89703-9910
  Phone: (775) 887-1222
New Hampshire


  Total Jobs: 13,480
  Direct Jobs: 7,090
  Total Value-Added: $939 Million
  Direct Value-Added: $404 Million

    The total jobs or value-added is the sum of the direct, indirect, 
and induced effects.

------------------------------------------------------------------------
                                                           Direct Value-
                 Sector                    Direct Jobs         Added
------------------------------------------------------------------------
              Agriculture & Forestry             1,840           $81.4M
                  Biobased Chemicals               <50            $7.6M
                         Biorefining               <50             <$5M
                             Enzymes               <50             <$5M
                     Forest Products             4,110          $240.3M
                            Textiles             1,080           $71.7M
      Bioplastic Bottles & Packaging               <50             <$5M
------------------------------------------------------------------------

                                                          
                                                          
    18 New Hampshire companies currently participate in the 
BioPreferred Program.
Example Biobased Product Firms
Biobased Chemicals
    Ink Mill (Sanbornton, NH; inkmillcorp.com): Ink Mill manufactures 
premium quality digital inks, including a line of inks produced with 
natural materials called, BTW BioSolvent Ink.
Forest Products
    WE Cork, Inc. (Exeter, NH; wecork.com): For more than 100 years, WE 
Cork has offered an array of all-natural products derived from the bark 
of cork trees. Product offerings include flooring, expansion joints, 
insulation corkboard, and composition cork.
Bioplastic Bottles & Packaging
    Stonyfield Farms, Inc. (Londonderry, NH; stonyfield.com): 
Stonyfield Farms, the world's largest organic yogurt producer, uses 
biobased plastic for its multipack yogurt cups. As a result, the 
company lowered its carbon emissions from packaging by 48 percent.
USDA Rural Development New Hampshire Office
  Ted Brady, State Director (www.rd.usda.gov/nh)
  87 State Street Suite 324, P.O. Box 249, Montpelier, VT 05601
  Phone: (802) 828-6000
New Jersey


  Total Jobs: 47,390
  Direct Jobs: 21,950
  Total Value-Added: $4.541 Billion
  Direct Value-Added: $1.878 Billion

    The total jobs or value-added is the sum of the direct, indirect, 
and induced effects.

------------------------------------------------------------------------
                                                           Direct Value-
                 Sector                    Direct Jobs         Added
------------------------------------------------------------------------
              Agriculture & Forestry             1,280           $38.8M
                  Biobased Chemicals               770          $215.1M
                         Biorefining               <50             <$5M
                             Enzymes               150           $35.3M
                     Forest Products            16,660            $1.4B
                            Textiles             3,560          $205.7M
      Bioplastic Bottles & Packaging               <50             <$5M
------------------------------------------------------------------------

                                                          
                                                          
    60 New Jersey companies currently participate in the BioPreferred 
Program.
Example Biobased Product Firms
Biobased Chemicals
    AVEENO Active Naturals (Skillman, NJ; aveeno.com): Aveeno's Active 
Naturals brand uses a number of renewable, natural ingredients, 
including oat, soy, blackberry, and wheat. The company offers several 
skin, beauty, and hair care products.
    Ingredion Incorporated (Bridgewater, NJ; ingredion.com): Ingredion 
has been a recognized leader in biomaterial innovation and application 
development since 1895. Biobased ingredients derived from feedstocks 
such as corn, tapioca, and potatoes, are used in a number of industry 
sectors, including personal care, household and fabric care, and 
biobased plastics.
    National Bio+GreenSciences (Branchburg, NJ; biogreencrystals.com): 
National Bio+GreenSciences offers the world's first nutraceutical 
grade, zero waste, [E]arth friendly product line of cleaning supplies, 
formulated with plant- and mineral-based ingredients.
USDA Rural Development New Jersey Office
  Howard Henderson, State Director (www.rd.usda.gov/nj)
  5th Floor North, Suite 500, 8000 Midlantic Drive, Mt. Laurel, NJ 
    08054
  Phone: (856) 787-7700
New Mexico


  Total Jobs: 6,630
  Direct Jobs: 4,210
  Total Value-Added: $389 Million
  Direct Value-Added: $208 Million

    The total jobs or value-added is the sum of the direct, indirect, 
and induced effects.

------------------------------------------------------------------------
                                                           Direct Value-
                 Sector                    Direct Jobs         Added
------------------------------------------------------------------------
              Agriculture & Forestry             1,120           $53.1M
                  Biobased Chemicals               <50             <$5M
                         Biorefining               <50             <$5M
                             Enzymes               <50             <$5M
                     Forest Products             2,740          $140.5M
                            Textiles               310           $12.0M
      Bioplastic Bottles & Packaging               <50             <$5M
------------------------------------------------------------------------

                                                          
                                                          
    8 New Mexico companies currently participate in the BioPreferred 
Program.
Example Biobased Product Firms
Biobased Chemicals
    BioShield Paint Company (Santa Fe, NM; bioshieldpaint.com): 
BioShield Paint Company manufactures a variety of paints, stains, 
thinners, and waxes, all of which are primarily produced from naturally 
derived raw materials such as citrus peel extracts, essential oils, 
seed oils, tree resins, and natural pigments.
    Private Label Select (Ranchos de Taos, NM; privatelabelselect.com): 
Private Label Select manufactures lip balms, lip tints, glosses, and 
other high-quality personal care and cosmetics products. A pioneer in 
the natural and organic cosmetics industry, its manufacturing 
facilities were some of the first USDA certified organic.
Forest Products
    Albuquerque Hardwood Lumber Company (Albuquerque, NM; 
abqhardwoods.com): Albuquerque Hardwood Lumber Company is the premier 
supplier of quality hardwood products in the southwestern U.S. In 
addition to lumber options, the company also offers wood panel 
products.
USDA Rural Development New Jersey Office
  Terrence Brunner, State Director (www.rd.usda.gov/nm)
  6200 Jefferson Street, Room 255, Albuquerque, NM 87109
  Phone: (505) 761-4950
New York


  Total Jobs: 100,630
  Direct Jobs: 52,300
  Total Value-Added: $9.236 Billion
  Direct Value-Added: $3.848 Billion

    The total jobs or value-added is the sum of the direct, indirect, 
and induced effects.

------------------------------------------------------------------------
                                                           Direct Value-
                 Sector                    Direct Jobs         Added
------------------------------------------------------------------------
              Agriculture & Forestry             4,450          $170.0M
                  Biobased Chemicals               720          $237.7M
                         Biorefining               <50             <$5M
                             Enzymes               120           $33.6M
                     Forest Products            36,130            $2.6B
                            Textiles            11,260          $828.9M
      Bioplastic Bottles & Packaging               <50             <$5M
------------------------------------------------------------------------

                                                          
                                                          
    83 New York companies currently participate in the BioPreferred 
Program.
Example Biobased Product Firms
Biobased Chemicals
    AnelloTech (Pearl River, NY; anellotech.com): AnelloTech produces 
cost-competitive renewable chemicals form non-food biomass feedstocks. 
These chemicals can be used in a number of consumer goods, including 
beverage bottles, automotive and electronic components, clothing, 
footwear, and carpeting.
Forest Products
    Ecovative (Green Island, NY; ecovativedesign.com): Ecovative is a 
leading biobased materials company, with products that span a range of 
applications, from furniture to packaging and insulation. Myco Board, 
one product offering, is a certified sustainable, engineered wood, 
which can be molded into desired shapes and designs.
Textiles
    Carnegie Fabrics (Rockville, NY; carnegiefabrics.com): In 2013, 
Carnegie Fabrics introduced Xorel, the world's first and only biobased 
high performance interior textile. This line of fabrics is sourced from 
sugarcane plants and has a biobased content range from 60 to 85 
percent.
USDA Rural Development New York Office
  Scott Collins, Acting State Director (www.rd.usda.gov/ny)
  The Galleries of Syracuse, 441 South Salina Street, Suite 357, 
    Syracuse, NY 13202-2541
  Phone: (315) 477-6400
North Carolina


  Total Jobs: 179,380
  Direct Jobs: 90,040
  Total Value-Added: $13.631 Billion
  Direct Value-Added: $6.437 Billion

    The total jobs or value-added is the sum of the direct, indirect, 
and induced effects.

------------------------------------------------------------------------
                                                           Direct Value-
                 Sector                    Direct Jobs         Added
------------------------------------------------------------------------
              Agriculture & Forestry             9,410          $625.9M
                  Biobased Chemicals               860          $349.8M
                         Biorefining               <50             <$5M
                             Enzymes               210          $103.6M
                     Forest Products            61,930            $4.3B
                            Textiles            17,870            $1.1B
      Bioplastic Bottles & Packaging               <50             <$5M
------------------------------------------------------------------------

                                                          
                                                          
    61 North Carolina companies currently participate in the 
BioPreferred Program.
Example Biobased Product Firms
Enzymes
    Novozymes North America (Franklinton, NC; novozymes.com): Novozymes 
is the world leader in biobased innovation, advancing both the biofuel 
and renewable chemical industries. Manufactured products include 
industrial enzymes, microorganisms, and biopharmaceutical ingredients.
Textiles
    Cotton Incorporated (Cary, NC; cottoninc.com): Cotton Incorporated 
is the research and marketing company representing upland cotton. The 
company focuses its efforts in three key areas: fiber processing, 
product development and trend analysis, and dyeing and finishing.
Bioplastic Bottles & Packaging
    Earth Renewable Technologies, Inc. (Brevard, NC; 
earthrenewable.com): Earth Renewable Technologies uses various plant-
based resins, in conjunction with their patent pending, biobased 
microfiber-additive packaging, to produce superior plant-based 
alternatives to traditional plastic packaging. Feedstock sources 
include sugarcane and sugar beets.
USDA Rural Development North Carolina Office
  Randall A. Gore, State Director (www.rd.usda.gov/nc)
  4405 Bland Road, Suite 260, Raleigh, NC 27609
  Phone: (919) 873-2000
North Dakota


  Total Jobs: 5,600
  Direct Jobs: 3,360
  Total Value-Added: $429 Million
  Direct Value-Added: $238 Million

    The total jobs or value-added is the sum of the direct, indirect, 
and induced effects.

------------------------------------------------------------------------
                                                           Direct Value-
                 Sector                    Direct Jobs         Added
------------------------------------------------------------------------
              Agriculture & Forestry               470           $21.1M
                  Biobased Chemicals               <50            $5.1M
                         Biorefining               <50            $5.8M
                             Enzymes               <50             <$5M
                     Forest Products             2,740          $200.8M
                            Textiles               120            $6.1M
      Bioplastic Bottles & Packaging               <50             <$5M
------------------------------------------------------------------------

                                                          
                                                          
    5 North Dakota companies currently participate in the BioPreferred 
Program.
Example Biobased Product Firms
Agriculture & Forestry
    Bison Forest Products LLC (Fargo, ND; bisonforestproducts.com): 
Bison Forest Products is a wholesale lumber supplier. In addition to 
its lumber offerings, the company provides quality wheat and barley 
straw.
Forest Products
    Weekes Forest Products, Inc. (Fargo, ND; weekesforest.com): Weekes 
is the leading distributor of specialty building materials, commodity 
lumber, engineered wood components, and industrial materials. Among its 
specialty product offerings, Eco-Side is a 100 percent recycled, 
ecologically friendly siding option.
USDA Rural Development North Dakota Office
  Ryan Taylor, State Director (www.rd.usda.gov/nd)
  Federal Building, Room 208, P.O. Box 1737, 220 East Rosser, Bismarck, 
    ND 58502-1737
  Phone: (701) 530-2037
Ohio


  Total Jobs: 117,370
  Direct Jobs: 52,930
  Total Value-Added: $9.730 Billion
  Direct Value-Added: $4.277 Billion

    The total jobs or value-added is the sum of the direct, indirect, 
and induced effects.

------------------------------------------------------------------------
                                                           Direct Value-
                 Sector                    Direct Jobs         Added
------------------------------------------------------------------------
              Agriculture & Forestry             3,500          $165.5M
                  Biobased Chemicals             1,310          $443.6M
                         Biorefining               <50             <$5M
                             Enzymes               180            $4.4M
                     Forest Products            45,260            $3.5B
                            Textiles             3,070          $192.0M
      Bioplastic Bottles & Packaging               100            $8.5M
------------------------------------------------------------------------

                                                          
                                                          
    92 Ohio companies currently participate in the BioPreferred 
Program.
Example Biobased Product Firms
Biobased Chemicals
    Arizona Chemical (Dover, OH; arizonachemical.com): Arizona Chemical 
is the world's leading producer and biorefiner of pine chemicals. The 
company provides innovative, biobased chemical solutions to multiple 
industry sectors, including adhesives, roads and construction, tires, 
and coatings. Approximately 85 percent of the company's raw materials 
are from renewable sources.
    Procter & Gamble (Cincinnati, OH; us.pg.com): Tide, a Procter & 
Gamble brand, recently launched the first biobased detergent, Tide 
purclean. The detergent is comprised of 65 percent biobased ingredients 
and aims to set the performance standard for natural detergents.
    Renewable Lubricants (Hartville, OH; renewablelube.com): Renewable 
Lubricants is the world's leading developer and manufacturer of high-
performance, biobased lubricants, producing utilizing soy, corn, 
canola, sunflower, and other biomaterials. The company offers more than 
250 biobased and biodegradable products.
USDA Rural Development Ohio Office
  Tony Logan, State Director (www.rd.usda.gov/oh)
  Federal Building, Room 507, 200 North High Street, Columbus, OH 
    43215-2418
  Phone: (614) 255-2400
Oklahoma


  Total Jobs: 21,550
  Direct Jobs: 10,320
  Total Value-Added: $1.960 Billion
  Direct Value-Added: $995 Million

    The total jobs or value-added is the sum of the direct, indirect, 
and induced effects.

------------------------------------------------------------------------
                                                           Direct Value-
                 Sector                    Direct Jobs         Added
------------------------------------------------------------------------
              Agriculture & Forestry             2,790          $138.1M
                  Biobased Chemicals               100           $40.5M
                         Biorefining               <50             <$5M
                             Enzymes               <50             <$5M
                     Forest Products             7,000          $773.2M
                            Textiles               730           $63.6M
      Bioplastic Bottles & Packaging               <50             <$5M
------------------------------------------------------------------------

                                                          
                                                          
    8 Oklahoma companies currently participate in the BioPreferred 
Program.
Example Biobased Product Firms
Biobased Chemicals
    Envia Energy (Oklahoma City, OK; enviaenergy.com): Envia Energy 
uses the latest developments in gas processing and Fischer-Tropsch 
technology to create high purity synthetic fuels and chemicals. Methane 
captured from landfills is used as a feedstock.
Forest Products
    Forest Products Supply Co. (Oklahoma City, OK; fp-supply.com): 
Forest Products Supply is a leading wholesale distributor of lumber and 
building materials in the Midwest. Product offerings consist of over 
2,500 products, ranging from general commodities to specialty products.
    TO MARKET (Oklahoma City, OK; tomkt.com): TO MARKET prides itself 
on bringing alternative materials for interior paces to the commercial 
marketplace, designing and selling commercial flooring. Flooring 
products are manufactured utilizing recycled and sustainable content, 
including rubber and cork.
USDA Rural Development Oklahoma Office
  David Ryan McMullen, State Director (www.rd.usda.gov/ok)
  100 USDA, Suite 108, Stillwater, OK 74074-2654
  Phone: (405) 742-1000
Oregon


  Total Jobs: 92,520
  Direct Jobs: 46,480
  Total Value-Added: $7.798 Billion
  Direct Value-Added: $4.159 Billion

    The total jobs or value-added is the sum of the direct, indirect, 
and induced effects.

------------------------------------------------------------------------
                                                           Direct Value-
                 Sector                    Direct Jobs         Added
------------------------------------------------------------------------
              Agriculture & Forestry            13,460            $1.1B
                  Biobased Chemicals                90           $17.5M
                         Biorefining               <50             <$5M
                             Enzymes               <50             <$5M
                     Forest Products            31,700            $3.0B
                            Textiles             1,230           $50.8M
      Bioplastic Bottles & Packaging               <50             <$5M
------------------------------------------------------------------------

                                                          
                                                          
    49 Oregon companies currently participate in the BioPreferred 
Program.
Example Biobased Product Firms
Biobased Chemicals
    Trellis Earth Products (Wilsonville, OR; trellisbioplastic.com): 
Trellis Bioplastics creates a range of biobased plastic resins and 
consumer products in efforts to replace traditional plastics. Trellis 
Earth branded food service disposables are currently the leading 
industry solution for ``greening'' the take-out food service sector.
Forest Products
    DR Johnson Lumber (Riddle, OR; drjlumber.com): DR Johnson is the 
first APA/ANSI certified manufacturer for cross-laminated timber (CLT) 
in the U.S.
    SierraPine (Medford, OR; sierrapine.com): SierraPine is North 
America's leading manufacturer of medium density fiberboard (MDF) and 
particleboard, which are used in a variety of applications including 
furniture, cabinetry, wall panels, shelving, and doors. SierraPine 
produces MDF and particleboard from recycled or recovered wood fiber 
and adhesives.
USDA Rural Development Oregon Office
  Vicki L. Walker, State Director (www.rd.usda.gov/or)
  1220 SW 3rd Avenue, Suite 1801, Portland, OR 97204
  Phone: (503) 414-3300
Pennsylvania


  Total Jobs: 151,090
  Direct Jobs: 71,360
  Total Value-Added: $13.667 Billion
  Direct Value-Added: $6.522 Billion

    The total jobs or value-added is the sum of the direct, indirect, 
and induced effects.

------------------------------------------------------------------------
                                                           Direct Value-
                 Sector                    Direct Jobs         Added
------------------------------------------------------------------------
              Agriculture & Forestry             6,860          $309.2M
                  Biobased Chemicals               820          $170.5M
                         Biorefining               <50             <$5M
                             Enzymes               170           $52.7M
                     Forest Products            58,790            $5.8B
                            Textiles             5,370          $267.3M
      Bioplastic Bottles & Packaging                70            $6.6M
------------------------------------------------------------------------

                                                          
                                                          
    79 Pennsylvania companies currently participate in the BioPreferred 
Program.
Example Biobased Product Firms
Biobased Chemicals
    Armstrong World Industries (Lancaster, PA; armstrong.com): In 
response to increased market demand for non-PVC flooring products, 
Armstrong Flooring created a bio-flooring line that is made with 85 
percent limestone and BioStride, a patented biobased polyester binder 
that is partly comprised of domestically produced corn.
    Houghton International, Inc. (Norristown, PA; houghtonintl.com): 
Houghton International produces a variety of specialty chemicals, oils, 
and lubricants. The company has two hydraulic fluids that are USDA 
Certified Biobased Products and are derived from vegetable oil-based 
feedstocks.
    Sun and Earth, Inc. (King of Prussia, PA; sunandearth.com): Sun and 
Earth has been producing non-toxic, all-natural cleaning supplies since 
1988. In lieu of petroleum-based materials, the company produces 
products via plant-based, naturally derived ingredients.
USDA Rural Development Pennsylvania Office
  Thomas P. Williams, State Director (www.rd.usda.gov/pa)
  359 East Park Drive, Suite 4, Harrisburg, PA 17111-2747
  Phone: (717) 237-2299
Rhode Island


  Total Jobs: 6,670
  Direct Jobs: 3,500
  Total Value-Added: $522 Million
  Direct Value-Added: $228 Million

    The total jobs or value-added is the sum of the direct, indirect, 
and induced effects.

------------------------------------------------------------------------
                                                           Direct Value-
                 Sector                    Direct Jobs         Added
------------------------------------------------------------------------
              Agriculture & Forestry               150             <$5M
                  Biobased Chemicals                70            $9.6M
                         Biorefining               <50             <$5M
                             Enzymes               <50             <$5M
                     Forest Products             2,190          $158.5M
                            Textiles             1,100           $56.0M
      Bioplastic Bottles & Packaging               <50             <$5M
------------------------------------------------------------------------

                                                          
                                                          
    5 Rhode Island companies currently participate in the BioPreferred 
Program.
Example Biobased Product Firms
Biobased Chemicals
    Spectral Chemical Co., Inc. (Warwick, RI; spectralchemical.com): 
Spectral Chemical Company offers a range of chemical and cleaning 
products, some of which are biobased products produced from soy-based 
feedstocks.
    Toray Plastics, Inc. (North Kingston, RI; toraytpa.com): Toray 
Plastics is the only U.S. manufacturer of polypropylene, polyester, 
metallized, and biobased films. The company developed a biobased bio-
axially oriented polyester film that is utilized in the manufacturing 
process of solar control window films for commercial and residential 
applications.
USDA Rural Development Rhode Island Office
  Scott Soares, State Director (www.rd.usda.gov/ct)
  451 West Street, Amherst, MA 01002-2999
  Phone: (413) 253-4300
South Carolina


  Total Jobs: 82,670
  Direct Jobs: 38,430
  Total Value-Added: $7.448 Billion
  Direct Value-Added: $4.227 Billion

    The total jobs or value-added is the sum of the direct, indirect, 
and induced effects.

------------------------------------------------------------------------
                                                           Direct Value-
                 Sector                    Direct Jobs         Added
------------------------------------------------------------------------
              Agriculture & Forestry             6,870          $449.0M
                  Biobased Chemicals               560          $152.1M
                         Biorefining               <50             <$5M
                             Enzymes               <50            $5.1M
                     Forest Products            22,930            $3.0B
                            Textiles             8,370          $640.9M
      Bioplastic Bottles & Packaging               <50             <$5M
------------------------------------------------------------------------

                                                          
                                                          
    15 South Carolina companies currently participate in the 
BioPreferred Program.
Example Biobased Product Firms
Biobased Chemicals
    Ingevity (North Charleston, SC; ingevity.com): Ingevity 
manufactures specialty chemicals and high-performance carbon materials. 
Ingevity's biobased product offerings create value for many industries, 
including wood coatings, plastic stabilizers, mining, and specialty 
additives.
    Sorbent Green LLC (Aiken, SC; greensorb.com): Sorbent Green 
develops, manufactures, and distributes biobased products for 
industrial and commercial applications. The biobased solvents offered 
are readily biodegradable, with zero volatile organic compounds.
Forest Products
    Domtar (Fort Mill, SC; domtar.com): In addition to being a global 
leader in pulp production, Domtar is also North America's largest 
producer of uncoated freesheet paper. Domtar is committed to using 
fiber from responsibly managed sources, and was an early supporter of 
the Forest Stewardship Council.
USDA Rural Development South Carolina Office
  Michele Cardwell, State Director (www.rd.usda.gov/sc)
  Strom Thurmond Federal Building, 1835 Assembly Street, Room 1007, 
    Columbia, SC 29201
  Phone: (803) 765-5163
South Dakota


  Total Jobs: 10,790
  Direct Jobs: 6,160
  Total Value-Added: $677 Million
  Direct Value-Added: $332 Million

    The total jobs or value-added is the sum of the direct, indirect, 
and induced effects.

------------------------------------------------------------------------
                                                           Direct Value-
                 Sector                    Direct Jobs         Added
------------------------------------------------------------------------
              Agriculture & Forestry               670           $35.2M
                  Biobased Chemicals               <50           $13.3M
                         Biorefining               <50             <$5M
                             Enzymes               <50            $9.7M
                     Forest Products             5,230          $274.7M
                            Textiles               240           $11.1M
      Bioplastic Bottles & Packaging               <50             <$5M
------------------------------------------------------------------------

                                                          
                                                          
    11 South Dakota companies currently participate in the BioPreferred 
Program.
Example Biobased Product Firms
Biobased Chemicals
    Ultra Green Floor Sweep (Platte, SD; ultragreenfloorsweep.com): 
Ultra Green Floor Sweep produces an all-natural sweeping compound, 
which can be used to shine floors without the need for any water.
Biorefining
    POET Biorefining (Chancellor, SD; poet.com): The POET Biorefining 
facility in Chancellor, the largest of the POET plants, processes 110 
million gallons of ethanol each year. POET INVIZ zein, a natural, non-
toxic edible protein product is extracted from the ethanol fermentation 
process and used as a biobased alternative for a number of industrial 
applications.
Forest Products
    Pure Pulp Products (Plankinton, SD; purepulpproducts.com): Pure 
Pulp Products utilizes biomass waste as a sustainable substrate for 
packaging. Post-industrial waste from corrugated box manufacturing is 
re-purposed to create fiber that can be turned into an array of 
products, including food service plates and bowls, trays, and 
clamshells.
USDA Rural Development South Dakota Office
  Bruce Jones, Acting State Director (www.rd.usda.gov/sd)
  Federal Building, Room 210, 200 Fourth Street, SW, Huron, SD 57350
  Phone: (605) 352-1100
Tennessee


  Total Jobs: 100,980
  Direct Jobs: 44,850
  Total Value-Added: $8.981 Billion
  Direct Value-Added: $4.430 Billion

    The total jobs or value-added is the sum of the direct, indirect, 
and induced effects.

------------------------------------------------------------------------
                                                           Direct Value-
                 Sector                    Direct Jobs         Added
------------------------------------------------------------------------
              Agriculture & Forestry             5,890          $322.2M
                  Biobased Chemicals               720          $174.9M
                         Biorefining               <50             <$5M
                             Enzymes               <50             <$5M
                     Forest Products            33,990            $3.7B
                            Textiles             4,320          $223.1M
      Bioplastic Bottles & Packaging               <50             <$5M
------------------------------------------------------------------------

                                                          
                                                          
    27 Tennessee companies currently participate in the BioPreferred 
Program.
Example Biobased Product Firms
Biobased Chemicals
    Colonial Chemical (Pittsburg, TN; colonialchem.com): Colonial 
Chemical is an industry forerunner in the development and manufacture 
of products that are derived from renewable ingredients. Products 
include cosmetic and industrial surfactants, performance additives, and 
key building-block ingredients for use in personal care, household, 
industrial, lubrication, and oilfield applications.
    DuPont Tate & Lyle (Loudon, TN; tateandlyle.com): DuPont's facility 
in Loudon was the first to produce commercial shipments of Bio-PDO, 
thereby creating a renewably sourced ingredient for biobased fibers. 
Bio-PDO can be used in cosmetics, apparel, and industrial applications.
Forest Products
    International Paper (Memphis, TN; internationalpaper.com): 
International Paper is a global leader in packaging and paper. 
Ecotainer packaging is a compostable solution for single-use packaging 
that is produced entirely from renewable resources.
USDA Rural Development Tennessee Office
  Bobby Mack Goode, State Director (www.rd.usda.gov/tn)
  3322 West End Avenue, Suite 300, Nashville, TN 37203-1071
  Phone: (615) 783-1300
Texas


  Total Jobs: 178,480
  Direct Jobs: 88,680
  Total Value-Added: $15.228 Billion
  Direct Value-Added: $6.828 Billion

    The total jobs or value-added is the sum of the direct, indirect, 
and induced effects.

------------------------------------------------------------------------
                                                           Direct Value-
                 Sector                    Direct Jobs         Added
------------------------------------------------------------------------
              Agriculture & Forestry            24,440            $1.7B
                  Biobased Chemicals             1,680          $471.3M
                         Biorefining               <50            $5.4M
                             Enzymes               350          $101.2M
                     Forest Products            57,020            $4.4B
                            Textiles             6,750          $253.1M
      Bioplastic Bottles & Packaging                60            $5.6M
------------------------------------------------------------------------

                                                          
                                                          
    136 Texas companies currently participate in the BioPreferred 
Program.
Example Biobased Product Firms
Biobased Chemicals
    DSI Ventures, Inc. (Tyler, TX; dsiventures.com): DSI offers a 
comprehensive line of eco-friendly, biodegradable lubricant solutions. 
Feedstocks for the biobased lubricants include vegetable and citrus 
oils.
    Samsill Corporation (Fort Worth, TX; samsill.com): Samsill 
Corporation manufactures business accessories and office supplies. The 
company's Earth's ChoiceTM Biobased binders are made using a 
biobased intermediate, and the binders are USDA Certified Biobased 
Products.
Bioplastic Bottles & Packaging
    Accredo Packaging, Inc. (Sugar Land, TX; accredopackaging.com): 
Using renewably sourced resin from sugarcane feedstock, Accredo 
successfully pioneered sustainably produced packaging with a renewable 
content. The renewable packaging is predominantly used for the pre-
packaged foods and consumer products markets.
USDA Rural Development Texas Office
  Paco Valentin, State Director (www.rd.usda.gov/tx)
  Federal Building, Suite 102, 101 South Main Street, Temple, TX 76501
  Phone: (254) 742-9700
Utah


  Total Jobs: 21,980
  Direct Jobs: 10,770
  Total Value-Added: $1.825 Billion
  Direct Value-Added: $963 Million

    The total jobs or value-added is the sum of the direct, indirect, 
and induced effects.

------------------------------------------------------------------------
                                                           Direct Value-
                 Sector                    Direct Jobs         Added
------------------------------------------------------------------------
              Agriculture & Forestry               610           $12.9M
                  Biobased Chemicals                90           $32.4M
                         Biorefining               <50             <$5M
                             Enzymes               <50             <$5M
                     Forest Products             9,140          $896.6M
                            Textiles               980           $28.7M
      Bioplastic Bottles & Packaging               <50             <$5M
------------------------------------------------------------------------

                                                          
                                                          
    11 Utah companies currently participate in the BioPreferred 
Program.
Example Biobased Product Firms
Biobased Chemicals
    Prolix (West Jordan, UT; prolixlubricant.com): Prolix offers a 
biodegradable, non-petroleum based solvent/lubricant for firearms. The 
product can also be used to clean clocks, bike chain, knives, vehicle 
locks, lawn and garden equipment, and musical instruments.
Forest Products
    Intermountain Wood Products (St. George, UT; Salt Lake City, UT; 
intermountainwood.com): Intermountain Wood Products offers a complete 
selection of wood products, including cabinet, casework, millwork, and 
flooring. In addition to using reclaimed wood, the company is also 
certified by the Forest Stewardship Council.
    National Wood Products, Inc. (Salt Lake City, UT; 
nationalwood.com): National Wood Products is a multi-product, multi-
location building products distributor. The company offers a range of 
lumber, plywood, and flooring products.
USDA Rural Development Utah Office
  Wilson ``David'' Conine, State Director (www.rd.usda.gov/ut)
  Wallace F. Bennett Federal Building, 125 South State Street, Room 
    4311, Salt Lake City, UT 84138
  Phone: (801) 524-4321
Vermont


  Total Jobs: 11,420
  Direct Jobs: 6,500
  Total Value-Added: $630 Million
  Direct Value-Added: $278 Million

    The total jobs or value-added is the sum of the direct, indirect, 
and induced effects.

------------------------------------------------------------------------
                                                           Direct Value-
                 Sector                    Direct Jobs         Added
------------------------------------------------------------------------
              Agriculture & Forestry             1,820           $53.9M
                  Biobased Chemicals               <50             <$5M
                         Biorefining               <50             <$5M
                             Enzymes               <50             <$5M
                     Forest Products             4,390          $213.9M
                            Textiles               280            $7.6M
      Bioplastic Bottles & Packaging               <50             <$5M
------------------------------------------------------------------------

                                                          
                                                          
    9 Vermont companies currently participate in the BioPreferred 
Program.
Example Biobased Product Firms
Agriculture & Forestry
    Currier Forest Products (Danville, VT; currierforestproducts.com): 
Currier Forest Products is a Forest Stewardship Council certified Chain 
of Custody supplier of custom sawn forest products, including an array 
of flooring, timber, and lumber products.
    The A. Johnson Co. (Bristol, VT; vermontlumber.com): The A. Johnson 
Co. produces an array of flooring, paneling, and lumber products. 
Timber is harvested in accordance with the guidelines of the 
Sustainable Forestry Initiative.
Biobased Chemicals
    Seventh Generation (Burlington, VT; seventhgeneration.com): Seventh 
Generation was one of the first recipients of the USDA BioPreferred 
Program's certification label. The company boasts a number of plant-
based offerings, including disinfectants, hand soaps, laundry supplies, 
and surface cleaners.
USDA Rural Development Vermont Office
  Ted Brady, State Director (www.rd.usda.gov/vt)
  87 State Street Suite 324, P.O. Box 249, Montpelier, VT 05601
  Phone: (802) 828-6080
Virginia


  Total Jobs: 75,540
  Direct Jobs: 38,920
  Total Value-Added: $6.456 Billion
  Direct Value-Added: $3.145 Billion

    The total jobs or value-added is the sum of the direct, indirect, 
and induced effects.

------------------------------------------------------------------------
                                                           Direct Value-
                 Sector                    Direct Jobs         Added
------------------------------------------------------------------------
              Agriculture & Forestry             5,750          $309.0M
                  Biobased Chemicals               460          $135.9M
                         Biorefining               <50             <$5M
                             Enzymes                50           $15.3M
                     Forest Products            29,430            $2.3B
                            Textiles             3,730          $401.9M
      Bioplastic Bottles & Packaging               <50             <$5M
------------------------------------------------------------------------

                                                          
                                                          
    45 Virginia companies currently participate in the BioPreferred 
Program.
Example Biobased Product Firms
Biobased Chemicals
    Earth Friendly Chemicals (Virginia Beach, VA; efchem.com): Earth 
Friendly Chemicals manufactures ``green'' chemistry products valued by 
many markets seeking 100 percent biodegradable and non-toxic products. 
Biobased product offerings include residential and commercial cleaners, 
as well as industrial degreasers.
Forest Products
    Blue Ridge Fiberboard (Danville, VA; blueridgefiberboard.com): Blue 
Ridge Fiberboard products are composed of all-natural, [E]arth-friendly 
wood chips. The binding agent utilized in the manufacturing process is 
also all-natural, consisting of vegetable starch that contains no added 
formaldehydes.
    uDo Inc. (Arlington, VA; udobrush.com): uDo manufactures eco-
friendly, bamboo-handled toothbrushes that are 92 percent biobased.
USDA Rural Development Virginia Office
  Basil I. Gooden, PHD, State Director (www.rd.usda.gov/va)
  Culpeper Building, Suite 238, 1606 Santa Rosa Road, Richmond, VA 
    23229
  Phone: (804) 287-1550
Washington


  Total Jobs: 82,640
  Direct Jobs: 41,140
  Total Value-Added: $7.867 Billion
  Direct Value-Added: $3.808 Billion

    The total jobs or value-added is the sum of the direct, indirect, 
and induced effects.

------------------------------------------------------------------------
                                                           Direct Value-
                 Sector                    Direct Jobs         Added
------------------------------------------------------------------------
              Agriculture & Forestry            11,180          $890.2M
                  Biobased Chemicals               130           $23.3M
                         Biorefining               <50             <$5M
                             Enzymes               <50            $6.9M
                     Forest Products            27,780            $2.8B
                            Textiles             2,080           $89.2M
      Bioplastic Bottles & Packaging               <50             <$5M
------------------------------------------------------------------------

                                                          
                                                          
    175 Washington companies currently participate in the BioPreferred 
Program.
Example Biobased Product Firms
Agriculture & Forestry
    WISErg Corporation (Redmond, WA; wiserg.com): WISErg harvests food 
scraps and turns them into fertilizer. The company sells Harvester 
machines in which the waste is collected and the resulting fertilizer 
products.
Forest Products
    Weyerhaeuser NR Company (Federal Way, WA; woodbywy.com): 
Weyerhaeuser makes construction products such as lumber, oriented 
strand board, and joists. Sustainability policies adopted by 
Weyerhaeuser include using third-party certifications such as the 
Sustainable Forestry Initiative (SFI) and the ISO 14001 Environmental 
Management System.
Bioplastic Bottles & Packaging
    Grow Plastics, Inc. (Bothell, WA; growplastics.com): Grow Plastics 
currently utilizes NatureWorks's Ingeo biobased polymer to produce a 
variety of biobased plastic products. With an ability to produce nearly 
any shape or size, Grow Plastic offers a number of custom options.
USDA Rural Development Washington Office
  Mario Villanueva, State Director (www.rd.usda.gov/wa)
  1835 Blacklake Boulevard SW, Suite B, Olympia, WA 98512-5715
  Phone: (360) 704-7740
West Virginia


  Total Jobs: 17,490
  Direct Jobs: 9,960
  Total Value-Added: $1.107 Billion
  Direct Value-Added: $601 Million

    The total jobs or value-added is the sum of the direct, indirect, 
and induced effects.

------------------------------------------------------------------------
                                                           Direct Value-
                 Sector                    Direct Jobs         Added
------------------------------------------------------------------------
              Agriculture & Forestry             1,920           $89.1M
                  Biobased Chemicals               210           $45.5M
                         Biorefining               <50             <$5M
                             Enzymes               <50            $6.5M
                     Forest Products             7,660          $463.8M
                            Textiles               200            $5.5M
      Bioplastic Bottles & Packaging               <50             <$5M
------------------------------------------------------------------------

                                                          
                                                          
    One West Virginia company currently participates in the 
BioPreferred Program.
Example Biobased Product Firms
Agriculture & Forestry
    AFP Lumber & Logs, LLC (Buckhannon, WV; afpcorp.com): AFP is a 
leading global provider of high-quality hardwood forest products, 
offering an array of lumber, timber, and forest products.
    Allegheny Wood Products (Petersburg, WV; alleghenywood.com): 
Allegheny Wood Products offers a variety of wood products, suitable for 
the manufacturing of cabinets, flooring, furniture, moldings, and 
millwork. All of the company's facilities are Forest Stewardship 
Council Chain of Custody certified.
Forest Products
    Carter Lumber (Ripley, WV; Parkersburg, WV; New Martinsville, WV; 
carterlumber.com): Carter Lumber, with three locations in West 
Virginia, is one of the nation's largest building materials suppliers, 
with product offerings including building supplies, lumber, flooring, 
and siding.
USDA Rural Development West Virginia Office
  Robert Lewis, State Director (www.rd.usda.gov/wv)
  1550 Earl Core Road, Suite 101, Morgantown, WV 26505
  Phone: (304) 284-4860
Wisconsin


  Total Jobs: 160,010
  Direct Jobs: 68,250
  Total Value-Added: $13.542 Billion
  Direct Value-Added: $6.252 Billion

    The total jobs or value-added is the sum of the direct, indirect, 
and induced effects.

------------------------------------------------------------------------
                                                           Direct Value-
                 Sector                    Direct Jobs         Added
------------------------------------------------------------------------
              Agriculture & Forestry             5,280          $202.5M
                  Biobased Chemicals               470          $136.5M
                         Biorefining               <50             <$5M
                             Enzymes               130           $25.4M
                     Forest Products            60,760            $5.8B
                            Textiles             1,710          $112.1M
      Bioplastic Bottles & Packaging                80            $6.7M
------------------------------------------------------------------------

                                                          
                                                          
    72 Wisconsin companies currently participate in the BioPreferred 
Program.
Example Biobased Product Firms
Biobased Chemicals
    Virent (Madison, WI; virent.com): Virent converts soluble, biomass-
derived sugars into products molecularly identical to those made with 
petroleum. Among its product offerings, Virent manufactured the first 
ever bio-polyester shirt produced from 100 percent renewable resources.
Enzymes
    Enviro-Zyme International, LLC (Beloit, WI; envirozyme.com): 
Enviro-Zyme offers an assortment of products and services for 
residential, commercial, and industrial cleaning. Products are made 
with naturally occurring microbes.
Bioplastic Bottles & Packaging
    Plastic Ingenuity (Cross Plains, WI; plasticingenuity.com): Plastic 
Ingenuity is one of the largest custom thermoformers in North America, 
offering packaging solutions that encompass every stage of packaging 
design and manufacturing. The Plastic Ingenuity team created new 
thermoforming methods that incorporate wood pulp into the packaging 
material, in addition to producing corn-based polylactic acid 
materials.
USDA Rural Development Wisconsin Office
  Stan Gruszynski, State Director (www.rd.usda.gov/wi)
  5417 Clem's Way, Stevens Point, WI 54482
  Phone: (715) 345-7600
Wyoming


  Total Jobs: 2,350
  Direct Jobs: 1,610
  Total Value-Added: $117 Million
  Direct Value-Added: $58 Million

    The total jobs or value-added is the sum of the direct, indirect, 
and induced effects.

------------------------------------------------------------------------
                                                           Direct Value-
                 Sector                    Direct Jobs         Added
------------------------------------------------------------------------
              Agriculture & Forestry               480           $13.6M
                  Biobased Chemicals               <50             <$5M
                         Biorefining               <50             <$5M
                             Enzymes               <50             <$5M
                     Forest Products             1,020           $36.5M
                            Textiles               110             <$5M
      Bioplastic Bottles & Packaging               <50             <$5M
------------------------------------------------------------------------

                                                          
                                                          
    7 Wyoming companies currently participate in the BioPreferred 
Program.
Example Biobased Product Firms
Agriculture & Forestry
    Bearlodge Forest Products, Inc. (Hulett, WY; 
bearlodgeforestproducts.com): Bearlodge Forest Products offers an array 
of wood products, including pallets, timber, lumber, and pellets and is 
certified with Timber Products Inspection.
    Natures Composites (Torrington, WY; naturescomposites.com): Natures 
Composites manufactures sustainable, high-performing composite 
products, including fencing, decking, landscaping, lumber, and other 
composite building materials, produced from recycled high-density 
polyethylene reinforced with wheat straw cellulose.
    Teton West Lumber Company (Cheyenne, WY; tetonwest.com): Teton West 
Lumber is committed to the health of Wyoming's forests by processing, 
and repurposing, beetle kill pine into useable lumber products, for 
both residential and commercial buildings.
USDA Rural Development Wyoming Office
  Connie Baker Wolfe, State Director (www.rd.usda.gov/wy)
  Dick Cheney Federal Building, P.O. Box 11005, 100 East B Street, Room 
    1005, Casper, WY 82601
  Phone: (307) 233-6700
C1. Case Study: Michigan Biotechnology Institute


    The Michigan Biotechnology Institute (MBI) was founded by the State 
of Michigan in the 1980s to help encourage start-ups in the biobased 
products industry with the goal of diversifying the state's economy 
away from the struggling automotive industry. According to Dr. Susanne 
Kleff, a biologist with a background in metabolic engineering who 
joined MBI 20 years ago, MBI's mission matured over the years to 
provide a not-for-profit entity that offered custom-tailored solutions 
to advance new biobased technologies for its own government-funded 
technologies and collaboratively for other companies all over the 
world.
    MBI houses fermenters that range from lab-scale up to 1,000 
gallons, and they provide the ability to manufacture products in the 
volumes required to support pre-commercial product development, 
application testing, and routine production. A general rule of thumb in 
the biobased products industry is that production at the 1,000 gallon 
scale identifies the technology's problems and demonstrates its 
robustness and viability. Other similar facilities in the United States 
have fermentation capacities in the range of 50-200 gallons.
    MBI has developed successful technologies of its own, such as 
processes for organic acid production, and its current focus is on 
ammonium fiber expansion technologies (AFEXTM), but these 
technologies failed to use the pilot facility at its full potential. 
This led to MBI's offering to collaboratively advance and scale-up 
technologies for and with other companies worldwide. Many well-known 
companies that have biobased capabilities have worked with MBI, 
including Genomatica, Bolt Threads, DuPont, OPX BIO (acrylic acids), 
Novozymes, Tepha Medical Devices, and others. Over the past 6 years, 
MBI had a 100 percent success rate in technology scale-up.
    Very recently, the Process Development and Scale-up Branch of MBI 
joined Michigan State University's Bioeconomy Institute (MSU-BI) and 
its sister facility in Holland, Michigan, to expand its downstream 
processing capabilities. The Holland plant was an old Pfizer 
pharmaceutical production facility, and it is capable of downstream 
recovery and chemical extractions. This addition of a chemical pilot 
plant to the fermentation facility in Lansing provides a unique set of 
scaling capabilities that is unparalleled in the United States.
    Dr. Kleff explained that the process of taking a new product from 
an idea or concept to commercialization encompasses many hurdles that 
many start-up entrepreneurs are not aware of, ``We had startups who 
came to us with ideas, but they have only produced their products in 
shakeflasks or 2 liter fermenters. They come to us at a stage where 
they need to be able to produce a material for application testing, 
which means they need larger scale fermenters. Acquiring or 
constructing a facility of their own with larger fermenters would be 
time consuming, and would require substantial additional funding to 
demonstrate whether the technology is scalable and viable. An organism 
may be sensitive to the differences in pressure, gas exchange rates, or 
mixing times at the larger scale. This is essentially the `de-risking' 
process, to ensure the technology can be scaled. Our team is also able 
to work with the start-up on the economics of the technology and can 
provide realistic feedback. Most of the people who come to us know the 
targets they have to achieve.''
    MBI also receives grants for some of its technologies. 
Nevertheless, MBI requires that startups that wish to run product 
scale-ups in its facility must do so on a fee-for-service basis. Today, 
representatives from MBI attend meetings seeking contacts, but they 
indicated that many of their clients approach them after others have 
recommended them. MBI provides both the facilities and skilled staff 
members who are well trained and very familiar with fermentation and 
recovery processes. This provides start-ups with a much lower cost 
alternative to building their own pilot facilities. Dr. Kleff observed 
that very few of the companies who come to MBI have the capital to 
build a platform for a new facility that often requires full capacity 
utilization to make it economical. As noted above, MBI does not limit 
itself to supporting only Michigan companies, but it works with many 
companies throughout the United States (e.g., Bolt Threads in 
California), and has also begun working with companies from Europe and 
Asia.
    Dr. Kleff emphasized that, given the current low prices of oil, it 
is important for the biobased products industry to move away from 
commodity chemicals and focus on the specialty chemicals sector.
C2. Case Study: Agricultural Utilization Research Institute (AURI)


    The Agricultural Utilization Research Institute (AURI) helps 
develop new uses for agricultural products through science and 
technology, and it collaborates with businesses and entrepreneurs to 
bring ideas to reality. AURI was founded by the State of Minnesota to 
help businesses take advantage of innovative opportunities in four 
areas: biobased products, renewable energy, coproducts, and food.
    AURI has three laboratories located in Crookston, Marshall, and 
Wauseca, MN. AURI also works closely with the faculty at the University 
of Minnesota. AURI does not engage in research itself, they provide the 
space and opportunity for entrepreneurs and other scientists to do 
research. Researchers conduct applied research on new ideas, which 
leads to products and businesses that can grow in the State of 
Minnesota. A significant part of the activity done by AURI involves 
program evaluation to ensure that the institute is effective. The group 
also has a Director of Innovation and Commercialization who involves 
project managers and directors across a variety of innovation networks. 
AURI intends to make the results of applied research available to 
businesses and to work with entrepreneurs to facilitate product 
formulation, troubleshooting, scale-up, and commercialization. Most of 
AURI's activity involves working side by side with clients in the 
field, helping them find resources to bring their ideas to market, and 
helping them network with other providers in the industry.
    AURI receives 80 percent of its funding from the State of 
Minnesota, which is augmented by contributions from a private 
foundation, research and promotion councils, and some Federal funding. 
The State of Minnesota is committed to finding new alternative product 
channels for the agricultural communities, and this funding is seen as 
being vital for the growth of the biobased products industry in 
Minnesota. AURI provides assistance, but it does not take equity or 
intellectual property positions on the projects, even though it has 
been named on several patents. The bulk of the AURI's work is simply to 
help businesses move from the laboratory scale to commercialization.
    AURI has developed some laboratory space that it has made available 
to entrepreneurs to conduct early work on formulations. In the early 
stages of chemical development, there is a need to develop formulations 
and develop the intellectual property that will enhance the ability to 
get venture capital funding.
    The biobased products facility is intended for use in processing 
agricultural commodities and co-products at the scale of 1 to 10 kg. 
Processes have been developed and demonstrated for producing increased 
value materials by fractionation, chemical conversion, and 
purification. Key processes that can be piloted include:

   Chemical processing of straw, stover, and other biomass 
        materials.

   Extraction and characterization of oils and high-value 
        components from oilseed meal and other feedstocks.

   Transesterification and esterification reactions for 
        demonstration of biodiesel processing.

   Small-scale fermentation and digestion processes for the 
        production of fuels.

   Distillation and evaporation for process development.

    The laboratory will host an ``entrepreneur in residence'', i.e., 
someone occupies laboratory space when it becomes available. The 
laboratory space is free of charge, and some analytical work will be 
provided for the entrepreneur. There may be scientific support as well. 
A representative noted that some entrepreneurs need R&D assistance 
beyond the capacity and experience of AURI. To help them, AURI has 
additional paid assistance available for different R&D efforts.
    The process typically starts with a meeting between the 
entrepreneur and AURI staff, who will get a feel for the business, the 
concept, and what the entrepreneur is hoping to achieve. This can lead 
to a deeper conversation concerning AURI's services and programs and to 
the development of a team to assist with the client's concept. In one 
case, a client sought to add fibers to plastics to strengthen the 
material so it would qualify for Leadership in Energy and Environmental 
Design (LEED) construction:

          We brought in different partners to help with funding the R&D 
        that was needed, and we brought in partners who provided $200K. 
        We helped connect them to potential users of the plastics in 
        window manufacturing. We are committed to helping them in the 
        idea stage and through research and prototype partners along 
        the path to commercialization.

    According to AURI staff members, there are only two criteria that 
must be met to qualify for these services. First, the product must fit 
into an area of service that requires the use of an agricultural 
commodity. Second, the science must be sound. The business must 
consider the competition and early discussions may involve evaluating 
the concept against the reality of the market through industry 
contacts. The idea must be technical viable and have and opportunities 
in the market before making further investments in the idea.
    AURI also provides consulting to give business insight into other 
entities that should be part of the new business venture team. The 
Institute helps identify locations for commercialization and locations 
where contract packers can provide support. Moreover, the AURI provides 
introductions to a network of subject matter experts. For instance, the 
group will host Innovation Networks that focus on a supply net for a 
particular technology. AURI has held forums on paint stripping 
materials, duct coatings, and other areas. Users, vendors, and 
potential users are invited for \1/2\ a day to share their experiences 
and to promote discussion. Individuals learn from the presenters, but 
there also are one-on-one conversations and product demonstrations.
    As outlined in its annual report, AURI believes that the 
``Commercialization Chain'' is very important to developing 
technologies. This is essential in creating a ``technology cluster'', 
which is a group of enterprises with common sets of knowledge and 
expertise that creates a network of support for growth. In a sense, 
Minnesota hopes to become the ``Silicon Valley'' for the biobased 
economy through its support of AURI.
    In terms of the biobased products industry, AURI's staff members 
recognize that there is a strong need for high value uses for soy, 
sugar, and corn beyond biodiesel and bioethanol. Examples include PLA, 
high value plastics, butanol, and other waste streams. AURI believes 
that public-private collaboration is essential to grow this industry. 
Partnerships with larger companies should be beneficial because they 
will provide the ability to leverage existing facilities. In any case, 
an AURI staff member we interviewed believes that a long-term 
perspective is needed:

          We have been around for 26 years, and we were not doing in 
        the beginning what we are doing today. We have evolved over 
        time through lessons learned. Investors cannot expect to see a 
        return on biobased products in 2 years, because the innovation 
        spectrum can take as long as 10 years to get to full fruition. 
        This is the building of an entirely new industry, and investors 
        have to be patient. This is a tough quality to find in 
        investors. However, the State of Minnesota is willing to invest 
        in the long-term, to put money into it, and allow the industry 
        to develop and progress. This is not an easy sell, but it is 
        the key to success.

    AURI and Minnesota stakeholders engaged the Battelle Technology 
Partnership to evaluate the state's potential for growth in the 
agbioscience sector. The study is a fascinating read, reflecting the 
development process, the benefits of public investment in growing the 
industry and the specific areas where Minnesota's core competencies 
could catalyze significant growth.
IV. Environmental Benefits
    A broad analysis of the biobased products industry was performed 
using Economic Input-Output Life Cycle Assessment (EIO-LCA) modeling to 
determine an estimate of the petroleum use savings and GHG emissions 
reductions resulting from the production and use of biobased products. 
Using the EIO-LCA methodology, calculated sector sales, and literature, 
GHG emissions reductions are estimated to be up to 10 million metric 
tons of CO2 equivalents in 2014. The estimated petroleum 
savings from biobased product production and use are up to 6.8 million 
barrels of oil in 2014. Other environmental impact categories that are 
not estimated in this report could produce different impacts for 
biobased products as compared to petroleum-based products. Further 
analysis should include modeling of additional impact categories and 
the implications of other parameters such as land use change.
A. Economic Input-Output LCA
    The EIO-LCA methodology was developed by Carnegie Mellon 
University's Green Design Institute as a method to estimate materials 
and energy resources required for various activities and the subsequent 
resulting emissions. The EIO-LCA method is one of several techniques 
used to examine the environmental impacts of a product over its 
lifecycle. In contrast to a process LCA, which examines a single 
process or product quantifying flows unique to that product, the EIO-
LCA process uses ``industry transactions--purchase of materials by one 
industry from other industries--and the information about direct 
environmental emission of industries, to estimate the total emissions 
throughout the supply chain''.\55\
---------------------------------------------------------------------------
    \55\Carnegie Mellon University Green Design Institute, ``About the 
EIO-LCA Method'', Carnegie Mellon University Green Design Institute, 
http://www.eiolca.net/Method/index.html.
---------------------------------------------------------------------------
    The EIO-LCA methodology builds upon the economic impact modeling 
methods developed by Nobel Prize winner Wassily Leontief, whose 
original work aimed to create a model of the U.S. economy and was 
expanded to include environmental metrics by Carnegie Mellon 
University. The EIO-LCA model and extensive documentation are available 
at www.eiolca.net.
B. Objectives and Methodology
    The production and use of biobased products has the potential to 
reduce GHG emissions and petroleum use.\56\ The reductions in 
environmental impacts and resource use depend on both product type and 
other factors influencing the production supply chain and products' 
lifecycles. Conducting an LCA for thousands of biobased products making 
up the bioeconomy was not feasible for this report. As a way to 
estimate the potential GHG emissions and petroleum use reductions, a 
range of GHG emissions and petroleum use reductions of 0 to 100 percent 
as compared to petroleum-based alternatives was used. A 0 percent 
reduction would indicate no difference as compared to petroleum-based 
products and a 100 percent reduction would indicate no fossil fuel use 
by biobased products. In reality, most of the biobased products will 
lie somewhere between 0 and 100 percent reduction; however, it is not 
possible to determine this for all the products making up the 
industrial sectors.
---------------------------------------------------------------------------
    \56\Cherubini, F., and Ulgiati, S., ``Crop residues as raw 
materials for biorefinery systems--A LCA case study,'' Applied Energy 
87, no. 1, (2010): 47-57.
---------------------------------------------------------------------------
    Only the biobased chemicals, biorefining, and bioplastic bottles 
and packaging sectors were considered as they can directly replace 
petroleum-based products. Other industry sectors, such as enzyme 
production, were not examined in this part of the study because the 
chemicals or products that enzymes directly replace are not always 
clear, as opposed to bioplastics, which generally displace other 
petroleum-based plastic products. This direct replacement assumption 
was required to perform the analysis described in this section.
    The environmental metrics of GHG emissions and petroleum use are 
two key indicators of interest, but there are other important 
environmental impacts that should also be considered when making policy 
decisions. In a previous report by Golden, et al., the authors examined 
a broader suite of environmental impacts in addition to GHG emissions 
specific to the biobased products industry.\57\ These additional impact 
categories are important to consider and are acknowledged here, but the 
scope of this work is limited to GHG emissions and petroleum use 
reductions resulting from the use of biobased products as a substitute 
for petroleum-based products.
---------------------------------------------------------------------------
    \57\Golden, J.S., Handfield, R.B., Daystar, J., and McConnell, 
T.E., An Economic Impact Analysis of the U.S. Biobased Products 
Industry: A Report to the Congress of the United States of America, A 
Joint Publication of the Duke Center for Sustainability & Commerce and 
the Supply Chain Resource Cooperative at North Carolina State 
University, 2015.
---------------------------------------------------------------------------
    As each biobased product and production process will produce 
different environmental impacts, this work does not seek to give one 
number that represents all products; instead, a range of GHG emissions 
savings and petroleum displacement was determined based on percent 
reductions compared to petroleum-based materials. The calculated range 
of reductions was also compared to the peer-reviewed literature, which 
describes reductions in environmental impacts. The values used to 
determine the estimated impact reductions were determined using EIO-LCA 
with the TRACI impact assessment method to calculate the GHG emission 
equivalents and petroleum use.\58\ Economic data used in the 
environmental analysis was based on 2014 U.S. national data as reported 
in previous sections of this report.
---------------------------------------------------------------------------
    \58\Carnegie Mellon University Green Design Institute, ``Economic 
Input-Output Life Cycle Assessment (EIO-LCA) U.S. 1997 Industry 
Benchmark Model'', Carnegie Mellon University Green Design Institute, 
http://www.eiolca.net/Models/index.html.
---------------------------------------------------------------------------
C. Results Overview
    The petroleum saved by the biobased products industry are estimated 
to be as much as 6.8 million barrels of oil. In terms of GHG emissions 
reductions, the biobased products industry are estimated to be as much 
as 10 million metric tons of CO2 equivalents. The avoided 
GHG emissions and petroleum use associated with direct replacement of 
petroleum-based products with biobased products are shown in Figures 10 
and 11, respectively. The EIO-LCA model results were generated in terms 
of kg CO2 equivalents and terajoules of petroleum, however, 
the petroleum use was converted to barrels of oil using a heating value 
of 6.077 MMBTU per barrel of oil.\59\ For both impact measures, lines 
show the potential avoided impacts as a function of percent reduction 
compared to the petroleum-based alternative ranging from 0 to 100 
percent. In addition to the range of avoided impacts, percent 
reductions from the peer-reviewed literature were also applied to the 
EIO-LCA output and reported in the following sections.
---------------------------------------------------------------------------
    \59\http://www.eia.gov/totalenergy/data/monthly/pdf/sec13_2.pdf.
---------------------------------------------------------------------------
Figure 10: Potential Reductions in Petroleum Use by Biobased Products 
        Manufactured in the United States with a Range of 0% to 100% 
        Reduction in Petroleum Use as Compared to Non-Biobased Product 
        Alternatives
Potential Reduction in Petroleum Use due to Biobased Product 
        Utilization
Percent Reduction in Petroleum Use as Compared to Traditional Products


          (Note: assuming a heating value of 6.077 MMBTU per barrel of 
        oil).60-63
---------------------------------------------------------------------------
    \60\Cherubini, F., and Ulgiati, S., ``Crop residues as raw 
materials for biorefinery systems--A LCA case study,'' Applied Energy 
87, no. 1, (2010): 47-57.
    \61\Yu, J., and Chen, L.X.L., ``The Greenhouse Gas Emissions and 
Fossil Energy Requirement of Bioplastics from Cradle to Gate of a 
Biomass Refinery,'' Environmental Science & Technology 42, no. 18, 
(2008): 6961-6966, doi: 10.1021/es7032235.
    \62\Harding, K. G., Dennis, J. S., Von Blottnitz, H., and Harrison, 
S.T.L., ``Environmental analysis of plastic production processes: 
Comparing petroleum-based polypropylene and polyethylene with 
biologically-based poly-b-hydroxybutyric acid using life cycle 
analysis'', Journal of Biotechnology 130, no. 1, (2007): 57-66.
    \63\Golden, J.S., Handfield, R.B., Daystar, J., and McConnell, 
T.E., An Economic Impact Analysis of the U.S. Biobased Products 
Industry: A Report to the Congress of the United States of America, A 
Joint Publication of the Duke Center for Sustainability & Commerce and 
the Supply Chain Resource Cooperative at North Carolina State 
University, 2015.
---------------------------------------------------------------------------
1. Avoided Petroleum Use
    The avoided petroleum use resulting from biobased product use 
instead of petroleum counterparts would create petroleum savings up to 
6.8 million barrels of oil. The potential petroleum use avoided by 
direct displacement with biobased chemicals was the largest, as the 
biobased chemicals market size is significantly larger than the other 
two sectors. Cherubini and Ulgiati determined that biobased chemicals 
produced at a biorefinery using a switchgrass feedstock reduced fossil 
fuel usage well beyond 80 percent as compared to petroleum-based 
chemical production methods and corresponds to 6 million barrels of 
oil.\60\* The biorefining industry producing biochemicals are reported 
to use 80 percent less petroleum as traditional refineries and could 
generate petroleum savings of up to 552,000 barrels of oil.\60\* The 
bioplastic bottles and packaging avoided petroleum use potential was 
the lowest of the three sectors examined. Using data from Yu and Chen 
and Harding, et al., bioplastic bottles and packaging displacement of 
petroleum plastics corresponded to a petroleum savings up to 77,000 and 
61,000 barrels of oil, respectively.61-62* The previous 
economic impact report estimated a petroleum use reduction of 200,000 
average passenger cars for a year.\63\* This previous estimate 
corresponds to a 26 percent reduction of petroleum use when biobased 
products are used instead of petroleum-based products. Given the data 
from the literature shown in this analysis, 26 percent appears to be a 
reasonable and conservative number.
---------------------------------------------------------------------------
    *Editor's note: the asterisk (*) marked footnote references should 
have been formatted as endnotes in the submitted document. The improper 
formatting is retained in the document, as submitted.
---------------------------------------------------------------------------
Figure 11: Potential Reductions in Greenhouse Gas Emissions by Biobased 
        Products Manufactured in the United States with a Range of 0% 
        to 100% Reduction in GHG Emissions as Compared to Non-Biobased 
        Product Alternatives60-63*
Potential Reduction in Greenhouse Gas Emissions due to Biobased Product 
        Utilization
Percent Reduction in Greenhouse Gas Emissions as Compared to 
        Traditional Products
        
        
2. Avoided GHG Emissions
    The production and use of biobased products replacing petroleum-
based products had the potential to reduce GHG emissions up to 10 
million metric tons of CO2 equivalents in 2014. The 
potential avoided GHG emissions for each sector grouping are shown in 
Figure 11. Since the biobased chemicals sector is the largest of the 
three sectors, it has the highest potential to reduce GHG emissions due 
to the higher volume of sales. Cherubini and Ulgiati estimated that 
chemicals produced from switchgrass at a biorefinery reduced GHG 
emissions compared to petroleum-based chemicals by 49 percent, which 
corresponds to approximately 7.5 million metric tons of CO2 
equivalents per year. The biorefining sector, with less industrial 
output than chemical production, has a lower potential to offset GHG 
emissions. With the same percent reduction of 49 percent, biorefining 
has the potential to offset GHG emissions up to 1.1 million metric tons 
per year.\64\
---------------------------------------------------------------------------
    \64\Cherubini, F., and Ulgiati, S., ``Crop residues as raw 
materials for biorefinery systems--A LCA case study,'' Applied Energy 
87, no. 1, (2010): 47-57.
---------------------------------------------------------------------------
    The bioplastic bottles and packaging sector was the smallest by 
sales of the three examined, but it had the highest GHG emission 
reductions reported in the literature. Yu and Chen reported an 80 
percent reduction of GHG emissions compared to petroleum-based 
plastics, and Harding, et al., reported a 65 percent reduction compared 
to petroleum-based plastic.65-66 When considering these two 
GHG reduction percentages, GHG emission reductions from bioplastics 
could correspond to 210,000 and 170,000 metric tons of CO2 
equivalents for the 65 percent and 80 percent reduction scenarios, 
respectively.
---------------------------------------------------------------------------
    \65\Yu, J., and Chen, L.X.L., ``The Greenhouse Gas Emissions and 
Fossil Energy Requirement of Bioplastics from Cradle to Gate of a 
Biomass Refinery,'' Environmental Science & Technology 42, no. 18, 
(2008): 6961-6966, doi: 10.1021/es7032235.
    \66\Harding, K. G., Dennis, J. S., Von Blottnitz, H., and Harrison, 
S.T.L., ``Environmental analysis of plastic production processes: 
Comparing petroleum-based polypropylene and polyethylene with 
biologically-based poly-b-hydroxybutyric acid using life cycle 
analysis'', Journal of Biotechnology 130, no. 1, (2007): 57-66.
---------------------------------------------------------------------------
D. Limitations
    While the EIO-LCA model is useful in many regards, it is dated and 
has limitations. The data describing the inter-industry transactions 
was developed from the 2002 benchmark U.S. input-output table and have 
likely changed considerably since then.
    Additionally, the emissions associated with the various industries 
also have likely changed due to increased emissions regulations and 
changing energy production systems. For this study, the U.S. 2002 (428-
sector) Producer model was used, and the adjusted industry output was 
deflated from 2013 dollars to 2002 dollars. For each of the three 
sectors examined (biobased chemicals, bioplastic bottles and packaging, 
and biorefining), a custom model was created by entering the adjusted 
output considered biobased for each of the sector groupings. In 
addition to the issues with the EIO-LCA model, there is also 
uncertainty surrounding the percentages of biobased products that make 
up the total industrial sectors. Because of these ambiguities, the 
results presented in this study are estimates and should be used 
cautiously in context. The aim of this analysis was to provide a range 
of estimates for GHG emission and petroleum use reductions. Additional 
work in this area is recommended but is outside the scope of the 
current study.
V. Recommendations
    The following recommendations are based on literature reviews, 
conducting individual and group interviews through conference 
proceedings, individual meetings with representatives from the biobased 
products industry, and various non-governmental organizations. This 
includes workshops hosted by the authors in California, North Carolina, 
and Washington, D.C. in 2015 and 2016.
    To be successful in driving the growth of this national industry 
will require the active participation of three distinct segments of our 
society. The first are consumers who we believe that upon being 
educated on the performance, economic and job benefits at the national 
and community level in addition to environmental benefits can be the 
voice to motivate retailers and brands to increase their use of 
biological feedstocks.
    Second are the brands and retailers who can use their purchasing 
power, supply chains, and marketing strength to promote the industry. 
Finally, the Federal Government and especially the USDA BioPreferred 
Program has the ability to support education of the benefits of 
biobased products to consumers, retailers, and brands.
    These recommendations reflect the opinions of the authors of the 
study based on their research and interviews. They do not necessarily 
reflect the opinions of the USDA.

    Recommendation 1: Congress should continue to advance the biobased 
products industry for National Security and Domestic Industrial 
Strength.

    The biobased products industry must be seen through the lens of 
National Security and Domestic Industrial Strength. This is a 
nonpartisan approach and domestic need. Through continued and increased 
support of the sectors, we are reducing our reliance on foreign 
supplies of oil used in petroleum-based products as well as creating 
needed American jobs throughout the country as has been presented in 
this report. Additionally, many of these jobs are being created in 
rural regions of our country where economic development needs are 
paramount.
    It is telling that the Department of Defense considers the biobased 
products industry a matter of national security and important part of 
the U.S. economy. Former Deputy Secretary of Defense Gordon England 
said, ``To be clear, this is not like the latest health food fad, where 
you go to a specialty shop and you buy a lot of additional expensive 
supplements and ingredients. This is about substituting an equally 
effective product or approach to meet a requirement you have that may 
well end up costing less in the end. Our strategy also supports our 
long-term national security interests by protecting and preserving the 
environment for the future generations, so they can enjoy life, liberty 
and the pursuit of happiness to the fullest here in America.''\67\
---------------------------------------------------------------------------
    \67\U.S. Department of Defense (DOD), ``Bio-Based Products Enhance 
National Security'', U.S. DOD, last updated 9/12/06, http://
archive.defense.gov/news/newsarticle.aspx?id=818.

    Recommendation 2: Congress should enact a Short-term Production Tax 
---------------------------------------------------------------------------
Credit.

    Tax policy needs to be changed throughout the supply chain to level 
the playing field with petroleum-based products. A national short-term 
Production Tax Credit (PTC) in the United States, coupled with a 
stronger commitment to market pull policies, would send a strong 
message to companies in the biobased products industry that the United 
States is serious about wanting to expand the domestic biobased 
products industry. More importantly, it would give companies in the 
biobased products industry the money and support they need to challenge 
the petroleum industry and the preferential tax treatment it receives. 
Increasing numbers of companies (including BASF, DSM, BioAmber, 
Elevance, and Amyris) are exploring global site options for commercial 
facilities because of the challenges of competing with the petroleum 
industry in the United States. PTCs would ensure that the United States 
is a competitive site for these new facilities and new jobs. In fact, 
the Union of Concerned Scientists documented\68\ that between 2007 and 
2014 in large part to a PTC, the United States wind capacity almost 
quadrupled and more than 550 manufacturing facilities located in 43 
states produced 70% of the wind turbine and components installed in the 
United States.
---------------------------------------------------------------------------
    \68\Union of Concerned Scientists, ``Production Tax Credit for 
Renewable Energy'', Union of Concerned Scientists, accessed August 
2016, http://www.ucsusa.org/clean_energy/smart-energy-solutions/
increase-renewables/production-tax-credit-for.html#.V7r_0rsrKM9.
---------------------------------------------------------------------------
    The oil and natural gas sectors have long benefited from PTCs, 
which has provided great benefits for petroleum-based products as 
compared to biobased-sourced products. Some of the oil and gas credits 
include:\69\
---------------------------------------------------------------------------
    \69\Center for American Progress, ``It Is Time to Phase Out 9 
Unnecessary Oil and Gas Tax Breaks'', Center for American Progress, 
accessed August 2016, https://www.americanprogress.org/issues/green/
report/2016/05/26/138049/it-is-time-to-phase-out-9-unnecessary-oil-and-
gas-tax-breaks/.

---------------------------------------------------------------------------
   Deductions for the costs of drilling wells 26 U.S.C. 263(c).

   Deduction for oil and gas production 26 U.S.C. __199.

    Deductions for the costs of oil shale exploration and development 
26 U.S.C. 617 The tax incentives offered to the biobased products 
industry needs to place them on a level playing field with the 
petroleum industry, if biobased products are expected to compete on the 
market. If Congress creates PTCs for biobased product manufacturers, 
the United States could revitalize the manufacturing and plastics 
industries.
    For a range of biobased product companies, a short-term PTC would 
provide collateral to help finance plants in the United States. This 
has been successfully done at the state level in Iowa. In July of 2016, 
Iowa's Biorenewable Chemical Tax Credit Program was enacted. The 
program provides a tax credit of up to $100 million over the next 10 
years for products that are over 50% biobased, and intended for uses 
other than food, feed, and fuel.\70\ However, there remains a need for 
PTCs at a national level to support biobased businesses throughout the 
United States.
---------------------------------------------------------------------------
    \70\Cultivation Corridor, ``Biorenewable Chemicals: The Iowa 
Advantage'', Cultivation Corridor, accessed 6/1/16, http://
www.cultivationcorridor.org/biochem/.
---------------------------------------------------------------------------
    On a national level, the Renewable Chemicals Act of 2015 was 
introduced to the Senate in November of 2015. If enacted, this bill 
would give a tax credit of $0.15 per pound of biobased content for 
producers of renewable chemicals who meet certain criteria. This credit 
would have an aggregate limit of $500 million and would be distributed 
over 5 years.\71\
---------------------------------------------------------------------------
    \71\114th Congress (2015-2016), ``S.2271--Renewable Chemicals Act 
of 2015'', Congress.gov, accessed August 2016, https://
www.congress.gov/bill/114th-congress/senate-bill/2271/text.

    Recommendation 3: Congress should direct the U.S. Department of 
Commerce to work with the USDA to Develop NAICS Codes in support of the 
---------------------------------------------------------------------------
biobased products industry.

    The NAICS codes do not currently provide an effective means of 
tracking the economic and job contributions of the biobased products 
industry in the United States. This results from a lack of biobased 
products industry-specific codes that are representative of the 
biobased products sectors of the economy. Many economists and industry 
groups have recommended that NAICS codes be developed for biobased 
product sectors and that reporting requirements be established to allow 
more effective tracking of purchases by Federal agencies. The codes are 
a necessary first step, but the goal should also be to improve data on 
the production, import, and export of biobased products. The 
incorporation of NAICS codes for the biobased product industry should 
be extended to Federal surveys of U.S. Industrial activity and trade. 
The appropriate U.S. agencies and industry should add biobased product 
NAICS codes similar to the biobased products industry specific codes 
that have been added in Europe (Nomenclature of Economic Activities--
NACE codes) and are being added in Canada.

    Recommendation 4: Congress should Fund the USDA BioPreferred 
Program at levels similar to its counterparts.

    Federal agencies are required to purchase biobased products 
designated for mandatory Federal purchasing by the USDA 
BioPreferred' Program, except as provided by Federal 
Acquisition Regulation (FAR) Part 23.404(b). In general, Federal 
agencies are required to give preference to qualified biobased products 
over non-biobased alternatives, as prescribed by Title 7 of the U.S. 
Code of Federal Regulations, section 3201.3.
    In addition to the mandatory Federal purchasing initiative, the 
2002 Farm Bill authorized USDA to implement an initiative to certify 
biobased products that are deemed eligible to display the USDA 
Certified Biobased Product label. The presence of the label indicates 
that the products have been tested by a third party and verified for 
biobased content, thus meeting the established minimum biobased content 
requirement for the product category applicable to that product. The 
BioPreferred Program was reauthorized and expanded under subsequent 
U.S. Farm Bills in 2008 and 2014. Increasing the coverage and public 
awareness of the USDA Certified Biobased Product label is critical. 
Increasing funding for the BioPreferred Program would give the 
necessary funding for marketing and to educate consumers on the 
benefits and availability of biobased products. With additional 
resources, the BioPreferred Program could increase tracking and use of 
biobased products. Currently, the BioPreferred Program's budget is 
about $2.7 million annually. This is very small compared to the budgets 
of some other government programs like the EPA's Energy Star (about $50 
million annually) or the USDA's National Organic Program (about $10 
million annually).
    In addition to the BioPreferred Program, there are other government 
drivers in the biobased products industry. For example, on March 19, 
2015, President Obama released Executive Order 13693, ``Planning for 
Federal Sustainability in the Next Decade'',\72\ which includes 
provisions to increase Federal agencies' accountability for achieving 
qualified biobased product purchasing requirements. Federal agencies 
have been directed to establish annual targets for the number of 
contracts awarded with biobased criteria and to report the dollar value 
of biobased products under those contracts.
---------------------------------------------------------------------------
    \72\The President, ``Executive Order 13693--Planning for Federal 
Sustainability in the Next Decade,'' Federal Register, accessed April 
2015, https://www.federalregister.gov/articles/2015/03/25/2015-07016/
planning-for-federal-sustainability-in-the-next-decade.
---------------------------------------------------------------------------
    Federal agencies also have been directed to ensure that contractors 
submit timely annual reports of their biobased purchases.

    Recommendation 5: Congress should ensure Federal Policies 
Strengthen the Biobased Products Industry.

    In terms of Federal policy, some of the ideas recommended from our 
interviews include:

   Fund and administer the USDA BioPreferred Program.

   Fund and administer the USDA Biorefinery Assistance Program, 
        recently expanded to include facilities producing biobased 
        chemicals and biobased products.

   Fund and administer the USDA Biomass Crop Assistance 
        Program.

   Fund and administer the USDA/DOE's Biomass Research and 
        Development Program.

   Work towards promoting the enactment of tax legislation for 
        a biobased chemical Production Tax Credit (PTC), an Investment 
        Tax Credit (ITC), Master Limited Partnerships (MLP), and 
        Research & Development (R&D).

   Ensure biogenic CO2 emissions related to biobased 
        products are treated as carbon neutral in EPA's carbon 
        accounting framework.

    Recommendation 6: Biobased Products Industry Participants Should 
Work Together on the Challenges Facing Their Industry.

    Based on our interviews, we identified six major challenges that 
should be addressed in the biobased products industry.

  1.  Examine Public Perceptions vs. Scientific Evidence. Undertake an 
            extensive analysis concerning how the public, NGOs, policy 
            makers, scientists, and institutional buyers perceive the 
            spectrum of biobased feedstocks and biobased products. This 
            includes quantifying the science or lack of science to 
            provide clarity concerning which perceptions are 
            inaccurate, which have a scientific basis, and which need 
            additional research.

  2.  LCAs and Land-Use Studies. There is a need to create a common LCA 
            structure that provides easy way to compare values and 
            relates LCA results to both consumer and industry 
            audiences. Stakeholders state that there is a need for 
            shared life cycle inventory data and standardized 
            definitions. A shared lifecycle inventory would reduce 
            costs to individual firms and reduce the person-hours 
            required to conduct lifecycle assessments.

  3.  Supply Chain Mapping and Location Analyses. Existing biobased 
            product supply chains are limited by transportation 
            disparities related to the location of biofuel producing 
            sources. Government influence in the form of grants and tax 
            rebates at the state and local levels can be used to help 
            promote investments to streamline supply chain execution, 
            create more integrated and collaborative facility designs, 
            create shared facilities, and help to stimulate industry 
            development and investment. Industry leaders should work to 
            reduce the burden on upstream supply chain participants and 
            drive more co-development activities to promote biobased in 
            lower tiers of supply chain. Since suppliers source to 
            different types of industries, there is a need to create a 
            common vehicle for marketing products. An example would be 
            a company deciding between two distinct marketing messages. 
            A common platform for messaging would create efficiencies 
            and improve opportunities for aligned investments. If 
            suppliers and industries could work together to identify 
            potential inefficiencies and work to solve them using a 
            common approach, it could be easier to implement biobased 
            products across the supply chain.

  4.  Marketing Messaging and Impact Scores. There is a need to conduct 
            biobased products marketing research and develop marketing 
            materials that support and promote the biobased products 
            message, downstream, upstream, in industrial, and in 
            government procurement processes. An example is an impact 
            score that can translate LCA information to the end 
            consumer to drive and influence buying behavior and 
            decision-making via a standardized scorecard.

        Another example might be a biobased material identifier that 
            could be used to award new business to sustainability-
            focused suppliers as part of a procurement initiative. 
            Better communication with retailers through value-chain 
            maps that provide a clear definition and value proposition 
            for biobased products would create differentiated products 
            that excel in performance.

  5.  Government Policy and Acquisition Recommendations. Biobased 
            products industry stakeholders should provide input to 
            government policies regarding grants and tax incentives to 
            foster ``downstream pull'' investments in biobased product 
            development, research, and innovation. Government policy 
            makers should strive to create consistency across 
            regulations and incentives for the biobased products 
            industry, and incentives to drive increased utilization of 
            biobased contracts, especially in light of the new General 
            Services Administration focus on Category Management. Since 
            plants sequester carbon, carbon credits could be given for 
            using biobased products instead of petroleum-based 
            products. Create more access to opportunities for industry 
            to tap into tax incentives, tax credits, and producer 
            credits, and to highlight the availability of these 
            programs to biobased producers. Policy makers need 
            education on biobased products that demystifies the 
            misconceptions about the industry with solid data. 
            Additionally, there is a need for education on how to sell 
            to the government within the context of the biobased 
            products industry, as legislative requirements have not 
            meshed well with acquisition actions, and tracking has been 
            problematic. The DOE's support also could be sought to 
            drive additional support at various points in the value 
            chain. Companies could commit to a certain percentage of 
            biobased sources or get the government to enact policy like 
            CAFE standards.

  6.  Identify and Model Risks Facing the Biobased products Sector. The 
            interviewees also identified risks that should be 
            considered for the biobased products industry. First, low 
            oil prices may continue for several years, given the 
            current reserves of oil and fracking, leading to a 
            sustained lower price of oil and reduced desire to explore 
            the potential of biobased products. This is problematic 
            considering the amount of time it takes to develop a 
            biobased product. In addition, the amount of venture 
            capital available for biobased products is decreasing. 
            Scaling up new projects and the time required to bring 
            capital investments to scale also are significant 
            challenges.

    How to cite this report

    Golden, J.S., Handfield, R.B., Daystar, J., Morrison, B., and 
McConnell, T.E., An Economic Impact Analysis of the U.S. Biobased 
Products Industry: 2016 Update, A Joint Publication of the Duke Center 
for Sustainability & Commerce and the Supply Chain Resource Cooperative 
at North Carolina State University, 2016.
Appendix A
The Economic Input-Output Model (IMPLAN)
The Economic Input-Output Model
    IMPLAN is an economic impact modeling system that uses input-output 
analysis to quantify economic activities of an industry in a predefined 
region. IMPLAN was designed in 1976 by the Minnesota IMPLAN Group Inc. 
under the direction of the U.S. Forest Service to help meet the 
reporting requirements for Forest Service land management programs. 
IMPLAN is now used extensively to quantify the economic impacts of 
various industrial activities and policies. The IMPLAN system is now 
managed by IMPLAN Group LLC of Huntersville, North Carolina.
    IMPLAN quantifies the economic impacts or contributions of a 
predefined region in terms of dollars added to the economy and jobs 
produced (IMPLAN Group LLC 2004).\73\ Data are obtained from various 
government sources including agencies and bureaus within the 
Departments of Agriculture, Commerce, and Labor.
---------------------------------------------------------------------------
    \73\IMPLAN, Computer Software, IMPLAN, IMPLAN Group LLC, http://
www.implan.com.
---------------------------------------------------------------------------
    The IMPLAN system's input-output model currently defines 536 unique 
sectors in the U.S. economy (which are North American Industry 
Classification System [NAICS] sectors, except in some cases in which 
aggregates of multiple sectors are used). The IMPLAN system uses its 
database to model inter-sector linkages, such as sales and purchases 
between forest-based industries and other businesses. The transactions 
table within IMPLAN quantifies the number of dollars each sector makes 
(sales) and uses (purchases). The table separates processing sectors by 
rows and purchasing sectors by columns; every sector is considered both 
a processor and purchaser. Summing each row quantifies an industry's 
output, which includes sales to other production sectors along with 
those sales to final demand. The total outlay of inputs, which are the 
sums of the columns, includes purchases from intermediate local 
production sectors, payments to local value-added, and imports (both 
intermediate and value-added inputs) from outside the study region. The 
transactions table can be used to explain a sector's economic 
relationships based on the value of the commodities exchanged between 
the industry of interest and other sectors.
    Leontief (1936) defined the relationship between output and final 
demand as shown below:


where x is the column vector of industrial output, I is an identity 
(unit) matrix, A is the direct requirements matrix relating input to 
output, and y is the final demand column vector. The term (I^A)^\1\ is 
the total requirements matrix or the ``multiplier'' matrix. Each 
element of the matrix describes the amount needed from sector i (row) 
as input to produce one unit of output in sector j (column) to satisfy 
final demand. The output multiplier for sector j is the sum of its 
column elements, or sector j's total requirements from each individual 
sector i. Employment and value-added multipliers also can be derived by 
summing the column's elements.
    Employment in IMPLAN is represented as the number of both full time 
and part time jobs supported within an industry to meet final demand. 
Value-added is composed of labor income, which includes employees' 
compensation and sole proprietor (self-employed) income, other property 
income (OPI), and taxes on production and imports, less subsidies 
(TOPI, formerly was labeled `indirect business taxes').\74\ OPI in 
IMPLAN includes corporate profits, capital consumption allowance, 
payments for rent, dividends, royalties, and interest income. TOPI 
primarily consist of sales and excise taxes paid by individuals to 
businesses through normal operations. Output is the sum of value-added 
and the cost of buying goods and services to produce the product.
---------------------------------------------------------------------------
    \74\IMPLAN refers to value-added in this context as ``total value-
added''.
---------------------------------------------------------------------------
    Key terms:

   Value-added: Value-added describes the new wealth generated 
        within a sector and is its contribution to gross domestic 
        product (GDP).

   Output: Output is an industry's gross sales, which includes 
        sales to other sectors (where the output as used by that sector 
        as input) and sales to final demand.

    When examining the economic contributions of an industry, IMPLAN 
generates four types of indicators:

  1.  Direct effects: effects of all sales (dollars or employment) 
            generated by a sector.

  2.  Indirect effects: effects of all sales by the supply chain for 
            the industry under study.

  3.  Induced effects: A change in dollars or employment within the 
            study region that represents the influence of the value 
            chain employees spending wages in other sectors to buy 
            services and goods.

  4.  Total effect: the sum of the direct, indirect, and induced 
            effects.

    Economic multipliers quantify the spillover effects, i.e., the 
indirect and induced contributions. The Type I multiplier describes the 
indirect effect, which is described by dividing the direct effect into 
the sum of the direct and indirect effects.\75\ A Type I employment 
multiplier of 2.00 for example, means that for every job in the 
industry of interest, one additional job is supported in that sector's 
supply chain.
---------------------------------------------------------------------------
    \75\U.S. Department of Commerce Bureau of Economic Analysis (BEA), 
Interactive Data Application, BEA web site, http://www.bea.gov/itable/
index.cfm, accessed April 2015.
---------------------------------------------------------------------------
    Type II multipliers are defined as the sum of the direct, indirect, 
and induced effects divided by the direct effect (Equation 1). The Type 
II multiplier operates by extending the input-output model to include 
any contributions induced by final demanders. Type II multipliers 
differ by how they define value-added and account for any of its 
potential endogenous components. A particular Type II multiplier, the 
Type social accounting matrix (SAM) multiplier, considers portions of 
value-added to be both endogenous and exogenous to a study region 
(Equation 2). This generally incorporates labor payments to the 
households and their subsequent consumption of goods and services. 
These multipliers indicate the extent to which total activity is 
generated in the economy due to the sectors under study. A Type SAM 
value-added multiplier of 1.50, for example, indicates that for every 
$1.00 of value-added produced in an industry under study, $0.50 of 
additional value-added would be generated elsewhere in the economy by 
other industries.
Contributions Analyses of Biobased Products Sectors
    A contributions analysis describes the economic effects of an 
existing sector, or group of sectors, within an economy. The results 
define the extent to which the economy is influenced by the sector(s) 
of interest. Changes in final demand, which generally are marginal or 
incremental, are not assumed here as they are in traditional impact 
analysis. Based on the number of sectors contained within each industry 
group, multiple sector contributions analyses were conducted. The 
bioeconomy at the national level was modeled using IMPLAN's 2013 and 
2014 national databases. These models were constructed using the 
Supply/Demand Pooling method. The 50 states and District of Columbia 
were modeled using IMPLAN's 2013 database for each economy; these 
models were constructed using the IMPLAN National Trade Flows Model 
method. The models were closed with respect to households only in all 
cases. Output was the basis by which contributions were assessed, but 
had to be adjusted to eliminate sales and purchases internal to the 
sectors to avoid double counting. This required five steps using 
Microsoft Excel: (1) compile the total requirements matrix of detailed 
Type SAM output multipliers from IMPLAN for the respective economy; (2) 
from this matrix, build a truncated matrix of the biobased industrial 
groups' sectors and invert it; (3) calculate the direct contributions 
vector by multiplying the inverted contributions matrix by the groups' 
sector outputs found in the economy's transactions table; (4) multiply 
the economy's total requirements matrix by the direct contributions 
vector to obtain total output contributions; (5) calculate employment 
and value-added contributions based their respective sectoral output 
shares. Use of this method avoided the structural changes that result 
from customizing the model, and at the same time, it preserved the 
original relationships found in the modeled economy's transactions 
table.
Equation 1: Type I Multiplier Calculation


Equation 2: Type SAM Multiplier Calculation


Appendix B

  Products Participating in the BioPreferred Program by Category--2016
------------------------------------------------------------------------
   Number of                            Number of
    Products          Category           Products          Category
------------------------------------------------------------------------
            36   2-Cycle Engine                  66   Inks--Printer
            61    Oils                                 Toner (Greater
                 Adhesive and                          Than 25 Pages Per
                  Mastic Removers                      Minute)
            14   Adhesives                       43   Inks--Printer
            71   Agricultural Spray                    Toner (Less Than
                  Adjuvants                            25 Pages Per
                                                       Minute)
           136   Air Fresheners and              19   Inks--Sheetfed
                  Deodorizers                          (Black)
            38   Aircraft and Boat               41   Inks--Sheetfed
                  Cleaners--Aircraf                    (Color)
                  t Cleaners
            31   Aircraft and Boat               52   Inks--Specialty
                  Cleaners--Boat
                  Cleaners
             4   Allergy and Sinus               50   Interior Paints
             5    Relievers                            and Coatings--
                 Animal Bedding                        Latex and
                                                       Waterborne Alkyd
           337   Animal Cleaning                 26   Interior Paints
            46    Products                             and Coatings--Oil-
                 Animal Habitat                        based and
                  Care Products                        Solventborne
                                                       Alkyd
             2   Animal Medical                 148   Intermediate
                  Care Products                        Feedstocks
            37   Animal Odor                      9   Intermediates--Bin
                  Control and                          ders
                  Deodorant
           130   Animal Repellents              100   Intermediates--Che
                                                       micals
             1   Animal Skin, Hair,              17   Intermediates--Cle
                  and Insect Care                      aner Components
                  Products
             1   Anti-Slip Products              35   Intermediates--Fib
                                                       ers and Fabrics
             2   Aromatherapy                    14   Intermediates--Foa
                                                       ms
             4   Art Supplies                    43   Intermediates--Lub
                                                       ricant Components
            38   Asphalt and Tar                 20   Intermediates--Oil
                  Removers                             s, Fats, and
                                                       Waxes
            13   Asphalt Restorers               45   Intermediates--Pai
                                                       nt & Coating
                                                       Components
            76   Automotive Care                 45   Intermediates--Pai
                  Products                             nt & Coating
                                                       Components
            26   Baby and Kids                   33   Intermediates--Per
         1,176   Bath Products                         sonal Care
                                                       Product
                                                       Components
           270   Bathroom and Spa                87   Intermediates--Pla
                  Cleaners                             stic Resins
           172   Bedding, Bed                     5   Laboratory
                  Linens, and                          Chemicals
                  Towels
             5   Biodegradable                    2   Laundry--Dryer
                  Foams                                Sheets
           172   Bioremediation                 223   Laundry Products--
                  Materials                            General Purpose
            15   Blast Media                     75   Laundry Products--
                                                       Pretreatment/Spot
                                                       Removers
             2   Body Powders                     6   Lavatory Flushing
                                                       Fluid
           526   Candles and Wax                 79   Leather, Vinyl,
                  Melts                                and Rubber Care
                                                       Products
           114   Carpet and                     179   Lip Care Products
                  Upholstery                      8   Loose-Fill and
                  Cleaners--General                    Batt Insulation
                  Purpose
           120   Carpet and                     856   Lotions and
           104    Upholstery                     14    Moisturizers
                  Cleaners--Spot                      Lumber, Millwork,
                  Removers                             Underlayment,
                 Carpets                               Engineered Wood
                                                       Products
           117   Chain and Cable                  2   Massage Oils
                  Lubricants
             4   Clothing                         5   Medical Supplies
             1   Clothing--Utility               23   Metal Cleaners and
            51    Gloves                               Corrosion
                 Composite Panels--                    Removers--Corrosi
                  Acoustical                           on Removers
            35   Composite Panels--              36   Metal Cleaners and
            68    Countertops                          Corrosion
                 Composite Panels--                    Removers--Other
                  Interior Panels                      Metal Cleaners
            22   Composite Panels--              27   Metal Cleaners and
            26    Plastic Lumber                       Corrosion
                 Composite Panels--                    Removers--Stainle
                  Structural                           ss Steel
                  Interior Panels
            18   Composite Panels--              63   Metalworking
            30    Structural Wall                      Fluids--General
                  Panels                               Purpose Soluble,
                 Compost Activators                    Semi-Synthetic,
                  and Accelerators                     and Synthetic
                                                       Oils
            78   Concrete and                    50   Metalworking
            63    Asphalt Cleaners                     Fluids--High
                 Concrete and                          Performance
                  Asphalt Release                      Soluble, Semi-
                  Fluids                               Synthetic, and
                                                       Synthetic Oils
             1   Concrete Curing                 99   Metalworking
                  Agents                               Fluids--Straight
                                                       Oils
             2   Concrete Repair                286   Microbial Cleaning
             2    Materials                            Products--Drain
                 Concrete Repair                       Maintenance
                  Materials                            Products
            69   Corrosion                      177   Microbial Cleaning
                  Preventatives                        Products--General
                                                       Cleaners
             1   Cosmetics                      197   Microbial Cleaning
            96   Cuts, Burns, and                      Products--Wastewa
                  Abrasions                            ter Maintenance
                  Ointments                            Products
             8   De-Icers--                     228   Mobile Equipment
                  Specialty                            Hydraulic Fluids
            83   Deodorants                     265   Mulch and Compost
                                                       Materials
            14   Dethatchers                    459   Multipurpose
                                                       Cleaners
            66   Diesel Fuel                     79   Multipurpose
                  Additives                            Lubricants
           148   Dishwashing                     11   Oral Care Products
                  Products
             5   Disinfectants                   21   Other
           439   Disposable                       9   Other Lubricants
                  Containers
           539   Disposable Cutlery              30   Oven and Grill
                                                       Cleaners
             1   Durable Cutlery                 78   Packing and
                                                       Insulating
                                                       Materials
            13   Durable Tableware               60   Paint Removers
            35   Dust Suppressants               14   Paper Products--
                                                       Non-writing paper
            10   Electronic                     184   Paper Products--
                  Components                           Office Paper
                  Cleaners
           692   Disposable                      73   Parts Wash
                  Tableware                            Solutions
            75   Engine Crankcase                75   Penetrating
                  Oil                                  Lubricants
           247   Erosion Control                  1   Perfume
                  Materials
             2   Expanded                         3   Pest Control--
                  Polystyrene (EPS)               5    Fungal--Agricultu
                  Foam Recycling                       ral
                  Products                            Pest Control--
                                                       Fungal--Home and
                                                       Garden
             9   Exterior Paints                  2   Pest Control--
                  and Coatings                         Insect--Agricultu
                                                       ral
             1   Fabric Stain                     6   Pest Control--
                  Preventers and                       Insect--Home and
                  Protectors                           Garden
            14   Facial Care                      2   Pest Control--
                  Products                             Insect--Industria
                                                       l
            16   Feminine Hygiene                 1   Pest Control--
                                                       Weeds--Home and
                                                       Garden
           545   Fertilizers                      3   pH Neutralizing
                                                       Products
           106   Films--Non-Durable               2   Phase Change
                                                       Materials
            43   Films--Semi-                     2   Plant Washes
                  Durable
             2   Filters                         48   Plastic Insulating
             2   Fingernail/Cuticle                    Foam for
                  Products                             Residential and
                                                       Commercial
                                                       Construction
             2   Fire Retardants                 21   Plastic Products
             8   Fire Starters,                  37   Pneumatic
                  Logs, or Pellets                     Equipment
                                                       Lubricants
            21   Firearm Cleaner                 12   Polyurethane
                                                       Coatings
            43   Firearm Lubricants              27   Product Packaging
           163   Floor Cleaners and              33   Roof Coatings
                  Protectors
           357   Floor Coverings                  3   Rugs and Floor
                  (Non-Carpet)                         Mats
            14   Floor Strippers                  5   Safety Equipment
             6   Fluid-Filled                    72   Sanitary Tissues
                  Transformers--Syn             577   Shaving Products
                  thetic Ester-
                  Based
             5   Fluid-Filled                     1   Shipping Pallets
                  Transformers--Veg
                  etable Oil-Based
             5   Foliar Sprays                   12   Slide Way
                                                       Lubricants
            35   Food Cleaners                    3   Solid Amendments
            92   Foot Care Products               1   Solid Fuel
                                                       Additives
            23   Forming Lubricants             139   Sorbents
            28   Fuel Conditioners                7   Specialty Fuels
            46   Furniture Cleaners              38   Specialty
                  and Protectors                       Precision
                                                       Cleaners and
                                                       Solvents
           111   Gasoline Fuel                   20   Sponges, Scrub
                  Additives                            Pads, and
                                                       Cleaning Tools
           107   Gear Lubricants                241   Stationary
                                                       Equipment
                                                       Hydraulic Fluids
            29   General Purpose De-            202   Sun Care Products
                  Icers
           272   General Purpose                  2   Thermal Shipping
                  Household                            Containers--Durab
                  Cleaners                             le
           187   Glass Cleaners                   1   Thermal Shipping
                                                       Containers--Non-
                                                       Durable
           327   Graffiti and                    58   Topical Pain
                  Grease Removers                      Relief Products
            23   Greases--Food                    6   Toys and Sporting
                  Grade                                Gear
            48   Greases--Multipurp               6   Traffic and zone
                  ose                                  marking paints
            17   Grease--Other                    2   Transmission
                                                       Fluids
            16   Greases--Rail                    5   Turbine Drip Oils
                  Track
            12   Greases--Truck                   4   Wall Coverings--
                                                       Commercial
             2   Greases--Wheel                  10   Wastewater Systems
                  Bearing and                          Coatings
                  Chassis Greases
            19   Hair Care                       13   Wastewater
                  Products--Conditi                    Treatment
                  oners                                Products
           472   Hair Care                       37   Water Clarifying
                  Products--Shampoo                    Agents
                  s
             1   Hair Styling                     8   Water Tank
                  Products                             Coatings
           470   Hand Cleaners and               11   Water Turbine
                  Sanitizers--Hand                     Bearing Oils
                  Cleaners
           130   Hand Cleaners and               36   Wood and Concrete
            11    Sanitizers--Hand                     Sealers--Membrane
                  Sanitizers                           Concrete Sealers
                 Heat Generating
                  Products
             1   Heat Transfer                   90   Wood and Concrete
            68    Fluid--Additive                      Sealers--Penetrat
                 Heat Transfer                         ing Liquids
                  Fluids
           389   Industrial                      28   Wood and Concrete
                  Cleaners                             Stains
             3   Industrial Enamel               12   Woven Fiber
                  Coatings                             Products
            32   Ink Removers and                 2   Writing Utensils--
                  Cleaners                             Pens
            21   Inks--News
------------------------------------------------------------------------
Note: If applicable, a product may be listed in up to four categories.
Source: USDA BioPreferred Program, May 2016.

Appendix C

  States Ranked by Direct Jobs in the Biobased Products Industry--2013
------------------------------------------------------------------------
                     Rank                      Direct Jobs      State
------------------------------------------------------------------------
 1                                                 145,080   California
 2                                                  90,040        North
                                                               Carolina
 3                                                  88,680        Texas
 4                                                  80,520      Georgia
 5                                                  71,360  Pennsylvania
 6                                                  68,250    Wisconsin
 7                                                  52,930         Ohio
 8                                                  52,300     New York
 9                                                  49,650      Alabama
10                                                  47,690      Florida
11                                                  46,480       Oregon
12                                                  46,050      Indiana
13                                                  44,850    Tennessee
14                                                  41,140   Washington
15                                                  40,350  Mississippi
16                                                  39,940     Illinois
17                                                  38,920     Virginia
18                                                  38,430        South
                                                               Carolina
19                                                  37,790     Michigan
20                                                  35,850    Minnesota
21                                                  31,400     Arkansas
22                                                  27,290     Missouri
23                                                  27,290     Kentucky
24                                                  22,440             Louisiana
25                                                  21,950   New Jersey
26                                                  20,500        Maine
27                                                  20,110         Iowa
28                                                  19,140  Massachusett
                                                                      s
29                                                  14,790      Arizona
30                                                  13,250        Idaho
31                                                  11,500     Colorado
32                                                  10,770         Utah
33                                                  10,320     Oklahoma
34                                                   9,960         West
                                                               Virginia
35                                                   9,570     Maryland
36                                                   9,080       Kansas
37                                                   8,970  Connecticut
38                                                   7,090          New
                                                              Hampshire
39                                                   6,500      Vermont
40                                                   6,340      Montana
41                                                   6,160  South Dakota
42                                                   6,020     Nebraska
43                                                   4,210   New Mexico
44                                                   3,840       Nevada
45                                                   3,500  Rhode Island
46                                                   3,360  North Dakota
47                                                   2,140     Delaware
48                                                   1,930       Hawaii
49                                                   1,610      Wyoming
50                                                   1,420       Alaska
51                                                     220   Washington
                                                                   D.C.
------------------------------------------------------------------------

Appendix D

 States Ranked by Direct Value-Added by the Biobased Products Industry--
                                  2013
------------------------------------------------------------------------
                                                  Direct
                     Rank                      Value-Added      State
------------------------------------------------------------------------
 1                                             9,862,930,0   California
                                                        00
 2                                             8,237,608,0      Georgia
                                                        00
 3                                             6,828,425,0        Texas
                                                        00
 4                                             6,522,151,0  Pennsylvania
                                                        00
 5                                             6,437,140,0        North
                                                        00     Carolina
 6                                             6,252,403,0    Wisconsin
                                                        00
 7                                             4,977,941,0      Alabama
                                                        00
 8                                             4,429,804,0    Tennessee
                                                        00
 9                                             4,276,668,0         Ohio
                                                        00
10                                             4,227,162,0        South
                                                        00     Carolina
11                                             4,159,173,0       Oregon
                                                        00
12                                             3,848,271,0     New York
                                                        00
13                                             3,807,744,0   Washington
                                                        00
14                                             3,737,850,0      Florida
                                                        00
15                                             3,543,046,0     Illinois
                                                        00
16                                             3,391,516,0    Minnesota
                                                        00
17                                             3,165,255,0     Arkansas
                                                        00
18                                             3,144,753,0     Virginia
                                                        00
19                                             2,882,370,0     Michigan
                                                        00
20                                             2,842,703,0      Indiana
                                                        00
21                                             2,692,484,0  Mississippi
                                                        00
22                                             2,648,699,0             Louisiana
                                                        00
23                                             2,506,357,0     Missouri
                                                        00
24                                             2,127,702,0     Kentucky
                                                        00
25                                             1,877,652,0   New Jersey
                                                        00
26                                             1,735,341,0         Iowa
                                                        00
27                                             1,599,745,0        Maine
                                                        00
28                                             1,416,696,0  Massachusett
                                                        00            s
29                                             995,033,000     Oklahoma
30                                             963,248,000         Utah
31                                             912,261,000      Arizona
32                                             885,697,000        Idaho
33                                             845,697,000  Connecticut
34                                             800,959,000     Maryland
35                                             634,553,000     Colorado
36                                             601,223,000         West
                                                               Virginia
37                                             503,890,000       Kansas
38                                             425,733,000     Nebraska
39                                             403,884,000          New
                                                              Hampshire
40                                             346,817,000     Delaware
41                                             333,014,000      Montana
42                                             331,892,000  South Dakota
43                                             277,682,000      Vermont
44                                             237,667,000  North Dakota
45                                             228,664,000       Nevada
46                                             227,704,000  Rhode Island
47                                             208,297,000   New Mexico
48                                              66,937,000       Alaska
49                                              65,890,000       Hawaii
50                                              57,902,000      Wyoming
51                                              18,364,000   Washington
                                                                   D.C.
------------------------------------------------------------------------

Appendix E

   Number of Companies Participating in the BioPreferred Program, Direct Jobs, and Direct Value-Added in Each
                                              State (Alphabetical)
----------------------------------------------------------------------------------------------------------------
                             Number of Companies
                            Participating in the
         State           BioPreferred Program (June     Direct Value-Added (2013)        Direct Jobs (2013)
                                    2016)
----------------------------------------------------------------------------------------------------------------
Alabama                                           16                $4,977,941,000                        49,650
Alaska                                             5                   $66,937,000                         1,420
Arizona                                           32                  $912,261,000                        14,790
Arkansas                                          14                $3,165,255,000                        31,400
California                                       286                $9,862,930,000                       145,080
Colorado                                          62                  $634,553,000                        11,500
Connecticut                                       28                  $845,697,000                         8,970
Delaware                                           7                  $346,817,000                         2,140
Florida                                          130                $3,737,850,000                        47,690
Georgia                                           79                $8,237,608,000                        80,520
Hawaii                                             8                   $65,890,000                         1,930
Idaho                                             13                  $885,697,000                        13,250
Illinois                                         132                $3,543,046,000                        39,940
Indiana                                           30                $2,842,703,000                        46,050
Iowa                                              79                $1,735,341,000                        20,110
Kansas                                            28                  $503,890,000                         9,080
Kentucky                                          13                $2,127,702,000                        27,290
Louisiana                                          8                $2,648,699,000                        22,440
Maine                                             16                $1,599,745,000                        20,500
Maryland                                          25                  $800,959,000                         9,570
Massachusetts                                     56                $1,416,696,000                        19,140
Michigan                                          57                $2,882,370,000                        37,790
Minnesota                                         97                $3,391,516,000                        35,850
Mississippi                                       19                $2,692,484,000                        40,350
Missouri                                          52                $2,506,357,000                        27,290
Montana                                           10                  $333,014,000                         6,340
Nebraska                                          25                  $425,733,000                         6,020
Nevada                                            15                  $228,664,000                         3,840
New Hampshire                                     19                  $403,884,000                         7,090
New Jersey                                        70                $1,877,652,000                        21,950
New Mexico                                         8                  $208,297,000                         4,210
New York                                          95                $3,848,271,000                        52,300
North Carolina                                    71                $6,437,140,000                        90,040
North Dakota                                       5                  $237,667,000                         3,360
Ohio                                             105                $4,276,668,000                        52,930
Oklahoma                                           9                  $995,033,000                        10,320
Oregon                                            54                $4,159,173,000                        46,480
Pennsylvania                                      90                $6,522,151,000                        71,360
Rhode Island                                       7                  $227,704,000                         3,500
South Carolina                                    19                $4,227,162,000                        38,430
South Dakota                                      11                  $331,892,000                         6,160
Tennessee                                         29                $4,429,804,000                        44,850
Texas                                            147                $6,828,425,000                        88,680
Utah                                              11                  $963,248,000                        10,770
Vermont                                            9                  $277,682,000                         6,500
Virginia                                          50                $3,144,753,000                        38,920
Washington                                        77                $3,807,744,000                        41,140
Washington D.C.                                    3                   $18,364,000                           220
West Virginia                                      2                  $601,223,000                         9,960
Wisconsin                                         78                $6,252,403,000                        68,250
Wyoming                                            7                   $57,902,000                         1,610
----------------------------------------------------------------------------------------------------------------

                               appendix d
The Billion Ton Bioeconomy Initiative: Challenges and Opportunities 


Official Disclaimer
    The Billion Ton Bioeconomy Initiative: Challenges and Opportunities 
is a product of interagency collaboration under the Biomass Research 
and Development Board and does not establish any new or explicitly 
reflect United States Government policy. Some information is based on 
activities conducted by the Executive Agencies as of May 2016. However, 
some of the views expressed in this document reflect stakeholder 
perspectives and do not represent United States Government policy. This 
report is not a policy or budget document nor an action plan, and it 
does not commit the Federal Government to any new activities or 
funding.


Table of Contents
    Foreword
    Introduction

          Overview of the Bioeconomy Initiative
          The Need for the Bioeconomy Initiative
          Potential Benefits of the Bioeconomy Initiative
          Stakeholder Engagement

    Expanding the Bioeconomy: Challenges and Opportunities

          Challenges
          Opportunities

    Next Steps
Foreword
    The Biomass Research and Development (R&D) Board (the Board) was 
created through the enactment of the Biomass Research and Development 
Act of 2000 ``to coordinate programs within and among departments and 
agencies of the Federal Government for the purpose of promoting the use 
of biobased industrial products by (1) maximizing the benefits deriving 
from Federal grants and assistance; and (2) bringing coherence to 
Federal strategic planning.''\1\
---------------------------------------------------------------------------
    \1\U.S. Congress (1999). H.R. 2827. 106th Congress, first session. 
http://www.gpo.gov/fdsys/pkg/BILLS-106hr2827ih/html/BILLS-
106hr2827ih.htm
---------------------------------------------------------------------------
    The Board is co-chaired by senior officials from the U.S. 
Departments of Energy (DOE) and Agriculture (USDA) and consists of 
senior decision makers from DOE, USDA, the U.S. Department of 
Transportation (DOT), U.S. Department of the Interior (DOI), U.S. 
Department of Defense (DOD), U.S. Environmental Protection Agency 
(EPA), National Science Foundation (NSF), and the Office of Science and 
Technology Policy (OSTP) within the Executive Office of the President. 
With its diverse membership, the Board facilitates coordination among 
Federal Government agencies that affect the research, development, and 
deployment of biofuels and bioproducts.
    In February 2016, the Board released the Federal Activities Report 
on the Bioeconomy (FARB) to highlight the potential for a stronger U.S. 
bioeconomy, specifically some of the impacts of increasing biomass 
utilization threefold by 2030.\2\ The goal of the Billion Ton 
Bioeconomy Initiative (Bioeconomy Initiative) is to develop innovative 
approaches to barriers in order to expand the sustainable use of 
America's biomass resources and maximize economic, social, and 
environmental outcomes.
---------------------------------------------------------------------------
    \2\http://www.biomassboard.gov/pdfs/farb_2_18_16.pdf.
---------------------------------------------------------------------------
    Since the release of the FARB, the Board has engaged with the 
bioenergy stakeholder community to further develop the Bioeconomy 
Initiative. This report is foundational to the Board's objective to 
strengthen the commitment and coordination between the U.S. Government 
and the bioeconomy community. Early feedback from stakeholders has 
underscored the importance of biofuels, bioproducts, and biopower. This 
report addresses several challenges and opportunities that stakeholders 
have identified as critical to the success of the Bioeconomy 
Initiative.
Introduction
Overview of the Bioeconomy Initiative
    The goal of the Bioeconomy Initiative is to develop and coordinate 
innovative approaches to expanding the sustainable use of America's 
abundant biomass resources, while maximizing economic, social, and 
environmental benefits. By increasing use of renewable plant material 
and waste feedstocks for biofuels, bioproducts, and biopower, the 
Bioeconomy Initiative has the potential to stimulate job growth and 
economic opportunities in certain industries;\3\ support a secure, 
renewable energy future; and contribute to improved environmental 
quality. The Bioeconomy Initiative differs from ``business as usual'' 
by creating a sustainability framework that considers multi-dimensional 
impacts and benefits to prioritize the most promising sustainable 
pathways.
---------------------------------------------------------------------------
    \3\Some example opportunities are agricultural and forestry 
feedstock production and biorefineries. USDA has a broad renewable 
energy portfolio that supports growers, landowners, producers, pulp 
workers, and biorefinery workers in allied bioenergy industries. http:/
/www.usda.gov/wps/portal/usda/usdahome?contentid=usda-results-
energy.html.
---------------------------------------------------------------------------
    To achieve its goals, the Initiative will require collaborative 
data sharing; peer reviewed analyses; optimized financial mechanisms 
and contract services; research, development, demonstration, and 
deployment for feedstocks; conversion technologies; manufacturing; 
infrastructure; harmonized policies and regulations; and market 
development of products.
The Need for the Bioeconomy Initiative
    The last decade has been unstable for the emerging bioeconomy, 
wherein the bioeconomy is defined as the global industrial transition 
of sustainably utilizing renewable aquatic and terrestrial biomass 
resources in energy, intermediate and final products for economic, 
environmental, social, and national security benefits. While the 
Renewable Fuel Standard (RFS) and a variety of subsidies have helped 
first-generation biofuels penetrate U.S. markets and second-generation 
biofuels move closer to reality, the bioeconomy has yet to reach its 
full potential.
    The economic recession of 2008 affected many bioproduct-related 
commodity markets, and the recent drop in oil prices has created 
further difficulties for biofuels to reach price parity with fossil 
fuels already on the market. The biobased sector has not received the 
amount of capital necessary to thrive in today's markets. This lack of 
investment in the U.S. bioeconomy contributes to the continued reliance 
on foreign and fossil-based energy supplies.
    The U.S. consumes over 19 million barrels of petroleum per day. In 
2015 ,when imported oil was at $40 per barrel, the U.S. spent nearly $1 
billion every day on domestic and imported crude oil, with imported oil 
accounting for nearly \1/2\ of this cost.\4\ When imported oil was over 
$100 per barrel in 2012, the U.S. spent about $1 billion per day on 
just oil imports.\5\ These dollars spent on oil imports could be 
reinvested to develop domestic, renewable biofuels.
---------------------------------------------------------------------------
    \4\Energy Information Administration, Monthly Energy Review, July 
2016, Tables 3.1 and 9.1. 2013.
    \5\Energy Information Administration, Monthly Energy Review, July 
2016, Tables 3.1 and 9.1. 2013.
---------------------------------------------------------------------------
    Although the United States is a global leader in promoting the use 
of sustainably produced feedstocks to fuel economic activity and 
growth, more efforts are needed to overcome challenges and maximize 
opportunities associated with creating products from renewable sources. 
Our nation is transitioning from a fossil-based economy to an economy 
that is fueled by sustainable and renewable energy, of which biomass 
plays a critical role. As outlined in the FARB, to accelerate the 
expansion of the bioeconomy, the Board is formulating a collaborative 
effort across the government and is currently seeking input and 
cooperation from stakeholders in support of the Bioeconomy Initiative. 
The Bioeconomy Initiative is defined by several agreed-to principles:

   Bioenergy is part of an extensive, evolving renewable energy 
        portfolio as well as an ``All of the Above'' energy strategy 
        for the U.S.

   The Bioeconomy Initiative includes biomass-derived 
        products--such as biofuels, bioproducts, and biopower.

   The development of America's bioeconomy must incorporate 
        sustainability and consider environmental, economic, and social 
        factors to minimize potential negative impacts and maximize 
        benefits. The bioeconomy should be used to conserve, enhance, 
        or repair ecological functions.

    The investment community seeks to minimize risk and maximize 
process capability prior to investing in large facilities. Due to price 
parity issues, competing demands for and potential impacts on natural 
resources, and policy-related market uncertainties, the private sector 
remains hesitant to provide investments to continue scaling up advanced 
technologies. However, the potential for a domestic bioenergy and 
bioproducts industry--that reduces our reliance on foreign and fossil-
based energy supplies through the sustainable use of agricultural, 
forestry, and waste biomass--remains a driving force behind 
diversifying the U.S. energy sector. If successfully expanded, the 
bioeconomy can keep energy dollars in the country as well as provide 
rural, energy, and manufacturing jobs and revitalize domestic 
manufacturing capabilities in biobased industries, while increasing the 
nation's competitive advantage and improving the environment.
    Federal agencies are coordinating their efforts to overcome the 
technical and financial barriers that may preclude the expansion of a 
bioeconomy:

   DOE funds research, development, and demonstration of 
        advanced biofuels to lower production costs.

   USDA supports the sustainable production of high-quality, 
        nonfood feedstocks for conversion into bioproducts, bioenergy, 
        bioheat, and biopower.

   EPA implements the Renewable Fuel Standard\6\ and regulates 
        the processes and safety of biobased products.
---------------------------------------------------------------------------
    \6\https://www.epa.gov/renewable-fuel-standard-program.

   The U.S. Department of Navy supports the use of alternative 
---------------------------------------------------------------------------
        fuels for its maritime fleet and national security.

   DOT funds research to develop alternative energy pathways 
        for the U.S. transportation sector.

   DOI manages and conserves the public lands for the use and 
        enjoyment of present and future generations under its mandate 
        of multiple-use and sustained yield.

   The NSF funds research and education in engineering and 
        areas that involve the transformation and/or transport of 
        matter and energy by chemical, thermal, or mechanical means.

   The Executive Office of the President's OSTP ensures that 
        the scientific and technical work of the Executive Branch 
        regarding biobased products is properly coordinated so as to 
        provide the greatest benefit to society.
Potential Benefits of the Bioeconomy Initiative
    Informed by the Analysis Interagency Working Group\7\ (AIWG) of the 
Biomass R&D Board, the Bioeconomy Initiative has the potential to 
benefit the environment, the economy, and national security. An 
expanded bioeconomy could help mitigate challenges associated with 
national resource management, environment, and public health if done in 
an appropriate manner.
---------------------------------------------------------------------------
    \7\http://www.biomassboard.gov/board/working__groups.html.
---------------------------------------------------------------------------
    While an expanded bioeconomy raises sustainability concerns such as 
increased nutrient runoff, soil disturbance, conversion of fragile 
lands, and water use, the Bioeconomy Initiative could be implemented in 
such a way as to encourage environmental benefits. For example, non-
food crops capable of thriving on marginal lands, which require fewer 
inputs for production, could help to reduce nutrient run-off, soil 
erosion, and water usage relative to food crops. Using diverse sources 
of renewable biobased feedstocks--such as manures, biosolids, food 
waste, and sorted municipal solid waste--could help to reduce 
greenhouse gas (GHG) emissions, management costs, and water quality 
degradation, as well as provide revenue streams and renewable energy. 
Some of these potential benefits are discussed in the FARB and 
preliminary analysis of the bioeconomy.\8\
---------------------------------------------------------------------------
    \8\Rogers J., Stokes B., Dunn J., Cai H., Wu M., Haq Z., Baumes H. 
2016. An Assessment of the Potential Products and Economic and 
Environmental Impacts Resulting from a Billion Ton Bioeconomy. 
Biofuels, Bioproducts & Biorefining. (in press).
---------------------------------------------------------------------------
    The Bioeconomy Initiative could also enable the development of 
rural economies by sustainably utilizing land resources, algae, and 
waste systems in rural America. Homegrown biofuels can help bolster 
U.S. renewable energy markets. There is significant opportunity for 
higher value bioproducts and materials to enter the market, reducing 
technology risks and ensuring feedstock supplies for biofuels. More 
biobased energy and product options could provide the United States 
with the flexibility to address environmental and energy challenges.
Stakeholder Engagement
    To increase the potential benefits of the U.S. bioeconomy, the 
Bioeconomy Initiative relies heavily on public engagement. The Board's 
Operations Committee held five Bioeconomy Listening Sessions\9\ to 
gather feedback on many of the areas impacting the growth of the 
bioeconomy. Bioeconomy stakeholders represent a wide number of sectors 
and interests: non-governmental organizations; international 
governments and organizations; environmental and industry groups; 
manufacturers; growers; and other members of the supply chain.
---------------------------------------------------------------------------
    \9\Advanced Bioeconomy Leadership Conference in D.C. (2/29); 
International Biomass Conference & Expo in Charlotte (4/10); BIO World 
Congress on Industrial Biotechnology in San Diego (4/17); 38th 
Symposium on Biotechnology for Fuels and Chemicals in Baltimore (4/27); 
GoToWebinar hosted in D.C. (5/5).
---------------------------------------------------------------------------
    In the first phase, the Operations Committee gathered feedback from 
over 400 stakeholders across the United States. Session attendees 
reported that the Federal Government, research community, and industry 
could be doing more to build a Billion Ton Bioeconomy by 2030. 
Stakeholders identified areas that need support and suggested ways to 
address perceived gaps in Federal support. Suggestions addressed a 
variety of topics such as technical barriers, workforce readiness, and 
public engagement.
    Stakeholders expressed dissatisfaction with access to capital and 
incentives necessary to develop and grow the Bioeconomy Initiative. One 
reason is the low oil prices which makes it hard for biofuels to 
compete, which in turn increases investor risks. Cheap oil, coupled 
with increased pressure to reduce biofuels mandates, are significant 
concerns to new start-up cellulosic plant developers.\10\ Many 
investors believe ``that the RFS will need to remain in place for the 
20 year life of a prospective investment, or a strong belief that low 
oil prices will not last long.''\11\
---------------------------------------------------------------------------
    \10\Talbot, David. 2014. Cheap Oil Could Kill Off Cellulosic 
Ethanol. MIT Technology Review. https://www.technologyreview.com/s/
532956/cheap-oil-could-kill-off-cellulosic-ethanol/.
    \11\Tyner, Wallace. 2015. How will low oil prices affect biofuels? 
World Economic Forum. February 6, 2015. https://www.weforum.org/agenda/
2015/02/how-will-low-oil-prices-affect-biofuels/.
---------------------------------------------------------------------------
    There are additional concerns regarding whether we have enough land 
to produce the needed food, forage, feed, and fiber in the future, as 
well as high volumes of biomass, in an expanded bioeconomy.\12\ This 
land availability issue is further compounded with concerns over the 
potential impacts on food prices. There are also concerns about 
potential negative environmental impacts, including GHG emissions and 
land conversions.
---------------------------------------------------------------------------
    \12\Marshall, Elizabeth and Margriet Caswell. 2011. Biofuels and 
Land-Use Change: Estimation Challenges. Amber Waves, USDA. July 16, 
2011. http://www.ers.usda.gov/amber-waves/2011-june/biofuels-and-land-
use-change.aspx#.V6yspjZTHcs.
---------------------------------------------------------------------------
    Many of the stakeholders involved in these sessions believe that a 
Billion Ton Bioeconomy is possible by 2030, but it will require the 
support of Congress and policies that advance the Bioeconomy 
Initiative. Finally, stakeholders agreed that stronger market pull is 
critical to the success of the Bioeconomy Initiative.
    With help from stakeholders, the Board will continue to find ways 
to overcome identified challenges, gaps, and barriers in order to 
create opportunities.
Expanding the Bioeconomy: Challenges and Opportunities
    This report discusses seven key challenges and ten opportunities 
recognized by the bioeconomy community, as identified via the 
stakeholder input process outlined above. The Federal Government has a 
potential role to play in mobilizing support across the supply chain to 
develop sustainable bioeconomy systems. By mobilizing partnerships 
between industry, government, and academia, the Federal Government and 
stakeholders can spur progress towards validated technologies, which 
attract investment for the scale-up and deployment of the most 
promising solutions that deliver sustainable economic, environmental, 
and social outcomes. However, this report is not a policy or budget 
document nor an action plan, and it does not commit the Federal 
Government to any new activities or funding.
Challenges
    Challenge: Major technical hurdles for development and scale.

    Before there can be investment in large-scale biorefineries capable 
of utilizing 1 billion tons of biomass to produce fuels and 
bioproducts, investors must be confident that the technology is sound, 
and that its supply chain is economically and environmentally 
sustainable. Technology risk has been a major focus of the research 
programs funded by industry, NSF, DOE, and USDA, as innovations are 
moved from the lab to pilot- and demonstration-scale. New discoveries 
can support innovations at the applied and engineering scales to reduce 
technical risks. Developments in biotechnology, whether for biomass 
plants or conversion-enabling microbes, are reaching early adopters.
    Collaboration among scientists, and the industries their inventions 
will support, has yet to be commonplace in the bioeconomy. Technical 
and environmental risks introduced by new catalysts or organisms for 
conversion are compounded by the diversity of the feedstocks locally, 
regionally, nationally, and seasonally as well as by the multitude of 
products that can be produced.

    Challenge: Steep competition from traditional petroleum-derived 
resources.

    Market uncertainty is a major challenge for the emerging 
bioeconomy. For more than 20 years, the variability in the cost of 
petroleum has led to waning interest in furthering the development of a 
bioeconomy. Through research and development, the cost of various 
renewable energy alternatives--such as wind, solar, and bioenergy--is 
continually dropping, which is revitalizing interest in renewables 
despite relatively low oil prices. However, for bioenergy, the 
uncertainty of the market limits the financial investment that is 
needed to scale-up and validate technology performance and the ultimate 
availability and price of bioproducts.
    Historically, driving down the consumer price of biofuels has been 
challenging. Since 2012, DOE has demonstrated technologies that can be 
scaled-up to produce modeled mature, price-competitive cellulosic 
ethanol.\13\ Current efforts focus on modeling mature, price-
competitive ``drop-in'' biofuels for various types of transportation 
fuels. Biofuels have been supported by a variety of economic 
incentives, including grants, income tax credits, subsidies, and loans 
to promote biofuels research and development.\14\ The RFS mandates the 
use of biofuels and monitors and tracks their use through RINs 
(Renewable Identification Numbers). It is unlikely that the consumer 
will voluntarily pay more for biofuels than for petroleum-derived 
fuels. Thus, price parity would enhance investments in biofuels.
---------------------------------------------------------------------------
    \13\BETO, MYPP. http://www.energy.gov/sites/prod/files/2016/07/f33/
mypp_march2016.pdf.
    \14\https://www.epa.gov/environmental-economics/economics-biofuels.
---------------------------------------------------------------------------
    Certain products, such as power and electricity, drop-in fuels, and 
biochemical replacements, can displace a portion of the existing 
products derived from fossil fuels with a renewable product; however, 
the products must reach the end user with consistent price and 
performance for consumer preference or demand to increase.

    Challenge: A lack of necessary infrastructure.

    Unless a new biofuel is truly compatible with existing 
infrastructure, lack of infrastructure for new biofuels is another 
challenge to increasing market penetration. Investments in new fuel 
dispenser pumps and potential vehicle improvements are costly and 
suffer from ``the chicken or the egg'' problem.
    While it is potentially exciting to introduce new biobased products 
to the market, even those that are chemically identical to their 
fossil-based competitor may have some risk to the end user. Extensive 
testing of new products is required to ensure that there are no 
unforeseen performance issues with the bioproducts that are considered 
as replacements for fossil-based products, yet testing has lagged.

    Challenge: Access to capital for large financial investments.

    Overcoming technical, logistical, and market risks is difficult but 
essential to re-energize the financial community to invest in the 
bioeconomy. However, overcoming the ``first-of-a-kind'' barrier will 
require more than science and engineering as it is inherently more 
expensive to build and operate a pioneer facility. Publicly supported 
loan guarantee programs and mandated incentives, including the RFS, 
have led to pioneer commercial-scale demonstrations for cellulosic 
ethanol, but the availability of large financial investments is still 
lower than what is necessary in order to achieve a Billion Ton 
Bioeconomy.

    Challenge: Uncertainties about sustainability--understanding 
environmental, social, and economic outcomes.

    One area of uncertainty highlighted via the stakeholder engagement 
process is the role of sustainability in the bioeconomy, and efforts to 
understand the potential environmental, social, and economic benefits 
and impacts related to its expansion.
    There are ongoing discussions and scientific processes focusing on 
the potential effects related to increasing production of biomass and 
its use as energy and/or for products, including continuing efforts to 
scientifically evaluate those potential effects. Major environmental 
concerns include potential impacts on soil and water quality, 
biodiversity, GHG emissions and carbon footprint, net energy values, 
and direct and indirect land use changes. Additionally, there are 
concerns about economic and social issues such as food and economic 
security. Another issue highlighted by stakeholders is efforts to 
evaluate and verify outcomes from the application of sustainability 
practices. The challenge identified there is to rely on relevant, 
credible, and validated data, develop and employ the necessary tools 
and methods, and adopt (scientifically proven) technologies to reduce 
the uncertainties concerning sustainability across the entire supply 
chain, but most certainly in feedstock production. The challenge 
includes not just being successful but also demonstrating and 
documenting that success to the public and policy makers.
    While an increasing number of studies demonstrate the benefits from 
the use of biomass, questions remain about how the bioeconomy will 
evolve over time, and how the costs and benefits can be consistently 
evaluated relative to other energy options.

    Challenge: Growth instability and increased investment risk caused 
by policy uncertainty.

    The Energy Policy Act of 2005 and the Energy Independence and 
Security Act of 2007 have provided the most support for biofuels. The 
RFS mandates the use of sugar-, cellulosic-, and non-fossil-derived 
biofuels. Congress set very ambitious goals in the law for growth of 
cellulosic biofuels, advanced biofuels, and total renewable fuel. The 
RFS supports emerging technologies and is intended to give companies 
the stability they need to continue expanding investments. However, 
technologies for advanced fuels--made from cellulosic feedstock such as 
grasses and corn stover--have not developed as fast as Congress had 
anticipated and required volumes have had to be adjusted. This can be a 
challenge with any policy that requires new and/or emerging 
technologies.
    Industry responds to incentives and/or clear supportive policy for 
investing in new infrastructure that supports the use of renewable 
fuels, power, or products and will not invest in a venture if profits 
cannot be made in the foreseeable future.

    Challenge: The need for a strong and capable workforce.

    As the United States experiences a shift in manufacturing 
competencies, new training could help the American workforce to meet 
the evolving demands of the bioeconomy. As an emerging industry, jobs 
will take time to develop, which could create difficulties for trade 
schools, community colleges, and universities looking to invest in 
developing programs.
    The rural workforce--including farmers, forest landowners, 
harvesting equipment operators--will need to learn new ways of doing 
business, harvesting crops, and managing logistics as new feedstocks 
and end uses emerge.
Opportunities
    Opportunity: Develop feedstock and fundamental innovations that 
reduce cost and technology risk in the supply chain.

    The Bioeconomy Initiative focuses on developing feedstocks that do 
not disrupt existing markets for agricultural crops such as food, feed, 
and fiber. In bioenergy supply chains for the production of biofuels, 
the diversity of the feedstock is a key consideration because diversity 
can insulate producers against economic shocks to the system.\15\ An 
advanced system reduces the variability of feedstock supply by allowing 
a wider range of sources that mitigate supply risks associated with 
feedstock outages, such as those associated with local weather, pests, 
and diseases. Feedstocks can be purpose-grown plants, wood, and wastes 
from agriculture, forestry, or industrial processing. Each of these 
feedstocks comes with characteristics that need to be understood for 
efficient conversion. In addition, large quantities of feedstocks of 
consistent quality need to be delivered to the biorefinery or 
distributed pre-processing center to reduce conversion risk. There are 
opportunities to densify feedstocks for more efficient transport, as 
well as to blend or otherwise pre-process feedstocks to ensure 
consistent quality and to enable larger volumes of delivered feedstocks 
at a lower cost to biorefinery.
---------------------------------------------------------------------------
    \15\Lamers, P., et al. 2015. Strategic supply system design--a 
holistic evaluation of operational and production cost for a 
biorefinery supply chain. Biofuels, Bioproducts, and Biorefining 9: 
648-660. doi: 10.1002/bbb.1575.

------------------------------------------------------------------------
 
-------------------------------------------------------------------------
The Importance of Food Security in the Bioeconomy
 
    The food crisis of 2008 indicated how many factors contribute to the
 state of global hunger. Rising oil prices, increased ethanol
 production, growing middle class populations, as well as the increased
 need for meat in China and milk in India, have all been blamed for
 recent increases in food prices.\16\ At the same time, shrinking energy
 resources and the possibilities that biomass can spur the development
 of a bioeconomy where energy, chemicals, and materials can all be
 produced without fossil fuels, have advanced the conversation regarding
 the impact of bioenergy production on food security and prices. It is a
 complex consideration that requires assessing the impact through
 careful analysis of many variables.
\16\https://poldev.revues.org/145.
    Through responsible planning, innovations could be applied to enable
 improved food production, while increasing the availability of biomass
 for fuels and chemicals. For example, landscape design principles can
 be used to integrate food and energy systems in a way that reduces
 waste, maintains crop yields, and contributes to multiple environmental
 and social goals. By proactively applying these design principles, the
 bioeconomy can potentially add resilience to agriculture and forestry
 production systems and may enhance their ability to provide food, feed,
 and fiber into the future.
    The Bioeconomy Initiative applies innovations to overcome the
 barriers defined by this report, while prioritizing sustainability
 principles to ensure that as products from biomass increase in the
 marketplace, there are more positive outcomes across market sectors.
------------------------------------------------------------------------

    Additionally, there is an opportunity to improve technologies, 
systems, and infrastructure that will enable higher productivity of 
biomass crops that could result in increased productivity of food, 
feed, and fiber, improved soil quality, and reduced water usage across 
the entire sector. Applying sustainability criteria to renewable 
feedstocks will likely add costs to these feedstocks; however, ensuring 
that petroleum products must also adhere to environmental standards 
will help to level the playing field and enable cost comparison on an 
``apples-to-apples'' basis. Overall, an integrated, multi-disciplinary 
effort creates opportunities to reduce risks throughout the entire 
supply chain.

    Opportunity: Seek opportunities to utilize low-cost waste 
resources.

    Growing a sustainable, thriving bioeconomy could involve the 
development of biomass or bioprocess waste stream utilization 
strategies for higher-value applications. This includes the 
valorization of lignin and/or carbon dioxide, full utilization of all 
algal biomass components, and the incorporation of price-advantaged 
feedstocks like organic, municipal, and wet waste materials.
    Converting waste streams to fuel, products, and chemicals can 
contribute to accelerating the widespread adoption of bioenergy 
technologies and to maximizing bioenergy's value proposition through 
valorizing underutilized biomass resources. These resources include 
landfill gas, municipal sludge, animal manure, industrial organic 
wastewaters (including ethanol stillage), food wastes, and organic 
fractions of sorted municipal solid waste that could otherwise incur 
social and economic costs.
    In addition to improving economic value, reliability, and 
availability of aggregate biomass resources, waste streams can 
supplement or be blended with traditional biomass feedstocks, which 
directly contributes to the viability, quality, and resilience of 
individual biomass supply chains. To capture the value offered by waste 
streams, collaborations among government agencies, industry 
stakeholders, research institutions, and national labs could include 
the following activities:

   Promoting a better understanding of feedstocks and modifying 
        those feedstocks to improve downstream processingefforts;

   Applying research concepts to conversion processes to 
        achieve breakthroughs in operations;

   Developing and testing engineering concepts to known 
        processes to reduce operational and capital costs and make 
        liquid fuels/renewable chemicals more cost-competitive;

   Conducting detailed and rigorous resource availability and 
        techno-economic analyses to identify feasible combinations of 
        waste streams and target markets; and

   Supporting the development of a distributed conversion 
        strategy.

------------------------------------------------------------------------
 
-------------------------------------------------------------------------
Food-Energy-Water Nexus (FEW Nexus)
 
    Several Federal programs are coordinating research, development, and
 demonstration to improve the understanding and management of
 sustainable food, energy, and water systems. This includes development
 of enhanced tools and methods for monitoring, data collection, and
 forecasting. In addition, efforts are underway to improve integrated
 decision-making at the Federal, state, and local levels to help ensure
 stewardship of U.S. resources.
    One example of ongoing collaborations is the Innovations at the
 Nexus of Food, Energy and Water Systems (INFEWS) program sponsored by
 NSF and USDA. The overarching goal of INFEWS is to catalyze the
 interdisciplinary research efforts to transform scientific
 understanding of the FEW Nexus in order to improve system function and
 management, address system stress, increase resilience, and improve
 sustainability.
    DOE is focused on the use of water with regard to energy production.
 In 2014, the Water-Energy Nexus Challenges and Opportunities report\17\
 identified six strategic areas to focus on, (1) energy efficiency of
 water management through end use; (2) optimization of energy production
 and its use of fresh water; (3) enhanced reliability of energy and
 water technologies; (4) safe and productive use of nontraditional water
 sources through improved technology; (5) responsible energy operations
 with respect to water quality, ecosystem, and seismic impacts; and (6)
 productive synergies among water and energy systems.
\17\http://www.energy.gov/under-secretary-science-and-energy/downloads/
 water-energy-nexus-challenges-and-opportunities.
    EPA is focused on partnerships with government agencies and business
 to achieve sustainable outcomes of advanced technologies. One such
 partnership is with the U.S. Army in support of its Net Zero
 Initiative, which is geared to dramatically reduce and even eliminate
 energy consumption, water use, and waste generation of military bases.
 To support this initiative, EPA is developing tools to assess the
 impacts of decisions and provide quality sustainability data.
------------------------------------------------------------------------

    Opportunity: Quantify, communicate, and enhance beneficial effects 
and minimize negative impacts.

    Realizing the full benefits of the bioeconomy requires commitment 
to rigorous science-based quantification of benefits and impacts across 
multiple environmental, social, and economic dimensions. This will 
enable the development of technologies and practices that deliver the 
benefits of renewable energy and the bioeconomy, while maintaining 
healthy communities and natural ecosystems. As more sustainable 
business practices are encouraged, investments in renewable 
technologies--including biofuels, bioproducts, and biopower--could 
grow.
    The Bioeconomy Initiative will create a sustainability framework 
that considers multi-dimensional impacts and benefits from the use of 
biomass. This framework will help the Bioeconomy Initiative 
simultaneously address pressing economic, social, and environmental 
challenges, including the preservation of ecosystem services and 
biodiversity; improved materials, water, and energy conservation; a 
shift from non-renewable to renewable feedstocks in industrial and 
consumer product manufacturing; the capture and recovery of non-
renewable and renewable materials from wastes; improved air quality; 
improved economic opportunities; and public health.

------------------------------------------------------------------------
 
-------------------------------------------------------------------------
Developing a Sustainability Framework
 
    A framework is needed to help coordinate a sustainable approach to
 expanding the bioeconomy across agencies. The framework is not
 envisioned as a rigid, sustainability oversight tool, but rather a way
 to improve cooperation. At the Bioeconomy Federal Strategy Workshop,
 experts identified ways to make and ensure the approach to expanding
 the bioeconomy is sustainable:
 
     Coordinate analyses and research that demonstrate the
     positive contributions the bioeconomy can make to environmental
     sustainability-improving land use, water use, water quality, and
     air quality--as well as socioeconomic sustainability.
 
     Establish a common framework across agencies to reflect
     sustainable futures and establish a common understanding of
     sustainability goals, impacts, and benefits from the bioeconomy.
 
     Build a library of economic, social, and environmental
     metrics across agencies, and compile data on environmental, social,
     and economic impacts, costs, and benefits of specific practices,
     technologies, and bioeconomy pathways.
 
     Coordinate the development of user-friendly models that can
     improve decision-makers' understanding of options in designing the
     bioeconomy, its benefits, and impacts.
 
     Synthesize information on impacts, costs, and benefits to
     address questions from diverse stakeholders. Measuring the
     economic, social, and environmental outcomes of bioenergy,
     biochemicals, and biopower will provide clarity on the short-term
     and long-term availability of resources; impacts of the use of
     renewable, non-renewable, virgin, and recycled resources; and the
     feasibility of creating closed-loop systems for optimal
     efficiencies.
 
     Accelerate innovation on sustainable system design that
     integrates economic, social, and environmental dimensions with
     consideration of synergies and trade-offs.
 
    The Board and the Federal agencies involved with the Bioeconomy
 Initiative are dedicated to sustainability and will make it a paramount
 goal in implementation. However, achieving sustainability in the
 bioeconomy or any other sector is a tenuous goal. Even with the use of
 indicators and other metrics and tools, achieving sustainability is a
 challenge that is readily recognized. In developing a common framework,
 sustainability can reflect an approach, rather than an absolute.
 Agencies have diverse approaches to sustainability and different
 measures of success, according to various missions and areas of
 responsibilities that range from research to implementation to
 regulatory oversight. The sustainability framework will allow the
 agencies to contribute to a sustainable bioeconomy, while still
 accomplishing their missions. A framework is needed to help direct and
 coordinate all of these approaches. Working with industry and
 collaborators can exacerbate the difficulty of achieving
 sustainability, which highlights the need for an agreed-upon framework.
------------------------------------------------------------------------

    Opportunity: Increase public education on biomass-derived products 
in a bioeconomy.

    Public perception plays a key role in market risk. A third-party 
analysis comparing bioenergy and bioproducts to fossil energy and 
fossil-based products could help communicate the underlying potential 
benefits of developing the bioeconomy.
    By better understanding and communicating the potential economic, 
social, and environmental benefits of biofuels, bioproducts, and 
biopower, as well as developing more practices that will mitigate 
potential negative impacts, the Bioeconomy Initiative can garner more 
public acceptance and demand for a larger bioeconomy. There is an 
opportunity to raise awareness about the positive impacts of bioenergy 
and bioproducts and discuss the synergies of the bioeconomy with other 
renewable opportunities and economic sectors.
    In recent years, industry has focused on the interconnectivity 
between global bioenergy production, the food and feed required to meet 
global needs, and the impacts of bioenergy production has on water 
resources and water quality. Industry must recognize the food, water, 
and energy sectors as a system of interdependent components and develop 
solutions based on multi-sector engagement to enhance the 
sustainability of the nation's food, water, and energy supplies. 
Through the Bioeconomy Initiative, the Board can help develop a greater 
coordination among these three sectors.

------------------------------------------------------------------------
 
-------------------------------------------------------------------------
Bioproducts and Biomanufacturing
 
    In April 2016, the National Science and Technology Council
 Subcommittee on Advanced Manufacturing published Advanced
 Manufacturing: A Snapshot of Priority Technology Areas Across the
 Federal Government.\18\ The document highlighted both ongoing
 activities to strengthen U.S. manufacturing and emerging advanced
 manufacturing priority areas. Two of the five priorities support the
 growth of a bioeconomy through engineering biology to support
 biomanufacturing and advanced bioproduct manufacturing.
\18\https://www.whitehouse.gov/sites/whitehouse.gov/files/images/Blog/
 NSTC%20SAM%20 technology%20areas%20snapshot.pdf.
    Federal investments have helped establish the processes and
 platforms needed to generate high-value intermediate and end-use
 products, thus supporting the growth of bioproduct manufacturing in the
 United States. Areas for improvement include the demonstration of
 biomass feedstock delivery systems at commercial scale; development of
 technologies to reduce costs for conversion processes that produce
 intermediates with multiple product potential, including the use of
 lignin to produce chemicals with unique characteristics; and scale-up
 demonstrations of common processing steps to reduce risk for
 commercialization.
    USDA, DOE, NSF, and DOD are actively involved in supporting
 engineering biology and biomanufacturing, and each agency has research
 programs working from fundamental discovery through applied research
 and scale-up.
------------------------------------------------------------------------

    Opportunity: Develop bioproducts that can accelerate biofuel 
production.

    Without portfolio diversity and alternative revenue sources to ride 
out market fluctuations, many of the early stakeholders working to 
develop a bioeconomy experienced significant barriers to continued 
biofuels development. Bioproducts--which include high-value chemicals, 
reagents, materials, and other biobased intermediates--are a viable 
option to reduce petroleum use, while potentially offering a 
diversification of market risk to investors once technology risks have 
been overcome.
    Within the bioeconomy, biofuels represent the product with the 
largest market share, yet carry challenging price requirements to 
compete with existing petroleum-derived fuels. The U.S. has become 
accustomed to readily available, low-cost fuels, which makes this a 
difficult and risky path to follow. Using biomass for power and 
electricity is less risky, but it derives the lowest economic value 
from the resources and must compete with other renewable technologies, 
such as solar and wind.
    Generally, biochemicals provide the highest value use of biomass 
products, and successful technologies can have a positive return on 
investment, making these more likely to scale-up to commercial 
production. Coupling biofuels and bioproducts development can result in 
an accelerated timeline to reduce risks versus a fuels scenario alone.

    Opportunity: Enable the testing and approval of new biofuels and 
bioproducts.

    Biofuels and bioproducts must meet current specifications set for 
fossil-derived products, requiring various testing and approval 
procedures ahead of market entry. The ability to provide enough 
feedstocks, intermediates, and final products to enable testing is a 
barrier in the fledgling industry, but it also represents one of the 
greatest opportunities. Industry needs capital, new and repurposed, to 
perform the necessary testing of new products to ensure they meet 
industry standards. Industry also requires capital to develop new 
standards across the value chain for bioenergy and bioproducts. 
Acquiring this capital will require large public and private 
investments that will only materialize if there is a stronger demand 
push or market pull for these renewable fuels and products. Leveraging 
more progressive international markets by exporting fuels and products, 
as well as technologies, can help secure a stronger market pull that 
would enable more investment in U.S. pioneer technologies, thus 
lowering overall risk while providing benefits to the U.S.\19\
---------------------------------------------------------------------------
    \19\https://www.whitehouse.gov/sites/whitehouse.gov/files/images/
Blog/NSTC%20SAM%20
technology%20areas%20snapshot.pdf.

------------------------------------------------------------------------
 
-------------------------------------------------------------------------
Co-Optimizing Fuels and Engines
 
    Recognized as an integral part of the bioeconomy vision, DOE's Co-
 Optimization of Fuels and Engines (Co-Optima) initiative\20\ seeks to
 accelerate widespread deployment of significantly improved fuels and
 vehicles. Two parallel research tracks are focused on the
 identification and co-development of fuel and engine technologies that,
 when used in tandem, offer the greatest combination of efficiency, GHG
 reduction, and performance.
\20\http://energy.gov/eere/bioenergy/co-optimization-fuels-engines.


 
 
-------------------------------------------------------------------------
    The Co-Optima initiative contributes to the Bioeconomy Initiative by
 accelerating the deployment of advanced biofuels, targeting 16 billion
 gallons per year of by 2030, and contributing to a potential 30%
 reduction in petroleum consumption nationwide versus the current 2030
 projections.21	22
\21\http://www.energy.gov/sites/prod/files/2016/08/f33/
 farrell_bioenergy_2016.pdf.
------------------------------------------------------------------------

    Opportunity: Expand the market potential for biomass.
---------------------------------------------------------------------------
    \22\http://energy.gov/eere/articles/co-optima-initiative-fuels-
combustion-engine-efficiency.

    To the extent that biomass products have demonstrable environmental 
advantages relative to fossil fuel-based or other alternatives, 
measures that monetize the value of environmental externalities will 
increase demand for biomass products. Without being able to monetize 
the value of externalities, the low cost of petroleum will result in a 
decreased market pull from industry to include renewables in their 
portfolios.
    The airline industry and its need for jet fuel is an example of an 
exception due to multiple factors: industry commitments to achieving 
carbon neutral aviation growth by 2020; the U.S. and other member 
states development at the International Civil Aviation Organization 
(ICAO) of a global market-based mechanism limiting international 
aviation emissions; and the potentially devastating effects of price 
volatility associated with petroleum-based jet fuels.
    Cellulosic ethanol has found a small niche in the oxygenate market 
where it will need to compete with starch-based ethanol for the 10% 
blend with gasoline. To further pursue this route will require 
expanding this market beyond the blend wall by increasing ethanol 
blends that are acceptable in current vehicles and by providing current 
or reasonable infrastructure upgrades, making room for both starch and 
cellulosic ethanol. Innovations and new technology also have the 
potential to increase this market by using ethanol as a precursor for 
new bioproducts that have a higher value for the production of 
polymers. The Bioeconomy Initiative can support the market and further 
enable pathways for biofuels and bioproducts, including aviation, 
maritime, and surface transportation applications.

    Opportunity: Encourage private-sector financing.

    Through strategic use of its convening power, the Federal 
Government has the ability to forge new partnerships and collaborations 
that could enable the development of policies and incentives to 
encourage private sector investment across the entire value chain, from 
feedstock production in the field to market driven product development 
and end-use.

------------------------------------------------------------------------
 
-------------------------------------------------------------------------
Federal Alternative Jet Fuel Research and Development (R&D) Strategy
 
    Commercial and military aviation are fundamental drivers of national
 economic development, mobility, and security. However, aviation faces
 significant energy and environmental challenges due to dependence on
 petroleum jet fuels. Drop-in alternative jet fuels (AJFs) can address
 these challenges by enabling a diverse, secure, and reliable fuel
 supply, increasing energy price stability, displacing fossil-based
 emissions that impact air quality and global climate, while also
 generating rural economic development. Efforts are needed to quantify
 emissions displacement using life-cycle analysis models.
    In June 2016, the National Science and Technology Council's
 Aeronautic Science and Technology Subcommittee published the Federal
 Alternative Jet Fuel Research and Development Strategy.\23\ The
 strategy was developed with input from the non-Federal stakeholder
 community by representatives from the U.S. Departments of Agriculture,
 Commerce, Defense, Energy, State, Transportation, EPA, NASA, and the
 NSF.
\23\https://www.whitehouse.gov/sites/default/files/
 federal_alternative_jet_fuels_research_Pand_development_strategy.pdf.
    The document highlights current Federal agency AJF R&D expertise,
 responsibilities, and collaborations. It aligns Federal agency R&D
 efforts across the AJF development path and sets out prioritized
 Federal R&D goals and objectives to address key scientific and
 technical challenges that inhibit the development, production, and use
 of economically viable AJFs. This strategic approach is intended to
 contribute to the successful mobilization of both the Federal agency
 and the non-Federal stakeholder communities towards a common effort to
 develop and deploy cost-effective AJFs.
------------------------------------------------------------------------

    Creative public-private partnerships with the insurance industry to 
cover a range of areas from crop insurance to regulatory-risk insurance 
could be considered to survive the early stage of development and 
deployment for this new industry. Programs such as the BioPreferred 
Program at USDA support and encourage the use of bioproducts throughout 
the Federal system. Long-term secure product off-take contracts and 
long-term feedstock supply contracts are important for industry 
stakeholders when working to secure financing and ensure investors.

    Opportunity: Support analysis as a foundation for stable, long-term 
policies.

    If carefully crafted policies were in place to encourage the 
sustainable expansion of a U.S. bioeconomy, many of the challenges 
discussed above could be reduced. For decades, the Federal Government 
has employed many different types of policy incentives to encourage 
energy production in the United States. Moving forward, such policies 
must be based on sound science and reflect our best efforts to identify 
and mitigate any potential negative environmental, economic, and social 
impacts. There are ongoing Federal scientific processes, such as the 
EPA's technical review of the carbon implications of biomass use for 
energy at stationary sources, that can help us identify forms of 
biomass that reflect carbon benefits.\24\ Information from such 
scientific processes can advance technical understanding of the role 
that biomass can play in GHG emissions strategies by enabling us to 
identify and promote biomass that is carbon-beneficial versus those 
that could result in CO2 emissions increases or other 
potential consequences.
---------------------------------------------------------------------------
    \24\Information regarding the EPA's draft technical report, 
Framework for Assessing Biogenic CO2 Emissions, and the 
related scientific peerreview process can be found at: https://
www3.epa.gov/climatechange/ghgemissions/biogenic-emissions.html.
---------------------------------------------------------------------------
    There are a number of policy pathways forward that can help foster 
thoughtful expansion of the bioeconomy. For example, policies that 
encourage the use of otherwise unused byproduct materials for renewable 
bioenergy and bioproducts should be considered. However, any policies 
relating to bioenergy must be founded on appropriate analysis and abide 
by current standards set in the Clean Air Act and meet established 
guidelines to maintain and improve the U.S. environment.

    Opportunity: Ensure a ready workforce to meet the needs of the 
bioeconomy.

    A growing bioeconomy will require a knowledgeable and well-trained 
workforce. U.S. K-12 and post-secondary education programs have put an 
increased focus on science, technology, engineering, and mathematics, 
but there is still room for growth. This will benefit the bioeconomy by 
providing a multidisciplinary workforce that will not only include 
engineers and scientists, but communications experts, human resource 
specialists, and other supporting positions as well. Additionally, 
workers will need experience across the supply chain, which could take 
the form of apprenticeships, internships, and volunteer opportunities 
in the growing industry.
Next Steps
    The activity across the Federal Government is extensive, and 
agencies have made progress in understanding many aspects of an 
emerging bioeconomy, including the production and logistics of 
delivering feedstocks to a refinery, as well as innovations that have 
significantly reduced the cost of converting feedstocks into fuels and 
products. The Bioeconomy Initiative will expand the focus beyond 
biofuels, increasing the value and potential benefits of biomass.
    The Federal Government has also made efforts to develop sustainable 
supply chains, establish standards, and has performed extensive testing 
of fuels for aviation and surface transportation. However, to further 
reduce the risks of the technology and overcome barriers to achieving a 
robust bioeconomy, the bioenergy community must do more.
    The Board will continue to develop the Bioeconomy Initiative in 
partnership with stakeholders. Building on the release of the FARB, 
this report is the next step in forming the coalition to drive the 
Bioeconomy Initiative forward by identifying many of the obstacles that 
need to be addressed, and understanding how to move forward 
cooperatively.
                               appendix e
Federal Activities Report on the Bioeconomy 


February 2016
Official Disclaimer
    The Federal Activities Report on the Bioeconomy is a product of 
interagency collaboration under the Biomass R&D Board and does not 
reflect any changes in policy. All information is based on current 
activities conducted by the Executive Agencies as of October 2015. The 
potential impacts of technical progress, pending or proposed 
legislation, regulations, standards, or any other changes that may have 
occurred after the publication date are not reflected in this report.


Table of Contents
    Foreword

          The Biomass R&D Board
          Purpose of the Federal Activities Report on the Bioeconomy

    Introduction

          Why a Bioeconomy

    Path to the Billion Ton Bioeconomy Vision

          Genesis of the Bioeconomy Vision
          The Goal of the Bioeconomy Vision
          The Role of the Biomass R&D Board

    Overview of the Billion Ton Bioeconomy Vision

          Scope of the Bioeconomy Vision
          Expected Benefits

    Proposed Objectives of the Bioeconomy Vision:
    Federal Agencies' Current Work in the Bioeconomy

          Executive Agencies
          Interagency Collaboration

    Looking Ahead

          Bioeconomy Federal Strategy Workshop
          Building a National Coalition

    Appendix I: Federal Agency Activities
    Appendix II: Interagency Activities Supporting the Bioeconomy.
Foreword
The Biomass R&D Board
    The Biomass Research and Development (R&D) Board (The Board) was 
created through the enactment of the Biomass Research and Development 
Act of 2000 ``to coordinate programs within and among departments and 
agencies of the Federal Government for the purpose of promoting the use 
of biobased industrial products by (1) maximizing the benefits deriving 
from Federal grants and assistance; and (2) bringing coherence to 
Federal strategic planning.''\1\ The Board is co-chaired by senior 
officials from the U.S. Departments of Energy (DOE) and Agriculture 
(USDA) and currently consists of senior decision makers from the DOE, 
USDA, U.S. Department of Transportation (DOT), U.S. Department of the 
Interior (DOI), U.S. Department of Defense (DOD), U.S. Environmental 
Protection Agency (EPA), National Science Foundation (NSF), and the 
Office of Science and Technology Policy (OSTP) within the Executive 
Office of the President. With its diverse membership, the Board 
facilitates coordination among Federal Government agencies that affect 
the research, development, and deployment of biofuels and bioproducts.
---------------------------------------------------------------------------
    \1\U.S. Congress (1999). H.R. 2827. 106th Congress, first session. 
http://www.gpo.gov/fdsys/pkg/BILLS-106hr2827ih/html/BILLS-
106hr2827ih.htm.
---------------------------------------------------------------------------
Purpose of the Federal Activities Report on the Bioeconomy
    A Federal Activities Report on the Bioeconomy has been prepared to 
emphasize the significant potential for an even stronger U.S. 
bioeconomy through the production and use of biofuels, bioproducts, and 
biopower. This report is intended to educate the public on the wide-
ranging, federally funded activities that are helping to bolster the 
bioeconomy. Further, the report will highlight some of the critical 
work currently being conducted across the Federal Government that 
either supports or relates to the bioeconomy.


Bioeconomy Vision
Introduction
Why a Bioeconomy
    ``Bioeconomy'' is a popular phrase used broadly in today's energy 
conversation. The term emphasizes the integral role of abundant, 
sustainable, domestic biomass in the U.S. economy.
    The benefits of the bioeconomy have been well documented.\2\ 
Biobased products support the growth of plants, trees, and vegetation, 
which recycle carbon (CO2) from the atmosphere, resulting in 
air quality improvements when compared to fossil fuel-based products. 
In addition, producing and utilizing biobased fuels reduces U.S. 
reliance on foreign oil (energy security) and creates jobs, 
particularly in rural areas.
---------------------------------------------------------------------------
    \2\Renewable Chemicals & Materials Opportunity Assessment--Major 
Job Creation and Agricultural Sector Engine, USDA, 2014. http://
www.usda.gov/oce/reports/energy/USDA_RenewChems_Jan2014.pdf; U.S. 
Economic Impact of Advanced Biofuels Production: Perspectives to 2030, 
Bioeconomy Research Associates, 2009. https://www.bio.org/sites/
default/files/EconomicImpactAdvancedBiofuels.pdf; Bio-based Chemicals--
Value-Added Products from Biorefineries, IEA 2011. http://
www.ieabioenergy.com/wp-content/uploads/2013/10/Task-42-Biobased-
Chemicals-value-added-products-from-biorefineries.pdf.

------------------------------------------------------------------------
 
-------------------------------------------------------------------------
What Is a Bioeconomy
 
    For the purpose of this report, the bioeconomy is defined as:
 
        ``The global industrial transition of sustainably utilizing
     renewable aquatic and terrestrial biomass resources in energy,
     intermediate, and final products for economic, environmental,
     social, and national security benefits.''\3\
\3\An Economic Impact Analysis of the U.S. Biobased Products Industry--A
 Report to the Congress of the United States of America, USDA 2015.
 http://www.biopreferred.gov/BioPreferred/faces/pages/
 DocumentBrowser.xhtml#; Opportunities in the Emerging Bioeconomy, July
 25, 2014. www.biopreferred.gov/files/WhyBiobased.pdf; Renewable
 Chemicals & Materials Opportunity Assessment--Major Job Creation and
 Agricultural Sector Engine, USDA, 2014. http://www.usda.gov/oce/reports/
 energy/USDA_RenewChems_Jan2014.pdf.
------------------------------------------------------------------------

    Because of these and other benefits, biobased resources are an 
important component of the nation's ``All of the Above'' energy policy, 
which is focused on developing a range of available energy sources to 
meet future demands and increase the stability and security of the 
nation's energy supply.\4\ In the Climate Action Plan, the President 
recognized that ``biofuels have an important role to play in increasing 
our energy security, fostering rural economic development, and reducing 
greenhouse gas emissions from the transportation sector.''5 In addition 
to biofuels, the Federal Government has emphasized the potential for 
biopower, bioproducts, and renewable chemicals as key components of the 
national bioeconomy.
---------------------------------------------------------------------------
    \4\https://www.whitehouse.gov/sites/default/files/docs/
clean_energy_record.pdf.
    \5\https://www.whitehouse.gov/sites/default/files/image/
president27sclimateactionplan.pdf.
---------------------------------------------------------------------------
    While the United States is a global leader in promoting the use of 
sustainably produced feedstocks to fuel economic activity and growth, 
the bioeconomy is still in its early stages. A transition is needed 
from a fossil-based economy to an economy that is fueled by sustainable 
and renewable energy, of which biomass plays a critical role. Assisted 
by public-private partnerships, development of new and innovative 
technologies in the United States is leading to renewable and drop-in 
fuels, biobased materials, and renewable chemicals that are replacing 
fossil-based products.
Bioeconomy and the Federal Government


    Bioeconomy activities have already touched on the interests of many 
Federal agencies and offices. For example, USDA's interest stems from 
the development and production of feedstocks to end-use markets for 
those feedstocks; DOE's interest involves alternative inputs used to 
generate energy and co-products, technologies, and end-use markets; EPA 
leads development of the renewable fuel standard for biofuels, 
environmental approval of biotechnologies essential to the bioeconomy, 
regulates emissions from mobile and stationary sources of the 
bioeconomy, and the management of manures, municipal solid waste and 
biosolids--all potential feedstocks for the bioeconomy; NSF recognizes 
innovative technology underpins a strong bioeconomy and increased 
demand for scientists and engineers; DOD and DOT view the bioeconomy 
from an alternative fuels and power dimension and are interested in 
reducing energy price variability and identifying reliable and 
sustainable fuel supplies for all transportation modes, as well as 
tactical and non-tactical assets; and DOI seeks to add value to U.S. 
land.
    The Federal Government as a whole sees great potential in the 
nation's abundant natural resources, the capacity for new and advanced 
technologies, and the entrepreneurial spirit of the American people. 
This potential offers the ability to triple the size of today's 
bioeconomy by 2030. To realize the full potential of a sustainable, 
domestic bioeconomy, collaboration among Federal agencies is needed, as 
are partnerships with state and local governments, universities, 
industries affecting the bioeconomy supply chain, and the American 
public. The Biomass R&D Board is a standing body that can facilitate 
effective implementation of this vision.
Path to the Billion Ton Bioeconomy Vision
Genesis of the Bioeconomy Vision


    Since fall 2013, Board members have been planning a broad, new 
vision to promote the expansion of the bioeconomy. With 1 billion tons 
of biomass projected to be sustainably produced and available annually 
by 2030, the Board recognized the need to fully develop a Billion Ton 
Bioeconomy Vision.\6\ The Board believes that a single, coordinated 
multi-department vision focused on developing and implementing a plan 
for utilizing this biomass for these purposes will increase economic 
activity, decrease reliance on foreign oil, and create market-driven 
demand for bioenergy and bioproducts.
---------------------------------------------------------------------------
    \6\U.S. Billion-Ton Update, August, 2011. http://
www1.eere.energy.gov/bioenergy/pdfs/billion_ton_update.pdf.
---------------------------------------------------------------------------
    The concept was discussed in parallel by the Biomass R&D Technical 
Advisory Committee (TAC). The TAC envisioned a new interagency effort 
that would help to replace more fossil carbon with renewable carbon in 
transportation fuels and related products. The TAC recommended that the 
new vision endeavor to rapidly expand emerging biofuels and bioproducts 
industries, targeting a potential 30% penetration of biomass carbon 
into the U.S. transportation market by 2030 in a sustainable and cost-
effective manner to create jobs, reduce greenhouse gas impacts, and 
enhance national security.

    Additional expected outcomes of a proposed Bioeconomy Vision by the 
TAC and Board include the following:

   Enhanced economic development by increasing direct and 
        indirect jobs.

   A cost-effective energy supply that is synergistic with 
        existing fossil-based energy markets.

   Enhanced economic, environment, and social sustainability.

   Improved national energy security and decreased dependence 
        of national defense on foreign energy supplies.

------------------------------------------------------------------------
 
-------------------------------------------------------------------------
Preliminary Analyses
 
    Members from the Analysis Interagency Working Group of the Biomass
 R&D Board have developed some early benefits metrics. The results of
 these analyses will be peer-reviewed and published in 2016.
------------------------------------------------------------------------

    The Board Operations Committee also conducted preliminary analyses 
to determine the feasibility of having 1 billion dry tons of biomass 
sustainably available annually within the relatively short timeframe of 
15 years.\7\ These bio-feedstocks would be used to produce biofuels, 
bioproducts, renewable chemicals, and biopower. Some preliminary 
analyses, led by members of the Board's Analysis Interagency Working 
Group, were conducted to determine the feasibility of reaching this 
target and harnessing some of the associated social, economic, and 
environmental benefits of the effort.\8\
---------------------------------------------------------------------------
    \7\The Billion-Ton Update assumes that the geographic range where 
energy crop production can occur is limited to areas where production 
is under rain-fed conditions, without the use of supplemental 
irrigation.
    \8\Analysis Interagency Working Group was established as part of 
the 2012 National Biofuels Action Plan. The focus of the group is to 
identify and address analysis needs in biofuels and bioproducts R&D. 
The IWG is co-led by the Departments of Agriculture and Energy and has 
representatives from these departments, EPA, and DOT. This Group, along 
with added members from national laboratories, provided input and 
recommendations to the initial Bioeconomy Vision analysis, as well as a 
formal review of the assumptions, data, references, and calculations. 
There were more than ten members including scientists and program 
managers with expertise in agricultural, forestry, modeling, 
statistics, GHG emissions, economics, transport systems, and many other 
areas.
---------------------------------------------------------------------------
The Goal of the Bioeconomy Vision
    The goal of the Billion Ton Bioeconomy Vision (the Vision) is to 
develop and implement innovative approaches to remove barriers to 
expanding the sustainable use of America's abundant biomass resources, 
while maximizing economic, social, and environmental outcomes. By 
increasing use of renewable plant material and waste feedstocks for 
biofuels, bioproducts, and biopower, the Vision has the potential to 
stimulate job growth and economic opportunities; increase the nation's 
competitive advantage; support a secure, renewable energy future; and 
contribute to improved environmental quality. This interagency vision 
differs from ``business-as-usual'' with an intention to create a 
sustainability framework that considers multi-dimensional impacts and 
benefits from the use of biomass.



------------------------------------------------------------------------
 
-------------------------------------------------------------------------
Interagency Collaboration
 
Founding Partnerships, Breaking Barriers
 
    USDA, DOE, and EPA jointly released a progress report on the Biogas
 Opportunities Roadmap of 2014. The Roadmap identifies voluntary actions
 that can be taken to reduce methane emissions through the use of biogas
 systems. It outlines strategies to overcome barriers limiting further
 expansion and development of a robust biogas industry in the United
 States.
 
    For more information on this activity and others like it, see
 Appendix II.
------------------------------------------------------------------------

    Biomass already plays a significant role in the Administration's 
``All of the Above'' energy strategy. The Vision is to take a systems 
approach to sustainably reach the full potential of biomass-derived 
products as a way of expanding our nation's economy.


    This effort will increase the sustainable production of biomass 
feedstocks and capture of usable wastes; development of innovative and 
more efficient technologies to transform renewable carbon to 
intermediates and products; construction of more biorefineries and 
manufacturing facilities; and expansion of the market for biofuels, 
biochemicals, biopower, and other biomass-derived products. As a 
result, the bioeconomy will provide multiple economic, environmental, 
and social benefits to the nation.
    The Vision requires new science and technologies from universities 
and laboratories; industry and manufacturing development; engagement 
with financial institutions; education and job training; and additional 
producers, contractors, and specialty personnel. Expanding the economic 
sector to the extent envisioned in such a short timeframe will require 
strong support, commitment, and involvement of many sectors and groups. 
The Board's Operations Committee will coordinate engagement and 
outreach efforts to achieve commitment and investment among these 
external stakeholders. The Committee will collaborate with bioeconomy 
partners to develop a strategic framework and plan of action for 
reaching target groups across various sectors.
The Role of the Biomass R&D Board
    The purpose of the Bioeconomy Vision is to expand the sustainable 
production and use of biomass. The Board will have the primary 
responsibility for providing overall leadership and coordination of 
this vision. The Vision will coordinate and enhance Federal efforts, as 
well as facilitate collaboration between the government and its 
stakeholders.


    There is already a high level of commitment and coordination among 
many Federal agencies, as well as a fairly comprehensive approach to 
remove barriers that may preclude the commercialization and expansion 
of the bioeconomy. To maximize the potential of the U.S. bioeconomy, 
the Vision seeks to further align and coordinate agency missions, and 
fully engage with the public to achieve success. By involving other 
agencies and stakeholders as part of a collaborative effort, the Vision 
will strengthen this commitment and coordination, while broadening the 
effort to assess impacts and benefits, and prioritize the design and 
efficient scale-up of production and utilization of the best biomass 
production and utilization pathways.

    Federal departments, agencies, offices, and programs will provide 
the following:\9\
---------------------------------------------------------------------------
    \9\As a separate body established to inform and advise the Board, 
the Biomass R&D Technical Advisory Committee, an independent rotating 
advisory group of about 30 bioenergy stakeholders, will be encouraged 
to provide recommendations on the Bioeconomy Vision to the Board.

   Investments in research, development, and demonstration 
        (RD&D), as well as an objective assessment of life-cycle 
        performance of technology and system choices looking at RD&D, 
        production, conversion, delivery, and use.
        
        
   Workforce development, training, public outreach, extension/
        technology transfer.

   An understanding of the policies of all agencies to 
        successfully implement regulations that enable and overcome 
        challenges to the sustainable expansion of the bioeconomy.

   New and existing mechanisms to leverage public-private 
        relationships and resources.

   DOE national labs, USDA, and other Federal research 
        facilities that will apply their technical expertise and 
        provide technologies to further break down technical barriers, 
        and decision support tools for the advancement of a sustainable 
        bioenergy industry.
Overview of the Billion Ton Bioeconomy Vision
Scope of the Bioeconomy Vision
    The Vision includes assessing benefits and impacts, and evaluating 
approaches for sustainably expanding the production of biomass-based 
fuels, power, and products along the entire supply chain (from the 
production of feedstocks to their conversion and end use). These 
efforts will require analyses, financial mechanisms, contract services, 
research, development, and deployment for feedstocks, conversion 
technologies, manufacturing, infrastructures, policies and regulations, 
and market development of products.
    Expanding the bioeconomy in a sustainable manner will increase 
energy diversity and long-term security. It will provide additional 
economic, environmental, and social benefits, such as reduced 
greenhouse gas emissions, job growth, and responsible management of 
diverse sources of biomass and waste materials. Efforts will result in 
a greener, stronger nation with diverse, new economic sectors that 
enhance U.S. competitiveness.



------------------------------------------------------------------------
 
-------------------------------------------------------------------------
Interagency Collaboration
 
A More Sustainable Future Together
 
    DOE and USDA engage with the Global Bioenergy Partnership to
 exchange information and findings on sustainability and greenhouse gas
 emissions of bioenergy. The Global Bioenergy Partnership (GBEP) was
 established in 2006 by a mandate from the G8 + 5 in 2005 and is the
 venue for the U.S. Government to discuss sustainability of bioenergy on
 an international level. Partners currently include 23 countries and
 seven United Nations organizations, with Brazil and Italy as co-chairs.
 
    For more information on this activity and others like it, see
 Appendix II.
------------------------------------------------------------------------

    The following are examples of existing and proposed Bioeconomy 
Vision approaches:

   The Vision will be developed with participation from Federal 
        agencies that are not currently involved with the Biomass R&D 
        Board, thereby expanding the commitment of the Federal 
        Government to identify and develop sustainable pathways in 
        support of the bioeconomy.

   The Vision will proportionately expand its focus on biofuels 
        to include other uses of biomass to derive increased value and 
        benefits.

   A national framework will be developed to coordinate Federal 
        and external efforts to advance the bioeconomy.

   Emphasis will be placed on achieving an overall national 
        bioeconomy goal; specific milestones and deadlines for that 
        goal will be established.
Expected Benefits
Environmental Benefits


    An expanded bioeconomy must help mitigate, and not exacerbate, 
challenges associated with resources, environment, and public health. 
The Vision is to potentially help address many of today's pressing 
environmental challenges: The preservation and/or enhancement of 
ecosystem services and biodiversity; improved materials, water, and 
energy conservation; shift from non-renewable to renewable feedstock 
availability, selection, and use in industrial and consumer product 
manufacture; capture and recovery of non-renewable and renewable 
materials from wastes; improved air quality; and improved public 
health. Environmental assessments can identify pathways that would 
result in environmental gains when accounting for their full life 
cycle. Some environmental benefits are highlighted below:

   Reduced Greenhouse Gas Emissions--Greenhouse gas emission 
        footprints associated with biomass-derived products are often 
        more favorable than their fossil-fuel derived counterparts. 
        Preliminary analyses show that a Billion Ton Bioeconomy could 
        potentially reduce GHG emissions by over 400 million tons 
        annually of CO2e, which is equivalent to an 
        approximate 8% reduction in current U.S. emissions.

   Optimizing Land Use--The sustainable production of biomass 
        makes use of multi-functional landscapes that improve ecosystem 
        services such as soil health, water quality and availability, 
        and accessibility of other natural resources for food, fuel, 
        and fiber production. For example, the development of non-food 
        crops capable of thriving on marginal lands, which require less 
        inputs for production, often helps reduce nutrient run-off, 
        soil erosion, and water use. Also, aquatic biomass developed on 
        coastal and marine landscapes can provide similar benefits and 
        expand the areal production of biomass for the bioeconomy.

   Higher Purpose Use of Biobased Materials--Opportunities 
        exist to develop and utilize diverse agricultural, algal, and 
        biogenic waste (e.g., manures, biosolids, food waste, and 
        municipal solid waste) feedstocks that, historically, have 
        presented environmental and economic challenges. Using diverse 
        sources of renewable biobased materials as feedstocks often 
        reduces greenhouse gas, eliminates management costs, reduces 
        water quality degradation, and provides revenue streams and 
        renewable energy.

   Capture, Re-use, and Market Value of Non-renewable Resources 
        and Pollutants from Biogenic Wastes--Innovative technologies 
        can extract non-renewable resources (such as phosphorus from 
        manures and biosolids) and transform them from costly 
        pollutants into marketable products.
Economic Benefits


    The Analysis Interagency Working Group of the Biomass R&D Board 
estimates that the bioeconomy currently contributes approximately $50 
billion and over a quarter million jobs to the U.S. economy. The 
government's Billion Ton Bioeconomy Vision has established goals that 
would considerably increase U.S. economic production and job growth. 
Effects of a significantly larger bioeconomy would ripple across all 
U.S. economic sectors, creating new jobs in biomass production and 
logistics, facility operation and quality control, and distribution, as 
well as R&D, finance, supplies, and services that deal with the 
complexities of building and running new biorefineries. If targets are 
met, the bioeconomy could achieve the following milestones:

   National Revenues: The total direct revenue could reach 
        approximately $250 billion annually, with a total economic 
        impact of $660 billion each year including indirect economic 
        outputs from the bioeconomy.

   Job Growth: The cumulative job benefit could be over a 
        million new positions that cannot be outsourced from the United 
        States. A strong bioeconomy will boost job growth in various 
        sectors, especially in the high-paying technology field. Such 
        progress would have positive effects throughout much of the 
        agriculture, aquaculture, forestry, and service sectors of the 
        economy.

   Rural Development: Sustainably utilizing our land resources, 
        algae, and waste systems would provide economic development 
        opportunities for both rural and urban America. Additionally, 
        rural communities and economies would have the potential to 
        benefit significantly as a result of the Bioeconomy Vision.
National Security Benefits
    The volatility of oil prices and supply is a major concern to a 
nation still reliant on oil for the majority of its transportation 
needs. Biofuels are less susceptible to global events and can help 
bolster the U.S. renewable energy markets. Additionally, an expanded 
bioeconomy will contribute to the U.S. maintaining a competitive 
advantage in a global market. Specific benefits include the following:

   Price Volatility: The Billion Ton Bioeconomy will create 
        more biobased energy options and provide flexibility to address 
        environmental challenges and future volatility in global fuel 
        prices.

   Infrastructure Compatibility: The bioeconomy will support 
        development of a responsive, reliable, and efficient transport 
        and distribution infrastructure that can safely deliver biofuel 
        products to their end-use locations.
        
        

------------------------------------------------------------------------
 
-------------------------------------------------------------------------
Interagency Collaboration
 
Scaling up for Success
 
    To supply the U.S. Navy with a home grown, secure fuel supply, USDA,
 DOE and the Navy have been working together since 2011 to help
 commercialize new fuels that meet military specifications for jet fuel
 and diesel. These domestically produced renewable biofuels will help
 the U.S. military increase the nation's energy security, reduce
 greenhouse gas emissions, and create jobs in America.
 
    For more information on this activity and others like it, see
 Appendix II.
------------------------------------------------------------------------

Challenge Areas
    There is general agreement that expanding the bioeconomy would 
offer significant benefits; however, some major hurdles still exist. 
They include: (1) a lack of available, cost-competitive, biomass-
derived products as compared to fossil resource (petroleum, natural 
gas, coal) products, (2) concerns over environmental issues associated 
with growing biomass and mitigating/reducing negative impacts, (3) 
reducing risks to warrant investment in biomass production systems, 
conversion facilities, and end-use infrastructure, (4) limited 
availability of land and resources (e.g., water, fertilizer, labor, 
etc.) to produce 1 billion tons of biomass, (5) current inability to 
transport and dispense larger quantities of fuels, and (6) the need for 
large capital expenditures in a risk-averse financial environment. The 
goals of the Vision can only be accomplished when these challenges have 
been considered and mitigated. At the same time, it is critical that 
U.S. food, feed, and fiber production is sustained and enhanced.



------------------------------------------------------------------------
 
-------------------------------------------------------------------------
    There are four main barriers that restrict our ability to achieve
 Billion Ton Bioeconomy goals:
 
     First, sustainably producing and accessing adequate,
     affordable feedstocks--Biomass as the source of low-cost renewable
     carbon feedstock for conversion to fuels, power, and products add
     significant complexity to the agricultural and forestry industries
     for the production of biomass and to the waste management
     industries for the recovery of organic materials.
 
     Second, developing and applying innovative, cost-
     competitive conversion technologies--Conversion technologies for
     production of fuel from cellulosic feedstocks suffer from high
     energy requirements and low productivity (yield, selectivity, and
     rate of production), as well as high capital expenditures per
     gallon, which results in conversion technologies that are unable to
     achieve reinvestment economics. Solid fuels combustion systems are
     relatively commercial state-of-the-art technologies, but are still
     significantly inefficient conversion processes for electricity and
     thermal energy production. Current conversion technology cannot
     economical maximize value from by- and co-products. Using and
     blending waste resources into conversion system are still limited
     by non-robust conversion technologies.
 
     Third, optimizing distribution infrastructure across the
     nation to allow movement of biomass and subsequent derivatives
     across the entire supply chain--The lack of an updated distribution
     infrastructure and other market incentives, especially for fuels,
     directly impacts their use by consumers. Developing functional,
     compatible, and competitive distribution systems for end use, while
     expanding existing infrastructure (i.e., feedstocks, distribution,
     end-use, and delivery) is critical to the success of the Bioeconomy
     Vision.
 
     Fourth, educating the consumer--Education of the positive
     aspects of biomass, re-use of waste streams, and production of
     biofuels and bioproducts.
------------------------------------------------------------------------

Proposed Objectives of the Bioeconomy Vision
    By leveraging existing expertise across the various agencies, this 
new vision could propel the United States to develop the leading 
bioeconomy in the world. The objectives of the Vision can be 
categorized into five distinct areas. A table has been provided to 
discuss the main themes of the Bioeconomy Vision.

------------------------------------------------------------------------
 
------------------------------------------------------------------------
1  Use an integrated systems     Holistic, integrated supply chains that
 approach                         overcome barriers and reduce
                                  financial, environmental, and market
                                  risks. Objectives are:
 
                                     Utilize financial data and
                                     business models to reduce risks in
                                     commercialization in order to
                                     satisfy needs along the entire
                                     supply chain.
                                     Utilize models and data
                                     across the Federal Government to
                                     understand and quantify tradeoffs
                                     and synergies to optimize the
                                     economic, environmental, and social
                                     benefits of the bioeconomy to
                                     minimize adverse impacts.
------------------------------------------------------------------------
2  Provide the science and the   Science provides solutions to barriers
 technology                       and innovative technologies help drive
                                  the bioeconomy. Objectives are:
 
                                     Efficiently integrate and
                                     validate engineering,
                                     environmental, and economic data
                                     that are associated with biomass
                                     production, conversion to
                                     bioeconomy products, and use.
                                     Adapt current
                                     infrastructure and design and
                                     develop new machinery for
                                     efficiency.
                                     Integrate biophysical,
                                     environmental, and social models in
                                     systems development.
------------------------------------------------------------------------
3  Public and private            Expansion of the bioeconomy requires
 collaboration to overcome        public and private collaboration
 barriers and accelerate          across the entire sector: Federal,
 deployment                       state, and local government, Tribes,
                                  business and industry, academia,
                                  producers, landowners, workers, and
                                  many others. Objectives are:
 
------------------------------------------------------------------------
4  Develop a workforce for the   Millions of additional workers are
 future bioeconomy                needed in agricultural, aquatic, and
                                  forestal production, biorefineries
                                  R&D, transportation, manufacturing,
                                  and various allied fields. Objectives
                                  are:
 
                                     Develop specific
                                     educational programs for
                                     professionals and technical
                                     students at various levels of
                                     higher education.
                                     Provide career pathways
                                     information and activities for high
                                     school students.
------------------------------------------------------------------------
5  Understand and inform policy  Policies seek to improve economic,
                                  environmental, and social outcomes,
                                  and drive direction and funding of new
                                  scientific endeavors and program
                                  implementation to accelerate the
                                  bioeconomy. Objectives are:
 
                                     Inform local and state
                                     governments, industry, and other
                                     stakeholders about policies and
                                     their impact.
                                     Integrate economic and
                                     environmental policy factors to
                                     reduce financial risks to
                                     investors, producers, and
                                     manufacturers, and to protect
                                     environmental quality across the
                                     supply chain.
------------------------------------------------------------------------

Federal Agencies' Current Work in the Bioeconomy
Executive Agencies
    As stated previously in this report, the bioeconomy involves many 
different agencies and mission areas within the Federal Government. The 
national bioeconomy is wide-reaching and multi-faceted, and relates to 
a range of different offices within many executive agencies, even 
beyond those represented on the Biomass R&D Board. Appendix I covers 
all Board agencies, and details specific offices and programs involved 
in the current bioeconomy in support of their specific mission areas 
(note that this is not an exhaustive listing for the entire Federal 
Government). The following chart presents a snapshot of the synergies 
and roles for each agency across the vast bioeconomy supply chain. For 
details on how each agency is currently supporting specific aspects of 
the bioeconomy, please see Appendix I.


Interagency Collaboration
    As evident throughout this report, there is already significant 
collaboration between agencies to take advantage of the wide-ranging 
expertise across the government. Interagency activities take many forms 
and seek to confront varied challenges facing the bioeconomy today. 
These collaborative projects offer the chance to fully leverage Federal 
Government expertise, ensuring that activities produce valuable 
projects and achievements for the public.
    Further, interagency projects offer some of the best opportunities 
for stakeholder organizations to work directly with multiple agencies 
on specific aspects of the bioeconomy. For more examples of interagency 
projects currently underway, please see Appendix II.
Looking Ahead
Bioeconomy Federal Strategy Workshop
    In May 2015, the Board convened a workshop of Federal agencies to 
discuss options for expanding and developing the bioeconomy. A 
significant component of this activity involved sharing information on 
existing agency programs and activities that intersect with or are 
directly focused on the bioeconomy. The Federal Government has numerous 
efforts underway to help expand the bioeconomy, and brief summaries of 
those activities are included in this report.
    The workshop included many productive discussions given the 
extensive knowledge, experience, opinions, and insights across the 
agencies. Participants addressed issues concerning specific aspects of 
the supply chain, while also considering the sustainable expansion of 
the bioeconomy from a holistic perspective. Exchanges among the 
participants were enlightening, concluding that the effort would be 
challenging, but not insurmountable. Some key discussion points 
involved the following:

   Addressing technical and sociological challenges to using 
        genetically modified organisms (GMOs) in developing sustainable 
        feedstocks.

   Identifying the key role algae plays for the future of 
        bioproducts and biochemicals. Sharing a common understanding of 
        sustainability and achievement metrics, and discussing paths 
        for practical implementation.

   Realizing that biomass production and use must be within the 
        context of sustainability, resource availability, social 
        concerns, and public perceptions.

   Being aware that, if done correctly, an expanded bioeconomy 
        could significantly impact America's landscape with 
        opportunities to improve ecological functions and ensure the 
        mitigation of negative impacts of increased land use.

   Expansion of the bioeconomy will happen in the marketplace, 
        and the market must simultaneously meet society's need for 
        food, fiber, and forage, as well as energy and products.

    Overall, the workshop helped Federal agencies identify processes 
for working together and with their many stakeholders. The following 
specific efforts were established at the meeting and are being 
addressed:

   Ensure consistent Federal messaging.

   Increase Federal agency coordination.

   Recognize opportunities for improvements across the supply 
        chain.

   Integrate diverse national goals and objectives linked to 
        the sustainable bioeconomy.

   Coordinate stakeholder interests and actions in both the 
        public and private sectors.

    Notably, the workshop became the bridge to building a national 
effort within the Federal Government to work together to expand the 
bioeconomy. Although many barriers and opportunities were identified 
and discussed, issues were not resolved at the meeting. The workshop 
was not intended to establish processes or undertake detailed planning. 
The workshop was the cornerstone for identifying roles and issues and 
building a vision that would conceivably bring together many Federal 
agencies, stakeholders, and the American public.
Building a National Coalition
    The work has already started on building a national Federal 
Government coalition with the goal to expand the bioeconomy. Agencies 
have distinctive missions that relate to the bioeconomy that are 
currently being accomplished through various approaches and programs, 
authorized by various statutes. This coordinated effort will leverage 
these approaches and programs, as appropriate.


    As described previously, many of these agencies have been 
coordinating similar efforts for over a decade through the Biomass R&D 
Board. The Board has the lead role in building the coalition while 
working through the agency's executive leaders, managers, and staff. 
However, this activity will not only involve agencies, but will be 
conducted in cooperation with many stakeholders and with the public. 
This report is the first step in building the coalition--the next step 
is engaging the public, beginning with agency stakeholders. From this 
collaborative engagement, an implementation plan will be developed to 
help direct the Vision.
    The Federal Government's goal to expand biomass resources for 
economic, environmental, social, and energy security benefits will be 
facilitated by collaborative educational and engagement efforts. The 
global transition to full utilization of biopower, bioenergy, and 
biobased products is being driven by a wide array of groups. Reaching 
out to diverse stakeholders (non-governmental organizations; 
international governments and organizations; environmental and industry 
groups; manufacturers; and other members of the supply chain) to obtain 
multiple perspectives, share key data, identify opportunities, and 
understand motivations, business cases, and realities will help achieve 
the bioeconomy goal and its expected benefits.


    Growth of the bioeconomy will require more than a ``public 
awareness campaign''. A Board committee is currently conducting efforts 
to identify and understand more about the various bioeconomy 
stakeholders. This effort will help determine the Board's future 
education and communications activities to address current barriers to 
growing the bioeconomy. These activities will include meaningful 
communication across the U.S. Government (developing and deploying 
consistent Federal messaging); stakeholder and public workshops 
(listening sessions to gather information about the Bioeconomy Vision 
and the role of education); and the potential establishment of a formal 
coalition to provide leadership and oversight of the Vision's strategy 
and practice. The information gathered from this direct engagement with 
the public will result in an overall plan for the Vision, to be 
detailed in an Integrated Bioeconomy Implementation Plan, to be 
released in 2016.
Appendix I: Federal Agency Activities
    This Appendix includes details on the missions, activities, and 
linkages to the U.S. Bioeconomy within the Executive Agencies 
participating on the Biomass R&D Board. Each agency brings their own 
mission and expertise to the issues surrounding creating a bioenergy 
industry. Numerous sub-agencies, divisions, and program offices are 
included below, however due to the broad nature of the bioeconomy, 
there are more offices that play a part in this sector that are not 
listed. Additionally, information included in this appendix is only a 
snapshot of the work being done by each office. For additional details 
on these offices and agencies, please visit the website listed.


Department of Energy
www.energy.gov
Bioenergy Technologies Office
    The Bioenergy Technologies Office seeks to develop and transform 
our renewable biomass resources into commercially viable, high-
performance biofuels, bioproducts, and biopower through targeted 
research, development, and demonstration supported through public and 
private partnerships.
    This Office conducts R&D, demonstration, and market transformation 
activities through an integrated supply chain approach addressing 
supply, conversion, distribution, and end-use. Cross-cutting areas--
sustainability, strategic analysis, and strategic communications--
develop and disseminate a body of knowledge and tools related to the 
economic, environmental, and social dimensions of advanced bioenergy. 
The process is managed through its Multi-Year Program Plan (MYPP).\1\ 
Program of work includes feedstock supply assessment, logistics systems 
improvements, lower cost conversion technologies, and market 
development. Signature elements are the periodic national assessment, 
advanced and depot logistics, validated conversion pathways, feedstock/
conversion interfaces and integration, market development, 
technoeconomic analyses, and sustainability analysis and research. Work 
is done through national laboratories, competitive R&D grants, 
consortia, and partnerships. The Office collaborates with other DOE 
Offices and departments.
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    \1\http://www.energy.gov/eere/bioenergy/downloads/bioenergy-
technologies-office-multi-year-program-plan-july-2014-update.
---------------------------------------------------------------------------
    The Bioenergy Technologies Office is dedicated fully developing the 
bioeconomy, and establishes partnerships with key public and private 
stakeholders to develop and demonstrate technologies for producing 
cost-competitive advanced biofuels from non-food biomass resources, 
including cellulosic biomass, algae, and wet waste (e.g., biosolids). 
The Office pursues innovations for and testing of crucial bioenergy 
technologies including pilot- and demo-scale integrated biorefineries.
Vehicle Technologies Office
    The Vehicle Technologies Office supports research and development 
that will lead to new technologies that reduce our nation's dependence 
on imported oil, further decrease vehicle emissions, and serve as a 
bridge from today's conventional powertrains and fuels to tomorrow's 
hydrogen-powered hybrid fuel cell vehicles. The Vehicle Technologies 
Office also supports implementation programs that help to transition 
alternative fuels and vehicles into the marketplace, as well as 
collegiate educational activities to help encourage engineering and 
science students to pursue careers in the transportation sector.
    The Office supports research to improve how vehicles will use 
alternative fuels in the future. Work includes determining the impact 
of biofuels' properties on engines' efficiency, performance, and 
emissions. Activities include examining ways to increase alternative 
fuel vehicles' fuel economy, investigating the potential effects of 
upcoming blends, and improving the quality of current and future 
biofuel blends, especially biodiesel and E85. VTO's Clean Cities 
Program develops public/private partnerships to promote alternative 
fuels, vehicles, and infrastructure.
Fuel Cell Technologies Office
    The Fuel Cell Technologies Office conducts comprehensive efforts to 
overcome the technological, economic, and institutional barriers to the 
widespread commercialization of hydrogen and fuel cells. The office's 
efforts will help secure U.S. leadership in clean energy technologies 
and advance U.S. economic competitiveness and scientific innovation.
    This is the lead Federal agency for applied research and 
development (R&D) of cutting edge hydrogen and fuel cell technologies. 
The overall challenge to hydrogen production is cost reduction which 
includes the use of biomass. DOE is working closely with its national 
laboratories, universities, and industry partners to overcome critical 
technical barriers to fuel cell commercialization.
Advanced Manufacturing Office
    The Advanced Manufacturing Office partners with industry, small 
business, universities, and other stakeholders to identify and invest 
in emerging technologies with the potential to create high-quality 
domestic manufacturing jobs and enhance the global competitiveness of 
the United States.
    Efforts leverage state, utility, and local resources to help 
manufacturers save energy, reduce climate and environmental impacts, 
enhance workforce development, and improve national energy security and 
competitiveness throughout the supply chain. The Office invests in 
emerging technologies that include the use of biomass for fuels, 
chemicals, materials, heat, and electricity. A specific example is 
developing polyacrylonitrile for the manufacture of carbon fiber.
Federal Energy Management Program Office
    The Federal Energy Management Program (FEMP) works with key 
individuals to accomplish energy change within organizations. It brings 
expertise from all levels of project and policy implementation to 
enable Federal agencies to meet energy-related goals and to provide 
energy leadership.
    The Program provides technical assistance to reduce the energy 
intensity of Federal facilities. FEMP also helps Federal agencies with 
funding mechanisms for their projects, such as energy-saving 
performance contracts (ESPCs). Such projects could include the use of 
biomass. FEMP works with the Federal fleet to increase the use of 
biopower, renewable and alternative fuels, and flexible-fuel vehicles.
Office of Fossil Energy
    The Office of Fossil Energy (FE) plays a key role in helping the 
United States meet its continually growing need for secure, reasonably 
priced and environmentally sound fossil energy supplies. Put simply, 
FE's primary mission is to ensure the nation can continue to rely on 
traditional resources for clean, secure and affordable energy while 
enhancing environmental protection.
    The Office's primary mission is to ensure the nation can continue 
to rely on traditional resources for clean, secure and affordable 
energy while enhancing environmental protection. The Office includes 
the National Energy Technology Laboratory. There are opportunities to 
integrate biopower applications into utility-scale electric generation 
and to use biomass and natural gas synergistically to maximize outputs.
Advanced Research Projects Agency--Energy
    The Advanced Research Projects Agency--Energy (ARPA-E) advances 
high-potential, high-impact energy technologies that are too early for 
private-sector investment. ARPA-E awardees are unique because they are 
developing entirely new ways to generate, store, and use energy.
    The focus of ARPA-E is on transformational energy projects that can 
be meaningfully advanced with a small investment over a defined period 
of time. ARPA-E empowers America's energy researchers with funding, 
technical assistance, and market readiness. An example is Plants 
Engineered to Replace Oil, PETRO, with its aim to develop non-food 
crops that directly produce transportation fuels. The PETRO activity 
conducts applied research and development to generate novel crop 
feedstocks that are directly a production of fuel molecules in planta, 
and improved photosynthetic activity. The production of new crop 
feedstocks is critical for advanced biofuels, bioproducts, and 
biochemicals, and the PETRO project will help develop the technology to 
expand the national bioeconomy. Another activity is the Transportation 
Energy Resources from Renewable Agriculture (TERRA) program, which 
conducts applied research and development of improved high throughput 
breeding tools (phenotyping/genotyping) to increase yields of energy 
crops. The expedited development of improved varieties of bioenergy 
feedstocks is what links TERRA to the Bioeconomy.
Office of Science: Office of Basic Energy Sciences
    The Office of Basic Energy Sciences (BES) supports fundamental 
research to understand, predict, and ultimately control matter and 
energy at the electronic, atomic, and molecular levels in order to 
provide the foundations for new energy technologies and to support DOE 
missions in energy, environment, and national security. BES also plans, 
constructs, and operates major scientific user facilities to serve 
researchers from universities, national laboratories, and private 
institutions.
    Within BES, the Physical Biosciences and Photosynthetic Systems 
programs support basic research to understand energy capture, 
conversion, and storage in plants and microbes.\2\ The Physical 
Biosciences program combines experimental and computational tools from 
the physical sciences with biochemistry and molecular biology to 
understand the conversion and storage of energy in living systems. 
Supported research includes characterization of the biochemical and 
biophysical principles determining the architecture and biosynthesis of 
biopolymers and the plant cell wall and studies of redox and active 
site protein chemistry that can provide a basis for development of 
highly selective and efficient bio-inspired catalysts. The 
Photosynthetic Systems program brings together biology, biochemistry, 
chemistry, and biophysics to uncover the fundamental science of 
biological capture of sunlight and its conversion to and storage as 
chemical energy. This research provides a scientific knowledge base 
that can inspire artificial photosynthesis and enable new strategies 
for more efficient generation of biomass as a renewal energy source. 
The Catalysis Science program develops fundamental understanding of the 
scientific principles enabling rational catalyst design and chemical 
transformation control.\3\ Supported research includes basic studies of 
catalysis relevant to the conversion and use of renewable energy 
resources and the creation of advanced chemicals. The DOE Energy 
Frontier Research Centers Program\4\ aims to accelerate transformative 
discovery to understand and manipulate matter on the atomic and 
molecular scales and address key scientific challenges for energy 
technologies. Located across the United States, the 32 multi-
investigator, multidisciplinary Energy Frontier Research Centers bring 
together leading scientists to tackle the toughest scientific 
challenges preventing advances in energy technologies. Their efforts 
are laying the scientific groundwork for fundamental advances in solar 
energy, biofuels, transportation, energy efficiency, and carbon capture 
and sequestration.
---------------------------------------------------------------------------
    \2\http://science.energy.gov/bes/csgb/research-areas/
photochemistry-and-biochemistry/.
    \3\http://science.energy.gov/bes/csgb/research-areas/catalysis-
science/.
    \4\http://science.energy.gov/bes/efrc/.
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    BES research programs provide the fundamental knowledge base of 
chemical and biochemical processes and properties that underpins 
development of new methods and technologies for efficient and 
sustainable production of biofuels and bioproducts.
Office of Science: Office of Biological and Environmental Research
    The Office of Biological and Environmental Research (BER) supports 
fundamental research aimed at expanding foundational knowledge of 
biological systems and enabling the development of secure and 
sustainable bioenergy solutions.
    This Office supports basic research programs relevant to DOE 
missions in energy and the environment. To enable the development of 
sustainable bioenergy and bioproducts, BER focuses on genome driven 
systems biology approaches that advance understanding of plants, 
microbes, integrated communities, and their interactions with 
environmental variables. This foundational understanding is used to 
further the development of more sophisticated biosystems design 
capabilities applicable to improving biomass feedstock plants, microbes 
applicable to biomass deconstruction and conversion to biofuels/
bioproducts, and photosynthetic microorganisms. BER research also 
examines the intersection between plants, their associated microbiomes, 
and their ecosystems in order to understand responses to changing 
environmental variables and identify factors critical to sustainable 
biomass production. BER science programs are conducted via research 
funding at DOE National Laboratories, competitive grants to academic 
institutions, cooperative agreements, and support of national 
scientific user facilities.
    BER research programs advance fundamental understanding of 
biosystems of plants, microbes, and biological communities and enable 
the development of more sophisticated biodesign approaches for 
sustainable production of biofuels and bioproducts.
Loan Programs Office
    The Loan Programs Office (LPO) accelerates the domestic commercial 
deployment of innovative and advanced clean energy technologies at a 
scale sufficient to contribute meaningfully to the achievement of our 
national clean energy objectives--including job creation; reducing 
dependency on foreign oil; improving our environmental legacy; and 
enhancing American competitiveness in the global economy of the 21st 
century.
    LPO enables DOE to work with private companies and lenders to 
mitigate the financing risks associated with clean energy projects to 
encourage the development of clean energy on a broader and much-needed 
scale. The Loan Programs consist of three separate programs managed by 
two offices, the Loan Guarantee Program Office (LGP) and the Advanced 
Technology Vehicles Manufacturing Loan Program Office. LPO originates, 
guarantees, and monitors loans to support clean energy projects, 
including large scale biorefineries, through these programs.


Department of Agriculture
www.usda.gov
Agricultural Marketing Service
    The Agricultural Marketing Service (AMS) administers programs that 
create domestic and international marketing opportunities for U.S. 
producers of food, fiber, and specialty crops.
    The AMS Transportation Services Division (TSD) serves as the 
definitive source for economic analysis of agricultural transportation 
from farm to market. TSD experts support domestic and international 
agribusinesses by providing market reports, economic analysis, 
transportation disruption reports, technical assistance, and outreach 
to various industry stakeholders. Tracking developments in truck, rail, 
barge, and ocean transportation, TSD provides information and analysis 
on the four major modes of moving food from farm to table, port to 
market. On every first Wednesday of the month, and with data from 
public documents provided by the railroads, TSD updates rail tariff 
rate information for Ethanol\5\ and Dried Distillers Grains with 
Solubles (DDGS).\6\ Information provided through the updates is only 
for reference. Individual railroads should be consulted prior to 
conducting any business transactions.
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    \5\http://www.ams.usda.gov/services/transportation-analysis/
datasets/ethanol.
    \6\http://www.ams.usda.gov/services/transportation-analysis/
datasets/ddgs.
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    AMS biofuels market reports and market intelligence reports apprise 
stakeholder of prices and volumes of select feedstocks, fuels, and 
transport metrics.
Agricultural Research Service
    The Agricultural Research Service (ARS) is the chief scientific in-
house research agency of the USDA which conducts research to develop 
and transfer solutions to agricultural problems of high national 
priority and provide information access and dissemination to:

  a.  ensure high-quality, safe food, and other agricultural products,

  b.  assess the nutritional needs of Americans,

  c.  sustain a competitive agricultural economy,

  d.  enhance the natural resource base and the environment, and

  e.  provide economic opportunities for rural citizens, communities, 
            and society as a whole.

    ARS priorities\7\ are in two parts. Part One includes the U.S. 
regional based feedstocks production systems with a focus on 
sustainability and economic impact. ARS conducts advanced biofuels 
research at the USDA Regional Biomass Research Centers7a 
through biophysical and economic models validated for regional 
conditions to incorporate energy production into existing agricultural 
systems. Genetic improvement work is primarily directed at perennial 
grasses including switchgrass and Napier grass, non-food biomass 
sorghum including sweet sorghum, energy cane, and lipid seed crops 
including industrial rapeseed and field pennycress. ARS also is 
developing technology to sustainably harvest crop residues including 
corn stover, and utilize livestock manure, as well as develop 
inventories for removing invasive tree species and restoring western 
rangelands.
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    \7\http://www.ars.usda.gov/SP2UserFiles/Program/213/
BioenergyResearchStrategy2010.pdf.
    \7a\http://www.ars.usda.gov/research/programs/
programs.htm?np_code=213&docid=24694.
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    Part Two includes developing conversion technologies at its four 
ARS utilization centers (Albany, CA; New Orleans, LA; Peoria, IL; 
Wyndmoor, PA) to enable sustainable commercial production of biofuels 
by the agricultural sector in ways that enhance our natural resources 
without disrupting existing food, feed, and fiber markets. Research 
will optimize both the production of plant feedstocks and the 
biorefining of agricultural materials to bioenergy and value-added 
(biobased) coproducts. This research will strengthen rural economies, 
provide increased supplies of renewable transportation fuel, enhance 
energy security, and improve the U.S. balance of trade. ARS is 
committed to diversifying rural economies and employment through new 
biobased technologies and commercial coproducts.
Animal and Plant Health Inspection Service
    The Animal and Plant Health Inspection Service (APHIS) protects and 
promotes U.S. agricultural health, regulates genetically engineered 
organisms, administers the Animal Welfare Act and carries out wildlife 
damage management activities.
    Biotechnology Regulatory Services (BRS) implements the APHIS 
regulations for certain genetically engineered (GE) organisms that may 
pose a risk to plant health. APHIS coordinates these responsibilities 
along with the other designated Federal agencies as part of the Federal 
Coordinated Framework for the Regulation of Biotechnology. APHIS' Plant 
Protection and Quarantine program vigilantly protects agriculture and 
the environment against pest and disease threats to ensure a diverse 
natural ecosystem and an abundant and healthy food supply for all 
Americans. An invasive pest is a non-native species whose introduction 
into the country can cause damage to the economy, natural resources, or 
human health.
Climate Change Program Office
    Climate-smart agriculture (CSA) promotes ``production systems that 
sustainably increase productivity [and] resilience (adaptation), 
reduc[ing]/remov[ing] greenhouse gases (mitigation), and enhancing 
achievement of national food security and development goals'' (FAO 
2015). The U.S. is a member of the Global Alliance for Climate-smart 
Agriculture (GACSA), a partnership of countries and organizations 
committed to sustainability, resilience, and greenhouse gas mitigation 
in agricultural systems in a changing climate. Federal and private 
research produces a diversity of practices, technologies, agricultural 
varieties and tools to assist farmers and ranchers in mitigating and 
adapting to climate change. In addition to critical research and 
research support, USDA provides data standardization, knowledge 
sharing, and collaborative platforms; monitoring and decision support 
tools; outreach and extension activities; and a far-reaching 
organizational infrastructure that allows the most effective 
transmittal of up-to-date information between scientists and producers, 
and among producers themselves, leading to favorable and regionally-
specific outcomes.
    The USDA Climate Change Program Office also focuses on assessing 
the lifecycle GHG emissions of Corn-Based Ethanol. EPA's 2010 
Regulatory Impact Analysis (RIA) of the revised Renewable Fuel Standard 
(RFS2) included a lifecycle analysis (LCA) of the GHG emissions 
associated with corn-based ethanol. The LCA concluded that substituting 
(on an energy equivalent basis) corn-based ethanol for gasoline in 
transportation fuels would result in a reduction in CO2 
emissions of 20-21 percent by 2022. EPA's LCA was based on projected 
emissions pathways through 2022 for 11 distinct GHG source categories 
associated with corn-ethanol. Since 2010, new scientific studies, data, 
and industry trends have emerged that show the emission paths of 
several key categories have not developed as projected, and, the actual 
paths strongly suggest the GHG profile of corn ethanol is significantly 
better than the RIA LCA concluded. For example, the largest source 
category in the RIA LCA is projected emissions from indirect land use 
change--due to future clearing of tropical forest (mainly in Brazil) to 
expand commodity production. Actual data now show that in the period 
U.S. corn ethanol increased from 3.0 billion gallons to just under 14 
billion gallons, deforestation in Brazil's Amazon dropped from 
10,200\2\ mile to just under 2,400\2\ miles. With renewable fuels and 
GHG mitigation becoming higher policy priorities, USDA's Climate Change 
Program, Office has contracted with ICF International to do a 
retrospective analysis of the RIA LCA including a review of new 
information that has become available since 2010 related to each 
emissions category, quantification of new emissions estimates for each 
source category, development of an updated LCA reflecting the current 
GHG profile of corn ethanol.
Departmental Management
    Departmental Management (DM) provides management leadership to 
ensure that USDA administrative programs, policies, advice and counsel 
meet the needs of USDA program organizations, consistent with laws and 
mandates; and provide safe and efficient facilities and services to 
customers.
    DM's Environmental Management Division (in the Office of 
Procurement and Property Management) develops policy and implements 
programs and projects for USDA sustainable practices, environmental 
response and restoration, and biobased product market transformation.
    USDA's BioPreferred program increases the development, purchase, 
and use of biobased products through two initiatives: mandatory 
biobased product purchasing requirements for Federal Government 
agencies (regulatory initiative) and voluntary bioproduct certification 
and labeling. Both parts of the program work in concert as end-use 
market tools in USDA's supply chain approach to hastening the global 
transition to the bioeconomy. An economic impact analysis recently 
released by the program finds that the biobased products industry 
contributed a total of $369 billion value to the U.S. economy. Biobased 
products industries directly employ approximately 1.5 million people, 
while an additional 2.5 million jobs are supported in other sectors. 
Environmentally, the increased use of biobased products currently 
displaces about 300 million gallons of petroleum per year--equivalent 
to taking 200,000 cars off the road. (All numbers as of 2013.) Numerous 
efforts are continually underway to increase biobased product 
procurement Federal Government-wide, track product use, and evaluate 
how these products are helping Federal agencies meet their 
sustainability goals. The more than 2,200 products that have received 
certification to display the USDA Certified Biobased Product label are 
creating and increasing consumer and commercial awareness about a 
material's biobased content as one measure of its environmental 
footprint.
    The two elements of the BioPreferred program work in concert as 
end-use market tools in USDA's supply chain approach to hastening the 
global transition to the bioeconomy. Further, DM operations work to 
make USDA facilities greener and reduce the greenhouse gas footprint of 
departmental assets.
Economic Research Service
    The Economic Research Service (ERS) informs and enhances public and 
private decision making on economic and policy issues related to 
agriculture, food, the environment, and rural development.
    The ERS strategic plan\8\ specifically includes understanding the 
effects of alternative fuels on agricultural markets, the interactions 
of commodity, livestock, and food markets with biofuels, bioenergy 
impacts on rural communities, and the production impacts on natural 
resources and the environment. Research is focused on these economic 
analyses and on examining the influence of bioenergy and bioenergy 
policy on domestic and global agricultural markets, natural resources, 
the environment, rural communities, and implications for food prices.
---------------------------------------------------------------------------
    \8\www.ers.usda.gov/about-ers/strategic-plan.aspx.
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    To the extent that policies or market developments associated with 
the bioeconomy affect commodity markets, rural communities, the 
environment, food prices or other issues within the domain of the ERS 
mission, ERS disseminates data, information, and special studies that 
address these interactions. Specifically, as a Principal Federal 
Statistical Agency, ERS has a long-standing and ongoing role in the 
collection, analysis, and distribution of market data and forecasts for 
the commodities that most directly influence, and are influenced by, 
the bioeconomy. ERS maintains a comprehensive set of economic data on 
ethanol and biodiesel production, consumption, trade, as well as for 
feedstock and co-product markets, in addition to other metrics. 
Economic modeling at ERS evaluates the economic and competitive 
potential for forest residues and dedicated energy crops (e.g., 
switchgrass) as feedstocks for electricity generation, under 
alternative scenarios such as a renewable portfolio standard or 
policies to reduce carbon dioxide emissions. Longer-term scenarios 
consider the role of bio-electricity combined with carbon dioxide 
capture and storage as a negative-emissions technology.
Farm Service Agency
    The Farm Service Agency (FSA) equitably serves all farmers, 
ranchers, and agricultural partners through the delivery of effective, 
efficient agricultural programs for all Americans.
    This Agency manages the Biomass Crop Assistance Program (BCAP)\9\ 
that provides financial assistance to owners and operators of 
agricultural and private forestland who wish to establish, produce, and 
deliver biomass feedstocks. As part of the process, the agency does 
conservation and forest stewardship plans, cost analysis, and has a 
Programmatic Environmental Impact Statement (PEIS). FSA also has 
Interagency Agreements with U.S. Forest Service and Bureau of Land 
Management to support economically viable retrieval of forest residues 
from the National Forest System (NFS) for delivery to bioenergy at 
facilities, at a long haul distance from the NFS. In 2015, USDA 
announced the Biofuels Infrastructure Partnership (BIP), with USDA 
sourced funding of $100 million in grants, and that to apply states and 
private partners match the Federal funding by a 1:1 ratio. USDA is 
partnering with 21 states through the BIP to nearly double the number 
of fueling pumps nationwide that supply renewable fuels to American 
motorists.
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    \9\http://www.fsa.usda.gov/FSA/
webapp?area=home&subject=ener&topic=landing.
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Forest Service
    The Forest Service (FS) sustains the health, diversity, and 
productivity of the nation's forests and grasslands to meet the needs 
of present and future generations.
    Woody biomass utilization is an important component of the Forest 
Service Strategic Energy Framework,\10\ which sets direction and 
proactive goals for the FS to contribute significantly and sustainably 
toward resolving U.S. energy resource challenges, by fostering 
sustainable management and use of forest and grassland resources. The 
Forest Service is part of the USDA Wood-to-Energy11-13 
initiative, an interagency effort to expand renewable wood energy 
development and use. The Forest Service's wood utilization program 
develops markets to reduce the cost of hazardous fuels treatments, 
forest management, and restoration activities. The Forest Service 
provides woody biomass feedstocks from hazardous fuels reduction 
treatments and restoration activities. FS researchers\14\ work to 
develop sustainable forest biomass management and production systems; 
conversion technologies for biofuels, biopower, and bioproducts; and 
information and tools for decision making and policy analysis.
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    \10\http://www.fs.fed.us/specialuses/documents/
Signed_StrategicEnergy_Framework_01_14_
11.pdf.
    \11\http://blogs.usda.gov/2010/10/25/wood-to-energy-efforts-
expanding-restoring-economies-and-ecosysems/#more-29613.
    \12\http://heatingthemidwest.org/wp-content/uploads//David-Atkins-
HTM-20121.pdf.
    \13\http://blogs.usda.gov/2013/09/13/funds-promote-development-of-
rural-wood-to-energy-projects/.
    \14\http://www.fs.fed.us/research/pdf/
RD_Bioenergy_Strategy_March_2010.pdf
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    The USDA Forest Service's emphasis on biomass, wood products, and 
wood energy encourages market development for woody biomass and 
provides high quality data to inform business, management, and policy 
decisions. Forest Service activities reduce investor risk, provide for 
sustainable feedstocks, and develop new products and efficient fuels. 
These activities significantly contribute to U.S. energy security, 
environmental quality, and economic opportunity and firmly supporting 
the bioeconomy.
National Agricultural Statistics Service (NASS)
    The National Agricultural Statistics Service (NASS) is responsible 
for conducting monthly and annual surveys and preparing official USDA 
data and estimates of production, supply, prices, and other information 
necessary to maintain orderly agricultural operations. NASS also 
conducts the Census of Agriculture which is currently conducted every 5 
years.
    Credible data is essential for a broad spectrum of uses ranging 
from simple visual inspection of data or data series to developing 
analytical frameworks to more in-depth analyses of policies, supply and 
demand drivers, markets dynamics, and price formation. NASS is the 
source of much of the data released by USDA and used by industry and 
analysts. NASS collects and publishes data on feedstocks relevant to 
bioenergy production and on grain crushings and coproducts.
    In 2014 NASS started publishing on a monthly basis a particularly 
valuable report, Grain Crushings and Co-Products Production which is 
part of the Current Agricultural Industrial Reports (CAIR) program. 
Data are collected from all known mills that produce ethanol. In 
addition, an operational profile was completed for each facility to 
determine the presence of dry and/or wet alcohol mill and the nameplate 
production capacity. All operations which will produce alcohol will be 
selected for the monthly Dry Mill Producers of Ethanol Survey and/or 
Wet Mill Producers of Ethanol Survey which ask for quantities of grain 
used as feedstock and co-products produced.
    NASS published the first Fats and Oils: Oilseed Crushings, 
Production, Consumption and Stocks in 2015. The data is a combination 
of all known crushing, rendering and refining facilities. Prior to the 
beginning of data collection, operations were contacted to verify that 
they met the scope of the project. The Fats and Oils: Oilseed 
Crushings, Production, Consumption and Stocks also publishes data on 
animal fats.
National Institute of Food and Agriculture
    The National Institute of Food and Agriculture (NIFA) provides 
leadership and funding for programs that advance agriculture-related 
sciences. We invest in and support initiatives that ensure the long-
term viability of agriculture.
    NIFA seeks to facilitate the development of regional biomass 
systems for the sustainable production of biofuels and biobased 
products. Coordinated Agricultural Projects (CAPs)\15\ that consist of 
partnerships between government, industry, non-government 
organizations, and universities, including 1890 land-grant 
universities, Tribal Nation colleges, and Hispanic serving institutions 
address the integration of the supply chain. The Biomass Research and 
Development Initiative (BRDI) is a joint effort between the U.S. 
Department of Agriculture (USDA) and the U.S. Department of Energy 
(DOE). Priorities are jointly set by USDA and DOE each year. USDA-DOE 
Plant Feedstock Genomics for Bioenergy\16\--This competitive grant 
program is committed to fundamental research in biomass genomics, 
providing the scientific foundation to facilitate use of 
lignocellulosic materials for bioenergy and biofuels.
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    \15\http://www.nifa.usda.gov/newsroom/news/2011news/
09281_biofuel_production.html.
    \16\http://genomicscience.energy.gov/research/DOEUSDA/awards.shtml.
---------------------------------------------------------------------------
    NIFA programs support the entire Bioeconomy supply chain at the 
regional scale. This begins with research, development and deployment 
for feedstock development and management; logistics including 
harvesting, storage, and transportation; and conversion processes for 
biofuels and biomaterials. Supporting this research is a full 
examination of environmental, economical, and social sustainability of 
these bioeconomy systems. The mission of each NIFA program connected to 
the bioeconomy is to reduce risk for stakeholders. NIFA also supports 
programs that build the future bioeconomy workforce as well as 
outreach/extension programs that translate research for stakeholder 
awareness.
Natural Resources Conservation Service
    Natural Resources Conservation Service (NRCS) provides America's 
farmers and ranchers with financial and technical assistance to 
voluntarily put conservation on the ground, not only helping the 
environmental but agricultural operations, too.
    NRCS provides technical assistance to producers to assess the 
feasibility of growing and harvesting biomass residues and its impact 
on environmental sustainability in individual fields and farms. In 
addition, NRCS Plant Materials Centers evaluate potential feedstocks in 
cooperation with USDA-ARS and Universities, collect plant data to 
support conservation planning for biomass crops, provide demonstrations 
and training on the production of energy crops, and support best 
management practices for the production of biomass crops.
Office of Energy Policy and New Uses
    Office of Energy Policy and New Uses (OEPNU) is part of the Office 
of the Chief Economist (OCE) and advises the Secretary of Agriculture 
on the economic implications of policies and programs affecting the 
U.S. food and fiber system and rural areas. OCE supports USDA policy 
decision making by analyzing the impact of proposals and coordinating a 
response among several USDA agencies.
    The Office assists the Secretary of Agriculture in developing and 
coordinating Departmental energy policy, programs, and strategies. 
Research is currently underway on biodiesel fuels, ethanol fuels, and 
other sources of biomass energy. Measurement of atmospheric emissions 
associated with renewable energy also is under study. OEPNU's scope of 
work also includes renewable electricity and examines the integration 
of energy with agriculture, the environment, and rural communities.
Rural Development
    Rural Development (RD) commits to helping improve the economy and 
quality of life in rural America. RD programs help rural Americans in 
many ways.
    Rural Development offers technical and financial assistance to help 
agricultural producers, cooperatives, and other businesses improve the 
effectiveness of their operations, produce energy as a new cash crop, 
and process raw agricultural and forestry raw materials into value-
added, biobased products. RD programs have funds available to complete 
energy audits, complete energy efficiency improvements, install 
renewable energy systems, construct biorefineries, support production 
of advanced biofuels and much more. USDA Rural Development is at the 
forefront of renewable energy financing, with options including grants, 
guaranteed loans and payments. RD programs, authorized through the 
Agriculture Act of 2014, fall into four main programs under the Energy 
Title: the Biorefinery, Renewable Chemical, and Biobased Product 
Manufacturing Assistance Program provides loan guarantees for the 
development, construction, and retrofitting of commercial-scale 
biorefineries and biobased product manufacturing facilities; the 
Repowering Assistance Program provides payments to eligible 
biorefineries to replace fossil fuels used to produce heat and/or power 
to operate the biorefineries with renewable biomass; the Advanced 
Biofuel Payment Program provides payments to producers in order to 
support and expand production of advanced biofuels refined from sources 
other than corn kernel starch; and the Rural Energy for America Program 
provides assistance to agricultural producers and rural small 
businesses to complete a variety of projects, including renewable 
energy systems, energy efficiency improvements, renewable energy 
development assistance, and energy audits. The mission area has helped 
contribute to effective public-private partnerships which connect 
industry with larger Departmental goals contributing to cleaner air and 
water as well as reducing waste contributing to a strong biobased 
economy in the U.S.


Environmental Protection Agency
www.epa.gov
Office of Air and Radiation/Office of Transportation and Air Quality
    The Office of Air and Radiation/Office of Transportation and Air 
Quality (OTAQ) protects human health and the environment by reducing 
air pollution and greenhouse gas emissions from mobile sources and the 
fuels that power them; advancing clean fuels and technology; and 
encouraging business practices and travel choices that minimize 
emissions.

    Renewable Fuel Standard Program

    The Renewable Fuel Standard (RFS) Program began in 2006 pursuant to 
the requirements in Clean Air Act (CAA) section 211(o) that were added 
through the Energy Policy Act of 2005 (EPAct). The statutory 
requirements for the RFS program were subsequently modified through the 
Energy Independence and Security Act of 2007 (EISA), resulting in the 
publication of major revisions in the regulatory requirements on March 
26, 2010. The fundamental objective of the RFS provisions under the 
Clean Air Act is clear: to increase the use of renewable fuels in the 
U.S. transportation system every year through at least 2022. These 
fuels must be derived from renewable feedstock, coming from qualifying 
land and demonstrate they meet certain minimum reductions of Greenhouse 
Gas Emissions over the fuels they are replacing. There are several 
categories of fuels specified in the law: Cellulosic biofuels which are 
required to have 60 percent or greater greenhouse gas (GHG) emissions 
benefits on a lifecycle basis than the petroleum based fuels they 
replace; advanced biofuels 50 percent or greater benefit; and 
conventional biofuels (other than grandfathered facilities) 20 percent 
or better benefit. Increased use of renewable fuels means less use of 
fossil fuels, which results in lower GHG emissions over time as 
advanced biofuel production and use becomes more commonplace. By aiming 
to diversify the country's fuel supply, Congress also intended to 
increase the nation's energy security. The law establishes annual 
volume targets, and requires EPA to translate those volume targets (or 
alternative volume requirements established by EPA) in accordance with 
statutory provisions. Since the initial promulgation of the RFS program 
regulations in 2007, domestic production and use of renewable fuel 
(also referred to as biofuel) volumes in the U.S. has increased 
substantially. Renewable fuels include corn starch ethanol, the 
predominant biofuel use to date, but Congress envisioned the majority 
of growth over time to come from advanced biofuels as the non-advanced 
(conventional) volumes remain constant starting in 2015, while the 
advanced volumes continue to grow. This program is currently the 
predominant biobased program with direct and significant intersection 
with the Bioeconomy Vision. The production of these renewable 
transportation fuels uses feedstocks that do and will likely continue 
to compete with feedstocks expected to play a role in the broader 
bioeconomy. As a broader Bioeconomy market develops, there could be 
market shifts and competition both in terms of feedstock availability, 
utilization, and diversification. Market economics will drive the 
Bioeconomy participants to select the most economical/profitable 
market. Shifts in feedstock competition, cost, availability and 
finished product values (Fuels, chemicals, energy, food, other) are 
likely to have impacts, potentially positive and negative, to existing 
and emerging markets, policies (mandated programs, subsidized programs, 
etc.). Evaluating the bioeconomy vision in this context is vital, given 
the additional complexity that is likely under such market 
circumstances.
Office of Air and Radiation/Office of Atmospheric Policy (OAP)
    OAP protects human health and the environment through 
implementation of cross-cutting atmospheric programs.
    Three programs have relevance to the Bioeconomy:

  1.  Framework for Assessing Biogenic CO2 Emissions from 
            Stationary Sources

        In November 2014, EPA released the second draft of the 
            technical report, Framework for Assessing Biogenic CO2 
            Emissions from Stationary Sources. EPA engaged in a 
            targeted peer review on the revised Framework with EPA's 
            Science Advisory Board in 2015.
        The intent of the Framework is to evaluate biogenic 
            CO2 emissions from stationary sources that use 
            biogenic feedstocks, given the unique ability of biogenic 
            material to sequester CO2 from the atmosphere 
            over relatively short time frames through the process of 
            photosynthesis. It is a methodological framework for 
            assessing the extent to which the production, processing, 
            and use of biogenic material at stationary sources results 
            in a net atmospheric contribution of biogenic 
            CO2 emissions. Biogenic CO2 emissions 
            are defined as CO2 emissions related to the 
            natural carbon cycle, as well as those resulting from the 
            production, harvest, combustion, digestion, fermentation, 
            decomposition, and processing of biologically based 
            materials. The Framework was developed as a policy-neutral 
            framework for assessing biogenic CO2 emissions 
            from stationary sources--it was not developed as technical 
            guidance in conjunction with any specific policy or 
            program. However, it was designed to be flexible so that 
            decisions on specific technical components can be made to 
            accommodate different policy applications.

  2.  AgSTAR

        The mission of AgSTAR is to promote the use of biogas recovery 
            systems at livestock operations to reduce methane emissions 
            and achieve other environmental benefits through outreach, 
            education, tools and partnerships.
        AgSTAR develops technical resources for farmers, state 
            government representatives and other stakeholders. AgSTAR 
            also participates in outreach events with livestock 
            producers, renewable energy industry leaders, and state and 
            local governments to raise awareness about the benefits of 
            livestock biogas recovery systems and the Federal resources 
            available for project planning and implementation. Finally, 
            AgSTAR hosts a partnership program, which brings together 
            representatives of universities, state and local 
            governments, not-for-profits, and other related 
            organizations to share information and encourage 
            implementation of biogas recovery systems.
        EPA is expanding the scope of AgSTAR's national mapping tool 
            (www2.epa.gov/agstar/agstar-national-mapping-tool) to 
            include sources of wasted food and other organic wastes, as 
            well as facilities with capacity to receive these 
            materials, and will be completed by fall 2016. This update 
            will allow organic waste generators to find anaerobic 
            digestion facilities and allow biogas project developers to 
            understand the potential organics available in a given 
            area.
        AgSTAR promotes widespread adoption of commercially available 
            technologies to capture and use methane in the agricultural 
            sector for power, fuel and other products.
      AgSTAR has an interagency agreement with USDA to coordinate 
            efforts to promote biogas recovery in the agricultural 
            sector.
        USDA, DOE and EPA jointly released the Biogas Opportunities 
            Roadmap in August 2014. The Roadmap builds on progress made 
            to date to identify voluntary actions that can be taken to 
            reduce methane emissions through the use of biogas systems 
            and outlines strategies to overcome barriers limiting 
            further expansion and development of a robust biogas 
            industry in the U.S. EPA participates in the Biogas 
            Opportunities Roadmap Working Group (along with DOE and 
            USDA) to pursue these solutions and enhance Federal 
            communication and collaboration regarding biogas 
            activities.

  3.  Landfill Methane Outreach Program (LMOP)

        The EPA's Landfill Methane Outreach Program (LMOP) is a 
            voluntary assistance program that helps to reduce methane 
            emissions from landfills by encouraging the recovery and 
            beneficial use of landfill gas (LFG) as a renewable energy 
            resource. LFG contains methane, a potent greenhouse gas 
            that can be captured and used to fuel power plants, 
            manufacturing facilities, vehicles, homes and more. By 
            finding cost-effective ways to utilize landfill methane as 
            energy, LMOP helps to reduce GHG emissions and prevent air 
            pollution, encourage development of a renewable energy 
            resource, promote local economic development, and reduce 
            dependence on non-renewable fossil fuels.
        LMOP forms partnerships with communities, landfill owners, 
            power marketers, states, project developers, Tribes, and 
            nonprofit organizations to overcome barriers to project 
            development by helping them assess project feasibility, 
            find financing, and market the benefits of project 
            development to the community. LMOP offers a wide array of 
            free technical, promotional, and informational tools as 
            well as services to promote the development of LFG energy 
            projects. Through its partnerships, LMOP creates a vital 
            network of landfills, states, communities, and companies 
            interested in LFG use.
        LMOP encourages the development and beneficial use of LFG as a 
            renewable fuel resource.
Office of Air and Radiation/Office of Air Quality Planning and 
        Standards
    The Office of Air and Radiation/Office of Air Quality Planning and 
Standards (OAQPS) preserves and improves the quality of the air that we 
breathe. To accomplish this, OAQPS compiles and reviews air pollution 
data; develops regulations to limit and reduce air pollution; assists 
states and local agencies with monitoring and controlling air 
pollution; makes information about air pollution available to the 
public; and reports to Congress the status of air pollution and the 
progress made in reducing it.
    On August 3, 2015, the EPA issued the first-ever national standards 
to address carbon pollution from existing fossil-fuel fired power 
plants, also known as the Clean Power Plan. Under the authority of 
Clean Air Act (CAA) section 111(d), the EPA is establishing a 
CO2 emission performance rate for each of two subcategories 
of fossil fuel-fired Electric Generating Units (EGUs)--fossil fuel-
fired electric steam generating units and stationary combustion 
turbines--that expresses the ``best system of emissions reduction . . . 
adequately demonstrated'' (BSER) for CO2 from the power 
sector. The EPA is also establishing state-specific rate-based and 
mass-based goals that reflect the subcategory-specific CO2 
emission performance rates and each state's mix of affected EGUs. The 
guidelines also provide for the development, submittal and 
implementation of state plans that implement the BSER--again, expressed 
as CO2 emission performance rates--either directly by means 
of source-specific emission standards or other requirements, or through 
measures that achieve equivalent CO2 reductions from the 
same group of EGUs.
    The EPA also issues preconstruction (i.e., New Source Review (NSR) 
permits) and construction (i.e., Title V) permits for sources that use 
biomass as feedstocks as long as these sources emit or have the 
potential to emit a non-greenhouse gas pollutant, in addition to 
greenhouse gases, at or above the applicable permitting thresholds.
    OAQPS routinely interacts with various USDA offices, and also, 
through their Federal Advisory Committee, participates in the 
Agricultural Air Quality Task Force that provides advice to EPA on air 
quality issues impacting agriculture.
    It is recognized that some biomass-derived fuels can play an 
important role in CO2 emissions reduction strategies. It is 
anticipated that some states may consider biomass-derived fuels used in 
energy production as a way to mitigate CO2 emissions, and 
will include them as part of their state plans to meet the emission 
guidelines in the Clean Power Plan or as part of their NSR's GHG Best 
Available Control Technology (BACT) review.
Office of Chemical Safety and Pollution Prevention
    Office of Chemical Safety and Pollution Prevention (OCSPP) protects 
you, your family, and the environment from potential risks from 
pesticides and toxic chemicals. Through innovative partnerships and 
collaboration, OCSPP also works to prevent pollution before it begins. 
This reduces waste, saves energy and natural resources, and leaves our 
homes, schools and workplaces cleaner and safer.

    Toxic Substances Control Act

    EPA's Office of Pollution Prevention and Toxics (OPPT) manages 
programs under the Toxic Substances Control Act (TSCA). Under this law, 
EPA evaluates new and existing chemicals and their risks, and finds 
ways to prevent or reduce pollution before it gets into the 
environment.
    The premanufacturing oversight portion of TSCA (Section 5) provides 
EPA with authority to review all new chemicals and new microorganisms 
subject to TSCA. These include microorganisms and chemicals used for a 
variety of applications such as biomass conversion for chemical 
production, waste and pollution control, and mining and resource 
extraction. Premanufacturing notification is required prior to 
commercial production for new substances subject to TSCA 
(Premanufacturing Notification [PMN] for chemicals, Microbial 
Commercial Activity Notice [MCAN] for microorganisms) to enable human 
health and environmental risk assessment [>]. Notification is also 
required (TSCA Experimental Release Application [TERA]), for all new 
microorganisms, for research activities that constitute environmental 
testing.
    EPA conditionally exempts certain organisms used in contained 
systems from MCAN review and conditionally exempts all R&D done inside 
structures from TERA review, provided specified safety procedures are 
complied with. Only commercial research is subject to TSCA oversight, 
but much academic research has commercial intent and is covered.
    With these procedures, TSCA oversight provides public confidence 
that activities in the commercial space that use newer technologies 
like biotechnology is subject to detailed risk assessment.
    Biotechnology throughout the Federal establishment is subject to 
coordination under the Coordinated Framework for Regulation of 
Biotechnology, led by the Office of Science and Technology Policy and 
involving all the relevant regulatory agencies. That framework, last 
updated in 1992, is undergoing a review started in July 2015.

    EPA'[s] Pollution Prevention (P2) and Green Chemistry Programs

    The mission of EPA's Pollution Prevention (P2) Program is to 
prevent pollution at the source, promote the use of greener substances, 
and conserve natural resources. The P2 Program's authority comes from 
the 1990 Pollution Prevention Act, which established a national policy 
to prevent or reduce pollution at the source, wherever feasible. The 
Presidential Green Chemistry Challenge Awards Program\17\ established 
in 1996, is one of several initiatives within the EPA's P2 Program. The 
Presidential Green Chemistry Challenge Awards Program promotes the 
environmental and economic benefits of developing and using green 
chemistry. The EPA manages the program in partnership with the American 
Chemical Society, and in the 20 years the program has been operating 
has received over 1,500 nominations and made 104 awards. Many of the 
recent awards are for using biobased feedstocks as substitutes for 
petroleum feedstocks to efficiently produce a wide range of products, 
from biofuels to biopolymers and specialty chemicals.
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    \17\www2.epa.gov/greenchemistry.
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    On July 13, 2015 EPA and the American Chemical Society held the 
20th Annual Presidential Green Chemistry Awards. Among the six winners 
was an academic researcher who developed a process for using plant-
based materials in the production of renewable chemicals and liquid 
fuels via a waste-free and metal-free catalytic process. One of the 
industry winners was a company that developed a blue-green algae to 
produce ethanol and other fuels; the algae uses CO2 from air 
or industrial emitters with sunlight and saltwater to create fuel while 
dramatically reducing the carbon footprint, costs, and water usage, 
with no reliance on food crops as feedstocks. Another industry winner 
was a company that developed a safer, plant-based polyurethane for use 
in a variety of applications, including flooring, furniture, and foam 
insulation; perhaps most notably, the technology eliminates the use of 
isocyanate feedstocks. A fourth winner developed a cost-effective two-
step process using supercritical water to deconstruct a wide range of 
renewable plant material and produce separate streams of cellulosic 
xylose and glucose for use as building block chemicals in a multitude 
of downstream technologies; after sugar extraction, remaining lignin 
solids can be burned to supply the bulk of the heat energy required for 
the process or utilized in higher-value applications like adhesives or 
thermoplastics.
    Other recent awardees include: a vegetable oil (soy) dielectric 
fluid for electrical transformers that is less flammable, higher 
performing, and less environmentally risky if spilled, than 
traditionally used mineral oil; a carbohydrate-based firefighting foam 
certified for hydrocarbon fire suppression that does not include 
persistent (and potentially toxic) fluorinated surfactants; and high-
throughput methods for using supercritical water (versus acids, 
enzymes, solvents) to economically break down plant material into low-
value sugars that are used as building blocks for renewable chemicals 
and fuels. These awardees represent just a few of the highly innovative 
and high impact green chemistry technologies that have received 
recognition through this competitive awards program.
    The EPA also has focused its P2 grant programs to include 
opportunities for grantees green chemistry innovations into the 
marketplace, with a focus on improving the environmental and economic 
performance of small and medium-sized companies. In FY 2015, the EPA 
issued more than 70 grants.
    Many of the recent Presidential Green Chemistry Challenge Awards 
have been for technology innovations that focus on either transforming 
plant-based materials economically into feedstocks for manufacturing 
chemicals/feedstocks, or for transforming such feedstocks into valuable 
biobased products like fuels and/or polymers. These innovations in 
materials-transformation are key enabling technologies for the 
Bioeconomy.
    Many companies that have received the Presidential Green Chemistry 
Challenge Award have also received grants or loans from other Federal 
programs to promote renewable, biobased economic development. EPA is 
increasingly looking to work with other Federal agencies (e.g., USDA, 
DOE, NSF) on identifying supply chain opportunities (or barriers) 
associated with adoption of green chemistry innovations into the 
marketplace.
Office of Land and Emergency Management
    The Office of Land and Emergency Management (OLEM) provides policy, 
guidance and direction for the Agency's emergency response and waste 
programs. OLEM develops guidelines for the land disposal of hazardous 
waste and regulation of underground storage tanks. OLEM provides 
technical assistance to all levels of government to establish safe 
practices in waste management. OLEM administers the Brownfields program 
which supports state and local governments in redeveloping and reusing 
potentially contaminated sites. OLEM also manages the Superfund 
program, which responds to abandoned and active hazardous waste sites 
and accidental chemical releases. Finally, OLEM encourages innovative 
technologies to address contaminated soil and groundwater.
Office of Underground Storage Tanks
    The Office of Underground Storage Tanks (OUST) carries out a 
Congressional mandate, under Subtitle I of the Solid Waste Disposal Act 
to develop and implement a regulatory program for underground storage 
tank (UST) systems (40 CFR Part 280) storing petroleum and certain 
hazardous substances.
    In 1985, EPA created the Office of Underground Storage Tanks to 
carry out a Congressional mandate to develop and implement a regulatory 
program for underground storage tank (UST) systems. EPA works with its 
state, territorial, and Tribal partners to prevent and clean up 
releases from UST systems. Many UST systems are designed for 30 year 
lifespans or longer, and many existing UST systems have components that 
were installed before ethanol and biodiesel became commonly blended 
with gasoline and diesel for use as motor fuel.
    Biofuels can be more aggressive towards certain parts of UST 
systems than their hydrocarbon counterparts, and may affect physical 
qualities of some components and cause them to swell or shrink or 
become hard or brittle. This incompatibility could cause a release of 
fuel to the environment. Biofuel blends also show higher rates of 
corrosion in UST systems which can prevent UST equipment, including 
release prevention equipment, from functioning correctly.
    The Office of Underground Storage tanks has led several regulatory 
and research efforts to address biofuel compatibility and corrosion 
considerations for UST systems. In 2011, the office released guidance 
for owners and operators to assist them when determining and 
demonstrating compatibility of their UST systems to ensure their UST 
system can store biofuels compatibly. New requirements in the updated 
2015 Federal UST regulation require owners notify implementing agencies 
of their intent to store biofuels and keep records demonstrating the 
compatibility of their UST systems. The clarity provided will help 
prevent biofuels from being stored in systems that are not compatible.
    The office has also funded research into: the potential impacts to 
UST systems of storing E15 blends of ethanol; suitability testing of 
leak detection equipment in various percentages of ethanol blended 
fuel; development of protocols for certifying leak detection equipment; 
corrosion of equipment in USTs storing ethanol blended fuels; and any 
role of biofuels in internal corrosion of UST systems storing diesel 
fuel.
    The Office of Underground Storage Tanks continues to work to find 
answers to existing and evolving compatibility and corrosion concerns 
with biofuels to ensure these fuels can be stored safely in UST 
systems.
Office of Resource Conservation and Recovery
    The Office of Resource Conservation and Recovery (ORCR) is 
primarily responsible for implementing EPA's resource conservation, 
recovery and waste management goals under the Resource Conservation and 
Recovery Act (RCRA.) A principal responsibility is to build a national 
waste management program, implemented through EPA Regional Offices and 
State Programs. The Office is responsible for promoting sustainability 
and safe materials management, and fostering waste reduction and 
responsible management practices that will conserve natural resources, 
prevent future problems, and clean up problems from the past. Specific 
activities include:
    Waste Reduction Model (WARM): In March 2015, EPA updated WARM to 
incorporate food wastes. EPA is currently working on updating the model 
to add anaerobic digestion as a waste management practice. WARM helps 
solid waste planners and organizations calculate the GHG benefits of 
alternative end-of-life waste management decisions. These new updates 
will allow them to consider the potential impacts of anaerobic 
digestion of food wastes compared to other optional practices when 
making decisions for their operations.
    Reducing Wasted Food: Reducing the amount of food waste sent to 
landfills continues to be an opportunity for improvement across the 
United States. Food is the largest stream of materials in our landfills 
accounting for 21% of the American waste stream. This large volume of 
disposed food is a main contributor to the roughly 18% of total U.S. 
methane emissions that come from landfills, a powerful greenhouse gas. 
In November 2015, EPA will co-host a Food Recovery Summit in 
Charleston, SC to gather critical feedback and develop key connections 
with the private and public players needed to achieve significant 
wasted food reductions.
    The Sustainable Materials Management (SMM) is a systemic approach 
to using and reusing materials more productively over their entire 
lifecycles, including production of biofuels, biochemicals, and 
biopower, when appropriate. It represents a change in how our society 
thinks about the use of natural resources and environmental protection. 
By looking at a product's entire lifecycle we can find new 
opportunities to reduce environmental impacts, conserve resources, and 
reduce costs.
Office of Water
    The Office of Water primarily supports the Clean Water Act, Safe 
Drinking Water Act, and portions of other Federal statutes. Many long-
standing regulations and programs, and new initiatives are supportive 
of the bioeconomy, as doing so positively impacts our nation's waters.
    Within the Office of Water's Office of Wastewater Management (OWM), 
primary regulatory duties include oversight of the regulation of 
industry and municipal wastewater discharges, in which most states are 
delegated to carry out the day-to-day aspects. Other activities within 
OWM include management of the Clean Water State Revolving Fund (CWSRF), 
which may provide financial assistance to support the bioeconomy 
through funding projects that produce biofuels and biopower from 
treatment of municipal wastewater. Many of these projects would be 
eligible for funding under the CWSRF's Green Project Reserve (GPR), a 
provision which requires, to the extent sufficient projects are 
available, that a portion of each state's capitalization grant be 
provided for green infrastructure, energy and water efficiency, and 
other environmentally innovative projects. Drinking Water State 
Revolving Funds (DWSRFs), managed by OW's Office of Groundwater and 
Drinking Water, are also eligible to be used in non-traditional ways 
that may support the bioeconomy. If funded by Congress, the new Water 
Infrastructure Finance and Innovation Act (WIFIA) program is another 
useful tool that will be able to provide low-cost financing for any 
project already eligible under the CWSRF or DWSRF programs. Through the 
use of these innovative financing tools, EPA hopes to find more 
integrated, lower long-term cost solutions to address the estimated 
$600 billion in infrastructure needs over the next 20 years.
    Within OWM's Rural Branch, several voluntary collaborative 
initiatives have been launched that focus on the animal agriculture 
industry, such as energy and nutrient recovery from animal manures, for 
example. The Rural Branch is partnering with dairy and swine producers, 
USDA, industry trade associations, and academic experts to launch an 
innovation challenge to encourage the development and adoption of 
affordable and effective technologies that can extract and transform 
nutrients in dairy and swine manure (raw and/or digested) and sequester 
them into reusable and/or sellable products. The challenge is 
anticipated to launch in fall 2015. Following a call for submissions of 
technology concepts, EPA and collaborators will implement multiple 
phases for innovators to bring their concepts through technology 
designs, then prototypes, and ultimately to pilot-scale systems to be 
demonstrated at U.S. dairy and swine operations.
    Annually, more than two billion livestock animals at animal feeding 
operations (AFOs) and concentrated animal feeding operations (CAFOs) 
generate over a billion tons of manure.\18\ Manure can be used as a 
feedstock in renewable energy generation systems, such as anaerobic 
digesters and gasifiers, to generate biogas and synthetic natural gas 
(syngas). Manure can also be transformed into a range of value-added 
co-products, such as composts, potting soils, animal bedding, paper 
products, planting pots, particle boards, and concentrated nutrient 
products.
---------------------------------------------------------------------------
    \18\USDA. 2014. 2012 Census of Agriculture, USDA. 2005. FY 2005 
Annual Report Manure and Byproduct Utilization National Program 206.
---------------------------------------------------------------------------
    A few U.S. livestock operations (ten, most of which are poultry 
operations) are experimenting with gasification and combustion systems. 
Such combustion systems that are able to concentrate the majority of 
nutrients in manure in a mineral-rich ash product, which may be used as 
a fertilizer and soil amendment.
    In the past decade, innovators have developed and demonstrated 
technologies that can recover a significant amount of N and P from 
manure, as well as from wastewater treatment plants (now being referred 
to as water resource recovery facilities [WRRFs]), and yield 
concentrated, dry, and potentially valuable nutrient products, such as 
struvite and ammonium sulfate fertilizer.
    OWM regularly coordinates with EPA AgSTAR, the Office of Research 
and Development, as well as USDA's Agricultural Research Service (ARS), 
Natural Resource Conservation Service (NRCS), and Rural Development 
(RD) on development of innovative manure nutrient recovery 
technologies. OWM also coordinates with EPA's AgSTAR Program and the 
Office of Land and Emergency Management, USDA's Rural Development, and 
DOE's Bioenergy Technologies Office on development of the Biogas 
Roadmap, which supports the President's Climate Action Plan.
    Within OW's Office of Wetlands Oceans and Watersheds (OWOW), the 
Nonpoint Source Branch provides grants (known as 319 Grants) that are 
targeted towards non-point sources (i.e., other than regulated entities 
under the Clean Water Act). These grants may also be used in ways that 
support the bioeconomy. OWOW is responsible for projection of our 
nation's wetlands.
    OW as an overall office collaborates with many other Federal 
agencies in issues that touch upon the bioeconomy, such as Department 
of Energy on energy and nutrient recovery from municipal waste water, 
and agencies active in climate adaptation.
Office of Research and Development
    The Office of Research and Development (ORD) conducts leading-edge 
research and fosters the sound use of science and technology to fulfill 
EPA's mission to protect human health and safeguard the natural 
environment. ORD develops flexible tools that inform decision-making 
based on a holistic assessment of impacts to environmental, social, and 
economic dimensions enabling insights into the trade-offs associated 
with alternative decision options.

    Net Zero

    As ORD's Net Zero Initiative moves forward, a research area of 
particular interest is the nexus between Net Zero/Net Positive energy 
and Net Zero waste. Net Zero scientists are looking into the 
development and implementation of innovative technologies that recover 
waste streams to produce energy, like co-digestion. In the process of 
co-digestion, food waste, oils and grease are added to under-capacity 
anaerobic digesters in wastewater treatment plants to produce energy in 
the form of biogas.
    This project links to the Bioeconomy by providing a sustainable 
method to utilize biomass resources for energy production, and will 
support ORD's mission to transition the term ``waste'' to ``resource''.
    The Net Zero team is partnering with the U.S. Army and the U.S. 
Army Corp of Engineers to investigate the feasibility of co-digestion 
at Fort Huachuca, AZ.

    National Research Area--Sustainable and Healthy Communities

    The EnviroAtlas is a multi-scaled spatial data resource and 
analysis tool that covers the conterminous U.S. Focused on mapping the 
supply and demand of ecosystem services (with over 300 national-scale 
GIS coverages), the EnviroAtlas also contains coverages depicting 
drivers of change (e.g., population, land use, resource exploitation, 
pollution, projected scenarios of climate change), demographics, 
economic data (e.g., employment dependent on ecosystem services), as 
well as features of the built environment (e.g., transportation). It is 
scalable from national to regional to local and includes analysis tools 
that allow evaluation of ``what-if'' scenarios. The EnviroAtlas is a 
useful tool for identifying sensitive resources (habitat for vulnerable 
species, limited water supplies) as well as opportunities for 
development. Future scenarios for land use and climate change can be 
used to explore possibilities of co-benefits or unintended 
consequences.
    The EnviroAtlas is a multi-agency/multi-institution effort 
including collaboration with USFS, USGS, NRCS, Nature-Serve, and a 
number of academic institutions. It is a foundational component of the 
Administration's EcoInforma effort.

    National Research Area--Air, Climate, and Energy

    ORD conducts leading-edge research and fosters the sound use of 
science and technology to fulfill EPA's mission to protect human health 
and safeguard the natural environment. The Air, Climate, and Energy 
(ACE) Research Program conducts research to evaluate the potential 
environmental impacts of increased biofuel production and use. Research 
is examining the effects of changing biofuel content on vehicle 
emissions and toxicity, the potential change in nutrients associated 
with increased biofuel feedstock production, and changes in emissions 
due to co-firing of coal and biomass for power generation. Additional 
work addresses potential changes in environmental impacts across the 
full life cycle of production and use for biomass- and fossil-fueled 
energy.
    The Program's research is designed to inform decision makers about 
the potential positive and negative impacts of large-scale adoption of 
biomass-based energy.
    Work is coordinated with USDA to understand how increased biomass 
production may affect feedstock prices and with DOE to understand 
advances in biofuel conversion technologies.

    National Research Area--Safe and Sustainable Water Resources

    ORD through the Safe and Sustainable Water Resources (SSWR) 
research program includes projects that focus on the costs of nutrient 
release to the environment and systems research on best management 
practices for nutrient sources. As the bioeconomy relies on 
agricultural biomass as feedstock, SSWR nutrient research informs 
practitioners in multiple sectors (e.g., irrigation, cropland 
management, CAFO, wastewater, and transportation) about the potential 
impacts or benefits of agricultural practices in protecting water 
quality and watersheds. This work represents collaborative research 
with USGS and USDA.
    The SSWR program also focuses on water reuse and resource recovery. 
SSWR conducts research on treatment technologies for fit-for-purpose 
water with an emphasis on low cost/low energy treatment systems. 
Resource recovery from wastewater and water reuse treatment aims to 
maximize energy recovery from biosolids through the generation and 
capture of methane.
EPA Regional Offices
    Region 4

    Regionally Applied Research Effort (RARE): Through a RARE project 
Region 4 provided funds to Mississippi State University in a research 
project that demonstrated the use of algae as a feedstock for biofuels. 
Region 4 is currently coordinating with EPA's ORD on a RARE project to 
investigate the use of common agricultural wastes in Region 4, such as 
corn stover and forestry wastes, in a process that will result in 
torrefied pellets that can be used as a bio-coal supplement to fossil 
coal as well as a bio-char that can be used as a soil amendment. The 
study will determine if the bio-coal pellets will have an equivalent 
heating content as fossil coal while reducing emission levels of 
controlled pollutants such as NOX.
    Southeast Regional Partnership for Planning and Sustainability 
(SERPPAS): Region 4 is a member of SERPPAS which is a six-state 
partnership of state and Federal agencies that promotes collaboration 
in making resource-use decisions supporting conservation of natural 
resources, working lands, and national defense. Specifically regarding 
biofuels, the Region coordinates the partnership's Biomass Workgroup. 
This Workgroup supports the sustainable use of forest resources to 
produce energy in order to support local economies, create clean energy 
jobs, reduce energy related greenhouse gas emissions, and enhance 
energy independence and security. The Workgroup's goals include 
advancing the use of forest biomass to energy initiative, bringing 
Federal and state agencies together to identify, address and 
communicate current and emerging issues in the use of biomass for 
energy, sharing information on successes and lessons learned regarding 
biomass energy, and increasing the range of technologies available for 
biomass projects in the region.
    Region 4's Southeast Diesel Collaborative (SEDC) was established to 
reduce emissions from the existing diesel fleet, such as through the 
use of biodiesel. The SEDC has been very proactive in promoting the 
production and use of biodiesel and has coordinated with the Department 
of Energy's National Renewable Energy Laboratory as well as that 
Departments' Clean Cities programs. The SEDC has hosted two biodiesel 
workshops that discussed the intricacies of the production of biodiesel 
as well the implementation of biodiesel strategies for fleet managers. 
Biodiesel producers such as St. Johns County, Florida and Hoover, 
Alabama have been frequent speakers at SEDC conferences and workshops.
    Region 4 has promoted the use of biomethane as a transportation 
fuel. The Region has coordinated tours of the Seminole Landfill 
biofuels facility with Dekalb, County, Georgia. State and local air 
directors as well as other EPA staff have toured this facility which 
collects landfill gases and cleans them to pipeline quality so they may 
be used in the County's waste haulers as well as being sold to the 
public as a transportation fuel. Additionally, representatives from the 
facility have been frequent speakers at Regional conferences and 
meetings.
    Region 4 representatives served on the State of Georgia's ``One 
Stop Shop'' for biofuels. This was an effort by the state to provide a 
forum for biofuel and energy companies considering locating in Georgia 
to simultaneously meet with all the representatives from state and 
Federal agencies having jurisdiction on biofuel and energy production 
facilities. The goal is to expedite an understanding of necessary legal 
requirements.
    Region 4 has worked to identify and promote the availability of 
alternate fuels along critical freight corridors such as the Region 4 
portion of the I-75 (the Green Corridor project). Additionally, the 
Region has coordinated with the State of Tennessee in implementing its 
Green Corridors project for alternative fuels throughout interstates in 
that state. Region 4 has also worked with Colonial Pipeline in their 
efforts to ship biodiesel blends on its pipeline to central and 
southern Georgia.
    The Region has been very active in promoting biodiesel. The Region 
worked with the National Park Service to promote and provide technical 
advice for the use of biodiesel in Park Service vehicles. The Region 
also coordinated with the Cherokee Indian Nation on the use of 
biodiesel and provided funds for the implementation of an overall 
biodiesel program that included two transit buses and six school buses. 
The Region has also provided grants to North and South Carolina for 
biodiesel fleets, including freight locomotives in and around the Port 
of Charleston. Additionally the Region has coordinated with nonprofit 
organizations such as the Southern Alliance for Clean Energy (SACE) to 
promote the use of biofuels and the establishment of biofuel refueling 
networks.

    Region 9

    EPA Region 9 provided funds to demonstrate an ultra-low nitrogen 
oxides (NOX) biogas powered engine installed at a dairy farm 
in the San Joaquin Valley, California. More information can be found at 
the Air District website.\19\ EPA Region 9 funded refuse trucks fueled 
by renewable natural gas at a food waste facility in Sacramento, 
California. Through anaerobic digestion, food waste is converted into 
compressed natural gas to fuel refuse trucks and provide electricity 
and heat used at the facility. The remaining processed material is 
turned into fertilizer and soil amendments.\20\
---------------------------------------------------------------------------
    \19\http://valleyair.org/grants/documents/technologyadvancement/C-
4236_EF&EE_Final
Report.pdf.
    \20\http://westcoastcollaborative.org/files/grants/smaqmd-dera-
fy13-refuse-truck-ag-tractor-replacements-wcc-factsheet.pdf.
---------------------------------------------------------------------------
    EPA ORD and Region 9 are conducting research to compare different 
biogas management technologies by examining air quality, greenhouse gas 
and economics/operations. This analysis may enable governments, 
regulators and project developers to identify geographically-
appropriate and cost-effective biogas management options. DOE and 
USDA's NRCS will continue to be involved with this research.
    EPA Region 9 is publishing food recovery guides for six 
metropolitan areas in the Pacific Southwest, which will include 
listings for anaerobic digestion and fats, oils, and grease recycling 
opportunities. The guides are intended for food waste-generating 
businesses to facilitate greater food recovery. The guides are expected 
to be published November 2015.
    In March 2015, EPA published a report titled ``Food Waste to 
Energy: How Six Water Resource Recovery Facilities are Boosting Biogas 
Production and the Bottom Line.''\21\ This report presents the co-
digestion practices, performance, and experiences of six such water 
resource recovery facilities. The report describes the types of food 
waste co-digested and the strategies--specifically, the tools, timing, 
and partnerships--employed to manage the material. Additionally, the 
report describes how the facilities manage wastewater solids, providing 
information about power production, biosolids use, and program costs.
---------------------------------------------------------------------------
    \21\epa.gov/region9/organics/ad/epa-600-R-14-240-food-waste-to-
energy.pdf.
---------------------------------------------------------------------------
    Starting in 2012, EPA Region 9 convened a state/Federal/local 
working group to facilitate the proliferation of dairy digesters in 
California, which is the nation's largest dairy producer. EPA co-
chaired the working group along with NRCS and California Department of 
Food and Agriculture, and the group included all relevant state and 
local agencies. The group accomplished several things including: (1) 
developing a coordinated permitting system of dairy digesters across 
the phalanx of agencies in California, (2) getting digesters included 
in the renewable energy mix required by California, and (3) developing 
criteria for the types of digesters that are ideal to be built in 
California. In 2014, $12 million from the California Department of Food 
and Agriculture was awarded to dairy digester projects in California as 
a result of this working group.


Department of [the] Interior
www.doi.gov
Bureau of Land Management
    The Bureau of Land Management (BLM) manages and conserves the 
public lands for the use and enjoyment of present and future 
generations under our mandate of multiple-use and sustained yield.
    Nearly \1/4\ of the lands--58 million acres--managed by the BLM are 
forests or woodlands. An estimated 14 million acres have been affected 
by the suppression of natural fire and are in need of active management 
to restore resilient species composition and stand structure. Forest 
and woodland management produces traditional wood products as well as 
woody biomass which primarily results from restoration residues and 
smaller diameter material from forestry, fuels and rangeland 
treatments.
    Biomass from BLM forest and woodland projects has become part of 
the feedstock that energy companies are relying on to meet various 
state and Federal renewable energy portfolio standards.\22\
---------------------------------------------------------------------------
    \22\https://www.doi.gov/sites/doi.opengov.ibmcloud.com/files/
uploads/FY2016_BLM_Green
book.pdf.
---------------------------------------------------------------------------
    From 2010 to 2014, BLM sold an average of 177,000 tons of biomass 
for energy through contracts and permits.\23\ Additionally the BLM 
entered into a Memorandum of Agreement in 2014 with the USDA Farm 
Services Agency to implement the Biomass Crop Assistance Program (BCAP) 
that allows collection, harvest, storage, and transportation assistance 
for biomass delivered to certified bioenergy facilities from BLM lands. 
BCAP projects on BLM land meet environmental standards equivalent to 
forest stewardship plans and the biomass is limited to material 
generated as a byproduct of wildfire hazard fuels treatments or 
treatments to reduce or contain disease or insect infestations in 
accordance with the Agricultural Act of 2014.\24\
---------------------------------------------------------------------------
    \23\https://www.doi.gov/sites/doi.gov/files/migrated/pmb/ppp/
upload/DOI-APPR-02022015-v2-Final.pdf.
    \24\http://www.fsa.usda.gov/Internet/FSA_File/
ccc_2015_0001_0001.pdf.


National Science Foundation
www.nsf.gov

    The Division of Chemical, Bioengineering, Environmental, and 
Transport Systems (CBET) supports innovative research and education in 
the fields of chemical engineering, biotechnology, bioengineering, and 
environmental engineering, and in areas that involve the transformation 
and/or transport of matter and energy by chemical, thermal, or 
mechanical means.
    Standing programs within the CBET Division of the ENG Directorate, 
including the Energy for Sustainability, Environmental Sustainability, 
Biochemical Engineering, Catalysis & Biocatalysis, and Process & 
Reaction Engineering programs, provide funding opportunities for 
supporting fundamental scientific research needed to develop future 
processes for advancing the bioeconomy. Awards typically range from 
$300-$400k for 3 years. There are no solicitations or proposal calls 
specifically for the bioecomony within CBET. However, many of 
unsolicited proposals, submitted primarily from the academic research 
community, are closely related to topics relevant to the bioecomony, as 
described below. Proposals on bioeconomy topics that are the most 
strongly recommended for funding through the peer review processes are 
considered for funding. CAREER awards offered through each program are 
designed to support early career, tenure-track faculty in these areas.
    The standing programs identified above support research relevant to 
advancing the bioecomony in the conversion and sustainability areas 
through development and scientific understanding of (1) new chemical, 
catalytic, and biological processes for the conversion of renewable 
carbon resources (plant biomass, algae, CO2) to biofuels, 
bioproducts, biochemicals, as well as their downstream separation; 
([2]) new catalysts and synthetic biology approaches for supporting 
these processes; (3) biopower production though energy-positive waste 
water treatment, (4) new tools for life cycle, environmental, and 
sustainability analyses of biofuel and biorefinery processes.
Engineering Directorate, Emerging Frontiers in Research and Innovation
    The Emerging Frontiers in Research and Innovation (EFRI) provides 
critical, strategic support of fundamental discovery at the frontiers 
of engineering research and education.
    Each year, EFRI develops and issues two topics for through a formal 
solicitation process. Up to $16 million is available to support each 
topic on up to eight awards of approximately $2 million each. Proposals 
are recommended for funding through a highly-competitive peer review 
process.
    Recent EFRI solicitations relevant to the bioeconomy in the 
conversion and sustainability areas were HYBI (NSF 08-599, Hydrocarbons 
from Biomass, FY09), and PSBR (NSF 12-583, Photosynthetic 
Biorefineries, FY13). The HYBI program supported research on new and 
potentially transformative approaches for chemical and catalytic 
conversion of biomass constituents and algae to energy-dense molecules 
and drop-in hydrocarbon biofuels.
    The PSBR program supported fundamental research to advance 
development and scientific understanding of biofuel and biorefinery 
processes by linking fundamental biology of phototrophic organisms, 
bioprocess engineering, and life cycle analysis through a multiscale 
analysis approach.
Biological Sciences Directorate
    The Biological Sciences Directorate (BIO) Directorate programs 
support research advances at the frontiers of biological knowledge, 
increases understanding of complex systems, and provides a theoretical 
basis for original research in many other scientific disciplines.
    The Plant Genome Research Project (PGRP) within the BIO Directorate 
supports academic research for the development and fundamental 
scientific understanding of functional genomics tools and sequence 
resources for use in the study of key crop plants and their models. 
From FY12 to FY14, the program supported approximately $120 million in 
research.
    The Plant Genome Research Project supports the bioeconomy in the 
feedstocks area by advancing the development and genetic tools for key 
crop plants and their models.
Science, Engineering and Education for Sustainability
    Science, Engineering and Education for Sustainability (SEES) is a 
cross-cutting initiative within NSF to advance science, engineering, 
and education to inform the societal actions needed for environmental 
and economic sustainability and sustainable human well-being. The SEES 
portfolio activities highlights NSF's unique role in helping society 
address the challenge(s) of achieving sustainability. Recent special 
solicitations and funding opportunities to support the bioeconomy in 
the context of SEES included:
    The Sustainable Energy Pathways (SEP) solicitation (NSF 11-590, 
FY12) supported fundamental research on scalable approaches for 
sustainable energy conversion to useful forms, as well as its storage, 
transmission, distribution, and use, through a systems approach to 
designed to seek comprehensive understanding of the scientific, 
technical, environmental, economic, and societal issues.
    The Sustainable Chemistry, Engineering, and Materials (SusChEM) 
Funding Opportunity (NSF 15-085) addresses the interrelated challenges 
of sustainable supply, engineering, production, and use of chemicals 
and materials.
    The SEP program supported seven projects to advance the bioeconomy 
through fundamental research on biofuel production platforms in the 
context of their integrated scientific, technical, environmental, 
economic, and societal issues. The SusChEM initiative advanced the 
bioeconomy by supporting a variety of projects related to the 
sustainable production of biofuels, bioproducts, and biochemicals 
through sustainable carbon resources.


Department of Transportation
www.dot.gov
Federal Aviation Administration
    The Federal Aviation Administration (FAA) strives to provide the 
safest, most efficient aerospace system in the world. FAA has taken a 
comprehensive approach to overcome barriers to the development and 
deployment of sustainable alternative (e.g., renewable) jet fuels that 
are drop-in replacements to fuels derived from petroleum, as part of an 
effort to achieve carbon-neutral growth at 2005 emissions levels 
starting in 2020. These efforts include R&D via the Continuous Lower 
Energy Emissions and Noise (www.faa.gov/go/cleen) (CLEEN) and Aviation 
Sustainability Center (www.ascent.aero) (ASCENT) University Center of 
Excellence program programs to evaluate alternative fuels for safety, 
technical, and environmental performance; sponsorship with industry of 
the Commercial Aviation Alternative Fuels Initiative (www.caafi.org) 
(CAAFI), a broad stakeholder coalition; new fuel certification through 
ASTM International; a partnership with USDA, DOE, and the aviation 
industry to enable fuel supply development via the Farm to Fly 2.0 
Initiative; and the joint development of a Federal alternative jet fuel 
R&D strategy in partnership with numerous Federal agencies. FAA also 
has bilateral agreements to leverage other countries' efforts to 
develop, assess, and deploy alternative jet fuels, and participates in 
the United Nation's International Civil Aviation Organization (ICAO) 
activities on alternative jet fuels.
    FAA's goal of goal of having 1 billion gallons of alternative jet 
fuel in use by 2018 has spurred rigorous research and rapid innovation 
in advanced feedstock and renewable aviation fuel pathway development. 
FAA-supported testing and demonstrations of many biobased jet fuels 
have shown a sharp reduction of air quality emissions with no adverse 
impact on aircraft engine operations. Broad deployment of renewable jet 
fuels may substantially reduce lifecycle aircraft exhaust emissions of 
aviation operations, and enhance public awareness of advanced biofuels.
National Highway Transportation Safety Administration
    National Highway Transportation Safety Administration (NHTSA) works 
daily to help prevent crashes and their attendant costs, both human and 
financial.
    Vehicle Corporate Fuel Economy (CAFE) standards are regulated by 
NHTSA; NHTSA sets and enforces the CAFE standards, while the 
Environmental Protection Agency (EPA) calculates average fuel economy 
levels for manufacturers, and also sets related GHG standards. NHTSA 
has proposed to require badges, labels and owner's manual information 
for new passenger cars, low-speed vehicles (LSVs) and light-duty trucks 
in order to increase consumer awareness regarding the use and benefits 
of alternative fuels, including biofuels.
    E85 capable flex-fuel vehicles (FFVs) have long-qualified for a 
special calculation of their fuel economy performance under NHTSA 
administered CAFE regulations. These special calculations provide 
vehicle manufacturers with powerful credit incentives to develop and 
produce FFVs. The existence of the current national FFV fleet is 
largely attributable to this regulatory incentive (effective in its 
current form through model year 2016). Consumer education on biofuel 
end-use would be advanced by NHTSA's proposed rule to require vehicle 
OEMs to prominently exterior-label vehicles capable of running on 
biofuels, describe the capabilities and benefits of using alternative 
biofuels to owners' manuals provided for alternative fuel vehicles, and 
clearly label the fuel filler compartment of vehicles capable of 
running on biofuels.
Federal Highway Administration
    The Federal Highway Administration (FHWA) strives to improve 
mobility on our nation's highways through national leadership, 
innovation, and program delivery.
    The Congestion Mitigation and Air Quality (CMAQ) Improvement 
Program provides funding to state departments of transportation (DOTs), 
municipal planning organizations (MPOs), and transit agencies for 
projects and programs in air quality non-attainment and maintenance 
areas that reduce transportation-related emissions, including 
alternative fuels deployment. The FHWA Office of Real Estate Services 
has been cooperating with states to examine the both the potential and 
implications for bioenergy production within highway right-of-ways 
(ROWs).
    Past and current CMAQ projects have provided for the purchase and 
development of alternative fuel refueling infrastructure, and 
conversion of public fleet vehicles to operate on alternative fuels, 
including biofuels. Generating biofuel feedstocks on highway ROWs would 
add highly-visible bioenergy production capacity, advance Federal and 
state sustainability goals, support a local green job market, and help 
reduce highway maintenance costs while potentially generating 
additional revenue for transportation agencies.
Pipeline and Hazardous Materials Safety Administration
    Pipeline and Hazardous Materials Safety Administration (PHMSA) 
works to protect people and the environment from the risks of hazardous 
materials transportation.
    PHMSA works with other Federal agencies, industry, standards 
organizations, and emergency responders, to ensure adequate design and 
operating standards for biofuel pipelines. PHMSA has examined the 
potential for ethanol-induced stress corrosion cracking in existing 
pipeline infrastructure used to transport ethanol and various ethanol-
blended fuels. PHMSA also supports emergency responder education and 
training on optimal emergency response to spill incidents involving 
ethanol and other biofuels in transportation. In partnership with the 
Federal Railroad Administration (FRA), PHMSA has undertaken a 
comprehensive, system-wide approach to prevent and mitigate rail 
accidents involving flammable liquids, including biofuels. The joint-
approach focuses on improvements to rail operations, ensuring proper 
classification of hazardous materials, and improving tank car 
survivability.
    Safe and efficient pipeline and rail transport will be critical to 
bioeconomy expansion. Continued Federal efforts in research and 
development, resolving technical issues, and setting/clarifying safety 
standards are key to reducing transport accidents, mitigating the 
consequences of an incident, and ensuring proper emergency response.
Maritime Administration
    The Maritime Administration (MARAD) promotes the use of waterborne 
transportation and its seamless integration with other segments of the 
transportation system, and the viability of the U.S. merchant marine.
    MARAD has been evaluating the use of renewable diesel fuel blends 
in commercial vessels. This has included recent at-sea testing and 
reporting on engine performance, fuel economy, air emissions, engine 
vibration, underwater radiated noise, and effect on the engine itself. 
MARAD has also conducted tests to determine the effects of long-term 
storage on renewable diesel blend quality.
    Successful operational and storage testing is critical for 
advancing the deployment of biofuels in the waterborne transportation 
sector and the national merchant marine fleet.
Federal Transit Administration
    Federal Transit Administration (FTA) strives to ensure personal 
mobility and America's economic and community vitality by supporting 
high quality public transportation through leadership, technical 
assistance and financial resources.
    FTA has supported the expanded use of biofuels (i.e., biodiesel) 
within the nation's transit bus fleet through a large number of field 
studies, fleet demonstrations, and funded deployments.
    Widespread evaluation of biodiesel blend use among U.S. transit 
agency fleets generates key information regarding the impact of 
biofuels on transit bus engines, fuel systems, operations, and 
maintenance, and has helped establish industry best practices. 
Successful, highly-visible biodiesel transit bus deployments have 
helped raise the public's awareness of biofuels and their benefits.
Federal Railroad Administration
    Federal Railroad Administration (FRA) works to enable the safe, 
reliable, and efficient movement of people and goods for a strong 
America, now and in the future.
    FRA has been evaluating the use of biodiesel and renewable diesel 
fuel blends, as well as biobased lubricants in freight and passenger 
locomotives. FRA-sponsored feasibility studies have assessed biofuel 
use impacts on locomotive performance, fuel efficiency, exhaust 
emissions, and engine parts. In partnership with the Pipeline and 
Hazardous Materials Safety Administration (PHMSA), FRA has undertaken a 
comprehensive, system-wide approach to prevent and mitigate rail 
accidents involving flammable liquids, including biofuels. The approach 
focuses on improvements to rail operations, ensuring proper 
classification of hazardous materials, and improving tank car 
survivability.
    Successful feasibility testing of biofuels in locomotives is 
critical for advancing the deployment of biofuels in the rail 
transportation sector and national rail passenger and freight fleet. 
Expanded rail tank car transport of biofuels is also critical to the 
growth of the bioeconomy, underscoring the need for rail transport 
safety improvements to prevent accidents, mitigate consequences in the 
event of an accident, and support emergency response.
Office of the Assistant Secretary for Research & Technology
    Office of the Assistant Secretary for Research & Technology (OST-R) 
is committed to transform transportation by expanding the base of 
knowledge to make America's transportation system safer, more 
competitive and sustainable.
    OST-R sponsors research focusing on the safe use of new fuels and 
energy technologies within the transportation system (including 
biofuels), and the safe, efficient distribution of biofuels and other 
energy resources across the transportation network. OST-R coordinates 
research across DOT modal administration, including efforts related to 
biofuels and bioenergy. OST-R supported research includes the Sun Grant 
Initiative Regional Competitive Grants Program, which funds research 
and demonstration activities related to biomass feedstock, biofuels, 
and biobased products, and analyses to determine the energy and 
environmental impacts of bioenergy. The Volpe National Transportation 
Systems Center, a part of OST-R, conducts model and tool development to 
analyze transportation needs and constraints associated with biofuel 
biomass collection, processing, and distribution.
    OST-Rs efforts to encourage bioenergy research collaboration 
between government agencies and regional land-grant colleges and 
universities helps foster innovations, and bioeconomy workforce 
development. Modeling work by the Volpe Center helps agencies and 
bioeconomy industry stakeholders better understand how multimodal 
transportation capacity and infrastructure constraints impact biomass 
feedstock and biofuel movements (and vice-versa), transport-related 
environmental impacts, and economic costs. Future policies, 
infrastructure investments, and other decisions supporting the 
bioeconomy may hinge upon robust scenario analysis models and tools.
Appendix II: Interagency Activities Supporting the Bioeconomy

------------------------------------------------------------------------
 
-------------------------------------------------------------------------
    As discussed in Appendix I, existing foundational pillars of the
 bioeconomy are in place to support further expansion. Each agency
 focuses on their own priorities and mission areas, but to fully develop
 a strong national bioeconomy, synchronization across the government is
 critical. Such examples of these interagency activities include EPA's
 Renewable Fuel Standard, the Farm to Fly 2.0 Initiative, the Defense
 Production Act Initiative, the Coordinated Agriculture Projects, the
 Farm to Fleet Initiative, the Rural Energy for America Program, the
 Biogas Roadmap, and the Biomass Crop Assistance Program.
------------------------------------------------------------------------

Feedstock Partnerships Across the Government
    The U.S. Department of Agriculture (USDA) and the Department of 
Energy (DOE) have compatible goals in the developing and promoting the 
use of biomass for biofuels, biopower, and biobased 
products.25-29 Collectively the two Departments have a well-
established portfolio covering agronomics, silviculture, genetics, 
engineering, economics, modeling, and many other scientific disciplines 
and resource areas. Several USDA agencies have research, technology, 
deployment or assistance programs associated with various aspects of 
the production and use of biomass from America's agricultural and 
forestry lands. DOE has feedstocks development and logistics RDD&D 
activities distributed across a program, an office, and an agency. USDA 
has feedstocks plant materials and genetic development, sustainable 
management and production systems development, logistics, improving 
interfaces in the supply chain, and integration with conversion 
activities. Much of the Federal Government's expertise in these areas 
is within the Departments and RDD&D activities are completed with 
National Laboratories, university and industrial partners.
---------------------------------------------------------------------------
    \25\http://energy.gov/quadrennial-technology-review.
    \26\http://www1.eere.energy.gov/biomass/pdfs/mypp_april_2011.pdf
    \27\http://www1.eere.energy.gov/biomass/pdfs/biomass_two_pager.pdf.
    \28\http://www.whitehouse.gov/sites/default/files/rss_viewer/
growing_americas_fuels.PDF.
    \29\http://science.energy.gov//media/ber/pdf/
Biofuels_strategic_plan.pdf.
---------------------------------------------------------------------------
    A long standing collaboration between USDA and DOE is the Plant 
Feedstock Genomics for Bioenergy Program. Initiated in 2006, the 
program funds fundamental science projects that accelerate plant 
breeding programs and improve biomass feedstocks by characterizing the 
genes, proteins, and molecular interactions that influence biomass 
production. In addition, the two agencies jointly fund a competitive 
program in support of the development of a biomass-based industry 
through the Biomass Research and Development Initiative. The technical 
areas under consideration include feedstocks development, biofuels and 
biobased products development, and biofuels development analysis. 
Projects span research through early stage demonstration.
    The Federal Working Group, ``Woody Biomass Utilization Group'' led 
by USDA, DOE and DOI with members also including EPA and DOD promotes 
and supports the utilization of woody biomass and woody biomass 
products and residues from forest and woodland health, management and 
restoration treatments wherever environmentally, economically and 
legally appropriate. The group has annual plans of work and many 
accomplishments including a resource center, special projects, and 
partnering with stakeholders.
Waste Resource Development
    USDA, DOE and EPA jointly released the Biogas Opportunities Roadmap 
in August 2014. The Roadmap builds on progress made to date to identify 
voluntary actions that can be taken to reduce methane emissions through 
the use of biogas systems and outlines strategies to overcome barriers 
limiting further expansion and development of a robust biogas industry 
in the United States. EPA participates in the Biogas Opportunities 
Roadmap Working Group (along with DOE and USDA) to pursue these 
solutions and enhance Federal communication and collaboration regarding 
biogas activities. A Progress Report is expected to be published in 
fall, 2015.\30\
---------------------------------------------------------------------------
    \30\Biogas Opportunities Roadmap: http://www3.epa.gov/
climatechange/Downloads/Biogas-Roadmap.pdf.
---------------------------------------------------------------------------
    Additionally, EPA's AgSTAR program partners with USDA to promote 
the use of biogas recovery systems at livestock operations to reduce 
methane emissions and achieve other environmental benefits through 
outreach, education, tools and partnerships. AgSTAR develops technical 
resources for farmers, state government representatives and other 
stakeholders. AgSTAR also participates in outreach events with 
livestock producers, renewable energy industry leaders, and state and 
local governments to raise awareness about the benefits of livestock 
biogas recovery systems and the Federal resources available for project 
planning and implementation. AgSTAR hosts a partnership program, which 
brings together representatives of universities, state and local 
governments, not-for-profits, and other related organizations to share 
information and encourage implementation of biogas recovery 
systems.\31\
---------------------------------------------------------------------------
    \31\For more information on AgSTAR please visit: http://
www2.epa.gov/agstar.
---------------------------------------------------------------------------
    NSF, EPA and DOE jointly hosted the Energy-Positive Water Resource 
Recovery (EPWRR) Workshop in April of 2015 to envision a transition 
from the wastewater treatment facilities of today to a new generation 
of Water Resource Recovery Facilities (WRRFs), nationwide, and identify 
specific opportunities to stimulate and support this transition. Future 
WRRFs could effectively manage more diverse waste streams, generate 
biogas for a number of biofuel platforms, produce water and fertilizer, 
and help communities recover other valuable resources. Participants of 
this collaborative interagency workshop provided information to Federal 
stakeholders about ongoing industry efforts and how Federal activities 
could best amplify and help realize the industry vision for the WRRF of 
the Future that would continue to assign top priority to wastewater 
treatment for the protection of public health and the environment, but 
also expand its slate of services and products in support of healthy, 
economically vibrant communities.
Looking Beyond Ground Transportation
    In 2014, the U.S. Departments of Energy, Navy, and Agriculture 
announced three awards to construct commercial scale integrated 
biorefineries capable of producing renewable jet and diesel that is 
compatible with military fuel specifications. The partnership between 
the Federal Government and private industry to make cost-competitive 
drop-in biofuels a reality while strengthening the nation's capability 
to lead the global clean energy market and diversifying potential fuel 
sources for the Department of Defense. The feedstock used to power 
these facilities comes from municipal solid waste, woody biomass, and 
waste oils and fats, and will be converted into more than 100 million 
gallons of renewable jet and diesel fuel annually. This means many 
additional professional jobs for engineers, plant operators, 
construction workers, and feedstock suppliers. The renewable jet fuel 
and diesel that will be produced from these facilities has been 
extensively tested and qualified by the Department of Defense and 
proven operate seamless with existing infrastructure, engines, and 
military operations.\32\
---------------------------------------------------------------------------
    \32\For more information about the DOE-DoN-USDA partnership please 
visit: http://www.energy.dla.mil/Pages/DefenseProductionAct.aspx.
---------------------------------------------------------------------------
    To date fuel blends consisting of up to 50% synthetic hydrocarbons 
made via the Fischer-Trospch and Hydroprocessed Esters and Fatty Acids 
pathways are acceptable in military fuel specifications. Additional 
pathways are being tested. Following adoption into fuel specifications, 
the Department of Defense has now moved to accept drop-in biofuels as 
part of its worldwide bulk fuel supply, which totals over 5 billion 
gallons. Jet and naval distillate fuel purchased for the Army, Navy, 
Marine Corps, and Air Force can be supplied by biofuel producers 
capable of meeting military specifications and cost-competitive with 
conventional fuels.\33\
---------------------------------------------------------------------------
    \33\For more information on Farm to Fly 2.0 please visit: http://
energy.gov/eere/bioenergy/articles/farm-fly-20-energy-department-joins-
initiative-bring-biofuels-skies
---------------------------------------------------------------------------
    Similar to the nation's military, the U.S. airline industry has a 
large demand for jet fuel--almost 22 billion gallons annually. In 2014, 
as part of an effort to meet the demand of renewable aviation fuels, 
DOE, USDA and FAA committed to Farm to Fly 2.0. The Federal Government, 
working closely with the aviation industry, will endeavor to enable 
commercially viable, sustainable renewable jet fuel and necessary 
supply chains in the U.S. in order to support the goal of 1 billion 
gallons jet fuel from biomass for use by 2018.\34\
---------------------------------------------------------------------------
    \34\For more information on Farm-to-Fleet visit: http://
www.usda.gov/wps/portal/usda/usdamediafb?contentid=2013/12/
0237.xml&printable=true&contentidonly=true.
---------------------------------------------------------------------------
    With Farm to Fly 2.0 as a model, the DON and USDA are working 
together in another partnership, Farm-to-Fleet, to ensure markets for 
renewable biofuel blends as part of the regular, operational fuel 
purchase and use by the military. $161.33 million of USDA Commodity 
Credit Corporation (CCC) funds are made available to defray premiums 
(up to a limit) associated with USDA-approved, U.S.-grown feedstocks 
for the acquisition of naval distillate or jet fuel. An award was made 
with the help of CCC funds in October 2015 to AltAir Fuels in 
Paramount, CA for 77.66 million gallons of F-76 naval distillate fuels 
consisting of 10% drop-in biofuels made using Midwestern-grown waste 
beef fats as a feedstock. Farm to Fly 2.0 will continue to seek awards 
in the domestic bulk fuel supply awards.
Developing a Sustainable Future
    DOE and USDA are actively involved in the Sustainability and 
Greenhouse Gas Accounting working groups of the Global Bioenergy 
Partnership. The Global Bioenergy Partnership (GBEP) was established in 
2006 by a mandate from the G8 + 5 in 2005 and is the preferred venue 
for USG to talk about sustainability of biofuels internationally. 
Partners currently include 23 countries and seven United Nations 
organizations, with Brazil and Italy as co-chairs. Significant 
achievements include a GHG Methodological Framework (United States co-
chaired with United Nations Foundation) and continued work on 
development of Sustainability Criteria and Indicators (chaired by 
United Kingdom). Partners: DOE, USDA, EPA, USTR, and Commerce 
collaborate with State Department, the National Security Council, and 
the National Economic Council on a U.S. position going into each of the 
quarterly GBEP meetings.\35\
---------------------------------------------------------------------------
    \35\For more information on the Global Bioenergy Partnership please 
visit: http://www.globalbioenergy.org/.
---------------------------------------------------------------------------
                               appendix f
February 21, 2017

 
 
 
Hon. Mike Enzi,                      Hon. Bernard Sanders,
Chairman,                            Ranking Minority Member,
Senate Committee on the Budget,      Senate Committee on the Budget,
Washington, D.C.;                    Washington, D.C.;
Hon. Diane Black,                    Hon. John Yarmuth,
Interim Chairwoman,                  Ranking Minority Member,
House Committee on the Budget,       House Committee on the Budget,
Washington, D.C.;                    Washington, D.C.;
Hon. Thad Cochran,                   Hon. Patrick Leahy,
Chairman,                            Ranking Minority Member,
Senate Committee on Appropriations,  Senate Committee on Appropriations,
Washington, D.C.;                    Washington, D.C.;
Hon. Rodney Frelinghuysen,           Hon. Nita Lowey,
Chairman,                            Ranking Minority Member,
House Committee on the Budget,       House Committee on the Budget,
Washington, D.C.;                    Washington, D.C.
 

    Dear Chairmen and Ranking Members:

    The undersigned organizations, representing America's agriculture, 
nutrition, conservation, rural development, finance, forestry, energy, 
trade, local government, plant/animal health, agricultural sciences and 
veterinary medicine, labor, outdoor recreation, equipment 
manufacturing, cooperatives, hunters, anglers and crop insurance 
sectors, strongly urge you to reject calls for additional cuts to 
policies within the jurisdiction of the Senate Committee on 
Agriculture, Nutrition and Forestry or the House Committee on 
Agriculture.
    Almost 3 years ago, Congress passed a bipartisan farm bill that 
made a significant contribution to deficit reduction. This bipartisan 
legislation was estimated to contribute $23 billion to deficit 
reduction over 10 years at the time of passage. This was the first time 
a farm bill voluntarily reduced spending before Congress began 
considering the bill. It was the only reauthorization bill in that 
Congress that voluntarily offered savings. These difficult cuts 
resulted from hard choices made to reform and reduce the farm safety 
net, conservation initiatives, and nutrition assistance.
    In fact, the Congressional Budget Office's (CBO) January 2017 
baseline estimates that the 2014 Farm Bill has cost far less than 
projected. According to CBO, nutrition and crop insurance alone will 
spend nearly $100 billion less, while mandatory Federal spending 
outside the Agriculture Committees' jurisdiction has risen over the 
same time period.
    We have all begun preparing for the 2018 Farm Bill and recognize 
that passing a bill with additional funding reductions would be 
extremely difficult, if not impossible. Therefore, as the Senate and 
House Agriculture Committees begin preparing for the 2018 Farm Bill, it 
is imperative that the committees not be hamstrung by further budget or 
appropriations cuts to any farm bill program. Instead, we strongly 
encourage you to recognize the substantial savings already achieved, 
which far exceed expectations, and to provide the committees the 
opportunity to complete their work through regular order, without 
arbitrary budget cuts or caps. With the agriculture and rural economy 
struggling, households across the country struggling to meet their 
basic needs for nutrition, and farm income down 46 percent from only 3 
years ago, it would be perilous to hinder development and passage of 
the 2018 Farm Bill with further cuts.
    During consideration of the 2014 Farm Bill, the Agriculture 
Committees made the difficult choices necessary to deliver a bipartisan 
bill. Budget cuts made in that bill should be recognized as 
Agriculture's contribution to deficit reduction. We know the committees 
will once again face challenging budgetary and policy choices in the 
development of the 2018 Farm Bill. That is why it is so important you 
ensure the Committee process for the farm bill can proceed with some 
budget flexibility.
    Thank you for your consideration.
            Sincerely,

 
 
 
Academy of Nutrition     Florida Peanut           Nebraska Pork
 and Dietetics            Producers Association    Producers Association
Ag Processing Inc        Food Bank Council of     Nebraska Soybean
                          Michigan                 Association
AgChoice Farm Credit     Food Bank of Alaska      Nebraska Wheat Board
AgCountry Farm Credit    Food Research & Action   Nebraska Wheat Growers
 Services                 Center (FRAC)            Association
AgCredit                 FoodCorps                Nevada Wildlife
                                                   Federation
AgFirst Farm Credit      Food Pantry              New England Forestry
 Bank                                              Foundation
AgGeorgia Farm Credit,   Forest Stewards Guild    New Jersey Anti-Hunger
 ACA                                               Coalition
AgriBank, FCB            Forestry Association of  New Jersey Farm Bureau
                          South Carolina
Agriculture Energy       Freestore Foodbank       New Mexico Appleseed
 Coalition
AgStar Financial         Frontier Farm Credit     New Mexico Sorghum
 Services, ACA                                     Association
Alabama Farmers          Garden Valley            New Mexico Association
 Federation               Neighborhood House       of Food Banks
Alabama Food Bank        Generations United       New Mexico Wildlife
 Association                                       Federation
Alabama Peanut           Georgia Farm Bureau      New York Farm Bureau
 Producers Association
Alabama Soybean & Corn   Georgia Food Bank        North Carolina Farm
 Association              Association              Bureau
Alaska Food Coalition    Georgia Peanut           North Carolina Pork
                          Commission               Council
Aldo Leopold             Grange Insurance         North Central Weed
 Foundation, Inc.         Audubon Center           Science Society
Algae Biomass            Greater Cleveland Food   North Dakota Soybean
 Organization             Bank                     Growers Association
Alliance to End Hunger   GreenStone Farm Credit   Northeast Organic
                          Services                 Dairy Producers
                                                   Alliance
American Academy of      Growth Energy            Northeast Organic
 Pediatrics              GROWMARK                  Farming Association--
American Agri-Women                                Interstate Council
American Agriculture     Hardwood Federation      Northeast Organic
 Movement Inc.                                     Farming Association
                                                   of New York
American Association of  Headwaters Chapter,      Northeast Organic
 Avian Pathologists       Izaak Walton League of   Farming Association
                          America                  of Vermont
American Association of  Hudson Crop Insurance    Northwest Farm Credit
 Bovine Practitioners     Services                 Services
American Association of  Humboldt State           NTCA--The Rural
 Crop Insurers            University Dept. of      Broadband Association
                          Forestry
American Association of  Hunger Free Colorado     Ohio AgriBusiness
 Mycobacterial Diseases                            Association
American Bankers         Hunger Free Vermont      Ohio Association of
 Association                                       Foodbanks
American Cotton          Hunger Solutions         Ohio Corn & Wheat
 Shippers Association     Minnesota                Growers Association
American Crystal Sugar   Hunger Solutions New     Ohio Ecological Food
 Company                  York                     and Farm Association
American Dairy Science   Hunger Task Force        Ohio Environmental
 Association                                       Council
American Farm Bureau     Idaho Hunger Relief      Ohio Farm Bureau
 Federation               Task Force               Federation
American Farm Bureau     Idaho Wildlife           Ohio River Foundation
 Insurance Services,      Federation
 Inc.
American Farmland Trust  Illinois Council Trout   Ohio Soybean
                          Unlimited                Association
American Feed Industry   Illinois Farm Bureau     Oklahoma Association
 Association                                       of Conservation
                                                   Districts
American Fisheries       Illinois Hunger          Oklahoma Farm Bureau
 Society                  Coalition
American Forest & Paper  Illinois Pork Producers  Oklahoma Pork Council
 Association              Association
American Forest          Independent Community    Oklahoma Sorghum
 Foundation               Bankers of America       Association
American Forests         Independent Insurance    Oklahoma Soybean
                          Agents & Brokers of      Association
                          America
American Heart           Indiana Farm Bureau      Oregon Cherry Growers,
 Association                                       Inc.
American Insurance       Indiana Forestry &       Oregon Farm Bureau
 Association              Woodland Owners
                          Association
American Malting Barley  Indiana Soybean          Oregon Food Bank
 Association              Alliance
American Mushroom        Intertribal Timber       Oregon Small Woodlands
 Institute                Council                  Association
American Rivers          Iowa Corn Growers        Organic Trade
                          Association              Association
American Seed Trade      Iowa Environmental       Our Lady of Mt. Carmel
 Association              Council                  St. Vincent dePaul
                                                   Society
American Sesame Growers  Iowa Farm Bureau         PA Association of
 Association              Federation               Conservation
                                                   Districts
American Sheep Industry  Iowa Soybean             Panhandle Peanut
                          Association              Growers Association
American Society of      Irrigation Association   Partners for a Hunger-
 Agronomy                                          Free Oregon
American Society of      Islamic Relief USA       PennFuture
 Farm Managers and       Kansas Appleseed Center  Pennsylvania Farm
 Rural Appraisers         for Law and Justice      Bureau
American Soybean         Kansas Association of    People's Community
 Association              Wheat Growers            Church
American Sugar Alliance  Kansas Cooperative       Personal Ag Management
                          Council
American Sugar Cane      Kansas Farm Bureau       Pheasants Forever
 League
American Sugarbeet       Kansas Grain Sorghum     Pinchot Institute for
 Growers Association      Producers Association    Conservation
American Veterinary      Kansas Pork Association  Pollinator Partnership
 Medical Association
American Water Works     Kentucky Association of  Prairie Rivers Network
 Association              Food Banks
American Wood Council    Kentucky Farm Bureau     Producers Cooperative
                                                   Association
AmericanHort             Kentucky Soybean         Project Bread
                          Association
Appalachian Mountain     Kiddie City Child Care   Public Health
 Club                     Community                Institute
Applegate Partnership    PYCO Industries, Inc.    Quail Forever
 and Watershed Council
Aquatic Plant            Land Trust Alliance      Rain and Hail
 Management Society                                Insurance Society
Archery Trade            Laurie M. Tisch Center   Resource Management
 Association              for Food, Education &    Service, LLC
Arizona Farm Bureau       Policy, Teachers        RESULTS
 Federation               College Columbia
                          University
Arizona Pork Council     Lee Miles Hunger Center  Rio Grande Valley
                                                   Sugar Growers
Arkansas Farm Bureau     Louisiana Association    Rural & Agriculture
 Federation               of Cooper[a]tives        Council of America
Arkansas Forestry        Louisiana Farm Bureau    Rural Advancement
 Association              Federation               Foundational
                                                   International
Arkansas Hunger Relief   Louisiana Food Bank      Schlitz Audubon Nature
 Alliance                 Association              Center
Arkansas Soybean         Louisiana Forestry       School Nutrition
 Association              Association              Association
Arkansas Wildlife        Louisiana Wildlife       Second Harvest Food
 Federation               Federation               Bank CCL
Aspen American           Lower Clear Fork SWCD    Second Harvest Food
 Insurance Company                                 Bank of North Central
                                                   Ohio
Associated Milk          Lower Mississippi River  Second Harvest Food
 Producers Inc.           Foundation               Bank of the Mahoning
                                                   Valley
Association of American  Lutheran Services in     Select Milk Producers,
 Veterinary Medical       America                  Inc.
 Colleges
Association of Arizona   Maryland & Virginia      Share Our Strength
 Food Banks               Milk Producers
Association of           Maryland Farm Bureau     Shared Harvest
 Equipment                                         Foodbank
 Manufacturers
Association of Fish and  Maryland Forests         Shoesole Management
 Wildlife Agencies        Association, Inc.        Team
Association of Illinois  Maryland Hunger          Silveus Insurance
 Soil and Water           Solutions                Group
 Conservation Districts  Massachusetts            SNF Agriculture
                          Association of
                          Conservation Districts
Association of Kansas    Massachusetts Farm       Society for Nutrition
 Food Banks               Bureau Federation,       Education and
                          Inc.                     Behavior
Association of Public    Massachusetts Law        Society of American
 and Land-grant           Reform Institute         Foresters
 Universities
Association of Texas     Meals on Wheels America  Society of St. Andrew
 Soil and Water          Michigan Agri-Business   Society of St. Vincent
 Conservation Districts   Association              de Paul, Cleveland
Association of           Michigan Bean Shippers   Soil and Water
 Veterinary Biologics                              Conservation Society
 Companies
Audubon Arizona          Michigan Farm Bureau     Soil Science Society
                                                   of America
Audubon Arkansas         Michigan Forest          South Carolina
                          Association              Appleseed Legal
                                                   Justice Center
Audubon California       Michigan Pork Producers  South Carolina Farm
                          Association              Bureau
Audubon Center at        Michigan Soybean         South Carolina Peach
 RIverlands               Association              Council
Audubon Connecticut      Mid-Ohio Foodbank        South Dakota Farm
                                                   Bureau
Audubon Dakota           Mid-West Dairymen's Co.  South Dakota Soybean
                                                   Association
Audubon Florida          MidAtlantic Farm Credit  South Dakota Wildlife
                                                   Federation
Audubon Great Lakes      Midwest Dairy Coalition  South East Dairy
                                                   Farmers Association
Audubon Minnesota        Midwest Organic and      Southeastern Lumber
Audubon Mississippi       Sustainable Education    Manufacturers
                          Service--MOSES           Association
                                                  Southern Oregon Forest
                                                   Restoration
                                                   Collaborative
Audubon Nebraska         Milwaukee Riverkeeper    Southern Peanut
                                                   Farmers Federation
Audubon New York         Minnesota Association    Southern States
Audubon North Carolina    of Soil and Water        Cooperative
                          Conservation Districts  Southwest Council of
                                                   Agribusiness
Audubon of the Western   Minnesota Corn Growers   Southwest Georgia Farm
 Everglades               Association              Credit
Audubon Pennsylvania     Minnesota Farm Bureau    Soyfoods Associat[i]on
                          Federation               of North America
Audubon Rockies          Minnesota Milk           Stewardship Alliance
                          Producers Association    of Northeast Elko
Audubon South Carolina   Minnesota Pork           Sugar Cane Growers
                          Producers Association    Cooperative of
                                                   Florida
Audubon Texas            Minnesota Soybean        Sustainable Northwest
                          Growers Association
Audubon Vermont          Mississippi Farm Bureau  Tennessee Farm Bureau
                          Federation               Federation
Audubon Washington       Mississippi Peanut       Tennessee Justice
                          Growers Association      Center
Aullwood Audubon Center  Mississippi Pork         Tennessee Pork
 and Farm                 Producers                Producers Association
Aurora Cooperative       Mississippi Soybean      Tennessee Soybean
                          Association              Association
B.A.S.S. LLC             Missouri Coalition for   Texas Agricultural
                          the Environment          Cooperative Council
Beartooth Fertilizer     Missouri Farm Bureau     Texas Farm Bureau
 Inc.                     Federation
Biotechnology            Missouri Pork            Texas Grain and Feed
 Innovation               Association              Association
 Organization
Blue Diamond Growers     Missouri Soybean         The American Chestnut
                          Association              Foundation
Bluestem Communications  MKC                      The American
                                                   Phytopathological
                                                   Society
Bongards Creameries      Montana Association of   The Community Pantry
                          Christians
Bread for the World      Montana Cattlemen's      The Conservation Fund
                          Associaton
C&H Associates           Montana Cattlemen's      The Fertilizer
                          Association Foundation   Institute
California Association   Montana Farm Bureau      The Food Depot
 of Food Banks            Federation
California Association   Montana Food Bank        The Food Trust
 of Resource              Network                 The Foodbank, Inc.
 Conservation Districts  Montana Food Security
                          Council
California Farm Bureau   Montana Grain Growers    The Hardwood
 Federation               Association              Federation
California Pork          Montana Partnership to   The Izaak Walton
 Producers Association    End Childhood Hunger     League of America
California Rice          Montana Wildlife         The Jewish Federations
 Commission               Federation               of North America
CarbonVerde, LLC         N.C. Association of      The Lyme Timber
                          Food Banks               Company
Catch-A-Dream            National All-Jersey      The Nature Conservancy
 Foundation
Center for Heirs'        National Alliance of     The Trust for Public
 Property Preservation    Forest Owners            Land
Center for Law and       National Association     The Wetlands
 Social Policy            for the Advancement of   Initiative
Central Aroostook Soil    Animal Science          Theodore Roosevelt
 & Water Conservation                              Conservation
 District                                          Partnership
CGB Diversified          National Association of  TN Environmental
 Services                 Clean Water Agencies     Council
Chesapeake Bay           National Association of  Trout Unlimited
 Foundation               Conservation Districts
CHS Inc.                 National Association of  U.S. Apple Association
                          Counties
City Bank Texas          National Association of  U.S. Canola
                          Farmer Elected           Association
                          Committees
CoBank, ACB              National Association of  U.S. Cattlemen's
                          Forest Service           Association
                          Retirees
Colorado Sorghum         National Association of  U.S. Dry Bean Council
 Association              Mutual Insurance
                          Companies
Colorado Wildlife        National Association of  U.S. Sweet Potato
 Federation               Nutrition and Aging      Council
Congressional Hunger      Services Programs       USA Dry Pea & Lentil
 Center                                            Council
Connecticut Forest &     National Association of  Union of Concerned
 Park Association         Plant Breeders           Scientists
Conservation Federation  National Association of  United Egg Producers
 of Missouri              Professional Insurance
                          Agents
Cooperative Network      National Association of  United Fresh Produce
Cottonseed and Feed       Resource Conservation    Association
 Association              & Development (RC&D)    United Way Worldwide
                          Councils
Crop Insurance and       National Association of  USA Rice
 Reinsurance Bureau       Retired ASCS/FSA        U.S. Rice Producers
Crop Insurance            Office Employees         Association
 Professionals
 Association
Crop Science Society of  National Association of  Utahns Against Hunger
 America                  State Departments of    Vermont Foodbank
D.C. Hunger Solutions     Agriculture
Dairy Business Milk      National Association of  Vineyard Community
 Marketing Cooperative    State Foresters          Church
Delaware Association of  National Association of  Virginia Conservation
 Conservation Districts   University Forest        Network
Delaware Farm Bureau      Resource Programs       Virginia Farm Bureau
                                                   Federation
Delta Waterfowl          National Association of  Virginia Forestry
                          Wheat Growers            Association
Ducks Unlimited          National Barley Growers  Washington Association
                          Association              of Conservation
                                                   Districts
eGovernment Payments     National Barley          Washington Farm Bureau
 Council of the           Improvement Committee   Virginia Soybean
 Electronic Funds        National Black Growers    Association
 Transfer Association     Council
Empire State Forest      National Bobwhite        Washington Farm
 Products Association     Conservation             Forestry Association
                          Initiative
Empower Missouri         National Cattlemen's     Watershed Research &
                          Beef Association         Training Center
Endangered Habitats      National Christmas Tree  Weed Science Society
 League                   Association              of America
Entomological Society    National Co+op Grocers   West Ohio Food Bank
 of America
End Hunger Connecticut!  National Coalition for   West Virginia Rivers
                          Food and Agricultural    Coalition
                          Research
Environmental and        National Conservation    Western Center on Law
 Energy Study Institute   District Employees       and Poverty
                          Association
Environmental Defense    National Corn Growers    Western Growers
 Fund                     Association              Association
Environmental Law &      National Cotton Council  Western Landowners
 Policy Center                                     Alliance
Equity Cooperative       National Cotton          Western Peanut Growers
 Livestock Sales          Ginners' Association     Association
 Association
Fair Food Network        National Cottonseed      Western Society of
                          Products Association     Weed Science
Farm Credit Bank of      National Council of      Western United
 Texas                    Farmer Cooperatives      Dairymen
Farm Credit Council      National Council on      Wholesome Wave
                          Aging
Farm Credit East         National Deer Alliance   Wildlife Management
                                                   Institute
Farm Credit Mid-America  National Farm to School  Wildlife Mississippi
                          Network
Farm Credit of the       National Farmers Union   Windmark Crop
 Virginias                                         Division, City Bank
                                                   Texas
Farm Credit Services of  National Milk Producers  Wisconsin Farm Bureau
 America                  Federation               Federation
Farmer Mac               National Organic         Wisconsin Pork
                          Coalition                Association
FarmFirst Dairy          National Parks           Women Involved in Farm
 Cooperative              Conservation             Economics
                          Association
Federation of Virginia   National Peach Council
 Food Banks
Feeding America          National Pork Producers  WoodWorks--Wood
                          Council                  Products Council
Feeding Illinois         National Potato Council  Wyoming Farm Bureau
Feeding Indiana's        National Sorghum         World Wildlife Fund
 Hungry                   Producers
Feeding Pennsylvania     National Sunflower       Wyoming Wildlife
                          Association              Federation
Feeding Texas            National Sustainable     NC Forestry
                          Agriculture Coalition    Association
Feeding Wisconsin        National Wild Turkey     Nebraska Appleseed
                          Federation
First District           National Wildlife        Nebraska Farm Bureau
 Association              Federation               Federation
Florida Farm Bureau      National Woodland        Nebraska Grain Sorghum
 Federation               Owners Association       Board
Florida Forestry         National Young Farmers   Nebraska Grain Sorghum
 Association              Coalition                Producers Association
Florida Impact           NAU Country Insurance
                          Company
 

                                 ______
                                 
     Submitted Statement by Ron Moore, President, American Soybean 
                              Association
    Chairman Scott, Ranking Member Scott, and Members of the 
Subcommittee and full Committee, the American Soybean Association (ASA) 
is pleased to provide this written statement for the record on the 
Energy Title programs for the next farm bill and their role in 
providing markets for agricultural products and economic growth for 
rural America.
    There are several Energy Title programs in which soybean producers 
have a strong interest, including the Biobased Market Program (Section 
9002), the Biodiesel Fuel Education Program (Section 9006), and the 
Bioenergy Program for Advanced Biofuels (Section 9005). ASA recognizes 
that these Energy Title programs do not have baseline going forward, 
increasing the challenge of extending these programs and building on 
the benefits they have provided. However, these programs remain high 
priorities for ASA and we believe that the relatively low cost and the 
benefits they provide warrant their continuation with an increased 
level of mandatory funding.
    Section 9002, Biobased Market Program: The Biobased Market Program 
continues and expands the Federal biobased procurement program and 
voluntary labeling program. This is an effective and important program 
for promoting the emerging biobased industry, which has significant 
potential to enhance agricultural markets, meet the growing demand for 
biobased alternatives in chemicals, plastics, cleaners and other 
industrial products, and contribute new jobs to the economy.
    The U.S. biobased products industry in 2014 added $393 billion to 
the U.S. economy and created 4.22 million jobs, according to a 2016 
report from authored by Duke University's Center for Sustainability & 
Commerce, and North Carolina State University's Poole College of 
Management. This study, authorized in the 2014 Farm Bill Energy Title, 
also reported that the state of Georgia ranks second, only behind 
California, in direct economic value addition from the biobased 
products industry in 2013. Georgia's direct value addition from 
biobased totaled $8,237,608,000. With 80,520 biobased-sector jobs, 
Georgia ranked fourth among states benefiting from the biobased 
industry's ability to create jobs.
    The soybean industry continues to partner with companies and invest 
resources into biobased product development. Funding from soybean 
farmers' check-off dollars has been invested with private-sector 
partners to develop soy biobased products.
    Through its use of soybean oil to displace petroleum in carpet and 
artificial turf and grass, the Dalton, Georgia-headquartered company, 
Universal Textile Technologies (UTT), is a global leader in the 
biobased and textile industries. UTT manufacturers, 
BioCelTM, a soy-based polyol technology developed with 
support from the soybean check-off. America is literally walking on 
thousands and thousands of square feet of soy-backed carpet available 
from major companies like Masland and Signature Accord. SYNLawn, a 
synthetic grass company, uses BioCel everywhere from New York City 
rooftops and playgrounds to North Dakota backyards to water-conscious 
resorts and residences in California and New Mexico.
    The Biobased Market Program, established and expanded through 
previous farm bills, plays an important role in the development of the 
biobased products industry in the United States. By providing a 
procurement preference for Federal Government purchases, the program 
helps pull products into the market and encourages investment and 
development of biobased products. ASA supports providing mandatory 
funding through the farm bill for USDA to more effectively administer 
the programs and further promote biobased markets.
    Section 9006, Biodiesel Fuel Education Program: The Biodiesel 
Education Program plays a vital role in helping expand marketplace 
acceptance and use of biodiesel as a low-carbon, renewable diesel 
replacement fuel. It supports technical outreach efforts to engine 
manufacturers, truckers, and fuel marketers that allow the use of 
higher biodiesel blends in conventional diesel applications. The 
education program serves to expand and increase market penetration, 
thus promoting growth for the entire industry. This translates into 
higher production, more jobs, and more economic value, especially in 
rural communities. Specifically, the biodiesel education program had a 
large part to play in building automakers trust in, and support for, 
biodiesel blends and growing the number of terminals, distributors, and 
retail outlets carrying biodiesel.
    ASA urges the continuation of this modest program that has achieved 
great success in expanding biodiesel acceptance and availability.
    Section 9005, Bioenergy Program for Advanced Biofuels: The 
Bioenergy Program for Advanced Biofuels is a program of significant 
interest and opportunity for producers of bioenergy and bioproducts, 
particularly biodiesel. The biodiesel industry is still working to 
establish itself in the competitive fuels marketplace and the Bioenergy 
Program plays a beneficial role is supporting domestic producers facing 
market fluctuations and uncertainty and competition from subsidized 
foreign biomass-based diesel imports.
    Many of the approximately 170 biodiesel production facilities in 
the U.S. are located in rural areas. Biodiesel is produced from soybean 
and other vegetable oils as well as animal fats. Nearly all of the 
feedstock used to produce biodiesel is grown or originates in rural 
areas. For the soybean industry, biodiesel provides a valuable market 
for soybean oil that has historically provided a drag on overall 
soybean prices and it has provided an outlet and market for soybean oil 
whose use in food production for baking and frying has declined due to 
trans fat issues.
    While ASA recognizes the funding challenges that exist, we believe 
that the Bioenergy Program for Advanced Biofuels can continue to play a 
role in supporting the development of advanced biofuels, bioenergy, and 
biobased products and we support the reauthorization and funding of the 
program in the next farm bill.
    We appreciate the Committee holding this hearing on rural 
development and energy programs and providing ASA the opportunity to 
submit this statement for the record. As always, we look forward to 
working with you on the development of a farm bill that includes an 
Energy Title and mandatory funding for priority programs.
            Sincerely,
            
            
Ron Moore,
President,
American Soybean Association.
                                 ______
                                 
                   Submitted Statement by CoBank ACB
    The farm bill is a unique piece of legislation that is reauthorized 
every 4 to 5 years. The first agricultural act was authorized during 
Roosevelt's ``New Deal'' period. The Agricultural Adjustment Act of 
1933 was authorized to aid farmers during troubling times. In 1938, 
this piece of legislation was updated to require farm programs be 
looked at every 5 years, ensuring Congress paid attention to the 
volatile markets and changing times of the ever growing economy. Today, 
the farm bill authorizes hundreds of programs. This piece of 
legislation provides food assistance to disadvantaged individuals, 
opportunities for emerging agricultural research, security for 
livestock and crop producers, and capital for infrastructure investment 
in rural communities.
    The Rural Development Title of the farm bill was created as an 
avenue to enhance the communities where agricultural producers live, so 
that the heart of the country will not have to leave home in order to 
thrive. Since 1973, every farm bill has included a rural development 
section. Of importance, there is no overarching statutory framework 
that underpins Federal rural policy. Title VI of the farm bill is the 
main policy tool to address emerging rural and small community issues. 
Issues including adequate housing, business creation, human capital 
concerns, rural poverty, adequate medical care, and infrastructure 
needed to serve these communities are all addressed in this one area of 
the omnibus farm bill.
    Rural populations and job opportunities continue to decline. The 
need for investment to improve and enhance rural America is more urgent 
than ever. According to the U.S. Census, manufacturing now accounts for 
over 20% of rural private-sector earning and nearly 11% of rural jobs. 
That economic activity depends on the answers to important questions. 
How do we get people to go to rural America? How do we keep them there? 
How should the government help rural America thrive and put rural 
residents in a position to compete in the global marketplace? When we 
answer these questions we help our communities thrive.
    The Rural Development title, addresses these questions every day. 
CoBank is proud to be a partner in those efforts. It is our mission to 
serve the hard working individuals, companies, producers, and customers 
that call our rural communities home. We work with those who have been 
overlooked. We do so by finding solutions to broadband issues in rural 
Utah, improving health care facilities for rural Minnesota, and we 
ensure that rural Iowa communities have access to clean water. We 
accomplish each of these missions in partnership with the United States 
Department of Agriculture (USDA).
    CoBank is a member of the Farm Credit System, a nationwide network 
of banks and retail lending associations chartered to support the 
borrowing needs of U.S. agriculture and the nation's rural economy. 
CoBank is a national cooperative bank, with the mission to serve rural 
America. The bank provides loans, leases, export financing and other 
financial services to agribusinesses and rural power, water and 
communications providers in all fifty states. In addition to serving 
our direct retail borrowers, we also provide wholesale loans and other 
financial services to our affiliated Farm Credit Associations across 
twenty-three states and serving approximately 70,000 farmers, ranchers, 
and other rural businesses.
    The mission of CoBank includes serving ``as a dependable provider 
of credit and other value-added financial services to agriculture and 
rural infrastructure businesses for the benefit of rural America.'' Our 
mission parallels' that of USDA's Rural Development office, which is, 
``We promote economic development by supporting loans to businesses 
through banks, credit unions and community-managed lending pools. We 
offer technical assistance and information to help agricultural 
producers and cooperatives get started and improve the effectiveness of 
their operations.'' Our two entities are naturally complementary. We 
serve the same entities to better the same communities, and to improve 
the lives of rural America's residents.
    A strong Rural Development title is necessary to bridge the growing 
divide between rural and urban America. As individuals leave the farm 
for the urban life, what is left is sometimes forgotten. The 
deteriorating infrastructure in our small and local communities is 
omnipresent. The idea that water treatment facilities have not been 
replaced in over sixty years is unacceptable. With water quality issues 
being prevalent throughout the country like we have most recently seen 
in Flint, Michigan, the fact that we are not able to take care of the 
issues in our back yard, is unsettling for most. The Rural Development 
title of the farm bill, when funded adequately and administered 
efficiently, has the ability to repair all of the issues that 
disadvantage most small and rural communities. Access to the capital to 
finance improvements to a local water treatment facility, access to 
broadband that allows for a teleconference with a doctor in an urban 
community 5 hours away from home, and financial incentives to attract a 
meat processing facility to a rural community all serve to improve the 
quality of life and economic activity of rural America. None would be 
possible without the programs that the Rural Development title 
authorizes.
    Several programs that are important to CoBank customers are 
included below.
Water and Wastewater Loan Programs
    The Water and Wastewater Loan Program is vital to the health of any 
rural community. Without clean water a community cannot exist. The 
program extends affordable access to clean and reliable water for 
households and businesses in rural areas. Infrastructure in these 
communities has exceeded its lifespan and the deterioration of these 
facilities is hurting communities. In most recent years, much of the 
country went through a major drought. Many were often faced with the 
tough decision between increasing water prices to deter usage, 
rationing water, or penalizing farmers for excessive water use? The 
irony of this situation is that many rural areas hurting the most were 
losing sometimes fifty percent of the water moving through their pipes. 
For many towns it was cheaper to waste water than to update their local 
communities' water infrastructure. This program must be continued.
Communities and Facilities Loan Program
    The Community Facilities Loan Guarantee Program encourages private 
lenders, like CoBank, to assist rural communities in building 
facilities that are essential to the lives of their residents. This 
program permits the investment in the purchase, construction, and 
improvement to equipment or necessary facilities. Public facilities, 
healthcare facilities, utility services, and public safety and 
educational services are considered essential as well. CoBank has 
recently partnered with a local farm credit association in Minnesota to 
finance improvements at a local rural hospital Improving their existing 
structure and expanding capacity to assist rural constituents who 
without this project may not be able to receive or seek necessary 
treatment without burdensome travel. This program is important and 
could be streamlined to make it even more useful.
Farm Bill Broadband Loan and Loan Guarantees and Telecommunications 
        Infrastructure Loan and Loan Guarantees
    It is no surprise that many rural areas still struggle with 
obtaining adequate access to rural broadband. Broadband is now a 
necessity everywhere: for any small rural community, every rural 
medical office, every farmer, and every household with a child in 
school. No one will stay or plant their roots in rural America if they 
cannot access services to which they have become accustomed or if they 
cannot find meaningful work.
    The Farm Bill Rural Broadband Access Loan and Loan Guarantee 
Program (Farm Bill Broadband Program) allows for cooperatives, like 
CoBank, to provide loans to provide funds for construction, 
improvement, and acquisition of facilities and equipment. Without the 
capital to purchase these materials, broadband would not be feasible 
for many rural communities.
    Further, the Telecommunications Infrastructure Loan and Loan 
Guarantees Program provide financing for improvements, expansions, 
constructions, some acquisitions, some opportunities for refinancing, 
and additionally to finance broadband capable telecommunications 
service. These programs are essential, and should be streamlined, where 
possible, to make them easier to deploy.
Business & Industry Loan Guarantees
    Business & Industry Loan Guarantees (B&I Loans) have the unique 
ability to allow farm credit banks, like CoBank, to offer the private 
credit structure by guaranteeing rural business loans. This allows 
entities participating in the loan to extend more credit than they 
typically would be able to, to bring investment needed to improve rural 
America and to improve the agricultural economy as a whole.
Rural Energy for America Program--Renewable Energy Systems and Energy 
        Efficiency Improvement Loan and Grants
    The Rural Energy for America Program (REAP) allows for guaranteed 
loan financing, and grant funding to agricultural producers and small 
rural businesses. REAP allow these entities to make investments and to 
enhance their operations and increase their energy efficiency to bring 
down their operating costs. This program allows cooperatives to invest 
in their customers by helping them weather the long term and constantly 
changing commodity prices we are experiencing.
    CoBank supports the passage of a strong Rural Development Title and 
will continue to advocate for the same. Improvements are always 
possible, but continuing the important progress USDA has made and 
working to enhance these programs to improve rural America is of the 
utmost importance to CoBank and the customers we serve.
                                 ______
                                 
            Submitted Statement by National Biodiesel Board
    Chairman Scott, Ranking Member Scott, and Members of the 
Subcommittee and full Committee, the National Biodiesel Board (NBB) 
appreciates the opportunity to submit this statement for the record for 
the hearing titled, ``The Next Farm Bill: Rural Development & Energy 
Programs''. The biodiesel industry is extremely proud of the 
contribution to energy & economic growth that our industry provides the 
nation, especially in rural America. The U.S. biodiesel industry 
experienced a record year in 2016, with approximately 2.9 billion 
gallons of biomass-based diesel utilized nation-wide, all of which is 
produced using co-products and waste products derived from agricultural 
sources.
    NBB is the national trade association representing the biodiesel 
industry. NBB has significant roots and ties to U.S. agriculture. It 
was founded in 1992, with significant investment from the U.S. soybean 
industry, and since that time, the NBB has developed into a 
comprehensive industry association that coordinates and interacts with 
a broad range of cooperators including industry, government and 
academia. NBB's membership is comprised of biodiesel producers; state, 
national and international feedstock and feedstock processor 
organizations; fuel marketers and distributors; and technology 
providers.
    Biodiesel producers include farmer-owned cooperatives and other 
farmer-owned companies, agribusinesses and independently owned 
biodiesel producers. The American Soybean Association, United Soybean 
Board, numerous state soybean associations, and the U.S. Canola 
Association play an active and important role in our organization, and 
our Governing Board consists of several active soybean farmers.
About Biodiesel
    Biodiesel is a renewable, low carbon diesel replacement fuel. 
Biodiesel is refined to meet the D6751 fuel specification set forth by 
ASTM International. Biodiesel is made from surplus soybean and canola 
oil, waste greases like recycled cooking oil, animal fats, algae, and 
inedible corn oil derived from the ethanol production process. There 
are approximately 170 biodiesel production plants spread all across the 
U.S.
    Biodiesel is primarily marketed as a five percent (B5) blending 
component with conventional diesel fuel, but can be used in 
concentrations up to twenty percent (B20). It is distributed utilizing 
the existing fuel distribution infrastructure with blending occurring 
both at fuel terminals and ``below the rack'' by fuel jobbers.
    Biodiesel is the first and currently the only fuel being produced 
in commercial quantities that qualifies as an Advanced Biofuel for 
purposes of the Renewable Fuel Standard, which means that it achieves a 
minimum of 50% greenhouse gas emissions reductions relative to 
petroleum. Along with significant reductions in greenhouse gas 
emissions, it dramatically reduces nearly every major toxic air 
pollutant, according to the EPA.
    The Biodiesel Industry is Creating Jobs and Making a Positive 
Contribution to the Economy, Especially in Rural America: In 2016, the 
NBB estimates that the U.S. biodiesel industry supports over 48,000 
jobs in all sectors of the economy. Biodiesel also makes a significant 
contribution to rural economic development. Many of the approximately 
170 biodiesel production facilities in the U.S. are located in rural 
areas and nearly all of the feedstock used to produce biodiesel is 
grown or originates in rural areas.
    While the biodiesel market was initially reliant on surplus 
vegetable oils as the primary feedstocks, animal fats and greases are 
now a prominent and growing portion of the industry. In fact, biodiesel 
and renewable diesel are now one of the largest markets for animal 
fats, utilizing over 1 billion pounds of fats annually and adding 
millions of dollars of value to animal production each year. Animal 
fats are used in biomass-based diesel to produce biodiesel, renewable 
diesel, and renewable aviation fuel. The livestock, rendering and 
biodiesel industries employ tens of thousands of workers nationwide, 
with many of these jobs in rural areas across the country.
    Biodiesel provides a valuable market for soybean oil that has 
historically been in surplus and whose use in food production has 
declined in recent years due to trans fat issues. In addition to 
providing a growing and valuable market for rendered animal fats, 
biodiesel helps increase production of soy meal used for livestock 
feed. Soybeans are 80% meal and 20% oil. Between 2005 and 2009, the 
increased demand for soybean oil has subsequently increased the 
production of soybean meal, which has lowered soybean meal prices for 
livestock feed by $16 to $48 per ton from where they would have 
otherwise been.\1\
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    \1\Economic Impacts of Biodiesel Production on The Soybean Sector, 
Revisited: Centric Consulting Group, LLC, December 2010.
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Biodiesel & the Farm Bill
    Given its agricultural roots and the benefits it provides to U.S. 
farmers and rural communities, programs supporting biodiesel are an 
appropriate piece of the farm bill. NBB has a particular interest in 
two existing farm bill energy title programs--the Biodiesel Fuel 
Education Program (Section 9006) and the Bioenergy Program for Advanced 
Biofuels (Section 9005). NBB recognizes that these Energy Title 
programs do not have baseline funding going forward, which creates a 
challenge to extending these programs and building on the benefits they 
have provided.
Section 9006, Biodiesel Fuel Education Program
    The Biodiesel Fuel Education Program plays a vital role in helping 
expand marketplace acceptance and use of biodiesel as a low-carbon, 
renewable diesel replacement fuel. NBB urges the continuation of this 
program in the next farm bill.
    Through competitive grants to nonprofit entities, this program 
supports technical outreach efforts to engine manufacturers, truckers, 
and fuel marketers that will eventually allow the use of higher 
biodiesel blends in conventional diesel applications. This program 
helps educate on the different characteristics and benefits of 
biodiesel and to clear up misperceptions that have developed. Since 
2003, the NBB has achieved great success in garnering and promoting OEM 
(Organization of Engine Manufacturers) support for biodiesel through 
the OEM biodiesel education program. The OEM biodiesel education 
program had a large part to play in building automakers' trust in, and 
support for, biodiesel blends.
Section 9005, Bioenergy Program for Advanced Biofuels
    Section 9005 of the 2008 Farm Bill also authorized and provided 
mandatory funding for USDA to implement the Bioenergy Program for 
Advanced Biofuels to make payments to producers of advanced biofuels 
and bioenergy to support a stable and expanding production base. The 
Bioenergy Program has been beneficial to many biodiesel producers as 
the industry is working to establish itself in the competitive 
marketplace. The program helps with the development and expansion of 
new markets for agricultural feedstocks including vegetable oils and 
animal fats. The markets that biodiesel provides for these agricultural 
waste and co-products increases value for farmers and ranchers. As 
such, we urge the Committee to reauthorize and fund this program.
    Conclusion: The U.S. biodiesel industry is proud to produce the 
only domestic, emissions-reducing, commercial-scale Advanced Biofuel 
that is readily available and accepted in the marketplace. The U.S. 
biodiesel industry has both the capacity and available feedstock to 
increase production and further expand markets for agricultural 
feedstocks.
    We are proud of the significant economic, energy, and environmental 
benefits associated with biodiesel production. Accordingly, the U.S. 
biodiesel industry urges continued mandatory funding for the Biodiesel 
Education Program as well as reauthorization and funding of the 
Bioenergy Pr[og]ram for Advanced Biofuels. These investments help the 
small but growing biodiesel industry gain a sustainable presence in the 
U.S. fuels marketplace.
          * * * * *
    Again, the NBB appreciates the opportunity to submit this statement 
for the hearing record. We look forward to working with you on the 
development of the farm bill and the continuation of the programs that 
support the growing U.S. biodiesel industry.
                                 ______
                                 
     Submitted Statement by Rural Community Assistance Partnership
    Thank you Chairman Scott, Ranking Member Scott, and Members of the 
Subcommittee, for this opportunity to submit written testimony on the 
importance of USDA Rural Development (RD) programs to rural America.
    The Rural Community Assistance Partnership (RCAP) is a nonprofit 
national network of regional service providers that for nearly 45 years 
has helped small, low-income, rural communities address water, 
wastewater, and other community development needs in all 50 states, 
Puerto Rico, and the Virgin Islands. Our staff of assistance providers 
deliver onsite training and technical assistance to small water and 
wastewater systems to help these systems meet Federal and state 
regulatory requirements, finance and manage capital improvement 
projects, and to develop and sustain technical, managerial, and 
financial capacities.
    For many years, the RCAP network has partnered with USDA to bridge 
the gap between RD and the communities they serve. RCAP assists rural 
communities with funding applications and every phase of the project 
planning and development process, as well as providing training and 
technical assistance after construction is complete, helping 
communities understand how to properly manage and operate their system 
in a fiscally sustainable manner. We work to ensure that RD borrowers 
are able to meet the terms of their Letters of Condition and that they 
are able to repay their loans on time. Every year, the RCAP network 
helps over 2,000 rural communities address their water and wastewater 
needs.
    Providing these basic services is a challenge for many rural 
communities. Rural residents are three times more likely than their 
urban counterparts to lack water and sanitation; they also typically 
pay nearly three or four times the amount for water and sewer services. 
Due to their limited customer base, small utilities lack the economies 
of scale that reduce the costs of infrastructure construction, 
operation, and maintenance to levels that are affordable to low-income 
residents. Few rural communities can access the municipal bond market 
or find banks that are willing to invest in such long-term, low-yield 
transactions. Many turn to RD as their lender of last resort.
USDA-RD Water and Wastewater Programs Have Been Enormously Successful
    RD's water and wastewater programs are a key component of economic 
development in rural America. Every water and wastewater construction 
dollar generates nearly $15 of private investment and adds $14 to the 
local property tax base. Without the basic infrastructure funded by 
RD--clean drinking water for household needs, sufficient quantities of 
water to support local industry, and sanitary sewers to remove sewage 
and industrial byproducts to protect public health--local employers 
will relocate or close factories and small businesses will decline and 
eventually disappear. The entrepreneurs and small business owners who 
are the engines of our economy won't open new businesses, shops or 
restaurants on Main Street without basic services. Infrastructure is 
the foundation of economic development, and to promote economic growth 
in rural America, you need to ensure that businesses' and residents' 
basic needs--like water and sewer services--are met. Opportunities for 
continued economic growth in rural communities are substantial. 
Agricultural production, oil and gas development, mining operations, 
alternative energy pursuits, and tourism are all vibrant economic 
sectors that depend on thriving rural communities. RD programs play a 
part in making available to rural communities water and wastewater 
utilities, essential community facilities, affordable housing, and 
broadband.
    The Water and Environment Programs at RD have enjoyed tremendous 
success over the past few decades. The agency boasts a portfolio of 
more than 18,000 active water/sewer loans, more than 19 million rural 
residents served, and a delinquency rate of just 0.43%. This success is 
partly attributable to the field presence RD has historically 
maintained in rural areas. With staff in field offices throughout the 
country, RD is uniquely positioned to evaluate the credit-worthiness of 
small utilities and can distribute Federal funds quickly and 
efficiently to areas of need. In drought years, or after natural 
disasters, community leaders benefit from being able to turn to a local 
RD staffer whom they know and trust and who is familiar with their 
system and its needs, though recent staff reductions in RD offices 
nationally have started to hinder the ability of RD to serve rural 
communities with these critical services. To build on the past 
successes of the Water and Environment Programs, the farm bill should 
reauthorize the water and wastewater loan and grant programs, the 
technical assistance and training grant program, and the water 
infrastructure revolving loan fund program at or near the levels in the 
current farm bill.
Technical Assistance Is Key to Ensuring RD's and Rural Communities' 
        Success
    Despite RD's many successes, a substantial number of small, low-
income towns and counties have difficulty accessing RD programs. The 
application process and eligibility requirements for each program are 
slightly different, and each poses unique challenges. Local leaders are 
most often volunteers who lack professional staff and the resources to 
find out what funding sources are available or the requirements for 
funding eligibility. Their first look at the Letter of Conditions on an 
RD loan can make the process seem overwhelming and discourage worthy 
applications. With help from an experienced technical assistance 
provider, however, even communities with no staff and limited planning 
resources can develop the local leadership capacity to manage needed 
infrastructure projects. Technical assistance plays a vital role in 
ensuring that the programs serve the communities they were designed to 
benefit in a cost-effective manner.
    While there are many calls for reducing the requirements associated 
with obtaining water and wastewater financing from RD, RCAP's opinion 
is that these requirements are for the most part necessary to ensure 
that the Federal Government is making financial support available to 
the neediest communities while ensuring the security of the Federal 
investment. The extremely low default rate on these loans is a 
testament to the efficacy of existing requirements. Common 
environmental review requirements among all Federal and state 
infrastructure programs would be one area for improvement. Oftentimes 
projects have multiple funding sources with varying environmental 
review/assessment requirements, and standardizing them across Federal 
programs would reduce the burden on applicants to conduct multiple 
separate reviews.
    Overall, the water and wastewater Technical Assistance and Training 
Grant Program has been so successful that many state RD offices and 
local community officials have asked the RCAP network to assist with 
other, non-water-related RD-funded projects. In the last farm bill, 
Congress authorized a new set-aside program for the Rural Housing 
Service's Essential Community Facilities (CF) Program to fund technical 
assistance because State RD Offices have requested RCAP for assistance 
with borrowers under the CF program. If implemented properly, the CF 
technical assistance and training program will provide much-needed 
support for the CF program, as has been the case with the water and 
wastewater programs. Under current and projected economic outlooks, 
essential community facilities constitute an important foundation for 
rural community growth. Reauthorizing this dedicated CF technical 
assistance program will ensure that these facilities are planned for, 
constructed, operated and managed in an efficient manner that benefits 
the entire community and promotes economic development opportunities.
Reauthorize Revolving Funds for Financing Water and Wastewater Projects
    7 U.S.C. 1926(a)(2)(B) authorizes a program for nonprofit entities 
to capitalize revolving loan funds for the purposes of financing 
eligible borrowers with predevelopment or other short-term capital 
costs (such as site acquisition or engineering costs or for equipment 
replacement, small service extensions or emergency repairs). RCAP would 
recommend that this program be maintained at currently authorized 
levels and the maximum for eligible loans to small-system borrowers be 
increased from $100,000 to $200,000, as costs for even the smallest 
repairs have increased significantly. Both RCAP and the National Rural 
Water Association have utilized this program to capitalize revolving 
loan fund programs that have assisted small communities to extend 
services, meet regulatory requirements, make emergency repairs and fund 
pre-development costs associated with major capital construction 
projects. These types of loans are typically not available from RD or 
the State Revolving Funds, nor do small communities have much hope of 
securing these loans from private sources. Demand for these loans far 
surpasses amounts authorized and appropriated for this purpose.
Household Water Well Program: 7 U.S.C. 1926(E)
    This section allows RD to make grants to nonprofit organizations to 
loan money to individuals to finance the construction, refurbishing and 
servicing of individually owned household water well systems in rural 
areas. While this program, combined at times with state housing 
programs, has benefited low-income families in isolated rural areas 
that would otherwise be unable to obtain water except through a 
household well, the farm bill should require that none of these loans 
go to residences in areas where RD has funded or is considering funding 
a community water system. Funding individual homeowner loans can 
adversely impact small customer bases within areas funded by RD's 
community water loans by reducing the potential number of customers who 
are ultimately responsible for servicing the Federal debt. Furthermore, 
encouraging multiple wells into potentially sensitive and increasingly 
depleted aquifers can negatively impact other users from both a water 
quality and water quantity perspective.
Conclusion
    Solving the challenges facing rural communities requires a multi-
pronged approach that includes adequate funding, along with steps to 
ensure that funding is available to all communities that truly need it, 
and a comprehensive approach to technical assistance to maximize the 
efficiency and effectiveness of RD's programs. It also includes an 
emphasis on rural economic development and cost-effective investments 
in infrastructure that provide maximum return on scarce Federal, state, 
and local resources. The farm bill reauthorization is an opportunity to 
replicate the success of the water/wastewater technical assistance 
program and modify existing programs, while protecting taxpayer 
investment in our nation's water and sewer infrastructure.
    We know that there is a long road ahead for the next farm bill 
reauthorization, but we stand ready and willing to assist you in 
pushing for its adoption and look forward to opportunities to work with 
you and your colleagues to ensure that it meets the needs of our rural 
communities. We thank you for your commitment to rural America and your 
earnest efforts to ensure a robust rural economy.
                                 ______
                                 
                          Submitted Questions
Response from Hon. Bob Fox, Chair, Board of Commissioners, Renville 
        County, MN; Member, Board of Directors, National Association of 
        Counties*
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    *There was no response from the witness by the time this hearing 
was published.
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Question Submitted by Hon. Stacey E. Plaskett, a Delegate in Congress 
        from Virgin Islands
    Question. In your testimony, you mention the importance of the 
Community Facilities Direct Loan and Grant Program within USDA Rural 
Development.
    The specific language establishing the program provides loans, 
grants, and loan guarantees for ``essential community facilities'' in 
certain rural areas.
    It has been over 20 years since the Virgin Islands has had 
sufficient resources to build a new school.
    Would the construction of a new school in a qualified rural 
community be included in the program's authority to fund ``essential 
community facilities''? If not, should the program be expanded to 
include this?
    Answer.
Response from Dennis L. Chastain, President and Chief Executive 
        Officer, Georgia Electric Membership Corporation; on behalf of 
        National Rural Electric Cooperative Association*
Question Submitted by Hon. Tom O'Halleran, a Representative in Congress 
        from Arizona
    Question. You mentioned that the needs of rural co-ops have changed 
and your emphasis has moved to making the grid smarter. I have native 
constituents that remain without electricity. What improvements to RUS 
do you believe will help the rural co-ops that are still working on 
expanding their grids?
    Answer.
Response from Steve Fletcher, Manager and Operator, Washington County 
        Water Company, IL; President, National Rural Water Association
Question Submitted by Hon. Tom O'Halleran, a Representative in Congress 
        from Arizona
    Question. You said it was a disaster for your customers when they 
turn on the faucet and don't have water. For many of my Tribal 
constituents, this disaster is daily life. What do you think what can 
we do better in the farm bill to encourage development of clean water 
systems in extremely rural communities?
    Answer. We understand that on the Navajo Nation in your state many 
residents are still hauling water. Many Tribal water systems share the 
same problems that many small communities experience, and we also 
recognize they have unique challenges such as sovereignty, cultural 
norms, many lack resources, capacity issues, high operator turn-over, 
etc. The Circuit Rider concept is very effective in addressing and 
identifying solutions to these unique issues because of established 
long-term relationships predicated on trust and the vast experience of 
the Circuit Riders.
    For decades, we have been working with these difficult situations 
on tribal lands in your home state of Arizona and in New Mexico, North 
and South Dakota, Minnesota and other states fulfilling the needs of 
their constituency. Currently in Arizona, the Rural Water Association 
of Arizona has two full-time Circuit Riders devoted to drinking water 
and one full-time Circuit Rider devoted to wastewater systems. You 
could expand this program to allow for a dedicated Circuit Rider for 
Tribal areas in states that have a large number of federally recognized 
tribes.Below are a few suggestions to address these unfortunate 
circumstances for tribal areas and extremely remote rural areas through 
the Farm Bill and the existing programs:

  1.  Water Stations--For some areas due to the remoteness and/or the 
            ability to finance and manage an affordable community water 
            system, an innovative and affordable solution could include 
            financing a watering station at a suitable water source 
            where the residents and/or the community could obtain safe 
            and affordable water. Then using sanitized water 
            containers, the residents and/or the community could fill 
            their containers with clean water and transport the water 
            and return to the filling station on an as needed basis.

        For instance, in the Maricopa Mountain area there are three (3) 
            well sites that are 60 miles south of Phoenix, 
            approximately 1,500 people live in this area and they are 
            still hauling water. Populations located around feed lots 
            with agriculture land is another concern with nitrates that 
            have contaminated the ground water and the wells have to 
            reach 3,000 before they are able to access clean water 
            that is safe enough to drink.
        We have been told this type of facility, a water station, has 
            been financed before by Rural Development even though the 
            authority is somewhat vague and left up to interpretation 
            from each state office. The current regulation 
            (1780.9(e)(1)(iii) (https://www.gpo.gov/fdsys/pkg/CFR-2017-
            title7-vol12/pdf/CFR-2017-title7-vol12-sec1780-9.pdf))* 
            states that allowable activities include ``Purchasing or 
            renting equipment necessary to install, operate, maintain, 
            extend, or protect facilities.'' You may want to add 
            language to clearly define that funds may be used for this 
            purpose and include critical equipment, like the vehicle 
            and containers necessary to transport the water, as an 
            eligible purpose for loan and grant funding.
---------------------------------------------------------------------------
    *Editor's note: See attachment. The hyperlink in the parenthesis is 
the offical hyperlink from the U.S. Government Publishing Office; the 
hyperlink as submitted is: http://federal.elaws.us/cfr/
title7.part1780.section1780.9.

  2.  Existing programs--Leverage existing programs currently 
            authorized in the farm bill to create a sustainable safe 
            drinking water supply for the community. For example, the 
            USDA Rural Development Water and Wastewater Loan and Grant 
            program provides funding to communities with populations of 
            less than 10,000 for clean and reliable drinking water 
            infrastructure. With the help of an Arizona Rural Water 
            Circuit Rider, the community could assess their water 
            supply sources, identify the needed infrastructure, and 
            develop a proposal for the review of USDA Rural 
            Development. One hundred percent of the loans and grants 
            from this program are targeted to small and rural 
            communities, and therefore make it an attractive option for 
            the extremely rural community to consider, especially if 
            their goal is to have a sustainable water supply of their 
---------------------------------------------------------------------------
            own wells.

        As you are aware, each annual appropriations bill includes a 
            specific set-aside for loans and grants for Federally 
            Recognized Native American Tribes (7 U.S.C. 1926) Unlike 
            the standard grant programs that is capped at 75% grant, 
            grant funding may be up to 100% of the eligible project 
            cost for tribal areas.

  3.  Native American Circuit Rider Program--There is also a program 
            created by the Appropriations Committee, the Native 
            American Circuit Rider Program that is specifically 
            targeted for a qualified national Native American 
            organization to provide technical assistance for rural 
            water systems for tribal communities. Since inception, this 
            program has historically received $800,000 annually. You 
            may want to review this program and make additional changes 
            specifically to address the unique needs of Tribal 
            communities. As previously mentioned, the Rural Water 
            Association of Arizona had a designated Native American 
            Circuit Rider, but that funding was lost. You could explore 
            the possibility to add a preference and/or additional 
            resources within the standard Circuit Rider program (7 
            U.S.C. 1926(a)(22) for system capacity and development for 
            Native Americans.

  4.  The Grassroots Source Water Protection Program (16 U.S.C. 3839bb-
            2)--This program is administered through the Farm Service 
            Agency and is another resource for Tribal areas and remote 
            rural communities. You may want to explore expanding this 
            authorization to provide priority in addressing the 
            critical water sources for Tribal lands and extremely 
            remote low-income communities. Recently in Arizona, we have 
            had requests in Tribal areas to provide this service in 
            order to mutually develop Source Water Protection plans 
            necessary to identify threats and preserve and protect 
            their valuable water sources.

  5.  Unserved and underserved communities--Unfortunately, many 
            unserved or underserved rural areas within the United 
            States lack the technical, financial, and managerial 
            capacity to adequately operate, maintain or provide safe 
            and affordable water and wastewater service necessary to 
            protect and enhance the public health and economic vitality 
            within in their communities. The National Rural Water 
            Association held a district/regional water meeting last 
            year with many utilities and Rural Development employees to 
            discuss this and other issues.

        One solution presented was to consider providing a financial 
            incentive, in the form of a direct loan at the poverty 
            interest rate, to encourage local utilities to provide 
            service to these communities. The intent is to allow 
            contiguous and local utilities located outside of the 
            unserved or underserved service areas that have the 
            capacity and experience to provide this essential water and 
            or wastewater service.
        We thought this would be another positive tool to provide Rural 
            Development additional authority to address these 
            situations. Here are a few details of the proposed concept. 
            We would welcome further discussions and suggestions and 
            would also encourage you to reach out to Rural Development 
            and get their comments. Key points--
  Assistance
        The Secretary may make direct water and wastewater loans at the 
            poverty interest rate as authorized under Section 307(a)(3) 
            of the CONACT (7 U.S.C. 11927 (a)(3)) for such projects in 
            cities, towns, or unincorporated areas with populations at 
            or below 10,000 in communities that lack the technical, 
            financial, and managerial capacity to adequately operate, 
            maintain and serve the present population, as determined by 
            the Secretary.
  Eligible applicants
        Eligible applicants shall be contiguous and local utilities 
            outside of the service area with demonstrated experience 
            and capacity, as determined by the Secretary, in delivering 
            water and or waste water programs administrated through the 
            Rural Utilit[ies] Service and can further demonstrate the 
            capacity to provide service to the unserved or underserved 
            area.
  Justification
        Presently, there are many unserved or underserved rural areas 
            within the United States lack the technical, financial, and 
            managerial capacity to adequately operate, maintain or 
            provide safe and affordable water and wastewater service 
            necessary to protect and enhance the public health and 
            economic vitality in their communities. Many contiguous and 
            local utilities located outside of the unserved or 
            underserved service area have the capacity to provide 
            essential water and or waste water services to these 
            unserved or underserve areas. This proposal provides a 
            financial incentive in the form of financing direct water 
            and waste water loans at the poverty interest rate that 
            will further enhance the ability to provide essential water 
            and waste water services to these communities in need.
        Eligible utilities for funding should be limited to have 
            demonstrated experience and capacity, as determined by the 
            Secretary, in delivering water and or waste programs 
            administrated through the Rural Utilit[ies] Service and can 
            further demonstrate the capacity to provide service to the 
            unserved or underserved area.

  6.  Other resources--In 2016, the Inter-Tribal Council of Arizona, 
            Inc. (ITCA) was awarded $600,000 proposing to provide 
            tribal operator certification training and examination 
            events, training workshops on water utility workforce 
            retention, public relations, and operator safety awareness. 
            ITCA will implement a tribally-led capacity development 
            program that provides technical assistance; SDWA training 
            and regulatory updates; asset management training; and 
            utility specific Effective Utility Management team exercise 
            assessment workshops. ITCA will conduct 12 workshops (two 
            for each region).
                               attachment
                      Code of Federal Regulations
    Title 7--Agriculture

  Volume: 12
  Date: 2017-01-01
  Original Date: 2017-01-01
  Title: Section A
  1780.9--Eligible loan and grant purposes.

    Context:

  Title 7--Agriculture.
  Subtitle B--Regulations of the Department of Agriculture (Continued).
  Chapter XVII--Rural Utilities Service, Department of Agriculture 
    (Continued).
  Part 1780--Water and Waste Loans and Grants.
  Subpart A--General Policies and Requirements.
1780.9  Eligible loan and grant purposes.
    Loan and grant funds may be used only for the following purposes:

          (a) To construct, enlarge, extend, or otherwise improve rural 
        water, sanitary sewage, solid waste disposal, and storm 
        wastewater disposal facilities.
          (b) To construct or relocate public buildings, roads, 
        bridges, fences, or utilities, and to make other public 
        improvements necessary for the successful operation or 
        protection of facilities authorized in paragraph (a) of this 
        section.
          (c) To relocate private buildings, roads, bridges, fences, or 
        utilities, and other private improvements necessary for the 
        successful operation or protection of facilities authorized in 
        paragraph (a) of this section.
          (d) For payment of other utility connection charges as 
        provided in service contracts between utility systems.
          (e) When a necessary part of the project relates to those 
        facilities authorized in paragraphs (a), (b), (c) or (d) of 
        this section the following may be considered:

                  (1) Loan or grant funds may be used for:

                          (i) Reasonable fees and costs such as: legal, 
                        engineering, administrative services, fiscal 
                        advisory, recording, environmental analyses and 
                        surveys, possible salvage or other mitigation 
                        measures, planning, establishing or acquiring 
                        rights;
                          (ii) Costs of acquiring interest in land; 
                        rights, such as water rights, leases, permits, 
                        rights-of-way; and other evidence of land or 
                        water control or protection necessary for 
                        development of the facility;
                          (iii) Purchasing or renting equipment 
                        necessary to install, operate, maintain, 
                        extend, or protect facilities;
                          (iv) Cost of additional applicant labor and 
                        other expenses necessary to install and extend 
                        service; and
                          (v) In unusual cases, the cost for connecting 
                        the user to the main service line.

                  (2) Only loan funds may be used for:

                          (i) Interest incurred during construction in 
                        conjunction with multiple advances or interest 
                        on interim financing;
                          (ii) Initial operating expenses, including 
                        interest, for a period ordinarily not exceeding 
                        one year when the applicant is unable to pay 
                        such expenses;
                          (iii) The purchase of existing facilities 
                        when it is necessary either to improve service 
                        or prevent the loss of service;
                          (iv) Refinancing debts incurred by, or on 
                        behalf of, an applicant when all of the 
                        following conditions exist:

                                  (A) The debts being refinanced are a 
                                secondary part of the total loan;
                                  (B) The debts were incurred for the 
                                facility or service being financed or 
                                any part thereof; and
                                  (C) Arrangements cannot be made with 
                                the creditors to extend or modify the 
                                terms of the debts so that a sound 
                                basis will exist for making a loan; and

                          (v) Prepayment of costs for which RUS grant 
                        funds were obligated.

                  (3) Grant funds may be used to restore loan funds 
                used to prepay grant obligated costs.

          (f) Construction incurred before loan or grant approval.

                  (1) Funds may be used to pay obligations for eligible 
                project costs incurred before loan or grant approval if 
                such requests are made in writing by the applicant and 
                the Agency determines that:

                          (i) Compelling reasons exist for incurring 
                        obligations before loan or grant approval;
                          (ii) The obligations will be incurred for 
                        authorized loan or grant purposes; and
                          (iii) The Agency's authorization to pay such 
                        obligations is on the condition that it is not 
                        committed to make the loan or grant; it assumes 
                        no responsibility for any obligations incurred 
                        by the applicant; and the applicant must 
                        subsequently meet all loan or grant approval 
                        requirements, including environmental and 
                        contracting requirements.

                  (2) If construction is started without Agency 
                approval, post-approval in accordance with this section 
                may be considered, provided the construction meets 
                applicable requirements including those regarding 
                approval and environmental matters.

          (g) Water or sewer service may be provided through individual 
        installations or small clusters of users within an applicant's 
        service area. The approval official should consider items such 
        as: quantity and quality of the individual installations that 
        may be developed; cost effectiveness of the individual facility 
        compared with the initial and long term user cost on a central 
        system; health and pollution problems attributable to 
        individual facilities; operational or management problems 
        peculiar to individual installations; and permit and regulatory 
        agency requirements.

                  (1) Applicants providing service through individual 
                facilities must meet the eligibility requirements in 
                1780.7.
                  (2) The Agency must approve the form of agreement 
                between the applicant and individual users for the 
                installation, operation, maintenance and payment for 
                individual facilities.
                  (3) If taxes or assessments are not pledged as 
                security, applicants providing service through 
                individual facilities must obtain security necessary to 
                assure collection of any sum the individual user is 
                obligated to pay the applicant.
                  (4) Notes representing indebtedness owed the 
                applicant by a user for an individual facility will be 
                scheduled for payment over a period not to exceed the 
                useful life of the individual facility or the RUS loan, 
                whichever is shorter. The interest rate will not exceed 
                the interest rate charged the applicant on the RUS 
                indebtedness.
                  (5) Applicants providing service through individual 
                or cluster facilities must obtain:

                          (i) Easements for the installation and 
                        ingress to and egress from the facility if 
                        determined necessary by RUS; and
                          (ii) An adequate method for denying service 
                        in the event of nonpayment of user fees.
Response from R. Craig Cook, Chief Operations Officer, Hill Country 
        Telephone Cooperative, Inc.; on behalf of NTCA--The Rural 
        Broadband Association
Question Submitted by Hon. Stacey E. Plaskett, a Delegate in Congress 
        from Virgin Islands
    Question. The Minority Leader in the Senate has proposed an 
allotment of $20 billion for broadband deployment as part of a $1 
trillion plan to spur infrastructure investment and job creation. This 
is proposed in association with the President's announcement to make 
new investment in infrastructure a priority on his agenda. The funding 
would be made available to projects currently eligible under existing 
programs at the Department of Agriculture.
    Will your organization be advocating for inclusion of supplemental 
broadband investment in any forthcoming infrastructure investment 
package?
    Answer. NTCA--The Rural Broadband Association and its 800+ members 
that provide broadband in rural areas strongly support including 
resources for broadband investment in any infrastructure legislation. 
NTCA began advocating for including resources to enable greater 
broadband deployment in an infrastructure package with a December 22, 
2016 letter to the National Governors Association, and followed that 
with a joint telecom-association letter to House and Senate Commerce 
Committee leaders and a letter to President Trump signed by over 100 
organizations that represent rural and/or telecommunications 
stakeholders.
    According to the FCC, over 39 percent of Americans living in rural 
areas still lack access to advanced telecommunications capability. 
That's a lot of people who are unable to experience new capabilities in 
delivering health care, educating children, promoting public safety, 
and managing energy, to say nothing of the new jobs created in areas 
with robust broadband along with unprecedented access to employment 
opportunities presented in established industries.
    America's most sparsely-populated rural areas often do not present 
a business case for the highly capital intensive undertaking of 
providing advanced broadband service. The Universal Service Fund High 
Cost Program helps the small broadband providers represented by NTCA 
and also other companies that serve rural America make the business 
case to deliver and then sustain broadband networks. However, the High 
Cost Program has been under the same hard cap since 2011, and currently 
lacks the resources to help rural broadband providers meet the 
Communications Act principle of reasonably comparable 
telecommunications rates and services in rural and urban areas. An 
infrastructure bill could help make up this shortfall by providing 
support that restores the business case for sustainable broadband 
investment.
    We are pleased to see broad agreement among elected officials and 
stakeholders on the importance of supporting broadband infrastructure, 
but the details of how that support is distributed will be key to 
achieving the goal of expanding broadband access. In a February 27, 
2017 letter to Senators Thune and Nelson and Representatives Walden and 
Pallone, NTCA, ITTA, USTelecom, and WTA recommended the following 
foundational principles ``to ensure that such broadband investment 
maximizes consumer benefits, ensures efficiency, produces results 
quickly, and is subject to accountability'':

          Any new broadband investment program must ensure sufficient 
        resources to meet the challenges of delivering broadband to 
        rural America. In order to truly realize universal broadband 
        access by all Americans, in all regions of the nation, any 
        funding should flow to areas currently lacking meaningful 
        access to broadband services in order to establish and sustain 
        such services. Adequate broadband services must meet reasonable 
        and realistic service parameters--e.g., with respect to speed, 
        latency, and price--and funding should flow to broadband 
        investment that best meets national broadband goals regardless 
        of the technology or technologies employed. To promote fiscal 
        responsibility, funding should not be made available for 
        duplicative networks that overbuild another provider's existing 
        broadband infrastructure.
          In addition, leveraging existing Federal expertise, gained 
        through programs such as the Federal Communications 
        Commission's Connect America Fund, in promoting and sustaining 
        broadband access will maximize speed-to-market and efficiency 
        of distribution mechanisms, and minimize administrative burdens 
        and costs. Strict yet reasonable accountability for broadband 
        program investments is essential, and requirements should 
        include build-out and performance targets. Federal and state 
        tax regulatory, permitting, and other requirements should be 
        coordinated and reconciled to maximize the benefits of the 
        broadband investment program.

    We appreciate your interest broadband infrastructure and look 
forward to working with you and your colleagues on the House Committee 
on Agriculture as Congress develops an infrastructure package.
                               attachment
February 27, 2017

 
 
 
Hon. John Thune,                     Hon. Bill Nelson,
Chairman,                            Ranking Minority Member,
Senate Committee on Commerce,        Senate Committee on Commerce,
 Science, and Transportation,         Science, and Transportation,
Washington, D.C.;                    Washington, D.C.;
Hon. Greg Walden,                    Hon. Frank Pallone, Jr.,
Chairman,                            Ranking Minority Member,
House Committee on Energy and        House Committee on Energy and
 Commerce,                            Commerce,
Washington, D.C.;                    Washington, D.C.
 

    Dear Chairman Thune, Ranking Member Nelson, Chairman Walden, 
Ranking Member Pallone:

    Our associations are composed of well over a thousand companies and 
cooperatives that today offer robust broadband over networks spanning 
thousands of miles and reaching millions of rural consumers and 
businesses. Yet, extending these networks into parts of rural America 
still lacking access, delivering affordable services, and upgrading 
existing networks to allow rural consumers to benefit from the 
capabilities of broadband all remain formidable challenges. Just over a 
year ago, the FCC found that over 39 percent of Americans living in 
rural areas still lack access to advanced telecommunications 
capability. It was nearly 7 years ago that the very first sentence of 
the FCC's National Broadband Plan declared that ``[b]roadband is the 
great infrastructure challenge of the early 21st century.'' Indeed, 
that remains the case.
    We are encouraged that one of the foremost priorities of the new 
Administration is to improve the infrastructure supporting the lives 
and livelihoods of all Americans. We are heartened by the recognition 
of how critical broadband infrastructure has been and will continue to 
be in improving Americans' collective well-being. Broadband has 
unleashed new capabilities in delivering health care, educating 
children, promoting public safety, and managing energy. It has enabled, 
and holds the promise of continuing to enable, the birth of entire new 
industries, in the process creating new jobs while also offering job 
seekers unprecedented access to employment opportunities presented in 
established industries. It facilitates the vast sharing of knowledge 
and has spawned a ``sharing economy.'' Its position as an engine of 
economic growth is manifest.
    All of these benefits of broadband, however, are only available to 
those who have access. In light of the benefits of universal broadband 
access coupled with its currently remaining an unrealized national 
ambition, we urge you to ensure that broadband infrastructure is a key 
priority in any new, comprehensive Federal infrastructure investment 
program. And in making it so, we recommend several foundational 
principles to ensure that such broadband investment maximizes consumer 
benefits, ensures efficiency, produces results quickly, and is subject 
to accountability.
    Any new broadband investment program must ensure sufficient 
resources to meet the challenges of delivering broadband to rural 
America. In order to truly realize universal broadband access by all 
Americans, in all regions of the nation, any funding should flow to 
areas currently lacking meaningful access to broadband services in 
order to establish and sustain such services. Adequate broadband 
services must meet reasonable and realistic service parameters--e.g., 
with respect to speed, latency, and price--and funding should flow to 
broadband investment that best meets national broadband goals 
regardless of the technology or technologies employed. To promote 
fiscal responsibility, funding should not be made available for 
duplicative networks that overbuild another provider's existing 
broadband infrastructure.
    In addition, leveraging existing Federal expertise, gained through 
programs such as the Federal Communications Commission's Connect 
America Fund, in promoting and sustaining broadband access will 
maximize speed-to-market and efficiency of distribution mechanisms, and 
minimize administrative burdens and costs. Strict yet reasonable 
accountability for broadband program investments is essential, and 
requirements should include build-out and performance targets. Federal 
and state tax regulatory, permitting, and other requirements should be 
coordinated and reconciled to maximize the benefits of the broadband 
investment program.
    We are at the beginning of an exciting new process to address our 
nation's critical infrastructure needs and to contribute to an improved 
way of life for all Americans. There is much work to be done in the 
coming months. We look forward to engaging with you on how to ensure 
that this work results in all Americans reaping the myriad benefits 
that new broadband infrastructure investment will foster.
            Sincerely,
            
            

 
 
 
Genevieve Morelli,                   Shirley Bloomfield,
President,                           Chief Executive Officer,
ITTA--The Voice of Mid-Sized         NTCA--The Rural Broadband
 Communications Companies;            Association;
 


 
 
 
Jonathan Spalter,                    Kelly Worthington,
Chief Executive Officer and          Executive Vice President,
 President,
USTelecom--The Broadband             WTA--Advocates for Rural Broadband.
 Association;
 

Response from Hon. James C. Greenwood, President and Chief Executive 
        Officer, Biotechnology Innovation Organization
Question Submitted by Hon. Collin C. Peterson, a Representative in 
        Congress from
    Question. Mr. Greenwood, does the language in Section 9003, the 
Biorefinery, Renewable Chemical, and Biobased Product Manufacturing 
Assistance Program need to be modified to ensure standalone renewable 
chemical producers can qualify? What has been your members' experience 
with the program?
    Answer. Yes. Unfortunately, USDA's interpretation of Section 9003 
limits renewable chemical facilities that can apply for the program. 
BIO urges the Committee to amend the language in Section 9003 to ensure 
standalone renewable chemical facilities are eligible in the next farm 
bill. This will speed the research, development and commercialization 
of biorefineries and job creation.
Question Submitted by Hon. Tom O'Halleran, a Representative in Congress 
        from Arizona
    Question. In your testimony, you mention BCAP and the use for woody 
biomass. The use of woody biomass has a great potential for the forest 
health of my district. Can you elaborate on what the problems were with 
using BCAP for woody biomass and how these problems have been address? 
And how do you see this program benefitting forest health?
    Answer. For continued growth of the biobased economy and growth of 
domestic bioenergy and bioproducts, access to sustainable agricultural, 
forestry and waste biomass is critical to its development. Biomass Crop 
Assistance Program (BCAP) helps overcome the challenge of accessing 
this biomass by providing financial assistance to owners and operators 
of agricultural and non-industrial private forest land who wish to 
establish, produce, and deliver biomass feedstocks.
    After adoption of BCAP in the 2008 Farm Bill, P.L. 110-246, an 
increase in price for wood shavings, wood chips, sawdust, and other 
wood ``scraps'' for products such as composite panels, particle board, 
and fiberboard, and bark and wood chips for mulch caused concern for 
some manufacturing and nursery industries about the impact BCAP was 
having on the cost of these raw materials.
    The 2008 BCAP language prohibited material collected or harvested 
from National Forest System and other public lands that would otherwise 
be used for higher value products. However, this prohibition did not 
initially apply to renewable biomass harvested from private land.
    USDA worked to address these concerns in its rulemaking of the 2008 
Farm Bill. The 2014 Farm Bill explicitly addressed this issue in 
Section 9010, where the definition of ``eligible material'' in previous 
law was rewritten to include the following exclusion: ``(vi) any woody 
eligible material collected or harvested outside contract acreage that 
would otherwise be used for existing market products.'' (For more 
information, please see CRS Report R41296 Biomass Crop Assistance 
Program (BCAP): Status and Issues, page 14, Jan. 12, 2015)
    Continuation of BCAP with mandatory funding will help ensure it can 
be a valuable tool to maintain and improving forest health. As the U.S. 
Department of Energy 2016 Billion-Ton Report noted, ``Removal of excess 
biomass from fuel treatment operations (reducing biomass to help 
forests increase fire resistance) and thinning operations designed to 
reduce risks and losses from catastrophic fires and improve forest 
health.'' (Please see https://energy.gov/sites/prod/files/2016/12/f34/
2016_billion_ton_report_12.2.16_0.pdf).
    BCAP incentivizes owners and potential owners of forest biomass to 
undertake removal of hazardous fuels and insect/disease projects on 
BLM- or Forest Service-managed lands, and orchard clearings. A new, 
improved BCAP that has steady mandatory funding would positively impact 
all of these biomass sources, produce new fuels, chemicals and power 
while reducing unhealthy forest biomass.


 
                           THE NEXT FARM BILL

                           (SPECIALTY CROPS)

                              ----------                              


                        THURSDAY, MARCH 9, 2017

                  House of Representatives,
 Subcommittee on Biotechnology, Horticulture, and Research,
                                  Committee on Agriculture,
                                                   Washington, D.C.
    The Subcommittee met, pursuant to call, at 2:03 p.m., in 
Room 1300 of the Longworth House Office Building, Hon. Rodney 
Davis [Chairman of the Subcommittee] presiding.
    Members present: Representatives Davis, Gibbs, Denham, 
Yoho, Bacon, Dunn, Lujan Grisham, Lawson, Panetta, Costa, 
McGovern, and Blunt Rochester.
    Staff present: Mykel Wedig, Patricia Straughn, Keith Jones, 
Kellie Adesina, Troy Phillips, and Nicole Scott.

  OPENING STATEMENT OF HON. RODNEY DAVIS, A REPRESENTATIVE IN 
                     CONGRESS FROM ILLINOIS

    The Chairman. This is a hearing of the Subcommittee on 
Biotechnology, Horticulture, and Research entitled, The Next 
Farm Bill: Specialty Crops. This hearing will come to order.
    We apologize for the delay and also for the fact that votes 
will probably interrupt this hearing. We will see how far we 
get before votes are called, and let the witnesses know what we 
intend to do to ensure that we either continue the hearing, or 
if we are all fast, you know what, we might get done before 
votes are called.
    First off, welcome to our witnesses. Good afternoon. Thank 
you for being here at today's Biotechnology, Horticulture, and 
Research Subcommittee hearing. Today's hearing continues our 
series where each of the six Subcommittees look at all aspects 
of the next farm bill.
    As we begin this work, the Committee will consider the 
needs of stakeholders who depend upon farm bill programs. 
Today, we are focusing on issues important to specialty crop 
producers and products. At the time of the most recent Census 
of Agriculture in 2012, the value of farm-level specialty crop 
production totaled nearly $60 billion, representing about \1/4\ 
of the value of U.S. crop production. The sheer diversity of 
the category, ranging from fruits and vegetables, to tree nuts, 
nursery crops, and floriculture, makes the task of developing 
specialty crop policies particularly challenging.
    The 2014 Farm Bill developed and extended many highly 
successful programs that have helped the specialty crop 
industry. A great example is the Specialty Crop Block Grant 
Program, through which mandatory funding is distributed to all 
50 states, including the great State of Illinois, with 
specialty-crop-intensive states receiving more funding. It has 
given states the flexibility they need to tailor their funds to 
their specific regional needs.
    Another example of a successful specialty crop program 
within the farm bill is the Plant Pest and Disease Prevention 
Program. Specialty crop producers are constantly bombarded by 
new pests and diseases. The Plant Pest and Disease Prevention 
Program provides early plant pest detection and surveillance 
through APHIS. It also funds a system of clean plant centers 
that safely distribute disease-free, or clean plant material to 
producers of nursery stock for high-value, high-risk crops such 
as apples, peaches, berries, and citrus. Commercial growers of 
these crops benefit from access to healthy stocks of new 
varieties in the event of their plants being compromised by 
disease.
    Additionally, while new stocks are helpful, when 
devastating diseases hit, and the witnesses here today know 
that they do hit often, research is crucial to finding a cure 
or an eradication pathway. The Specialty Crop Research 
Initiative in Title VII of the farm bill sets aside mandatory 
funding to make sure that specialty crops are not left on the 
sidelines when it comes to research funding.
    I do believe it is important to highlight that other 
Subcommittees' work directly impacts specialty crop producers. 
For example, we have made significant strides over the past 
several years in expanding crop insurance coverage to a variety 
of specialty crops.
    While I am proud of the successes we have enjoyed up to 
this point, we live in an ever-changing world. To that end, I 
look forward to reviewing current programs and hearing about 
improvements needed in the next farm bill.
    [The prepared statement of Mr. Davis follows:]

 Prepared Statement of Hon. Rodney Davis, a Representative in Congress 
                             from Illinois
    Good afternoon and welcome to today's Biotechnology, Horticulture, 
and Research Subcommittee hearing. Today's hearing continues our series 
where each of the six Subcommittees look at all aspects of the next 
farm bill.
    As we begin this work, the Committee will consider the needs of 
stakeholders who depend on farm bill programs. Today, we are focusing 
on issues important to specialty crop producers. At the time of the 
most recent Census of Agriculture in 2012, the value of farm-level 
specialty crop production totaled nearly $60 billion, representing 
about \1/4\ of the value of U.S. crop production. The sheer diversity 
of the category, ranging from fruits and vegetables, to tree nuts, 
nursery crops, and floriculture, makes the task of developing specialty 
crop policies particularly challenging.
    The 2014 Farm Bill developed and extended many highly successful 
programs that have helped the specialty crop industry. A great example 
is the Specialty Crop Block Grant program, through which mandatory 
funding is distributed to all 50 states, with specialty-crop-intensive 
states receiving more funding. It has given states the flexibility they 
need to tailor their funds to their specific regional needs.
    Another example of a successful specialty crop program within the 
farm bill is the Plant Pest and Disease Prevention Program. Specialty 
crop producers are constantly bombarded by new pests and diseases. The 
Plant Pest and Disease Prevention Program provides early plant pest 
detection and surveillance through APHIS. It also funds a system of 
``clean plant centers'' that safely distribute disease-free, or 
``clean'' plant material to producers of nursery stock for high-value, 
high-risk crops such as apples, peaches, berries and citrus. Commercial 
growers of these crops benefit from access to healthy stocks of new 
varieties in the event of their plants being compromised by disease.
    Additionally, while new stocks are helpful, when devastating 
diseases hit--and the witnesses here today know that they do hit 
often--research is crucial to finding a cure or an eradication pathway. 
The Specialty Crop Research Initiative in Title VII of the farm bill 
sets aside mandatory funding to make sure that specialty crops are not 
left on the sidelines when it comes to research funding.
    I do believe it's important to highlight that other Subcommittees' 
work directly impacts specialty crop producers. As just one example: we 
have made significant strides over the past several years in expanding 
crop insurance coverage to a variety of specialty crops.
    While I am proud of the successes we have enjoyed up to this point, 
we live in an ever-changing world. To that end, I look forward to 
reviewing current programs and hearing about improvements needed in the 
next farm bill.
    With that, I'd like to turn it over to Ms. Lujan Grisham for any 
comments she'd like to make.

    The Chairman. And I would like to turn it over to my new 
Ranking Member on this Subcommittee, my good friend, Ms. Lujan 
Grisham, for her opening comments.

      OPENING STATEMENT OF HON. MICHELLE LUJAN GRISHAM, A 
           REPRESENTATIVE IN CONGRESS FROM NEW MEXICO

    Ms. Lujan Grisham. Thank you, Mr. Chairman. He made me 
sound younger by far than I actually am. I will take that every 
day. And I also want to add my welcome and thank you to the 
panelists who have joined us here today.
    Our objective, I think I can say that for both of us, is 
really simple. We want to make sure that we are looking at 
which programs work, and which programs need additional 
investments or strategies as we undertake the next cycle for 
the farm bill. Also, as part of my thank you today, we 
recognize that specialty crops producers are engaged in a 
continuous cycle of growing, so it means so much to us that you 
are here participating in today's hearing.
    As I read today's testimony, I am struck by the 
extraordinary diversity in your businesses in products, 
practices, and size. You grow at a level of tens of acres, 
hundreds of acres, and thousands of acres, producing a wide 
diversity of crops: apples, oranges, carrots, pinto beans, 
lettuce, grapes, and, of course, New Mexico chile. I am further 
struck by the fact that you as specialty crop producers are on 
the frontlines of delivering fresh, healthy, and wholesome food 
to America and to the world's tables. And as a mother and a 
grandmother, I know how important it is to provide my children 
and my granddaughter with the nutritious foods that she needs. 
And as a twelfth generation New Mexican, I know how difficult, 
frankly, it can be for individuals living in most of New 
Mexico, in rural areas and food deserts, especially in Indian 
Country, to access fresh and healthy foods. I just came from a 
meeting, Mr. Chairman, in my office where members of the Navajo 
Nation were talking about their inability to actually get to a 
highway because their bridges and roads are impassable and 
completely unsafe. It is really very difficult to do.
    Our job in Congress is to assist and promote what you do as 
producers, and I look forward to working with the Chairman as 
we write a new farm bill, to provide you with the tools so that 
you can invest in your businesses, research new technology to 
improve yields, improve pest resistance and plant health, and 
find many new markets for your crops, both domestically and 
internationally. I believe this will expand access to the 
abundant, healthy, and nutritious food contained within the 
specialty crop and organic sectors for more and more of our 
constituents and citizens.
    I am looking forward to this discussion today. And with 
that, I thank you again, and I yield back, Mr. Chairman.
    The Chairman. Thank you, Ms. Lujan Grisham. We are going to 
work in other committees on that infrastructure bill to help 
the Navajo Nation.
    To our witnesses, welcome. It is always great to be the 
Chairman from a state like Illinois and have your first witness 
from the State of Illinois. I want to welcome my friend, James 
Field. James is part of Frey Farms, and the founder of Frey 
Farms has sat in that exact same chair in the past for a 
hearing such as this when I didn't chair them. So can we please 
give our best to Sarah, and we appreciate her time that she 
spent here.
    Frey Farms operates facilities and farms in Illinois, 
Florida, Georgia, Missouri, Indiana, West Virginia, and 
Wisconsin. And their production operations specialize in 
growing, packing, and shipping of fresh market produce 
including watermelons, cantaloupes, sweet corn, fall 
ornamentals, hard squash, and fresh market pumpkins. If you 
shop at local stores like I do, many of them have the Frey 
Farms label on them, especially the last Springfield Wal-Mart 
store in Springfield, Illinois, that I toured. And just so 
everybody knows, Frey Farms started out of the back of a pick-
up truck, selling produce on the sides of roads, with Sarah as 
a young teenager with her father, I believe. And it is a 
testament that somebody can take an idea and turn it into the 
American Dream. And it started right there where you are at. I 
want to welcome James for your opening remarks please.

      STATEMENT OF JAMES FIELD, Jr., DIRECTOR OF BUSINESS 
            DEVELOPMENT, FREY FARMS, LLC, KEENES, IL

    Mr. Field. Thank you, sir. Thank you, Chairman Davis, 
Ranking Member Lujan Grisham, and all other Members of the 
Subcommittee for allowing me to speak here today on specialty 
crops under the farm bill. We appreciate the work that you have 
done to allow our industry to be more competitive.
    And I would like to tell you a little more about myself. I 
am the Director of Business Development for Frey Farms. And as 
the Chairman stated, we farm in seven, eight states now, I 
believe, and so we have great understanding of the agricultural 
industry across this nation.
    We are a member of the United Fresh Produce Association, 
which represents growers, shippers, processors, and sellers of 
fresh fruits and vegetables across the country. Sarah Frey, our 
CEO, serves on the United Fresh Executive Board, and has served 
on the Government Relations Committee as well.
    Before we discuss the farm bill programs, I would like to 
discuss with you what I believe is the most pressing issue 
facing agriculture today, and there is probably a large 
consensus of that in this room as well.
    Frey Farms participates in the H-2A Program. This is the 
only program through which nondomestic workers can be recruited 
for our seasonal agricultural needs. The problem with this 
program is that we don't receive an adequate number of workers 
every year to supply the workforce that we need during harvest 
time. Given the highly sensitive nature of harvesting fresh 
fruits and vegetables, it is critical that we get workers when 
we need them.
    According to the Council of Agricultural Employers, the H-
2A Program provides approximately 150,000 guest workers each 
year, which is only about ten percent of the 1\1/2\ million 
seasonal ag workers needed in this country. The majority of 
farmland in the U.S., as you well know, is based in rural 
communities, far away from the larger labor pools in urban 
areas. On top of that, the seasonality of harvesting specialty 
crops is such that it moves very quickly across the country 
based on the weather, geographical locations, and climates of 
these areas where specialty crops are grown. So we move very 
quickly within our business from Florida to Georgia, Missouri, 
Arkansas, Indiana, Illinois, and West Virginia, kind of being 
an outlier for us. But we grow throughout the country, try to 
follow the weather, and that requires us to hire a great deal 
of labor who work seasonally, and only in sporadic parts 
throughout those states. It is a very short harvest window of, 
as short as 2 to 3 weeks sometimes, for certain specialty crops 
that we grow. We have to have those workers at that specific 
time. And the migratory nature of the business is such that it 
makes it very hard for us to locate a domestic labor force. It 
is unfeasible and impractical to relocate domestic families 
every few weeks across the country. The lack of access to 
domestic labor, combined with an overburdened Federal Guest 
Worker Program, means that fruit and vegetable providers are in 
a daily struggle to secure an adequate workforce at harvest 
time.
    There is a high level of uncertainty in agriculture as it 
relates to the future of migratory workers right now. And the 
reality is this, the vast majority of the nation's foreign-born 
farmworkers do not have proper work authorization. And the 
emphasis on enforce, without an accompanying legal guest worker 
program, puts our entire industry at jeopardy.
    We want our workforce to be legally authorized to work in 
this country. Frey Farms and the industry as a whole have long 
advocated for reforms to the nation's immigration system to 
deal with this issue. And the ag community would like to work 
with you and other lawmakers to find a solution to this 
problem. Having said that, for the 2014 Farm Bill, this 
Committee acted on recommendations from farmers like us and 
implemented the following programs: $75 million annually for 
the Animal Plant and Health Inspection Service, $9 million 
annually for the Technical Assistance for Specialty Crops, $20 
million for the Market Access Program, $75 million annually for 
the Specialty Crop Block Grant Program, $80 million in annual 
funding for the Specialty Crop Research Initiative, and my 
personal favorite is the $184 million spent on the Fresh Fruits 
and Vegetables Program, which serves over four million low-
income elementary school students, affording them the ability 
to have a fresh fruit and vegetable snack daily in school. And 
that is very important to us at Frey Farms because there are 
over 107,000 students in the State of Illinois who benefit from 
this program, and over $5.4 million are allocated to it. And to 
us it is very, very important that these students receive this 
nutritional help because a lot of times at home, these are many 
of the same recipients who are SNAP or Supplemental Nutrition 
Assistance Program recipients, and a lot of times their 
Supplemental Nutrition Assistance Program has to be spent on 
things that can last longer than fresh product. So for many of 
them, their fresh produce is gotten at school through this 
program, so we really appreciate that.
    These programs have been effective in helping fresh produce 
deliver on their mission to ensure that all Americans have 
access to abundant and affordable fresh fruits and vegetables. 
I speak on behalf of Frey Farms and the entire agriculture 
community when I say that we need your support on agricultural 
immigration reform. Your efforts to enact meaningful specialty 
crop programs in the farm bill are greatly appreciated. We know 
we have friends here who want our industry to succeed, and for 
that we thank you.
    And with that, Mr. Chairman, I am happy to take any 
questions.
    [The prepared statement of Mr. Field follows:]

     Prepared Statement of James Field, Jr., Director of Business 
                Development, Frey Farms, LLC, Keenes, IL
    Thank you Chairman Davis, Ranking Member Grisham, and all Members 
of the Subcommittee for the opportunity to share my thoughts about the 
treatment of specialty crops under the farm bill. This Subcommittee's 
work to promote specialty crops--and on crafting Federal policies that 
allow providers to be competitive in the marketplace--is appreciated by 
fresh fruit and vegetable providers across the country.
    First, a bit about myself and the business I represent. My name is 
James Field. I am the Director of Business Development for Frey Farms, 
headquartered in Keenes, IL. Frey Farms specializes in growing, 
packing, and shipping fresh market fruits and vegetables. We are best 
known as the nation's largest fresh pumpkin producer. Our farms and 
facilities are located in Florida, Georgia, Missouri, Arkansas, 
Indiana, West Virginia, and Illinois.
    Frey Farms is a member of the United Fresh Produce Association, 
which represents growers, shippers, processors and sellers of fresh 
fruits and vegetables across the country. The CEO of Frey Farms, Sarah 
Frey, has served on United Fresh's Government Relations Council and is 
a member of its board of directors.
    Through United Fresh and on our own, Frey Farms has actively 
engaged with policymakers on a variety of issues that impact the 
specialty crop sector, including the farm bill, so we are thankful for 
the opportunity to share our perspective on farm bill programs that 
impact our ability to do business.
    Before we discuss farm bill programs, it is not possible to give a 
full and accurate perspective on Federal policies that most affect our 
sector without mentioning immigration. Frey Farms participates in the 
H-2A program. Administered by the Department of Labor, H-2A is the only 
Federal program through which agriculture employers can recruit 
seasonal agricultural guest-workers. We do our best to make the program 
work for our operation, but it is very difficult. Frequently we, like 
other participants in the program, do not get the adequate number of 
workers we need in a timely manner. Given the highly time-sensitive 
nature of harvesting fruits and vegetables, it is essential to get 
workers when we need them.
    According to the National Council of Agricultural Employers (NCAE), 
the H-2A program provides approximately 150,000 guest-workers a year--
or only ten percent of the nearly 1.5 million seasonal ag workers 
needed in this country. Yet, the program is being used in increasing 
numbers--doubling the last 5 years--in a trend that is expected to 
continue.
    The vast majority of farm land in this great nation is located in 
rural communities, far away from the larger labor pools needed to fill 
the jobs that are necessary for harvesting specialty crops. The 
seasonality of harvesting specialty crops also poses a tremendous 
hurdle in recruiting an adequate domestic workforce. In order to 
maintain a steady supply of fresh fruits and vegetables, farming moves 
across the country rapidly with the changing of the seasons. Many of 
the specialty crops grown in the United States have harvest windows as 
short as a few weeks due to the geographic location and regional 
climates associated with the farmland. Relocating a domestic family 
every few weeks is logistically unfeasible. Therefore, the lack of 
access to domestic labor, combined with an overburdened Federal guest-
worker program means fruit and vegetable providers are in a near daily 
struggle to secure an adequate workforce. There is a high level of 
uncertainty in agriculture right now as it relates to the future of 
migratory workers.
    The reality is this: The vast majority of the nation's foreign-born 
farm workers do not have proper work authorization and the emphasis on 
enforcement without an accompanying effective legal ag guest-worker 
program, puts our industry, and our nation's ability to sustainably and 
affordably feed our people, in jeopardy.
    I want to be clear: we support strengthening our nation's ability 
to uphold the law.
    We want our workforce to be legally authorized to work in this 
country, and this is why Frey Farms, and the produce industry as a 
whole, have long advocated for reforms to our nation's immigration 
system to deal with this issue.
    I want to express that we at Frey Farms, and the agriculture 
industry at large, would like to work with you, and other law makers, 
to find solutions. We believe those who are working in agriculture 
without proper documentation should to be able to make their presence 
known and join the H-2A program. When their seasonal harvest work is 
finished, these workers would return to their home country as the 
current H-2A program requires and transportation would be provided for 
by their American employer. Moreover, the legality of these working 
immigrants would no longer be in question and the regulations for 
proper execution of the law would firmly be in place. These workers 
would be allowed to return under the lawful rules of the H-2A program 
and the American farmer could operate without the stress and anxiety of 
wondering where their next group of laborers will come from.
    Without the farm labor we need, we cannot deliver produce items to 
the people of our country. Fresh fruits and vegetables are left to rot 
in fields every year due to the lack of a reliable labor pool. Given 
that approximately 80 percent of the farm bill budget goes to 
supporting supplemental nutrition programs, more commonly known as food 
stamps, this is an egregious offense to the people of this country. 
Allowing fresh food to go to waste is not a problem that solely affects 
our industry, but impacts each and every American.
    Farmers are inherently trying to provide healthy, sustainable, and 
competitively priced fresh fruits and vegetables, while working against 
the factor of time and the perishable nature of these very items. H-2A 
is however slow, inefficient, and riddled with bureaucratic 
inefficiencies the H-2A program may be, it is the only workforce 
solution that we have. The foundation is in place to help agriculture 
bridge the gap between its current supply and the vastly disparate 
demand for labor. We recognize that immigration policy does not pass 
through this Committee--but it most certainly affects the day-to-day 
business viability of the men and women who supply most of America's 
fresh produce, dairy, and horticultural commodities. Given your support 
on past measures, we know that is important to you.
    We urge you to do what it takes to ensure that whatever immigration 
legislation Congress debates does not become final without a mechanism 
for addressing agriculture's real and urgent labor needs. Failure to 
address these needs will undermine all the good work you have done to 
support specialty crops through legislation like the farm bill--and 
ultimately--you would fail to serve the farmers and ranchers this 
Subcommittee is designated to represent. I, and many others in the 
produce community, do not believe that is what you want to do.
    By ensuring agriculture's labor concerns are met, you will show 
once again that you recognize how important this sector is to the 
overall well-being of America, just as you did when you passed a farm 
bill and invested heavily in programs designed to allow produce 
providers to act on their own initiative and be competitive. I'd like 
to elaborate on a few of those farm bill programs and urge your 
continued support for them.
    Since 2002, United Fresh has coordinated the Specialty Crop Farm 
Bill Alliance, a group of nearly 120 organizations nationwide that 
represent almost every specialty crop commodity produced in this 
country.
    The purpose of the Alliance is to review the farm bill and make 
recommendations about programs most relevant to specialty crops. The 
Alliance identified a few basic thematic priorities in the most recent 
farm bill: market competitiveness, research, nutrition, international 
market access and pest and disease control. This priorities further our 
goals to increase consumption of fruits and vegetables by promoting the 
nutritional and economic well-being of Americans. They also provide 
tools and services that growers generally cannot control themselves.
    In the past, the Alliance assessed prior program funding levels and 
current program usage and gave Congress funding recommendations for the 
programs that met these basic priorities. In the 2014 Farm Bill, the 
Agriculture Committee acted on those recommendations to provide:

   $75 million annually for the Animal Plant Health Inspection 
        Service (APHIS) Section 10201 program. This helps prevent the 
        introduction or spread of plant pests and diseases that 
        threaten U.S. agriculture and the environment, while ensuring 
        the availability of a healthy supply of clean plant stock;

   $9 million annually for the Technical Assistance for 
        Specialty Crops (TASC) program and $20 million for the Market 
        Access Program (MAP). Both of these programs are designed to 
        address various barriers to agriculture exports;

   $184 million for the Fresh Fruit and Vegetable Program, or 
        FFVP, which provides a fresh fruit or vegetable snack to four 
        million low-income elementary school students in all 50 states. 
        In Illinois, where Frey Farms is headquartered, the program 
        allocates $5.4 million to provide such snacks to more than 
        107,000 students. As the Members of the Subcommittee may be 
        aware, FFVP has been evaluated by outside experts and found to 
        be highly effective at increasing students' fresh fruit and 
        vegetable consumption;

   $75 million annually for the Specialty Crop Block Grant 
        program to enhance the competitiveness of specialty crops. The 
        2014 Farm Bill also authorized funding for multi-state block 
        grants; and

   $80 million in annual funding for the Specialty Crop 
        Research Initiative to develop and disseminate science-based 
        tools to address the needs of specific crops and their regions.

    These programs have been effective in helping fresh produce 
providers to deliver on their mission to ensure that all Americans have 
access to an abundant and affordable supply of nutritious fresh fruits 
and vegetables.
    We in the produce-sector are aware that Congress must address a 
great many pressing needs across America. But few initiatives are as 
important, or pay such dividends as helping Americans enjoy the health 
benefits of fresh fruits and vegetables. Given your past support for 
these initiatives, it is clear that this Subcommittee understands this.
    On behalf of the fresh produce industry, I urge you to continue the 
progress we have made together by ensuring that these programs are 
maintained and are not cut below their current funding levels.
    The produce industry also looks forward to working with you to 
address agriculture's needs on issues such as trade, infrastructure and 
implementation of the Food Safety Modernization Act (FSMA).
    All of these issues also go right to the heart of whether a produce 
provider can stay in business or not, so your time, attention and 
support on these matters is very much appreciated. I reiterate again 
however, that no program or policy is more critical and vital to the 
continued success of agricultural legislation as that of the H-2A 
program and immigration. I thank you on behalf of Frey Farms, and the 
agricultural community as a whole, for the continued work and service 
that you dedicate to our livelihoods.
    Again, thank you for the opportunity to share my thoughts about the 
farm bill programs most important to the specialty crop sector, and on 
the pressing need of immigration reform. As I stated before, reforms to 
our nation's immigration system to provide a steady and reliable stream 
of guest workers has the power to make or break our industry. This is 
why we are looking to you for more than just support; we are looking 
for action on agricultural immigration reform. This Subcommittee's 
efforts to enact meaningful specialty crop programs in the farm bill 
has not gone unnoticed. We know that we have friends here who want our 
industry to succeed, and we want to work with you to guarantee that 
future success.
    With that, Mr. Chairman, I will be happy to take questions from 
you.

    The Chairman. Thank you, Mr. Field.
    And the rest of the panel will notice that I probably gave 
a home state advantage and a little extra time to the witness 
from Illinois. We would appreciate, for time's sake, if 
everybody could keep their testimony within 5 minutes. I say 
that because I am going to ask that my colleague, Mr. Yoho, who 
is sitting a few chairs down from me, to introduce the next 
witness. And I know that he would gladly take over 5 minutes to 
do that. So I would like to yield to Mr. Yoho.
    Mr. Yoho. Thank you, Mr. Chairman. The benefits of the 
gavel. Thank you.
    I get the distinct honor and privilege of introducing a 
Florida native, Mr. Larry Black, of Peace River Packing Company 
in Fort Meade, Florida. Peace River Packing Company, a family 
business established in 1928, is a fully integrated citrus 
service company, active in growing, harvesting fresh fruit, 
packaging and processed fruit sales. The company runs over 
3,300 acres of citrus property, and he is the past President of 
Florida Citrus Mutual and development of the Foundation Board. 
And we appreciate you being here, and I look forward to hearing 
the insight that you have about what is going on in our state 
of citrus greening.
    And with that, I am going to yield back, but we look 
forward to hearing from you. Thank you all of you for being 
here.
    The Chairman. Mr. Black, you are recognized for 5 minutes.

STATEMENT OF N. LARRY BLACK, Jr., GENERAL MANAGER, PEACE RIVER 
                 PACKING COMPANY, Ft. MEADE, FL

    Mr. Black. Chairman Davis, Ranking Member Grisham, 
Congressman Yoho, and Congressman Lawson, good afternoon.
    Huanglongbing, also known as HLB or citrus greening, is a 
bacterial disease spread by a vector, the Asian citrus psyllid. 
HLB has seriously affected citrus production throughout the 
world for over 100 years. Since 2005, my home state, Florida, 
has been severely impacted. The Asian citrus psyllid and HLB 
are also found in Texas and California. There is a national 
citrus crisis, and one of our signature specialty crops is 
threatened.
    Throughout history, whenever this disease has appeared, 
citrus production has been compromised with the loss of 
millions of trees. The disease attacks the vascular system of 
the tree, compromising yields, eventually rendering the tree 
unproductive.
    At our 1998 peak, Florida citrus plantings exceed 850,000 
acres, and we produced over 300 million boxes of oranges, 
grapefruit, and tangerines. We are now down to about 80 million 
boxes of production and \1/2\ million acres. Much of the 
decrease is due to HLB.
    Huanglongbing and the Asian citrus psyllid are not native 
to the State of Florida or the United States. Like citrus 
canker, which has also been an ongoing problem for the 
industry, HLB is an example of an imported pest and disease 
that has resulted in reduced citrus acreage and fruit 
production. We have lost packing houses and juice plants. 
University economists have estimated since 2011, HLB has cost 
our industry $4.5 billion in lost economic activity, and over 
8,000 jobs. Today, Florida Citrus Mutual estimates those losses 
to be double that amount.
    While yields have been drastically decreased, the cost of 
growing citrus has skyrocketed. Production costs are now over 
$2,100 per acre; triple the cost prior to HLB.
    The silver lining, despite the tough times, the Florida 
citrus industry is still a major economic driver for the State 
of Florida, providing an estimated $10 billion in annual 
economic impact. Citrus forms the backbone of many communities 
throughout the state's interior. Citrus not only directly 
supports processing plants and packing houses, but also 
businesses such as banks, truck dealerships, plant nutrition 
companies, restaurants, equipment sales, et cetera.
    The Florida citrus industry, along with state and Federal 
Governments, are making a historic commitment to researching 
solutions to solve HLB. Currently, more than 300 research 
projects designed to beat HLB are underway across the globe. 
Citrus growers, the State of Florida, and the Federal 
Government have collectively spent, or have appropriated over 
$250 million over the past 6 years on research. Half of this 
investment was from the 2014 Farm Bill.
    While there is no silver bullet to stop the spread of HLB, 
the research investment is yielding tools the growers can use 
right now to counter the disease. They include a combination of 
bactericides, nutritional therapies, innovative growth design, 
thermal therapy, and tolerant root stocks. The future of our 
nation's citrus industry is in the hands of our research 
scientists. Early HLB detection, ACP management, breeding will 
be crucial elements in the long-term success of our production. 
These tools will be needed for Florida producers to continue to 
provide the most nutrient-filled and great-tasting juice to 
consumers.
    So what can Congress do? First, it is imperative the next 
farm bill include an extension of the Emergency Citrus Disease 
and Extension Program which was created by the 2014 Farm Bill. 
The trust fund has enabled promising new research that offers 
long-term solutions to citrus greening and the hope for the 
future of our industry. We are only 3 years into the program 
and more time is needed.
    The farm bill also provides necessary funding to several 
other specialty crop programs, such as the Specialty Crop 
Research Initiative, block grants, the National Clean Plant 
Network. We urge Congress to continue to invest in these 
crucial programs, and seek to increase the allocation to these 
programs when available.
    While a long-term solution is being developed through 
research, citrus producers are working hard to maintain as much 
production as possible to keep our industry intact. For now, 
our goal is to get more trees in the ground to sustain the 
Florida citrus industry. Fruit is the life blood of the 
industry, and planting is necessary.
    Thank you very much, and I stand ready for questions.
    [The prepared statement of Mr. Black follows:]

Prepared Statement of N. Larry Black, Jr., General Manager, Peace River 
                     Packing Company, Ft. Meade, FL
Regarding Huanglongbing
    My name is Larry Black and I am a fifth-generation citrus grower 
from Lakeland, Florida. I currently serve as General Manager of Peace 
River Packing Company. Peace River manages more than 3,300 acres of 
citrus groves in central Florida. Peace River Packing Company is a 
fully integrated citrus services company, active in growing, 
harvesting, fresh fruit packing, and processed fruit sales.
    I am also past President of Florida Citrus Mutual and I serve on 
the Citrus Research and Development Foundation Board.
    Huanglongbing (HLB, or citrus greening) is a bacterial disease 
spread by the Asian citrus psyllid (ACP). HLB has seriously affected 
citrus production worldwide in Asia, Africa, the Indian subcontinent, 
the Arabian Peninsula, Brazil and since 2005, my home state--Florida. 
The vector--the Asian Citrus Psyllid (ACP)--and the disease are also 
found in Texas and California. Although HLB has most severely affected 
Florida, this is a national citrus crisis.
    Throughout history, wherever the disease has appeared, citrus 
production has been compromised with the loss of millions of trees. It 
attacks the vascular system of a tree, severely compromising yields, 
and eventually rendering the tree unproductive. Trees are often dead 
within 3 years.
    At its 1998 peak, Florida citrus plantings exceeded 850,000 acres 
and produced 300 million boxes of oranges, grapefruit, and tangerines. 
We are now down to about 80 million boxes of production and 500,000 
acres. Much of the decrease is due to HLB.
    Huanglongbing and the Asian Citrus Psyllid are not native to the 
state of Florida or the United States. Like citrus canker, which has 
been an ongoing problem for the industry, HLB is another example of an 
imported pest and disease that has resulted in reduced citrus acreage 
and fruit production; [w]e have lost packinghouses and juice plants. 
The processing plants that remain are running below capacity. 
University of Florida economists have estimated since 2011, HLB has 
cost our industry $4.5 billion in lost economic activity and 8,257 
jobs. Today, Florida Citrus Mutual estimates those losses to be double 
that amount.
    And while yields have dramatically decreased, the cost of growing 
citrus in this environment has skyrocketed; production costs in Florida 
total over $2,100 per acre, triple the cost prior to HLB. The ``perfect 
storm'' has forced many growers out of business.
    The silver lining is despite the tough times, the Florida citrus 
industry is still a major economic driver for the State of Florida 
providing an estimated $10.7 billion in annual economic impact. Citrus 
forms the backbone of many communities throughout the state's interior. 
Citrus not only directly supports processing plants and packinghouses 
but also ancillary businesses such as banks, truck dealerships, plant 
nutrition companies, restaurants and equipment stores. These businesses 
would have a hard time surviving if it were not for Florida citrus.
    Consequently, the Florida citrus industry, along with the state and 
Federal Governments, has made a historic commitment to researching 
solutions to HLB. Currently, more than 300 research projects designed 
to beat HLB are underway across the globe. Citrus growers, the state of 
Florida and the Federal Government have collectively spent or 
appropriated more than $250 million over the past 6 years on research. 
Half of this investment was provided through the 2014 Farm Bill.
    While there is no ``silver bullet'' to stop spread of HLB, the 
research investment is yielding tools that the grower can use right now 
to counter the disease. These include a combination of:

   Bactericides.

   Nutritional Therapies.

   Innovative Grove Design.

   Thermal Therapy.

   Tolerant Rootstocks.

    The future of the Florida, Texas and California citrus industries 
is in the hands of our research scientists. Early HLB detection, ACP 
management, conventional breeding, and engineered resistance will all 
be crucial elements in the long-term success of our national citrus 
production. These tools will be needed for Florida producers to 
continue providing the most nutrient-filled and great tasting juice to 
consumers.
    What can Congress continue to do?
    First, it is imperative that the next farm bill include an 
extension of the Emergency Citrus Disease Research and Extension 
Program which was created by the 2014 Farm Bill. The Trust Fund has 
enabled promising new research that offers long-term solutions to 
citrus greening, and hope for the future of our industry. But we're 
only 3 years into the program, and more time is needed.
    The farm bill also provides necessary funding to several other 
important specialty crop programs--such as the Specialty Crop Research 
Initiative (SCRI), Specialty Crop Black Grants, the National Clean 
Plant Network. We urge Congress to continue to invest in these critical 
programs and seek to increase the allocation to these programs to the 
extent funds are available.
    While a long-term solution is being developed through research, 
citrus producers are working hard to maintain as much production as 
possible to keep their businesses, critical infrastructure, and the 
domestic citrus industry intact. These efforts include various 
cultivation techniques--such as more intensive planting and certain 
remedial measures that can have the effect of slowing the spread of the 
disease and maximizing short-term productivity. These techniques are 
costly but necessary.
    For now, our goal is to get more trees in the ground to sustain the 
Florida citrus industry. Fruit is the lifeblood of the industry and we 
need to replant 30 million additional trees to restore our crops to the 
pre-HLB levels and support existing infrastructure.
    The strategy is to create incentives for growers that will mitigate 
some risk and prompt them to invest.
    Last September, the House overwhelmingly passed, under suspension, 
H.R. 3957--the Emergency Citrus Disease Response Act, introduced by 
Rep. Vern Buchanan. The legislation would allow a producer the full 
deduction of the cost of replacing damaged or lost citrus trees, rather 
than capitalizing the trees then depreciating over a 14 year period. 
Unfortunately, the Senate took no action. Congress should take up and 
enact this legislation this year.
    In addition, we urge Members of this Committee to weigh in with 
your colleagues on the Appropriations Committee to fully fund both the 
Citrus Health Response Program (CHRP) at $58 million and the USDA's 
Multi-Agency Coordination Group. These two programs provide important 
resources for short and medium-term solutions for the industry.
    In closing I would just like to point out resilience is a hallmark 
of the Florida citrus grower. Growers are proud to produce products 
that support the economy, are nutritious, and taste good. Many 
families, including mine, have grown citrus for three, four and five 
generations while facing many crises including drought, freezes, 
hurricanes and disease. Our industry has a bright future ahead of it, 
but we need the Federal Government's continued investment and support 
during this crisis.
    Thank you for your time and allowing me to testify on the 
industry's behalf.

    The Chairman. Thank you. Sorry we are rushing.
    They just called votes, but we are going to try to get the 
witnesses to offer their testimony before we go, so we can come 
back directly to the question and answer session.
    So our next witness is Sean Gilbert with Gilbert Orchards/
Sundquist Fruit, in Yakima, Washington. Mr. Gilbert, you are 
recognized for 5 minutes.

          STATEMENT OF SEAN GILBERT, GENERAL MANAGER,
     GILBERT ORCHARDS, INC. AND SUNDQUIST FRUIT, YAKIMA, WA

    Mr. Gilbert. Thank you. Thank you, Chairman Davis and 
Ranking Member Lujan Grisham, for the opportunity to testify 
before the Subcommittee.
    Today, I am representing my family's fruit business that 
has been farming in the Yakima Valley since 1897, where we grow 
apples, cherries, pears, and wine grapes. I am also 
representing a broad community of fruit farmers and their 
employees in our state and across the country who share a 
common interest in continuing to produce delicious, healthy, 
safe, and American-grown fruit for generations to come.
    The Pacific Northwest is home to many family-owned orchards 
that provide approximately \2/3\ of the apples and about \3/4\ 
of the pears and sweet cherries grown in the United States. 
Together, these crops are valued at over $3 billion annually, 
and create tens of thousands of jobs, with about \1/3\ of this 
value coming through foreign trade.
    Like all farming, tree fruit production is an inherently 
risky business, where the whims of weather, pest and disease 
can decimate an entire year's crop or an entire orchard. 
Through crop insurance programs funded by the farm bill that 
fill in where private-sector insurance comes up short, growers 
are able to confidently reinvest in modern orchards that are 
better for our employees and our customers, and out-compete the 
other fruit growing regions of the world.
    A number of research programs funded through the farm bill 
have yielded critical new tools for tree fruit growers, and 
warrant continued or enhanced support. I would like to 
highlight two great stories that resulted from federally funded 
research. The ARS Laboratory in Wapato, Washington, has given 
growers new methods to combat pests like codling moth, an apple 
maggot that can destroy fruit in one orchard and jeopardize 
export markets. My dad, Craig, who was an early adopter of 
organic, says simply, ``Organic farming in Washington would not 
be possible without USDA's ARS in Wapato.'' Also a project 
partially funded by the Specialty Crop Research Initiative 
grant led to the development of a vision system that is a 
critical piece of the most promising automated harvester for 
fresh apples we have ever seen.
    Before I move on to other issues, I want to note that tree 
fruit growers do not expect taxpayers to fund all of our 
research needs. Our state's growers have paid annual 
assessments to fund research since 1969, and in 2013 we voted 
to impose an additional assessment to fund a $32 million 
endowment at Washington State University to support new 
research.
    I would also like to highlight the value of the Clean Plant 
Network. The Clean Plant Center, located in Prosser, 
Washington, has played a vital role in the maintenance and 
distribution of virus-free tree fruit material that encourages 
us to invest in new orchards with confidence.
    Another area I would like to address is organic production, 
which is close to my heart personally, and has become a vital 
part of our industry. My family has embraced organic practices 
throughout our organization, giving us more ecologically 
diverse orchards, while giving consumers the right to choose 
how their fruit is grown. The membership requirements and 
appointment process for the National Organic Standards Board 
have not been reviewed since the Board was first created in 
1990. The makeup of the organic industry has changed 
substantially since then, and I ask that the Subcommittee work 
with stakeholders to ensure that the makeup of the NOSB better 
represents the organic industry producers and consumers. I 
believe this is a needed step in ensuring that organic 
practices have the widespread impact on American agriculture 
they deserve, while meeting ever-growing consumer demand.
    Another area of increasing concern to me is the Food Safety 
Modernization Act. Let me be clear, our industry is committed 
to producing the safest possible fruit for consumers; however, 
two areas of regulation in particular are unreasonable and not 
based on risk: the water testing requirements and the 
definition for packinghouses that regulates differently based 
on size, not risk. I am pleased that FDA Acting Commissioner, 
Dr. Stephen Ostroff, informed us that the agency recognizes 
these problems, and is reconsidering the language on these 
issues.
    While it does not fall under the Subcommittee's 
jurisdiction, I would like to highlight the Market Access 
Program, which, through a 2016 study, showed a remarkable $24 
in export gains for every additional $1 spent on foreign market 
development. Given the clear effectiveness of the program, I 
believe that MAP funding should be increased to $400 million 
annually.
    Last, I would like to address the need for a stable, legal 
agricultural workforce. The bottom line is that the H-2A 
Program is insufficient for meeting the needs of our growers, 
and it disproportionately hurts small farmers. We need a guest 
worker program that is affordable, reliable, and reasonable, 
and a solution that provides a pathway to legal status for the 
current workforce so that this expertise is not lost. The 
culture of fear that looms over our immigrant population puts 
at risk our industry's ability to supply the best-tasting, 
safest produce in the world, grown in America. I encourage 
bold, effective action to address this issue.
    Once again, I would like to thank the Subcommittee for 
giving me this opportunity, and I am happy to answer any 
questions.
    [The prepared statement of Mr. Gilbert follows:]

Prepared Statement of Sean Gilbert, General Manager, Gilbert Orchards, 
                  Inc. and Sundquist Fruit, Yakima, WA
    Thank you, Chairman Davis and Ranking Member Lujan Grisham, for the 
opportunity to testify before the Subcommittee today on the ways that 
the next farm bill can serve the needs of specialty crop growers like 
myself. I am Sean Gilbert, General Manager of Gilbert Orchards, Inc. I 
am a fifth generation farmer and packer. Our family's growing and 
packing operations consist of organic and conventional apples, 
cherries, pears, stone fruit, and wine grapes.
    The Pacific Northwest is home to family-owned orchards that provide 
approximately 66 percent of the apples, 74 percent of the pears, and 78 
percent of the sweet cherries grown in the United States. Together, 
these crops are valued at an average of $3 billion annually, and create 
tens of thousands of jobs in rural communities throughout our region.
    Exports are vital to our industry, with approximately \1/3\ of the 
apples, pears, and cherries grown in the region going to other 
countries. We compete in a global environment, not only against fruit 
imported into the United States, but also against these same 
competitors in the more than 50 countries we export to around the 
world. Mexico is our top market for apples and pears, and Canada is our 
largest market for cherries and our second largest market for apples 
and pears. Many of the other most commercially-important markets for 
our products are in the Asian region.
    Like other types of farming, tree-fruit production is an inherently 
risky business, where the invasion of a pest or disease, or just 1 day 
of the wrong weather, can decimate an entire year's crop. I and my 
fellow growers rely on programs funded by the farm bill to help address 
some of these risks and continue to produce and market fruit of the 
highest quality.
    For example, research conducted at the USDA Agricultural Research 
Service (ARS) laboratory in Wapato has yielded critical new tools to 
combat harmful pests like codling moth and apple maggot that can not 
only destroy fruit in one orchard, but also jeopardize export markets 
for the entire industry. The ARS laboratory in Wenatchee has done 
important work on issues ranging from developing new harvest and 
storage techniques that improve post-harvest storage of specific apple 
varieties like Honeycrisp, to providing new tools for managing apple 
replant disease.
    ARS laboratories outside our region have also made significant 
contributions. For example, the ARS laboratory in Geneva, New York, 
runs an apple rootstock breeding program that has been very beneficial 
to growers like me by developing plant material with built-in 
resistance to pests and diseases. Work coming out of the Kearnsville, 
West Virginia, laboratory on the brown marmorated stink bug and out of 
the Beltsville, Maryland, laboratory on post-harvest fungicide 
resistance have also been of great value.
    These and other ARS laboratories throughout the United States have 
been level-funded for years, while expenses continue to rise. This has 
led to the inability of these laboratories to fill open positions and a 
reduction in overall research capacity. I would ask the Subcommittee to 
consider increasing the authorization levels for the Agricultural 
Research Service to allow some of this research capacity to be built 
back up.
    Under the research umbrella, I would also like to highlight the 
value of the Specialty Crop Research Initiative (SCRI). In spite of its 
relatively short existence in comparison to other farm bill research 
programs, the SCRI has yielded important results in a variety of areas 
for myself and other tree-fruit growers. For example, as the 
Subcommittee is likely aware, access to an adequate labor supply to 
grow and harvest our crops has become an increasingly significant 
problem. During the first year of the SCRI program, a grant was 
provided to a group led by Carnagie-Mellon that developed a machine 
vision system that is a critical component of an automated robotic 
harvester that is now being developed and tested by a California 
company with support from the industry-funded Washington Tree Fruit 
Research Commission.
    Another example of an SCRI success is the RosBREED program, which 
is delivering breeding tools to accelerate the commercialization of 
tree-fruit varieties with enhanced disease resistance and superior 
consumer attributes--reducing production costs and increasing returns.
    I would ask the Subcommittee to, at a minimum, extend the SCRI at 
its current funding level of $80 million per year, and to consider 
building upon this number.
    The Specialty Crop Block Grant (SCBG) program has also been a 
useful program for the tree-fruit industry. One especially beneficial 
component of this program is that it allows for funding to be pooled by 
multiple states for projects that have a more regional or national 
benefit. This has allowed for collaboration with groups like the Center 
for Produce Safety to combine private and public resources from 
different states to fund top-priority projects to enhance food safety 
for produce. I would ask the Subcommittee to again, at a minimum, 
extend funding for this program at its current level.
    While not specific to specialty crop growers, I would also like to 
recognize the value of the Agriculture and Food Research Initiative 
(AFRI). This program, and its predecessor, has helped support projects 
of value to the tree-fruit industry for decades, and I would hope that 
the Subcommittee would consider extending or enhancing its funding 
level in the next farm bill.
    Before I move on to other issues, I do want to highlight that tree-
fruit growers do not expect taxpayers to fund all of our research 
needs. Since 1969, when the Washington state industry voted to create 
the Washington Tree Fruit Research Commission, growers have paid an 
assessment on every box of fruit sold commercially to fund research 
that we believe to be of value to the industry. The WTFRC has a board 
and several committees composed of industry members that determine how 
these funds are distributed to individual research projects. More than 
$3.8 million industry dollars were allocated directly to research 
projects by the WTFRC last year.
    Also, growers voted in 2013 to impose an additional assessment on 
each box of fruit sold to fund a $32 million Tree Fruit Endowment at 
Washington State University to support new research and extension 
positions focusing on enhancing orchard and post-harvest operations. 
This is the largest contribution to WSU in the University's history. I 
am a member of the Tree Fruit Endowment Advisory Committee that helps 
oversee the allocation of these funds.
    The research conducted at the ARS laboratories and supported 
through the SCRI, SCBG, and AFRI programs help leverage these grower 
dollars and keep our industry competitive in the global marketplace--
which in turn supports tens of thousands of jobs throughout our region.
    Another area of importance that I would like to highlight is the 
invaluable work done by U.S. Animal and Plant Health Inspection Service 
(APHIS) in both protecting our domestic industry from the invasion of 
foreign pests and diseases, and in negotiating new market access with 
other countries for our products.
    While many of these activities by APHIS are funded outside the farm 
bill, one important program that does fall within this area is the 
Clean Plant Network. This program provides funding to the Clean Plant 
Center Northwest (CPCNW) in Prosser, Washington, which in turn has 
played a vital role in developing rapid and accurate techniques for 
virus testing, virus elimination, and maintenance and distribution of 
domestic virus-free tree-fruit material. Planting a new orchard is a 
considerable expense that does not yield income for several years, and 
the CPCNW provides growers with the ability to ensure that they are not 
introducing viruses into these new plantings. The Center also serves as 
a quarantine site for the importation of foreign fruit tree cultivars.
    The funding provided through the Clean Plant Network is critical to 
the CPCNW's success, and I would like to thank Congress for including 
funding for this program in the baseline for the current farm bill. 
That being said, there is more need both in the current centers and by 
industries that are not yet a part of the program for the services that 
the CPN provides, so I would ask the Subcommittee to increase funding 
for this program in the next farm bill.
    Another area where USDA plays a valuable role is in supporting the 
registration of crop protection compounds. In some cases, specialty 
crop producers have a hard time maintaining access to these crop 
protection tools because registrants don't want to go to the expense of 
providing the data necessary to EPA to ensure that the product 
continues to be registered for these ``minor'' crops. This is because 
the registrants prioritize the uses of larger commodities where the 
returns are higher.
    The Minor Crop Pest Management, or IR-4, program which is currently 
funded by the National Institute of Food and Agriculture (NIFA), 
provides assistance to the growers of ``minor'' crops in funding the 
research needed to support the registration of these products. 
Otherwise, growers would have to shoulder this burden and in some cases 
would lose access to these products due to the expense of re-
registration. I would ask that the Subcommittee ensure that NIFA is 
still able to support such important work in the next farm bill.
    While this is not referenced in the current farm bill, the National 
Agricultural Statistics Service (NASS) currently conducts a ``Chemical 
Use Survey'' that provides information on the percentage of a crop that 
has been treated with a specific pesticide. When used in conjunction 
with the Pesticide Data Program, the information from these surveys is 
critical to developing more highly-refined risks assessments to support 
re-registration of these products.
    In recent years, NASS has considered either reducing the frequency 
of these biannual surveys or stopping them completely. The data 
included in these surveys is critical to maintaining access to 
important crop protection tools, and I would request that the 
Subcommittee consider adding language to the farm bill to ensure the 
continuation of these surveys on a biannual basis.
    Another area I would like to address is organics, which is becoming 
an increasingly important part of my operation. Gilbert Orchards, Inc. 
has been growing and packing organic apples for over 25 years and have 
expanded organics to all commodities we grow, making up twenty percent 
of our acreage.
    Regionally, the Pacific Northwest is the national leader in the 
production of organic apples, pears, and cherries. Over eleven million 
boxes of organic apples are now harvested from more than 14,000 acres 
in Washington state, amounting to over 70 percent of the entire organic 
apple crop in the United States. There is also a significant amount of 
organic pears and cherries, with more than 1,800 acres planted of each 
across the Pacific Northwest. Organic tree-fruit production in the 
Pacific Northwest is increasing, with additional acreage being 
transitioned to organic each year.
    The Organic Agriculture Research and Extension Initiative (OAREI), 
funded at $100 million in the current farm bill, has provided valuable 
research dollars to find new crop protection approaches that fit into 
the organic arena. With organic production increasing so substantially 
year-after-year, I would ask that the Subcommittee consider increasing 
funding for OAREI in the next farm bill.
    I would also like to take this opportunity to raise a second issue 
that the Subcommittee should consider as you work on the next farm 
bill. The membership requirements and process for the formation of the 
National Organic Standards Board (NOSB), which advises USDA on every 
product and process that is allowed in organic production, has not been 
reviewed since the NOSB was first created in 1990. Alternatively, 
organic production and the makeup of the organic industry has changed 
substantially in the nearly 27 years since the NOSB was first 
authorized. I ask that the Subcommittee work with the variety of 
stakeholders that currently operate in, or have an interest in, the 
organic marketplace, to modernize the makeup of the NOSB to better 
represent the current state of the organic industry.
    Another area that has become of increasing concern to myself and 
other tree-fruit growers is implementation of the Food Safety 
Modernization Act (FSMA). The U.S. Food and Drug Administration (FDA), 
which has zero experience regulating on-farm practices, has now 
finalized seven regulations to implement this law.
    Let me be clear, our industry is committed to delivering a safe 
food product to consumers and is no stranger to food safety 
requirements. Over the last decade, food safety requirements from 
competing retailers have led to our orchards and packinghouses seeing 
countless food safety auditor visits each year.
    However, there are two issues in-particular that I would like to 
highlight for the Subcommittee's consideration as you develop the next 
farm bill. First, the water testing requirements included in the 
Produce Safety rule are unnecessarily burdensome, costly, and not based 
on risk. I am pleased that FDA Acting Commissioner, Dr. Stephen 
Ostroff, informed industry representatives on February 16 of this year 
that the agency recognizes that fact and is reconsidering the entire 
water quality section of the rule.
    Initial compliance dates for the Produce Safety rule are in January 
of 2018, but Dr. Ostroff and his staff indicated that those dates would 
likely need to be delayed for the water quality requirements. I would 
ask the Subcommittee to support efforts to ensure that any water 
testing requirements imposed by FDA are risk-based and reasonable to 
implement on the farm level.
    A second concern with FSMA implementation is the way the 
regulations treat produce packinghouses. The Preventive Controls for 
Human Food rule includes a ``farm'' definition that incorporates some 
packinghouses while exempting others that conduct identical activities, 
by basing the definition on the location of the packinghouse or the 
ownership of the packinghouse and produce handled.
    These vague and daunting proposed rules leave many growers and 
packing facilities confused about implementation and feelings of unfair 
treatment. Providing a safe, high quality, and healthful product to 
consumers is the highest priority for our family-owned operation. Not 
only does our business depend on it, but our growers and their families 
eat the harvested fruit from their orchards. However, that FDA's vague 
farm definition is based off of ownership and structure, not risk, 
presents a much increased risk to the an operation such as ours.
    This definition has implications for whether a facility falls under 
the Produce Safety rule or the Preventive Controls rule; whether 
certain transportation activities are exempted under the Sanitary 
Transportation rule; whether a facility must follow the Intentional 
Adulteration rule; and how the FDA's draft Listeria guidance applies to 
a facility. I am pleased that Dr. Ostroff told industry representatives 
at that same February 16 meeting that the agency recognizes the 
problems with an ownership-based farm definition, and is considering 
alternatives.
    I believe that the farm definition should be based on what 
activities a packinghouse conducts, and not extraneous details like 
ownership or location that have nothing to do with the level of risk, 
and would ask the Subcommittee to support such a definition.
    Before closing, I would be remiss if I did not mention my support 
for several programs that, while not falling under this Subcommittee's 
jurisdiction, still have a significant impact on myself and other tree-
fruit growers. As I mentioned earlier in my testimony, approximately 
\1/3\ of Pacific Northwest tree-fruit is exported to other countries. 
The Market Access Program (MAP) has been a pivotal part of our 
industry's success in expanding overseas markets.
    MAP, which is administered by USDA's Foreign Agricultural Service 
(FAS), forms a highly successful partnership between nonprofit U.S. 
agricultural trade associations, farmer cooperatives, nonprofit state-
regional trade groups, small businesses and USDA to share the costs of 
international marketing and promotional activities such as consumer 
promotions, market research, trade shows, and trade servicing. MAP has 
been tremendously successful and extremely cost-effective in helping 
maintain and expand U.S. agricultural exports, protect and create 
American jobs, strengthen farm income and help to offset the 
government-supported advantages afforded international competitors. A 
recent 2016 study by Informa Economics IEG, working with Texas A&M 
University and Oregon State University economists, showed that between 
2002 and 2014 a return on investment by MAP of a remarkable $24 in 
export gains for every additional $1 spent on foreign market 
development. Given the tremendous cost-benefits and effectiveness of 
the program, I strongly believe that MAP funding should be increased to 
$400 million annually, with the increase phased in as part of the next 
farm bill.
    Another program that has been helpful in both maintaining and 
expanding overseas market access is the Technical Assistance for 
Specialty Crops (TASC) program. I would request that the Subcommittee 
continue to provide adequate support for this program.
    I would also like to highlight crop insurance, which does not fall 
under this Subcommittee's jurisdiction but has long been recognized by 
our industry as a critically important management tool. It is estimated 
that approximately 72 percent of apple orchards nationwide are covered 
by Federal crop insurance, which provides an important safety net to 
growers should a catastrophic event occur.
    Last, while not traditionally a topic addressed by the farm bill, I 
cannot address the impact of Federal policies on specialty crop growers 
without mentioning the need for a stable, legal workforce. It is 
becoming increasingly difficult to find the skilled workers necessary 
to grow, harvest, and pack the crop. The H-2A program is burdensome and 
costly, yet critical to our business. Visa processing delays by the 
U.S. Department of Labor often cause workers to arrive days or weeks 
late--which can be a disaster for perishable tree-fruit.
    The bottom line is that this program is insufficient for meeting 
the needs of our growers and packers. We need a guest-worker program 
that is affordable, reliable, and reasonable, and that provides a 
pathway to legal status for the current workforce so that this 
expertise is not lost.
    As I conclude my testimony, I do want to note that my industry is 
represented on the Specialty Crop Farm Bill Alliance, which is in the 
early stages of developing specific requests on behalf of the entire 
specialty crop industry for many of the programs I have mentioned 
today.
    Once again, I would like to thank the Subcommittee for giving me 
the opportunity to testify before you today on the priorities of the 
tree-fruit industry for the next farm bill. I am happy to answer any 
questions the Subcommittee may have.

    The Chairman. Thank you. That is very good and on the time.
    I would like to yield to Ms. Lujan Grisham to introduce our 
next witness.
    Ms. Lujan Grisham. Given that votes have been called, I 
will forgo a glowing, fabulous description of our New Mexico 
witness, Jay Hill, who is a farmer in Mesilla Valley, which is 
in southern New Mexico, and grows a variety of fabulous crops, 
including New Mexico chile, and simply to say to Mr. Hill, 
thank you for being here.

STATEMENT OF JAY HILL, OWNER-OPERATOR, HILL FARMS AND WHOLESOME 
                 VALLEY FARMS, MESILLA PARK, NM

    Mr. Hill. Chairman Davis, Ranking Member Lujan Grisham, and 
Members of the Subcommittee, thank you for inviting me to join 
you this afternoon.
    My name is Jay Hill, and I am a specialty crop farmer in 
the Mesilla Valley, southern New Mexico. My family and I are 
growing carrots, lettuce, pinto beans, chile, along with 
another 63 varieties of specialty crops. We grow these for 
wholesale and retail markets, as well as for a new store that 
will be opening this spring called FARMesilla. We also own a 
pinto bean processing facility, and have recently acquired 
greenhouses that we are in the process of installing a 
hydroponic production system in, in order to expand our growing 
season to year-round. We are looking to further diversify our 
expanding family-owned and operated business, just as many 
others are aspiring to do.
    I sit before you today to discuss the success of the 
Specialty Crop Block Grant Program. Although I have not yet 
directly been a recipient of these funds, my family as well as 
so many others throughout our diverse state, have benefitted 
from these funds. Beginning in the early 2000s, these funds 
were used to carry forward some of the green chile research 
being done at New Mexico State University. As a result of this 
research, NMSU has released several chile pepper varieties, 
such as the Heritage 6-4 and Big Jim, that are now commonly 
grown in southern New Mexico, and sought after by retailers and 
consumers alike throughout the country.
    As a result of cheaper labor costs in other chile-producing 
countries, competition and pressure from imported markets have 
affected the processing industry. The New Mexico Department of 
Agriculture responded by seeking out specialty crop funding to 
further develop our retail markets for the fresh green chile. 
Since 2006, funds have been used to conduct training for more 
retailers, recipe development, and create promotional events in 
target markets, and so much more.
    Just as these promotional efforts have driven consumer 
demand, similar promotional efforts have been undertaken by our 
chile growers and shippers in the retail industry. 
Specifically, our growers and shippers worked together to 
create a New Mexico pavilion at the largest produce trade show 
in the country, the Produce Marketing Association's Fresh 
Summit. Over 20,000 qualified retail buyers walk the show each 
year, and over 60 countries are represented there. It is the 
Specialty Crop Block Grants that allow producers like myself to 
step off the farm and exhibit and connect with potential 
buyers. As a direct result of all these efforts, over 3,000 
retail stores across the United States as well as Canada now 
offer fresh New Mexico green chile. These chains are many you 
may recognize: Wegmans, The Fresh Market, and Whole Foods.
    To further quantify the success of our outreach on green 
chilies, planted acreage in New Mexico grew 11 percent in 2016. 
At the same time, Specialty Crop Block Grant funds have been 
used to develop markets for New Mexico green chile throughout 
food service channels, further benefitting both chile producers 
and value-added processors. Establishments right here in 
Washington, D.C., such as Stanton and Greene have served New 
Mexico green chile. And, in fact, our famous green chile is 
being served just down the street in two of USDA's cafeterias; 
the South Cafe and Whitten Cafe.
    While I have chosen to focus my testimony on the 
progression of the New Mexico green chile industry as a result 
of the Specialty Crop Block Grant program, there are many, many 
other specialty crop programs that have worked as well, such as 
SCRI. The block grant program, however, allows producers such 
as myself to innovate and try new things that otherwise would 
not have been possible. It allows recipients to gain from 
other's lessons learned. Some of these stories will be 
highlighted in my written testimony.
    To conclude, I would like to recognize the efforts by 
Congress, USDA, as well as New Mexico Department of 
Agriculture, and the other states involved in the program. The 
collaboration between the Federal and state governments have 
resulted in the ability to efficiently administer the program 
and meet the specific needs of each state or territory. The 
program has also supported an overarching goal of bolstering 
specialty crop marketability. The Specialty Crop Block Grant 
Program is key to the 2018 Farm Bill, that will help 
agribusinesses like mine to grow and progress. These program 
enabled me to showcase our chile-roasting process in an Iowa 
grocery store, and these humble beginnings were the 
steppingstones to becoming a successful producer and processor 
with national distribution.
    I appreciate the opportunity to be with you today, and I am 
happy to answer any questions you may have.
    [The prepared statement of Mr. Hill follows:]

    Prepared Statement of Jay Hill, Owner-Operator, Hill Farms and 
                Wholesome Valley Farms, Mesilla Park, NM
Introduction
    Chairman Davis, Ranking Member Lujan Grisham, and Members of the 
Subcommittee, thank you for inviting me to join you this afternoon. My 
name is Jay Hill. I am a specialty crop farmer from the Mesilla Valley 
in southern New Mexico. My family and I are growing carrots, lettuce, 
pinto beans, chile, along with another 63 varieties of other specialty 
crops. We grow these for wholesale and retail markets as well as for 
our new store that will open this spring called FARMesilla. We also own 
a pinto bean processing facility and have recently acquired some 
greenhouses and we are in the process of installing a hydroponic 
production system in order to expand our growing season year-round. We 
are looking to further diversify our expanding, family-owned and 
operated business just as many others are aspiring to do.
    I sit before you today to discuss the success of the Specialty Crop 
Block Grant Program. Although I have not yet been a direct recipient of 
these funds, my family and I, as well as so many others throughout our 
diverse state, have benefited from this program since its inception.
Success Story
    Beginning in the early 2000s, these funds were used to carry 
forward some of the chile research being done at New Mexico State 
University. As a result of this research, NMSU has released several 
chile pepper varieties, such as the Heritage 6-4 and Big Jim, that are 
now commonly grown in Southern New Mexico and sought after by retailers 
and consumers alike throughout the country.
    As a result of cheaper labor costs in other chile producing 
countries, competition and pressure from imported chile for the 
processing industry began to increase and many growers began seeking 
alternative markets for their product. The New Mexico Department of 
Agriculture responded by seeking out specialty crop funding to further 
develop retail markets for fresh green chile outside of New Mexico. 
Since 2006, funds have been used to conduct training for the retailers, 
recipe development, create promotional events in target markets, and 
more.
    Just as promotional efforts drove consumer demand, similar 
promotional efforts have been done by our chile growers and shippers 
for the retail industry. Specifically, our growers and shippers worked 
together to create a New Mexico pavilion at the largest produce trade 
show in the country: the Produce Marketing Association's Fresh Summit. 
Over 20,000 qualified retail buyers walk this show each year and over 
60 countries are represented there. It is this grant program that 
allowed producers like myself to step off the farm and exhibit at the 
show and connect with potential buyers.
    As a direct result of all these efforts, over 3,000 retail stores 
across the United States as well as Canada now offer fresh New Mexico 
green chile during harvest season. Chains that many of you may 
recognize are Wegmans, The Fresh Market, and Whole Foods. To further 
quantify this success, planted acreage of New Mexico green chile grew 
by 11% in 2016.
    At the same time, these funds have been used to develop markets for 
New Mexico-grown chile throughout foodservice channels further 
benefiting both chile producers and value-added processors. 
Establishments right here in Washington D.C. such as Stanton & Greene 
have served New Mexico chile. In fact, our famous green chile has been 
served right here in two of USDA's cafeterias: the South Cafe and the 
Whitten Cafe.
    While I have chosen to focus my testimony on the progression of the 
New Mexico chile industry as a result of this grant program, there are 
many other successful specialty crop stories to be told. This grant 
program allows producers, such as myself, to innovate and try new 
things that otherwise would not have been possible. It also allows 
recipients to gain from others' lessons learned. Some of these stories 
are highlighted in my written testimony.
Conclusion
    To conclude, I would like to recognize the efforts by Congress, 
USDA, as well as the New Mexico Department of Agriculture and the other 
states involved in the program. The collaboration between the Federal 
and state governments has resulted in the ability to efficiently 
administer the program and meet the specific needs of each state or 
territory. The program has also supported the overarching goal of 
bolstering specialty crop research and marketability. The Specialty 
Crop Block Grant Program is a key program to the 2018 Farm Bill that 
will help agribusinesses, like mine, progress and grow. The program 
enabled me to first showcase our chile roasting process in an Iowa 
grocery store parking lot. These humble beginnings were the stepping 
stones to becoming a successful producer and retailer nationwide.
    I appreciate the opportunity to be with you today and I am happy to 
answer any questions that you may have.
                               Appendix A
Recent Program Highlights from the New Mexico Department of Agriculture 
        Funding Summary
   2014-2017 Funding Cycle:

     New Mexico received $550,749.99.

     8 projects funded.

   2015-2018 Funding Cycle:

     New Mexico received $507,181.82.

     9 projects funded.

   2016-2019 Funding Cycle:

     New Mexico received $495,628.39.

     9 projects funded.
Sample Projects
   2013-2016 Wine Trail Signage and Tourism Promotion Project 
        ($63,700):

      The original intent of this project was to improve awareness of 
        New Mexico wines by establishing wine trails and marking them 
        with roadside signage. However, many of the wineries and 
        tasting rooms do not qualify for the type of roadside signage 
        that was needed. After several unsuccessful requests for 
        exemptions to the existing signage guidelines, the New Mexico 
        Wine Growers' Association (NMWGA) decided to change their 
        strategy.
      With this change in direction, future efforts aimed at improving 
        awareness of New Mexico wines included creating a New Mexico 
        wine trails app for smart phones, developing various 
        promotional materials, as well as creating advertisements such 
        as billboards. Individually, these tools helped the NMWGA reach 
        their various target markets.

      As the project was coming to a close, the NMWGA asked to utilize 
        the remainder of their funding primarily for winery 
        participation in the Finger Lakes wine competition. As a 
        result, all of the New Mexico wines that entered into the 
        competition were awarded medals. The focus of their advertising 
        campaign is now centered around these award-winning wines, 
        helping to not only increase awareness for all New Mexico wines 
        but to increase awareness of the quality of wines as well.

   2014-2017 Taos Veterans Farmers Project ($12,785):

      The Not Forgotten Outreach (NFO) Farmers Project provides 
        veterans and Gold Star Families (survivors of fallen heroes) 
        with horticulture therapy and beginning specialty crop farmer 
        training. NFO utilizes previously uncultivated land by means of 
        Memorandums of Understanding with elderly landowners as well as 
        hoop houses for season extension purposes in the Taos area in 
        northern New Mexico.
      By the end of the second year, NFO had introduced 17 military 
        families and three beginning veteran farmers to land 
        reclamation, planting specialty crops, and preparing the crops 
        for various wholesale and retail sales throughout their 
        community. NFO also hosted an aquaponics workshop for 32 
        individuals that included both military families and civilians. 
        Nine veterans whom attended the workshop are extremely 
        interested in producing specialty crops via aquaponics farming 
        techniques.
      Just recently, NFO joined forces with Taos Village Farms and 
        gained the use of 90 acres. The 90 acres includes a 40x90 
        greenhouse, cold storage space, 7 acres of drip line irrigated 
        field crops, 1 acre of hops, and 40 acres of irrigated land.

   2015-2018 and 2013-2016 Mitigation of Alternate Bearing in 
        New Mexico Pecans ($84,997.39 and $93,000 respectively):

      Pecans are among the largest economic contributors to New 
        Mexico's agricultural economy, with production exceeding $60 
        million annually. One of the most important horticultural 
        constraints for profitable pecan production in New Mexico is 
        alternate bearing, which is the annual cycling of pecan trees 
        between heavy and light crop load. The mechanism behind 
        alternate bearing is the year-to-year variation in formation 
        and development of female flowers.
      The transition to flowering in pecan trees cannot be visualized 
        until bloom but the ``decision'' to become a flower takes place 
        prior to bloom. Neither the timing nor location of the source 
        for the genetic signal for a shoot meristem to transition from 
        vegetative to floral is known in pecan trees. Therefore, a 
        practical approach to address this problem is to utilize 
        genetic techniques to determine how flowering occurs in pecan 
        trees. New Mexico State University is using the Specialty Crop 
        Block Grant Program to do this important research. This 
        research will allow better resolution for timing of such 
        alternate bearing mitigation approaches such as mechanical 
        hedge pruning, fruit thinning, and plant growth regulator 
        applications. These genetic studies are necessary in 
        understanding how flower induction in pecan trees occurs, which 
        will give the pecan growers an invaluable tool to use with 
        their horticultural practices for mitigating alternate bearing 
        in pecan trees.
      The results of this research will further help southern New 
        Mexico pecan growers produce a more consistent crop from year 
        to year. Consistency in production and quality is key to 
        capturing and maintaining market share.

   2015-2018 Cooking with Kids Community Connections for a 
        Healthy Future ($60,274.65):

      The goal of this project is to increase purchases of specialty 
        crops through: addressing the nutritional health of families in 
        New Mexico by providing hands-on food and nutrition education 
        using New Mexico-grown specialty crops; connecting New Mexico 
        specialty crop farmers with local school children through the 
        Cooking with Kids Farmers in the Schools program; and to train 
        farmers in demonstration and sampling skills to market their 
        crops.
      The Cooking with Kids program has experienced great success in 
        increasing first year sales of specialty crops through their 
        in-school programing efforts for K-6th graders. Further, 
        agricultural producer participation in these education programs 
        is on track to meet or exceed their target goals for the 2 year 
        project. An unexpected outcome was identifying additional needs 
        for Spanish-speaking farmers. The program's Year 2 efforts will 
        focus on facilitating a Spanish-language training on developing 
        and selling value-added products. The training will include: 
        (1) a translated presentation from the New Mexico Environment 
        Department on guidelines and requirements, (2) a presentation 
        on strategies and lessons learned from farmers who are 
        successfully marketing value-added products, and (3) a focus 
        group discussion with current market customers on the types of 
        products they would like to purchase at market.
                               Appendix B
Information from the New Mexico Farm & Livestock Bureau
    The 2014 U.S. Farm Bill was estimated to contribute $23 billion to 
deficit reduction over 10 years. This was the first time a farm bill 
has voluntarily reduced spending before consideration and the only 
reauthorization bill that offered a savings. The Agriculture Committees 
made difficult decisions to deliver a bipartisan bill. As you all begin 
preparing for the 2018 Farm Bill we would ask that the substantial 
savings that have been achieved be taken into consideration. 
Agriculture and rural New Mexico struggles, New Mexicans have 
difficulty meeting their nutritional needs. Farm income is down and so 
the development and passage of the 2018 Farm Bill without further cuts 
is essential.
    For New Mexico, the 2018 Farm Bill is important, while many farmers 
and ranchers take advantage of the various farm bill programs it is 
ultimately the consumers, citizens and our country that truly benefits 
from a safe, abundant and affordable food supply. We cannot say that 
one program is more important than the other and so careful 
consideration must be given to all programs.
    As a Board of Director for New Mexico Farm and Livestock Bureau, a 
producer and consumer, I respectfully ask that you consider the 
contributions that agriculture has already made to reducing the 
deficit. We ask that you pass a 2018 Farm Bill with the funding needed 
to support our farmers and ranchers while ultimately benefiting all 
consumers.
                               Appendix C
Information from the National Association of State Departments of 
        Agriculture
    The Specialty Crop Block Grant program (SCBGP) is a critical area 
of collaboration between the State Departments of Agriculture, the 
specialty crop industry, and USDA. Since 2009, the state departments of 
agriculture have distributed nearly $393 million in grants to 5,400 
project partners that have enhanced the competitiveness of specialty 
crops in the United States. These projects are not just increasing 
consumer access to safe and healthy food but are expanding economic 
opportunities across rural America.
    While we highlight this program as a success, program funding 
recipients have growing concerns that the flexibility the SCBG program 
was built upon is eroding due to increased and unnecessary bureaucratic 
processes. This is especially evident in the establishment of certain 
performance measures for the program. While we all want to ensure the 
wise use of tax dollars, we are concerned these requirements--
especially new sales reporting requirements for marketing projects--are 
simply not feasible for many of the kinds of projects that have made 
this program so successful. We ask this Subcommittee to take these 
concerns into consideration as we work towards a flexible, locally 
responsive program in the next farm bill.

    The Chairman. With that, I really appreciate your opening 
comments, Mr. Hill.
    Ms. Davis, since we share the same last name, you are going 
to have to have a little bit of patience with me. I am going to 
recess this hearing so that we can go vote. We have been trying 
to get them to hold it open as long as possible, and they are 
now texting me asking where we are at.
    So with that being said, this hearing is in recess, and we 
will come back immediately after votes to listen to your 
opening statement and take questions. Thank you.
    [Recess.]
    The Chairman. I think Ms. Lujan Grisham is on her way back, 
but since we only have one more witness left to offer opening 
remarks, I would like to call the hearing back to order and let 
Ms. Davis feel free to offer her opening remarks, and then Ms. 
Lujan Grisham, our Ranking Member, will be back in time to 
begin the question period.
    So with that, Laura Davis from Long Life Farm, in 
Hopkinton, Massachusetts, who told me earlier today that she 
was born in the great State of Illinois, correct? Well, thank 
you, another pleasant surprise from the witness table. So with 
that, thank you for being here, you are recognized for 5 
minutes.

STATEMENT OF LAURA DAVIS, CO-OWNER/CO-OPERATOR, LONG LIFE FARM; 
   PRESIDENT, BOARD OF DIRECTORS, NORTHEAST ORGANIC FARMING 
                         ASSOCIATION--
              MASSACHUSETTS CHAPTER, HOPKINTON, MA

    Ms. Davis. Thank you, Chairman Davis, and Subcommittee 
Members.
    My name is Laura Davis, and like most farmers who are 
trying to piece together a living, I wear many hats. Foremost, 
I own and operate Long Life Farm, along with my husband, Donald 
Southerland. Our daughters, 12 and 14, are the most important 
crop we grow. I am the President of the Board of Directors of 
the Northeast Organic Farming Association--Massachusetts 
Chapter. On behalf of NOFA--Mass, I earn an hourly wage 
assisting farmers and food handlers with their organic 
certification process. In addition, I organize the Hopkinton 
Farmers' Market in Hopkinton, Mass., and I also work as an 
independent organic inspector.
    The energy that my husband and I have put into building our 
farm and raising our children, combined with my experience with 
NOFA--Mass, has provided me with an important and unique 
perspective on the state of small diversified farms and 
specialty crop production in Massachusetts and throughout the 
Northeast.
    Long Life Farm is a 2\1/4\ acre certified organic, 
diversified vegetable farm. We grow 100 varieties of vegetables 
and annual fruits. We launched our farm in early 2011, and are 
growing produce for 85 families, a community-supported 
agriculture program, and we sell our produce at two farmers' 
markets.
    NOFA--Mass has 1,100 members, and it is part of the NOFA 
Interstate Council of seven Northeast states, with 
approximately 5,000 members. The NOFAs are proud members of the 
National Sustainable Agriculture Coalition, as well as the 
National Organic Coalition.
    As everyone in this room knows, farms of all types are 
struggling throughout country. Rock-bottom commodity prices and 
tightening international commodity markets have more and more 
farmers looking to local, regional, and organic markets to 
diversify their business and ensure their long-term viability.
    In such a state of transition, it is critical that the next 
farm bill, at the very least, maintain, or better yet, increase 
current investments in those sectors of the agriculture 
economy. Now is not the time to cut important programs that 
serve family farms, that promote rural jobs and economic 
opportunity.
    I would like to mention a number of farm bill programs that 
are critical to supporting producers in the Northeast. Since I 
rely on direct market channels for selling my produce, 
marketing and sales is a critical part of my job. I know from 
experience and from other farmers how important finding a 
consumer base is for the success of our farms. The National 
Organic Certification Cost-Share Program and the Farmers' 
Market and Local Food Promotion Program have been incredibly 
important to connecting with customers and supporting both new 
and expanded markets. NRCS EQIP grants for high tunnel 
greenhouses have also been a very important investment, 
allowing farmers like me to extend my season earlier in the 
spring and later in the fall.
    We are promoting SNAP, Supplemental Nutrition Assistance 
Program, at the Hopkinton Farmers' Market, and hope to gain 
funding for SNAP nutrition incentives so that we can bring more 
benefits to our seniors who are on a limited income. This is 
our main SNAP population in our community.
    We would also like to be able to accept SNAP EBT for CSA 
shares. Like many other Massachusetts farmers, we thought 
changes to the last farm bill would make that possible, but 
there are still logistical challenges. I hope the next farm 
bill can fix some of these logistical challenges.
    Food safety is also critical to marketing, and represents 
both a challenge and an opportunity. While it is not an 
immediate concern for my farm at is current size, as my farm 
grows, I will have to become increasingly focused on produce 
regulation compliance with the Food Safety Modernization Act. 
Understanding FSMA and becoming third-party certified is 
weighing heavily on the minds of produce farmers throughout the 
Northeast. From my perspective, the next farm bill needs to 
invest more research in outreach, education, technical 
assistance, and cost-share assistance for farmers to support 
FSMA compliance.
    Last, in terms of long-term future of farming, we need to 
focus on research that benefits organic and sustainable 
agriculture. My farm and others throughout the Northeast have 
benefitted from on-farm research of new practices shared 
through farmer-to-farmer networks. Continued growth in the 
local, regional, and organic sectors of agriculture depends 
upon developing new locally adapted seeds and techniques. It is 
important that the next farm bill continue to invest in 
agricultural research and education through programs like the 
Organic Research and Extension Initiative.
    I am grateful for the Subcommittee's interest in learning 
more about how farm programs and policies affect farmers in the 
Northeast, and I encourage the Subcommittee Members to give 
careful consideration into how the next farm bill can support 
rural communities, small family farmers by supporting local and 
regional food economies.
    Thank you.
    [The prepared statement of Ms. Davis follows:]

 Prepared Statement Laura Davis, Co-Owner/Co-Operator, Long Life Farm; 
 President, Board of Directors, Northeast Organic Farming Association--
                  Massachusetts Chapter, Hopkinton, MA
Introduction
    Good afternoon! I appreciate the opportunity to testify before the 
Subcommittee on a topic area that is important to farmers throughout 
the Northeast. My name is Laura Davis and like most farmers who are 
trying to piece together a living, I wear many hats. Foremost, I own 
and operate Long Life Farm along with my husband Donald Sutherland. Our 
daughters 12 and 14 are the most important crop we grow. I am the 
President of the Board of Directors of the Northeast Organic Farming 
Association--Massachusetts Chapter; this is a volunteer position. On 
behalf of NOFA--Mass, I earn an hourly wage assisting farmers and food 
handlers with their organic certification process. In addition, I 
organize the Hopkinton Farmers Market in my town and I am an 
Independent Organic Inspector. The sweat and energy that my husband and 
I have put into building our farm and raising our children, combined 
with my experience with NOFA--Mass, has provided me with an important 
and unique perspective on the state of small diversified farms and 
specialty crop production in Massachusetts but also throughout the rest 
of the Northeast.
    I have walked the path that Beginning Farmers must travel to access 
land, learn agricultural skills and finance infrastructure. Unlike 
young farmers starting out, I had a bit of savings that paid my 
personal expenses and early capital expenses as I launched my 
agricultural business. In addition, several important Federal programs 
helped Long Life Farm gain a foothold in our local market.
    Long Life Farm is a certified organic diversified vegetable farm 
growing over 100 varieties of vegetables and fruit on 2\1/4\ acres of 
leased land. We launched our farm in early 2011, and are growing food 
and selling direct to 85 families and our community at the Hopkinton 
Farmers' Market and the Ashland Farmers markets.
    As I mentioned previously I am also the President of the Board of 
Directors of NOFA--Mass. NOFA--Mass has 1,100 members and is part of 
the NOFA Interstate Council of NOFA organizations from New York, 
Vermont, New Hampshire, Connecticut, Rhode Island and New Jersey which 
is made up of about 5,000 members. NOFA--Mass enjoys a diversified 
revenue mix of Federal, state and private grants, membership, donations 
and conducts numerous educational workshops and seminars on organic 
farming and gardening.
    We teach farmers, gardeners, consumers, landscapers, educators and 
policy makers how to take action on their own to return carbon to the 
soil and produce nutrient dense food that will resist insect/disease 
pressure as well as resist extreme weather events.
    NOFA--Mass Mission statement reads: Through education and advocacy 
NOFA--Mass promotes organic agriculture to expand the production and 
availability of nutritious food from living soil for the health of 
individuals, communities and the planet.
    The NOFAs are proud members of the National Sustainable Agriculture 
Coalition as well as the National Organic Coalition.
    I want to turn my attention now to the topic at hand, the next farm 
bill and specialty crops. As a small-diversified organic specialty crop 
farm relying on direct market channels for selling my produce, 
marketing and sales is critical to my job. I know from experience and 
through other farmers, how important marketing and finding a way to 
connect with customers is for the success of farms like mine throughout 
the Northeast.
    The National Organic Certification Cost-Share Assistance Program is 
an important program that helped us connect and communicate with 
potential customers and access the strong and growing market for 
certified organic food. There was no hesitation, when I launched Long 
Life Farm, that I would pursue organic certification. I have relied on 
the USDA/Organic seal in purchasing food for my family and it felt like 
a natural progression to certify the food that we were producing on our 
farm. It was also important to me to have instant credibility with my 
new customers as a new farmer. The USDA Organic label enabled me to 
instill confidence with shareholders up front. Farmers can spend years 
getting to know customers and familiarizing them with their farming 
practices. In the case of farmers interested in selling to wholesale 
markets, many institutional buyers, as well as supermarkets and other 
groceries now carrying organic produce, require certification.
    As the Organic Certification Assistance Coordinator for NOFA--Mass, 
I often hear objections from farmers to certification due to cost of 
the program. For small farmers, the Organic Cost-Share Program brings 
the cost in line with affordability. While costs can vary amongst 
different certifiers, recouping 75% (for a maximum $750) of the organic 
certification fee paid to certifiers is a huge benefit for small farms. 
This means higher margins for farmers who grow commodity crops, when 
prices are at historic lows. One could argue that more organic farms 
means more conservation programs too, as organic farmers are doing 
conservation work through nutrient management, cover cropping, crop 
rotations and now more so than ever reduced or no-till farming. The 
Organic Certification Cost Share program is bringing benefits to our 
farm communities that keep on giving, on multiple fronts.
    Another program that I know has been important for developing new 
marketing opportunities for family farms is the Farmers Market and 
Local Food Promotion Program. This program also helps farmers tap the 
existing demand for local produce by developing new markets and 
increasing consumer demand. One entity who was awarded a FMPP grant in 
2016 here in Massachusetts, New Entry Sustainable Farming Project, is 
launching workshops and training programs to develop a direct marketing 
plan which will include technical support, branding, websites and 
marketing strategy for farmers going through their farm business 
planning course and those farming on their incubator farm.
    As everyone here in this room knows, farms of all types are 
struggling throughout the country. Rock bottom commodity prices and 
tightening international commodity markets have more and more farmers 
looking to local, regional and organic markets to diversify their 
businesses and ensure long-term viability of their farms and the next 
generation of farmers. In such a state of general uncertainty with more 
and more producers looking to local, regional and organic markets, it 
is critical that the next farm bill at the very least maintain or 
increase current investments in those sectors of the agriculture 
economy--now is not the time to cut important programs serving 
agriculture and promoting rural jobs and economic opportunity. In light 
of the state of the rural economy and local and international marketing 
opportunities, we should really be discussing increasing farm bill 
investments in developing local and regional food economies and organic 
agriculture.
    USDA/NRCS EQIP grants have been an extremely valuable program to so 
many Northeast farmers. I have been able to extend my season with the 
aid of a high tunnel greenhouse, partially paid for by an NRCS high 
tunnel grant in 2015. This grant also enabled me to pay for additional 
greenhouse soil testing to insure maximum nutrient management. Not only 
have I expanded my farm share offerings to include early spring and 
fall greens, but early and late crops undercover are safer from severe 
weather events. This would not have been possible without the EQIP 
grant. This program should continue to benefit farmers throughout the 
U.S.
    My farm markets most of our produce through a CSA program, though 
we also sell through farmers['] markets where we have benefited from 
being able to accept SNAP EBT and double-value SNAP incentives. Only 
about 5% of the community that I live in receives SNAP benefits, but 
they are seniors who live in subsidized housing. They used to have a 
local grocery they could get to within blocks of their home. Now they 
must travel some ways to do their grocery shopping. We are promoting 
SNAP at the Hopkinton Farmers['] Market and hope to gain funding for 
SNAP matching so that we can bring more benefits to our seniors on a 
limited income.
    We would like to also be able to accept SNAP EBT for CSA shares. 
Like many others Massachusetts farmers, we thought changes to the last 
farm bill would make that possible but unfortunately severe limitations 
in the implementation phase of the farm bill resulted in inadequate 
changes. For instance, Many Hands Organic Farm in Barre, MA brings out 
the EBT machine once per week for one customer, must connect via dial-
up to connect, and must be available and present when the customer 
picks up. They cannot be out in the fields working. All their other 
shares are picked up by customers without someone there to assist them. 
Many farms deliver CSA shares to more convenient drop off points for 
their customers, having to scan the EBT card each week or every other 
week, instead of once per season, is preventing farmers from accepting 
SNAP benefits for CSA shares, causing people who need the nutritious 
food most going without, if they cannot get to the farm. I hope the 
next farm bill can fix some of these logistical challenges and make it 
possible to truly receive SNAP benefits for a CSA farm share.
    In terms of marketing, one of the biggest challenges I face is from 
food safety regulations. Food safety is important to our operation 
first and foremost for our customers' health and well-being, but food 
safety is also about marketing and access to markets, and about 
government regulations.
    While it is not a concern for my farm at the current size, like 
every small business owner I hope my small farm business will continue 
to grow and that means I will have to become increasingly focused on 
compliance with the Food Safety Modernization Act (FSMA) produce 
regulations whether through direct application of those regulations on 
my farm or the indirect impact of driving increased reliance on third 
party food safety auditing in the larger local and regional produce 
markets. Understanding FSMA, and becoming third party food safety 
audited for FSMA compliance and/or market access are weighing on the 
back of the minds of many farmers throughout the northeast and indeed 
the whole country.
    Food safety is both a major challenge and an opportunity for which 
the farm bill could really help. Throughout the Northeast many small 
and medium size farmers are struggling to figure out how and when they 
have to or don't have to comply with FSMA rules and regulations. This 
is one area in which the farm bill should really play a stronger role. 
There needs to be much more robust outreach and education efforts aimed 
at helping to educate and train small farmers across this country about 
FSMA and its associated rules, regulations and thresholds for 
compliance. Providing additional funding for the Food Safety Outreach 
Program through the farm bill could help to address these issues. In 
addition, the farm bill should look at cost share programs that would 
help offset the water testing requirements for surface water for FSMA. 
While my organic certifier requires me to do water testing annually at 
a cost of $70, the FSMA required 20 tests ($700) to establish baseline 
and then five water tests ($175) per year thereafter is not only costly 
in terms of testing, it is a logistical nightmare. Labs usually require 
you to use only their sample cups, so if you don't have enough in 
stock, you must go get them before taking water samples and returning 
them to the lab. There is also a small window of time when samples can 
be delivered to the lab, making it difficult for farms that are not 
within proximity.
    A cost-share assistance program focused on food safety would be 
tremendous, it could mean the difference between survival and failure 
for many farmers of all types from well-established producers to 
beginning and veteran farmers. For me and many other farmers it seems 
only fair. If society through Congress and the FDA has decided that we 
need to impose certain industrial-type food safety regulations and 
standards on farmers throughout the country, society should share in 
that burden rather than place it all on struggling family farmers and 
rural communities.
    Last, I would like to talk about a topic that is less focused on 
current and short-term challenges and opportunities and on the long-
term future. That topic is research. My farm and so many others 
throughout the Northeast have benefited from on-farm research into new 
practices and approaches to farming, shared through farmer-to-farmer 
networks and events. Farming is not an exact science and techniques 
continue to evolve for small organic farms utilizing no-till or minimal 
till farming. There are only a handful of universities that focus on 
research that is relevant to organic farming. This primarily due to 
limited funding to support such research rather than a lack of 
interest. Research studies can make a big impact to Northeast farmers. 
For instance, the results\1\ from a single recent study from the 
University of New Hampshire may have saved \1/4\ acre of fall brassicas 
that I lost to aphids last year.
---------------------------------------------------------------------------
    \1\https://extension.unh.edu/resources/files/
Resource006332_Rep9072.pdf.
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    I participated in a Specialty Crop Research Initiative grant 
through NOFA--Mass over the last year, and while results have not been 
published yet, I do expect to learn about new practices that will make 
me a more profitable farmer. I will be sharing my efficiencies in using 
black weed guard mulch in between rows of cucurbits and tomatoes.
    We also need to research how our changing climate is impacting 
agriculture in the Northeast as it pertains to flooding, drought, 
severe temperature swings and the direct market farmer.
    Continued growth in the local and regional and organic sectors of 
agriculture depend on developing new regionally and locally adapted 
seeds and techniques, continued investment in organic research and on-
farm research and dissemination of that research to farmers and other 
researchers. As you know certified organic growers are required to use 
organic seed, however there are limited varieties available if you 
compare catalogs of conventional seed. As an Independent Organic 
Inspector, I visited 20 organically certified farms in 2016 to do their 
annual inspection. A very small handful uses 95-100% organic seed in 
their farming operations. This all has to do with the limited 
availability, or lack of vigor and breeding of organic seed. It is 
important that the next farm bill continues to invest in agriculture 
research and education through programs like the Organic Research and 
Extension Initiative (OREI).
    Organic farming continues to be one of the fastest growing sectors 
of agriculture. However, a major challenge facing organic farmers is 
the lack of sufficient, appropriate, and relevant research, education 
programs, and extension resources. A strong investment in research 
underpins growth in any sector, as all farmers--sustainable, organic, 
conventional, or otherwise--need cutting-edge research that is easily 
accessible and relevant to their farming systems. OREI helps fill the 
void of knowledge by supporting research projects that specifically 
address the most critical challenges that organic farmers face in their 
fields every day. And most of the research results from OREI can also 
inform and be applied by more conventional operators as well. The next 
farm bill should redouble research investments and activities in OREI.
    Thank you. I appreciate the opportunity to speak to you this 
afternoon about such an important topic. I am grateful for the 
Subcommittee's interest in learning more about how farm programs and 
policies are and aren't working for farmers in the Northeast. I 
encourage the Subcommittee Members to give careful consideration into 
how the next farm bill can and should support rural communities and 
small family farmers by supporting local and regional food economies.

    The Chairman. Thank you, Ms. Davis.
    I would like to get back to the page I had. The chair would 
like to remind Members that they will be recognized for 
questioning in order of seniority for Members who were here at 
the start of the hearing. After that, Members will be 
recognized in order of arrival. I appreciate the Members' 
understanding.
    I now recognize myself for 5 minutes to begin the question 
and answer session.
    Mr. Field, I would like to start with you. I have heard 
from numerous specialty crop groups and they all agree most 
Title X Programs are working well. How have the programs been 
working for your operations at Frey Farms?
    Mr. Field. The programs work great for us. We really don't 
seem to have many issues. For us, the number one issue, and I 
reiterate this from my testimony, is the fact that immigration 
is the one main issue that we need to focus on. Immigration 
reform for agriculture is the single largest issue facing us 
today, and if we don't fix it, it can likely put our industry 
in jeopardy, especially as we come upon the 2018 Farm Bill.
    Agriculture needs to be the number one priority for us. And 
we understand that it isn't through the jurisdiction of this 
particular Subcommittee, however, we are looking to you to be 
our champions on that.
    The Chairman. Thank you, Mr. Field. You mentioned 
immigration reform. Obviously, that is not under the 
jurisdiction of our Committee. Looking at the farm bill, can 
you offer up any suggestions on what we can do better to make 
operations like yours, a multi-state operation, make it more 
functional so that we can continue to get produce out into the 
global marketplace?
    Mr. Field. Absolutely. Research is probably the single 
biggest initiative that we should be focusing on. For an 
operation like ours, certainly, and I am speaking here from our 
personal experience, is that research helps us understand 
things like mechanization, it helps us understand food safety, 
it helps us understand citrus greening. And especially when you 
farm in multiple states like us, under multiple different types 
of specialty crops, research is critical for us. And, 
specifically for research, this Subcommittee could take a close 
look at the funding levels and the structure of how the 
research is done at the USDA because, for example, right now 
there are plenty of groups who would like to have funding from 
the USDA to understand how fruits and vegetables or specialty 
crops can be allocated the right funding from the USDA, but 
they find it from a lot of other sources. Right now, for 
example, in Miami, Florida, where my hometown is, where I am 
from, there is a group called Fairchild Tropical Gardens, and 
they are one of the finest botanical gardens in the world. And 
they are currently doing a study on fresh fruits and 
vegetables, funded by NASA. And they are trying to figure out, 
they have the funding, but they are trying to figure out how 
they can get fresh fruits and vegetables grown in space. So it 
is kind of interesting that they are going to NASA to find ways 
to do research on fresh fruits and vegetables instead of the 
USDA.
    The Chairman. I share your concern about USDA funding for 
research. Obviously, NASA is another opportunity. We see 
opportunities with some of our universities, both land-grant 
and non-land-grant universities. But let me ask you, do you at 
Frey Farms use any of those opportunities to partner, or do you 
use any opportunities to take research that has been partnered 
with industry, for example? And what are your thoughts on 
industry sponsoring research also?
    Mr. Field. Absolutely. We need to have those types of 
initiatives in place. I think the university programs are 
phenomenal. In Florida, for example, we have worked closely 
with IFAS to understand different research programs and 
initiatives that they have.
    The Chairman. Can we clarify, you said IFAS?
    Mr. Field. IFAS.
    The Chairman. Okay, thank you.
    Mr. Field. Yes. In Florida. And then in Illinois it is 
University of Illinois there. And they have helped us with 
several different studies, whether it be juice marketing, 
things that we do with our commodities that are based in that 
part of the country. So those programs are great. They can be 
enhanced and probably better equipped for our industry.
    The Chairman. Okay. And any private-sector-funded research 
opportunities that you guys have taken care of you would like 
to expand upon?
    Mr. Field. Not that I can think of at the moment.
    The Chairman. Do you agree that sometimes researchers 
partnering with the private-sector sometimes get unfairly 
labeled?
    Mr. Field. Yes, I absolutely do. I believe that they do. We 
have seen that in the food industry in general where they get 
labeled as though they are trying to push them one way or 
another. And, in fact, there is some great research done in the 
private-sector. I think that initiative should be firmly pushed 
forward because they have some skin in the game, and they want 
to see something better for the industry.
    The Chairman. So public-private partnerships, even in 
research, are working to expand the playing field to get us the 
next best research project.
    Mr. Field. Yes, they are very efficient.
    The Chairman. So with that, Mr. Field, thank you very much 
for your time.
    I now recognize the Ranking Member, Ms. Lujan Grisham, for 
5 minutes.
    Ms. Lujan Grisham. Thank you, Mr. Chairman. And, of course, 
I will ask a question, but before I do I ask unanimous consent 
to enter an article from Politico entitled, The Vegetable 
Technology Gap, because the information it provides regarding 
the importance of investing in specialty crop research, is 
right on topic.
    The Chairman. Without objection.
    [The article referred to is located on p. 459.]
    Ms. Lujan Grisham. Thank you.
    Mr. Hill, as I mentioned in my opening remarks, one of the 
greatest challenges that we face in New Mexico, and many rural 
states face, is the difficulty of getting healthy, fresh, and 
nutritious foods to rural areas and food deserts, especially 
Indian Country. New Mexico ranks 49th in the country in 
children's food insecurity: 120,000 or 24 percent of all 
children in our state aren't sure about where their next meal 
might come from. And 17 percent of all New Mexico households 
are food-insecure. In the article that I just entered into the 
record, the Director of USDA's National Institute for Food and 
Agriculture, Sonny Ramaswamy, said if Americans were to 
actually go ahead and consume the recommended amounts of fruits 
and vegetables, we would be hard-pressed to, in fact, meet that 
demand.
    This means that even if we didn't have challenges like food 
deserts and access in rural and urban America, we aren't 
producing sufficient healthy fruits and vegetables to fulfill 
the nutritional recommendations and requirements we are 
advising our citizens to follow.
    We know that we need to increase crop yields and get more 
bang for our buck. Today we get about six times as much corn 
out of 1 acre of land as we did in the 1920s. However, in 
specialty crops, such as iceberg lettuce, have only doubled 
their yields in that same amount of time.
    It seems to me then, Mr. Hill, that research, and we talked 
about this in the Chairman's question, is fundamental to the 
innovation in the sector. In addition to what we have heard 
from our panelists, what else can we do in addition to funding 
to make sure that we are creating environments, like we do at 
New Mexico State University to engage in investing in 
innovation, research, and technology that would make a 
difference in your future?
    Mr. Hill. Thank you for that question, Congresswoman. I 
participate on this panel, surrounded by other producers, I 
often find a challenge in marketing, and it ties back to 
feeding children in my home state. We are asked to provide the 
world, through our exports, with healthy, nutritious, great-
tasting food. And people want to purchase that food at, of 
course, the lowest dollar that they can. As I try to target 
markets, especially those that are close, I look at what covers 
overhead: payroll, mortgage payments, and enough to keep new 
and updated equipment on my farm, and while I do a sustainable 
job as a producer. Everything I do has to make business sense. 
I would love to know that when I walk into my operation one of 
my greenhouses, that a fresh head of lettuce from my operation 
goes to an elementary school cafeteria. I would love to make 
that connection. But at this point right now, we need 
additional research to make sure that it is feasible, from a 
business perspective, for me as a grower to actually produce 
that crop and deliver it to that specific marketplace.
    Ms. Lujan Grisham. With the time I have left, based on that 
response, in addition to making sure that investments in the 
farm bill continue, there needs to be parallel efforts to think 
about the marketing and the education in connecting buyers, and 
in that, provide access to areas that currently don't have that 
access to fresh healthy food, such as food deserts. And maybe 
that has to be part of that research, Mr. Chairman.
    Thank you very much, Mr. Hill.
    Mr. Hill. Thank you.
    The Chairman. The gentlelady yields back.
    I would like to recognize Mr. Yoho, for 5 minutes.
    Mr. Yoho. Thank you, Mr. Chairman. I appreciate you all 
being here, enduring Congress, I guess, going through votes.
    I want to ask Mr. Field and Mr. Black: Since you have had 
experience in Florida and you grew up down there, in Miami, 
Florida is home to roughly 360 specialty crops. When we talk 
about crop insurance and you look at this farm bill and 
previous ones, going into the next one, you know how Florida, 
we are blessed with an abundance of water, great agricultural 
land, and people can switch crops readily, to have the 
protection and the safety net. The way I understand it now, if 
you look at Florida with the orange groves, 50,000 acres have 
been replanted as either blueberries or corn in a lot of the 
areas. When you change from one crop to another, and it is a 
specialty area, you might try it for a year or 2, it seems like 
you fall out of the risk management programs or the crop 
insurance because you don't have a track record, even though 
you may even border a county that has a historical record. What 
are your thoughts on that, and how can we strengthen it, and is 
there a need to do that?
    Mr. Field. There is absolutely a need to do that, to 
strengthen crop insurance, and those programs as you mentioned 
them. For example, in Florida, that is one of our newer states 
where we produce, we do watermelons. And we have grown 
watermelons there, but we have recently taken----
    Mr. Yoho. We are first or second in the country on 
watermelons.
    Mr. Field. Yes.
    Mr. Yoho. We are proud of those.
    Mr. Field. Yes, absolutely. And we grow a lot of 
watermelons down in the LaBelle area and in Parrish, Florida, 
and through that part of the country, through that part of the 
state, I should say. But we do need to have crop insurance 
there because as we are transitioning land from orange grove in 
some areas where we have a lot of grove land, but we have had 
to take it out due to citrus greening, which kind of goes back 
to the research point. But it is very important that we have 
that crop insurance, and the ability to fall back on what we 
are doing there, because we are trying to utilize the land that 
we have there as best as possible. We are trying to do the 
right thing by agriculture.
    Mr. Yoho. All right. I am going to kind of speak out of 
turn here, feel free, especially you, Mr. Black, since you are 
from the state, but this goes for everybody up here, and the 
suggestions that you can give us early so that we can be 
proactive to look at these things, to vet them, to make sure 
that this is a program that we can get support bipartisanly, 
which this is a great Committee for that, but to go ahead and 
vet it so that it is ready for the next farm bill.
    And then I want to switch over to citrus greening real 
quick. That is something that is dear to all of us in Florida. 
I have a Valencia tree, and I bring oranges up here and my wife 
loves them when I come back. She loves those more than me. With 
the citrus greening we have the problem there, and if we don't 
get a handle on this real soon, Florida, it would be like Bud 
without weiser, or Wal without Mart. They just go hand in hand. 
And so we have to get a fix for this real quickly, and I have 
talked to Mike Sparks with Florida Citrus Mutual, and we have 
had in-depth conversations. But what I wanted to ask you, do 
you know of anybody doing transgenic research on the psyllid 
that is spreading the disease, kind of like they have done with 
mosquitoes, against the Aedes mosquito? And the other thing is 
on GMOs, we know that is going to be one of the cures. And 
tress with natural resistance, on the GMO side, do you feel 
there is an adequate marketing program out of the USDA to bring 
the public into the awareness of how safe GMOs are, and the 
processors too, and on the other side, where are you with 
natural resistance in trees? That is a lot.
    Mr. Black. Thank you, Mr. Yoho. Yes, there is significant 
work. The massive research investment, significant dollars are 
being funneled both into genetic solutions for the vector, the 
Asian citrus psyllid, and also the host, the tree. And as a 
tree crop, the genetic solution is much longer and tedious, 
compared to an annual crop.
    I do believe that genetics will provide solutions long-
term, but we do need to maintain our industry and our 
infrastructure short-term.
    As far as the consumer perception, those research solutions 
are in the 7-10 year horizon, beyond the scope of the next farm 
bill. But, that it is a very valid point, that we have to make 
consumers aware that we provide safe food to feed the world. 
There is the need to increase production in specialty crops, as 
we have, and more of our commodity crops around the country, 
and it is a very valid goal.
    And also for your crop insurance point, I wanted to 
encourage increased use of pilot programs. For citrus trees we 
have a pilot program that has been in place for several years, 
that gives the opportunity to work on new programs in real 
time.
    Mr. Yoho. I am going to cut you off because I am out of 
time, but those are the kind of suggestions, feel free to pass 
them up to us.
    And I yield back, and thanks for touting IFAS.
    The Chairman. Thanks for clarifying IFAS too.
    I would like to recognize our colleague from California, it 
looks like the Central Valley crew there with Mr. Panetta, Mr. 
Jim Costa, for 5 minutes.
    Mr. Costa. Thank you very much, Mr. Chairman, and Members 
of the Subcommittee for allowing me to be a part of this 
afternoon's hearing.
    Yes, Mr. Panetta and I represent a great deal of 
California's bountiful cornucopia of products, and we are very 
proud of that.
    This effort on specialty crops, and the focus of the 
Subcommittee, is important. This is my third farm bill. Two 
farm bills ago we were able to successfully establish a new 
specialty crop title. I am very proud of that. Although, 
perhaps we should readdress the title because specialty crops 
are not just special, but a part of every day good nutrition on 
America's dinner table. These are the fruits and vegetables, 
the products that our families want to consume for healthy 
diets. Members of this Subcommittee, and of the Agriculture 
Committee, must understand that agriculture is a part of 
America's national security. But not enough of our colleagues, 
not enough folks around the country understand that less than 
four percent of America's population is actively engaged in the 
production of food and fiber. We not only feed the entire 
nation, but feed a hungry world as well. A timely 
reauthorization of the farm bill is extremely important.
    I have a couple of questions as it relates to our block 
grant program and research. I will start with Mr. Field, who 
has been involved in this program over the years. The block 
grant program has been successful, but we need to look at how 
we can improve it and expand it in the next reauthorization. Is 
the specialty crop industry united in support for specialty 
crop farm bill programs? How might we improve them based upon 
your experience?
    Mr. Field. I am sorry, your question was are we united on 
that?
    Mr. Costa. Yes.
    Mr. Field. Yes. Yes, we are united in seeing those grants 
continue, if not improve. There are a lot of great 
organizations, both private and public, that can benefit from 
these programs. We, as farmers, don't have the resources to go 
out and do this research ourselves. There are a lot of 
organizations who are equipped to do research that need to have 
adequate funding, so funding through the farm bill is very 
important.
    Mr. Costa. Isn't it true that these block grants are 
coupled with not only industry organizations but also land-
grant universities, whether it be Purdue or UC Davis or Fresno 
State, go Dogs. But the fact is that we are able to create 
value-added by bringing these funding sources together.
    Mr. Field. There is no question. Yes, sir.
    Mr. Costa. And we can do more of that, and we can do it 
better.
    Mr. Field. I believe we can, yes, sir.
    Mr. Costa. Well, I would hope that the specialty crop 
organizations would come together, and as we are putting the 
farm bill, that you provide suggestions on how we can improve 
upon it.
    Does anyone else have a comment you would like to make on 
this?
    Mr. Black. Yes.
    Mr. Costa. Yes, Mr. Black.
    Mr. Black. Yes, I would like to encourage increased use of 
the Specialty Crop Research Initiative and the block grants. 
The hallmark of that is stakeholder involvement and oversight. 
When stakeholders can participate in selecting projects, along 
with the scientific review panel, it is really a government-
public-private partnership at its best.
    Mr. Costa. Right. It creates an incentive.
    Mr. Black. Exactly.
    Mr. Costa. Public-private partnerships, and you combine the 
educational institutions and you have a trifecta.
    Mr. Black. Exactly.
    Mr. Costa. All right. It was highlighted here, and my time 
has gone almost, but I would like comments on improving the H-
2A Program, along with comprehensive immigration reform, which 
is badly needed with the broken immigration system we have 
today. I see a lot of head nodding.
    Mr. Field. Yes, sir. It is, as I have stated, the most 
critical thing facing agriculture today. It really puts us in 
jeopardy, especially with the high tensions right now around 
immigration, and the fact that we do have a nondomestic 
workforce, the majority of which does not have the proper work 
authorization, causes major stress.
    Mr. Costa. Right. Mr. Chairman, my time has expired. I want 
to thank you again. But the point is that, in California, 70 
percent of our workforce in agriculture is undocumented. And we 
can have the best, bountiful crops in the world and good 
prices, but if we don't have people to participate in that 
agriculture activity, you are not going to get the products to 
market or to the dinner table.
    The Chairman. The gentleman's time has expired.
    I would like to recognize one of our newest Members from 
the great State of Florida, Mr. Neal Dunn, for 5 minutes.
    Mr. Dunn. Thank you very much, Mr. Chairman. And thank you 
all for being here today, and especially for being patient with 
our rather fluid schedule.
    Mr. Black, a lot of attention has been paid to addressing 
immediate threats of disease and pests to specialty crop. For 
example, the State of Florida has spent tens of millions, of 
course, to combat citrus greening, HLB and its vector, which 
are an existential threat to us. In view of that, is the 
Federal Government also providing adequate resources to protect 
specialty crops from the next infectious crisis through 
proactive identification and mitigation of risks that these 
emerging threats pose?
    Mr. Black. Thank you for the question. And yes, it is a 
very difficult task. Tremendous resources are being placed at 
the borders and the airports, et cetera, to stave off the next 
citrus greening threat to the specialty crops. It is very 
difficult, as all of us enjoy traveling, we enjoy our contra-
season fruits and vegetables that are imported into this 
country, and it is very difficult to police all of the imports 
that come through the borders. And so we need to be ready. We 
need to have the funding mechanisms set up through SCRI, or the 
block grants, to provide funding for these diseases and threats 
that are on the horizon. Some examples are citrus leprosis, 
CLV, et cetera, that are around the world, we know they are in 
our backyard, and we need to be ready with the research. 
Research is the key.
    Mr. Dunn. Let me go on and advance. Specialty crop 
producers who use, and this is on the crop insurance, specialty 
crop producers were, for the first time in 2014 bill, subject 
to conservation compliance rules under that farm bill as a 
condition of receiving premium subsidies. Can you discuss any 
challenges you might have encountered bringing your operation, 
your farms into compliance with those regulations?
    Mr. Black. For our operations it is just another form that 
needs to be completed. We are already complying with the soil 
and weather conservation requirements placed on us by the farm 
bill. I am a fifth generation farmer, landowner. We care about 
our land and water and resources, and we are in compliance, as 
all of agriculture is. We love our land and our resources.
    Mr. Dunn. So let me open this question up to the panel, and 
I will let you decide which one of you or all of you think are 
best suited to answer this. Have you identified any 
opportunities where Congress can help you with either complying 
with regulations or maybe decreasing the number of regulations 
that you have to comply with? I am sort of asking for your wish 
list on the regulatory environment. Anybody.
    Ms. Davis. I would say that definitely the farm bill could 
help farmers who need to become compliant with the FSMA 
regulations, the water testing. In Massachusetts, with small 
farms being the majority of our farms, 5 to 10 acres, it is 
very difficult even to read through it several times and 
understand if you are actually supposed to comply. Education, 
technical assistance in that regard, and most likely cost-
sharing for water testing. I mean currently, as a certified 
organic operation, I have to do water testing every year, but 
it is not 13 times, it is one time a year. So the cost of water 
testing is certainly one thing that would be difficult for a 
small farm.
    Mr. Dunn. Anybody else? Mr. Field, I see you reaching for 
the microphone.
    Mr. Field. Absolutely, yes. For an organization like us, in 
our experience, we are not just growers, we are growers, 
shippers, packers of fresh produce, but we are also processors 
in the fact that we make juice, we are now getting into whole 
new different parts of our business in the value chain by doing 
total crop utilization, using things like our pumpkin seeds and 
watermelon rind, and crops that are left in the field that we 
can now utilize for the value chain purposes. And so for us, 
when you do that you have different food safety requirements, 
or different FSMA requirements that will be in place for not 
only the growing side, but the facilities and then, of course, 
any manufacturing that you do. We need to make sure that those 
food safety requirements are streamlined throughout the 
process, and that they are talking to each other, that they 
work well from a business standpoint.
    Mr. Dunn. Our time is running out, so I am going to jump in 
here and say you should provide for us some guidance on this 
regulatory environment and how we can make that better for you.
    And with that, I yield back my time, Mr. Chairman.
    The Chairman. Thank you, Mr. Dunn.
    I would like to now recognize one of the newer Members of 
our Committee also, this Subcommittee, the gentleman from 
Florida, Mr. Lawson, for 5 minutes.
    Mr. Lawson. Thank you. I know we have a time constraint 
here, so I am going to Mr. Black. Mr. Black, welcome to D.C. 
During my tenure in the Florida Legislature, we spent quite a 
bit money, and continue to spend money on the problems with 
citrus, citric canker specifically, and if memory serves me, 
appropriated maybe $12 million a year for homeowners to cut 
trees from their yard. We have seen a deterioration of our 
productivity, as compared to Brazil and other places. I wanted 
to know how we are recovering? I see a lot of homes being built 
in those areas that used to be covered with citrus?
    Mr. Black. Thank you. Yes, we are threatened in Florida by 
many invasive pests and diseases. Citrus canker was the focus 
in the 1980s and 1990s, and millions of dollars were spent at 
the state level in an attempt to eradicate citrus canker, and 
unfortunately, we weren't successful. So we have to add 
production costs every year to deal with that bacterial disease 
that affects the surface of the plant. So it is a tax that we 
have to continue to pay through production costs each year. We 
lost that battle due to the hurricanes of 2004 and 2005 that 
spread that invasive plant disease from a small area in the 
Miami-Homestead area, that was brought to our country from 
Central and South America, and it spread through the hurricanes 
throughout the citrus-growing belt.
    Urban pressures on development is also a threat to our 
nation's farmland. I believe strongly in private property 
rights, but we have to protect America's farms so we can 
continue to provide safe and nutritious food for all of us.
    Mr. Lawson. I yield my time.
    The Chairman. Thank you, Mr. Lawson. The gentleman yields 
back.
    I would like to recognize another one of our newer Members 
from the great State of Nebraska, Representative Bacon, for 5 
minutes.
    Mr. Bacon. With the name Bacon, this was a natural 
committee to get on. So by the way, I echo my friend's, Mr. 
Dunn, comments about being tolerant with our schedule. It is 
just shifting all over the place today, so I thank you.
    And I was going to talk about the Food Safety Modernization 
Act, and the impact on farmers, I hear about it in Nebraska 
quite a bit, but I think that question has been asked, so I 
will move on to my other one.
    Mr. Gilbert, you expressed interest in changing the 
structure of the National Organic Standards Board. Can you 
outline for us who makes up the Board, how they are chosen, and 
what sort of change you would like to see on the Board?
    Mr. Gilbert. Thank you. Yes, thank you for that question. 
Yes, it is important to point out that a top priority really 
should be the protection of the organic program overall. My 
family has benefitted from the organic program because it has 
really become a logo that consumers trust, and we want to 
protect that. However, what we have found recently is a grower 
from Washington State, from where I am from, was on the Board 
for a number of years and that was able to relay our thoughts 
and concerns on that Board, and when he stepped off, nobody 
from our region was able to replace him. And so I can't point 
to the specific composition of the Board, but I can say I 
believe it should reflect the changing representation of 
organic producers. The organic producers have become bigger. 
That is a really good thing because it means organic techniques 
are getting more widespread.
    Mr. Bacon. This question may be a little outside the 
boundaries of where you have gone on it, and I feel bad because 
I came in a little bit late, but I went to University of 
Nebraska-Lincoln, I toured their innovation lab and the testing 
they were doing, and they were working on trying to grow crops, 
corn or sorghum, with less water and see, just try to expand 
that out. How are we doing with that? Are we, through research, 
able to produce new seeds and plants that can do better through 
droughts? Are we making progress in that area? I will open that 
up to anybody who has some insight there.
    Mr. Hill. So in our operation, we are diversified in the 
fact that we do grow organically and conventional. We utilize 
GMO technology and we have seen a huge change in seed 
technology. You look at just corn alone, even though we are 
talking about specialty crops this is year 18 in New Mexico of 
a drought. I grew up waterskiing on a lake that I can almost 
walk across now.
    Mr. Bacon. Right.
    Mr. Hill. And for us to be able to utilize new technologies 
that we can actually take a trait, put it into a crop, put it 
in the ground and grow a crop that will yield with minimal 
inputs, that still is sustainable, is amazing.
    So as far as research is concerned on genetics, it is 
winning.
    Mr. Bacon. Is there a way to quantify how much progress we 
have made there, because it is very fascinating that we have 
been able to do that, because that is going to feed many more 
people as we gain billions over the next decades?
    Mr. Hill. Well, the big question is what have we lost in 
trust in the American consumer though. We have put so much into 
research as far as how can we get the most out of a gene or the 
most out of a crop, at the same time we haven't done our part 
as producers to ensure trust in people that when I put a GMO 
technology seed in the ground, I do this because I know I am 
sustainable, and my inputs are that much less. So as far as 
that question is, I think it is 50/50.
    Mr. Bacon. Well, thank you very much. I yield back.
    The Chairman. The gentleman----
    Mr. Bacon. Did you have a comment? I am sorry.
    Ms. Davis. Yes. Thank you. I am from Massachusetts, and we 
had our first drought this past growing season, which we 
weren't used to. We normally have quite a lot of rain. But what 
we did notice is that those farms that had high organic matter 
were the ones that sustained the drought the best. So the more 
percentage points of organic matter they had, the better off 
they are going to be, the more water that soil holds.
    And so the more that we can do to keep the ground covered 
with cover crops, rotate our crops, make sure that we are 
constantly growing the fertility of our soils, the more water 
we are going to be able to retain and use.
    Mr. Bacon. Thank you very much. I yield back.
    The Chairman. All right. The new freshman made the first 
mistake. He yielded back before we had another witness talk. 
But let the record show I let him speak a little longer. You 
owe me now, Bacon.
    Next up, another new Member. Great to see you out in 
specialty crop land a few weeks ago. One of my new friends, 
Jimmy Panetta, for 5 minutes, is recognized.
    Mr. Panetta. Thank you, Mr. Chairman. I appreciate your 
leadership, and this opportunity. I too appreciate all of the 
witnesses who took the time to come here. I know it takes a lot 
of preparation, a lot of effort on your part, so thank you very 
much.
    Mr. Chairman, if I could have your indulgence for just a 
little bit. You are right, in the farm bill and in the 
Agriculture Committee, we are not talking about immigration, 
but more people need to realize that specialty crops and 
immigration go hand-in-hand.
    Mr. Hill, I am sorry for your state's drought. And as you 
probably know, California endured a long drought in the past 
few years. In fact, I read a report the other day saying that 
last year at this time, 95 percent of California was under 
drought conditions. However, this year, thanks to the storms 
that we have had, only eight percent is now under drought 
conditions. So that is a very good thing.
    But nevertheless, during this period of extreme drought, 
when I would talk to growers, and I would them what is your 
number one issue, you would expect it to be the drought and 
water, but not in my area, not on the central coast of 
California, not in the salad bowl of the world, as we are aptly 
called. The number one issue was labor and immigration. I 
believe that to tie it to the farm bill though, because for too 
long we have been spoiled because of the labor force that we 
have had. And that has kind of stunted us when it has come to 
mechanization research. I believe that we need a Specialty Crop 
Research Initiative in the farm bill dealing with 
mechanization.
    Mr. Field, is that something you think is applicable, you 
think we could do, is that something that you would agree with?
    Mr. Field. I certainly think that is a phenomenal research 
avenue for us. We can have mechanization in the field, so we 
become less reliant on manual labor. At this time, we really 
are searching for a solution, an adequate solution, to the 
inadequacies that we face in nondomestic, on-farm labor. We 
have several solutions for that that we think that we can 
provide or would like to help in those solutions, such as 
bringing current nondomestic foreign-born farmworkers that are 
here, that are without the proper documentation, into the H-2A 
Program. Unfortunately, H-2A does have some slow 
inefficiencies, but it is a solid foundation, and it is a move 
in the right direction.
    Another solution would be to bring H-2A into the USDA, and 
move that particular program away from DOL. We would like to 
see something in that vein, and we believe that some of those 
solutions, with the work from people like us in the ag 
business, people right here on this very panel, can help with 
input on how to do that successfully.
    Mr. Panetta. I completely agree with you, but, a two-
pronged approach, is needed. It is two efforts, you have to 
have two avenues going; one dealing with the visa issue, there 
is no doubt about that. What you referred to was similar to S. 
744, the Border Security, Economic Opportunity, and Immigration 
Modernization Act from the 113th Congress, that was a 3 year 
visa that was brought underneath the Department of Agriculture, 
taken out of the DOL's purview, which is smart. But, while we 
do need to work on the visa issue and revamping it, at the same 
time, we need to catch up, and we need to mechanize the 
harvesting of our crops. Let me give you an example. When I go 
into the fields, and when I do see machinery there, I always 
ask them where is that from. Inevitably, what is the answer? 
Spain, Portugal, other countries in Europe. Why? Because they 
have had to deal with labor shortages, they have had to deal 
with the high price of labor in Europe. We haven't had to, and 
I believe that it is time that we need to step up our efforts 
in that regard.
    Here's another point, the Salinas Valley, where I am from, 
is in the shadow of the Silicon Valley, and what you are seeing 
is a lot of relationships being built in the area of agtech, as 
it is called. Is there anything in your opinion that we can do 
to promote private investment in this emerging web of 
agriculture and high-tech?
    Mr. Field. You hit it on the head right there with the 
partnerships between groups in Silicon Valley as an example, 
and groups in Salinas. They are close. One has the handle on 
the tech, the other one has the handle on ag, and they can 
marry the two beautifully to find solutions for mechanization.
    We should be the industry leader on figuring our solutions 
for ag. The USDA should be able to pioneer those types of 
relationships between these types of companies in the private- 
and public-sector, and be able to find solutions for 
mechanization because, obviously, they are out there. You see 
other countries, as you have pointed out, who are pioneering 
the engineering on these types of mechanization outlets, and we 
should be doing that as well here. Absolutely. Couldn't agree 
with you more.
    Mr. Panetta. Great. Thank you again. Thanks to all the 
witnesses.
    Mr. Chairman, thank you. I yield my time back.
    Mr. Denham [presiding.] The gentleman yields back.
    Okay, further questions? Going through another farm bill 
again, as a Californian, we have looked a lot at specialty 
crops. I would just ask each of our panel members, as we are 
embarking on another farm bill, what would be your number one 
priority, or something that you feel that we should address in 
the farm bill this year? Ms. Davis?
    Ms. Davis. I would definitely continue the Organic Cost-
Share Program that helps small farms that want to certify 
organic, especially beginning farmers who are just starting 
out. It makes sense for them to start that way. That cost-share 
helps them take up 75 percent of the cost of certifying 
organic. I do believe that research in organic is very 
important. We are seeing no-till in organic really working, and 
we are doing small studies within Massachusetts in NOFA that 
have really been quite successful.
    We believe that more money needs to be spent on research, 
for sure. And we also are looking forward to additional support 
for CSA shares, for community-supported agriculture, for SNAP 
beneficiaries to be able to pay for their CSA share with SNAP. 
And we are looking forward to piloting with the State of 
Massachusetts that new program this year that enables the 
amount of money to be taken out by month automatically, and so 
we are looking forward to that as well.
    Mr. Denham. Thank you. Mr. Hill.
    Mr. Hill. An overhaul of FSMA to actually look and see what 
is applicable to growers all sizes, making sure that we all sit 
at the same playing table, depending on if you are 2 acres or 
30,000 acres, that we are all held accountable to the same 
standards. Also too I would like to see the research in the 
mechanization side. With that being said, I do think we need to 
tread lightly though because as we mechanize, you will change 
the local social structure, and as you stop employing people, 
you will change the way that your whole demographic works. That 
is all I have to say.
    Mr. Denham. Thank you. Mr. Gilbert.
    Mr. Gilbert. Yes, I would echo the comments from the 
previous speakers, but in regards to FSMA, I might make the 
comment that any solutions, any regulations need to be risk-
based first, and not just ``blanketly'' cast across all 
agriculture. In terms of dollars, the Specialty Crop Research 
Initiative has been excellent at being able to respond to new 
threats to our industry, like the brown marmorated stink bug. 
And then also MAP funding, we are going to be asking that, and 
I know that is not specifically part of this Subcommittee's 
purview, but the MAP Program has been incredibly successful, 
and is really helping us build markets overseas.
    Mr. Denham. Changes to MAP?
    Mr. Gilbert. Increases in MAP funding, please.
    Mr. Denham. Thank you. Mr. Black.
    Mr. Black. Echoing the previous comments, increase funding 
and flexibility to the Specialty Crop Research Initiative, and 
also the Special Crop Block Grants. I believe that we are all 
united that research and innovation in agriculture is essential 
for us to deal with labor issues, as was pointed out, but also 
to feed the world. The example that was presented earlier, that 
the multiplier effect of our efficiencies is not as great as 
some of the commodity crops, and there is a real opportunity 
there. We have a number of examples of technology that have 
been put in place in our agriculture growing operation, also 
our packinghouse that is making us more efficient and more 
competitive, which is essential.
    Mr. Denham. Thank you, Mr. Black. Mr. Field.
    Mr. Field. The Fresh Fruits and Vegetables Program does a 
phenomenal job, and it can be enhanced. There are opportunities 
to have more people in the agriculture sector brought in. I 
think that there are ways to have public funding enhance this 
program, because right now it serves over four million low-
income people and elementary schools, and the majority of 
these, as I stated earlier, are actually SNAP recipients. When 
you look at this from a fundamental perspective of we are 
serving children their fresh fruits and vegetables that they 
are probably not getting at home, when they are already part of 
SNAP, it is important that they start these programs early, 
that they start the consumption of fresh fruits and vegetables 
early on in their life and build those habits. An independent 
third-party study did show that students who take part in the 
Fresh Fruits and Vegetables Program early on end up being long-
term adopters of fresh fruit and vegetable consumption, and we 
find that very important. We also find it important that we 
continue to support the fact that it is a fresh program, 
because there has been a lot of tension between the processing, 
canning, and frozen foods groups who would like to see us move 
away from the fresh side of that program. And obviously, as you 
know, when you process certain things, it can reduce the 
nutritional value from them, and the adoption of fresh fruits 
and vegetables is so critical to the success of that program 
that we need to focus on that.
    Mr. Denham. I would just ask one follow-up, Mr. Field. What 
about local-grown or American-grown as part of the school 
nutrition program?
    Mr. Field. It is important to have American-grown, locally-
grown. I think that is very important, especially because the 
people who are taking part in that program can then see it. It 
is around them regionally or locally, they can understand where 
the food comes from. We have a huge deficit in this country, 
people who don't understand the fact that their food doesn't 
grow in a grocery store. So that is important to us.
    Mr. Denham. Thank you.
    Well, I would like to thank each of our witnesses today for 
not only your insight in part of this discussion, but thank you 
for helping us as we formulate the next farm bill.
    There is a misperception out there that the farm bill only 
focuses on row crop commodity farmers. Today's hearing shows 
simply that is not the case. This country has made a 
substantial investment to support the production of specialty 
crops. In fact, in the last farm bill, specialty crops received 
an additional $1.5 billion, while others faced significant 
cuts. It is our intention to ensure that the needs of our 
specialty crop producers continue to be met.
    If there are no further questions this hearing of the 
Subcommittee on Biotechnology, Horticulture, and Research is 
adjourned.
    [Whereupon, at 3:48 p.m., the Subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]
 Submitted Article by Hon. Michelle Lujan Grisham, a Representative in 
                        Congress from New Mexico
The Vegetable Technology Gap
Washington spends millions on crop research. Why doesn't more go toward 
        the foods we're actually supposed to eat?
        
        
POLITICO
By Helena Bottemiller Evich
03/08/17 07:33 a.m. EST

    In the great quest to get Americans eating healthier, spinach is an 
unusual success story. We're consuming four times as much fresh spinach 
as we were 4 decades ago, as a vegetable once derided as choke-it-down 
``good for you'' has become a mainstay of home cooking and upscale 
restaurants. But the spinach boom wasn't driven by changing tastes, or 
the cartoon exhortations of Popeye (https://www.pinterest.com/
loriwytheriddel/popeye/). It was driven by technology.
    Spinach, like many vegetables, is finicky. If you packaged it in 
the same airtight bags used for potato chips, the leaves would start to 
break down before they made it from California's Central Valley to a 
supermarket in Chicago. It wasn't until scientists came up with a 
special bag--one that controls how much oxygen and carbon dioxide can 
seep in and out--that pre-washed, ready-to-eat spinach became something 
that a shopper could grab in the produce section and dump straight into 
a salad bowl or smoothie. Spinach, and leafy greens in general, have 
become so convenient that Americans are actually eating more of them--
an impressive feat considering just one in ten Americans eats the 
recommended servings of fruits and vegetables each day.
    As the country seeks solutions to the obesity epidemic, there's 
been plenty of debate about how to get people to eat better. Do we need 
to improve access to healthy foods? Teach cooking? Tax sugary drinks? 
But there's one thing that's often left out of the conversation: 
technology.
    It might seem strange to think about vegetables as a technology, 
but they are. The average supermarket produce aisle represents decades, 
if not centuries, of agricultural research and development. But in the 
United States, big-league commodity crops like corn and soy, as well as 
meat, gobble up most of the agricultural research investment from both 
the public- and private-sectors. The U.S. Department of Agriculture's 
dietary guidelines tell us to fill \1/2\ our plate with fruits and 
vegetables to maintain a healthy diet, but its research priorities are 
far different. So-called ``specialty crops''--the government's name for 
the category that includes, essentially, all fruits, vegetables and 
nuts--received just 15 percent of the Federal research budget over much 
of the past 3 decades.
    ``There's nothing more important we can do to improve the health of 
this country than to invest billions and billions into researching the 
fruits and vegetables that we're encouraging people to eat,'' said Sam 
Kass, the former White House chef and food policy guru under the Obama 
Administration who now works with food tech startups.
    Agricultural research is fundamental to improving how we raise, 
grow, harvest, process and ship everything that we eat. It took 
millions of dollars of public and private research and years of 
experimenting with limp leafy greens before breathable salad packaging 
came onto the scene. Consumers no longer have to wash sand and dirt off 
their greens, remove tough stems and ribs or chop them into bite-sized 
portions. The same types of technologies have also helped bring us baby 
carrot packs with dips, sliced apples in McDonald's Happy Meals and 
ready-to-eat kale salad kits.


          Packages of Fresh Express salad wait for customers in a San 
        Francisco grocery store. The technology that keeps spinach and 
        lettuce fresh in breathable packaging was based on government 
        agricultural research conducted in the 1950s. D Getty.

    The enormous logistical and technological challenges facing so many 
of the foods that nutritionists tell us to eat make research especially 
critical for produce, which as a sector is still relatively 
inefficient. Apples bruise. Berries don't all ripen at once. Cilantro 
wilts. Cherries can split and crack if it rains at the wrong time--a 
problem that can be so expensive, some growers hire helicopters to fly 
over their crop to dry the delicate fruit. Many of these crops still 
rely on increasingly expensive (and oftentimes undocumented) labor to 
pick them by hand. And water. They need lots of water.
    Specialty crops remain special--just three percent of cropland is 
dedicated to growing them--though they make up roughly \1/4\ of the 
value of crops grown in the U.S. because they demand higher prices. 
This lopsided dynamic means that specialty crops have historically 
received very little Federal research investment compared to their 
value. It also means the country simply doesn't have a food system that 
supplies what we're told to eat. In 2007, there were about 8.5 million 
acres of specialty crops in a sea of more than 300 million acres of 
everything else.
    ``If Americans were to actually go ahead and jump into consuming 
the amount of fruits and vegetables recommended, we'd be hard-pressed 
to meet that demand,'' said Sonny Ramaswamy, Director of the USDA's 
National Institute for Food and Agriculture, which coordinates a large 
part of the government's agricultural research portfolio. ``There's an 
incredible amount of innovation that we need, all the way from the farm 
to the table.''
    The imbalance is no accident: In a sense, it's built into the 
mission of the USDA itself, which frustrates both vegetable growers and 
nutrition advocates. But there are signs it's starting to change--if 
slowly.
    The Road To packaged salad isn't just an example of how research 
pays off: It shows just how long the process can be, and how much 
commitment it requires. It began in the late 1920s when a young 
Berkeley grad named Bruce Church bought a field of head lettuce in 
Salinas, California, and devised a plan to ship it, packed in ice, by 
rail across the United States. According to local lore in the Salinas 
Valley, children as far away as Maine would greet the rail cars 
excitedly, shouting: ``The icebergs are coming! The icebergs are 
coming!'' The name stuck.
    After World War II, a handful of USDA scientists stationed in 
Fresno, California, set out to learn more about how to best handle, 
store and ship fruits and vegetables. They obsessively measured 
temperatures, shelf life, spoilage and the rate at which different 
crops respire--or breathe--which is one way of measuring how fast 
something will rot.
    ``They're still alive!'' explained Gene Lester, national program 
leader for the Agricultural Research Service's food science and 
technology division. ``You're eating a lettuce leaf or a kale leaf, or 
a string bean, or an apple--they're still alive. There's still 
CO2 and oxygen exchanging in those organisms, and that's 
what's keeps them healthy for us.''


          A vintage poster for Bruce Church, Inc., the Salinas, 
        California company that helped popularize iceberg lettuce 
        starting in the 1920s. Bruce Church Inc. later morphed into 
        Fresh Express, which pioneered the use of breathable packaging 
        for lettuce and other leafy greens. D Fresh Express.

    In 1954, researchers published a roundup of everything they'd 
learned in a massive book, known as AH-66. That tome served as a base 
of knowledge that preceded major advances in produce innovation for 
decades afterward. ``That was kind of a bible for us,'' said Jim Lugg, 
a longtime agriculture scientist who in many ways is the grandfather of 
modern salad technology. ``The problems weren't really with growing the 
crops, it was with shipping them and keeping them fresh.'' Lugg, who's 
now 83 years old, still consults in the industry (and, for the record, 
still eats lots of salad).
    In 1963, Lugg signed on to lead the research division of Bruce 
Church Inc., which teamed up with a subsidiary of refrigerator-maker 
Whirlpool--a partnership based largely on the hope that they might be 
able to figure out how to get lettuce from Salinas to the East Coast 
before it turned brown. After a lot of experimentation, they figured 
out how to manipulate the atmosphere inside the vehicles in which they 
shipped the lettuce so that it was more hospitable, providing the right 
balance of CO2 and oxygen in refrigerated rail cars and 
containers--a hack that took the shelf life of the lettuce from 3 or 4 
days to 14, as long as the lettuce was kept cold.
    ``We've put it to sleep,'' Lugg explained. ``It's sleeping! It's 
not breathing at its normal rate.''
    Bruce Church Inc. eventually morphed into Fresh Express, which in 
1989 introduced what is believed to be the first pre-washed, bagged 
salad in grocery stores nationwide. That first mix, packaged in 
breathable bags, was chopped iceberg lettuce, with bits of shredded 
carrots and purple cabbage, a combo that meant home cooks could serve a 
multi-ingredient salad without chopping a single vegetable. ``We saw a 
way to really improve the customer experience with lettuce,'' Lugg 
said.
    Lugg recalled serving on a board that helped advise the government 
on investing in specialty crop research in the 1990s. ``I don't think 
they were spending very much,'' he says. (USDA couldn't provide an 
estimate.) ``The then-head of [the Agricultural Research Service] was 
very defensive about all the problems they had getting money and that 
they had to spend money for things like corn and ethanol and cotton.''
    He'd sometimes give Ed Knipling, the then-head of ARS, a hard time 
about the disparity. ``He would point out how much they spent on this 
crop or this crop, and we'd say `Well, how much did you spend on 
lettuce?'''
    So Why Doesn't the nation spend more on better lettuce? The answer 
lies partly in the history of the U.S. Department of Agriculture 
itself. On one hand, the department, founded by Abraham Lincoln, is 
dedicated to promoting and boosting American agriculture as an 
industry. That means investing in the massive commodity crops that 
largely fuel American farming, giving us the cheapest, most abundant 
food supply in the history of the world. But the department is also 
tasked with encouraging healthy eating--it's the agency that gives 
Americans nutrition advice--and these two major goals can at times be 
directly at odds.
    Public health advocates have long lamented that the USDA's 
nutrition advice doesn't align with how the institution actually spends 
its money, and they often point to crop subsidies as the most glaring 
example. Between 2008 and 2012, for example, fruits and vegetables and 
other specialty crops got just under \1/2\ of 1 percent of all the 
subsidies that were doled out. A full 80 percent of those payments went 
to supporting grains used in all manner of foods, to feed livestock and 
to fuel our cars, and oils, like what we use to fry potato chips.
    The disparity is something that frustrates Rep. Chellie Pingree, a 
Democrat from Maine, who also happens to be an organic farmer. When the 
Congresswoman speaks at food conferences, she often shows a side-by-
side graphic comparing MyPlate (https://www.choosemyplate.gov/), the 
government's nutrition guide, and a plate representation of crop 
subsidies.
    ``Vegetables are called specialty crops! Don't ask me to explain 
why,'' Pingree said as she unveiled her graphic at TedxManhattan back 
in 2014. The room full of foodies gasped and mumbled disapprovingly.
    The idea that junk food is cheaper than produce because of farm 
subsidies is so often repeated by food movement leaders like Michael 
Pollan that almost everyone assumes that it's true. But the reality is 
more nuanced.
    Subsidies on their own don't explain why processed foods are 
cheaper than produce, calorie for calorie. Fruits and vegetables, first 
and foremost, are highly perishable, which makes everything about 
growing, harvesting, storing and shipping them infinitely more 
complicated and expensive. Many of these crops also take a ton of labor 
to maintain and harvest. Economists who've crunched the numbers have 
found that removing agricultural subsidies would have little effect on 
consumers' food prices, in part because the cost of commodities like 
corn and soybeans represent just a tiny share of the cost of the food 
sold in the grocery store.
    The U.S. has simply gotten much better at growing corn than 
lettuce. Today, we get about six times as much corn out of 1 acre of 
land as we did in the 1920s, when Bruce Church started his lettuce 
farm. Iceberg lettuce yields, on the other hand, have only doubled in 
that time. The USDA didn't start tracking such data for most of the 
darker leafy greens until the 1990s.
    Even if subsidies did make fruits and vegetables dramatically 
cheaper, it's far from clear that everyone would start eating their 
broccoli. The price of produce isn't the only cost to eating fruits and 
vegetables; many consumers also lack the time or the skills to prepare 
and cook their perishables. And increasing fruit and vegetable 
consumption is hard to keep up as Americans eat more of their food on 
the go, away from home and prepare far fewer traditional meals on their 
own.
    Moreover, the produce industry doesn't want to be subsidized like 
Big Corn or Big Soy. When industry leaders come to Capitol Hill, they 
have been clear that they didn't want traditional subsidies, like price 
supports, said Glenda Humiston, Vice President of Agriculture and 
Natural Resources at the University of California. ``They want help 
with the infrastructure to do their jobs better,'' she says, including 
more funding for research labs and data collection that can help 
industry solve problems on the ground.


          Migrant workers pick organic spinach in a field in Colorado. 
        Labor, often from immigrant workers, remains one of the most 
        costly inputs to growing healthy fruits and vegetables. D 
        Getty.

    Reducing the need for labor is one of the top priorities for the 
industry, especially with the Trump Administration's rhetoric and 
recent crackdown on undocumented workers. Labor alone can account for 
\1/2\ a farm's costs and labor shortages are already preventing the 
expansion of acreage of specialty crops in many regions. Farmers can be 
hesitant to invest in growing, watering and raising a crop if there's 
uncertainty about having enough workers to harvest it.
    ``Growers and shippers are going to have to find ways to mechanize, 
or we're not going to be able to harvest our products, and we're 
talking about delicate products,'' said Steve Church, CEO of Church 
Brothers Farms, a major grower in Salinas.
    ``The biggest issue we have here is labor,'' Church added. ``No 
question in my mind.''
    Today, the government is funding research at Washington State 
University and other universities to design robots that can gently 
harvest apples and even see or smell when the fruit is ripe--a 
potential leap for the kind of mechanization that has so far eluded 
much of the produce industry.
    USDA researchers are also working on a system that drastically cuts 
down on the need to sort fruit. The prototype is an elaborate, six-
armed machine that goes into the field with apple pickers. The apples 
are fed onto a conveyer belt that uses an infrared system to detect 
blemishes and even grade the fruit on the spot.
    Other research is focusing on improving flavor. In Florida, 
researchers have cracked the code to make tomatoes taste better, an 
innovation that could help reverse decades of breeding tomatoes for 
durability and thick skin that has left the fruit tasteless and watery. 
The tomatoes, which also have more lycopene, an important nutrient and 
anti oxidant, have begun being marketed in Florida under the name 
Tasti-Lee. The company that commercialized the technology says nearly 
94 million pounds of the tastier tomato have been sold so far.
    ``We first of all had to have a stable supply. We had to figure out 
how to get tomatoes from the West Coast to the East Coast,'' says a 
USDA scientist, permitted to speak on background. ``But now we can 
focus on the whole flavor component.''
    Making tomatoes tastier is only the beginning. ``Understanding this 
pathway, it's not unique to just tomatoes, but you can use this as a 
model for citrus, or peppers or apples or anything else,'' the 
scientist said.
    Though Specialty Crops have lagged behind their shelf-stable 
brethren for much of the past century, the needs of the produce 
industry haven't gone totally unheard in the halls of Washington. The 
idea that these smaller crops might deserve more attention began to 
gain some traction in the early 2000s, when California growers became 
increasingly angry that their state was the No. one agriculture state 
based on value, largely due to high-dollar specialty crops, but they 
were coming up around 16th in terms of USDA research funding coming 
into the state.
    In 2006, there was also a renewed interest in investing in research 
after a deadly E. coli outbreak linked to packaged spinach rocked the 
entire produce industry--and consumer confidence. Three people died, 
and 276 people were hospitalized. The disaster fueled an intense food-
safety push across Salinas Valley and the rest of the produce industry. 
It also helped energize a diverse coalition of growers that had started 
to organize to ask Washington for a greater share of spending in the 
farm bill, the law that every 5 years sets the agenda for the 
Agriculture Department. They demanded that more money be invested in 
food safety and other types of research. Producers of commodities like 
dairy and grains were less than pleased to have another group vying for 
a part of the Federal pie, according to Congressional aides.
    ``It was a hell of a fight,'' said Humiston.
    But Big Produce's political push has paid off. In 2008, the farm 
bill for the first time included a section dedicated to specialty 
crops. There's now a $72 million fund to promote various specialty crop 
projects, like building hoop houses to extend the growing season. Fruit 
and vegetable farmers are also starting to get access to the same 
government-subsidized insurance policies that other commodities have 
enjoyed for years. But the biggest growth for specialty crops in recent 
years has been in research spending.
    The USDA now dedicates some $400 million to studying specialty 
crops each year--a big increase, though still a modest fraction of the 
nearly $3 billion the government invests in agricultural research each 
year. That pot of money is spread among USDA's in-house research, land 
grant universities and other public research institutions. The USDA 
couldn't provide specialty crop research estimates from before 2008.
    The Obama Administration and its intense focus on healthy eating 
was also a boon to the specialty crop sector. The Administration not 
only backed allocating more money to the crops, but it also promoted 
more fruits and vegetables in school meal programs that serve 30 
million children each day, and in the Women, Infants and Children 
program, which provides nutritional support for \1/2\ of all babies 
born in the United States.
    While much of the new Federal boost for produce investment is 
motivated more by the industry's business needs than any push to combat 
the nation's crippling obesity epidemic, public health advocates with 
little political clout are thrilled to see the needle moving, however 
it happens.
    ``If what we want is for people to eat fruits and vegetables, we 
have to make it easier, we have to make it taste better,'' said Marion 
Nestle, a food studies professor at New York University and author of 
the popular blog Food Politics.
    ``It's about time produce got some attention.''
                                 ______
                                 
  Supplememntary Material Submitted by James Field, Jr., Director of 
                 Business Development, Frey Farms, LLC
March 23, 2017

 
 
 
Hon. Rodney Davis,                   Hon. Michelle Lujan Grisham,
Chairman                             Ranking Minority Member,
Subcommittee on Biotechnology,       Subcommittee on Biotechnology,
 Horticulture, and Research           Horticulture, and Research
House Committee on Agriculture,      House Committee on Agriculture,
Washington, D.C.;                    Washington, D.C.
 

    Dear Chairman Davis and Ranking Member Grisham:

    Thank you Chairman Davis and Ranking Member Lujan Grisham for the 
opportunity to provide supplemental comments for the record of the 
March 9 hearing of the Biotechnology, Horticulture, and Research 
Committee on the topic of specialty crops in the farm bill. It was a 
privilege to represent my business and the United Fresh Produce 
Association as a witness at that hearing and I hope these additional 
comments will be useful to the Subcommittee Members as you craft 
proposals in the farm bill relevant to specialty crops.
    Specifically, I would like to address questions that were posed to 
me during the hearing. As you know, I am the Director of Business 
Development at Frey Farms, based in Keenes, Ill. We specialize in 
growing, packing, and shipping fresh market produce, including 
cantaloupes and watermelons, but we are best known as the nation's 
largest fresh pumpkin producer. Our farms and facilities are 
strategically located in Florida, Georgia, Missouri, Arkansas, Indiana, 
West Virginia, Wisconsin, and Illinois.
    During the hearing, the issue was raised about how Congress might 
help multi-state operations such as ours be more functional. Within the 
farm bill, there are two programs in particular that have a strong 
multi-state component that the specialty crop industry believes need to 
be maintained and strengthened. In the 2014 Farm Bill, Congress 
improved the $85 million Specialty Crop Block Grant Program to include 
a Multi-State Program. Under this initiative, grants are offered to 
participating State Departments of Agriculture in any of the 50 states. 
These grants address regional or national level issues such as food 
safety, plant pests and disease, research, crop-specific projects 
addressing common issues and marketing and promotion. In addition, 
Congress allotted $80 million annually for the Specialty Crop Research 
Initiative which addresses industry-specific issues such as plant 
breeding and genetics, pest and disease threats, production efficiency, 
technological innovation and methods to address food safety hazards. 
These programs take a broad view toward enhancing the competitiveness 
of the specialty crop sector through regional and national initiatives 
that are beneficial to multi-state operations in areas that producers 
are not able to act on by themselves. The specialty crop industry 
supports these initiatives and urges Congress to protect and maintain 
them.
    As I mentioned in my testimony and which was mentioned by others 
who provided testimony, the single most urgent and impactful issue 
today with respect to specialty crops is labor; more specifically, the 
challenges that specialty crop providers have in securing and retaining 
a skilled labor force. There is a broad consensus within our sector 
that, while there may be varying opinions about how best to do so, 
there needs to be reforms to the current Federal H-2A program, which is 
currently the only Federal program that provides agricultural guest 
workers. There is also broad agreement that our nation's immigration 
system is not truly functional and is badly in need of improvement. The 
Agriculture Workforce Coalition (AWC), of which United Fresh is a 
founding member, is currently in the process of developing a set of 
recommendations for improvements to H-2A, as well as how to improve our 
nation's immigration policies that are relevant to agriculture labor. 
The AWC has pledged to work with policymakers to craft legislative 
proposals that ensure an effective, efficient and humane program that 
provides appropriate assurances for workers and allows providers to 
succeed in business.
    A major part of why ag labor is such a pressing issue for our 
industry, is that unlike other sectors, mechanization is not used often 
in the harvesting of fruits and vegetables. With the harvesting of our 
crops being so time-sensitive and their marketability being highly 
dependent on appearance, the vast majority of fruit and vegetable crops 
are brought in from the field by workers with the experience and skill 
to know when the time is right to harvest a commodity. However, because 
the labor challenges in the specialty crop sector are long-standing and 
will require time to resolve, there is a need for more research on how 
to mechanize key parts of the fruit and vegetable production chain. 
There is agreement within our industry that there needs to be more 
research on innovations such as mechanization, through programs such as 
the Specialty Crop Research Initiative.
    Improvements to our nation's immigration policies and development 
of new and innovative technology such as mechanization would help 
mitigate some of the unique risks that specialty crop providers 
experience. As this Subcommittee examines other farm bill policies that 
provide risk mitigation to agricultural producers, such as crop 
insurance, that may affect specialty crops, our industry asks that 
Congress restrict the use or development of policies that affect our 
industry in a market distorting way, ensure the consistent availability 
of insurance products to all growers of the same commodity and conduct 
a thorough analysis of the potential market impacts of a new insurance 
product.
    While risk mitigation is one area in which the specialty crop 
sector often has a unique perspective, another area in which we 
frequently collaborate with our counterparts in other crop sectors is 
regulatory reform. United Fresh has joined with agriculture 
organizations in the grain and livestock sectors to support initiatives 
such as the withdrawal of the WOTUS rule and ensuring that regulation 
of crop protection products is based on proven scientific evidence and 
not on a politically driven precautionary principle. As policymakers 
consider regulatory policy for agriculture, we urge a consistent 
consideration of data driven by science and not politics.
    Finally, I would like to note that United Fresh has been the leader 
among specialty crop stakeholders in promoting nutrition policies that 
help the under-served and also provide opportunities for produce 
providers. A cornerstone of that nutrition policy has been the Fresh 
Fruit and Vegetable Program (FFVP) which provides a fresh fruit or 
vegetable snack to nearly four million schoolchildren across the 
country, 107,000 alone in Frey Farms' home state of Illinois. 
Unfortunately, this program has been under attack by efforts to dilute 
its mission of providing America's children with much-needed exposure 
to fresh fruits and vegetables. I, and the rest of the fresh produce 
industry, implore you to resist these efforts and do all you can to 
defend this program and keep it as it is--fresh.
    These, of course, are just a small sample of the plethora of issues 
that Congress will need to consider when addressing specialty crops. 
However, even with the diversity within the specialty crop sector, 
there is a great deal of agreement about the general regulatory and 
policy landscape needed to allow specialty crop providers to succeed. 
United Fresh is the coordinating body of the Specialty Crop Farm Bill 
Alliance, a national coalition of nearly 120 specialty crop interests 
who have worked together for over 15 years to review specialty crop 
farm bill programs and provide policy recommendations to Congress. As 
Congress and interested stakeholders head into crafting and debating 
the next farm bill, the Alliance will be conducting its own review of 
specialty crop farm bill programs and how to make them work even 
better. The Alliance's review will be thorough, encompassing all 
relevant programs, with a particular focus on key priorities such as 
nutrition, trade, pest and disease mitigation, block grants and 
research. In addition, the Alliance will be determining if there are 
ways to improve public and private partnerships that can promote 
specialty crops, how the land-grant university system might be better 
utilized to assist specialty crop providers and how work done in the 
private-sector might be useful in enhancing the ability of our 
producers to ensure Americans have a steady and abundant supply of 
fresh fruits and vegetables.
    As the Alliance presents its recommendations to Congress, we in the 
fresh produce industry look forward to working with the House and 
Senate to pass legislation that maximizes the capacity of fruit and 
vegetable growers to do what they want to do: improve the nutritional 
well-being of America and have thriving businesses that contribute to 
the surrounding communities. Thank you again for the opportunity to 
comment further and I am happy to provide any additional information 
you may need.
            Sincerely,

James Field, Jr.
                                 ______
                                 
 Submitted Statement by Charles Wingard, Director of Field Operations, 
                       Walter P. Rawl & Son, Inc.
    Thank you, Subcommittee Chair Davis and Ranking Member Grisham, for 
the opportunity to testify before the Biotechnology, Horticulture, and 
Research Subcommittee on the specialty crop provisions of the farm 
bill. My name is Charles Wingard and I am Vice President of Field 
Operations for Walter P. Rawl & Sons in Pelion, SC. Three generations 
of our family have farmed in this area since the 1920s, and ten family 
members oversee our operations today in a hands-on manner. We 
specialize in southern leafy greens such as collards, kale, mustard & 
turnip greens, and also produce a variety of summer vegetables in 
season along with a few other year round vegetable crops.
    We have farm operations in several South Carolina counties and 
Florida and have farming relationships in Wisconsin, Florida, Virginia, 
Mississippi, and New York. Our produce is marketed and delivered 
throughout the eastern United States, and about \1/2\ of our leafy 
greens are washed and packaged in our own facility and sold as fresh-
cut chopped greens, with the rest sold in bulk.
    While I am here to represent myself as a specialty crop provider, I 
am also here as a member United Fresh Produce Association. As you know, 
United Fresh has been in existence since 1904 and is the only fresh 
produce association based in Washington, D.C. with members in all 50 
states, and that represents all aspects of the fresh fruit and 
vegetable production chain. I serve as Chairman of United Fresh's 
Government Relations Council which provides public policy guidance to 
the association. United Fresh is also helps coordinate the Specialty 
Crop Farm Bill Alliance, a 120 member coalition devoted to advocating 
for specialty crop programs in the farm bill.
    The specialty crop industry is very grateful to you for all that 
this Committee has done to support and advocate for the needs of the 
specialty crop sector through the farm bill, which is the single 
largest Federal investment in the fresh produce industry. You have 
recognized the immense value our sector brings to America's 
nutritional, economic and social well-being and we are very 
appreciative of that support.
    It is in that context that I must address an issue of primary 
importance to our industry and one which our sector will be looking to 
you with high expectations for support. It will be no surprise to you 
that I am referring to immigration policy. The farm bill matters 
tremendously to specialty crop producers; it has done a great deal to 
advance the goal of ensuring Americans have access to an abundant 
supply of fresh fruits and vegetables. However, that goal cannot be 
attained without the seasonal workers needed to get crops from the 
field to consumers. While it is virtually impossible to know the exact 
numbers, this workforce is overwhelmingly foreign-born and not properly 
authorized. We in the produce industry have long advocated for changes 
to our nation's immigration system to address this. The Federal 
agriculture guestworker program, known as H-2A, as often as not, does 
not provide adequate numbers of workers in a timely manner, often 
leading to crops going unharvested. Federal immigration policy must 
balance enforcement with a humane and effective program to allow 
foreign-born workers to come here to do the produce harvesting and 
processing jobs that Americans simply won't. If that does not happen, 
then to be blunt, it doesn't matter what you do for us in the farm 
bill. If America's fruit and vegetable providers cannot retain or 
attract the skilled, dedicated workforce needed to get crops to the 
marketplace, then programs like Specialty Crop Block Grants won't help 
us a bit. Produce providers will be closely watching the progress of 
the farm bill and action on immigration reform; if immigration reform 
does not show progress soon, I expect that if you haven't already, you 
will be hearing specialty crop producers advocate for action on ag 
labor within the farm bill.
    As you know, this Administration has begun to pursue stricter 
immigration policies. We in the produce industry are well-aware that 
enforcement of the law is needed and we support ensuring that our 
nation's borders are secure. However, I can tell you that the change in 
policies has created a real sense of fear within the immigrant 
community and that has begun to result in increasing problems for 
produce providers in being able to retain workers. With workers 
increasingly reluctant to come to work, the ability of produce 
providers to stay in business is increasingly threatened. And it is not 
just simply those foreign-born seasonal workers who will feel the 
impact of an enforcement-only policy. While the vast majority of 
workers who hold jobs in the fields and packing sheds are foreign-born, 
the workers who hold jobs on down the chain, in areas such as 
transportation and retail, generally are American citizens. If workers 
at the front of the chain leave and they have no replacements, it is 
only a matter of time before those American workers down the line will 
also suffer.
    We are aware that under the House of Representatives' rules of 
jurisdiction, immigration policy is not under this Committee's purview. 
But it is this Committee's constituency that will be among the hardest 
and first-hit by policies that lack an effective agriculture labor 
component. Congress has completely failed to act on agriculture's 
legitimate needs and all indications are that more enforcement and 
security-oriented policy changes will be coming. If the current 
situation continues or gets worse, produce providers are expecting you 
to ACT on their behalf, jurisdiction or no jurisdiction. Many Members 
of this Committee have repeatedly conveyed that you are aware of 
agriculture's needs and that is encouraging and is appreciated. 
However, there will come a time when saying the right things simply 
won't be enough--if policymakers continue down an enforcement-only 
path, the fruit and vegetable industry will expect you to take the 
actions necessary to step in and ensure that further policy changes do 
not become finalized without an effective agriculture labor component 
included.
    Without the dedicated and skilled workers to harvest the fruit and 
vegetable crops grown here in this country, logic dictates that we as a 
nation will then have to source those commodities from other countries, 
and for the first time in our history, make us unnecessarily dependent 
on other nations for something as fundamental as food. But this would 
be an economic and national security disaster that can be averted; as a 
nation, we do not have to choose between food security and border 
security--it is possible to have both. But only if Congress will 
actually take actions to craft a set of reforms to our nation's 
immigration policies that strengthen security at the border and 
internally, and simultaneously provide a way for agriculture workers 
who are here currently to stay here legally, as well as policies that 
provide for a future legal workforce. As I mentioned, the fresh produce 
industry supports making America's borders as secure as possible and 
upholding our nation's immigration laws. But we also believe that by 
making much-needed improvements to America's immigration system, 
Congress will significantly strengthen the policy foundations laid 
through the farm bill that enable America's specialty crop producers to 
be among the world's most productive.
    Regarding the farm bill, as I mentioned before, United Fresh is the 
coordinating body of the Specialty Crop Farm Bill Alliance. For each 
successive farm bill, the Alliance has provided a set of 
recommendations about how those programs could maximize the ability of 
specialty crop producers to be successful. The Alliance is grateful 
that in the 2014 Farm Bill this Committee acted on our recommendations, 
which our industry believes are sound policies that will enhance our 
ability to meet America's nutritional needs.
    Briefly, a few highlights of the 2014 Farm Bill that enhance the 
work of specialty crop providers include:

   $80 million a year for the Specialty Crop Research 
        Initiative for industry-specific research; this program 
        addresses the critical needs of the specialty crop industry by 
        developing and disseminating science-based tools to address 
        needs of specific crops and their regions;

   $75 million a year for the Plant Pest and Disease Program to 
        eradicate harmful pests and diseases. These projects aim to 
        prevent the introduction or spread of plant pests and diseases 
        that threaten U.S. agriculture and the environment, as well as 
        ensure the availability of a healthy supply of clean plant 
        stock;

   $85 million per year for the Specialty Crop Block Grant 
        program, including a multi-state program;

   Technical Assistance for Specialty Crops (TASC)--Authorized 
        under the 2002 Farm Bill, TASC has been used to address 
        barriers prohibiting or threatening the exports of U.S. 
        Specialty Crops. The program has had constant funding of $9 
        million since the 2002 Farm Bill[; and]

   Market Access Program (MAP)--To improve access to overseas 
        markets for America's agriculture producers. The program is 
        funded at $200 million per year.

    Furthermore, I want to highlight what has been done through your 
collaboration with United Fresh to promote Federal feeding programs in 
the Farm Bill Nutrition Programs
    The role of investment in Federal nutrition programs cannot be 
overstated, this investment in nutrition programs increases consumption 
of fruits and vegetables which benefits the specialty crop industry.
    For example, the Fresh Fruit and Vegetable Program which will reach 
more than four million low-income elementary school children nation-
wide this coming school year. This highly effective program provides 
young students with a fresh fruit or vegetable snack every day at 
school and increases their overall consumption of a wide variety of 
fresh fruits and vegetables. My State of South Carolina received $3.27 
M this school year to implement the Fresh Fruit and Vegetable Program; 
this allows 153 elementary schools to participate and 60,000 students 
to benefit. How does this program translate to my business which is 
growing collard greens and other vegetables? Walter P. Rawls & Son has 
been a leader in the Fresh Fruit and Vegetable Program since 2008. We 
have worked with South Carolina's Child Nutrition Director to ensure 
successful implementation, we have traveled to school districts all 
over our state to promote the program and help local schools 
effectively implement it, and we have developed fresh-cut vegetables 
and fruits in kid-friendly packs designed specifically for schools to 
use in the Fresh Fruit and Vegetable Program and in school lunch. We 
are South Carolina's champions for the Fresh Fruit and Vegetable 
Program! This program is a Win-Win-Win for agriculture and the produce 
industry, our kids and public health.
    I'd also like to highlight the impact of FINI (Food Insecurity 
Nutrition Incentives) on helping SNAP families purchase more fresh 
fruits and vegetables. Providing produce incentives to SNAP families is 
an effective strategy to increase their fruit and vegetable consumption 
and improve the quality of their diet especially when the produce 
incentives can be used at grocery stores and supermarkets where these 
families shop and have access to a wide variety of fresh fruits and 
vegetables are available year round. Increasing fruit and vegetable 
consumption for 40 million SNAP recipients is another big WIN for 
specialty crops and public health.
    In many instances farm bill specialty crop programs provide 
services and resources that growers are not always able to get on their 
own. For example, since 2008, the Clean Plant Network has provided 
nearly $30,000,000 in support of 35 initiatives in the critical mission 
of providing clean planting stock which is essential to preventing 
highly dangerous pests and pathogens from destroying crops. Another 
example is the language in the 2014 Farm Bill providing for a multi-
state program in the Specialty Crop Block Grant program that allows for 
the kind of regional response to threats such as plant disease that 
farmers cannot do individually.
    While the lack of needed immigration policy reform is the greatest 
overarching current threat to America's specialty crop sector, the 
programs I just mentioned are also critical to addressing other 
important needs for fruit and vegetable production. This Committee has 
done tremendous work to address our needs regarding market 
competitiveness, research, pest and disease management, opening foreign 
markets and nutrition programs that promote consumption. As a result, 
the produce industry is much better equipped to address these issues, 
and we believe that these tools are vital to helping providers do what 
they can to keep their operations viable and successful. Knowing that 
Congress is working to address significant budget constraints, we in 
the industry pledge to work with you to do all we can to keep these 
programs at their current funding levels. Our industry looks forward to 
working with you to promote American production of specialty crops. 
Thank you for the opportunity to speak to you today and I will be happy 
to answer any questions.


 
                           THE NEXT FARM BILL

                        (AGRICULTURAL RESEARCH)

                              ----------                              


                        THURSDAY, MARCH 16, 2017

                  House of Representatives,
 Subcommittee on Biotechnology, Horticulture, and Research,
                                  Committee on Agriculture,
                                                   Washington, D.C.
    The Subcommittee met, pursuant to call, at 10:03 a.m., in 
Room 1300 of the Longworth House Office Building, Hon. Rodney 
Davis [Chairman of the Subcommittee] presiding.
    Members present: Representatives Davis, Gibbs, Yoho, Bacon, 
Dunn, Lujan Grisham, Lawson, Panetta, McGovern, Blunt 
Rochester, and Peterson (ex officio).
    Staff present: Bart Fischer, Caleb Crosswhite, Callie 
McAdams, Haley Graves, Stephanie Addison, Keith Jones, Kellie 
Adesina, Troy Phillips, and Carly Reedholm.

  OPENING STATEMENT OF HON. RODNEY DAVIS, A REPRESENTATIVE IN 
                     CONGRESS FROM ILLINOIS

    The Chairman. This hearing of the Subcommittee on 
Biotechnology, Horticulture, and Research, entitled, The Next 
Farm Bill: Agricultural Research, will come to order.
    Good morning and welcome to today's Biotechnology, 
Horticulture, and Research Subcommittee hearing. I would like 
to welcome our three witnesses and all of the guests today. 
This hearing continues our series where each of the six 
Subcommittees is looking at all aspects of the current and the 
next farm bill.
    The focus of today's hearing is on agricultural research. 
As we kick off the discussion, try to imagine where the United 
States, as a whole, and American agriculture in particular, 
would be without the massive productivity gains that have 
resulted from more than a century of investment in ag research. 
We enjoy the safest, most affordable, and most abundant food 
supply in the world in large part due to sustained public 
investment in agricultural research. In fact, USDA describes 
the rise in agricultural productivity as the single most 
important source of economic growth in the entire U.S. farm 
sector.
    USDA's Research, Education, and Economics mission area 
includes four agencies that serve as the Federal lead for our 
research, education, and extension activities. USDA's 
Agricultural Research Service conducts research and develops 
solutions for ag problems of high national priority. The 
Economic Research Service, through science-based economic 
research and analysis, informs public policy and other 
decisions about agriculture, food, rural development, and 
environmental challenges. The National Agricultural Statistics 
Service conducts hundreds of surveys every year and prepares 
reports covering virtually every aspect of U.S. agriculture. 
And, the National Institute of Food and Agriculture supports 
research, education, and extension programs in the land-grant 
university system and other partner organizations. Together 
with state-level and private-sector funding, the U.S. ag 
research system is the envy of the world.
    And while private-sector research investment is substantial 
and growing, public funding for ag research in the United 
States has been on the decline for the past decade. 
Agricultural research increasingly occupies a smaller share of 
the United States' public research portfolio. And at the same 
time, other countries like China are rapidly outpacing U.S. 
public investment. Given that public research is often the 
foundation upon which private research is built, public 
investment is essential to maintaining our competitiveness in 
our U.S. ag economy.
    We have a tremendous legacy of supporting public 
agricultural research in this country. While we have a lot of 
difficult decisions to make, ag research will be a vital part 
of ensuring the success of America's agricultural sector over 
the next century.
    I look forward to the testimony of our witnesses today in 
exploring the importance of ag research, in addressing ag 
research priorities, and in examining the effectiveness of 
public-private research partnerships. To that end, I welcome 
their thoughts on the next farm bill as well.
    [The prepared statement of Mr. Davis follows:]

 Prepared Statement of Hon. Rodney Davis, a Representative in Congress 
                             from Illinois
    Good morning and welcome to today's Biotechnology, Horticulture, 
and Research Subcommittee hearing. This hearing continues our series 
where each of the six Subcommittees is looking at all aspects of the 
next farm bill.
    The focus of today's hearing is on agricultural research. As we 
kick off the discussion, try to imagine where the United States as a 
whole--and American agriculture in particular--would be without the 
massive productivity gains that have resulted from more than a century 
of investment in agricultural research. We enjoy the safest, most 
affordable, and most abundant food supply in the world in large part 
due to sustained public investment in agricultural research. In fact, 
USDA describes the rise in agricultural productivity as the single most 
important source of economic growth in the entire U.S. farm sector.
    USDA's Research, Education, and Economics mission area includes 
four agencies that serve as the Federal lead for our research, 
education, and extension activities. USDA's Agricultural Research 
Service conducts research and develops solutions for agricultural 
problems of high national priority. The Economic Research Service--
through science-based economic research and analysis--informs public 
policy and other decisions about agriculture, food, rural development, 
and environmental challenges. The National Agricultural Statistics 
Service conducts hundreds of surveys every year and prepares reports 
covering virtually every aspect of U.S. agriculture. And, the National 
Institute of Food and Agriculture supports research, education, and 
extension programs in the land-grant university system and other 
partner organizations. Together with state-level and private-sector 
funding, the U.S. agricultural research system is the envy of the 
world.
    While private-sector research investment is substantial and 
growing, public funding for agricultural research in the United States 
has been on the decline for the past decade. Agricultural research 
increasingly occupies a smaller share of the United States' public 
research portfolio. At the same time, other countries like China are 
rapidly outpacing U.S. public investment. Given that public research is 
often the foundation upon which private research is built, public 
investment is essential to maintaining the competitiveness of U.S. 
agriculture.
    We have a tremendous legacy of supporting public agricultural 
research in this country. While we have a lot of difficult decisions to 
make, agricultural research will be a vital part of ensuring the 
success of American agriculture over the next century.
    I look forward to the testimony of our witnesses today in exploring 
the importance of agricultural research, in addressing agricultural 
research priorities, and in examining the effectiveness of public-
private research partnerships. To that end, I welcome their thoughts on 
the next farm bill as well.
    With that, I turn to Ms. Lujan Grisham for any opening comments 
she'd like to make.

    The Chairman. With that, I turn to my friend and my 
colleague, the Ranking Member, Ms. Lujan Grisham, for any 
opening statements she would like to make.

      OPENING STATEMENT OF HON. MICHELLE LUJAN GRISHAM, A 
           REPRESENTATIVE IN CONGRESS FROM NEW MEXICO

    Ms. Lujan Grisham. Thank you, Mr. Chairman, and good 
morning to everybody at the hearing. And thank you very much 
again to the panel witnesses this morning.
    There is no question, and thank you, Mr. Chairman, you made 
an incredibly valid point which is the public money that we are 
investing in research gives us the best public-private 
partnering, so that we are getting resources into private 
research firms, we are getting those resources into 
universities, and we are creating an environment where we have 
a huge return in the ag industry, and then, of course, into the 
U.S. economy as a whole.
    It is imperative that we continue to talk about ways to 
reverse, or at least slow, the decline in research funding. I 
am hoping that we will discuss strategies to increase funding, 
establish priorities, and to dedicate ourselves to identifying 
the places where additional research would be useful.
    Let me give you an example. A Dr. Ian Ray, who is a plant 
breeder at New Mexico State University, has developed a 
drought-resistant, or an arid climate resistant variety of 
alfalfa, named Billy Melton. It is commercially available for 
the first time this season. Let me put that release in 
perspective, Mr. Chairman. New Mexico is in the middle of a 100 
year drought, and we need every kind of water sipping crop that 
we can obtain. Alfalfa is one of New Mexico's mainstay crops.
    Economists conclude that if we were to be able to get the 
Billy Melton variety established as a predominate variety, we 
could save $2 million in water costs in the state. Mr. 
Chairman, we are being outspent by China, who is continuing to 
increase and bolster its research investments, and Brazil and 
India are catching up in their research investments. That means 
that the demand for agricultural scientists is increasing, and 
many of America's best and brightest are being poached by 
foreign research firms and universities.
    After reading your testimonies, it is certainly clear to me 
that we have to do more. However, after getting a glimpse of 
the President's current budget, it looks to me that the current 
Administration is cutting agricultural discretionary spending 
by about $4.7 billion, and that absolutely will impact our 
research priorities.
    Mr. Lawson. Percent----
    Ms. Lujan Grisham. Yes. I am concerned about that, and 
would love for the witnesses to try to address that in today's 
hearing.
    Such cuts can impact our ability to recruit and train our 
own ag scientists, and to get young people into the ag 
industry. And while we are doing better at promoting women and 
minorities into ag research and ag work, these cuts would 
further diminish our efforts.
    Mr. Chairman, it is critical that we continue to discuss 
these areas. Thank you very much for your support for research.
    And with that, Mr. Chairman, I yield back.
    The Chairman. Thank you, Ranking Member Lujan Grisham.
    The chair would request that other Members submit their 
opening statements for the record so the witnesses may begin 
their testimony, and to ensure that there is ample time for 
questions.
    I am going to go ahead and introduce all three of our 
witnesses, and then allow each of you to make opening 
statements.
    I would first like to welcome Dr. Jay Akridge, the Glenn W. 
Sample Dean of Agriculture at Purdue University, one of the 
secondary land-grant universities, to the University of 
Illinois, of course. And Purdue, as you know, is in West 
Lafayette, Indiana. Good luck in the NCAA tournament. We are 
playing in the NIT, so I know you will wish us luck there. I 
know Dr. Akridge is here on behalf of the Association of Public 
and Land-grant Universities. Thank you for being here. Mr. 
Richard Wilkins, the Chairman of the American Soybean 
Association, from Greenwood, Delaware, on behalf of the 
National Coalition for Food and Ag Research. And my friend, Dr. 
James Carrington, the President of the Danforth Research Center 
in St. Louis, Missouri, that I and our colleague on this 
Committee, Congressman Mike Bost, had the chance to tour 
together just a few short months ago. So welcome to all three 
of you.
    I would remind the witnesses that there will be a clock in 
front of you. We would appreciate it if you would keep it to 5 
minutes. We will try to do the same up here. And if you hear a 
little tap, that means that you haven't looked at the clock, 
and need to speed up a little bit. We will make sure you do.
    So with that, Dr. Akridge, please begin when you are ready.

  STATEMENT OF JAY T. AKRIDGE, Ph.D., GLENN W. SAMPLE DEAN OF 
   AGRICULTURE, PURDUE UNIVERSITY; CHAIRMAN, POLICY BOARD OF 
DIRECTORS, BOARD OF AGRICULTURE ASSEMBLY, ASSOCIATION OF PUBLIC 
                         AND LAND-GRANT
                UNIVERSITIES, WEST LAFAYETTE, IN

    Dr. Akridge. Well, thanks, Chairman Davis. The University 
of Illinois is a great competitor, but also a great 
collaborator in our academic enterprise.
    The Chairman. And we have cooler colors of ties, right?
    Dr. Akridge. Chairman Davis, Ranking Member Lujan Grisham, 
and Members of the Subcommittee, again, my name is Jay Akridge, 
I am Dean of the College of Agriculture at Purdue, and I 
appreciate the opportunity to testify today.
    I am here representing the Board on Ag Assembly of the 
Association of Public and Land-grant Universities. The BAA 
represents a national system that knits together more than 107 
land-grants, and 60 non-land-grant universities.
    While public support for agricultural research and 
education comes from a variety of sources, my comments today 
will focus on the extramural funds; capacity and competitive 
funds provided by USDA through the National Institute of Food 
and Agriculture, and authorized in the farm bill.
    In my written testimony, I outline the case for public 
investments and agriculture research and extension is 
fundamental for global competitiveness of our U.S. agriculture, 
and provide a brief overview of the key points here, but I 
would be pleased to elaborate on these or provide Purdue 
examples during the discussion.
    As has been mentioned, the productivity story of U.S. 
agriculture is extraordinary, and that productivity was fueled 
by research and education. As just one small example, corn 
yields in the 1930s were 30 bushels per acre, increasing to 
about 100 bushels per acre while I was growing up on my 
family's retail farm supply business in western Kentucky. Last 
year, U.S. corn average yields was 175 bushels per acre.
    However, there is no resting on our laurels as the world's 
population is increasing. Forecasts hit 9+ billion in 2050, 
which requires 25 to 100 percent more food. The Global Harvest 
Initiative reports that Total Factor Productivity must grow by 
1.75 percent per year for the world to double agricultural 
production by 2050.
    But how to drive that level of productivity has become much 
more complex in the new century, and this has been alluded to 
in the opening comments. More variable weather has brought new 
challenges to the world's farmer. Access to new arable land is 
limited. Availability and competition for water is increasingly 
an issue. The environmental implications of farming practices 
are being questioned globally. Some consumers have demonstrated 
much deeper interest in how and where food is produced, and 
societal acceptance of new technology cannot be taken for 
granted.
    Given these issues, what set of technologies and 
investments and human talent will drive the type of agriculture 
needed, and who will provide them? The science of the 21st 
century agriculture will be built on data, collected in ways 
and volumes unprecedented in our history. The word convergence 
will characterize agricultural technology as biology, data 
analytics, and automation, combined to provide the productivity 
increases we need. Universities can play a unique role in 
bringing these disciplines together and realizing this future.
    At the same time, the next century will not be ours alone, 
as other nations are investing heavily in public agriculture 
research, and U.S. agricultural competitiveness will be a key 
issue. As of 2011, for every dollar the United States invested 
in public agriculture R&D, China, Brazil, and India combined 
invested $2.15. In addition, U.S. agricultural competitiveness 
will require both private and public investment. In 1950, 
public spending on ag research was about 65 percent of the 
total investment, and by 2010 that figure had declined to 35 
percent. But public research is needed to address the questions 
that the private-sector will not, and public-private 
partnerships will be increasingly important.
    While technology is important, technology in the hands of 
farmers who know how to use it is even more important. 
Cooperative extension plays a key role in disseminating 
research to stakeholders. And as our stakeholders have evolved, 
so has extension, with the traditional county-based extension 
educator or agent, complemented by direct access to campus-
based extension specialists and a wide variety of e-learning 
tools.
    Competitiveness is built on human talent, and our colleges 
of agriculture are focused on providing the talent needed for 
the next century, with more than 175,000 students enrolled 
across degree levels. 4-H, a youth development program of 
cooperative extension, is a talent pipeline and reaches nearly 
six million youth annually. New STEM, science technology 
engineering and math programming, has taken the proven 4-H 
volunteer-led model into exciting new areas.
    What are some of the challenges looking ahead? Federal 
funding for ag research has been stagnant over the past decade 
in real terms. From 2005 to 2012, USDA funding for ag research 
declined by 16 percent, falling from $2.9 to $2.4 billion. Our 
system needs investments in capacity and competitive funds. 
Federal capacity funds provide land-grant universities with the 
human talent required to address local research and extension 
needs, provide timely response in emergency situations such as 
disease or pest outbreaks, and ultimately the capacity to 
pursue competitively funded research.
    Another significant challenge is the state of our 
university infrastructure, and we face a current deficit of 
about $8.4 billion there.
    In closing, the most recent QS World University Rankings 
show that ten of the top 15 ag and forestry universities 
globally are located within the U.S. With a proven record of 
impact and with appropriate levels of Federal funding, our 
land-grant agricultural colleges are ready to address the 
challenge of helping to ensure the agricultural competitiveness 
of our U.S. agriculture.
    I want to thank you for this opportunity today, and to 
thank you for your past support of ag research and extension.
    [The prepared statement of Dr. Akridge follows:]

  Prepared Statement of Jay T. Akridge, Ph.D., Glenn W. Sample Dean of
 Agriculture, Purdue University; Chairman, Policy Board of Directors, 
  Board of Agriculture Assembly, Association of Public and Land-grant 
                    Universities, West Lafayette, IN
2018 Farm Bill_Research, Education, and Extension
Introduction
    Chairman Davis, Ranking Member Lujan Grisham, and Members of the 
Subcommittee, I am Jay Akridge, Dean of the College of Agriculture at 
Purdue University in Indiana, and I appreciate the opportunity to 
testify as you begin discussions for the next farm bill. I am here 
today to represent the Board on Agriculture Assembly (BAA) of the 
Association of Public and Land-grant Universities (APLU) and serve as 
Chair of the Policy Board of Directors of the BAA.
    APLU is a research, policy, and advocacy organization that is 
dedicated to strengthening and advancing the work of public 
universities across the nation. Annually, APLU's 238 member 
institutions enroll 4.8 million undergraduate students and 1.3 million 
graduate students, while employing over 1.2 million faculty and staff. 
Each year, 1.2 million degrees are awarded, and institutions conduct 
$43.5 billion in university-based research.
    The purpose of the BAA is promotion and support of agriculture in 
all of its phases (agriculture, food/nutrition, natural resources, 
environment, veterinary medicine, forestry, international) and all 
three missions (research, education, and extension) in the land-grant 
and agricultural colleges in all 50 states, the District of Columbia, 
the Commonwealth of Puerto Rico, the territories of the Pacific, and 
the U.S. Virgin Islands. The APLU BAA includes the deans of 
agriculture, and the leadership of academic programs, Cooperative 
extension, experiment stations, and international agriculture in land-
grant and non-land-grant colleges of agriculture.\1\
---------------------------------------------------------------------------
    \1\A land-grant college or university is an institution that has 
been designated by its state legislature or Congress to receive the 
benefits of the Morrill Acts of 1862, 1890, and 1994. Non-land-grant 
colleges of agriculture (about 60) are public colleges and universities 
that offer baccalaureate or higher degrees in agriculture, food, and 
renewable resource education.
---------------------------------------------------------------------------
    The BAA has held several meetings on the farm bill beginning in 
mid-2016 to discuss proposals submitted by BAA members and to identify 
system priorities. This process is on-going. As a result of this 
inclusive process, the Agriculture Committees can trust that the APLU 
BAA priorities for the next farm bill will reflect a comprehensive 
cross-section of agricultural research, education, and extension 
stakeholders.
    While public support for agricultural research and education comes 
from a variety of sources, my comments today will focus primarily on 
the extramural funds provided by USDA through the National Institute of 
Food and Agriculture (NIFA) and authorized in the farm bill. These 
extramural funds take two general forms: capacity funds (primarily 
Hatch, Smith-Lever, McIntire Stennis, Evans-Allen, and 1890s extension) 
and competitive funds (Agriculture and Food Research Initiative--AFRI).
Agricultural Research: Driving Competitiveness in a Global Economy
A Changing Agriculture
    The agriculture of the 21st century will be as different from the 
20th century as 20th century agriculture was different from the 19th 
century. Over the 20th century, advances in genetics, machine power, 
and chemical fertilizers and pesticides promoted staggering increases 
in agricultural productivity. As an example, U.S. corn yields of 30 
bushels per acre in the 1930s, were nearly 140 bushels per acre by 
2000. The population of the world soared from 1.5 billion in 1900 to 
six billion in 2000. While forecasts of mass starvation did not 
materialize, more than 826 million were food insecure in 2000, despite 
the profound increases in agricultural productivity.\2\
---------------------------------------------------------------------------
    \2\``The State of Food Insecurity in the World''. FAO, http://
www.fao.org/docrep/x8200e/x8200e00.htm.
---------------------------------------------------------------------------
    Looking forward, agriculture still faces a fundamental question--
how to feed a growing world? But, that question has become much more 
complex in the new century. More variable weather has brought new 
challenges to the world's farmers. Access to new, arable land is 
limited. Availability of and competition for water is increasingly an 
issue. The environmental implications of farming practices are being 
questioned globally. Farmers are finding new opportunities to produce 
for non-food markets. Some consumers have demonstrated much deeper 
interest in how and where food is produced, and societal acceptance of 
new technology cannot be taken for granted. Obesity is a global public 
health issue and not just in the high income countries. The average age 
of the U.S. farmer is nearing 60 years old and questions are being 
raised about where the next generation of farmers will come from.
    What set of technologies and investments in human talent will drive 
the type of agriculture needed to address our 21st century 
challenges?\3\ The science of the 21st century agriculture will be 
about precision: precise editing of genes to drive plant improvement, 
precise use of inputs to give plants and animals exactly what they 
need, precise management of resources to mitigate environmental 
impacts. This precision will be built on data collected in ways and 
volumes unprecedented in our history. The word `convergence' will 
characterize agricultural technology as biology, data analytics, and 
automation combine to provide the productivity increases we need to 
address the challenges defined above. Technology will also help enable 
an even more consumer-responsive agriculture. Note this 21st century 
technology revolution is not just about large scale agriculture, 
producers of all sizes will ultimately have access to many of these 
technologies in some form as they build their farm businesses around 
the markets they serve. At the same time, the next century will not be 
ours alone as other nations are investing heavily in agricultural 
research and U.S. agricultural competi[ti]veness will be a key issue.
---------------------------------------------------------------------------
    \3\See Woodson, R. ``The Role of U.S. Research Universities in 
Meeting the Global Food Security Challenge.'' 2016 AAAS Charles 
Valentine Memorial Lecture, for an overview of some of these emerging 
technologies.
---------------------------------------------------------------------------
    Land-grant universities and colleges of agriculture have answered 
the call for the research and education needed by our industry in the 
past, and can in the future. We are prepared to play our role in 
conducting the research required and the education needed to drive U.S. 
agricultural competitiveness. Continued public investment in 
agricultural research and extension is fundamental to addressing the 
challenges outlined above, and ultimately supports the global 
competitiveness of the U.S. agricultural sector. We have certainly 
appreciated your support in the past, and look forward to your support 
in the future.
Feeding a Growing World
    According to the U.S. Census Bureau, the United States gains one 
new person every 16 seconds; the world gains a new person about every 
\1/2\ second.\4\ At present rates, the global population will reach 9.6 
billion by 2050, and experts believe that agricultural productivity 
must increase 25-100% from current levels to feed a global population 
of that magnitude.\5\ The challenge here is more than producing 
calories, it is about providing proper nutrition for a growing 
population.\6\ And, this challenge is more than a food security issue, 
it is a national security issue as food insecurity and political 
instability are tightly linked.\7\ This task is also made more 
challenging by a variety of factors: limited land and water resources, 
increasingly variable weather, natural response to modern farming 
practices (pests and weeds resistant to insecticides and herbicides, 
for example), societal attitudes toward science and technology, and 
barriers to adoption of improved farming practices 
globally.8-9
---------------------------------------------------------------------------
    \4\https://www.census.gov/popclock/.
    \5\Hunter, M.C., R.G. Smith, M.E. Schipanski, L.W. Atwood, D.A. 
Mortensen. ``Agriculture in 2050: Recalibrating Targets for Sustainable 
Intensification.'' BioScience, February 22, 2017.
    \6\Jones, A.D. and G. Ejeta. ``A New Global Agenda for Nutrition 
and Health: The Importance of Agriculture and Food Systems''. Bulletin 
of the World Health Organization. 2015-94: 228-229.
    \7\Ejeta, G. ``Revitalizing Agricultural Research for Global Food 
Security''. Food Security, Volume 1, No. 4 (2009).
    \8\Glickman, D. ``A Food and Agricultural Research Agenda to Deal 
with the Asteroids of the Future''. 2014 Charles Valentine Riley 
Memorial Lecture, June 4, 2014.
    \9\Baldos, U.L.C. and T.W. Hertel. ``Global Food Security in 2050: 
The Role of Agricultural Productivity and Climate Change.'' 
Agricultural and Resource Economics. 58: 2014.
---------------------------------------------------------------------------
Figure 4: Sources of Growth in Ag Output Low-Income Countries, 1961-
        2013
        
        
          Source: USDA Economic Research Service (2016).
          http://www.globalharvestinitiative.org/wp-content/uploads/
        2016/09/p13_figure-4_Sources-of-Growth-in-Ag-Output_LowIncome-
        300x226.jpg.
          2016 GAP Report' Infographics.

    The Global Harvest Initiative (GHI) has worked to quantify the 
challenge of feeding a growing world and measuring the current status 
of our ability to meet that challenge. The charts above and below are 
from the GHI's 2016 Global Agricultural Productivity Report and 
demonstrate the profound difference that Total Factor Productivity 
(TFP) has made in the developed world over the past 50 years. TFP is 
the ratio of agricultural outputs (gross crop and livestock output) to 
inputs (land, labor, fertilizer, machinery and livestock). When TFP 
rises, more output can be produced from a fixed amount of inputs. TFP 
growth can result from increased effectiveness of inputs, more precise 
use of inputs, or adoption of improved production practices.\10\
---------------------------------------------------------------------------
    \10\2016 GAP Report: http://www.globalharvestinitiative.org/GAP/
2016_GAP_Report.pdf.
---------------------------------------------------------------------------
Figure 5: Sources of Growth in Agricultural Output High-Income 
        Countries, 1961-2013
        
        
          Source: USDA Economic Research Service (2016).
          http://www.globalharvestinitiative.org/wp-content/uploads/
        2016/09/p13_figure-5_Sources-of-Growth-in-Ag-Output_HighIncome-
        300x226.jpg.
          2016 GAP Report' Infographics.

    GHI reports that TFP must grow by 1.75% annually for the world to 
double agricultural output through productivity gains by 
2050.Investment in agricultural research will be a fundamental 
determinant of whether or not this level of productivity growth is 
achieved.
    According to the GHI's 2016 Global Agricultural Productivity 
Report, ``Agriculture research and development (R&D) and extension 
programs are essential public goods and the principal drivers of TFP. 
Along with private-sector and collaborative research, public R&D in 
agriculture plays an essential role in fostering agricultural 
innovation systems.'' The report goes on to state that publicly funded 
agricultural research generates technologies and innovation that 
enhance farmer productivity and competitiveness, reduce waste in the 
food value chain, and ultimately benefit consumers through lower prices 
and improved access to safe and nutritious food.
Investment Strategies of U.S. Competitors
    Who will produce the food needed for a growing world and who will 
bring the next generation of agricultural technologies to the market 
are important questions. The U.S. is being quickly outpaced by other 
countries in public agricultural research and development spending. The 
chart below from USDA's Economic Research Service shows that China has 
dramatically increased its investment in agricultural research at the 
same time that U.S. public investment in agricultural research 
stagnated. Between 1990 and 2013, the U.S. share of spending among 
nations with major public agricultural research and development 
investments fell from 22.5 percent to 13.4 percent, largely driven by a 
decline in U.S. investment and rising spending from developing 
countries such as China and India.\11\
---------------------------------------------------------------------------
    \11\https://www.ers.usda.gov/amber-waves/2016/november/us-
agricultural-rd-in-an-era-of-falling-public-funding/.
---------------------------------------------------------------------------
U.S. Public Sector Funding for Agricultural R&D Falls as Spending by 
        China and India Rises
Constant 2011 PPP$, Billions


          PPP = purchasing power parity.
          Source: USDA, Economic Research Service and Agricultural 
        Science and Technology Indicators (ASTI), Organisation for 
        Economic Co-operation and Development.
          [https://www.ers.usda.gov/webdocs/charts/november16--
        feature_clancy_fig03png/
        november16_feature_clancy_fig03.png?v=42676.]

    The chart below shows the shares of global public agricultural 
research and development spending for the U.S. and Brazil, India, and 
China. Pardey and Beddow note that ``key middle-income countries with 
agricultural sectors (specifically Brazil, India, and China) 
collectively overtook the United States in 1998. As of 2011, for every 
dollar the United States invested in public agricultural R&D, those 
countries invested $2.15.''
Shifting Global Public Share of Food and Agricultural R&D, 1960-2011


          Source: Pardey, P.G. and J.M. Beddow, ``Revitalizing 
        Agricultural Research and Development to Sustain U.S. 
        Competitiveness.'' Farm Journal Foundation, InSTePP R&D 
        accounts version 3.8.

    This shift in research and development spending has occurred 
despite the consistent evidence of the large and pervasive societal 
return on investment from U.S. public investment in agricultural 
research. Pardey and Alston summarize much of this work and report that 
``surveys of hundreds of studies quantifying the returns from 
agricultural research suggest that rates of return in the range of 40-
60 percent per year. The most recent, comprehensive work by Alston, et 
al., reconfirms that U.S. public investment in agricultural research 
has paid off handsomely, with benefit-cost ratios of 20:1 or 
higher.''12-13
---------------------------------------------------------------------------
    \12\Pardey, P.G. and J.M. Alston. ``For Want of a Nail: The Case 
for Increased Agricultural R&D Spending''. American Enterprise 
Institute.
    \13\Alston, J.M., M.A. Anderson, J.S. James, P.G. Pardey. 
Persistence Pays: U.S. Agricultural Productivity Growth and the 
Benefits from Public R&D Spending. Springer, 2010.
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Public- and Private-Sector Research: A Needed Partnership
    Addressing the global challenges outlined above will require both 
increased levels of public investment as well as more private 
investment in agricultural research. Over the past 50 years, there has 
been a pronounced shift toward private funding of agricultural research 
in the U.S. In 1950, public spending on agricultural research was about 
65% of the total investment, by 2010 that figure had declined to about 
35%.


          Source: Pardey, P.G. and J.M. Beddow. ``Revitalizing 
        Agricultural Research and Development to Sustain U.S. 
        Competitiveness''. Farm Journal Foundation, February 2017.

    Despite increased levels of investment by private firms in 
agricultural R&D, public investment is still much needed. Private-
sector investment will rightly follow opportunities for short-term 
return on the research investment. Public-sector investment is needed 
to pursue questions/areas where the pay-off will ultimately happen, 
just over a longer period of time than private investors would be 
satisfied with. Examples include work on understanding the ways that 
plants respond to environmental stress such as drought or heat at the 
most fundamental level. Such work is typically deemed too exploratory 
and hence too risky to be the focus of private-sector research. But, 
unless such basic research questions are answered, it is impossible to 
breed better plants. In addition, some critical questions are more 
applied and/or have immediate societal payoffs, even if short-run 
returns to an individual or a private firm are modest. Examples here 
would include research on farming practices that enhance water quality. 
Such research may well have no immediate commercial value, but the 
value of clean water to a community, a state, or our nation is obvious.
    Importantly, public and private investment in agricultural research 
is not an `either/or' situation, and private investment in university 
agricultural research now accounts for about 23-24% of the total 
funding.14-15 Such public-private partnerships will in all 
likelihood be even more important in the future.
---------------------------------------------------------------------------
    \14\Monke, J. ``Agricultural Research: Background and Issues.'' 
Congressional Research Service, October 6, 2016.
    \15\Clancy, M. K.O. Fuglie, P.W. Heisey. ``U.S. Agricultural R&D in 
an Era of Falling Public Funding.'' Amber Waves, ERS-USDA, Vol. 14, 
Issue 10, November 2016.
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Cooperative Extension: Providing Research-Based Insights
    Cooperative extension is the unique pillar of the three that make 
up the land-grant system (research, education, extension). Reaching the 
more than 3,000 counties in the U.S. with research-based insights, the 
stakeholder connections provided by extension help insure relevancy of 
the land-grant system's applied research and education activities. In 
rural counties, extension provides a lifeline to unbiased insights on 
agricultural, health, and community development questions. In urban 
areas, increasing interest in urban agriculture as well as health and 
wellness issues are addressed through extension. As stakeholders have 
evolved, so has extension with the traditional county-based extension 
educator or agent, complemented by direct access to campus-based 
extension specialists and a wide variety of e-learning tools. More on 
the impact of extension can be found here: https://extension.org/.
    Recent research has quantified the societal returns to investments 
in agricultural extension and finds the payback is both large (returns 
on investment of over 100%) and quick (in many cases a year or less 
given the fact that extension influences current decision making).\16\
---------------------------------------------------------------------------
    \16\Huffman, W.E. ``New Insights on the Impacts of Public 
Agricultural Research and Extension''. Choices, 1st Quarter 2016 (31): 
1.
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Building Human Talent
    The land-grant system and our non-land-grant colleges of 
agriculture have a fundamental role in training the next generation of 
talent for the food and agricultural industry. The most recent data 
(2013) show more than 175,000 students (BS, MS, Ph.D.) enrolled at 
land-grant and non-land-grant colleges of agriculture, and demand for 
that talent remains strong. A recent study by Purdue and NIFA reported 
an annual demand for 57,900 BS and higher degree graduates per year 
through 2020 in the areas of food, agriculture, renewable natural 
resources, or the environment.\17\ While enrollments at colleges of 
agriculture have been growing, the total supply of agriculture 
graduates is expected to be 35,400 annually--leaving a gap (39%) to be 
filled by graduates with other degrees. Beyond the supply and demand 
situation, the fact that these students enrolled in colleges of 
agriculture are being trained by individuals who have research or 
extension appointments (or both) brings state of the art science and/or 
stakeholder relevance to students in a unique way, enhancing their 
educational experience.
---------------------------------------------------------------------------
    \17\``Employment Opportunities for College Graduates in Food, 
Agriculture, Renewable Natural Resources, and the Environment, United 
States, 2015-2020.'' USDA and Purdue University, 2015.
---------------------------------------------------------------------------
    Extension also has a fundamental role in developing human talent 
and the 4-H program provides an important example. 4-H is the largest 
youth development program in the U.S., reaching nearly six million 
youth annually, who are supported by 500,000 volunteers, and 3,500 4-H 
professionals. 4-H has a well-documented impact building life-skills in 
youth.18-19  Importantly, 4-H members pursue higher 
education at a higher rate than do high school students in general.\20\ 
While traditional 4-H projects remain a fundamental part of 4-H, new 
Science, Technology, Engineering, and Math (STEM) programming is taking 
the proven 4-H volunteer-led, research-based model into an exciting new 
areas. In Indiana, the fastest growing 4-H clubs are in urban centers 
such as Gary and Indianapolis. We now have more than 70 counties with 
robotics 4-H clubs in Indiana.
---------------------------------------------------------------------------
    \18\Mulroy, M., Kraimer-Rickaby, L. ``The Impact and Sustainability 
of 4-H Youth Development Programs: A Synthesis Report'' University of 
Connecticut Center for Applied Research, 2006.
    \19\4-H Study of Positive Youth Development: http://
3t61of1t6u3x3af7ir2y91ib.wpengine.
netdna-cdn.com/wp-content/uploads/2016/02/4-H-Study-of-Positive-Youth-
Development-Full-Report.pdf.
    \20\Ratkos, J. ``4-H Makes a Difference in Post-secondary Education 
Enrollment.'' http://msue.anr.msu.edu/news/
4_h_makes_a_difference_in_post_secondary_education_enrollment, Posted 
December 19, 2014.
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The Land-Grant System: Leveraging Resources
    It is essential to understand the leverage that Federal funding for 
research and Cooperative extension enjoys as a result of the network of 
land-grant and non-land-grant Colleges of Agriculture that exists. We 
are part of a national system that knits together more than 107 land-
grant colleges and universities and 60 non-land-grant universities. 
This network allows us to share best practices, collaborate on research 
and extension initiatives, avoid duplication in our efforts, and at the 
same time drill down to address local needs. In fact, 25% of our 
Federal capacity fund investments in agricultural research programs 
must be spent on projects that span multiple states. In addition, 
competitive funds drive multi-institution collaboration as researchers 
build the most competitive teams they can to put the best possible case 
forward for limited available funding.
    The total public investment in agricultural research and extension 
is a partnership between Federal, state, and county sources--with a 
mandatory match of the Federal funds dollar for dollar with state funds 
required (for most states, the match is much higher).\21\ Without 
Federal support, this partnership collapses, and stressed state budgets 
will simply not be able to support even current levels of investment, 
much less what is needed.
---------------------------------------------------------------------------
    \21\Clancy, M., K.O. Fuglie, P.W. Heisey.
---------------------------------------------------------------------------
    As pointed out earlier, public investment in agricultural research 
is also leveraged with private-sector investment--in 2013, for every 
dollar the Federal Government invested in university research, the 
private-sector invested 49.\22\ Again, without Federal investment in 
capacity and competitive funds, these private-sector investments in 
agricultural research at universities do not happen at this level.
---------------------------------------------------------------------------
    \22\Clancy, M., K.O. Fuglie, P.W. Heisey.
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An Indiana Example
    I will provide an Indiana example of the importance of Federal 
funding for agricultural research that demonstrates the critical role 
of partnerships and the leverage of available Federal funding. Purdue 
University made a $20 million commitment to a new Plant Sciences 
Institute based in our College of Agriculture, one of only two research 
investments made as part of a set of ten university level strategic 
initiatives called Purdue Moves. The focus of this Institute is 
improved plants--plants that yield more, plants that are more tolerant 
of drought, plants that use nutrients more effectively, and plants that 
have improved nutritional profiles. This investment was made because 
our President and Trustees recognized the importance of plant 
agriculture as we look to the future, for all of the reasons 
highlighted above. However, beyond the importance of the problem, the 
University also invested because our College had deep strength in plant 
agriculture research and extension, which was built on and supported by 
Federal capacity funding.
    This University investment included new faculty positions, some new 
facilities and equipment, a focus on bringing discoveries to the 
marketplace, and new student training initiatives. The $20 million was 
intended to be platform investment, to help attract others to invest--
and, that is happening. Our Indiana corn and soybean farmers through 
their check-off funds have supported the construction of a new field 
scale plant phenotyping facility to help us both drive plant 
improvement and take the idea of precision agriculture to an entirely 
new level through sensor development and new data analytics. Other 
industry partners, including firms far outside of agriculture such as 
Verizon and IBM, have joined us as well. Multiple start-up companies 
have been launched since the University made the commitment in 2014. In 
addition, we have launched a pre-college educational experience in the 
summer to help attract young men and women to plant agriculture, as 
well as an undergraduate research fellows program for students on 
campus.
    None of this would have happened without the Federal capacity 
funding that supported the salaries and research of our plant 
scientists. Bringing this full circle, one of our soybean breeders 
recently received a large AFRI grant to put the new phenotyping 
facility to work in improving soybean genetics. Looking forward, it 
will take enhanced levels of Federal capacity and competitive funds, 
leveraged with farmer, industry, foundation, and state funds, to drive 
the kind of research and education program we need to feed a growing 
world.
Looking Forward: Opportunities and Issues
Funding Levels
    Advances in food, agricultural, and environmental sciences depend 
upon research through the USDA NIFA. However, current USDA funding for 
food and agricultural research at $2.4 billion per annum, is not 
sufficient to address the challenges outlined earlier. In fact, Federal 
funding for agricultural research has been stagnant over the past 
decade, and has declined in real terms.\23\ From 2005 to 2012, USDA 
funding for agricultural research declined by 16% in real terms, 
falling from $2.9 billion to $2.4 billion in constant 2014 dollars.
---------------------------------------------------------------------------
    \23\Pursuing a Unifying Message: Elevating Food, Agricultural, and 
Natural Resources Research as a National Priority. Charles Valentine 
Riley Memorial Foundation, November 2014.
---------------------------------------------------------------------------
    Like agriculture, modern advances in health care depend upon 
research advances from the public sector, supported with investments of 
more than $32 billion per annum directed through the National 
Institutes of Health. Much of this research takes place at public 
universities, and depends upon state of the art facilities for 
conducting research, and is enhanced by funding from private-sector 
interests. Over the 1990-2012 period, funding for NIH increased 135% 
while USDA funding increased 21% over that same period.\24\ There is no 
doubt that medical research addressing health issues in our country is 
a national priority, but one can question the relative investment in 
research addressing the security of our food supply.
---------------------------------------------------------------------------
    \24\Charles Valentine Riley Memorial Foundation.
---------------------------------------------------------------------------
    Another instructive trend is the split of Federal and state support 
for agricultural research and development. Since 1950, the share of 
publicly funded research and development carried out by state-based 
land-grant universities and other agencies has increased from 61 
percent in 1950 to 73 percent in 2013--leading to more dependence on 
state-funding and facilities, an increasingly tenuous position given 
the status of state budgets.
Capacity and Competitive Funding Are Equally Important
    Federal support for both capacity (Hatch, Smith-Lever, McIntire 
Stennis, Evans-Allen, and 1890s extension) and competitive funding 
(Agriculture and Food Research Initiative--AFRI) is essential. Federal 
capacity funds provide land-grant universities with the human talent 
and support needed to address local research and extension needs, 
provide timely response in emergency situations such as a disease or 
pest outbreak or weather event, and ultimately the capacity to pursue 
research supported by other funding sources including competitive 
Federal funds, foundation funding, and private funding. AFRI is NIFA's 
flagship competitive funding program, but has never been funded at its 
authorized level of $700 million. As a result, many research proposals, 
deemed both important and deserving of funding, are not funded. In 
fiscal 2015, more than 2,600 proposals were submitted for AFRI funding, 
requesting almost $1.8 billion. Through a rigorous peer-review process, 
over 1,400 were recommended for funding, but only 569 could be 
supported with the funds available.
Infrastructure Challenges
    Another significant challenge faced by our land-grant universities 
is the state of our research and education infrastructure. In 2015, the 
APLU BAA commissioned a study into deferred maintenance\25\ which 
estimates that the land-grant system faces a deferred maintenance 
backlog of $8.4 billion. The study delivered three key findings:
---------------------------------------------------------------------------
    \25\http://www.aplu.org/news-and-media/News/2015/10/15/
sightlinesaplu-study-finds-84-billion-in-deferred-maintenance-at-
schools-of-agriculture-in-us.

  1.  The level of deferred maintenance identified is significant and 
---------------------------------------------------------------------------
            conditions exist for it to grow.

  2.  There are three main areas identified that are contributing to 
            the growth of deferred maintenance:

      a.  The majority of space was constructed during a period of 
            rapid, poor qual-
                ity construction.

      b.  Most buildings have received insufficient capital investments 
            as they have
                aged.

      c.  80% of campuses are investing at such a low level that 
            deferred mainte-
                nance will grow annually.

  3.  These conditions are consistent across the country.

    A major driver of deferred maintenance at land-grant institutions 
is the age profile of buildings. Of the 15,596 buildings included in 
the study, containing 87\2\ million gross of space, 53% were built 
between 1951 and 1990, the period when buildings were built ``quickly 
and with lower quality standards and materials.'' Facilities built in 
this time period account for 68% of the total $8.4 billion in deferred 
maintenance costs across the system. The replacement cost of all 
research and education space in the system is estimated at $29 billion.
    The study also found that the capital investment needed to renovate 
these buildings is also falling well short. ``Over 80% of the schools 
of agriculture were spending at levels that meant they are deferring 
projects on an annual basis'' the study said. The average capital 
spending per year at schools of agriculture was $1.82 per gross 1\2\, 
compared to $4.40 per gross 1\2\ for the broad database of U.S. 
colleges and institutions--significantly lower.
    As just one example of this issue at Purdue University, we recently 
completed a study of infrastructure needs at our eight research farms 
strategically located around Indiana. The 2014 study showed that more 
than $25 million is needed by 2020 to address the backlog of deferred 
maintenance and to equip the farms to do the contemporary applied 
research needed by farmers in our state.
Efforts to Unify under a Common Message for Research
    Purdue and other land-grant universities, along with partners at 
non-land-grant schools, research societies, agricultural organizations 
and many others, have actively been engaged in national discussions on 
how we take a different approach to ensure a sustainable future in 
food, agricultural and natural resources. Led by the Charles Valentine 
Riley Memorial Foundation, this effort envisions the opportunity for a 
convergence of efforts that result in development of a unified 
message--one that calls for making public investment in food, 
agricultural and natural resources research a higher national priority. 
A common thread of these dialogues has been exploring the formation of 
a broad coalition committed to develop the compelling case for enhanced 
investment in research. The times call for an inspiring vision, bold 
action and a heightened sense of purpose. We believe these continuing 
discussions underscore the need to think differently about how 
agriculture speaks out on the need to fund research at the priority it 
deserves--by speaking together on the benefits made possible for the 
public good and our common future.
Challenge of Change Commission
    To advance the goal of feeding the world, the APLU has established 
the Challenge of Change Commission,\26\ which aims to examine 
challenges to food security and make recommendations on the actions 
required by public research universities to meet global food needs by 
2050. The commission's charge is three-fold:
---------------------------------------------------------------------------
    \26\http://www.aplu.org/projects-and-initiatives/international-
programs/challenge-of-change/ChallengeofChangeCharge.pdf.

  1.  Identify and prioritize the key challenges that our public 
            universities can successfully address that will advance 
---------------------------------------------------------------------------
            food security in North America and the world.

  2.  Recommend how our public universities can align their resources 
            to address the challenges identified by the Commission.

  3.  Determine the resources required for our public universities to 
            address the challenges identified by the Commission.

    There is an obvious synergy among the land-grant system's research, 
education, and extension mandate and the agriculture industry's charge 
to feed the growing population. APLU is ready to lead the discussion 
and address the challenge with the direction and support of Congress.
Closing Comments
Up for the Challenge . . .
    Despite these challenges, the nation's land-grant universities and 
agricultural colleges remain the world's premier source of research, 
education, and extension programs benefiting the agricultural industry 
from producer to consumer. The recent QS World University Rankings 
provide evidence of this fact with ten of the top 15 agricultural and 
forestry universities globally located in the U.S.\27\ With a proven 
record of impact, and with appropriate levels of Federal investment, 
APLU members stand ready to address the challenges of feeding a growing 
world.
---------------------------------------------------------------------------
    \27\https://www.topuniversities.com/university-rankings/university-
subject-rankings/2017/agriculture-forestry.
---------------------------------------------------------------------------
    Thank you for this opportunity to share the nature of the food 
security challenge in front of us, the reasons public investments in 
agricultural research and extension are important, and some of our 
system's successes and challenges. Thank you for your past support of 
agricultural research and extension. The Association of Public and 
Land-grant Universities is available to assist the Agriculture 
Committee, and the broader industry, in any way possible, and we look 
forward to the culmination of the next farm bill.

    The Chairman. Thank you, Dr. Akridge.
    Mr. Wilkins, you are recognized for 5 minutes.

   STATEMENT OF RICHARD WILKINS, CHAIRMAN, AMERICAN SOYBEAN 
             ASSOCIATION; VICE PRESIDENT, NATIONAL
  COALITION FOR FOOD AND AGRICULTURAL RESEARCH, GREENWOOD, DE

    Mr. Wilkins. Good morning, Mr. Chairman, and Members of the 
Subcommittee.
    My name is Richard Wilkins, and I am a farmer from 
Greenwood, Delaware; the state that continuously ranks first in 
the nation in gross farm revenue per acre of farmland.
    I am pleased to testify today in my capacity as Vice 
President of the National Coalition for Food and Agricultural 
Research. My written testimony is provided for the record, and 
I will use my time today to offer a few highlights.
    NCFAR is a customer-led coalition that advocates sustaining 
and increasing public investment, and food and agricultural 
science. Our support encompasses the entire USDA Research, 
Extension, and Education mission area, including extramural and 
intramural programs. By customer, I mean not only my farm 
business, but all the other stakeholders who need and benefit 
from the scientific outcomes that are produced by our nation's 
publicly funded agricultural research. I would suggest that all 
of us are customers, including the Members of this 
Subcommittee.
    While I am not a researcher, I do appreciate the vital role 
that researchers play. Modern agriculture is a science-based 
business. I know that I can do what I do better because of 
advancements made possible by Federal investments in 
agricultural research.
    The research title of the farm bill represents the nation's 
signature Federal investment in the future of the food and 
agricultural sector. The success of every other title in the 
farm bill is connected to scientific outcomes made possible 
through the research title.
    I respectfully submit that we as a nation are not investing 
enough in publicly funded research to regain and then maintain 
our nation's place as the leader in agricultural research. That 
is a major reason I invest a significant amount of my time in 
NCFAR, the American Soybean Association, and other groups, to 
help make the case for public investment in food and 
agricultural research.
    Investment in food and agricultural science is not only 
good business, it is good for business. One recent report 
estimates a return on investment of ag research dollars of 
about 67 percent. Yet, Federal funding for agricultural 
research has been essentially flat for over 20 years, despite 
much greater demonstrated needs, and has reportedly declined by 
about 25 percent in real terms since 2003. Our nation's 
competitiveness in global markets is at risk, as investments in 
agricultural research by our global competitors have been 
growing rapidly.
    NCFAR has several activities underway with the objective of 
better informing our leadership and others in laying the 
groundwork for a strong research title and the necessary 
funding. One new initiative I am pleased to announce is that 
NCFAR is involved in planning for a Summit on Integrated 
Research, Education, and Extension Priorities To Advance 
American Agriculture. The aim of the summit is to engage 
stakeholders in developing a vision for what the agricultural 
research enterprise should look like to best serve the needs of 
the food and agricultural system in the 21st century. The 
summit will focus on four critical areas: fueling growth in the 
agricultural economy through rapid adoption of innovations; 
harnessing the power of big ag data in research and extension; 
advancing the health of U.S. consumers and environmental 
quality; and assuring the security of United States agriculture 
and food systems. Additional information will be made available 
in the near future.
    We appreciate the longstanding leadership of this 
Subcommittee in authorizing and overseeing implementation of a 
strong research title, and we look forward to working with you.
    I appreciate the opportunity to share our views, and would 
be pleased to respond to any questions.
    [The prepared statement of Mr. Wilkins follows:]

       Prepared Statement of Richard Wilkins, Chairman, American
  Soybean Association; Vice President, National Coalition for Food and
                  Agricultural Research, Greenwood, DE
    Mr. Chairman and Members of the Subcommittee,

    My name is Richard Wilkins. I am a farmer from Greenwood, Delaware. 
I farm 400 acres of soybeans and 400 acres of corn annually and produce 
250 acres of wheat, 100 acres of barley, 300 acres of vegetables, and 
400 acres of hay. I also raise 120 head of beef cattle.
    I am pleased to testify today in my capacity as Vice President of 
the National Coalition for Food and Agricultural Research (NCFAR), a 
nonprofit, nonpartisan, consensus-based and customer-led coalition that 
brings food, agriculture, nutrition, conservation, and natural resource 
stakeholders together with the food and agriculture research and 
extension community. NCFAR serves as a forum and a unified voice in 
support of sustaining and increasing public investment at the national 
level in food and agricultural science as a top national priority. A 
membership list is attached. More information about NCFAR is available 
at http://www.ncfar.org.
    NCFAR's support encompasses the entire U.S. Department of 
Agriculture (USDA) Research, Extension, and Education (REE) mission 
area, including extramural programs in the National Institute of Food 
and Agriculture (NIFA)--such as the Agriculture and Food Research 
Initiative (AFRI), and capacity funds to support Experiment Stations 
and Cooperative extension--and intramural programs in the Agricultural 
Research Service (ARS), Economic Research Service (ERS), and National 
Agricultural Statistics Service (NASS), as well as the U.S. Forest 
Service research program. NCFAR urges a balanced portfolio, as the 
various programs serve important and complementary roles. NCFAR 
supports mandatory programs in the farm bill that provide funding for 
research. It is important to include investments in both fundamental 
and applied research, as well as translational education. In addition, 
publicly funded research serves critically important objectives that 
private-sector research cannot fulfill in a number of areas. For 
example, the results of publicly funded research are available to the 
public, including policy makers. Companies are often unable to fund 
fundamental research that lays the foundation for much of our nation's 
applied research.
    With the farm bill reauthorization process in its early stages, 
NCFAR has several activities underway with the objective of better 
informing our leadership, other stakeholders, the Congress, and the 
Administration in laying the groundwork for a strong research title and 
supporting funding.
    One longstanding initiative is our signature `LunchNLearn' 
seminar series in which our team works to inform hill staff and other 
stakeholders by featuring the publicly funded work of leading-edge 
scientists on a diverse array of disciplines and timely topics. Over 
the past decade, we have convened 125 seminars with nearly 8,000 
attendees. A document providing highlights of the seminar series is 
attached. More detail is available at http://www.ncfar.org/
Hill_Seminar_Series.asp.
    Mr. Chairman, we greatly appreciate the support of your staff as 
well as staff from other Committee Member offices in helping to arrange 
the Agriculture Committee hearing rooms for these seminars. Thank you.
    NCFAR is taking additional action on several fronts to inform the 
current farm bill reauthorization process and be a more effective voice 
for a strong research title.
    First, NCFAR's Research Outreach Committee has convened a farm bill 
task force, which is in the early stages of developing recommendations 
on the reauthorization of the farm bill research title for our Board to 
consider. We are also collaboratively engaging allied groups with the 
objective of providing timely recommendations to this Subcommittee and 
the Congress.
    Second, I am pleased to announce that NCFAR is involved in planning 
for a Summit on Integrated Research, Education, and Extension 
Priorities to Advance American Agriculture. The aim of the Summit is to 
engage stakeholders in developing a vision for what the food and 
agricultural research, extension and education enterprise should look 
like to best serve the needs of the food and agricultural system in the 
21st century and capitalize on the robust potential of the 
agricultural, food, and resource sectors to fuel further growth in the 
United States economy. The summit will focus on four critical areas; 
fueling growth in the agricultural economy through rapid adoption of 
innovations; harnessing the power of big Ag data in research and 
extension; advancing the health of U.S. consumers and environmental 
quality; and assuring the security of U.S. agriculture and food 
systems. We will provide additional information in the near future.
    Third, NCFAR is actively involved in other collaborative efforts 
intended to inform and support the reauthorization of a strong farm 
bill research title, including (1) the unified messaging effort led by 
the Riley Memorial Foundation, and (2) launch of the Breakthroughs 2030 
study, being managed by the SoAR Foundation in conjunction with the 
National Academies of Science (NAS), to produce a 10 year agenda for 
food and agricultural research.
    I mentioned earlier that NCFAR is ``customer-led.'' By ``customer'' 
I mean my farm business and all other the stakeholders who need and 
benefit from the scientific outcomes that are produced by our nation's 
publicly funded research, extension and education system in our own 
work.
    Research is an important means to critical ends--providing science-
based information and tools that help us in the food and agricultural 
system do our jobs for the ultimate benefit of consumers, the nation's 
economy, and the world.
    The same holds true for a myriad of other ``customers''--such as my 
fellow farmers and ranchers across the nation; the agricultural input 
industry; food processors; professionals in the fields of nutrition and 
health; natural resources and environment; rural communities; and 
ultimately all consumers of food and natural fiber around the world.
    Furthermore, this Subcommittee and other Members of Congress and 
policy makers at all levels of government are important ``customers'' 
of research, extension and education made possible through the research 
title.
    This is indeed an exciting time for me and our family farming 
operation. The challenges our farm family is experiencing--and indeed 
across our nation's food and agricultural system--have brought into 
fresh focus the need for a robust public investment in research, 
extension and education.
    I am not a researcher, though I do some experimenting in my farming 
operations. However, I do appreciate the vital role that researchers 
and extension specialists play in our society. Modern agriculture is a 
science-based business. I need what research and extension can provide 
in my operations. I know that I can do what I do better because of 
advancements made possible by Federal investments in food and 
agricultural research.
    The research title of the farm bill represents the nation's 
signature Federal investment in the future of the food and agricultural 
sector. In fact, the success of every other title in the farm bill and 
those who are charged with carrying out their respective missions is 
arguably dependent in significant part on scientific outcomes and tools 
generated by programs authorized through the research title, and then 
funded by Congress.
    Research is not an end in itself--rather it is a vital means to 
help achieve many national priorities. The research title is critical 
in providing advancements in food and agricultural research, extension 
and education that help provide the tools needed to sustain and 
strengthen America's food and agricultural sector, rural communities, 
and the national economy. Public investment in food and agricultural 
research, extension and education today and in the future must 
simultaneously satisfy a range of needs, including food quality and 
quantity, resource conservation, producer profitability, and food 
safety and security, and helping to improve health.
    At the risk of oversimplification, Federal funding is the fuel for 
USDA's REE engine and determines how effectively the important goals of 
the research title are realized. I respectfully submit that we as a 
nation are not investing enough in publicly funded research to permit 
discovery necessary to regain and then maintain our nation's place as 
the leader in agricultural research. That is a major reason I invest a 
significant amount of my time in NCFAR, the American Soybean 
Association and other groups to provide input as a stakeholder and 
leadership in urging increased public investment in food and 
agricultural research, extension and education.
    Investment in food and agricultural science is not only good 
business, it's good for business. By any measure, publicly funded food 
and agricultural science represents an outstanding investment. Public 
and private investments in U.S. agricultural research and practical 
application of results have paid huge dividends to the United States 
and the world, especially in the latter part of the 20th century. The 
CARD report entitled ``Measuring Public Agricultural Research and 
Extension and Estimating their Impacts on Agricultural Productivity: 
New Insights from U.S. Evidence'' (Jin & Huffman, 2016) presents a 
summary of the most recent returns on investment of agricultural 
research dollars to have a rate of return of approximately 67 percent.
    However, the unparalleled success story in the food and 
agricultural system is in large part the product of past investments in 
food and agricultural research and extension. Federal funding for food 
and agricultural research, extension and education has been essentially 
flat for over 20 years despite much greater demonstrated needs, and has 
reportedly declined by about 25 percent in real terms since 2003. At 
the same time support for other Federal research has increased 
substantially. Our nation's competitiveness in global markets is at 
risk, as investments in food and agricultural science by our global 
competitors have been growing rapidly.
    The 2008 and 2014 Farm Bills recommitted to an authorized level of 
$700 million annually for AFRI. Yet 8 years later, for FY16, 
appropriations were about $350 million. NCFAR is on record in support 
of funding AFRI at the fully authorized level as soon as practicable. 
Increases in AFRI should represent an addition to funding for REE 
programs and not come at the expense of other REE programs. NCFAR is 
expressing support for $375 million in FY17, the same level reported 
out by both the House and Senate Appropriations Committees. We urge the 
Congress to include that amount in any final budget reconciliation. Our 
position on FY18 funding for the REE mission, including AFRI, is 
currently under development.
    Increased Federal investments in the USDA, REE mission area will 
lead to advances and breakthroughs in agricultural productivity, 
improved animal, plant and soil health, and nutrition and lead to 
healthier citizens, a healthier agricultural economy, and a stronger 
and more globally competitive America.
    Tools provided through publicly funded research, extension and 
education are needed to help achieve safer, more nutritious, convenient 
and affordable foods delivered to sustain a well-nourished, healthy 
population; more efficient and environmentally friendly food, fiber and 
forest production; improved water quality, land conservation, wildlife 
and other environmental conditions; less dependence on non-renewable 
sources of energy; expanded global markets and improved balance of 
trade; and more jobs and sustainable rural economic development.
    Societal demands and expectations placed upon the food and 
agricultural system are ever-changing and growing. Examples of current 
and future needs include addressing bio-security; food-linked health 
costs; development of vaccines and diagnostics, antibiotics, de-
wormers, antifungals and parasiticides, antimicrobial use strategies, 
control and therapy for diseases and infections, transboundary disease 
and foreign animal disease; environment and conservation; water 
quality; farm income and rural revitalization; biofuels and climate 
change; the increasing world demand for food and fiber and improved 
diets; and needed advances in biotechnology and genetic resources 
research. A United Nations report projects that we will need to double 
food production to feed nine billion people by 2050, and that 70 
percent of the increase must come through research developing new 
technologies and increased productivity.
    We appreciate the longstanding support this Subcommittee, the full 
Committee and its Members have demonstrated over the years to authorize 
and oversee implementation of a strong research title that can compete 
more effectively in the funding process, both within the Administration 
and in the Congress.
    NCFAR looks forward to working as a customer-led coalition with 
this Subcommittee, the full Committee, Congress, the Administration and 
other stakeholders to help ensure that the USDA REE mission moves 
forward as envisioned and receives the resources and funding needed to 
achieve scientific outcomes that are necessary for the food and 
agricultural sector to address multiple demands, challenges and 
expectations.
    I appreciate the opportunity to share our views.
Attachments
   Witness Disclosure Form.*
---------------------------------------------------------------------------
    *The documents referred to are retained in Committee file.

   Wilkins Biography.*
                              Attachment 3
National Coalition for Food and Agricultural Research Members List

 
 
 
                          Member Organizations
 
Academy of Nutrition and Dietetics   International Food Information
American Pulse Association and USA    Council (IFIC)
 Dry Pea and Lentil Foundation       Iowa State University--CALS
Agricultural Retailers Association   Kansas State University
 (ARA)
American Seed Trade Association      Michigan State University
 (ASTA)                              Mississippi State University
American Society for Horticultural   Monsanto
 Science (ASHS)                      National Association of State
American Society for Nutrition        Departments of Agriculture (NASDA)
 (ASN)
American Society of Agricultural     National Association of Wheat
 and Biological Engineers ASABE)      Growers (NAWG)
American Society of Agronomy (ASA)   National Corn Growers Association
American Society of Animal Science    (NCGA)
 (ASAS)                              National Council of Farmer
American Society of Plant             Cooperatives (NCFC)
 Biologists (ASPB)                   National Grain and Feed Association
American Soybean Association (ASA)    (NGFA)
American Veterinary Medical          National Oilseed Processors
 Association (AVMA)                   Association
                                     National Pork Producers Council
Animal Agriculture Alliance Animal   National Potato Council
 Health Institute (AHI)              Noble Research Institute, LLC
Association of American Veterinary   North American Millers' Association
 Medical Colleges (AAVMC)             (NAMA)
Biotechnology Innovation             North Central Regional Association
 Organization (BIO)                   of State Agricultural Experiment
Cargill                               Station Directors (NCRA)
CoBank                               Northeastern Association of State
Corn Refiners Association             Agricultural Experiment Station
Council for Agricultural Science &    Directors (NERA)
 Technology (CAST)                   SoAR Foundation
Council for Biotechnology            Soil Science Society of America
 Information (CBI)                    (SSSA)
Council on Food, Agricultural, and   Southern Association of
 Resource Economics (C-FARE)          Agricultural Experiment Station
                                      Directors (SAAESD)
                                     Sustainable Agriculture Coalition
                                      (SAC)
CropLife America                     Syngenta
Crop Science Society of America      The Cotton Foundation
 (CSSA)
Experiment Station Committee on      The Fertilizer Institute
 Organization & Policy (ESCOP)       The IR-4 Project
Extension Committee on Organization  University of Arkansas
 & Policy (ECOP)                     University of Idaho
Farm Foundation                      University of Kentucky
Federation of American Societies     University of Nebraska
 for Experimental Biology (FASEB)    University of Tennessee
FASS, Inc.                           Weed Science Society of America
Illinois Farm Bureau                  (WSSA)
Institute of Food Technologists      Western Association of Agricultural
 (IFT)                                Experiment Station Directors
                                      (WAAESD)
 
                           Individual Members
 
Dr. Jerry Baker                      Dr. John Patrick (Pat) Jordan
Dr. Gale Buchanan                    Dr. Martin A. Massengale
Dr. Nancy M. Cox                     Kristina Owens
Dr. William Danforth                 Michael Newman, D.V.M.
Kellye Eversole                      Dr. Fred Stormshak
Dr. Barbara Glenn
 
                                Sponsors
 
Academy of Nutrition and Dietetics   Experiment Station Committee on
Agronomy, Crop and Soil Science       Organization & Policy (ESCOP)
 Societies                           Extension Committee on Organization
American Bakers Association           & Policy (ECOP)
American Phytopathological Society   Institute of Food Technologists
American Seed Trade Association      Michael Newman, D.V.M.
American Society of Plant            National Council of Farmer
 Biologists                           Cooperatives (NCFC)
Bayer CropScience
Biotechnology Innovation             National Farmers Union
 Organization (BIO)                  National Milk Producers Federation
Corn Refiners Association            National Oilseed Processors
                                      Association
Council for Agricultural Science     North American Millers' Association
 and Technology (CAST)                (NAMA)
Council for Biotechnology            Riley Memorial Foundation
 Information (CBI)                   Syngenta
Council on Food, Agricultural, and   United Soybean Board
 Resource Economics (C-FARE)         University of Wyoming
CropLife America                     Weed Science Society of America
Dr. William Danforth                 Western Skies Strategies
Eversole Associates
 
7/10/2017.

                              Attachment 4
`LunchNLearn' Hill Seminar Series Highlights
http://www.ncfar.org/Hill_Seminar_Series.asp

    Goal: Inform Hill Staff & other policy stakeholders about the value 
of public investment in food & ag research through hill seminars 
featuring leading edge researchers on topics of high interest. Helps 
staff make more informed recommendations about federal funding for Food 
and Ag RE&E.

   478 attendees at 6 seminars in 2017. Over 8,300 attendees 
        over past 12+ years through 130 seminars.

   Leading presenters from over 60 institutions (http://
        ncfar.org/HSS_Past_Speakers_Institutions.pdf) across the 
        nation-wide range of disciplines and topics.
        
        
          (http://www.ncfar.org/Hill_Seminar_Series_2017.asp)
2017 Titles
    Farm Economy Update--Pressures on Repayment & Spending * Plant 
Breeding and Genetics Accelerating the Path To Improving Public Health 
Through Food Based Solutions Robotic Weed Wars * Digital Agriculture * 
Why Does Honey Bee Health Matter?
2017 Lineup` (http://www.ncfar.org/Hill_Seminar_Series_2017.asp)
---------------------------------------------------------------------------
    `Editor's note: the hyperlinked presentations have been retained in 
Committee file.
---------------------------------------------------------------------------
    Why Does Honey Bee Health Matter? (http://www.ncfar.org/
HSS_20170619_
Presentation.pdf)--The Science Surrounding Honey Bee Health Concerns 
and What We Can Do About It, Dr. Marla Spivak, U. of Minnesota (June 
19-146).
    Digital Agriculture (http://www.ncfar.org/
HSS_20170612_Presentation.pdf)--Technology Innovation in Complex 
Production Environments, Dr. Harold van Es, Cornell (June 12-62).
    Robotic Weed Wars (http://www.ncfar.org/
HSS_20170522_Presentation.pdf)--A New Game, New Players, New Rules, Dr. 
Steven Fennimore, UC-Davis (May 22-43).
    Accelerating the Path to Improving Public Health Thr[o]ugh Food 
Based Solutions (http://www.ncfar.org/HSS_20170512_Presentation.pdf)--
Leveraging Collaborations between Government and Academia to Create a 
More Convenient and Healthful Food Supply, Dr. Mario Ferruzzi, North 
Carolina State; and Dr. Janet Novotny, USDA, ARS (May 12-45).
    Plant Breeding and Genetics (http://www.ncfar.org/
HSS_20170322_Program.
pdf)--The Need for Ag Innovation to Sustainably Feed the World, Dr. 
Stephen Baenziger, U. of Nebraska-Lincoln; and Dr. Rita Mumm, U. of 
Illinois (Mar 22-62).
    Farm Economy Update_Pressures on Repayment & Spending (http://
www.ncfar.org/Hill_Seminar_Series_2017.asp)a--Cooperative Extension 
Translates Scientific Research to Help Farmers and Ranchers Manage 
Financial Risk, Dr. Jason Henderson, Purdue; Dr. Allen Featherstone, 
Kansas State; and Dr. Jeff Hopkins, USDA, ERS (Feb 13-120).
---------------------------------------------------------------------------
    aEditor's note: the Farm Economy Update--Pressures on Repayment & 
Spending subject is broken up into three presentations: Henderson 
(http://www.ncfar.org/HSS_20170213_Presenta
tion_Henderson.pdf); Featherstone (http://www.ncfar.org/
HSS_20170213_Presentation_Fea
therstone.pdf); Hopkins (http://www.ncfar.org/
HSS_20170213_Presentation_Hop
kins.pdf).
---------------------------------------------------------------------------
2016 Lineup (http://www.ncfar.org/Hill_Seminar_Series_2016.asp)
    Implications of Trade Disruptions (http://www.ncfar.org/
HSS_20161208_Pres
entation.pdf)--The Impact of Asynchronous Trade Approvals for Biotech 
Crops on Agricultural Sustainability, Trade and Innovation, Dr. 
Nicholas Kalaitzandonakes, U. of Missouri (44).
    The Latest Innovation in Plant Breeding (http://www.ncfar.org/
HSS_20160919_Presentation.pdf)--Genome Editing, Dr. Anne Blechl, USDA, 
ARS (65).
    Give Me a Break! (http://www.ncfar.org/
HSS_20160722_Presentation.pdf)--Using Forest Windbreaks to Reduce Crop 
Gene Flow, Dr. Carol Auer, U. of Connecticut (70).
    The Economics of Drought--Realities and Policy Choices,b Dr. Rob 
Johannson, USDA; Dr. Ariel Dinar, UC-Riverside; & Dr. Steve Wallander, 
USDA, ERS (100).
---------------------------------------------------------------------------
    bEditor's note: the Realities and Policy Choices presentation is 
not posted on the NCFAR website; however, the program has been retained 
in Committee file and is available at: (http://www.ncfar.org/
HSS_20160711_Program.pdf).
---------------------------------------------------------------------------
    Climate Smart Precision Agriculture (http://www.ncfar.org/HSS_2016
0627_Presentation.pdf)--Dr. Raj Khosla, Colorado State (91).
    Food From Thought (http://www.ncfar.org/
HSS_20160620_Presentation.pdf)--ARS Mission, Programs and Challenges, 
Dr. Chavonda Jacobs-Young, USDA, ARS (101).
    Losing Track! (http://www.ncfar.org/
HSS_20160610_Presentation.pdf)--Do You Really Know from Where Your 
Lunch has Come?, Tejas Bhatt, Institute of Food Technologists (75).
    Including the U.S. Economy By Adding Fiber (http://www.ncfar.org/
HSS_20160429_Presentation.pdf)--Challenges of Adding Industrial Hemp 
Production, Dr. Ron Turco, Purdue & Dr. Janna Beckermann, Purdue (51).
    U.S.-Cuba Agricultural Trade (http://www.ncfar.org/
HSS_20160321_Presenta
tion1.pdf)--Economic Policy Implications of a Changing Trade 
Environment, Bryce Cook, USDA, ERS & Dr. William Messina, U. of Florida 
& Dr. Luis Ribera, Texas A&M (84).
    More Crop for the Drop! (http://www.ncfar.org/
HSS_20160208_Presentation.
pdf)--Technology Implementation in Agriculture for Enhancing Crop Water 
Productivity, Dr. Suat Irmak, U. of Nebraska-Lincoln (71).
    Preventing the Next Kudzu (http://www.ncfar.org/
HSS_20160222_Presenta
tion.pdf)--A Life-Cycle Approach to Low-Invasion Potential Bioenergy 
Production, Dr. Jacob Barney, Virginia Tech (62).
2015 Lineup (http://www.ncfar.org/Hill_Seminar_Series_2015.asp)c
---------------------------------------------------------------------------
    cEditor's note: the Can Staple Food Crops Reduce the Incidence of 
Chronic Diseases in Humans? subject, not listed in this document (but 
listed on the NCFAR website) presentation entitled, Dry Edible Beans 
Can Reduce Chronic Diseases in Humans and Improve Human Nutrition, Mark 
Brick, Colorado State University; has been retained in Committee file 
and is available at: http://www.ncfar.org/
HSS_20151016_Presentation.pdf.
---------------------------------------------------------------------------
    Battling the Wicked Problem of Herbicide Resistance (http://
ncfar.org/HSS_20151204_Presentation.pdf)--The Human Dimensions of 
Herbicide Resistance Evolution, Dr. David Shaw, Mississippi State (55).
    Partners for Life (http://ncfar.org/
HSS_20151113_Presentation.pdf)--The Untapped Potential of Plant 
Microbiomes in Agriculture, Dr. Jan Leach, Colorado State (53).
    Choices (http://ncfar.org/HSS_20151105_Presentation.pdf)--Improving 
Nutrition Among Low-Income and Food-Insecure Individuals, Dr. David 
Just, Cornell (85).
    Role of U.S. Agriculture in Chinese Markets (http://ncfar.org/HSS_
20151026_Presentation.pdf)--Factors Affecting Chinese Food and 
Agricultural Markets,e Dr. Holly Wang, Purdue (106).
---------------------------------------------------------------------------
    eEditor's note: the Glauber presentation, not listed in this 
document (but listed on the NCFAR website) Trends in China Grains, 
Oilseeds and Fibers S&D, has been retained in Committee file and is 
available at: http://www.ncfar.org/
HSS_20151026_Presentation_Glauber.pdf.
---------------------------------------------------------------------------
    Warning: This Food Label May Cause Confusion (http://ncfar.org/
HSS_20151005_Presentation_Messer.pdf)--Process Labeling of Food: 
Consumer Behavior, the Ag Sector and Policy Recommendations, CAST Issue 
Paper, Dr. Kent Messer, U. of Delaware (100).
    Biotechnology: Great Potential Stifled By Good Intentions (http://
ncfar.org/HSS_20151005_Program_Folta.pdf)--Arresting Application of 
Genetic Engineering Solutions,f Dr. Kevin Folta, U. of Florida (100).
---------------------------------------------------------------------------
    fEditor's note: the hyperlink is not to the Arresting Application 
of Genetic Engineering Solutions presentation; the title of the linked 
presentation is Reframing Agricultural Biotechnology Communication.
---------------------------------------------------------------------------
    The Future of Food: Optimal Or Orwellian? (http://ncfar.org/
HSS_2015
0921_Presentation.pdf)--How Plant Breeding Decisions Made Today Will 
Determine the Future of Food, Dr. William F. Tracy, U. of Wisconsin 
(66).
    What Are Children Eating at School Lunch? (http://ncfar.org/
HSS_2015
0911_Presentation.pdf)--5 Years After the Healthy, Hunger-Free Kids 
Act, Dr. Bethany Yon, U. of Vermont (68).
    Climate Change: So What's Up With Dinner? (http://ncfar.org/
HSS_20150720_Presentation.pdf)--Climate Changes and Its Impact on our 
Diverse and Abundant Food Supply, Dr. Michael Hoffmann, Cornell 
University (39).
    Bees on Their Knees? (http://ncfar.org/HSS_20150615_Presentation_
Pettis.pdf)--Factors Affecting Honey Bees and Other Pollinators,g Dr. 
Kevin Hackett and Dr. Jeff Pettis, USDA, ARS (120).
---------------------------------------------------------------------------
    gEditor's note: the subject Bees on Their Knees? has two 
presentations; the Pettis presentation, hyperlink above, and the 
Hackett presentation which has been retained in Committee file and is 
available at: http://www.ncfar.org/
HSS_20150615_Presentation_Hackett.pdf.
---------------------------------------------------------------------------
    A Case For Soil Health (http://ncfar.org/
HSS_20150518_Presentation.pdf)--Opportunities to Change the Face of 
Agriculture and How We Feed Our Nation, Bianca Moebius-Clune, USDA, 
NRCS (63).
    Waste to Wisdom (http://ncfar.org/HSS_20150420_Presentation.pdf)--
Using Agriculture and Forestry Residues to Create Bioenergy and 
Biochar, Dr. Deborah Page-Dumroese, USDA, USFS (45).
    Trends in Farms, Food and Markets (http://ncfar.org/
HSS_20150303_Pres
entation.pdf?v2)h--USDA's Economic Research Service Findings, Dr. Mary 
Bohman, Administrator, USDA, ERS (71)
---------------------------------------------------------------------------
    hEditor's note: the hyperlink for the Trends in Farms, Food and 
Markets subject is incorrect it is (http://www.ncfar.org/
HSS_20150323_Presentation.pdf).
---------------------------------------------------------------------------
    The Wisdom of Crowds (http://ncfar.org/
Hill_Seminar_Series_2015.asp)]--Can the Public Guide Research and 
Extension Programs?, Dr. Robert Kallenbach, U of Missouri (26).
---------------------------------------------------------------------------
    ]Editor's note: the hyperlink for the The Wisdom of Crowds subject 
is incorrect it is (http://www.ncfar.org/
HSS_20150303_Presentation.pdf?v2).
---------------------------------------------------------------------------
2014 Lineup (http://www.ncfar.org/Hill_Seminar_Series_2014.asp)
    You Can't Eat What Doesn't Grow (http://ncfar.org/
HSS_20141117_Presenta
tion.pdf)--The Contributions of Pesticides to Pest Management in 
Meeting the Global Need for Food Production by 2050, Dr. Stephen 
Weller, Purdue (66).
    NIFA Vision (http://ncfar.org/HSS_20140923_Presentation.pdf)--User 
Inspired Science Transforming Lives, Dr. Sonny Ramaswamy, USDA, NIFA 
(62).
    Cornucopia in the Cities (http://ncfar.org/
HSS_20140728_Presentation.pdf)--Growing Urban Agriculture with Trees, 
Gary Bentrup, MLA, U.S. Forest Service, National Agroforestry Center 
(72).
    From Farm to Cell (http://ncfar.org/
HSS_20140718_Presentation.pdf)--Integrating Agriculture, Food and 
Nutrition Sciences to Develop Improved Food Products Delivering 
Nutritional Quality, Dr. Mario Ferruzzi, Purdue (48).
    Carving the Path for the Nation's Future for Natural Resources 
(http://ncfar.org/HSS_20140616_Presentation.pdf)--A Science, Education 
and Outreach Roadmap, Dr. John Hayes, Colorado State (64)
    Farm Animal Research in Crisis (http://ncfar.org/
HSS_20140606_Presenta
tion.pdf)--A Neglected Research Resource for Advancing Human Health and 
Animal Agriculture, Dr. James Ireland, Michigan State (74).
    Shifting Winds in International Agricultural Development (http://
ncfar.org/HSS_20140519_Presentation.pdf)--What's Behind Africa's 
Turnaround?, Dr. William Masters, Tufts University (18).
    Detours on Road to Sustainable Feedstock Production for Cellulosic 
Biofuel (http://ncfar.org/HSS_20140508_Presentation.pdf)--Assessing 
Multidimensional Policy Approaches, Dr. Madhu Khanna, U. of Illinois 
(23).
    To Label Or Not To Label (http://ncfar.org/
HSS_20140428_Presentation.pdf)--The Potential Impacts of Mandatory 
Labeling for Genetically Engineered Food, CAST Report, Dr. Alison Van 
Eenannaam, UC-Davis (67).
    Cooperative Extension (http://ncfar.org/
HSS_20140408_Presentation.pdf)--Innovation for the Next Century, Dr. 
Jimmy Henning, U. of Kentucky (32).
    Easy As ABC, 123! (http://ncfar.org/
HSS_20140331_Presentation.pdf)--Integrating Nutrition and Activity in 
Early Childhood Learning to Build Lifelong Healthy Habits, Laura 
Bellows, Ph.D., Colorado State (40).
    More Crop for the Drop (http://ncfar.org/
HSS_20140324_Presentation.pdf)--A Global Search Through the National 
Plant Germplasm System for Drought Tolerant Soybeans, Tommy Carter, 
Ph.D., USDA, ARS (45).
2013 Lineup (http://www.ncfar.org/Hill_Seminar_Series_2013.asp)
    From Childhood Obesity to SNAP (http://ncfar.org/
HSS_20131204_Presenta
tion.pdf)--Opportunities and Challenges in Nutrition Research, Robert 
M. Russell, M.D. Former Special Advisor to NIH
    Did a Cow Just Eat My Dinner? (http://ncfar.org/
HSS_20130923_Presenta
tion.pdf)--Animal Feed vs. Human Food: Challenges in Sustaining Animal 
Ag Toward 2050, Dr. Jude Capper, Montana State.
    Got Trees? (http://ncfar.org/HSS_20130909_Presentation.pdf)--
Building Climate-Ready Agriculture, Dr. Michele Schoeneberger, USFS.
    Safely Crossing the Food Chain (http://ncfar.org/
HSS_20130801_Presenta
tion.pdf)--The Economics of Reducing Food Risk, Dr. Julie Caswell, U. 
of Massachusetts Amherst.
    Ag Sustainability, Field to Market (http://ncfar.org/
HSS_20130715_Presenta
tion.pdf)--Role of Sustainable Agriculture in Global Economic 
Competitiveness, Dr. Marty Matlock, U. of Arkansas.
    Goldilocks and Risk Management (http://ncfar.org/
HSS_20130624_Presenta
tion.pdf)--Impact of the Precautionary Principle on Feeding Current and 
Future Generations, Dr. Gary Marchant, Arizona State U.
    Applied Bee-Nomics (http://ncfar.org/
HSS_20130617_Presentation.pdf)--How the Honey Bee Project is 
Revolutionizing Pollinator Research, Dr. May Berenbaum, University of 
Illinois.
    Market Forces Or Regulation? (http://ncfar.org/
HSS_20130513_Presentation.
pdf)--Organization of Ag & Natural Resource Markets, Dr. Rachael 
Goodhue, UC-Davis.
    Watershed View of Ag Conservation (http://ncfar.org/
HSS_20130426_Presenta
tion.pdf)--Effectiveness of Ag Conservation Practices at the Watershed 
Scale, Dr. Deanna Osmond, North Carolina State.
    Safe Food (http://ncfar.org/HSS_20130408_Presentation.pdf)--
Research to Practice, Dr. Elizabeth Andress, North Carolina State (57).
    Balancing Nutrients: A Growing Need (http://ncfar.org/
HSS_20130318_Pres
entation.pdf)--Food, Fuel & Plant Nutrient Use in the Future, Dr. David 
Zilberman, UC-Berkeley & Dr. Bruce Dale, Michigan State (47).
    Invasive Weeds and Bioenergy Crops (http://ncfar.org/
HSS_20130307_Pres
entation.pdf)--Economic Boon or Environmental Disaster?, Dr, Jacob 
Barney, Virginia Tech.
2012 Lineup (http://www.ncfar.org/Hill_Seminar_Series_2012.asp)
    The Next 40 Years (http://ncfar.org/
HSS_20120928_Presentation.pdf)--The Challenge of Feeding 9.6 Billion, 
Dr. Robert Thompson, Johns Hopkins U. (80).
    Out of the Trash and Onto Trays (http://ncfar.org/
HSS_20120914_Presenta
tion.pdf)--Increasing Fruit & Vegetable Consumption in the School Lunch 
Program, Dr. David R. Just, Cornell (75).
    Location, Location, Location! (http://ncfar.org/
HSS_20120730_Locating_Buff
ers.pdf)--Putting Forested Buffers in Their Place, Dr. Michael Dosskey, 
U.S. Forest Service (87).
    What Would Lincoln Do? (http://ncfar.org/
What_Would_Lincoln_Do_7_12_12.
pdf)--The Critical Value of Extension in Translating Agricultural 
Research, Dr. Douglas Steele, Montana State (104).
    Safeguarding the Seeds of Our Food Security (http://ncfar.org/
Germplasm_
Presentation_062512.pdf)--The U.S. National Plant Germplasm System, Dr. 
Peter Bretting, USDA, ARS (109).
    Healthy Animals, Confident Consumers (http://www.ncfar.org/Animal_
Health_Food_Safety_Hurd_FINAL.pdf)--The Direct Relationship Between 
Animal Health and Food Safety Outcomes, Dr. H. Scott Hurd, Iowa State 
(79).
    American Agriculture Cooperates (http://www.ncfar.org/Economics_Re
search_and_Structure_of_Farmer_Owned.pdf)--Economics, Research and 
Structure of Farmer Owned Cooperatives, Dr. Phil Kenkel, Oklahoma State 
(63).
    Hands-On Science in the Wild (http://www.ncfar.org/
Lila041612.pdf)--Discovery of the Innate Plant-Protective Properties of 
Plants, and Delivery to the U.S. Marketplace and Beyond, Dr. Mary Ann 
Lila, North Carolina State (57).
    A Diagnosis of Troubled Waters (http://www.ncfar.org/
SWQ_Huggins_Pres
entation.pdf)--Impacts of Ag Land Management Change on Water Quality, 
Dr. Donald Huggins, Kansas Biological Survey, U. of Kansas (81)
    Can Processed Foods Be Healthy? (http://www.ncfar.org/
food_processing_pres
entation.pdf)--How Do Processed Foods Fit into a Healthy Lifestyle, Dr. 
Eric Decker, U. of Massachusetts, Amherst (96).
    Invasion Persuasion (http://www.ncfar.org/
Leafy_Spurge_022712.pdf)--A Review of a Successful USDA Program For 
Defeating a Wide-Spread Invader: TEAM Leafy Spurge, Dr. Rodney Lym, 
North Dakota State (48).
    Putting Energy In To Get Energy Out (http://www.ncfar.org/Corn-
Soybean_Energy_CAST_012312.pdf)--Energy Issues Affecting Corn/Soybean 
Systems: Challenges for Sustainable Production, Dr. Doug Karlen, USDA, 
ARS (82).
2011 Lineup (http://www.ncfar.org/Hill_Seminar_Series_2011.asp)
    Clearing the Air on Greenhouse Gases_Can Ag Help? (http://
www.ncfar.
org/Climate_Change_103111.pdf)--Carbon Sequestration and Greenhouse Gas 
Fluxes in Ag: Challenges and Opportunities, Dr. Jack Morgan, USDA, ARS.
    Agriculture_Science for All Americans (http://www.ncfar.org/
Soybean_Tiffany10_24_11.pdf)--Promoting Ag Science Through the Food and 
Ag Research Experience for Teachers (RET) Program, Drs. Jon Peterson & 
Tiffany Heng-Moss, U. of Nebraska.
    Providing for Tomorrow's Food Days--The Critical Role of Food and 
Agricultural Research,G Dr. Lowell Catlett, New Mexico State.
---------------------------------------------------------------------------
    GEditor's note: the The Critical Role of Food and Agricultural 
Research presentation is not posted on the NCFAR website; however, the 
program has been retained in Committee file and is available at: 
(http://www.ncfar.org/NC-FAR_Program_093011.pdf).
---------------------------------------------------------------------------
    The Air We Breathe (http://www.ncfar.org/MITLOEHNER_091911.pdf)--
Air Issues Associated with Animal Agriculture, Dr. Frank Mitloehner, 
UC-Davis.
    Mapping for the Future of Our Food (http://www.ncfar.org/NC-
FAR_Semi
nar_Program_072511.pdf)--Harvesting Opportunities from Lessons Learned 
in the Maize (Corn) Genome Project,F Dr. Patrick Schnable, Iowa State.
---------------------------------------------------------------------------
    FEditor's note: the Harvesting Opportunities from Lessons Learned 
in the Maize (Corn) Genome Project presentation is not hyperlinked in 
the document; however, the program has been retained in Committee file 
and is available at: (http://www.ncfar.org/Schnable-C-FAR.pdf).
---------------------------------------------------------------------------
    i-Trees (http://www.ncfar.org/2011_7_11_iTree_CFAR.pdf)--
Maintaining Health-
y Cities, Dr. David J. Nowak, USDA Forest Service.
    Guess What's Coming to Dinner? (http://www.ncfar.org/
Science_and_Regula
tion_of_Food_from_GE_Animals_No_Intro.pdf)--The Science and Regulation 
of Food from Genetically Engineered Animals, Dr. Eric Hallerman, 
Virginia Tech.
    Public Research Agenda for Agriculture (http://www.ncfar.org/
NCFAR_Me
dia_Advisory_REE_Action_Plan_0606.pdf)--USDA's Action Plan for 
Research, Education & Extension, Under Sec. Cathie Woteki, USDA.
---------------------------------------------------------------------------
    Editor's note: the USDA's Action Plan for Research, Education & 
Extension presentation is not hyperlinked in the document; however, the 
program has been retained in Committee file and is available at: 
(http://www.ncfar.org/6-6-11_NC-FAR_-_Woteki.pdf).
---------------------------------------------------------------------------
    Food Fraud (http://www.ncfar.org/MSU_acapp_Spink_NCFAR_2011.pdf)--
Do You Know What You Are Eating?, Dr. John Spink, Michigan State.
    Eating Out and Overeating (http://www.ncfar.org/
Lusk_presentation_050211.
pdf)--Effects of `Fat Tax' and Calorie Information on Restaurant Food 
Choices, Dr. Jayson Lusk, Oklahoma State.
    We Reap What We Sow (http://www.ncfar.org/AgResearch_FINAL.pdf)--
Better Future Through Public Ag Research, Dr. George Norton, Virginia 
Tech.
    Waging War On Invasive Grasses (http://www.ncfar.org/
Wa_DC_talk_Feb_
%2711_FINAL.pdf)--Preventing--Not Just Controlling--Rangeland Fires in 
the West, Dr. Richard Mack, Washington State U.
2010 Lineup (http://www.ncfar.org/Hill_Seminar_Series_2010.asp)
---------------------------------------------------------------------------
    Editor's note: the presentations for the 2005-2010 Lineups were 
not included in the submitted document; however, the presentations are 
linked on the NCFAR website and were available they will be included in 
this publication and retained in Committee file.
---------------------------------------------------------------------------
    Turning Today's Crops Into Tomorrow's Fuel (http://www.ncfar.org/
NC-FAR_Presentation_091310.pdf)--Infrastructure Requirements for 
Harvest, Transportation and Storage, Dr. Jerry Fruin, U. of Minnesota.
    Dynamic Duo! (http://www.ncfar.org/AgroforestryNCFARSeminar_FINAL.
pdf)--Agroforestry, Sustainable Agriculture Through the Blending of 
Trees and Agriculture, Andy Mason, USDA AgroForestry Research Center.
    Solving Africa's Weed Problem (http://www.ncfar.org/
NCFAR_Africa.pdf)--Key to Improving Women's Lives and Increasing Food 
Production, Leonard Gianessi, CropLife Foundation
    Local Foods Across the Country and Close to Home--The Implications 
of Local Foods Supply Chains, Dr. Robert King, U. of Minnesota.
    Animal Rights and Wrongs (http://www.ncfar.org/IP46Thompson.pdf)--
Ethical Implications of Animal Biotechnology: Considerations for Animal 
Welfare Decision Making, Dr. Paul Thompson, Michigan State.
    From Specialized Farming To Your Fork (http://www.ncfar.org/
HillAgri
culture_Structure.pdf)--Implications for Competition and the Changing 
Structure of Agriculture, Dr. Brian Buhr, U. of Minnesota.
    The Road To 2012--Budgeting to Provide Sound Science to Meet Future 
Challenges, Under Secretary Molly Jahn, USDA.
    One Fish, Two Fish, Food Fish, Feed Fish (http://www.ncfar.org/
Mar22_N-CFAR_Briefing_032210.pdf)--Meeting Nutritional Challenges in 
Aquaculture & Aquatic Resources Management, Dr. Jesse Trushenski, 
Southern Illinois U.
    Feeding Our Future--Role of Research in Updating Child Nutrition 
Programs, Dr. Suzanne Murphy, U. of Hawaii.
    Agriculture's Perfect Storm--Agricultural Productivity Strategies 
for the Future, Dr. Gale Buchanan, U. of Georgia.
    World Security At Risk? (http://www.ncfar.org/
US_vulnerability_to_Ug99-Jan_2010.pdf)--The Race Against Ug99 Stem Rust 
in Wheat, Dr. Jim Peterson, Oregon State.
2009 Lineup (http://www.ncfar.org/Hill_Seminar_Series_2009.asp)
    The Green Connection (http://www.ncfar.org/200_%2003-Hill_seminar-
Moon_
b.pdf)--Nanotechnology and Wood, Dr. Robert Moon, USDA, FS, U.S. Forest 
Products Lab, Madison, WI & Purdue.
    One Health? (http://www.ncfar.org/
April_17_Seminar_Presentation.pdf)--Ag Research Protecting Human, 
Animal, and Enviro. Health, Dr. Marguerite Pappaioanou, AAVMC
    Porcine Nirvana?--Scientific Assessment of the Welfare of Dry Sows 
Kept in Individual Accommodations, Dr. John McGlone, Texas Tech.
    Are Local Food Consumers Civic Minded Or Seeking Assurances? 
(http://www.ncfar.org/DC-presentation.pdf)--Policy Implications & 
Research Agenda, Dr. Dawn Thilmany McFadden, Colorado State.
    Soybean Fields Forever--Sustainability of U.S. Soybean Production: 
Conventional, Transgenic and Organic Production Systems, Dr. Bryan 
Young, Southern Illinois University.
    When Good Food Goes Bad--Food Safety and Fresh Produce: An Update, 
Dr. William McGlynn, Oklahoma State.
    Food Traceability--Finding Our Way (And Our Food), Dr. Chris 
Thompson, U. of Kentucky.
    Animal Productivity And Genetic Diversity--Cloned and Transgenic 
Animals, Dr. Robert Wall, USDA-ARS and University of Maryland.
    The Endangered Species Act--Interfacing With Agricultural and 
Natural Ecosystems, Bernalyn McGauhey, Compliance Services 
International.
    Water, People and the Future--Water Availability for Agriculture in 
the U.S., Dr. Sharon Megdal, University of Arizona.
2008 Lineup (http://www.ncfar.org/Hill_Seminar_Series_2008.asp)
    Blowin' In The Wind--Implications of Gene Flow in Commercial Use of 
Biotech-derived Crops (CAST Issue Paper), Dr. David Gealy, USDA, ARS, 
Dale Bumpers, Natl. Rice Resource Center.
    Choices_Climate Change & Agriculture (http://www.ncfar.org/
Presentation_1591McCarl_Sohngen-3-31.pdf)--Outlook & Investigation on 
Climate Change, Ag & Natural Resources, Dr. Bruce McCarl, Texas A&M & 
Dr. Brent Sohngen, Ohio State.
    Shots Are for the Birds--Avian Influenza Vaccines Using DNA Tech 
(CAST Reports) Dr. Karen Burns Grogan, Chicken Scratch, LLC & Dr. 
Robert Silva, USDA, ARS.
    Water, Water Everywhere & Not a Drop To Spare (http://
www.ncfar.org/June_9_Presentation.pdf)--Issues for Turfgrasses in Urban 
Landscapes, (CAST Report), Dr. Michael Kenna, Director, Green Section 
Research, USGA.
    You Humans Think You're Thirsty? Try Life As A Plant! (http://
www.ncfar.org/Specht_July_14_Presentation.pdf)-The Quest to Improve 
Crop Plant Use & Drought Tolerance, Dr. James Specht, U. of Nebraska-
Lincoln.
    Food Nanoscience??? (http://www.ncfar.org/
Nanotech&Food_Presentation0908
08.pdf)--How Tiny Particles Have a Big Impact, Dr. Bernadene Magnuson, 
University of Toronto & Cantox Health Services.
    $Valuing Your Diet--Effects of Rising Food Prices on Food 
Insecurity & Diet Quality, Dr. Parke Wilde, Tufts University & Deborah 
Rhoades, R.D., University of Maryland Extension.
    From Stump to Pump--Cellulosic Biofuels from America's Forests 
Ready to Make the Leap Forward, Dr. Theodore Wegner, USDA Forest 
Service, Forest Products Laboratory.
    Living Off the Fat of the Land--Convergence of Energy & 
Agriculture: III. Considerations in Biodiesel Production, Dr. Jon Van 
Gerpen, University of Idaho.
2007 Lineup (http://www.ncfar.org/Hill_Seminar_Series_2007.asp)
    Biofuel Feedstocks (http://www.ncfar.org/
Presentation_DiTomaso_11_09_
07.pdf)--The Risk of Future Invasions, CAST Report, Dr. Joseph 
DiTomaso, UC-Davis & Convergence of Ag & Energy (http://www.ncfar.org/
Presentation_Fales_11_09_07.pdf)--Cellulosic Biomass for Biofuels, CAST 
Report, Dr. Steven L. Fales, Iowa State University.
    What You Don't Know Won't Hurt You!--CAST Report on Probiotics & 
Human Health, Dr. Mary Ellen Sanders, Dairy & Food Technologies, 
Centennial, CO.
    Wild Pigs and Spinach--Food Safety Microbiological Concerns of 
Fresh Produce and Microbiological Issues, Imported Foods, Dr. Michael 
Doyle, University of Georgia.
    Our Vulnerablility To Animal Diseases (http://www.ncfar.org/
July_16_
2007_Presentation.pdf)--Zoonotic Diseases and Their Potential for 
Infecting Humans, Dr. James Roth, Iowa State University.
    If Pollinators Are In Trouble, So Are We!--Insect & Other Animal 
Pollinators and Their Vital Role in Ag & Healthy Ecosystems, Dr. May 
Berenbaum, University of Illinois.
    Health May Be a Different Animal--CAST Report on the Role of 
Transgenic Livestock in the Treatment of Human Disease, Dr. Carol L. 
Keefer, University of Maryland.
    Create-Ing a Better Future for Agriculture--CREATE-21, Dr. Robert 
Steele, Penn State University & Dr. L. Washington Lyons, Association of 
Extension Administrators.
    Why a National Institute for Food and Agriculture--Fundamental 
Research Benefiting Food, Fiber, Fuels and the Environment, Dr. William 
Danforth, Washington U.-St. Louis West.
    Cultivating Our Competitive Edge--Research, Extension and the 
Future of Agriculture, Dr. Philip Pardey, University of Minnesota & Dr. 
Julian Alston, UC-Davis.
2006 Lineup (http://www.ncfar.org/Hill_Seminar_Series_2006.asp)
    Agriculture Trade Policy--Responding to a Moving Target, Dr. David 
Blandford, Penn State University, Dept. of Agricultural Economics and 
Rural Sociology.
    Genomics? Bioinformatics? Translation Please!--Realizing the 
Promises of Bioinformatics, Dr. William Beavis, Chief Scient. Ofcr., 
Natl. Ctr. for Genome Research, Santa Fe, NM.
    Purple Carrots--A Kaleidoscope of Carrots for Nutritional Needs and 
Market Niches, Dr. Philipp Simon, USDA, ARS & Professor, Dept of 
Horticulture, University of Wisconsin.
    Eden Works! (http://www.ncfar.org/EDEN_Cong_Pres.pdf)--A National 
Network In Disaster Readiness, Dr. Edwin Jones, EDEN Chair, North 
Carolina State University.
    Turning Green Into Yellow--Improving Plants for Use as Home-Grown 
Biofuels, Dr. Kenneth Keegstra, Director, Plant Research Laboratory, 
Michigan State U., Dept of Energy.
    Drink the Best and Drive The Rest--Optimizing Biomass as a 
Renewable Resource, Dr. Sharon Shoemaker, California Institute of Food 
and Agricultural Research, UC-Davis.
    Rebuilding the Food Chain for Nemo--An Integrated Approach to 
Sustainability in Aquaculture, Dr. Wendy Sealey, Hagerman Fish Culture 
Experiment Station, University of Idaho.
2005 Lineup (http://www.ncfar.org/Hill_Seminar_Series_2005.asp)
    Mad Cows and Bt Potatoes: Global Public Goods In The Food System 
(http://www.ncfar.org/Mad_Cows_and_Bt_Potatoes.ppt)--Dr. Laurian 
Unnevehr, Department of Agricultural and Consumer Economics, University 
of Illinois.
    Powering An Enhanced Green Revolution With Protein-Packed Corn, Dr. 
Daniel Gallie, Department of Biochemistry, University of California-
Riverside.
    Down To Earth Science From Outer Space (http://www.ncfar.org/
May13Earth.ppt)--Applying NASA Technologies to Advance Agricultural 
Science and Natural Resource Management, Dr. David Shaw, Mississippi 
State University.
    Energy_Our `Growing' Need (http://www.ncfar.org/
Apr11Bioenergy.ppt)--Expanding the Use of Biomass to Produce Renewable 
Fuels and Biodegradable Plastics, Dr. Lonnie Ingram, University of 
Florida.
    Diet By Design--Nutrigenomics to Revolutionize Wellness and Disease 
Management, Dr. John Milner, National Cancer Institute & Dr. Leena 
Hilakivi-Clarke, Georgetown University.

    The Chairman. Thank you, Mr. Wilkins.
    Dr. Carrington, you are recognized for 5 minutes.

  STATEMENT OF JAMES C. CARRINGTON, Ph.D., PRESIDENT, DONALD 
          DANFORTH PLANT SCIENCE CENTER, ST. LOUIS, MO

    Dr. Carrington. All right, thank you. And good morning, 
Chairman Davis, Ranking Member Lujan Grisham, and Members of 
the Subcommittee.
    My name is Jim Carrington, and I am the President of the 
Donald Danforth Plant Science Center in St. Louis, Missouri. We 
are a research-intensive organization of about 240 scientists 
and staff, working every day to improve the human condition 
through plant science. Thank you for the invitation to discuss 
the vital role of research as you prepare for the next farm 
bill.
    First, let me state very clearly, providing food security 
for a growing, changing world, while at the same time 
preserving our natural resources, like water and soil, and 
maintaining a healthy environment for this and future 
generations, is among the grandest of grand challenges for the 
21st century.
    My colleagues and I believe we can meet this challenge, by 
attracting the best minds to the problem, by continuing to grow 
and support Federal investments in research, and by delivering 
innovations to the marketplace through the private-sector.
    The role of public investment by the USDA in research to 
meet this challenge cannot be overstated. Past research in 
agronomy, genetics, genomics, computer science, data science, 
and many other fields, means that now we have technologies to 
breed improved crops and livestock much more quickly and 
effectively, to preserve more soil and water resources, to 
reduce the cost of production, to maintain quality and 
affordability for the consumer. These all start with 
investments in fundamental science.
    Publicly funded agricultural research, as has been pointed 
out, has extensive economic payback, and as has been well 
documented by USDA. And we can see a glimpse of future returns 
just by looking in the neighborhood around the Danforth Plant 
Science Center in St. Louis, where Federal research, private 
capital, entrepreneurs, and community support have attracted 
and grown nearly 40 high-tech, ag-tech companies just within 
the past few years.
    As you consider the next farm bill, I strongly encourage 
recommitting to and strengthening research within USDA. And I 
will restrict the remainder of my comments specifically about 
competitive research funded through and supported by the 
Agriculture and Food Research Initiative, or AFRI program, 
within NIFA.
    As the flagship USDA Competitive Grants Program, AFRI 
should have a budget that reflects the program's broad scope 
and responsibilities, and its mission that affects every U.S. 
citizen. We stand with many other organizations in supporting 
continued growth of competitive research funding, through 
mechanisms that Congress determines to be most appropriate and 
stable. Currently funding levels are modest, to put it plainly, 
and not on par with other agencies like NIH that fund research 
supporting other national priorities. To illustrate, I will 
give you an example from the Danforth Center, consider that 
over the past 2 calendar years, from January 2015 to present, 
we have been awarded about $21.7 million in new competitive 
Federal grants from three agencies; NSF, Department of Energy, 
and the USDA through AFRI. Of that $21.7 million, only $1.1 
million, or five percent, of those new awards came from the 
AFRI program. This was not due to the funded topical areas, 
which align extremely well with our center's mission and 
capabilities, but rather to the modest size of the AFRI budget.
    I have a few comments that we can talk about in more detail 
later. They have to do with structural and managerial aspects 
of AFRI. I would refer the Subcommittee to a 2015 National 
Research Council report that I was honored to coauthor called 
Spurring Innovation in Food and Agriculture: A Review of the 
USDA Agriculture and Food Research Initiative Program.* We 
pointed out many strengths of the program, and why it exists 
and why it should remain, but we also made several 
recommendations such as developing a dedicated leadership team 
with sole responsibility for AFRI, and putting in place 
stronger mechanisms to align the scientific community with 
national priorities. We also recommended that AFRI reconsider 
its indirect cost recovery policies, which are capped at 30 
percent of overall awards. This funds only part of the real 
costs to support AFRI-funded research. For example, for every 
dollar that we receive in direct funding, the Center needs to 
contribute 22 from other sources to fully fund the project. 
That is non-sustainable for us and for other AFRI-recipient 
organizations.
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    *This report is retained in Committee file and available at: 
https://download.nap.edu/cart/download.cgi?record_id=18652.
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    Finally, I will make the case that competition for AFRI 
funds should be on a level playing field, and that provisions 
in the 2014 Farm Bill, which authorizes a dollar-for-dollar 
matching requirement only for non-land-grant university 
institutions, like the Danforth Center or Washington 
University. We recommend that that be reconsidered in future 
legislation and not be included.
    So with that, I will thank you for listening, for inviting 
me here this morning, and for inviting these remarks. Thank 
you.
    [The prepared statement of Dr. Carrington follows:]

  Prepared Statement of James C. Carrington, Ph.D., President, Donald 
              Danforth Plant Science Center, St. Louis, MO
    Good morning, Chairman Davis, Ranking Member Lujan Grisham, and 
Members of the Subcommittee. My name is Jim Carrington and I am the 
President of the not-for-profit Donald Danforth Plant Science Center in 
St. Louis, Missouri. We are a research-intensive organization with over 
240 scientists and staff working to improve the human condition through 
plant science. I am also a scientist working to understand how plants 
work, and to apply that knowledge in ways that help people and 
communities. Thank you for the invitation to discuss the importance of 
agricultural research and innovation as you prepare the next farm bill.
    First, let me state this clearly: Among the most important Grand 
Challenges of the 21st century is to provide food security to a 
growing, changing world while, at the same time, preserving our vital 
natural resources and maintaining a healthy environment for this and 
future generations. I and my colleagues at the Danforth Center and 
across the nation strongly believe we can meet this challenge by 
attracting the best minds to the problem, by continuing and growing 
Federal investments in research, and by delivering innovations to the 
marketplace through the private-sector.
    The role of public investment in research by the USDA--through 
intramural, cooperative state, and competitive funding--in fueling 
agricultural advances cannot be overstated. Just over my lifetime, that 
is since 1960, U.S. agricultural productivity (Total Factor 
Productivity) has more than doubled, meaning that we are producing over 
twice as much with the same total inputs. This was due almost entirely 
to technological advances and innovations, based on science!
    Let's examine this in a different way. What would happen if we 
eliminated all of those technological advances and brought back the 
U.S. farm of 1960 to serve our needs today?

   We would need over twice as much farm and pasture land 
        compared to what we use today, or roughly 900 million new 
        acres, for a total of approximately 1.8 billion agricultural 
        acres. That would be almost the area of the entire continental 
        United States;

   We would need nearly twice as much irrigation water from 
        lakes, rivers and groundwater sources;

   We would suffer annual instability in most row and specialty 
        crops due to lack of disease-resistant, drought-tolerant and 
        climate-resilient varieties.

    Past research in agronomy, biochemistry, genetics, genomics, 
quantitative and computer sciences, and many other scientific fields 
that bear on agriculture means that we now have technologies to breed 
improved crops and livestock more quickly, lower the use of fresh 
water, reduce emissions, preserve soil and water quality, reduce costs 
of production and maintain quality for the consumer. These all start 
with investments in fundamental science, which is as critical now as it 
was in the past. I also stress the importance of USDA competitive 
research funding that encourages and supports creative science by a 
broad spectrum of institutions and scientists.
    Federal investments in science underlying agriculture have 
extensive economic payback, as has been well documented by the USDA and 
others organizations. They are also paving the way for future returns, 
as is now clearly evident in the neighborhood around the Danforth 
Center in St. Louis. Research investments at the Center, combined with 
private capital, entrepreneurs, and corporate and community investments 
have fueled a vibrant innovation ecosystem focused on agricultural 
technology in our region. Just within a \1/4\ mile radius around the 
Danforth Center, there are now nearly 40 high-tech companies delivering 
products to improve crop productivity with fewer inputs, like water and 
fertilizer; facilitate better decision-making on the farm; and produce 
high-value natural products for food and industrial uses.
    Therefore, I strongly encourage strengthening and growing 
competitive research through the Agriculture and Food Research 
Initiative (AFRI) program in the next farm bill, with recommendations 
in three areas.
1. Quality, Quantity and Impact of AFRI-Funded Research
    As the flagship USDA competitive research program, AFRI should have 
a budget that reflects the vital importance of food and agriculture for 
every U.S. citizen, and the fact that science provides the foundation 
to assure food safety, improve food quality, grow agricultural 
productivity, and preserve soil, water and air quality as impacted by 
agriculture. We stand with many other organizations in supporting 
continued growth of competitive research funding through the mechanisms 
that Congress determines to be most appropriate and stable. AFRI should 
be on par with programs in agencies, like NIH, that fund fundamental, 
competitive research in support of other national priorities. By 
comparison, current authorized and appropriated AFRI funding levels are 
modest.
    To illustrate the comparatively modest levels of available AFRI 
funding, consider competitive research grants awarded to my 
organization, the Danforth Plant Science Center, from Federal agencies 
over the past 2 years. During this period, we were awarded new grants 
totaling $21.7 million from the NSF, DOE and USDA (AFRI) to understand 
plant responses to changing environments, improve sustainability of 
food and bioenergy crops, and develop next generations of technology to 
measure crop performance in the field. AFRI grants comprised only $1.1 
million, or 5%, of new Federal grant awards to the Center. This was due 
to the modest size of the AFRI budget for plant science research 
funding, not to the mandated or funded topical areas, which align 
extremely well with our expertise and capabilities.
2. Structural and Managerial Aspects of AFRI
    In 2015, I co-authored the National Research Council report 
``Spurring Innovation in Food and Agriculture: A Review of the USDA 
Agriculture and Food Research Initiative Program.''* I refer the 
Subcommittee to our analysis of strengths of AFRI, as well as to the 
recommendations to improve structure and management of AFRI. For 
example, we recommended that AFRI have dedicated leadership and staff 
with sole responsibility for competitive research, and that better 
mechanisms be put in place to align the scientific community with 
national priorities.
---------------------------------------------------------------------------
    *This report is retained in Committee file and available at: 
https://download.nap.edu/cart/download.cgi?record_id=18652.
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    I strongly recommend that AFRI indirect cost recovery rates be 
brought in line with most programs at other agencies, like NIH, NSF and 
DOE, that fund research at public and not-for-profit institutions. 
Current AFRI indirect cost rates capped at 30% fund only part of our 
actual indirect costs (determined using our federally negotiated rate). 
For every dollar of AFRI direct research funding received, the Danforth 
Center needs to contribute $0.22 to fully fund the project. That is a 
non-sustainable funding model for us and most other AFRI grant 
recipient institutions.
3. Access to Grants
    I strongly argue that the public, which includes both consumers and 
agricultural producers, benefit when scientific research funding is 
awarded through open competition played on a level field. The 
scientific community is most effective when talented people with the 
best ideas are encouraged to participate and compete. The 2014 Farm 
Bill authorizes a dollar-for-dollar matching requirement only on AFRI 
funds awarded to non-land grant university institutions, like the 
Danforth Plant Science Center and universities like Washington 
University. It is recommended that discriminatory matching requirements 
not be included in future legislation affecting the AFRI program.
    Thank you for inviting these comments, and for supporting science 
that helps assure food, environmental and economic security in the U.S.

    The Chairman. Thank you, Dr. Carrington. And thank you to 
all the witnesses.
    The chair would like to remind Members that they will be 
recognized for questioning in order of seniority for Members 
who were here at the start of the hearing. After that, Members 
will be recognized in order of arrival. And I appreciate the 
Members' understanding.
    And I am going to forego asking the first round of 
questions because my colleague to my left, your right, Mr. 
Gibbs, has another hearing to go to, so I recognize him for 5 
minutes.
    Mr. Gibbs. Okay. Thank you, Mr. Chairman. Thanks for your 
indulgence.
    Mr. Wilkins, I love your perspective on the per acre thing. 
I mean the glass is half full, right?
    Dr. Akridge, you really hit it on the nose about the 
changes when you talked about the yield and that. It just kind 
of symbolizes or illustrates all the change we have seen in 
agriculture in our lifetimes. And I have always used that 
example. I have always said 1950, the national corn crop 
average was 50 bushels. When I started farming in 1975 my goal 
was to have an 100 bushel corn crop, and I have reached 195 in 
some years. And I don't have that Illinois soil.
    My question, and I think everybody on this Committee is 
going to do what they can to make sure that R&D research is 
funded for our agriculture as what we think it should be. The 
question, as you know, the money is tight, resources are tight, 
and so we have to do the best we can. Dr. Akridge, we have seen 
the changes in agriculture, and we have seen farms get bigger. 
Farms that didn't get bigger, they either found a niche or got 
out of business, or they supplement their income. I am curious, 
because you brought up the issue about extension. On the bigger 
operations, can you explain the interaction of disseminating 
that material to the larger operations, are they working 
closely with the land-grants, or are they going more to the 
private-sector, or what is the interaction there?
    Dr. Akridge. I would be pleased to. Certainly, looking back 
in time, every farmer knew their county extension agent and 
they provided advice and insight, as counties were populated 
primarily by farmers. And certainly, as you described, that has 
changed dramatically with the size and scale and sophistication 
of the operations. There are two or three ways that the 
extension is really critical to that group now. One is, many of 
those operations will connect directly with our extension 
specialist on our campus. Those are people funded by Smith-
Lever funds that are available to them, many times doing 
applied research, and that producer wants to ask a question 
directly of that extension specialist who actually did the 
work. We see that in the agronomic side, we see it on the 
business management side where those producers want to engage 
with economists who, again, are very focused on where the farm 
economy is going.
    The other thing that is really important to understand is 
we also partner with the private-sector on extension. So many 
of the CCA's certified agronomists that are in the countryside 
are trained ultimately by their land-grant university and/or 
use materials that were developed by the land-grant. Sometimes 
we are in train the trainer mode as we engage with that 
producer.
    And then there are still other questions where they may go 
to their local person about a soil issue, a conservation issue, 
a practice. Extension remains relevant, although the way we 
connect with them--and then the last thing I need to mention, 
e-delivery has become a very important way of connecting with 
those larger producers. They may not have time to come to 
campus, but they will watch a webinar with their farm team, 
talk about what that meant for their business, and go back to 
work.
    Mr. Gibbs. Yes.
    Dr. Akridge. And so that has been another way we have 
reached that kind of producer as well.
    Mr. Gibbs. That is a great response. I wanted to get that 
out so people in the public understand that.
    You mentioned in your testimony how Federal dollars have 
decreased. I suspect some of that has been offset because there 
is a better partnership now with the private-sector, our 
private-sector companies and their research departments working 
with the land-grants and leveraging money. Can you expound a 
little bit on how, in your case, Purdue has leveraged money 
through the private-sector to build that private-public 
partnership you talked about?
    Dr. Akridge. Sure. So again, in many cases our faculty, 
working on agricultural issues, paid for by capacity funds 
provided by the Federal Government, they then engage with the 
private-sector partners working on research projects that we 
jointly identify as important. There are things the private-
sector is going to do that we shouldn't be involved in, because 
it is unique and proprietary to them, but there is a big space 
where we can work together on moving things forward. It 
provides great training opportunities for graduate students to 
work on those industry partnerships. And we are definitely 
turning this into a partnership. These are not so much projects 
anymore as long-term relationships, where we have goals and 
metrics and regular meetings to try to make sure we are 
advancing their agenda, our agenda, and ultimately the public 
sees the value of the work.
    So it has been a very important part of what we are----
    Mr. Gibbs. Another benefit, Mr. Chairman, on that is that 
relationship, that partnership, then you are really focusing on 
really what the needs are. I used to work in that sector in my 
early days, on the public side, and sometimes you would see if 
one of the professors kind of goes off on a tangent and it is 
good to file a report or a study, but maybe we have to 
prioritize the dollars with the best part, that partnership is 
great.
    So thank you, Mr. Chairman. I yield back.
    The Chairman. Thank you, Mr. Gibbs.
    The chair would like to recognize the Ranking Member of the 
entire Agriculture Committee, Mr. Peterson, for 5 minutes.

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

    Mr. Peterson. Well, thank you, Mr. Chairman. And thanks to 
the witnesses for being here.
    I have had a chance to be in both Purdue and in St. Louis. 
You guys do great work, and as you said in your testimony, we 
have made tremendous progress in production agriculture with 
the research we have done. To some extent, that is driven by 
the commodity groups and the folks that have had money to put 
in with you guys, right?
    The question I have is this, it doesn't seem to me that we 
have done as much research and tried to use science to address 
the conservation issues. Our friends in the environmental 
community seem only to want to regulate us and stop us from 
doing many good things. I don't see much coming from them on 
using technology in conservation, like we have used technology 
in crop production. Let me give you and example. We have people 
in southern Minnesota that are upset because we are putting too 
many nitrates into the water. Is there a way to capture that 
nitrogen and put it back into the cropping system, rather than 
letting it go to the river? Has anything been done to look at 
that? By using tiling, we are able to deal with some of the 
runoff issues. But nitrates don't really fall into that. Our 
friends in the environmental community are also against tiling, 
which is probably the best conservation thing we can do in 
terms of cleaning up the water, but that is another story.
    So my question is this, are people coming to you at the 
universities to do research, to use your resources to try to 
improve conservation and use technology in that area?
    Dr. Akridge. And the answer is absolutely yes. Pick your 
area. But use of cover crops as a conservation tool, and using 
those in a sophisticated way. Breeding crops that are more, 
again, efficient with nutrient utilization, using----
    Mr. Peterson. Well, I understand that, but is that getting 
us any place with these groups?
    Dr. Akridge. Right. Well, and including----
    Mr. Peterson. They seem to only want to regulate us.
    Dr. Akridge. Well, in my mind, there is option for much, 
much more work, but there is at least some foundation there to 
build on. Trying to model a water shed to figure out which 
practices are going to help us deal with this issue.
    So there is some work going on. There is a need for much 
more. But we are definitely engaged in that issue and it is 
definitely front and center for Indiana farmers right now, and 
they want more answers.
    Mr. Peterson. Dr. Carrington.
    Dr. Carrington. Yes, let me say a few words about this. I 
am going to give a shout out to at least one environmental 
organization, The Nature Conservancy, because they are actually 
attacking this problem with research and with science. I don't 
know how much interaction you have had with The Nature 
Conservancy. In Minnesota, I believe they are quite active as a 
state chapter. They certainly are in Missouri. But as the 
largest environmental organization, I would encourage you to 
interact with them because they have shifted their focus from 
conservation for conservation's sake, land preservation, for 
example, wildland preservation, and shifted their focus, their 
entire organization, to serve human needs and to accommodate 
human needs.
    Mr. Peterson. Well, I am familiar with them, and largely 
what they have done in my area is buy land. With the state----
    Dr. Carrington. That is the old Nature Conservancy.
    Mr. Peterson. They put rules against the DNR and other 
people buying land, and then they turned around and sold it to 
the DNR. And they went in and pushed all of this CRP land into 
what is called the Beach Ridge in my area, and so we lost a lot 
of the CRP land. Maybe I haven't seen the change.
    Dr. Carrington. Yes.
    Mr. Peterson. Maybe I am behind the times, I don't know.
    Dr. Carrington. Yes. Look, I don't want to defend Nature 
Conservancy too much here, but the other thing I do want to say 
is that there are huge opportunities for research from 
universities, research institutions, and the private-sector, to 
improve the use of things like nitrogen and phosphorus, to be 
more precise, this whole field of precision agriculture, which 
we are very familiar with, is geared exactly at addressing the 
types of problems. Can we use levels of fertilizer and water 
that are most appropriate, as opposed to putting enough on a 
field to ensure--let's put enough of what you need, but in a 
way that assures the farmer they are going to get the most 
yield that they can. This is an area we are very active in, 
looking at it from the genetics side, but huge investments in 
the private-sector in technologies to do this with equipment, 
instrumentation, sensors, and so forth.
    The Chairman. The gentleman's time has expired.
    Mr. Peterson. Thank you, Mr. Chairman.
    The Chairman. The chair would like to recognize Mr. Dunn 
from Florida, who has another hearing to get to also, for 5 
minutes.
    Mr. Dunn. Thank you very much, Mr. Chairman, and obviously, 
gentlemen, for sharing your time with us today in this hearing.
    Dr. Carrington, can you discuss some areas of research 
where Federal funding has the potential for the greatest near-
term return for the challenges that our farmers face today? The 
greatest area.
    Dr. Carrington. Well, there are a lot of things, and I 
would very much look forward to hearing Mr. Wilkins talk about 
this as a producer. But the farmer today, very broadly 
speaking, is in a challenging business. Margins are slim, 
production costs are not going down, commodity prices are 
challenging in many cases. The intersection with natural 
resources is more challenging, and by every measure and every 
indicator it is going to get more challenging. Regulations----
    Mr. Dunn. I guess I was thinking more of bench-type science 
rather than research into the economics.
    Dr. Carrington. Yes. We are very interested in research 
that will lead in the relative short-term to more efficient use 
of resources and lowered input costs.
    Mr. Dunn. Excellent.
    Dr. Carrington. This is to benefit the farmer. Precision 
agriculture is one area. If we can lower the cost of 
fertilizer, one of the major inputs for many crops, or lower 
the use of water, not only a costly but a restrictive resource, 
that will have immediate benefits for the farmer. We can do 
this, because we have done it in the past. Water use efficiency 
on the farm, broadly across agriculture in the U.S., is twice 
as good as what it was the year I was born, 1960.
    Mr. Dunn. That is good. Because the time is pressing, let 
me turn the question to Mr. Wilkins.
    When the USDA conducts its research, the research becomes 
part of the public domain. Is that the situation around the 
world, other governments when they fund research, do we get the 
benefit of that?
    Mr. Wilkins. That is a very good question. I am not sure 
how other countries handle their public research dollars. I 
would imagine that that differs between how free a market a 
particular country is.
    I can say that I have visited China on a few occasions, and 
have actually visited one of their biotechnology research 
institutes. Certainly, in that nation, anything that is derived 
from public research is public property, but then everything 
within their system is public property.
    Mr. Dunn. Do the other members of the panel also have the 
sense that there is a free flow of information, about the 
research, around the world?
    Dr. Akridge. It does vary country to country, but in 
general, it finds its way into the public literature, with some 
exceptions when there is really tight relationships with 
industry through like contract research organizations where 
they are really doing private work. And in those cases, it 
would be held close.
    Mr. Dunn. All right.
    Dr. Carrington, I am a science junkie, can you give us an 
example of some real cutting-edge research or discoveries made 
at your center that would surprise me, my constituents, and how 
that was relevant to us as consumers?
    Dr. Carrington. Sure. We focus more on the fundamental end 
of science, and so we are looking for ways to rapidly translate 
that fundamental knowledge into stuff that is useful for all of 
us.
    To give you a few examples: we have a significant effort at 
the center, looking to figure out a mechanism called gene 
silencing. That might be something, as a science junkie you 
might have heard about this. RNA interference. Fascinating 
mechanism. Nobel Prizes were awarded about 10 years ago. It is 
an area I have been very active in.
    Why do we care? We care because it is the main antiviral 
defense mechanisms of plants. It is the plant immune system 
when they are infected by viruses. Turns out this has been used 
to save the papaya industry in Hawaii. We wouldn't have papayas 
grown domestically in Hawaii if it weren't for technology that 
was based directly on gene silencing. We would not have----
    Mr. Dunn. My time is about to expire, but I want to say 
that you have satisfied the science junkie in me, so thank you 
very much.
    I yield back, Mr. Chairman.
    The Chairman. The gentleman yields back.
    The chair would like to recognize our colleague from 
Florida, Mr. Lawson, for 5 minutes.
    Mr. Lawson. Thank you very much, Mr. Chairman. First, I 
would like to congratulate Purdue for making the big dance. I 
will be sure to watch Florida State tonight too.
    I would like to say my colleague, Congressman Dunn, and I 
know Congressman Yoho, he and I both share land-grant 
institutions in Florida. Congressman Dunn is about a block away 
from the land-grant institution in Tallahassee, so we both 
represent them, even though they say it is in my district.
    But what I would like to ask, and my question is similar, 
and anybody can respond, in the President's request today, 
there was about a 21 percent reduction in the budget for 
agriculture. How does that really affect research at the 
institutional level? I know you all have a lot of experience in 
that. But that is quite a bit of reduction going to land-grant 
universities. I will start with you, Dr. Akridge.
    Dr. Akridge. Sure. A reduction of that magnitude hits us 
really in two ways. On capacity funds or those funds that come 
to our campus via formula, and we pay salaries, so those are 
salaries of our researchers, their staffs, et cetera, and 
ultimately, that is the capacity we have to respond to local 
needs, to respond to emergencies that hit our farmers with 
weather or crops or pests, or to compete for Federal money. So 
that kind of a hit means a headcount, ultimately, and reduced 
capacity.
    The other place, obviously, it would hit us is in the 
competitive funding, and a reduction of something like that. 
And we already know that we have already talked about the AFRI, 
our competitive program funding, there is tremendous 
competition for those dollars currently. Roughly 2,700 
proposals last year, about 600 funded, and about 800 were 
deemed worthy of funding and we weren't able to fund them at 
the current levels. We already have intense competition for the 
available monies, and further cuts just simply put us in a 
place where we have less ability to fund worthy research.
    Mr. Lawson. Mr. Wilkins? Dr. Carrington, do you care to 
respond to that?
    Dr. Carrington. I will give you a very quick financial 
overview of the Danforth Center. Fifty percent of our overall 
budget, which is about $28 million per year, comes from 
competitive grants. Top three funding foundations; Bill and 
Melinda Gates Foundation, Department of Energy, and National 
Science Foundation. If there is a decrease in funding available 
or that we can compete for, that affects that 50 percent of our 
budget every year.
    The other half of our budget, by the way, comes directly or 
indirectly through philanthropy; annual gifts or gifts that 
have gone into our endowment that help us support us being an 
institution. Projects funded by research, competitive research 
funding, institutions supported by the endowment and 
philanthropy.
    Every cut affects our ability to deliver on our mission.
    Mr. Lawson. Okay, and I see I have a little time. Since I 
represent Florida A&M University, I have the important focus of 
the National Institute of Food and Agriculture. Can you discuss 
the importance of a strong capacity building and grant program?
    Dr. Akridge. So those capacity funds, again, ultimately 
help us fund salaries of our faculty and staff that, again, 
provide the capacity to do the work we do. Whether that is 
answering farmer problems in the field, conducting applied 
research, working with the 4-H through the youth development 
organizations, those salaries provide that kind of capacity. 
And then they also provide the capacity for us to compete for 
competitive dollars. Without that capacity that establishes a 
baseline of, again, people who do the work, we can't go after 
competitive funds. So they are incredibly important to us to 
serve our farmers, the people of our state.
    Mr. Lawson. Okay. And, Mr. Chairman, because of the time 
restraint here, I yield back, but if you get a chance, I had 
one other question that I did not get to, it dealt with 
LunchNLearn, and maybe somebody else can discuss it, but I 
yield back.
    Mr. Yoho [presiding.] The gentleman from Florida yields 
back.
    Thank you guys for being here. I am Ted Yoho, I represent 
Florida's Third Congressional District. No offense, but I feel 
it is the best part of Florida. We have the University of 
Florida there and IFAS, which is world-renowned. The work that 
the land-grants do is phenomenal. And if you look at the ag 
population, which is less than one percent of the population of 
our country, but yet they feed so many, they are so productive 
that we have to be a strong voice to protect, not just the 
family farms, but all the agriculture in the United States. And 
ag is focused so hard on BMPs, those days of indiscriminate use 
of fertilizers, water, insecticides, herbicides, is gone 
because, number one, the cost, and it just makes better sense 
to use less.
    And if you look at what we are producing as far as beef, we 
are producing the same amount of beef, with \1/3\ of head and 
\1/3\ amount of land being used. And this comes from best 
management practices, genetics, things like that.
    One of the big things in our state is citrus greening. As 
you know, Florida was a leader in citrus, still is in oranges 
and grapefruit. And 100 percent of our crop has been affected, 
and it is going to happen throughout the country, any place 
that has citrus. And I know that there is a lot of research 
being done on that.
    With the research that you are doing at the universities, I 
know there is transgenic work being done on the psyllid, there 
is work being done on the trees, there are antibacterials being 
used for the trees, and different methods, we have to continue 
that. And one of the big things that has come up is the 
pollinators. One of the effects of pollinators, there are a lot 
of controversies are insecticides bad? Yes, they can be. We met 
with one of the top researchers from the University of Florida, 
Dr. Jamie Ellis, and we sat down to find out exactly where the 
problem is with the honey bees and what is leading to the 
colony collapse. And out of the top ten reasons of colony 
collapse, insecticides are number six.
    What I found interesting, and I would like to hear your 
opinion on this, is the genetics of the bees. I work cattle, I 
am a large animal veterinarian, and I know if you don't change 
the genetics with your bulls in your herd, it gets diluted, 
your gene pool. But we haven't been able to import honey bees 
into this country, which I find just kind of baffling, to get 
the new genetics because of the threat of germs and bacteria.
    What are your thoughts about the best way to move forward 
to where we can ease restrictions, in your experience? I would 
like to hear from each of you on that. Go ahead, Dr. Akridge.
    Dr. Akridge. The restrictions are obviously a bigger issue, 
maybe with respect to regulation and the legal side of it, but 
I did want to comment on this genetics point because it is 
critically important.
    Mr. Yoho. Absolutely.
    Dr. Akridge. We have an individual working on honey bee 
genetics at Purdue. His focus has been the Varroa mite, which 
as you know is probably the single most important parasite that 
is affecting colony collapse disorder. What he has identified 
is bees that have a grooming behavior where they basically kill 
the mites on other bees. He has looked at the genetics of this, 
he has identified the genes that are responsible for it, and he 
is breeding better bees in this country, and it has doubled the 
survival rate in the hives they have tested in Indiana.
    So the point is you can put sophisticated biology to work 
on something like this issue, create a better bee, and that may 
then also provide evidence that we need to be looking at 
bringing bees in from other countries to give us maybe broader 
genes to work with, with respect to accomplishing it in this 
way.
    Mr. Yoho. I agree.
    Mr. Wilkins?
    Mr. Wilkins. Thank you. Although I don't grow cribit crops 
myself, I have many neighbors and colleagues in my state that 
do farm cribit-type crops, a class of crops that are very 
dependent upon pollinators. We, as farmers, we understand this 
issue probably better than anybody else. The banning of 
particular types of classes of chemistries, crop protectant 
materials, and as you just stated, insecticides are the number 
six cause for colony collapse disorder.
    That would be a knee-jerk reaction. There are best 
management practices that we all follow as far as to the time 
of day that we apply these crop protectant materials. We know 
that we are dependent upon pollinators for successful harvests 
of different types of crops, so it is in our best interest to 
protect our pollinators, and that is what we do.
    Mr. Yoho. Dr. Carrington, do you want to weigh-in, or have 
they already said what you need to?
    Dr. Carrington. Yes, I don't have too much to add. Research 
is going to help. And to the extent that everyone can 
contribute, add a little bit of native landscaping, provide a 
little more native habitat for bees.
    Mr. Yoho. Thank you. And I know you guys are very cognizant 
of this, the work you are doing on GMOs, you guys are the 
forefront of getting that word out. And we know that over 100 
Nobel laureates are on our side. The science is on our side. We 
need your help getting the information of what a GMO is or 
isn't. Our goal up here is to get to USDA to have a marketing 
program on that.
    I want to just comment like a Schoolhouse Rocks on how a 
bill becomes a law so that everybody is educated of the 
benefits of GMOs.
    And with that, we are going to go to our great Member, Mr. 
Jimmy Panetta from the State of California.
    Mr. Panetta. Thank you. I haven't been introduced as great 
before, so thank you. I appreciate that. Thank you, Congressman 
Yoho. Gentlemen, thank you very much for being here. I 
appreciate your time, your efforts. I know it takes a lot of 
preparation to come here, and so thank you very much. I 
apologize for being late.
    I am Jimmy Panetta. I represent the Central Coast of 
California. We have a large agricultural industry in 
California, as all three of you, I am sure, know. We have some 
of the most fertile valleys in the world, San Juan, Pajaro, 
and, of course, the Salinas Valley, otherwise known as the 
salad bowl of the world.
    We are fortunate enough to have our own Agricultural 
Research Service station in Salinas, and its focus is on 
specialty crops. I have talked to many of the growers in that 
area, and they realize how lucky they are to have their own 
research station that focuses on their crops.
    But also, Salinas Valley is in the shadow of Silicon 
Valley, and we are currently trying to develop bridges between 
the two, when it comes to R&D and the advances in technology 
for agriculture. In fact, we have an annual ag-tech conference. 
I know they are working on mechanization, but I was wondering 
if you are familiar with any other efforts between Silicon 
Valley and the agricultural industry, in particular Salinas 
Valley, of course, but in other areas as well? Further 
research, be it in mechanization or be it in producing better, 
healthier crops.
    Dr. Carrington. As a native Californian, I will be first. I 
am from the Los Angeles area, but I love your part of the 
state.
    Mr. Panetta. Thank you.
    Dr. Carrington. This is very much on the radar of Silicon 
Valley. It is particularly on the radar of the investment 
community centered in Silicon Valley. All of the major venture 
firms and private capital firms that you would know are looking 
at ag-tech, and they are looking at it for the simple reason 
that it is a great challenge to solve through technology.
    Where we are seeing, and where we cross paths frequently 
are with the investment community. Looking to fund startups, 
looking to put investments in, and companies that are 
developing technologies to lower animal meat consumption, for 
example, artificial meat based on plants. They are looking at 
companies in the precision ag space, like we have talked about, 
they are looking at companies that get us to a point where 
natural resources are far less of a constraint in agriculture.
    They are also very much, and this has been a bit of a shift 
compared to the early days of ag-tech, they are looking at 
things that have a much more direct impact on the consumer. A 
lot of the early ag-tech very much benefitted the farm and the 
farmers, and possibly in the grand scheme of things, this 
didn't help public perception. Silicon Valley is very aware of 
this, and we are looking to put investments in technology 
related to ag that interfaces directly with the consumer.
    Dr. Akridge. I wish we had more time to talk about it 
because this is one of the most exciting and dynamic areas in 
agriculture today. Purdue has put a major investment in this 
space, we are able to measure things about growing plants in 
ways we have never been able to do that before, created 
incredible sets of data. And that is what so many of the tech 
companies are able to work with us on, manipulating and using 
that data in a predictive way to better manage a crop. Our 
Indiana farmers have made a major investment in that area. We 
are partnering with IBM, Verizon, HP Enterprises, I mean these 
companies are bringing what they know about managing big data 
and the analytic tools in to helping us do a better job of 
running farms, and it is a pretty exciting space.
    Mr. Panetta. Great. I just have a few seconds left. I was 
fortunate enough to graduate from UC Davis, one of the land-
grant schools, and am glad to say that for the first time, they 
have made the NCAA tournament as well. They drew Kansas, I 
don't know if they can compete with Kansas on the basketball 
court, but, I am sure they can compete with them when it comes 
to agricultural research.
    Thank you, gentlemen. I yield back my time, Mr. Chairman.
    The Chairman [presiding.] And anybody who yields back 7 
seconds is a great Member of this Subcommittee.
    Mr. Panetta, I wish you luck, and I remind you that one 
year I picked Arizona to win the bracket, and they lost in the 
first round to Santa Clara. So it could happen today, you just 
never know.
    I would like to recognize our colleague from Nebraska, Mr. 
Bacon, for 5 minutes.
    Mr. Bacon. Thank you very much. And I appreciate all of you 
being here today and sharing your expertise.
    I will tell you, what an exciting stance to go from 30 
bushels 90, 80 years ago, to now 175, and some places near 200. 
That is incredible. There is no farmer more efficient than the 
American farmer. While not necessarily in the purview of this 
particular Subcommittee, but it is a reminder how hard we have 
to work on trade policy out of the Agriculture Committee, 
because we can produce, but we have to make sure the demand is 
there, and the American farmer can do that.
    I wanted to ask a little bit about AFRI. And I appreciate 
some of the comments mentioned earlier that we need to invest 
more there. My understanding is that an AFRI grant, to be 
approved under NIFA, must clear a lot of different processes, a 
lot of layers of approval there. Approval from the leadership 
of the relevant NIFA institute, the NIFA senior executives, the 
NIFA policy office, then the Office of the Chief Scientist. Are 
there too many layers in this for approval, can we do better 
there, and how does this compare to other Federal agencies when 
it comes to research? Thank you. And I just open it up to any 
of the three that would care to answer.
    Dr. Carrington. There are a lot of layers. Honestly, before 
preparing for this, I didn't realize how many layers there 
actually were. Now, my brief comment would be if they are 
simply check-off layers, that is one thing. If they are layers 
of impediment, that would be a different problem. If they are 
stifling innovation and the most creative science, that would 
be a problem. I actually don't know if that is the case.
    I will make one broader comment, because you are touching 
on the organization of NIFA and the competitive grants program 
within the context of the broader agency. There is a lot of 
room, a lot of study, and some very interesting proposals that 
have been made to consider restructuring how research, broadly 
within USDA, is structured and managed. Can we elevate 
competitive research and scientific research in the agency, and 
appropriately structure the management such that it is more 
efficient, there is tighter link between the Secretary and 
research, and there are some very interesting proposals to do 
that. I would be in strong support of that. And the best model 
in my opinion for looking at this would be NIH.
    Mr. Wilkins. I worry that, certainly, that there is the 
need for levels of review in order to advance a potential 
project for funding, is in part due to the competitiveness, 
there are only so many dollars appropriated.
    One of my worries is whether it is a graduate student, 
whether it is an untenured research professor, that it is only 
about a 25 percent success rate of getting funding for an 
innovative idea, that they lose their creativeness, that they 
lose their desire to innovate and think about new ways to solve 
challenges. Therein lies another reason why National CFAR is 
constantly asking to fully appropriate the AFRI funding at the 
amount that is authorized.
    Dr. Akridge. And I can't compare NIFA to other agencies on 
this, but clearly, anything we can do to make processes more 
streamlined, is important, and to lower the barriers for folks 
to apply.
    I know NIFA has made investments in trying to upgrade some 
of their information technology, simply to make that better, 
but down the road, it would certainly be an area to continue to 
focus on.
    Mr. Bacon. One brief question I will focus a little more 
towards Dr. Carrington. The farm bill currently requires grants 
to be matched by non-land-grant institutions. It is often 
waived. Are you a proponent for removing that out of the next 
bill? Could you expound on that? Thank you.
    Dr. Carrington. Well, through appropriations there is 
agreement with the notion, since it is being waived, so I would 
question or suggest that if it is being waived against what is 
in the authorizing language, why put it in. It is a 
discriminatory element in the authorizing language that I 
struggle to find a purpose for. It puts organizations like us, 
and private universities and non-land-grant universities at a 
competitive disadvantage. It also creates a problem with 
faculty and scientists even applying, if their organizations 
are saying, ``Well, you have to raise a dollar-for-dollar 
match,'' it impedes and inhibits the creative applications that 
come from a broad diverse range of institutions.
    Mr. Bacon. Okay, thank you.
    And I yield back my minus 20 seconds there to you, Mr. 
Chairman.
    The Chairman. You would have been a great Member if you 
wouldn't have gone over time. No, a great new Member from 
Nebraska. Thank you for your comments.
    I would like to recognize our colleague from Delaware, Ms. 
Blunt Rochester, for 5 minutes.
    Ms. Blunt Rochester. Thank you, Mr. Chairman. And thanks to 
the panel. Excuse me for being late. I have three hearings 
going on at the same time. I really wanted to get here so that 
I could recognize a Delaware farmer. I am from the State of 
Delaware, and we are so very proud of our farming industry. We 
also have two land-grant institutions, and focusing on research 
is really important to our ag sector.
    I just want to ask a question of Mr. Wilkins. We are aware 
of the significance of research in agriculture as a field, but 
can you talk about specifically the impact that research has 
had on you in terms of supporting and expanding your actual 
operation?
    Mr. Wilkins. Thank you. As a young farmer just starting out 
in the 1970s, I relied very much upon the cooperative extension 
system, the land-grant universities, as a disinterested third 
party, so that when a salesman, a manufacturer of farm inputs 
was giving me data to support the reason why I should use their 
product, I could look to the public research system for whether 
they had actually tested, tried, and proven, whether that was 
an input that I should employ in my operation.
    Ms. Blunt Rochester. Yes.
    Mr. Wilkins. Even today, I rely very strongly upon my 
county extension agent for advice. The industry has evolved and 
changed, we are much larger farming operations than we were 30 
or 40 years ago, and we do a lot of our own on-farm practical 
studies and research.
    Ms. Blunt Rochester. Yes.
    Mr. Wilkins. But most of the time, we reach out to our 
extension agents to involve them so that we can actually aid 
and assist in the public research field with our own practical 
on-farm studies.
    Some of the things that more recent, evolutions, the 
studies to determine the optimum rates of input nutrients to 
apply to my crops, and not just the optimum rates but the 
timing of those rates. We have employed a lot more irrigation 
on our farm. That is removing that as a barrier to reaching 
economic yield capacity.
    Ms. Blunt Rochester. Yes.
    Mr. Wilkins. That way enables us to be able to determine 
what is the proper stage, how much nutrients does the crop need 
at each stage of growth, and then we can deploy those nutrients 
through the irrigation water. And then we proof that using 
tissue analysis.
    Now, I would not have known about all of these tools and 
analytical things that were available to me had it not been for 
the research that had been done at public land-grants.
    Ms. Blunt Rochester. Yes. Great, thank you.
    I am not sure if Mr. Lawson was going to ask this question, 
he started to mention the LunchNLearn Series.
    Mr. Lawson. Yes, he did, go ahead.
    Ms. Blunt Rochester. Great. Can you talk to us a little bit 
about the LunchNLearn Series and some specifics on that as 
well?
    Mr. Wilkins. I would be happy to, yes. For a number of 
years, National CFAR has sponsored these LunchNLearn Series 
here, and we appreciate very much the House Committee on 
Agriculture making their facilities available to us for that.
    As you know all so well, the youth and spirit that works 
here on the Hill, and their desire to absorb as much knowledge 
as they possibly can. These LunchNLearn Series that we 
conduct are an opportunity for us to bring researchers, 
scientists, experts, just the vestibules with a wealth of 
knowledge and information, into these chambers and to be able 
to share that information about what we are doing in the field 
of agricultural and food research to your legislative 
correspondents, legislative assistants, and many times Members 
of Congress themselves attend.
    Ms. Blunt Rochester. Okay, thank you.
    I yield back the balance of 40 seconds.
    The Chairman. The great Member from Delaware yields back 39 
seconds. So, no, thank you.
    The great part about being in the chair is I get to stay 
here the whole time and now you get to answer my questions. And 
it is great to have you here.
    Look, today's hearing is another example of where we can 
find bipartisanship here in Washington that many in this 
country don't think exists, but it does exist right here on 
this Committee, and especially within this Subcommittee. The 
questions that have been asked have been about the subject at 
hand, and that is what we are here for. We are here to talk 
about the successes of our last farm bill, which I believe 
everybody around this horseshoe, and that serves on this 
Committee, can find something in that bill that is working 
extremely well. And I would like to remind everyone here that 
the Congressional Budget Office estimated that taxpayers would 
have only saved $23 billion in mandatory spending with the 
passage of that bill, and in reality in 3 years, the CBO now 
says we have saved $104 billion in taxpayer dollars. When we 
change words on pieces of paper here in Washington, D.C., it 
actually has an impact on taxpayers in this country. And what 
we have heard from each of you and from my fellow colleagues is 
a back-and-forth on how we make those words on pieces of paper 
better within the research community. Thank you all for being 
here today to do that.
    And now, Dr. Carrington, since we asked you to be here, I 
would want to make sure that I start with you. I am very 
impressed by your facility. I meant that in my introduction of 
you earlier today. I saw some of the cutting-edge research that 
has been done there. I know my colleague, Mr. Dunn, asked a 
similar question about framing the importance of ag research. I 
think it was you, Dr. Carrington, forgive me if I was wrong, 
brought up the discrepancies and lack of parity between ag 
research and public investment in ag research versus public 
investment in other research priorities of this Congress. I 
would like to see more invested in NIH too, don't get me wrong, 
but they have had steep increases. I would like to see more 
invested in energy research, but they have had steep increases. 
Whereas, where we have seen ag research remain somewhat steady, 
and some cases go down.
    You mentioned an example of cutting-edge research with the 
papaya, I believe, to Mr. Dunn's question. Are there any other 
examples that you would like this Committee to understand that 
have come through the Danforth Center? And then I would open it 
up to the other two witnesses too to talk about any cutting-
edge research that you are a part of.
    Dr. Carrington. Sure, I will keep it on the RNA gene 
silencing theme, and just keep giving you more examples that 
should relate to consumers. Consumers should care about these.
    If you care about your diet and the types of oils and 
lipids you are eating, you care about having a high oleic acid 
diet, gene silencing turns out to be a terrific way to 
rebalance in certain crops the levels of good oils versus bad 
oils. And through research in this area, we learned that nature 
already figured out how to do that. And breeding stocks and 
soybeans, for example, use this gene silencing mechanism and we 
now have improved crops with a better oil profile.
    To give you one other example, and this one is a global 
example. If you care about our friends overseas, in particular 
those individuals in less-developed countries, gene silencing 
is being used in research at our institution with partners in 
East Africa to address a problem affecting 30 to 50 million 
small-holder farmers that depend on cassava as a staple crop. 
Cassava is highly susceptible to viruses, however, and it is 
the biggest threat to food security for people in Tanzania, in 
Uganda, and Kenya.
    Now, it is not in our immediate backyard, but I will make 
the case that if we can use research that we are doing here to 
improve food security around the world, we are doing something 
that is going to have direct benefits to the United States and 
United States citizens.
    The Chairman. And just one quick follow up before I go to 
the other two witnesses, what percentage of ideas do you think, 
because of a lack of funding, end up on the cutting room floor?
    Dr. Carrington. The majority of ideas do not make it to 
funding. I will give you just a few stats. You have the funding 
rates, AFRI, depending on the stats, it is somewhere between 
ten and 20 percent of the applications get funded. NSF it is 23 
percent, NIH 17 to 18 percent. But if you look at the success 
rate at a funding agency like NSF, and I assume it is 
comparable through AFRI and other competitive grant programs, 
at NSF the success rate for an individual investigator applying 
for grants over a 3 year period, that is applying for grants 
every year, is only 35 percent. What that is saying is that the 
majority of investigators, most of them have pretty good ideas, 
some have great ideas, but \2/3\ of these scientists are not 
being funded when their ideas are pitched to the competitive 
grants programs.
    And I can tell you, having served on panels, having served 
as President of a research institution where I sign off on 
every proposal that gets submitted, there are a heck of lot of 
great ideas that are never funded, and it is very unfortunate. 
It is a reflection of capacity that we have in this country 
that is, I will say largely untapped, because the resources 
aren't available to fund most of those ideas.
    The Chairman. Thank you.
    Dr. Akridge?
    Dr. Akridge. Yes, just a couple of quick examples. I 
mentioned this whole issue of what we can measure now and use 
in management decisions. We have some researchers working on 
using cameras of a very particular type that can detect insect 
damage maybe a week or 10 days before the human eye can ever 
see it. And now we start to determine or identify problems 
before we would ever normally catch them in the field, which 
gives us a chance to pursue solutions maybe with different 
forms of pesticides or lower levels, or maybe even avoiding 
pesticides, because of the fact we can, again, detect this 
damage early. So that would be one example.
    Another international example, and you will appreciate 
this, we have a corn breeder working on orange corn. Very, very 
bright orange corn.
    The Chairman. The Illini orange corn?
    Dr. Akridge. Yes, it would definitely be something an 
Illini would appreciate. And what is going on there is they, 
again, through sophisticated biology, elevated the vitamin A 
content in that corn. That is a major issue in developing 
countries, low vitamin A leads to blindness in children. And 
this particular corn then can be served, it is biofortified, it 
is another important area of research, again, helping us 
address child blindness in the developing world because of, 
again, some work done here.
    The Chairman. Curing child blindness with orange corn.
    Dr. Akridge. You bet.
    The Chairman. Very interesting.
    Mr. Wilkins, did you have anything you wanted to add to 
this particular question too?
    Mr. Wilkins. Yes. Although, as I said, I am not a 
researcher, but through my capacity with the American Soybean 
Association and National CFAR, I have met great researchers. 
One of the shameful things that has occurred in our society the 
last few years has been the inability to commercialize 
innovative ideas because of the cost to bring a new, whether it 
is a GMO or something that is from gene silencing and gene 
editing to the marketplace.
    The Chairman. What is the single most cost-prohibitive 
element of the research process in moving that product to 
market that you would like to see us address?
    Mr. Wilkins. Time. The amount of time that it takes for the 
innovation to make it through the regulatory process. That 
ultimately is what is causing the most amount of expense.
    The Chairman. Is it too many agencies have their fingers on 
the research to have to sign off on, or is it just the overall 
compliance and regulatory environment that is in place already?
    Mr. Wilkins. I think there are several factors. One of 
those is the desire at the government agencies to be sure that 
when they are sued by another NGO, that what they have done, 
the work that they have done, every ``i'' has been dotted, 
every ``t'' has been crossed, and they don't have to be 
embarrassed by something that they may have forgotten.
    We need some protections on the science and technology that 
will allow good regulators, good government officials to have 
some safeguards that they are going to be able to do their job 
and not be weighed down by insignificant review processes of 
their decisions.
    The Chairman. Insignificant review processes, and you 
brought up legal challenges and legal issues.
    Mr. Wilkins. Yes.
    The Chairman. Is this more of an issue with NGOs or certain 
organizations having problems with industry-based research 
partnerships?
    Mr. Wilkins. Once we can get past this point of time in our 
society of not trusting science and technology and food, 
everybody wants the latest, greatest science technology on 
their smart phone, the latest technology in their 
pharmaceutical, but they are apprehensive when we try to use 
science and technology in food production.
    It has been proven that Omega-3 and Omega-6 fatty acids 
leads to greater heart health. These are solutions to human 
health conditions that we can provide through healthier oils, 
healthier vegetable oils. But that innovation is sitting on a 
shelf because the marketability of that idea, that the 
potential return on the investment has been determined to be 
less than what it will cost to go through the process to be 
able to commercialize it.
    Citrus greening: there are solutions to citrus greening 
using biotechnology, but because citrus fruit is something that 
is directly consumed by humans, there is a fear that the 
millions of dollars spent trying to bring this to market will 
be wasted because of lack of public acceptance of the 
technology.
    The Chairman. Well, thank you. And I would remind the 
witnesses, what you and everybody in the room are saying too, 
is even with public investment in research, you have to have an 
ROI.
    Mr. Wilkins. Yes.
    The Chairman. All right, thank you.
    I know I took a lot of time, but that is the Chairman's 
prerogative.
    I will now turn it over for a second round of questions to 
my colleague from Florida, Mr. Lawson, for 5 minutes.
    Mr. Lawson. Thank you very much.
    My questions deal with the STEM fields. Here is my 
question. Models have been changing for the universities over 
the last century. Curricula offerings have grown more diverse 
to reflect a very different society than it was in the 1800s. 
Is agriculture becoming lost in the mix? What road do you see 
the colleges in agriculture and STEM education reaching non-
traditional agricultural student, especially minority men or 
opportunities for women as an example? This is a very, very 
important issue for the next century, in my opinion.
    Dr. Akridge. Yes, and I can't agree more that it is a 
critical issue in this century because everything we have 
talked about to this point depends on human talent, and having 
the people in place to do the research that we need to address 
the challenge.
    We have been working hard as APLU and as local 
institutions, to help position ag as front and center for 
science, technology, engineering, and math. Our President will 
talk about STEAM periodically. He puts an A in the middle of 
that for agriculture. And that is happening with respect to the 
curriculum, and it is very science-focused in general now in 
terms of preparation.
    You put your finger on the challenge though is how do you 
help young men and women see their passion for science 
addressing food and agricultural issues. 4-H is one way that 
that is playing out across the country. Six million youth, they 
have taken on STEM and STEM projects as an important part of 
their overall curriculum. Just to give you Indiana examples, it 
is taking us into downtown Indy, into Gary, Indiana, where 
maybe traditional 4-H kinds of things just didn't fit, but when 
you start talking about fluid power, biotechnology, or 
renewable energy, young men and women get really excited about 
the science happening there, and the 4-H volunteer model, with 
the science underneath it, has been working very effectively. 
We have a lot of work to do there, but I would say nationally 
it is a priority for us to help young men and women find their 
passion for science and agriculture, and vehicles like 4-H can 
help us do that.
    Dr. Carrington. Yes, two quick points. First of all, we see 
a big issue attracting people into agriculture and agriculture-
related scientific fields. We have taken on, even though we are 
not a university, we are not a degree-granting institution, we 
have taken on our part of that challenge and asked what can we 
do to motivate and stimulate young minds to consider plant 
science and agriculture as a career. We believe, as do many 
others, that one of the most important things to do is to get 
people experiencing what plant science and agriculture is. 
Bring them to the center, get their hands dirty, and very 
importantly get materials, talent, STEM-compatible educational 
supplements into the schools.
    We have wonderful schools in St. Louis. We also have some 
schools that, for historical reasons, have been under-served. 
And we have identified those as big opportunities. We, for 
example, have outreach and education programs in schools in the 
City of St. Louis, 16 schools. These are programs that in some 
cases are very simple, in other cases are a little more 
sophisticated. We have a program called Green Means Grow, and 
it provides students with the experience of planting a seed, 
watching it grow, and learning where their food comes from. 
This is not an inner-city problem, it is not a problem unique 
to anywhere, it is a problem that Americans have because so few 
of us grew up on a farm. We don't know where our food came from 
in most cases, and it is a huge problem that affects the 
problem that Mr. Wilkins referred to as well.
    So this is a big issue, getting people experiencing STEM 
education, agriculture through STEM experiences is a very 
important part of the solution.
    Mr. Lawson. Mr. Wilkins, would you like to comment?
    Mr. Wilkins. I would love to, yes. STEM education, it is 
very dear to me, to my heart, that as a layman scientist myself 
that decided to be a producer rather than going into scientific 
research. My colleagues and I, we work very closely with our 
high school, our public school systems, to try to provide 
opportunities for students to be able to visit our farms, to be 
able to be initiated to what it means to produce food. Many 
times we support in our rural areas, both financially and 
through advocacy, for small school farms or small school 
gardens to be able to assist the educators there in introducing 
our future consumers to way that modern food production is 
done.
    I do stress modern food production. Oftentimes, what 
happens in many of these situations is someone with another 
agenda tries to impress that upon these impressionable minds at 
an early stage. I think that we as administrators of social 
programs need to be cognizant that we need to head that off and 
not allow that to happen, because science, technology, 
engineering, and math, we are deficient in that field here as a 
nation, and we need to develop that in order for us to continue 
to be an economic superpower in the world.
    The Chairman. Thank you, Mr. Lawson. And thank you again to 
our panel.
    I have just a couple more questions, if you three could 
bear with me.
    Dr. Akridge, some of our biggest competitors in the global 
commodity markets are the same countries that are investing 
billions in their domestic agricultural research, to say 
nothing of the billions in trade distorting subsidies to their 
growers. This includes, as you mentioned and others, countries 
like China, India, and Brazil. What are the short-term and 
long-term implications of their growing investment compared to 
our U.S. investment in ag research?
    Dr. Akridge. Yes, it comes back to many of the points that 
we have been making to this point in the hearing. Ultimately, 
research drives productivity, it drives competitiveness. There 
are always lags in research, from the time that dollar is spent 
until we ultimately see it in Mr. Wilkins's farm or benefitting 
the consumer in some way. Sometimes we don't see those things 
in the short-run because we are living on investments that we 
have seen in the past, but the kind of investments that China, 
India, and Brazil are making right now are definitely going to 
pay off long-term for their sectors, making them more 
competitive, again, helping feed a growing world. The question 
for us then becomes will we make the commitment today, 
obviously, to benefit the future as we think about the lags 
that these research investments are going to take.
    Additionally, as we think about research, it is also about 
human talent, and the dollars we invest, again, today are 
helping train the next generation of scientists that ultimately 
find their way into the companies that are going to do much of 
that work.
    So again, if we don't have that talent coming into the 
pipeline today because they don't see a future, these 
frustrations for funding rates, et cetera, drive them into 
other places, we undermine the human talent, the human capital 
that is in this industry. And again, that has really important 
long-term impacts.
    The Chairman. Dr. Carrington?
    Dr. Carrington. One quick comment on this. Everyone 
appreciates what China, in particular, is doing to build its 
scientific infrastructure and its scientific talent base. They 
are putting huge investments in.
    Two effects that are acute right now. First, it is 
increasing the competition globally for talent. This cannot be 
overstated. Second thing it is doing even closer to home, I 
know that the dean, no doubt, deals with this issue, because 
funds are being invested in China, talent is being drawn away 
part-time from the United States, and it is being done in a 
couple of ways. Here is a common way. You are a talented 
professor at Purdue University or Washington University, 
perhaps you are of Chinese origin, perhaps not. You are being 
hired on a part-time basis perhaps for 2 months out of the year 
to work at a Chinese university. Now, if you think about the 
implications of that, on the surface, what is the problem? We 
are sharing, we are an international scientific community, but 
the reality is that we are also losing time, we are losing 
intellectual capacity. There are teams that are being built 
around these individuals who are getting these part-time 
appointments, and those are teams that are being built in 
China, not in the United States.
    I want to make sure that my comments are not misconstrued 
as objectionable to investments that the Chinese are making, 
hats off to them, but there are impacts on our institutions, 
our scientists, and our scientific capacity here in the United 
States.
    The Chairman. And would you agree that there are going to 
be impacts on our producers, impacts on their ability to sell 
in the global marketplace too if products are available that 
are cutting-edge, that are developed in other countries, that 
give them a competitive advantage over all producers?
    Dr. Carrington. That is exactly right. And whether or not 
we see that this year, next year, or the following year versus 
5, 10 years out, I can't give you a timeframe but the dean is, 
I believe, quite accurate in his assessment on the long-term 
impact.
    The Chairman. Mr. Wilkins, since you are part of what I 
call one of my special crops; soybeans, in Illinois, rather 
than specialty crops, are you concerned, in your capacity with 
the American Soybean Association, as a leader of producers, 
that America's economic edge that we talked about, I know I 
talked about in my opening statement, when it comes to ag and 
the ag sector, that we are going to be losing that 
competitiveness in the global marketplace because other 
countries are investing more public dollars into their own 
research?
    Mr. Wilkins. Well, I would argue that we have just recently 
celebrated over 100 years of our cooperative extension system. 
As I have participated in international trade missions and 
helped to host trade teams from other countries that have come 
to the United States, they often look at our model of how we 
conducted agricultural research, food research, and how we 
disseminate that information to producers, that 100 year model 
that has been part of what has led to the success of our 
agricultural industry in this nation. I think that that 
behooves us to recognize that we have been falling short in 
maintaining that strength within our agricultural sector.
    Am I worried about losing market potential? I think that 
the statisticians tell us that the global population is 
growing, and we in this country alone are not going to be able 
to fulfill that growing need for not just calories, but proper 
and good nutrition.
    It may be a double-edged sword. If other nations are 
investing dollars in public research, and if a component of 
that research is modern biotechnology and other production-
enhancing tools, and if that leads to greater consumer 
acceptance, then in the long-run that may help us to be able to 
bring our creative innovation ideas to the marketplace even 
more quickly and with less economic expense.
    We are a great nation, the United States. We are very good 
at innovation. There is a reason why other countries try to 
steal our intellectual property, because we have such great 
ideas. In order to solve some of these problems of global needs 
for food and nutrition, I think that there are opportunities 
for us to cooperate, but at the same time making sure that 
trade is very near and dear to me, but we need to make sure 
that when we are involved in international trade, that it is 
not only free and open access, but that it is fair, fair for 
all of us.
    The Chairman. Well, thank you.
    One last question for those of you who have participated in 
the AFRI application process. This Subcommittee is, I believe, 
part of our Congressional organization that has to get into the 
weeds on certain issues that really impact the ability of 
public dollars to be able to go further, and in this case, go 
further with research. I am concerned that there might be some 
processes in place with our public research dollars and the 
institutions that govern them, that slow down your ability to 
actually get new ideas into the testing stage and out into the 
marketplace. Are there any suggestion, Dr. Akridge or Dr. 
Carrington, any suggestion you would give us as policymakers, 
as we move into this next farm bill, to make the process go 
more smoothly, because I heard earlier that time, time was the 
biggest hindrance to getting products through the research 
process. How do we make your time better spent, and how do we 
do that with something as simple as the application process and 
the grant administration process? Whoever wants to start.
    Dr. Akridge. Well, maybe just two suggestions and thoughts. 
First, preproposals can be a way to short-circuit this process 
and help screen ideas. Where the process is, let's get the 
essence of the idea in front of somebody, let's get a quick 
read whether or not it is useful or not, and then we let that 
person elevate and put more effort in it if it has merit, as 
opposed to spending tons and tons of time writing full 
proposals that, in the end, the success rate is really low.
    The second one, and we have seen this some in Europe where 
the response by the government to industry investments in ag 
research is very quick. If industry is willing to put some 
money on the table, the Federal Government in those cases will 
match that money very quickly. There is not an elaborate 
process. And it allows you to move at the speed of industry in 
some cases where, again, our normal processes wouldn't do that.
    So more effective ways of thinking--more creative ways of 
thinking about how we handle the industry match might be 
another possibility.
    The Chairman. Thank you, Dr. Akridge.
    Dr. Carrington?
    Dr. Carrington. Yes, I would echo those comments. I don't 
know if you have actually held in your hand an AFRI application 
before.
    The Chairman. Is it like the Tax Code?
    Dr. Carrington. It is in some ways worse than the Tax Code. 
It takes an average investigator putting together a $500,000 
proposal, it takes roughly a month of their time working 
seriously on it. It takes institution's time. It is a pretty 
onerous process. The preproposal notion is a very good one, and 
it is used very effectively in many different agencies, 
including some within NIFA.
    How we handle budgets at the preproposal stage. It used to 
be that all grants to all agencies had full vetting of the 
budgets internally, and had to be developed at the proposal 
stage. NIH had the great idea to just do budgets modularly, 
just give us a guess on how much it will cost. And if the 
proposal was meritorious and recommended for funding, then we 
will figure out the budget pieces, but we only devote the time 
to figuring out a budget after the fact.
    The Chairman. Have you seen that reduce that compliance 
time and the length it takes?
    Dr. Carrington. For agencies and programs that have a low 
budget preparation requirement at the submission stage, let's 
put it this way, it is a big morale boost in the finance 
department.
    The Chairman. Well, I am not here to look for morale 
boosters in the finance departments at the institutions, I want 
to know though, Dr. Carrington, what would you estimate the 
time savings is, and is there an increase in the amount of time 
once that so-called pre-application is put in, because I have 
known some other government agencies that will have a 
simplified introductory process, but then the second-tier 
process doubles what the previous process would have taken if 
you would have provided more specifics on the front-end?
    Dr. Carrington. Yes, that----
    The Chairman. How do we make that better on all ends?
    Dr. Carrington. Yes, doubling the work by saving work up-
front and doubling it at the end, that doesn't sound very good 
either.
    The Chairman. No.
    Dr. Carrington. The reality is that when these proposals 
are put together, it takes a large institutional investment, 
all the way from certifications to budgets to just making 
commitments, and the biggest investment on the part of the 
investigator who is pitching the idea. A standard 15 page 
proposal or a ten page proposal isn't really a ten or 15 page 
proposal, that is just the research plan part. A typical 
proposal is 60, 70, 80, 100 pages, with other stuff in it. It 
is a big burden so we could really get in the serious weeds if 
we wanted to here. I don't think you really want to, but I will 
offer to provide suggestions at a future time if you do 
reconsider this.
    The Chairman. Thank you. Well, I would like to get into the 
weeds, but I don't think anybody else in the room would, so we 
will take your suggestions to make the processes better. Please 
feel free to submit those. We would love to work with you on 
those.
    I know I said that was my last question, but I have thought 
of another one, Mr. Wilkins. Obviously, our Subcommittee has 
jurisdiction over NASS. We have had NASS Administrators in, in 
our oversight responsibilities, talking about some of the 
surveys, the Census documents that they require our producers 
to fill out. You are a producer too, right?
    Mr. Wilkins. Yes, sir.
    The Chairman. Give me an estimate, how many hours a year do 
you spend filling out NASS documents, besides the one Census 
survey, how many would you guess that you would fill out a year 
on average?
    Mr. Wilkins. Chairman Davis, I must confess that the amount 
of time that I spend on filling out the reporting and documents 
that I know are required of me and that are going to keep me in 
compliance with programs, including crop insurance, what I am 
referring to is risk management administration production 
reports.
    The Chairman. Yes.
    Mr. Wilkins. I spend a lot more time on those documents 
because I know that they are subject to an audit and review, 
and I want to make sure that the information that I provide on 
those reports is accurate to \1/10\ of a bushel. I confess that 
when NASS reaches out to me with a survey, because of the 
number of irons that I have in my fire, and the amount of time 
that I must commit to my business and my family, maybe not 
always giving the specific and most accurate information that I 
can. Oftentimes I may not have the time to do the written 
report, so then NASS follows that up with a telephone call. And 
if I am in the pick-up truck on my way to a field or on my way 
to a cow that is giving birth, I am going to try to make that 
call as short as possible. I am not always referring back to my 
records and relaying completely accurate information.
    That being said, I am grateful for the number of producers 
in our country that do take the time and do have the time to be 
able to provide accurate information to NASS, because when I 
look at NASS data in its aggregate for the country as a whole, 
it usually is spot-on, it is usually pretty accurate at 
predicting what the planted acres may be, predicting what 
production may be, or proving what production actually is. 
However, when you drill down to the individual survey area, 
whether that be a state or a county, it is oftentimes simply 
dependent upon the accuracy and the number of respondents to 
that survey that they get the information from.
    The Chairman. Well, thank you. Obviously, as we move 
forward, we want to make NASS more accountable and get the data 
that is going to allow better ag research possibilities in the 
future too. Thank you for answering that question that I 
probably bet you never thought you would get here today. But I 
appreciate your honesty, I truly do, Mr. Wilkins, in responding 
to that, because that does make a difference for policymakers 
like us to talk to the agencies in charge to make those surveys 
more friendly and drill down on what is important. In our 
oversight hearing, the first question I asked the 
representative from NASS was, on a scale of 1 to 10, do you 
consider yourself a risk-taker. The gentleman responded he 
thought he was a 5, but his wife would say more closer to a 10. 
He couldn't answer the question, it was question 17, on their 
Census of Agriculture. At what point does the psychological 
condition of the producer at that point in time matter to the 
overall dataset? To me it doesn't, and if we can work together 
to reduce those issues then you are going to better provide 
more accurate information to NASS, and then the researchers can 
use that information in a much more consistent and better way. 
As we move forward, we may ask for your assistance.
    I see we have no more Members ready to ask questions. My 
closing remarks are thank you to each and every one of you. 
This is truly essential information that we are going to be 
able to take back to our colleagues and also the folks that 
work in our Agriculture Committee to write a better farm bill. 
If there is anything that we have not asked you that you would 
like to provide to us, please feel free to follow up with us.
    I know that some of my colleagues today wanted to mention 
the President's budget. While we haven't seen a lot of 
specifics on the President's budget and how it is going to 
impact ag overall, one specific line that has been put forth is 
the research title. And it looks to me, luckily, like the 
research title is going to remain stable. That is good news for 
what we are discussing here today, and I am just as interested 
as the rest of my colleagues to find out what the funding 
levels are for the rest of the ag title.
    So with that, I want to say thank you again to our 
witnesses. Mr. Lawson, thanks for sticking around with me and 
sticking it out today.
    And under the Rules of the Committee, the record of today's 
hearing will remain open for 10 calendar days to receive 
additional material and supplementary written responses from 
the witnesses to any question posed by a Member, or any other 
information you would like to offer us.
    This hearing of the Subcommittee on Biotechnology, 
Horticulture, and Research is adjourned.
    [Whereupon, at 11:51 a.m., the Subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]
  Submitted Letter by Roger Johnson, President, National Farmers Union
March 16, 2017

 
 
 
Hon. K. Michael Conaway,             Hon. Collin C. Peterson,
Chairman,                            Ranking Minority Member,
House Committee on Agriculture,      House Committee on Agriculture,
Washington, D.C.;                    Washington, D.C.;
Hon. Rodn,ey Davis                   Hon. Michelle Lujan Grisham,
Chairman,                            Ranking Minority Member,
Subcommittee on Biotechnology,       Subcommittee on Biotechnology,
 Horticulture, and Research,          Horticulture, and Research,
House Committee on Agriculture,      House Committee on Agriculture,
Washington, D.C.;                    Washington, D.C.
 

    Dear Representatives Conaway, Peterson, Davis, and Grisham:

    Thank you for holding today's hearing entitled, The Next Farm Bill: 
Agricultural Research. As you are well aware, research plays a vital 
role in advancing the agricultural sector. The United States has long 
maintained the world's premier agricultural research and development 
(R&D) system. However, since 2009, public agricultural R&D investments 
have declined. National Farmers Union (NFU), as directed by its member 
driven policy, advocates for maintaining and increasing public 
investments in agricultural R&D.
    Public agricultural R&D promotes advancements in the sustainability 
and productivity of United States agriculture. NFU believes the 
Agricultural Research Service, the National Institute of Food and 
Agriculture, the land-grant universities and the cooperative extension 
system each play a significant role in the success of modern-day 
agriculture.
    The R&D investments made from 1948 to 2013 contributed to a 169 
percent increase in U.S. agricultural output despite decreases in 
agricultural land and labor.\1\ With world population expected to grow 
to nearly 10 billion by 2050,\2\ agricultural productivity must 
increase to unprecedented levels. As America's farmers and ranchers 
carry a heavy burden in closing an estimated 70 percent food gap by 
2050,\3\ they require significant public investments in research that 
promotes further productivity, improves resistance to pests and 
climate, and increases overall sustainability.
---------------------------------------------------------------------------
    \1\Matthew Clancy, Keith Fuglie, and Paul Heisey, U.S. Agricultural 
R&D in an Era of Falling Public Funding. November 10, 2016. https://
www.ers.usda.gov/amber-waves/2016/november/us-agricultural-rd-in-an-
era-of-falling-public-funding/.
    \2\United Nations, Department of Economic and Social Affairs, 
Population Division. 2015. World Population Prospects: the 2015 
Revision, Key Findings and Advance Tables. July 29. https://esa.un.org/
unpd/wpp/Publications /Files/Key_Findings_WPP_2015.pdf.
    \3\Janet Ranganathan, et. al. 2016. ``Shifting Diets for a 
Sustainable Food Future.'' Creating a Sustainable Food Future. World 
Resources Institute. http://www.wri.org/publication/shifting-diets.
---------------------------------------------------------------------------
    Some may argue that the decline in public agricultural R&D spending 
is offset by the subsequent increase in the private-sector. However, 
private companies have little incentive to invest in new technologies 
that do not lead to financial gain. There is little motivation for a 
corporation to invest in research in products that cannot be profitably 
commercialized. Furthermore, private industry cannot be relied on to 
share the knowledge they gain with the general public. Because of these 
factors, private R&D is fundamentally different than its public 
counterpart.
    NFU believes family farms most benefit from the findings and by-
products of publicly funded research that remain in the public domain. 
Since Congress passed the Hatch Act in 1887, land-grant universities 
have served as the driver of American agricultural innovation. The 
research conducted at these universities has directly contributed to 
improved success of family farmers and has promoted greater stability 
in the food supply chain.
    No-till farming is one of the many examples of how the land-grant 
system and the Cooperative Extension Service (CES) drive innovation in 
American agriculture. The world's first research on no-till farming was 
conducted at the Ohio State University, a land-grant institution, in 
1962.\4\ Once the benefits of no-till farming were understood, the 
Cooperative Extension Service (CES) disseminated information 
encouraging farmers' adoption of the practice. Today, no-till farming 
is widely practiced by farmers across the country. Research by the 
Agricultural Research Service shows no-till farming provides 
significant carbon storage and soil stability and productivity 
benefits.\5\
---------------------------------------------------------------------------
    \4\Rafiq Islam and Randall Reeder, ``No-till and conservation 
agriculture in the United States: An example from the David Brandt 
farm, Carroll, Ohio,'' International Soil and Water Conservation 
Research, 2.1 (2014): 97-107.
    \5\Humberto Blanco-Canqui, et al. ``Regional study of no-till 
impacts on near-surface aggregate properties that influence soil 
erodibility,'' Soil Science Society of America Journal, 73.4 (2008): 
1361-1368.
---------------------------------------------------------------------------
    The agricultural sector is rapidly evolving, and the challenges 
facing the industry are growing. Public research and development is 
vital to effectively and efficiently responding to new challenges. The 
United States should strive to regain our position as the world leader 
in agricultural R&D investment. We must correct the trend of declining 
investments and make R&D a priority in the next farm bill.
    Thank you again for the opportunity to testify. NFU stands ready to 
provide any additional support that may be helpful to this committee in 
supporting the future success of America's farmers and ranchers.
            Sincerely,

Roger Johnson,
President, National Farmers Union.
                                 ______
                                 
     Submitted Statement by American Veterinary Medical Association
    Chairman Davis, Ranking Member Lujan Grisham, and Members of the 
Subcommittee,

    The American Veterinary Medical Association (AVMA) submits this 
written statement for the record for the March 16 hearing before the 
Committee on Agriculture, Subcommittee on Biotechnology, Horticulture, 
and Research entitled, ``The Next Farm Bill: Agricultural Research.''
    The AVMA is one of the oldest and largest veterinary medical 
organizations, with more than 89,000 member veterinarians worldwide, 
engaged in a wide variety of professional activities and dedicated to 
the art and science of veterinary medicine. The mission of the AVMA is 
to lead the profession by advocating for its members and advancing the 
science and practice of veterinary medicine to improve animal health 
and welfare and human health.
    As the Subcommittee turns its attention to reauthorizing the farm 
bill, the AVMA urges Congress to redouble our nation's commitment to 
the entirety of USDA's Research, Education, and Economics (REE) mission 
area. Increased Federal investments in REE will lead to advances and 
breakthroughs in agricultural productivity, improved animal health and 
welfare, better nutrition, and increased food safety and a strong 
agriculture economy. A renewed commitment to sound scientific research 
and technology transfer--the foundation upon which we succeed 
nationally and globally--is necessary as China has surpassed the U.S. 
in research funding and is nipping at our heals as it seeks to become 
the global leader in agriculture. The AVMA encourages the Committee to 
require consideration of the health and welfare of the animals 
explicitly in all research proposals, including not only the well-being 
of animals used in research but the advancement of welfare standards 
beyond existing minimums and norms.
USDA REE Programs in Veterinary Medicine and Animal Health
    USDA's extramural programs in the National Institute of Food and 
Agriculture (NIFA) are of paramount importance to veterinary medicine. 
Several of these programs are exceedingly small but powerfully 
important. The Food Animal Residue Avoidance Databank (FARAD) is a tiny 
food safety and animal health program that helps to keep milk, meat and 
eggs free of drug and pesticide residue. This program receives just 
$1.25 million--\1/2\ its authorized level--but increases are needed to 
bolster FARAD's ability to provide expert advice in situations 
involving accidental or intentional contamination of food producing 
animals; validate higher-level mathematical approaches for determining 
safe withdrawal periods, validates withdrawal estimates and expand into 
contaminant exposure; broaden the Department of Homeland Security data 
elements and analyses to help mitigate the impact of intentional acts 
of bioterrorism on the nation's food supply; and strengthen the Global 
Veterinary Drug Database to ensure that imported foods are safe to eat 
and expands the U.S. domestic exports.
    This Subcommittee need not be reminded how important it is to 
educate and train veterinarians for careers in research as well as to 
provide medical care that keeps all different kinds of animals healthy, 
including livestock and poultry in rural America. Two programs 
administered by NIFA prepare and/or incent veterinarians to practice 
what is needed most and where services are in short supply. The 
Veterinary Medicine Loan Repayment Program (VMLRP) incents 
veterinarians to practice food animal medicine in rural American or 
public practice in areas of need like diagnostic laboratories and State 
Departments of Agriculture. Since 2010, USDA has issued 388 VMLRP 
awards to veterinarians. AVMA urges the Committee to include a 
provision in the next farm bill that would exempt VMLRP awards from 
withholding taxes. Had awards been exempted since 2010, roughly 130 
more veterinarians would have been placed into service in rural 
America. The other key program is the Veterinary Services Grant Program 
(authorized in the 2014 Farm Bill) which helps educate and prepare 
veterinarians for rural practice and sustains private practice 
veterinarians serving in rural America.
USDA's Research Enterprise
    When Congress and the USDA strengthen investment and devote more 
attention to the animal diseases the result will be improved animal 
health and welfare. Advancements in detection, treatment, eradication 
and recovery for the animal diseases outlined below will also save 
billions of dollars for the U.S. agricultural economy.
    Competitive research administered by NIFA's the Agriculture and 
Food Research Initiative (AFRI), and the Animal Health and Disease 
Research (which is only competitively awarded when funded above $5 
million), as well as intramural research at the Agricultural Research 
Service is essential to the advancement of animal health and welfare.
    It is imperative that USDA devote increased resources to the 
development of biological agents (vaccines) and diagnostics, 
antibiotics, anthelmintics (de-wormers), antifungals and parasiticides; 
antimicrobial use strategies, control and therapy for diseases and 
infections; transboundary disease and foreign animal disease; water 
quality; animal welfare, including animal handling and management; 
biosecurity for agro-tourism and prevention, surveillance and response 
to agro-terrorism; food security; improving genetics; management and 
transport of food producing animals; microbiome; and organics.
    Development of a vaccine bank/stockpile for Foot-and-Mouth Disease, 
African Swine Fever, and Avian Influenza, and research on novel 
technologies to detect, manage and eliminate foreign livestock pests 
and other devastating animal diseases. The U.S. faces constant threats 
from animal disease that could cripple American animal agriculture. 
This threat demands increased attention to the proactive study of 
contagious animal diseases and vaccine development and stockpile and 
improvement of diagnostic capabilities. Although novel technologies 
(e.g., gene modification for disease resistance) will play a role in 
managing animal disease, no technology is completely effective. 
Therefore, the AVMA strongly urges the USDA to also focus attention on 
vaccine development and stockpiles. In addition, because many 
infectious animal diseases have the potential to cross into the human 
population and impact human health, USDA is urged to collaborate with 
biomedical researchers to support assessments of human impacts. Disease 
outbreaks lead to millions of sick animals, many of which must be 
culled and cost the U.S. billions in production losses and response 
costs.

   Highly Pathogenic Avian Influenza (HPAI): During a 7 month 
        span beginning in Dec. 2014 in the Pacific Northwest, a highly 
        pathogenic avian influenza (HPAI) outbreak spread across 21 
        states, affected 211 commercial and 21 backyard poultry flocks 
        and resulted in the depopulation of 7.5 million turkeys and 
        42.1 million egg-layer and broiler chickens. The outbreak cost 
        over $1 billion, not including downtime losses faced by 
        producers. There are currently four commercially available 
        vaccines for AI licensed in the U.S. but there are several 
        problems associated with their use. They are primarily in 
        injectable form which makes their utilization in the face of a 
        major disease outbreak labor and cost intensive. Additionally, 
        their use must be approved by the USDA and state veterinarian 
        because vaccination can have negative trade implications. 
        Vaccinated animals cannot be differentiated from naturally 
        infected animals. Importing countries view the presence of 
        antibody as evidence of prior or active infection. Additional 
        funding to further develop both the DIVA vaccination strategy 
        for AI as well as continued research into the development of an 
        effective vaccine against avian influenza that can be 
        administered via aerosol or water would greatly benefit the 
        United States and its poultry industry.

   Foot-and-Mouth Disease (FMD): It is estimated that an 
        uncontrolled outbreak of Foot-and-Mouth Disease (FMD) would 
        have a $200 billion impact over 10 years. FMD is a highly 
        contagious viral disease causing fever, blisters on the feet 
        and mouth, loss of appetite, drooling, and lameness impacts in 
        cows, pigs, sheep, goats, deer and all other domestic and wild 
        animals with cloven hooves. FMD is considered one of the most 
        economically devastating diseases in the world. Most affected 
        herds are culled, as was the case in 2001 in Great Britain when 
        over ten million animals were destroyed. While the U.S. has 
        been FMD-free since 1929 there is no guarantee the disease 
        won't return--an outbreak would devastate the livestock 
        industry. USDA is urged to redouble investment in the 
        development of a universal vaccine for FMD as well as 
        biotherapeutic countermeasures that will provide immunity. 
        There are seven different types of FMD viruses and more than 60 
        subtypes, so vaccines must be highly specific, matched to the 
        type and subtype present in an outbreak, to protect animals 
        against developing clinical signs of disease. Resources need to 
        be devoted to investigating ways to differentiate between 
        vaccinated and infected animals. Current diagnostic testing 
        methods are only validated for single sample/single animal 
        testing. To have any hope of responding to an outbreak, pooled 
        sample/multi-animal diagnostic tests must be developed and 
        validated.

   African Swine Fever (ASF): African Swine Fever (ASF) is a 
        highly contagious hemorrhagic disease of pigs that produces a 
        wide range of clinical signs and lesions that closely resemble 
        those of classical swine fever. There is no treatment for ASF, 
        and all attempts to develop a vaccine have so far been 
        unsuccessful. Prevention depends on ensuring that neither 
        infected live pigs nor pig meat products are introduced into 
        areas free of ASF. All successful eradication programs have 
        involved the rapid diagnosis, slaughter, and disposal of all 
        animals on infected premises. Introduction of this disease into 
        the United States would have a devastating effect on the 
        American swine industry. USDA has developed surveillance 
        programs for the early detection of FMD and ASF. These programs 
        are awaiting validation in order to be approved for deployment 
        to the veterinary diagnostic laboratories. In addition, the 
        current sample types (oral swabs for FMD and whole blood for 
        ASF) are not routinely included in most swine diagnostic 
        samples submitted to the veterinary diagnostic laboratories. 
        Additional sample types (such as oral fluids or tonsil) need to 
        be developed and validated. The funding necessary to support 
        surveillance enhancement, validation and implementation need to 
        be prioritized.

   Cattle Fever Tick (CFT) and Bovine Babesiosis: Babesia are 
        emerging health threats to both animals and humans in the U.S. 
        Accelerated research at USDA is needed to prevent catastrophic 
        economic losses due to cattle fever tick (CFT) and bovine 
        babesiosis. Additionally there are impacts from human 
        babesiosis due to cattle-associated Babesia divergens and 
        Babesia divergens-like organisms which has led to an increase 
        in the number of cases of human babesiosis over the past 25 
        years. Research on novel technologies to manage and eliminate 
        foreign livestock pests and tick-borne diseases from south 
        Texas is needed to protect the U.S. cattle industry from 
        suffering losses similar to those faced by Brazil ($3 billion) 
        and Mexico ($573 million). Movement of CFT infested wildlife 
        (i.e., white-tailed deer and nilgai across the Mexican border) 
        exacerbates our need to protect the U.S. cattle industry and 
        human health. At present, Texas is issuing temporary preventive 
        quarantines on multiple premises in the CFT-free zone of the 
        U.S.; however, that is not a permanent solution. We need 
        methods for integrated eradication to control and eliminate CFT 
        outbreaks involving wildlife, expedited area-wide tests of 
        innovative technologies to control CFT infestation, and to 
        adapt protocols for research in wildlife. Technology innovation 
        involves anti-tick vaccines; longer-acting acaricide 
        formulations; safer acaricides; alternative acaricide delivery 
        systems; tick growth regulators; acaropathogenic fungi and 
        nematodes; remote surveillance and delivery systems; and 
        algorithms to assess return on investment for the 
        implementation of adaptive area-wide integrated CFT eradication 
        protocols. Resistance to acaricides commonly used to prevent/
        treat CFT infestation renders those treatments ineffective, and 
        drugs to prevent bovine babesiosis are not approved for use in 
        the U.S. Funding is needed to research new methods to prevent 
        further spread of CFT and to mitigate the risk for the re-
        emergence of bovine babesiosis.

      Amplifying USDA's attention to these animal diseases will improve 
        animal health and welfare, help protect the U.S. food animal-
        producing industries from economic harm, and protect U.S. 
        consumers from contamination of the domestic food supply.
      Additionally, the AVMA urges Congress to ensure the USDA has 
        leadership and oversight for activities associated with control 
        of all animal diseases. It is imperative for the Agency to 
        assure the availability of sufficient numbers of Federal 
        veterinarians who are trained to recognize and diagnose exotic 
        and endemic animal diseases. Currently, the U.S. Department of 
        the Interior's Fish and Wildlife Service sets disease standards 
        for imported animals and interstate movement of those animals. 
        As the world's population continues to grow and the demand for 
        animal protein increases, animals that are not currently 
        considered to be part of animal agriculture will play a bigger 
        role in meeting those demands. It is imperative that the USDA 
        take a leadership role in developing resources to support 
        related activities.
USDA & Animal Welfare
    The welfare of animals used in or impacted by agricultural 
practices is an under-emphasized subject area. Much of the research 
that does exist is fragmented or industry-funded which reduces its 
influence in the public sphere. There are multiple areas which require 
concerted and transparent research efforts including: validation of 
welfare assessment methods and certification schemes; stress reduction 
during transportation of animals; the role of genetics on welfare; 
outcomes for neonatal animals such as male chicks and dairy calves; 
welfare-friendly and practical animal housing; reduction of the use of 
painful procedures; and development rapid depopulation methods that are 
humane and acceptable to society. In order to protect the 
sustainability and reputation of the agricultural sector the AVMA 
encourages the Committee to support and fund USDA research 
opportunities in the aforementioned areas.
National Animal Health Laboratory Network (NAHLN)
    Infrastructure investments in the U.S. network of animal health 
laboratories are critical. Laboratories must be expanded and 
strengthened to ensure sufficient capability and capacity for both 
routine and emergency diagnostic needs. Improvements across-the-board 
are needed to ensure robust connections among all component 
laboratories (Federal, state, university, and commercial labs) 
contributing to the diagnosis of animal and zoonotic diseases. All 
parties involved--Federal and state governments, and universities--must 
prioritize investment in labs participating in the NAHLN.
    The 2014 Farm Bill recognized the importance of the NAHLN, the 62 
member laboratory network serves as the nation's surveillance and 
emergency response system during animal disease outbreaks and recovery 
phase, by establishing a $15 million discretionary budget line 
specifically for the Network. A fully functional NAHLN needs Federal 
investment of more than $40 million annually to expand surveillance and 
surge capacity. This funding would bolster the number and level of 
participating state labs; to spur development of infrastructure for 
electronic transmission of data between sample collectors, labs and 
state and Federal databases; and increase efficiency and effectiveness 
of lab personnel training and employment both regionally and 
nationwide. In addition, states should double their support for the 
NAHLN.
    The USDA needs to invest more in the development of technologies 
that will improve and increase the efficiency, effectiveness and 
accuracy of the NAHLN and other animal diagnostic laboratories, and 
allow them to communicate rapidly and efficiently regarding food animal 
outbreaks and antibiotic resistance. USDA as well as states ought to 
encourage and support rapid assay development, standardization, 
validation, and adoption of new technologies for the prevention, 
detection, and diagnosis of animal diseases and zoonoses.
    Additionally, Congress should encourage the USDA, all 50 states and 
U.S. territories, as well as private industry to explore how they may 
assist unaccredited laboratories in preparing to achieve the standards 
for accreditation and determine how such laboratories can be prepared 
to complement Federal efforts and the NAHLN in the face of food animal 
outbreaks.
Conclusion
    Thank you for the opportunity to provide this information to the 
Committee on Agriculture, Subcommittee on Biotechnology, Horticulture, 
and Research. The AVMA stands ready to be of assistance in any way 
possible. For more information please contact Ms. Gina Luke, Assistant 
Director, Governmental Relations Division, at [Redacted] or via e-mail 
to [Redacted].


 
                           THE NEXT FARM BILL

                         (FORESTRY INITIATIVES)

                              ----------                              


                        THURSDAY, MARCH 16, 2017

                  House of Representatives,
                 Subcommittee on Conservation and Forestry,
                                  Committee on Agriculture,
                                                   Washington, D.C.
    The Subcommittee met, pursuant to call, at 2:23 p.m., in 
Room 1300 of the Longworth House Office Building, Hon. Frank D. 
Lucas [Chairman of the Subcommittee] presiding.
    Members present: Representatives Lucas, Thompson, LaMalfa, 
Allen, Abraham, Kelly, Walz, Kuster, Nolan, O'Halleran, and 
Panetta.
    Staff present: John Weber, Josh Maxwell, Patricia Straughn, 
Stephanie Addison, Evan Jurkovich, Liz Friedlander, Troy 
Phillips, Faisal Siddiqui, and Nicole Scott.

 OPENING STATEMENT OF HON. FRANK D. LUCAS, A REPRESENTATIVE IN 
                     CONGRESS FROM OKLAHOMA

    The Chairman. This hearing of the Committee on Agriculture 
entitled, The Next Farm Bill: Forestry Initiatives, will come 
to order.
    Good afternoon. I want to welcome everyone to today's 
Conservation and Forestry Subcommittee hearing. Today, we will 
continue our farm bill Subcommittee hearings by discussing 
another important issue, our nation's forests. Our nation's 
forests are a great natural resource, and today we will examine 
farm bill provisions that work to ensure our National and 
private forests remain healthy and productive.
    While I may not have as many trees in my backyard as some 
of my colleagues, or maybe for that matter, my whole district, 
we are all concerned about the benefit from healthy forests, 
timber, clean air, clean water, habitat, recreation, and a 
variety of forest products and much more.
    Since its creation by President Teddy Roosevelt, the Forest 
Service has grown significantly and now manages 193 million 
acres across 154 National Forests and 20 National Grasslands, 
in 43 states and Puerto Rico.
    Our forestlands, whether Federal, state, or private, are 
huge economic drivers in many communities. The forest products 
industry is estimated to employ 900,000 people and is among the 
top ten manufacturing sectors in 47 states. Unfortunately, we 
have seen a decline in timber harvested over the years. As 
timber harvest has decreased, so too have jobs and local 
businesses connected to this natural resource. I believe the 
U.S. Forest Service, housed at the Department of Agriculture, 
should return to its original purpose of conserving natural 
resources through sustainable use. In short, a working, 
productive forest.
    In the 2014 Farm Bill, we made some meaningful reforms, 
from Good Neighbor Authority to addressing insect and disease 
concerns. These reforms were intended to help further the 
better management that our forests so desperately needed at the 
time. However, there is more work needed to improve forest 
management in every region of the country. As the recent 
rangeland wildfires in Oklahoma, Texas, Kansas and Colorado 
remind us, wildfires can wreak incredible havoc, destroying 
livelihoods all along the way.
    As a Committee, we need to do everything in our power to 
give the Forest Service the flexibility to act to reduce fuel 
loads. Not only is the productivity of our forest and 
rangelands at risk, also the lives of those who live and work 
on these lands.
    As we begin these farm bill discussions, we cannot forget 
the importance of the private forestlands in all aspects of the 
farm bill. We should continue to support the voluntary 
conservation efforts that our forest owners make on their 
lands, and we should continue to support innovation through 
advanced forest products and fuels.
    I look forward to hearing from our panel on how we can 
better address our resource concerns, protect our private 
forestlands and get our National Forests working again.
    [The prepared statement of Mr. Lucas follows:]

Prepared Statement of Hon. Frank D. Lucas, a Representative in Congress 
                             from Oklahoma
    Good afternoon. I want to welcome everyone to today's Conservation 
and Forestry Subcommittee hearing.
    Today, we will continue our farm bill Subcommittee hearings by 
discussing another important issue--Our Nation's Forests.
    Our nation's forests are a great natural resource, and today we 
will examine farm bill provisions that work to ensure our National and 
private forests remain healthy and productive.
    While I may not have as many trees in my backyard as some of my 
colleagues, we all benefit from healthy forests--timber, clean air and 
water, habitat, recreation, a variety of forest products and much more.
    Since its creation by President Teddy Roosevelt, the Forest Service 
has grown significantly and now manages more than 193 million acres 
across 154 National Forests and 20 Grasslands, in 43 states and Puerto 
Rico.
    Our forest lands--whether Federal, state or private--are huge 
economic drivers in many communities. The forest products industry is 
estimated to employ 900,000 people and is among the top ten 
manufacturing sectors in 47 states.
    Unfortunately, we have seen a decline in timber harvested over the 
years. As timber harvest has decreased, so too have the jobs and local 
businesses connected to this natural resource.
    I believe the U.S. Forest Service, housed at the Department of 
Agriculture, should return to its original purpose of conserving 
natural resources through sustainable use. In short--a working, 
productive forest.
    In the 2014 Farm Bill, we made some meaningful reforms--from Good 
Neighbor Authority to addressing insect and disease concerns. These 
reforms were intended to help further the better management that our 
forests so desperately need.
    However, there is more work needed to improve forest management in 
every region of the country.
    As the recent rangeland wildfires in Oklahoma, Texas, Kansas and 
Colorado remind us, wildfires can wreak incredible havoc, destroying 
livelihoods along the way.
    As a Committee, we need to do everything in our power to give the 
Forest Service the flexibility to act to reduce fuel loads.
    Not only is the productivity of our forest and rangelands at risk, 
but also the lives of those who live and work on these lands.
    As we begin these farm bill discussions, we cannot forget the 
importance of the private forestlands in all aspects of the farm bill.
    We should continue to support the voluntary conservation efforts 
our forest owners make on their lands, and we should continue to 
support innovation through advanced forest products and fuels.
    I look forward to hearing from our panel on how we can better 
address our resource concerns, protect our private forestlands and get 
our National Forests working again.
    I now recognize Mr. Walz, for his opening statement.

    The Chairman. And with that, I would now like to recognize 
Mr. Walz, the acting Ranking Member today, for his opening 
statement.

OPENING STATEMENT OF HON. TIMOTHY J. WALZ, A REPRESENTATIVE IN 
                    CONGRESS FROM MINNESOTA

    Mr. Walz. Well thank you, Chairman Lucas. It is a pleasure 
to be back with you, having gone through the last farm bill 
cycle with you, and this is a place that the Chairman is truly 
bigger than life in this room.
    The Chairman. Isn't it inspiring?
    Mr. Walz. Always keeps me honest looking over my shoulder 
here.
    Ms. Fudge was unable to be here today. Our current Ranking 
Member is doing a fabulous job on this. But thank you, Mr. 
Chairman, for holding today's hearing.
    Forestry issues are an important piece of the farm bill. 
They play a critical role in our conservation efforts, habitat 
development, for industries that support rural communities 
across the country. In Minnesota, forestry plays a vital role, 
and my colleague from Minnesota, Mr. Nolan, has created many, 
many good paying jobs through his work in forestry over the 
years, and he is going to share, I am sure, about his personal 
experience on why it is critical.
    Our private forestlands and National Forests provide clean 
water, clean air, and greatly contribute to our states' 
economy. This is all despite the decline in the timber industry 
we are seeing, and we must work to reverse this. Today's 
hearing is an important opportunity to look at how the forestry 
programs and authorities in the farm bill are working on the 
ground and areas that we can improve on from our experts' 
testimony.
    Today, we are also going to take a look at how conservation 
programs, which include forestry practices, are working for the 
private landowners, as the Chairman mentioned.
    It is clear our forests need a lot of work. The farm bill 
can help provide the tools for that work to be accomplished by 
the Forest Service and other private forest owners. We can't 
talk about how tools are working and what tools might be needed 
to address our forest health until the Forest Service has the 
resources and personnel to fully utilize the tools they already 
have. This means Congress and the Committee must address 
wildfire funding issues that plague the Forest Service. I will 
have to say, in a first look at the President's budget, it is 
called a skinny budget because it is skinny on the USDA. It 
cuts it by 21 percent, so every part of the Forest Service is 
already hurting because of runaway fire budgets and fire 
borrowing. Roads and trails that provide recreation access to 
sportsmen, community and urban forestry initiatives, and the 
ability of the Forest Service to be able to carry out timber 
contracts, tree marking and the necessary environmental 
reviews. Every aspect is not performing as it could or should 
because of budget levels that are going to get exponentially 
worse. We need to fix the fire funding issue so the Forest 
Service can do the work we expect of it, and then we should 
have the discussions on additional management tools and 
strategies that make sense to get our forests healthy again.
    As we discuss forestry and the farm bill, it is incredibly 
important to keep the budget challenges at the forefront and 
top of our mind. This Committee solves big and challenging 
problems, and there is no reason wildfire funding and the 
health of our Forest Service can't be addressed also.
    I look forward to working with Members of this Committee, 
and having a robust discussion about how our farm bill forestry 
programs are working, and what we can do to give tools to folks 
to make it even better.
    Again, I thank the Chairman. He has proven a person who can 
make these things happen, and I look forward to the testimony 
today. I yield back.
    The Chairman. I thank the acting Ranking Member, and I note 
for everyone's benefit, you can tell the Ranking Member and the 
Chairman want to get to your information, your insight, so we 
are prepared to go.
    The chair, in that spirit, would request that other Members 
submit their opening statements for the record so the witnesses 
may begin their testimony, and to ensure that there is ample 
time for questions.
    With that, I would like to welcome our witnesses to the 
table. Mr. George Geissler, Oklahoma State Forester, Vice 
President of the National Association of State Foresters, 
Oklahoma City, Oklahoma; Ms. Susan Benedict, Managing Partner, 
Beartown Family Limited Partnership, State College, 
Pennsylvania; Mr. Jim D. Neiman, President and CEO, Neiman 
Enterprises, Incorporated, Hulett, Wyoming; Ms. Becky 
Humphries, Chief Conservation and Operations Officer, National 
Wild Turkey Federation, Edgefield, South Carolina; and Mr. Tom 
Harbour, retired National Director, Fire and Aviation 
Management, U.S. Forestry Service, Falls Church, Virginia.
    And with that, Mr. Geissler, you may begin. You are 
recognized for 5 minutes.

 STATEMENT OF GEORGE L. GEISSLER, C.F., FORESTER AND DIRECTOR, 
              FORESTRY SERVICES DIVISION, STATE OF
    OKLAHOMA; VICE PRESIDENT, NATIONAL ASSOCIATION OF STATE 
                  FORESTERS, OKLAHOMA CITY, OK

    Mr. Geissler. Thank you, Chairman Lucas, acting Ranking 
Member Walz, and Members of the Subcommittee for the 
opportunity to appear in front of you today on behalf of the 
National Association of State Foresters. You have a copy of our 
written testimony, and I would like to provide you some 
background and share with you some key points.
    NASF represents our nation's state and territorial forestry 
organizations, and about \1/3\ of the United States is 
forested. Of those forested acres, approximately 60 percent are 
state and private forests, which are the purview of our 
nation's State Foresters, who provide landowner technical 
assistance, forest management, and wildland fire suppression. 
state and private forests provide 90 percent of the nation's 
wood supply, in addition to critical ecological and quality of 
life benefits. Through farm bill authorized programs, State 
Foresters work with landowners to achieve sizable economic and 
environmental benefits.
    Last year in 2016, 82 percent of the nation's wildfires 
occurred on state and private lands, which accounted for about 
\1/2\ of the forested acres burned nationally. State Foresters 
and local fire departments, many of which are volunteers, are 
responsible for suppressing those fires.
    While private forestlands are steadily being converted to 
other uses, State Foresters work to find landowners access to 
markets and assistance to manage their forest in order to keep 
forests as forests for the benefits of America.
    There are 136 million acres of urban and community forests 
in the United States. These reduce energy costs, increase 
property values, mitigate storm water, enhance air quality, and 
support jobs, among many other things. Through the Urban and 
Community Forestry Program, State Foresters support this vital 
green infrastructure. All of us at NASF believe that the farm 
bill is a unique opportunity to support rural America's 
economic backbone and improve the quality of life for all 
Americans through enhancing support for America's trees and 
forests.
    In generating ideas for your consideration in the 2018 Farm 
Bill, NASF is honored to lead the Forests in the Farm Bill 
Coalition, along with the partners that are here with us today. 
Your State Foresters are recommending that in the farm bill, we 
address six points, and these points are in no particular 
order.
    Priority item one, provide support to the State Foresters 
to update our state forest action plans. These collectively 
serve as a powerful strategic plan for the nation's forests. 
This should include Federal agency direction, making these all-
lands plans a foundation and priority for driving decisions and 
resource allocations. Forest action plans highlight and define 
critical issues, prioritize available funding and resources, 
and encourage coordination between organizations and 
individuals.
    Priority two, provide Federal and state forest managers 
with tools that increase the pace of active forest management, 
including cross boundary work and rapid and effective response 
to insects, disease, and wildfires, expanding the use of Good 
Neighbor Authority, the insect and disease designation areas, 
and categorical exclusions will go a long way. In Oklahoma 
alone, four insect and disease designation areas have 
contributed to both forest and economic health by thinning high 
density forests and expediting timber sales, which sent wood 
cut by local loggers to local mills.
    Priority three, support biomass energy, America's original 
renewable energy source, as well as legislation which 
encourages tall timber buildings and increased use of wood in 
construction.
    Priority four, support the initiative to reforest America, 
to address not only forest lost from commercial and residential 
development, but also from the impacts of wildfire, insects, 
and disease.
    Priority five, support the conservation title programs that 
provide assistance to private landowners, including funding of 
the Regional Conservation Partnership Program.
    Priority six, to the extent that the farm bill can 
contribute to this, as many have said, we need to provide a 
comprehensive wildland fire funding fix.
    The nation's State Foresters look forward to working with 
the House Agriculture Committee, our partners with us here 
today, our Federal partners, including the USDA Forest Service, 
and the Natural Resources Conservation Service in developing 
the 2018 Farm Bill. I thank you for the opportunity to testify 
here today, and for this Committee's work on this bill.
    [The prepared statement of Mr. Geissler follows:]

 Prepared Statement of George L. Geissler, C.F., Forester and Director,
Forestry Services Division, State of Oklahoma; Vice President, National 
           Association of State Foresters, Oklahoma City, OK
    Thank you Chairman Lucas, Ranking Member Fudge, and Members of the 
Subcommittee for the opportunity to appear before you today on behalf 
of the National Association of State Foresters (NASF). NASF represents 
our nation's state and territorial forestry organizations. There are 
some 750 million acres of forested land in the United States or about 
\1/3\ of the continental U.S. Of those forested acres, approximately 40 
percent are Federal forests and the other 60 percent are state and 
private forests, the purview of our nation's State Foresters.
    Here are some facts about state and private forests:

   State and private forests provide 90 percent of the nation's 
        wood supply and critical benefits such as clean water and air, 
        wildlife and fish habitat, recreation opportunities and more.

   Forest-based industry is consistently in the top ten 
        manufacturing sectors in 45 of the 50 states and, in terms of 
        total economic compensation, larger nationally than the motor 
        vehicles and parts manufacturing industry.

   In 2016, 82 percent of the nation's wildfires occurred on 
        state and private lands which accounted for about half of the 
        forested acres burned.

   Unlike public lands, private forest lands are steadily being 
        converted to other uses, fragmented, and developed--these 
        landowners need access to markets and technical and financial 
        assistance to manage and maintain their forests for the public 
        good.

   There are 136 million acres of urban and community forests 
        in the U.S. that reduce energy costs, increase property values, 
        mitigate storm water, enhance air quality, support jobs and 
        more. The tree-trimming industry alone has revenue of $17 
        billion annually. These forests are vital infrastructure that 
        provide social, economic and environmental benefits to families 
        and communities.

    Call To Action: State Foresters believe that the farm bill is a 
unique opportunity to support rural America's economic backbone and 
improve the quality of life for all Americans by enhancing support for 
America's trees and forests. State Foresters recommend that the 2018 
Farm Bill address these six priorities (please note that these are not 
listed in order of importance to State Foresters):

  (1)  Provide support to State Foresters for updating state Forest 
            Action Plans that collectively serve as a powerful 
            strategic plan for the nation's forests. This should 
            include Federal agency direction making these all-lands 
            plans a foundation and priority for driving public lands 
            decision-making and resource allocation.

  (2)  Provide Federal and state forest managers with tools that 
            increase the pace and on-the-ground results of active 
            forest management, cross boundary work, and rapid and 
            effective response to insects, disease and wildland fire. 
            This includes but is not limited to expanded use of Good 
            Neighbor Authority, the Insect and Disease Area 
            Designations and categorical exclusions.

  (3)  Support the development of new and expanded markets for forest 
            products to provide all landowners, public and private, 
            with more forest management options.

  (4)  Strengthen forestry outreach, education, research and inventory 
            programs that enhance the ability of State Foresters to 
            assist private landowners and deliver Federal and state 
            programs serving all lands across the rural to urban 
            spectrum. This is fundamental in supporting trees and 
            forests as America's green infrastructure. State Foresters 
            support an initiative to reforest America to begin to 
            address the emerging threat of forest loss from commercial 
            and residential development as well as from the impacts of 
            wildfire, insects and disease.

  (5)  Include strong provisions for forests in conservation title 
            programs that provide technical and financial assistance to 
            private landowners, including reauthorization of the 
            Regional Conservation Partnership Program.

  (6)  Provide for a comprehensive wildland fire funding fix. This is 
            critically needed to address the increasing cost of 
            wildfire suppression and the challenges this poses to the 
            USDA Forest Service and the Department of the Interior 
            capabilities. To the extent that the farm bill process can 
            help facilitate a Congressional solution to this issue, 
            NASF would support those efforts.

    Strong partnerships between state forestry agencies and the Federal 
agencies are critical to helping landowners manage their forests and to 
keeping the forests on the landscape that benefit all Americans. The 
following are farm bill programs of particular importance to State 
Foresters which have had significant positive impacts for America's 
forests.
Positive Impacts of Previous Farm Bills on America's Forests
    Farm bill authorizations have been instrumental in protecting and 
enhancing the ecological health of America's trees and forests and the 
economic health of rural America. State Foresters applaud the Committee 
for current and past efforts. The Forest Stewardship Program, which was 
first enacted in the 1990 Farm Bill, supports the states' field 
foresters who deliver technical assistance and stewardship plans to the 
nation's private forest owners. A forest owner with a forest 
stewardship plan is almost three times more likely to actively managing 
his or her land than a forest owner without a plan. This program 
produces significant quantifiable results in terms of actively managed 
forests and all of the ecological and economic benefits that ensue for 
rural America.
    The Urban and Community Forestry program, also authorized in the 
1990 Farm Bill, provides funding to care for the trees and forests 
closest to our nation's communities. Studies show direct linkages 
between trees and human health benefits, significant storm water 
treatment savings, absorption of pollutants, reduced crime rates, 
increased residential and commercial energy savings (heating and air 
conditioning), increased business activity and more. Investments in 
America's infrastructure needs to include support for the accompanying 
green infrastructure and encourage utilization of products from 
America's forests. Rebuilding America's green infrastructure starts 
with support for this program.
    Recent farm bills have also been instrumental in elevating the role 
of forestry in conservation title programs. The financial and technical 
assistance provided through programs such as the Environmental Quality 
Incentives Program (EQIP) and the Conservation Stewardship Program 
(CSP) is invaluable in supporting small private landowners in their 
forest management objectives. State forestry agencies are proactively 
involved in working with the Federal agencies in successfully 
implementing these programs. NASF appreciates the ongoing program 
support and attention in the farm bill that is responsible for 
significant on-the-ground results due to these partnerships.
Helping Lead the Forests in the Farm Bill Coalition
    In generating ideas for your consideration in the 2018 Farm Bill, 
NASF is honored to be helping to lead the Forests in the Farm Bill 
(FIFB) coalition along with the American Forest Foundation, the 
National Wild Turkey Federation and The Nature Conservancy. The FIFB 
coalition includes almost 100 participating organizations who are 
working together to provide input on key provisions to help our 
nation's trees and forests and the American people who depend upon 
them.
Recent Farm Bill Provisions--Impacts and Possibilities
(1) Broader Application of State Forest Action Plans
    NASF thanks the Committee for including in the 2008 Farm Bill the 
direction for State Foresters to develop Statewide Forest Resource 
Assessments and Strategies, now known as state Forest Action Plans. 
Together these publicly vetted plans covering all ownership categories 
provide foundational guidance for managing America's forests. They have 
helped our state agencies focus limited resources on areas of greatest 
concern; e.g., an area where there is particularly high fire danger or 
threat of an insect outbreak. NASF would like to see these Forest 
Action Plans used as foundational documents in land management planning 
at all levels of government so that State Foresters can work with our 
Federal and local partners to focus our limited resources on areas with 
the most critical challenges. State Foresters will be updating these 
plans, as required by Federal law, and as such request the Committee 
authorize Federal funding in order to assist State Foresters in this 
important process.
(2) Encouraging Improved Federal Forest Management To Support Forest 
        Health and Resilience Across All-Lands
    Without well-managed Federal forests, active management of state 
and private forests will be difficult in parts of the nation, 
especially the West. Insects and disease know no boundaries, and 
neither do wildfires. Actively managed forest land can reduce 
deleterious impacts on both sides of a property line. Several farm bill 
authorities have significantly helped address the management challenges 
mounting on Federal lands, and additional changes to these authorities 
would yield significant positive results.

  a.  Expanding Use of Good Neighbor Authority (GNA) that was 
            permanently authorized in the 2014 Farm Bill, allowing 
            states to act as ``good neighbors'' to the USDA Forest 
            Service (Forest Service) and the Bureau of Land Management 
            (BLM) to accomplish cross-boundary work. Today there are 
            Good Neighbor agreements in 24 different states. A 
            challenge that has emerged in the implementation of this 
            authority is that the 2014 Farm Bill specifically excluded 
            GNA projects with ``construction, reconstruction, repair, 
            or restoration of paved or permanent roads.'' This 
            significantly limits the use of this authority since most 
            forest management projects require road repair such as 
            culvert replacement. It should be remembered that any 
            project which would be eligible for a GNA agreement with 
            the State Forester, would have been approved in a Federal, 
            publicly vetted National Environmental Policy Act (NEPA) 
            process. If states have marking crews and project 
            administrators in place, it makes little sense to have the 
            Federal Government expend funds to hire, train and 
            transport additional field staff. Including an exception 
            for road work limits the use of this authority in places 
            where GNA could make significant improvements to the health 
            and resilience of Federal forests. This is simply good 
            government.

  b.  Addressing Insect and Disease Infestations on Federal forests is 
            another important accomplishment of the 2014 Farm Bill. To 
            date 36 governors have identified over 400 ``treatment 
            areas'' in their states totaling over 55 million acres. In 
            the Forest Service report to Congress for 2016 on 
            implementation of this program, the agency identified 74 
            projects that had been completed using the streamlined 
            planning authorities as provided. State Foresters are 
            encouraged by this work and urge broader use made of this 
            authority.

        As an example, in Arkansas, the State Forestry Commission 
            worked in partnership with the Ouachita National Forest to 
            prepare the reasoning for the treatment areas based on 
            National Insect and Disease Risk Maps (NIDRM), aerial 
            reconnaissance and site visits by staff from both agencies, 
            informing the Governor on his designation requests. 
            Subsequently, through Categorical Exclusion (CE) 
            authorities granted by the farm bill, the Ouachita National 
            Forest in Arkansas has been able to treat almost 1,000 
            acres of priority insect-infested acres through eight 
            individual projects, with another 2,000 acres planned in 
            2017. With strong partnerships and good communication, the 
            Commission was successful with the authorities provided in 
            the farm bill.

  c.  State Foresters would also like the Committee to consider a 
            similar authority where there is significant wild fire 
            threat. NASF proposes that Governors would identify and map 
            forested areas at the highest risk to wild fire, and that 
            Federal agencies be provided with similar streamlined 
            planning authorities; e.g., categorical exclusions of up to 
            3,000 acres, to accomplish work in those areas identified 
            on wildfire risk maps.
(3) Expanding Markets
    Without markets for wood products, the nation's forests will not be 
actively managed and the wildlife, watersheds, and rural Americans 
which depend on those forests will suffer. State Foresters are looking 
for opportunities to expand the use of biomass as a most basic source 
of renewable energy. State Foresters also support the Timber Innovation 
Act of 2016, which encourages additional use of wood products in 
building as well as research into additional market opportunities.
(4) Reforesting America
    As we look at the challenges facing the millions of private forest 
owners in this country, primary among these is the impending conversion 
of forest land, especially in the South, to residential and commercial 
development. The conversion and fragmentation of forestland associated 
with land development is a well-documented issue that defies one simple 
or programmatic solution. We do know that timely and targeted 
reforestation can be a helpful mitigating measure. In addition, 
assisting and encouraging local planning authorities to incorporate 
forest resource information in land use planning decisions could 
promote more favorable outcomes for forestland. Reforestation is also 
essential on landscapes and communities across the nation which have 
been impacted by fire and/or insects and disease, as well as in urban 
areas where trees provide critical green infrastructure and benefits. 
We need to look at programs to encourage the replanting of America's 
communities and forests and target those investments wisely as 
identified in state Forest Action Plans.
(5) Reauthorize funding for the Regional Conservation Partnership 
        Program
    Thanks to the work of this Committee, the 2014 Farm Bill created 
the Regional Conservation Partnership Program (RCPP). This program has 
been used across the country to leverage state and local resources to 
support the needs of local forest landowners. In Virginia, an RCPP 
grant of $1.3 million leveraged with matching funding from Virginia's 
Reforestation of Timberlands Program, has supported over 200 forest 
owners holding a total of 20,000 acres in improving the health, 
condition and habitat of their forested lands through dedicated 
Environmental Quality Incentives Program (EQIP) funding. The RCPP 
program enabled the Virginia Department of Forestry to look at the 
needs of the landowner base, and develop a program of work in 
partnership with NRCS that was tailored to successfully reaching the 
maximum number of landowners with Federal assistance.
(6) Pass a Wildfire Funding Fix
    It will be challenging to address the management needs across 
America's private and public forests with a shrinking pool of available 
Federal funding. In 1995 wildfire firefighting costs constituted 16 
percent of the Forest Service budget. Today over 50 percent of the 
budget is consumed by fighting wildfires and the pool of funds 
available to support vital agency programs which can prevent some of 
the devastation and help America's forests is thus impacted. To the 
extent that the farm bill process can help facilitate a Congressional 
solution to this issue, we ask Congress to please find a comprehensive 
wildfire funding solution quickly for the USDA Forest Service and the 
Department of [the] Interior. A comprehensive solution would address 
both late-season wildfire funding transfers and the erosion of agency 
budgets over time due to increasing wildfire suppression costs.
Conclusion
    As we look to the challenges facing the millions of private forest 
owners in this country, we see many opportunities for this farm bill to 
assist in the stewardship of these lands. State and private forests 
provide many societal benefits including jobs and economic development, 
clean air and water, wildlife habitat for both game and non-game 
species and so much more.
    In summary, State Foresters believe the farm bill is an opportunity 
to support rural America's economic backbone and improve the quality of 
life for all Americans by enhancing support for America's trees and 
forests. State Foresters are asking the Committee to focus on these 
five key areas:

  (1)  Support State Foresters in updating state Forest Action Plans 
            that collectively serve as a powerful strategic plan for 
            the all of nation's trees and forests, including Federal 
            lands.

  (2)  Increase the pace and on-the-ground results of active Federal 
            forest management, cross boundary work, and rapid and 
            effective response to insects, disease and wildland fire.

  (3)  Support the development of new and expanded markets for forest 
            products.

  (4)  Strengthen the ability of State Foresters to assist private 
            landowners and deliver Federal and state programs serving 
            all lands across the rural to urban spectrum. Support a 
            ``Reforest America'' initiative to begin to address forest 
            conversion to development as well as the impacts of wild 
            fire and insects and disease.

  (5)  Include strong provisions for forests in conservation title 
            programs that provide technical and financial assistance to 
            private landowners, including reauthorization of funding 
            for the Regional Conservation Partnership Program.

  (6)  To the extent that the farm bill process is able, facilitate a 
            Congressional comprehensive wildfire funding solution

    We look forward to working with the House Agriculture Committee, 
our partners with us here today and our Federal partners, including the 
USDA Forest Service. Our common goal is the same: to support the health 
of America's trees and forests and the rural and urban communities 
which rely on them. Thank you for this opportunity to provide 
testimony. We look forward to working with you to provide the 
collective insights of the nation's State Foresters in developing the 
2018 Farm Bill.

    The Chairman. Thank you very much.
    The chair now recognizes Ms. Benedict for 5 minutes. You 
may proceed when you are ready.

  STATEMENT OF SUSAN S. BENEDICT, MANAGING PARTNER, BEARTOWN 
                 FAMILY LP; MEMBER, TAX POLICY
   SUBCOMMITTEE, NATIONAL PUBLIC AFFAIRS COMMITTEE, AMERICAN 
              FOREST FOUNDATION, STATE COLLEGE, PA

    Ms. Benedict. Thank you for the opportunity to testify 
today. I am a tree farmer from central Pennsylvania, where my 
family owns 2,087 acres of forestland. I am also here on behalf 
of the American Forest Foundation, which helps the nation's 22 
million family forest owners care for our land. AFF has helped 
me better manage my land, and I feel so strongly about their 
forestland owners support that I have been an active volunteer 
for over 6 years.
    AFF co-chairs the Forests in the Farm Bill Coalition with 
the National Association of State Foresters, the National Wild 
Turkey Federation, and The Nature Conservancy. This Coalition 
has identified five key issues for the next farm bill in a 
letter signed by over 40 organizations. I would like to ask 
that this letter be inserted into the hearing record.
    The Chairman. Without objection, the letter is made part of 
the official record.
    [The letter referred to is located on p. 547.]
    Ms. Benedict. Thank you.
    Taking care of our woods requires money. Even though we 
regularly harvest timber, this income is often not enough to 
pay the taxes, let alone pay for forest management. Our timber 
markets aren't what they used to be. Currently, we are selling 
wood for the same actual dollars as we received in the 1980s.
    On top of these challenges, landowners have significant 
risks we can't plan for. Our land was hit from 2006 to 2008 by 
a gypsy moth outbreak, which ultimately destroyed over $1.2 
million worth of timber on our land. This is why farm bill 
conservation programs are so important for woodland owners like 
me. We enrolled our family land in the Conservation Stewardship 
Program in 2005. It helped us continue management during a very 
tough economic time for us. We also have used the Environmental 
Quality Incentives Program. With the EQIP funds, leveraging our 
own, we were able to afford what is called a crop tree release, 
which allows competing trees to be removed and desirable trees 
to flourish. This benefits both wildlife and our oak 
regeneration. We are so grateful for this Committee's work to 
include forest owners in these conservation programs.
    My story is not unique. I am one of 22 million people 
across rural America who, like my family, own and care for 
woodlands. Recently, AFF assessed the biggest issues facing 
family woodland owners. In the West, we found that wildfire is 
the biggest challenge. In the Northeast and South, we found 
that wildlife, in particular, the growing number of species 
that are either already listed or could be listed in the near 
future was one of the biggest issues.
    I would like to ask your help in five key areas today to 
help us tackle these issues. First, we ask you to maintain 
funding and support for woodland owners in forestry and 
conservation programs. We know that budgets are tight. We ask 
that you prioritize funding for the Environmental Quality 
Incentives Program, the Conservation Stewardship Program, and 
Conservation Reserve Program, which provide support for 
woodland owners. Additionally, we strongly support the Regional 
Conservation Partnership Program, and authorities that 
encourage targeted application of conservation program funding 
to priority landscapes to achieve measurable outcomes. We ask 
that you support cross-boundary landscape scale efforts to 
tackle forestry issues, especially wildfire.
    Because forests are often a patchwork of small parcels and 
different public and private ownerships, it won't be enough if 
just one or two landowners in a landscape are managing. New 
tools for USDA agencies are needed so they can more efficiently 
work across ownership boundaries and targeted landscapes, and 
with willing landowners to address these issues. We ask you to 
provide support and regulatory assurance for landowners 
managing for at-risk wildlife. And last, the farm bill can help 
support a strong, diverse forest products industry. Markets are 
essential for landowners, good management, and growing rural 
jobs and rural economies. One way you can do this is support 
for the Timber Innovations Act, which many of you are sponsors 
of. Although largely outside the jurisdiction of the 
Agriculture Committee, we respectfully ask that you continue to 
work with the relevant committees and enact a wildfire funding 
fix.
    Thank you for considering these ideas, and I look forward 
to questions.
    [The prepared statement of Ms. Benedict follows:]

  Prepared Statement of Susan S. Benedict, Managing Partner, Beartown 
  Family LP; Member, Tax Policy Subcommittee, National Public Affairs 
        Committee, American Forest Foundation, State College, PA
    Mr. Chairman, Ranking Member Fudge, Mr. Vice Chairman, Members of 
the Subcommittee, thank you for the opportunity to testify before you 
today regarding the upcoming reauthorization of the farm bill.
    I'm a Tree Farmer from central Pennsylvania, where my family and I 
own 2087 acres of forestland in the headwaters of the Chesapeake Bay.
    I'm also here on behalf of the American Forest Foundation (AFF), a 
nonprofit forest conservation organization helping the nation's 22 
million family forest owners care for our land and continue to provide 
the clean air and water, wildlife habitat, and wood products that all 
Americans benefit from. AFF also operates the American Tree Farm 
System', which my family is a part of, you have probably 
seen the green and white sign on the side of the road. ATFS is the 
nation's oldest and largest sustainable family woodland system in the 
world with some 74,000 landowners who own 20.5 million acres 
participating in the program. It provides woodland owners with the 
assurance that we're practicing good forestry and provides people that 
buy our timber the assurance that our forests are managed to the 
highest of standards.
    AFF co-chairs the Forests in the Farm Bill Coalition, alongside the 
National Association of State Foresters, the National Wild Turkey 
Federation, and The Nature Conservancy. This Coalition, with a 
diversity of landowner, industry, forestry, and conservation interests, 
is currently developing detailed farm bill recommendations for your 
consideration. The Coalition has identified five key issues for the 
next farm bill in a letter to the Subcommittee. Most of the Coalition's 
issues are consistent with my testimony. I'd like to ask that this 
letter be inserted into the hearing record.*
---------------------------------------------------------------------------
    *Editor's note: the letter referred to follows this prepared 
statement as Attachment.
---------------------------------------------------------------------------
My Story
    Our land has been in our family for three generations and I'm 
hopeful we can make it five when we pass it to my children and 
grandchildren. Keeping our land in forest and ensuring it is well 
managed is important to me and my family but it's also important to my 
community and the millions of people that rely on the Chesapeake Bay 
watershed for their clean water.
    Our woods are also home to a number of at-risk or declining 
wildlife including the golden winged and cerulean warblers and the 
timber rattler.
    Our woods also support our local rural economy. To help us manage 
our woods, we directly employ a consulting forester and four loggers. 
We harvest timber annually. We also have both a wind farm and a natural 
gas lease on our property, which of course supports the local economy 
and provides our family with income.
    Taking care of our woods requires money. Even though we regularly 
harvest timber and lease the land for energy, this income is often not 
enough to pay the taxes let alone pay for management. We regularly must 
put money into maintaining our 8 miles of roads and into management 
practices necessary to keep the deer herd in check, so our trees 
survive. Additionally, the conservation practices, like managing for 
the at-risk wildlife noted above, also cost money.
    Our timber markets aren't what they used to be. We used to have 
five mills that bought our wood, now we only have three. The remaining 
mills are a good distance from our woods, so hauling costs cut into our 
margins. These remaining mills, which now take the wood of the closed 
mills too, often have gluts of wood that suppress our prices further. 
Because of the loss of mills, finding loggers to do the work is very 
difficult because many can't afford the equipment.
    On top of these challenges, landowners have significant risks that 
we can't plan for. Our land was hit in 2006 and again in 2008 by gypsy 
moth, which then trigge[re]d root rot and destroyed over $1.2 million 
worth of timber. We are now dealing with the Emerald Ash Borer. Timber 
insurance is just too expensive, so these are uninsured losses we will 
never recoup. We also can't take a loss for tax purposes because it's 
naturally regenerated timber with no tax basis. Essentially we lost a 
generation's retirement and have no way to recover it.
    This is why farm bill conservation programs are so important for 
woodland owners like me. We enrolled our family land in the 
Conservation Stewardship Program (CSP) in 2005. Because we were 
struggling financially to cover the costs to manage our land well on 
top of covering ``life's costs'' like health insurance, we decided CSP 
was the right program for us. It rewarded us for the good stewardship 
we were already doing, helped defray some of our management costs, and 
encouraged us to do more. I recognize we can't provide this support to 
every landowner all the time, but it helped us get through some hard 
times when we weren't sure if we were going to be able to keep all the 
land that had been in our family for so long.
    Additionally, the Environmental Quality Incentives Program (EQIP) 
has helped my family out. With EQIP funds, leveraging our own, we were 
able to afford what's called a ``crop tree release'' which removes 
competing trees, allowing desirable trees to flourish. This benefits 
both wildlife and our oak regeneration.
    In my day job, I'm an accountant and my husband is recently 
retired. We care passionately about keeping this land and managing it 
well for all the benefits for our family and our community. However, 
sometimes, we can't afford managing it without some help.
    My story is not unique. I'm one of the 22 million people across 
rural America who like my family, own and care for woodlands. Families 
own more than \1/3\ of the forests in the U.S., more forests than 
what's owned by the Federal Government or by private companies. And our 
families work hard every day to pay the taxes, stay on the land, and 
continue to provide all the many benefits we and our rural communities 
thrive on-the-jobs, wood products, clean water and air, wildlife 
habitat, and places to hike, hunt, and fish.
What Challenges do Family Woodland Owners Face Today?
    Recently, AFF conducted assessments in the West, South, and 
Northeast to determine the biggest issues facing family woodland owners 
and threatening the water, air, wildlife and wood that comes from our 
land that every American, thousands of businesses, and millions of 
rural jobs rely on.
    While every piece of land is unique, AFF found some recurring 
themes.
    In the West, we found that wildfire is the biggest challenge. 
Often, when we think of wildfire in the West, we think of public lands. 
AFF's analysis found that more than \1/3\ of the western lands with the 
highest wildfire risk-covering an area the size of the state of 
Kansas--are owned by families and individuals. While wildfire threatens 
homes, lives, wildlife, and much more, AFF found that wildfire risk on 
family and individual lands threatens the water supplies of nearly 22 
million Americans in the West. Given the pattern and frequency of 
drought across the West, this poses grave risk to major cities, rural 
communities, agriculture, and many other businesses.
    Why aren't more landowners doing something about this wildfire 
risk? We found landowners are motivated to act, they know the risks, 
but there are two major barriers standing in their way: the cost of 
treating their land can be in the thousands per acre and the worry that 
even if they act, if their neighbors, including their public land 
neighbors, don't act, then their work is for nothing.
    The farm bill can help address these issues--and is already. NRCS 
and the USFS, through state forestry agency partners, can provide 
technical and financial assistance to help leverage the money that 
landowners put in, to treat their land.
    But there will never be enough government funding to fully solve 
this problem, so we need other solutions too, including markets for the 
wood coming from these lands. Because many of the mills have 
disappeared across the West, landowners have little outlet to sell 
their trees and cover at least some of their treatment costs. The farm 
bill can help support markets.
    In the Northeast and South, we found a different story. We found 
that one of the biggest issues facing family woodland owners was 
wildlife--in particular the growing number of species that are either 
already listed or could be listed in the near future.
    In the South, for example, we could see more than doubling of the 
number of forest-dependent wildlife listed under the Endangered Species 
Act. These wildlife are not at risk because of forestry, but because 
they rely on forests for their habitat, family woodland owners could 
face additional regulatory burdens if these wildlife are listed.
    We found that some 35 million acres of important wood supply on 
family lands in the South also happens to be habitat for these at-risk 
wildlife. The South's wood supplies could also be impacted by addition 
species regulations. Since families supply more than 50% of the wood 
harvested in the south to feed mills, this could have serious 
implications on the South's rural, forest-based economies.
    When we talked to landowners, we found that in fact, we can manage 
for wood and wildlife. We found that landowners that harvest timber are 
doing more for wildlife than landowners that aren't.
    In the Northeast, the story is slightly different. There are about 
36 wildlife species that rely on forests that are at-risk and could 
face listing, impacting significant amounts of family lands in the 
northeast. But in the Northeast, our forests are facing a ``midlife 
crisis.'' For a variety of reasons including historic land management 
and lack of markets, we are lacking younger forests and older forests 
in the region but have a prevalence of ``middle aged'' forests. Again, 
not a consequence of today's land management, but something that 
today's landowners, many of whom own their land for wildlife benefits, 
are faced with.
    Because my family has been fortunate to work with foresters and do 
the management mentioned above, our land doesn't face this problem--we 
have diverse wildlife habitat. But we are unique--only 20% of woodland 
owners are working with a forester or professional, meaning most don't 
know the value of active management.
    Landowners, across the board, want to manage for wildlife. In fact 
85% site wildlife as the top reason for owning woodlands in the first 
place. The same is true for my family--we value our woods for the 
income as well as the opportunity to hunt, hike, and fish on the land. 
We want to be part of the solution, but need voluntary tools, to help 
us do so.
    Similar to the situation with wildfire, markets for timber, that 
help defray the cost of management and encourage harvesting that helps 
create younger forests, will mean better habitat for wildlife in the 
Northeast.
    So again, the farm bill can help with this. Providing technical and 
financial assistance and programs and policy that support markets, will 
help landowners tackle these challenges and have the added benefit of 
supporting the rural economy. In partnership with the U.S. Fish and 
Wildlife Service, these programs should also provide landowners with 
regulatory assurances that protect them from future regulation if the 
species they are managing for is listed under the Endangered Species 
Act.
    While families like mine want to do our part to supply the nation 
with the wood we all consume, the air we breathe, the water we drink, 
and the wildlife we all hunt and fish, we need some help. We want to 
support our rural communities and make them both economically viable 
and enjoyable places to live, but we can't do it alone.
2018 Farm Bill Priorities
    While the issues in the regions are somewhat different, the 
solutions are similar. I'd like to ask you're your help in five key 
areas today. I know others on the panel will talk about other forest 
priorities, so I'll focus on topics that uniquely help family woodland 
owners and the challenges we face. Also, we have not yet finished 
gathering feedback from our landowners, so this may not reflect a 
complete list of priorities for family woodland owners.
Maintain Funding and Support for Woodland Owners in Forestry and 
        Conservation Programs
    We know that budgets are tight. For those programs that need 
reauthorization in the next farm bill, we ask that you prioritize 
funding for the Environmental Quality Incentives Program, the 
Conservation Stewardship Program, and the Conservation Reserve Program, 
which provide support for woodland owners. In the last several farm 
bills this Committee made changes to these programs to allow forest 
owners to participate. We greatly appreciate these changes and hope 
you'll maintain these improvements while also further expanding the use 
of these programs for forestry.
    We also ask that you consider funding the Healthy Forest Reserve 
Program, or other strategies to help address the growing at-risk 
wildlife concerns.
    Additionally, we strongly support the Regional Conservation 
Partnership Program and authorities that encourage targeted application 
of conservation program funding to priority landscapes to achieve 
measurable outcomes. While individual landowners taking action is 
important, if many landowners in a landscape take action, our 
individual actions are amplified. For example, if I implement a 
wildlife habitat practice and my neighbors do the same, our combined 
action can reduce the need to list species because we're providing 
sufficient habitat. This helps all of us.
Improve Technical Assistance and Program Implementation for Woodland 
        Owners
    The Agencies should be applauded for having made significant 
progress including forest owners in these programs. However, we still 
have challenges with forestry technical assistance and program 
implementation as they apply to woodland owners. Tackling these 
challenges will result in more efficient delivery of program resources 
in ways that increase the benefits produced on issues like those 
mentioned above: wildfire, water quality and quantity, and at-risk 
wildlife habitat.
    Forestry technical assistance and program implementation issues 
include:

   Education and technical assistance, not tied to specific 
        EQIP or CSP contract, is limited. Woodland owners often need 
        significant help up front, before they can be ready to talk 
        about EQIP or CSP practices. Most landowners don't even know 
        they need to be managing their woods, let alone how to get a 
        plan or implement a practice. Conservation Technical Assistance 
        funding is a key precursor to efficient and effective 
        implementation of Financial Assistance such as EQIP or CSP. 
        NRCS staff is challenged to fill this roll, suggesting that 
        additional resources be allocated to provide the necessary 
        capacity, whether within NRCS or through a partner.

   NRCS forestry expertise is limited, forestry partnerships 
        needed. Some states have NRCS forestry experts on staff, others 
        do not. As a result, not all forestry practices are informed by 
        forestry experts. Stronger partnerships with state forestry 
        agencies could help fill this gap. In some states, NRCS has 
        contracted with the state forestry agency to deliver forestry 
        assistance, a collaboration that should be encouraged.

   Technical Service Providers are limited and focus on already 
        managing landowners. While TSPs can be a great solution to 
        getting more forestry assistance delivered, the incentive for 
        TSPs to engage new landowners and to target landowners with the 
        most need is limited. Often, TSPs are private consultants who 
        rightly need to make a living. There is little incentive for 
        them to work with landowners who aren't already engaged and 
        paying clients. There is also little incentive for TSPs to 
        focus their effort on the highest priority lands. Consideration 
        should be given to streamlining the TSP program itself and 
        focusing resources on partnerships with state forestry agencies 
        and other partners for the initial work to engage landowners.

   Most NRCS staff are tied up in getting contracts out, with 
        little time to focus on outcomes. Because NRCS staff are 
        pressed to get their funding out each year and have limited 
        time to do so, there is little time for NRCS to focus on 
        helping landowners who own lands that will accomplish the most 
        significant outcomes. They often must focus on those contracts 
        that come in the door rather than those contracts that have the 
        most impact.

   Forest Management Planning recognition still a challenge. 
        The U.S. Forest Service and NRCS, along with State Foresters 
        and conservation districts have worked together to develop a 
        shared template for forest management planning, so landowners 
        don't need multiple plans to participate in various Federal and 
        state programs. While about half of the states have adopted 
        mutual plan recognition, there is still more work to be done to 
        streamline forest planning.

   Paperwork and process are difficult. Most forest owners 
        aren't used to working with NRCS or FSA and even those 
        landowners that are very astute have difficulty working through 
        all the steps necessary to participate in a program. Often 
        landowners must turn to the Agencies to fill out their 
        paperwork, an inefficient use of agency resources. We must find 
        ways to streamline this process.

    To solve some of these challenges, AFF has been working alongside 
NRCS and many partners including state foresters and the National Wild 
Turkey Federation, in targeted landscapes, to reach woodland owners, 
educate them on the need for active forest management and get them 
access to technical assistance and planning assistance. The idea is to 
get many landowners engaged, interested in management, and if and when 
they are ready to implement practices, NRCS can then work with them to 
develop a contract. This work is highly targeted, focused on lands with 
the best opportunity to deliver on water, wildlife, or other goals. But 
this is the exception, not the rule, and funding for this work is 
limited. Aligning resources with this important up-front work with 
landowners will enhance the important conservation outcomes achieved 
through financial assistance.
    While we don't have all the answers, we ask the Committee to work 
with us to solve these issues.
Support Cross-Boundary, Landscape Scale Efforts To Tackle Forestry 
        Issues, Especially Wildfire
    As mentioned above, all landowners will be better off if we aren't 
the only ones in our landscape that are tackling these issues. Whether 
we're trying to reduce wildfire risk or protect at-risk wildlife 
populations and avoid listings, because forests are often a patchwork 
of small parcels and different public and private ownerships, it won't 
be enough if just one or two landowners in a landscape are managing. 
New tools for USDA agencies are needed, so they can more efficiently 
work across ownerships boundaries, in targeted landscapes and with 
willing landowners, to address these issues. We ask that the following 
new tools be included in the next farm bill:

   Landscape-Scale Restoration Program: currently the U.S. 
        Forest Service, using a patchwork of Congressional authority, 
        is implementing a Landscape-scale Restoration Program in 
        partnership with state forestry agencies. This program is 
        targeting landscapes identified in state forest action plans 
        and wildlife action plans, helping improve management on both 
        public and private land, in a way that measurably addresses key 
        outcomes. Rather than just working on one parcel here or there, 
        this is allowing the agencies to scale the work needed to the 
        scale of the problem. We ask that you clarify and create 
        permanent direction and authority for U.S. Forest Service and 
        state forestry agencies to continue this work and to carry it 
        out in partnership with NRCS and FSA, including with the 
        Regional Conservation Partnerships Program.

   Cross-Boundary authority in USFS Hazardous Fuels Program: 
        currently, the U.S. Forest Service has limited authority to 
        work with nearby landowners, when doing wildfire mitigation 
        work. With the patchwork of public and private lands in the 
        West for example, to fully protect communities, water supplies, 
        and homes and lives, work is needed on all these lands, not 
        just the Federal lands. Expanding the U.S. Forest Service 
        ability to work with adjacent landowners will better enable the 
        scaled wildfire mitigation that's needed. Our intention is not 
        to reduce funding for work on Federal land but as funding 
        increases for hazardous fuels, to proportionately more funds to 
        be used on private lands.
Provide Support and Regulatory Assurance for At-Risk Wildlife
    In addition to the above mentioned program improvements, there are 
two important policy improvements that we believe will significantly 
increase landowners ability to manage for wildlife, especially at-risk 
wildlife, to avoid the need for listing.

   Increase tools for prescribed burning. Often, to maintain 
        habitat for wildlife, especially in forests in the south like 
        longleaf and shortleaf pine ecosystems that are home to 
        significant at-risk wildlife populations, prescribed burning is 
        necessary. Unfortunately, even as we're seeing increased 
        interest in restoring these habitats, landowners are not 
        conducting the burning that's needed to maintain and improve 
        the habitat long-term. While liability insurance is certainly 
        an issue, the biggest barrier is lack of burning professionals 
        that can do the work. We ask that you consider new approaches 
        to help tackle this barrier.

   Provide landowners with regulatory assurance. As noted 
        above, landowners want to manage for wildlife, we want to do 
        the right thing, but often lack the tools and assurance that we 
        won't face future regulations. NRCS has been working with the 
        U.S. Fish and Wildlife Service to provide landowners in some 
        instances with such regulatory assurances if they are 
        participating in NRCS programs. We see significant 
        opportunities for expansion of this work to provide landowners 
        who undertake conservation actions, with protection from 
        further regulatory burdens for both listed and at-risk 
        wildlife. The Healthy Forests Reserve Program offers safe 
        harbor protections and could be expanded and other programs 
        could adopt similar protections.
Support a Strong, Diverse Forest Products Industry
    As noted above, markets are essential for landowners, good 
management, and growing rural jobs and rural economies. Landowners need 
a diversity of markets to sell their wood into: markets for high 
quality trees on their land and markets for low-grade pulp wood and 
residual tops and limbs.
    Markets can be one of the biggest tools for tackling the wildfire 
and wildlife challenges noted above. For example, in the West, if 
landowners had more opportunities to sell low quality wood, more 
landowners would be able to reduce their wildfire risks. In the 
Northeast, as pulp-wood markets have disappeared, landowners aren't 
thinning their forests and creating younger forest habitat needed for 
certain wildlife.
    While not all of these issues can be addressed in a farm bill, but 
we offer three suggestions for your consideration:

   Support the Timber Innovation Act. Many of you have already 
        agreed to cosponsor the Timber Innovation Act, thank you. This 
        legislation clarifies authority and directs the U.S. Forest 
        Service to conduct research and development into new and 
        improved forest products, such as products for building tall 
        buildings out of wood. New and improved forest products mean 
        more landowners can sell their wood and afford good 
        stewardship.

   Support forest-based facilities in Energy titles, especially 
        in areas where we've lost forest markets. The Energy titles 
        grants, loans, loan guarantees can be aimed at facilities that 
        will use forest materials in areas where there are little or no 
        markets left.

   Encourage Rural Development that uses forest materials. 
        USDA's rural development programs that fund building 
        construction could be encouraged to use agriculture-based 
        materials, including wood products. While this may not be a 
        significant market by itself, it will encourage architects and 
        engineers to learn how to use wood, which will then impact 
        private markets.
Wildfire Funding Fix
    In addition to enacting the above recommendations in the upcoming 
farm bill, there is one other policy issue that we ask for your support 
on, although largely outside the jurisdiction of the Agriculture 
Committee. If not addressed, this issue could impact the success of 
improvements you enact in the farm bill.
    As you all know, wildfire fighting is literally consuming the U.S. 
Forest Service budget. While it may seem tangential to today's hearing 
discussion, it is far from it. As more and more of the Forest Service 
budget is used for wildfire fighting, less funding is available for the 
technical assistance and research that the U.S. Forest Service, in 
conjunction with state forestry agencies, delivers. This support is 
fundamental to successfully implementing the farm bill programs. We 
respectfully ask that you continue to work with the relevant committees 
and enact a wildfire funding fix that stops the erosion of the Agency's 
budget and stops the persistent ``borrowing'' the Forest Service must 
do when they run out of funds for firefighting.
    Thank you again for the opportunity to testify and I'm happy to 
answer any questions you may have.
                              [Attachment]
March 16, 2017

    Dear Chairman Lucas and Ranking Member Fudge:

    On behalf of the millions of forest owners, conservationists, 
hunters, anglers, forest industry, and natural resource professionals 
represented in the Forests in the Farm Bill Coalition, we ask for your 
continued support of forest priorities in the upcoming farm bill 
reauthorization.
    The Forests in the Farm Bill Coalition is a diverse group of 
interests that has worked together for over 15 years to build consensus 
forest sector platforms for the last three farm bills. We are greatly 
appreciative of the Committee's increasing support for forests over 
these last three farm bills. You have made significant policy 
improvements that are making a real difference on the ground.
    Unfortunately, our work is not yet done, as we aim to ensure that 
the nation's forests continue to support rural economies and almost one 
million direct jobs while also providing much of the clean air and 
water, wildlife habitat, and recreational opportunities that every 
American enjoys. With over \1/2\ of the forestland (475 million) in the 
United States in private ownership, including individuals, families, 
corporations and Tribal forest landowners, it is especially important 
that the farm bill continue to support these owners, many of whom 
provide these public benefits at little or no cost to consumers.
    There are challenges that the farm bill can help address, which 
limit opportunities for forests to provide economic and other public 
benefits including:

   As much as 34 million acres of forestland are projected to 
        be converted to development by 2060.

   While not attributed to forestry activities, there is the 
        potential, particularly in the South, to nearly double the 
        number of listed species subject to the Endangered Species Act; 
        such listings could, however, significantly limit forest 
        management opportunities.

   Wildfire occurrence (average acres burned) has increased by 
        160 percent from 1985 to 2015 and burns about 7 million acres 
        of forestland each year.

   In the West, more than \1/3\ of the high wildfire risk acres 
        are family-owned lands, largely because these families lack 
        resources and markets to reduce firerisk.

   Approximately 81 million acres of forests are subject to 
        increased mortality from insects, disease and invasive plant 
        infestation.

   About 80 percent of the 22 million family-owned forest 
        landowners in the U.S. have not utilized assistance from 
        professional foresters in making decisions about forest 
        management and marketing opportunities.

    Addressing these issues requires a combination of strong markets, 
effective technical and financial assistance, informed forest 
landowners, land managers, and communities, and continued research and 
education.
    The Forests in the Farm bill Coalition asks that you include 
policy, programs, and funding support in the 2018 Farm Bill that will:

   Increase the long-term protection and conservation of forest 
        resources from threats such as wildfire, insects and diseases 
        including the use of fire as an important forest management 
        tool,

   Conserve and enhance wildlife habitat through voluntary 
        conservation activities, particularly habitat for at-risk 
        species, to prevent the need to list species under the 
        Endangered Species Act,

   Encourage the retention and perpetuation of forestland and 
        associated values, goods, and services,

   Increase employment, manufacturing, rural jobs, and 
        sustainable forest management through a strong forest products 
        industry, and

   Improve forest conservation program effectiveness and 
        availability to private landowners and land managers to address 
        many of the above issues.

    As in the past, we understand that the Agriculture Committees will 
be challenged with limited budgets and options. Given the work that 
your Committee has already done to reduce farm bill spending, we urge 
you to resist additional cuts to farm bill programs that will limit 
opportunities to craft responsive forest policy.
    We also recognize that for many of the above noted issues to be 
fully addressed, the wildfire funding issues currently plaguing the 
U.S. Forest Service must be dealt with. As you know, as wildfires have 
grown, the increased costs of fighting these wildfires has consumed an 
increasing portion of the Forest Service budget. Today, wildfire 
fighting costs consume over 50% of the budget, whereas in 1985, these 
costs were only 15% of the Agency's budget. With more funds going to 
fight wildfires, less funds are available for Forest Service programs 
and activities that support the nation's private forest owners and 
forest industry. While much of the solution to this funding challenge 
lies in other Committee's jurisdiction, we ask that you continue to 
serve as an advocate to fix this issue, so improvements your Committee 
cho[o]ses to make in the upcoming farm bill can be fully utilized.
    While each of our organizations has priorities within and in 
addition to these recommendations, we agree that a focus on these key 
priorities will help ensure that forests and the people that live in 
and work in them, can continue to contribute to the nation's economy 
and environment. The Forests in the Farm Bill Coalition looks forward 
to providing more detailed recommendations to address the above 
priorities as work on the farm bill continues.
    Thank you for your consideration. We look forward to working with 
you as you develop the 2018 Farm Bill.Sincerely,

 
 
 
Alliance of Landowner    Hardwood Federation      Ruffed Grouse Society
 Associations
American Bird            Land Trust Alliance      SCJ General Services
 Conservancy
American Chestnut        Lyme Timber Company      Society of American
 Foundation                                        Foresters
American Forest          National Alliance of     Southeastern Lumber
 Foundation               Forest Owners            Manufacturers
                                                   Association
American Forests         National Association of  Sustainable Forestry
                          Conservation Districts   Initiative
American Wood Council    National Association of  Sustainable Northwest
                          Forest Service
                          Retirees
Association of Fish and  National Association of  The Center for Heirs'
 Wildlife Agencies        State Foresters          Property
Boone and Crockett Club  National Association of  The Conservation Fund
                          University Forests
                          Resources Programs
CarbonVerde              National Bobwhite        The Nature Conservancy
                          Conservation
                          Initiative
Environmental and        National Wild Turkey     Trust for Public Land
 Energy Study Institute   Federation
Environmental Defense    National Wildlife        Theodore Roosevelt
 Fund                     Federation               Conservation
                                                   Partnership
Forest Resources         National Woodland        Western Pennsylvania
 Association              Owners Association       Conservancy
Forest Stewards Guild    Northern Forest Center   Weyerhaeuser Company
Forestry Association of  Resource Management      Wildlife Mississippi
 South Carolina           Service
Green Diamond Resource
 Company
 

CC:

House Agriculture Committee, Conservation and Forestry Subcommittee 
Members.

    The Chairman. Thank you.
    Mr. Neiman, you are recognized for 5 minutes.

        STATEMENT OF JIM D. NEIMAN, PRESIDENT AND CHIEF
          EXECUTIVE OFFICER, NEIMAN ENTERPRISES, INC.;
    PRESIDENT, FEDERAL FOREST RESOURCE COALITION, HULETT, WY

    Mr. Neiman. Chairman Lucas and acting Ranking Member Walz, 
if I am recognizing the right person here, thank you for the 
opportunity to speak here today on behalf of all my fellow 
purchasers of National Forest timber, and to discuss the next 
farm bill. I am extremely honored.
    I am Jim Neiman, President--and I am a third generation. 
This is our 80th year, going on 81 in business. It is a family-
run business that employs nearly 500 people in four small 
communities in Wyoming, South Dakota, and Colorado. We are 
almost entirely dependent on timber off the National Forests, 
and in our states, the Forest Service manages almost all of the 
timber in those states because of the high elevation. I am also 
President of the Federal Forest Resource Coalition. Our members 
operate in 32 states, employ nearly 400,000 employees, and 
provide over $19 billion in payroll. And all of us rely on a 
dependable, predictable supply of timber off our National 
Forests. It is very critical.
    Unfortunately, the health of many of our National Forests 
is declining. Millions of acres have been devastated by 
catastrophic insect epidemics and wildfires. The Forest Service 
estimates that another 82 million acres, 82, are at an elevated 
risk of fire and insect outbreaks. In the Black Hills, we have 
already lost over 100,000 to outbreaks of bugs and 100,000 to 
fire. In Colorado, we have lost hundreds of thousands of acres 
to the spruce beetle.
    Across the National Forest system, foresters are selling 
less timber and managing fewer acres than called for in the 
forest plans. When the Forest Service backed away from active 
forest management in the 1990s, harvests declined rapidly, 
mills closed, and communities suffered. Meanwhile, the trees 
kept growing, which led to overstocking, drought, insects, and 
catastrophic fires. This Committee recognized the magnitude of 
the crisis, and in the 2014 Farm Bill adopted the most 
significant forestry reform since the Healthy Forest 
Restoration Act in 2003. Unfortunately, these authorities, 
while a much appreciated first step, have yet to be implemented 
at a rate that will meaningfully improve the situation of our 
National Forests.
    For instance, the Insect and Disease Treatment Areas 
Authority identified over 56 million acres in 37 states as 
needing treatment. Yet at the current pace of treatment, it 
will take over 440 years to treat all 56 million acres 
designated in 2014. This is treatment for one time. It does not 
include growth.
    Our written testimony provides a number of specific 
recommendations for the next farm bill. The enormity of the job 
facing the Forest Service, which is horrendous, and the current 
slow pace of action indicate the much broader adoption and 
streamlined approaches are needed if we are to restore the 
health of our forests. We urge the Committee to adopt greatly 
expanded categorical exclusions and to treat insects and 
disease outbreaks, reduce fire danger, create early seral 
habitat, and increase the pace and scale of management. The 
Forest Service should be given broad new authorities to use 
streamlined NEPA approaches on all acres that are not set aside 
in wilderness or other protected categories. Unintended 
obstacles to the use of the Good Neighbor Authority should be 
removed, such as the requirement that work be done on acres 
adjacent to state and private lands, and the restrictions on 
modest road repair and reconstruction should be removed.
    Our members are extremely grateful for the work that this 
Committee did in the 2014 Farm Bill. We continue to encourage 
the Forest Service to more fully utilize the authorities 
provided in this landmark bill. The above recommendations would 
allow the Forest Service to do more across the landscape, do 
more work better and faster, which will result in lower costs, 
more community support, more jobs, healthier forests, and 
potentially higher returns to the Treasury. A failure to act 
means that the alarming trends in declining forest health, loss 
of forest industry jobs, continued catastrophic fires are a 
virtual certainty. We urge you to take the opportunity offered 
by the next farm bill to help move the trend towards more, 
better, and faster management.
    Thank you, Mr. Chairman, and all the Committee Members.
    [The prepared statement of Mr. Neiman follows:]

   Prepared Statement of Jim D. Neiman, President and Chief Executive
 Officer, Neiman Enterprises, Inc.; President, Federal Forest Resource
                         Coalition, Hulett, WY
Building on the Success of the 2014 Farm Bill for Federal Forests
    Thank you, Chairman Lucas and Ranking Member Fudge. My name is Jim 
Neiman, and I am President and CEO of Neiman Enterprises. We have four 
sawmills, one each in Hill City and Spearfish, SD, one in Hulett, WY, 
and one in Montrose, Colorado. These mills create 475 direct jobs, and 
help support 250 contractors.
    I am also President of the Federal Forest Resource Coalition, 
representing purchasers of Forest Service timber from 32 states. 
Collectively, our members employ over 390,000 people, and provide over 
$19 billion in payroll. Our members purchase, harvest, transport, and 
process National Forest and BLM timber into renewable wood, paper, and 
biomass energy products.
    The 2014 Farm Bill was the most significant Forest Service reform 
legislation at least since the passage of the Healthy Forest 
Restoration Act in 2003. Among other provisions, the 2014 Bill 
included:

   Permanent reauthorization for Stewardship Contracting, 
        including reforms that protected contractors from unlimited 
        fire liability;

   Expanded Good Neighbor Authority from a two-state pilot to a 
        nation-wide program;

   Authority to use Designation by Prescription and Designation 
        by Description, streamlining timber sale preparation and 
        reducing costs; and

   Creation of new Categorical Exclusions and streamlined 
        Environmental Analyses to implement forest insect and disease 
        treatments on certain National Forest acres.

    These provisions, while much appreciated, have yet to yield 
significant progress in reversing alarming trends in forest health on 
our National Forests. The relatively low level of use suggests that 
greater flexibility is required in order to move the National Forests 
closer to forest plan objectives, including healthier forests, reduced 
fire danger, and increased timber outputs.
    As you well know, millions of acres of National Forests have been 
affected by insect epidemics and catastrophic fires, and the Forest 
Service estimates that over 82 million acres of National Forests are at 
elevated risk of catastrophic wildfires, insect, or disease outbreaks. 
Last month, the Colorado State Forest Service estimated there are 834 
million dead trees in the state, mostly from devastating insect 
epidemics. California is dealing with a large and rapidly growing 
mortality event, with as much as 10 billion board feet dead on just two 
of their overcrowded National Forests. Large scale wildfires cost 
billions annually to suppress, and cities such as Denver have been 
forced to spend tens of millions of dollars restoring damaged 
watersheds.
    In other National Forests, such as those in the Lake States and New 
England, passive management has allowed forests to develop into closed 
canopy stands where little sunlight reaches the forest floor. These 
forests have limited value as wildlife habitat and are susceptible to 
fire and insects, while populations of species that require early 
successional habitat, such as the ruffed grouse and Kirtland's Warbler, 
continue to decline.
    The extent of the problem is not in doubt. The Government 
Accountability Office recognized the urgency of the need to reduce 
hazardous fuels in 1991. The Forest Service acknowledges that over 73 
million acres of their lands are a high priority for management and 
that ``one time treatment of all high fire risk areas would not fully 
address the fuels problem, as landscapes continue to change over time 
and fuels would build up on many lands currently in historic condition, 
without periodic maintenance treatments.'' The Western Governors' 
Association has adopted numerous resolutions acknowledging the extent 
and severity of the problem, and urging rapid action to address it.
    These problems are often the most severe in states which have lost 
most of their wood using industries due to constrained supplies from 
Forest Service lands. We've learned through painful experience that 
efforts to rebuild the industry infrastructure in such places is a 
slow, laborious process. Efforts to increase the pace and scale of 
management are often stymied by this problem--a classic chicken-or-egg 
problem. The Forest Service must demonstrate it will reliably offer 
viable projects to attract investment, and it's difficult for the 
Forest Service to offer these projects under current authorities.
    Current Forest Plans allow for roughly twice the current level of 
harvest from our National Forests. Increasing the pace and scale of 
management to meet the roughly 6 Billion Board Feet called for in 
current plans will not only create American jobs in frequently hard 
pressed rural areas; it will reduce fire hazards and improve wildlife 
habitat coast to coast.
    Current authorities do not allow the Forest Service to plan and 
implement needed management projects in a timely fashion. Badly needed 
projects to thin hazardous fuels can take years to plan, at which point 
groups opposed to management file lawsuits that cause further delays. 
Many National Forests are woefully behind on meeting forest plan 
objectives, particularly those associated with young forests. At best, 
it takes the Forest Service at least a year to plan and begin 
implementing salvage projects. Worse yet, the Forest Service has, in 
our view, been slow to implement streamlined authorities provided in 
the 2014 Farm Bill.
    The Insect & Disease Treatment Areas authority created by the 2014 
Bill is a case in point. The authority allowed states to petition the 
Secretary of Agriculture to designate certain NFS lands as ``Insect & 
Disease Treatment Areas,'' where the Forest Service would then be 
allowed to use expedited NEPA tools--including Categorical Exclusions 
of up to 3,000 acres--to reduce fuel loads and increase stand health. 
37 states petitioned for the inclusion of over 56 Million acres of 
National Forest lands. Since the petition process ended in May of 2014;

   41 Categorical Exclusions have been decided in 12 states, 
        covering a grand total of about 78,000 acres of treatments, 
        including 26,000 acres of timber harvest.

   An additional 28 projects--using Categorical Exclusions and 
        focused Environmental Assessments & Environmental Impact 
        Statements--covering an additional 127,000 acres--are in the 
        works.

    This May, it will be 3 years since the close of the designation 
period. At this rate, the Forest Service is treating just over 26,000 
acres per year. If we assume that the additional 127,000 acres will be 
decided entirely in this fiscal year, that would represent a 
significant ramp up. However, even at that higher rate, it will take 
over 440 years to treat all 56 million acres designated in 2014.
    We are flummoxed at the low rate of use of these new authorities in 
regions that have had significant forest mortality events. Region 2, 
where my businesses are, has only used the new authorities on 1,600 
acres for mechanical treatments, despite the fact that we've had 
millions of acres of damage from Mountain Pine beetles and Spruce 
Beetle epidemics. Oregon, for another example, had over 6.5 million 
acres designated as treatment areas, yet has completed only had two 
projects covering a few thousand acres, with only 5,100 acre in 
progress.
    Likewise, we are concerned that Good Neighbor Authority Master 
Agreements are only in place in 18 states (Alabama, Alaska, Arizona, 
California, Colorado, Florida, Idaho, Indiana, Louisiana, Michigan, 
Minnesota, Montana, New Hampshire, Ohio, Oregon, South Dakota, 
Tennessee, Texas, Vermont, Wisconsin and Wyoming). The Forest Service 
should have Master Agreements with every state that includes NFS lands.
    Moreover, we are concerned that implementation of the current Good 
Neighbor Authorities has exposed limitations which are hampering 
program effectiveness. Overlapping and conflicting authorities present 
this Committee with the opportunity to fix problems we didn't foresee 
in 2014.
Recommendations for the Next Farm Bill
    We learned from experience that the farm bill is a viable vehicle 
for meaningful reforms of our National Forest System. We urge this 
Subcommittee to continue this commitment to ensuring better management 
of the 191 million acres of National Forests, working closely with your 
counterparts on the Natural Resources Committee and, of course, your 
colleagues in the other chamber.
    In order to address the continuing forest health crises these 
Federal lands are experiencing, we urge you to take the following steps 
in the next farm bill:
    Create Additional Categorical Exclusions: Additional CE authority 
through new categories or expansion of existing categories would mean 
fewer projects would require detailed NEPA analysis. In adopting new 
CE's, Congress should specify that the Forest Service has the 
discretion to determine when and how to apply ``extraordinary 
circumstances'' reviews to the projects, and clarify that projects 
conducted pursuant to new and existing CE's do not require 
documentation of cumulative impacts. We recommend the following new or 
expanded CE's:

   Early Seral Habitat Creation on up to 10,000 acres'.

   Expansion of Insect & Disease Treatment Area CE's to 10,000.

   Improve wildlife habitat on up to 10,000 acres.

    Allow the FS to conduct projects consistent with the Insect & 
Disease CE: The existing Insect & Disease CE's could be improved by (1) 
allowing the Forest Service to move forward with projects on lands that 
it determines meet the criteria for designation; (2) expand its 
application to all acres outside of designated wilderness, roadless, or 
on which removal of vegetation is prohibited by law; and (3) making the 
authorities permanent; and (4) authorizing projects in lands in Fire 
Regime IV.
    Clarify NEPA Responsibilities at the Forest Service: GAO has found 
that the Forest Service does more NEPA compliance, produces more EIS's, 
and takes longer to do so than most other Federal agencies whose 
projects have inherently more lasting impacts on the landscape, for 
instance through creation of permanent infrastructure. Congress should 
clarify that at the Forest Service:

   Application of NEPA should be restricted to truly ``major'' 
        actions, not routine land management: Thinning of forests in 
        general forest or ``suited for timber production'' acres under 
        existing forest plans should presumptively not be considered a 
        major action. Taking steps to rapidly address hazard trees 
        after wildfires, ice storms, or wind throw events should not 
        presumptively be considered ``major.''

   Clarify that (1) environmental impact statements only 
        require an agency to analyze the proposed action and a no 
        action alternative, and that consideration of additional 
        alternatives is solely at the discretion of the Forest Service; 
        and (2) environmental assessments done by the Forest Service do 
        not require analysis of a no action alternative.

    Clarify Problems Restricting Use of Good Neighbor Authority: Due to 
a rapidly unfolding series of events, Congress enacted two different 
Good Neighbor Authorities during 2014. Unfortunately, both of these 
authorities contain language that, as explained in Forest Service 
guidance, limits the ability of the Forest Service to use these 
authorities. In our view, an effective, single National Good Neighbor 
Authority is needed to strengthen the Forest Service relationships with 
the states, create program efficiencies, and maximize program 
effectiveness. A single new Good Neighbor Authority should:

   Allow the Forest Service to use GNA for projects anywhere on 
        the National Forest System, not just those that meet abstract 
        and poorly defined adjacency requirements; and

   Remove restrictions on road repair and rehabilitation. 
        Current practice defines road reconstruction so broadly that 
        even limited road work triggers concern when the Forest Service 
        uses GNA. This leads to poorly designed timber sales and 
        precludes some projects altogether.

    Clarify Congressional Intent on Stewardship Contracting: 
Stewardship Contracting is one tool for achieving land management 
goals; in many cases, the same land management results can be--and are 
currently being--achieved with traditional timber sale contracts. 
Congress recognized this when they made the authority permanent in the 
2014 Farm Bill, saying that Stewardship Contracting authorities is not 
intended to replace or supplant other contracting tools. The Forest 
Service and BLM can achieve greater program efficiency and transparency 
in the use of Stewardship Contracts, while ensuring local support for 
the projects performed using this important tool. These reforms will 
also help attract a broader variety of potential partners who want to 
support and participate in Stewardship Contracting projects. The next 
farm bill should:

   Make retention of existing wood products infrastructure a 
        co-equal objective with other goals of Stewardship contracts 
        and agreements.

   Provide clearer criteria to help the Forest Service 
        determine when to use Stewardship Contracts, Stewardship 
        Agreements, or other contracting mechanisms. In general, if a 
        project is located in the suitable timber base and can be a 
        viable, commercial timber sale, it should be offered as such.

   Clarify the Forest Service and BLM ability to use ``best 
        value'' or ``lowest cost, technically acceptable'' criteria 
        when making contract awards.

   Where Stewardship contracts or agreements result in payments 
        to the Forest Service, 25% of those gross payments should be 
        directed to the County where the project is being performed.

   Congress must remind the Forest Service that funds collected 
        under the Knutson-Vandenberg Act may be used beyond the sale 
        area boundary, and direct the Forest Service to reduce overhead 
        costs charged against K-V collections.

    Provide Greater Certainty for Project Level Decisions: The House 
Agriculture Committee played a key role in providing some of the 
judicial review relief for certain Forest Service decisions in the 
Healthy Forest Restoration Act of 2003. In addition to creating a 
streamlined ``objection'' process (expanded to all Forest Service 
projects in 2011), HFRA encouraged courts to provide deference to the 
Forest Service for a narrowly defined set of projects, required 
participation in the administrative objection process in order to be 
eligible to file suit, required courts to consider the ``balance of 
harms'' from a proposed project versus the harms that could be caused 
if a project wasn't done, and provided that injunctions be limited to 
60 days. In the next farm bill, the Congress should:

   Expand HFRA judicial review provisions to all Forest Service 
        vegetation management projects, except on acres where timber 
        management is prohibited by law or the Forest Plan[.]

   Provide for alternative dispute resolution mechanisms, 
        including ``baseball'' style arbitration, for some projects on 
        a pilot basis.

   Restrict EAJA payments to reasonable limits for hourly 
        reimbursement, and provide stricter controls to ensure that 
        payments do not go to losing plaintiffs or organizations which 
        have substantial financial resources.

    Conclusion: The Federal Forest Resource Coalition is extremely 
grateful for the work this Committee did in the 2014 Farm Bill. We 
continue to encourage the Forest Service to more fully utilize the 
authorities provided in that landmark bill. However, we've also become 
aware of some key missing elements and unforeseen challenges as the 
Forest Service has worked to implement these authorities. The above 
recommendations would allow the Forest Service to more rapidly propose, 
analyze, and implement needed forest management projects across the 
landscape. Doing more work, better, and faster will result in lower 
costs, more community support, and potentially higher returns to the 
Treasury.
    If we fail to act, however, the alarming trends in declining forest 
health, loss of forest industry jobs, continued catastrophic fires, 
destroyed watersheds and degraded wildlife habitat are a virtual 
certainty. While the Congress has consistently provided streamlined 
authorities since 2003, we've seen that they have yet to succeed in 
moving the Forest Service far enough, fast enough to address its many 
and serious problems.
    We urge you to take the opportunity offered by the next farm bill 
to help move the trend towards more, better, and faster management.

    The Chairman. Thank you, and the chair now recognizes Ms. 
Humphries for 5 minutes.

            STATEMENT OF REBECCA A. HUMPHRIES, CHIEF
   CONSERVATION AND OPERATIONS OFFICER, NATIONAL WILD TURKEY 
                   FEDERATION, EDGEFIELD, SC

    Ms. Humphries. Thank you, Chairman Lucas. I am Becky 
Humphries. I am the Chief Conservation and Operations Officer 
for the National Wild Turkey Federation, and previously I was 
the Director of the Michigan Department of Natural Resources 
that managed 4\1/2\ million acres of state forests and wildlife 
lands.
    The National Wild Turkey Federation is a national nonprofit 
conservation organization. We have 230,000 members located 
across the country, and we have chapters in every state of this 
country. We have a team of wildlife biologists and foresters 
that focus on doing actual on the ground conservation work, 
putting conservation on the ground, as we say. We have had a 
formal partnership with the U.S. Forest Service since 1986, and 
with NRCS for more than a decade. We are a leader in 
stewardship contracting, having the first stewardship contract 
and 93 successful contracts since, and we are in the top 20 
purchasers of Federal timber by volume each and every year, 
ranking as high as fifth. In conjunction with NRCS, we provide 
technical assistance to over 900 landowners, and as was 
mentioned, we are co-chair of the Forests in the Farm Bill 
Coalition.
    Wildlife biologists know that forest diversity at the 
landscape level is key to diversity, and it takes active 
management of our forests. It creates younger forests. It 
reduces the risk of wildfire, insects, disease, and improves 
our water quality across the country. And it creates jobs and 
economic vitality for many of our rural communities. The pace 
of creating young forest habitat needs to be greatly increased. 
It is one of the must vulnerable landscapes we have right now. 
The farm bill is a really important legislative priority for 
conservation work and forestry and conservation titles 
authorize critical programs and funding for both the U.S. 
Forest Service and the NRCS to implement active management.
    There were a lot of good things in the 2014 Farm Bill, and 
we appreciate the authorities and tools that have been granted. 
The end result is increasing the scale and pace of good 
conservation work.
    Looking forward to the next farm bill, we are recommending 
the following. First, to focus on landscape level opportunities 
and program delivery, to enhance collaboration, particularly 
between state wildlife agencies and Federal agencies to ensure 
management helps achieve fish and wildlife population 
objectives. To continue to incentive, mid-contract management 
of forestry practices to maximize long-term wildlife habitat 
value, and to increase adjusted gross income limits for 
participation in farm bill conservation programs, and increase 
payment limits for conservation activities to better reflect 
the larger family farm budgets. This will increase 
participation on large blocks of land and landscapes.
    Program-specific recommendations that we are advocating for 
include Environmental Quality Incentive Program, or EQIP as we 
all call it, to increase the minimum amount of EQIP funds for 
wildlife-related practices from five to ten percent. Eligible 
land should include lands capable of production, in addition to 
those that are in production. This was allowed in WHIP, but not 
included when the programs were combined.
    The Regional Conservation Partnership Program, or RCPP, as 
we call it, we have participated in a number of these projects 
and we see tremendous potential with this new program. We 
support reauthorization and maintaining funding levels. We have 
seen and had concerns with implementation of the program that 
limits our ability to fully participate. Funding to offset a 
portion of the recipient's administrative costs should be 
allowed. There is a true cost to partners to deliver these 
practices on the ground.
    The forestry title, we support expansion of stewardship end 
result contracting to all Federal agencies, not just the 
current U.S. Forest Service and BLM.
    We appreciate this Committee and the House's work in the 
last Congress to address how fire funding and wildfire was 
addressed, but a fix is still needed because borrowing takes 
away from active management. The House Committee on Agriculture 
has a long history of addressing large multi-committee issues 
and developing the farm bill, and we are fully supportive of 
using the farm bill as a vehicle for true forest management and 
wildfire funding reform.
    In conclusion, our recommendations will improve current 
programs, and we think benefit wildlife species, help improve 
forest health and water quality, reduce wildfire. We thank you 
for your time and your attention to addressing these critical 
issues. Thank you.
    [The prepared statement of Ms. Humphries follows:]

  Prepared Statement of Rebecca A. Humphries, Chief Conservation and 
   Operations Officer, National Wild Turkey Federation, Edgefield, SC
Introduction
    Mr. Chairman, Members of the Subcommittee, I am Becky Humphries, 
Chief Conservation and Operations Officer of the National Wild Turkey 
Federation (NWTF), and I appreciate the opportunity to testify as you 
begin discussions for the next farm bill. Founded in 1973, the National 
Wild Turkey Federation is a national nonprofit wildlife conservation 
organization dedicated to the conservation of the wild turkey and 
preservation of our hunting heritage. The National Wild Turkey 
Federation is 230,000 members strong and maintains local chapters in 
every state. With the successful restoration of the wild turkey 
complete, the National Wild Turkey Federation has focused its efforts 
on our ``Save the Habitat. Save the Hunt.'' initiative, which connects 
both parts of our mission by recognizing the importance of quality 
habitat for wildlife conservation and its' significance to our hunting 
tradition. Through this initiative, our ``Save the Habitat'' efforts 
are largely focused on creating and maintaining healthy forests through 
active management.
    NWTF is unusual among conservation organizations. We do not simply 
advocate for what we want, we actually do serious forestry work and put 
conservation directly on the ground on private and Federal public 
lands. The NWTF has over fifty professional conservation staff located 
across the nation, including nine professional foresters. These staff 
work daily with state agencies, Federal agencies, and private 
landowners to implement forest management and other wildlife habitat 
projects on the ground. The NWTF has a long-standing formal partnership 
with the United States Forest Service (USFS) dating to 1986 and with 
the Natural Resources Conservation Service (NRCS) for over a decade. We 
have worked together to deliver thousands of projects benefiting 
wildlife and wildlife based recreation. The NWTF has been a leader in 
stewardship contracting, implementing one of the first projects by a 
nonprofit organization a decade ago. Since, we have partnered with the 
USFS on 93 successful stewardship contracts and agreements. These 
projects demonstrate the benefits of partnership and have resulted in 
thousands of acres of sustainable forest management and enhanced 
wildlife habitat. As a result of these agreements, over the last decade 
the NWTF has consistently been one of the top 20 purchasers of Federal 
timber on a volume basis, ranking as high as fifth. We understand 
first-hand the power of collaboration and partnerships, the value of 
categorical exclusions to getting work done in an efficient manner, and 
the challenges faced by the Federal agencies and private landowners in 
getting active management implemented on the ground.
    Professionally trained wildlife biologists know that forest 
diversity at the landscape level is the key to proper management to 
achieve robust species diversity. There are four fundamental criteria 
each forest species needs for survival: food, water, shelter, and 
space. Depending on how a forest is managed, various amounts of these 
criteria become available to the animals living there. Wildlife 
managers consider active management the best solution to meet the 
habitat requirements of the largest variety of species. Active 
management creates young forest habitat, which provides adequate food 
sources, nesting habitat, and hiding places for forest dependent 
wildlife. Throughout the U.S. we are losing this diversity on a 
landscape-level scale, in many cases because our forests are becoming 
more homogenized and over-mature. The U.S. Forest Service and the 
Natural Resources Conservation Service have recognized the need for 
young forest habitat, and thanks to this Committee's work, those 
agencies provide funding and guidance to provide habitat for imperiled 
species such as the golden-winged warbler, New England cottontail, 
gopher tortoise, and red-cockaded woodpecker. These benefits extend to 
numerous other species of wildlife, and result in a greater diversity 
of plants and animals.
2014 Farm Bill--What Was Good
    The National Wild Turkey Federation recognizes and appreciates the 
authorities and tools that have been granted in recent years by the 
Agriculture Committees to expand the ability of private landowners to 
manage their lands and Federal agencies to manage Federal forestlands. 
We believe that the 2014 Farm Bill provides important tools aimed at 
streamlining processes, increasing multi-party collaboration, directing 
closer cooperation with state fish and wildlife agencies in order to 
achieve fish and wildlife population objectives, transitioning towards 
landscape-level (``all lands'') management while respecting private 
landowners property, building capacity, improving watersheds, 
addressing forest health risks (e.g., fire risk and insect/disease 
infestations), and generally enhancing the pace and scale of management 
for healthy forests. The permanent authorizations of Stewardship End-
Result Contracting and Good Neighbor Authority, along with the 
establishment of Insect and Disease Area designations in the 2014 Farm 
Bill are very helpful additions. The specific focus of each tool 
varies, but all strive to increase the pace and scale of restoration on 
forest lands by addressing contracting and process inefficiencies; 
dealing with specific ecosystem/forest health concerns within 
designated geographical units on public lands; allowing for 
coordination of management activities on Federal lands and adjacent 
private lands within a watershed; and enabling non-governmental 
organizations and state agency partners to provide additional resources 
through cooperative agreements for the mutual benefit of all parties. 
If utilized to their fullest extent, such programs and authorities will 
lead to healthier forests, which in turn will provide quality wildlife 
habitat, much needed economic benefits, clean water, and public 
recreational opportunities.
2018 Farm Bill Priorities
    As in previous farm bills, NWTF is a steering-committee member of 
the Forest in the Farm Bill Coalition. We are working cooperatively 
with conservation and forestry stakeholders toward common goals that 
help producers and landowners better manage their lands for forestry 
and wildlife. While the Forests in the Farm Bill Coalition is still 
developing its specific recommendations, I can say now that NWTF's 
general ``asks'' of this Subcommittee will be to:
    Continue landscape scale wildlife and habitat management consistent 
with NWTF goals of large regional focal areas.
    Enhance cooperation between Federal forest management agencies and 
state fish and wildlife agencies to meet land/habitat management 
objectives consistent with fish and wildlife population objectives.
    Continue longleaf pine enrollment in CRP and ensure that proper 
active management is applied to ensure maximum wildlife benefit.
    Continue to improve mid-contract management on forestry practices 
to require proper thinning, prescribed fire, and other management on 
enrolled acres.
    Continue to streamline the Technical Service Provider (TSP) rules 
to reduce paperwork and make it easier to get conservation on the 
ground and offer flexibility to landowners who want to manage for 
forestry, wildlife, water quality, or other purposes.
    Explore and implement further incentives for forest plan design by 
collaboratives, including enhanced use of categorical exclusions as 
contemplated by NEPA and administered under CEQ rule and policy. Also, 
consider allowing road maintenance--not road building--for the purposes 
of public safety or to enable hunter access be included in Stewardship 
End Result Contracting authorities.
    Consider increasing the Adjusted Gross Income (AGI) limits for 
participation as well as updating payment limits on forestry and 
conservation programs so larger landscape scale tracts could be 
enrolled in programs that meet priority conservation objectives. If you 
expand current payment caps to better reflect today's larger family 
farm budgets, you will remove disincentives for larger conservation-
minded landowners to participate and enable landscape scale restoration 
of habitat.
Management & Wildfire
    This Committee has a history of addressing large multi-committee 
issues as it develops long-term farm bills. Accordingly, this Committee 
should develop a fix to the forest management and wildfire funding 
issues faced by the U.S. Forest Service. We are agnostic on the budget 
process that Congress chooses to accomplish this, but we need to 
resolve the ``borrowing'' of appropriated funds designated for 
wildlife, forest management, fire prevention, recreation, etc. to cover 
catastrophic fire suppression costs. There also needs to be a cap on 
the 10 year average of fire suppression costs used to calculate this 
line item in the budget, otherwise as the costs of fire suppression 
continue to escalate, budget items for wildlife, recreation, forest 
management and fire prevention will continue to decline. The House--
with the support of this Committee--passed legislation (Westerman Bill) 
in the 114th Congress to address both but that legislation failed to 
pass the Senate.
    NWTF fully supports using the farm bill vehicle for true forest 
management and wildfire funding reform that would yield success. As we 
have observed earlier, our current funding model for fighting 
catastrophic wildfires remains a severe problem. Over the last 30 
years, the length of the fire season has increased by more than 2 
months. In addition, the intensity of many fires has increased largely 
due to an increased fuel load that is a result of decreased timber 
harvest and reduced active forest management. During the same time 
period, the cost of wildfire suppression has increased an average of 
more than 22% annually and now accounts for over \1/2\ of the U.S. 
Forest Service's annual budget. Hundreds of millions of dollars are 
spent annually to fight forest fires. Unfortunately, these fires often 
result in scorched earth that all agree is not good for wildlife, water 
quality, recreation, or local economies and jobs. Active forest 
management to prevent wildfires costs less than suppression and is 
proven to be extremely effective at preventing wildfires, as well as 
helping reduce fire containment and suppression efforts. By reducing 
the obstacles to sustainable forest management on our Federal lands, 
not only can we reduce the likelihood of wildfires and the costs of 
fighting them, but we can also realize additional benefits of improved 
public safety, the protection of private and public property, quality 
wildlife habitat, improved water quality, fewer invasive species, 
enhanced recreational opportunities, and more robust local economies.
Environmental Quality Incentives Program (EQIP)
    The EQIP program has been a bedrock conservation program that has 
worked well. This Committee has worked to incorporate forest management 
into the program and now around 5% of the program is used to improve 
forested lands adjacent to farmland. That's where the wildlife lives 
and is usually what helps control soil erosion and thus improve water 
quality. We suggest that over the life of the farm bill, the Committee 
increase the minimum amount of EQIP funds for forestry and wildlife 
conservation practices to at least ten percent annually. We also 
support incorporating state input to target EQIP wildlife funds towards 
priority fish and wildlife species, as identified in State Wildlife 
Action Plans. Further, we support increasing the availability of and 
emphasis on long-term incentive payments and contracts (such as those 
up to 10 years) to private forest landowners to encourage sustained 
management for wildlife. We also believe that eligible land should 
include lands capable of production in addition to those lands 
currently in production. These lands were previously eligible for the 
Wildlife Habitat Incentives Program (WHIP), but eligibility was not 
carried over into the wildlife portion of EQIP in the 2014 Farm Bill. 
We also support allowing forest landowners the option of managing their 
forest land specifically for wildlife habitat, timber production, or 
both, depending on their priorities.
    Finally, we support including guidance reiterating the need for 
USDA to convene State Technical Committee meetings on at least an 
annual basis for the purpose of soliciting input from members on the 
implementation of EQIP within the state. The timing of such meetings 
should allow for meaningful input prior to final decisions being made 
on program and practice implementation for the upcoming year.
Forestry
    The direct forestry tools in the farm bill have ebbed and flowed 
over time. Because of their critical nature in preserving wildlife 
habitat, controlling soil erosion, and improving water quality, we hope 
the Committee will continue to invest in forestry programs. We support 
the continued authorization of the Healthy Forests Reserve Program 
(HFRP) with mandatory annual funding at $12 million. An even more 
important goal for the forestry title is to fully support utilizing 
prescribed burning as an effective management tool and increasing the 
financial and technical capacity for prescribed burning on private 
lands to improve forest health and enhance wildlife habitat. The 
Committee should also consider expanding Stewardship End Result 
Contracting authorities to all Federal agencies.
Conservation Stewardship Program (CSP)
    Unlike EQIP, the CSP program has not yet developed into a program 
that fully supports wildlife and forestry. Recent changes to the 
program may improve that, but it is too early to tell. The Committee 
should insure that CSP rankings and payments reward enhancements and 
practices with higher conservation benefits, regardless of whether they 
are generated from new or ongoing conservation work. The program should 
be focused on sustained conservation outcomes, not on the timing of 
when a conservation activity was initially adopted. Like in EQIP, the 
Committee should include guidance language reiterating the need for 
USDA to convene State Technical Committee meetings on at least an 
annual basis for the purpose of soliciting input from members on the 
implementation of CSP within the state. The timing of such meetings 
should allow for meaningful input prior to final decisions being made 
on program implementation for the upcoming year. Further, lands 
expiring from CRP with low-quality wildlife cover, such as monoculture 
or low-diversity introduced grass cover, should not be given priority 
to be re-enrolled into CSP.
Regional Conservation Partnership Program (RCPP)
    NWTF has participated in a limited number of RCPP projects with 
partners and we are seeing a tremendous benefit to private landowners 
and to conservation through its use. We, however, have some concerns 
with this program that are reducing our ability to participate fully. 
We support reauthorization and maintaining funding levels for RCPP. We 
believe that the Committee should allow a limited portion of partners' 
administrative costs to be funded through RCPP and that USDA should be 
provided with the necessary technical assistance and administrative 
funds to implement the program. This amount should be a fixed 
percentage of RCPP funding and not be negotiated after grants are 
awarded to partners, as is the case now.
Conclusion
    As shown through our continued partnership with conservation 
programs within the USFS and the NRCS and our conservation efforts 
through our ``Save the Habitat. Save the Hunt.'' Initiative, the 
National Wild Turkey Federation is a strong proponent of active, 
sustainable forest management and the conservation programs that 
support these efforts. The benefits to numerous wildlife species, their 
habitats, and forest health are matched with economic benefits that 
contribute to vibrant local economies. Our recommendations above will 
improve current programs that in turn will help farmers and private 
landowners meet both production and wildlife goals. Members of this 
Committee have much of which to be proud. You have helped conservation 
and forestry with past legislation and the suggested updates will 
improve that effort. Thank you for your time and consideration and for 
your desire to address these critical issues. I would be happy to 
answer any questions.

    The Chairman. Thank you.
    Mr. Harbour, you are recognized for 5 minutes.

 STATEMENT OF TOM HARBOUR, NATIONAL DIRECTOR (RET.), FIRE AND 
   AVIATION MANAGEMENT, U.S. FOREST SERVICE, USDA; FOUNDER, 
           HARBOUR FIRE CONSULTING, FALLS CHURCH, VA

    Mr. Harbour. Thank you, Mr. Chairman. Thank you for this 
opportunity. I am Tom Harbour. I come here today as a citizen. 
I retired from the Forest Service about 15 months ago. I am 
here today to ask you to utilize the forestry title of the farm 
bill to help build a better future with wildfire management in 
these United States.
    My written testimony in these 5 minutes all concern 
wildfire. Your work on the 2014 Farm Bill provided some key 
improvements in building a better future with fire, and I am 
proposing you be even bolder with this farm bill.
    I speak given a lifetime of experience, 47 years, inside, 
atop, and beside the Wildland Fire Program. I am here today to 
express the seriousness of the current wildfire situation. 
Without improvements, fires are going to get much worse.
    In the last 11 years of active duty, I was honored to 
present our nation's flag to 163 families whose loved one had 
fallen in the line of duty. As I presented the flag, saluted, 
and then stepped back, I saw the tears and yearned for a 
solution. I still do. Death represents the most compelling need 
for action.
    Today, wildfire is no longer an issue to be ignored, 
organizationally or regionally. It is a national issue of 
significance. There are over a billion burnable acres in the 
United States. Wildfire damage is on the increase. There are 
over 70,000 communities at risk. Wildlands are being converted 
to places for homes at 3 acres per minute. Total estimated 
wildfire damage exceeds $100 billion and direct suppression 
costs exceed $5 billion. Agencies like the U.S. Forest Service 
are being slowly transformed by fire to mutations of their 
original intent. Most important to me, the stress of modern 
wildfire is causing depression, suicide, and death in the women 
and men who deal with wildfire.
    We have the best fire suppression system in the world. We 
need the best fire management system in the world. Fire 
management is much more than fire suppression. It is thinking 
about what we do before, during, and after any fire, acting for 
both protection and long-term benefit.
    In the context of this farm bill forestry title, there are 
opportunities to invest $1 ahead of the fire instead of the 
comparable $10-$100 after it. For example, utilizing incentives 
to help promote practices which reduce risks on private lands 
would benefit neighboring public lands. We need more incentives 
and markets to remove small woody biomass from our forests. We 
need more responsible active forest management on private and 
public lands. We need to improve our understanding and practice 
of risk management to help us determine where and when we take 
effective action. We need to find ways to encourage and reward 
local government for adopting land use policies and building 
practices which reduce wildfire risk. We need to find ways to 
facilitate local and state-based solutions to the problems of 
wildfire within a national context. We need to adapt programs 
which save firefighter lives, like the Everyone Goes Home 
Program from the National Fallen Firefighter Foundation.
    Wildfire problems in the U.S. are significant, but we can 
solve them. We need improvements to do so. I have seen the 
future of fire, and without change, it is bleak. In 1973 in 
northern Arizona, I was on a really big fire, about 150 acres, 
in the timber. In 2011, I went back to that same place to see a 
fire burn 550,000 acres. Burned acres are a problem. Homes lost 
are a problem. Expense and organizational transformation are a 
problem. Lives lost are forever.
    I urge you to use the farm bill forestry title to improve 
our wildfire situation in America. I know you can do it, and we 
need your help. Thank you. I will be happy to answer any 
questions.
    [The prepared statement of Mr. Harbour follows:]

 Prepared Statement of Tom Harbour, National Director (Ret.), Fire and 
 Aviation Management, U.S. Forest Service, USDA; Founder, Harbour Fire
                      Consulting, Falls Church, VA
Fire and the Farm Bill--Lives and Landscapes
    I'm Tom Harbour and I'm pleased to be asked to testify to Congress. 
Wildland fire has been the focus of my professional life since 1970 
when I picked up a shovel for the United States Forest Service (USFS) 
in central California for my first wildfire. I spent 46 years with the 
United States Forest Service (USFS). I had an opportunity to deal with 
forest and rangeland fires in every region of these United States. I 
represented our nation in international wildfire situations. I retired 
in January 2016 after 11 years as the National Director of Fire and 
Aviation Management (basically, the National Fire Chief) for the USFS, 
the longest serving Fire Director in the Agency history. I worked my 
way up from the bottom and over the course of my career had the 
opportunity to serve in many capacities including duties at every 
organizational level of the USFS and every component of the fire 
program. I was an Incident Commander at the highest level, Area 
Commander, Regional Director, and National Deputy Director. In 2014, I 
was honored to have the State Foresters present me with the Earl 
Peterson Current Achievement Award for Fire Protection. I believe this 
was the first time a USFS Fire Director was honored with this award. 
Now I am a concerned citizen with continuing interest in fire. Today I 
have the notable privilege to interact with you.
    We have the best fire suppression system in the world, the best 
people, the best scientists, but we need the best fire management 
system in the world. The fire management we need to do is more than we 
as a nation are doing now. It is thinking about what we do before, 
during, and after any fire, acting for the long-term, based on 
accumulated wisdom. In too many ways we are bound to traditions and 
past practices. The laws, rules, regulations and practices of the past 
need to be evaluated and updated to deal with the future. Fire 
management is more than fire suppression. We can be leaders in fire 
suppression, as well as fire management, natural resource management, 
forestry, and conservation, but only if we learn from what is happening 
now.
    We know fire played an important role in establishing the forests 
and grasslands of our nation. Fire needs to play an important role in 
sustaining and promoting healthy forests and rangelands. We've known 
for years that a singular focus on fire suppression is not sustainable. 
For example, forests in the southeastern part of our United States have 
adopted aggressive prescribed burning programs, especially in pine 
forests. Forests in the northeastern part of our United States have 
their own interesting fire management concerns. Large blocks of Federal 
lands out West are the ``poster child'' for unwanted wildfire. 
Essentially, the USFS was ``born of fire'', but as early as the 1970s, 
Federal agencies clearly understood fundamental principles of fire 
management. By 1978, for example, the USFS changed the title of its 
Fire Control division to Fire Management. General ideas about fire 
management became more well known through the 80's and 90's. In 2001 an 
update of a review done of Federal wildland fire policy resulted in 
important guiding principles and endorsement of a key doctrinal 
statement. That statement is:

          ``Fire, as a critical natural process, will be integrated 
        into land and resource management plans and activities on a 
        landscape scale, and across agency boundaries. Response to 
        wildland fire is based on ecological, social, and legal 
        consequences of fire. The circumstances under which a fire 
        occurs, and the likely consequences on firefighter and public 
        safety and welfare, natural and cultural resources, and values 
        to be protected dictate the appropriate management response to 
        fire.''

    That statement encompasses the basics of wildland fire management. 
Fire management includes wise suppression practices while encouraging 
long term conservation principles. Fire management can be equally 
applicable to private and public lands. Said collectively about our 
United States, our conceptual understanding of fire management has 
preceded and progressed faster than our practices. That is why the 
forthcoming forestry title of the farm bill is an opportunity. We need 
to help encourage policies and practices which move us more 
aggressively to fire management. Without change, our nation faces a 
future where wildfires increasingly darken our skies, degrade our 
lands, destroy our homes, and empty our coffers. If that bleak future 
happens, and it will without change, vibrant young women and men will 
die more frequently as they put themselves between the flames and the 
people they serve.
    Wildfire has been a significant national concern since the 
firestorms of 1910 in northern Idaho killed 87 people, burned several 
communities, and consumed timber on 3 million forested acres. Building 
on the concern of a nation that had 2,000 people die in a single 
wildfire (Peshtigo) in northern Wisconsin in 1871, those 1910 fires 
spawned a debate about how we deal with wildfire. That debate continues 
today, but we have the benefit of over a century of learning, 
perspective, and science to help us form better public policy and 
improved practices about fire in our United States. As you know, we 
simply can not put out every fire every time, nor is it wise to do so.
    Fire has long been a concern of Congress. I know a better future 
with fire is a concern of this Committee. After Congressional action, a 
large group of partners affected by wildfire, led by Governors, County 
Commissioners, Mayors, and the Secretaries of Agriculture, the 
Interior, and Homeland Security have agreed upon broad goals to guide 
future actions. This agreement is known as the National Cohesive 
Wildfire Strategy (the Cohesive Strategy). The Cohesive Strategy has 
three goals:

  1.  Resilient Landscapes.

  2.  Fire Adapted Communities.

  3.  Safe and Effective Wildfire Response.

    The farm bill forestry title should be used, and added to, as one 
of the pieces of good public policy, to promote positive action on all 
these worthy goals. It has done so before and should in the future. In 
the 2014 Farm Bill, key pieces of the forestry title, specifically 
Stewardship Contracting, Good Neighbor Authority, State based Statewide 
assessments, and Reimbursement of Funds to assist states were all good 
enduring public policy and good practices with wide application.
    Fire touches every state. Fire of the future, without change, will 
be a significant detrimental impact in every Region of the United 
States. As highlighted by the tragedy which befell Gatlinburg, 
Tennessee in December, and by the prairie fires of last week, wildfire 
is a continuing year round problem in our United States. Wildfire 
threatens lives of civilians and firefighters, it threatens landscapes 
which supply our water, our timber, and wild places. Fire can threaten 
entire communities. It threatens agencies like the USFS who 
increasingly see the bulk of their work directed towards fire 
suppression. The kind of wildfire we are seeing today and which will 
occur without a change in our approach, threatens not only firefighters 
and the public, but our National Forestry conservation ethic and nearly 
every other forestry initiative. Specifically:

   Currently, around 75,000 wildfires per year burn between 5 
        to 10 million acres per year in the U.S. Without change, these 
        figures will rise in the future. Most of the fires occur on 
        private, local, and state lands. Most of the acres burn on 
        Federal lands.

   Up to $100 billion damage to infrastructure, public health, 
        and natural resources may be occurring each year from wildfire.

   An estimated 120 million people in over 46 million homes are 
        at risk due to wildfire.

   About 3,000 homes per year are being lost. With more than 
        86% of undeveloped private lands proximate to public land, 
        future increased fire severity, and increased development, even 
        more homes will burn. In 2015, about 5,000 structures were 
        lost.

   $5 billion per year (or more) in direct fire suppression 
        costs are being spent by local, state, and Federal agencies. 
        Future costs are likely to increase dramatically without a 
        change in approach.

   The impact of high intensity fire on private lands can be 
        devastating to the property owner and of significant negative 
        impact to those ``downstream''.

   The integrity of the forest and rangeland conservation 
        mission in some agencies, for example, the USFS, is threatened 
        by fire because of the extraordinary expense of fire 
        suppression. By the year 2025, \2/3\ of the USFS budget could 
        be devoted solely to fire. The need to deal with wildfire is 
        dramatically changing the USFS. Other agencies face similar 
        challenges.

   Wildland firefighters die at a rate five to ten times higher 
        than their sisters and brothers who battle fires in buildings 
        and homes (structure firefighters)

   Intense fire activity, extended time away from home, ``near 
        misses'', tragic deaths, and the nature of our personal 
        connections with other firefighters, have caused depression, 
        and suicide, in an increasing number of wildland firefighters.

   Despite all our efforts, between 15 to 20 wildland 
        firefighters, vibrant young women and men, continue to die each 
        year in the line of duty.

    Through a series of well intended decisions made over the last 
several decades, wildfire has slowly become an increasingly significant 
problem. Wildfire occurs too frequently at the wrong time in the wrong 
places. More and more of the values we treasure, our lives, our homes, 
and our landscapes, are being threatened by fire. The threat of fire is 
increasing as many important and critical values increase on private 
lands, not within the public domain, but very near.
    Conundrums abound with our current approach. The ``wildfire 
paradox'' (coined by Dr. Dave Calkin, et al.) is that ``current fire 
suppression practices invariably lead to wildfires which can not be 
suppressed''.
    Increasingly volatile fire behavior in increasingly frequent and 
difficult tactical situations endangers not only people, communities, 
community improvements, and natural resource values, but the most 
talented fire responders in the world. Increasing values on private 
lands proximate to public lands are the focus of much of the threat of 
wildfire and increasingly the place where our firefighters are 
deployed. As an example in 2015, my last year of active duty, the 
largest fire in terms of direct property loss (monetary property 
damage) in the United States was the ``Valley Fire'' in California with 
a loss of $1.5 billion. In 9 of the 10 years before 2015, a wildfire 
(not a warehouse fire, not a building fire, not a depot fire, etc.) was 
the largest single direct property loss fire of the year. The Mayor of 
Gatlinburg, Tennessee estimated $500 million of damage to his town from 
the recent ``Chimney Tops 2 Fire''. Unless we change, our future may 
have been previewed in Canada when on May 1, 2016 a wildfire broke out 
in the Alberta city of Fort McMurray. The fire became the costliest 
ever Canadian natural disaster for insurers, with 1,600 buildings 
destroyed. Two fatalities were attributed to the fire and the entire 
population of about 90,000 were evacuated.
    We have the best fire suppression system in the world, the best 
people, the best scientists, but we need the best fire management 
system in the world. Let's keep what we have for that amazing fire 
suppression system, while we enhance fire management.
    The forestry title of the farm bill can help shape a better future.
    In the vernacular of fire, when a fire is running uncontrolled, we 
decide where we can begin our work. We call it an ``anchor''. An 
``anchor point'' in our world is somewhere where we can start, stay, 
and endure safely. It is a place where we are sure things will 
``hold''. Working as a team, we ``anchor'', then go from that point to 
begin the long arduous process of dealing with the fire. As you debate 
the new farm bill there are several ``anchor points'' to start from as 
we focus on better fire management.
    We need to invest $1 ahead of the wildfire instead of the 
comparable $10 or $100 after. Utilizing farm bill forestry title 
incentives to help promote practices which reduce risk on private lands 
would benefit neighboring public lands. For example, we should 
encourage prescribed burning on private lands by encouraging adoption 
of statutes which promote burning. We need more incentives and markets 
to remove small woody biomass from our forests, public and private, 
large and small. Wood-based nanotechnology as a biomass use, by 
creating high-value, high-volume markets, would create cost-effective 
ways to enable enough hazardous fuels to be removed from America's 
forests so wildfires remain smaller and begin again to be a tool for 
improved forest health as opposed to destructive behemoths that destroy 
lives, communities and landscapes. The future of nanotechnology may 
revolutionize small woody biomass, but for now we need to remove it 
since the ``small stuff'' is what causes the ``big stuff'' to burn. We 
need more responsible, active, forest management on private and public 
lands. We need to learn from the exciting insights of the best fire 
scientists in the world to improve our understanding and practice of 
risk management in the context of fire and natural resource management. 
Those risk management practices could help us determine where and when 
we take effective action. Since fire knows no boundaries, we need to be 
even better in reaching seamlessly across jurisdictions ahead of 
wildfire with treatments, planning, and coordination. We need better 
ways, tools, and incentives for citizens to engage in understanding and 
mitigating the risks to their homes and forest property. We need to 
find ways to encourage and reward local government for adopting land 
use policies and building practices which reduce wildfire risk. We need 
to find ways to facilitate local and state based solutions to the 
problems of wildfire. State and local voices will be important to 
shaping a different future. We need a greater focus on improving 
efficiency. We need to determine how we maintain a focus on natural 
resource management while we strive for greater excellence in fire 
management. We need to learn from programs which save firefighter 
lives, for example, adapting the ``Everyone Goes Home'' program from 
the National Fallen Firefighter Foundation for wildland fire.
    We do need to light the candle at both ends! Doing ``nothing'', or 
continuing to do what we have done, is a choice, one which brings 
tragedy. There are local needs which can be incentivized and 
encouraged, things like better planning, zoning, application of 
existing codes, prescribed burning, improved forest management for 
small landowners, training, coordination, and equipment. There are 
state needs and there are national needs, like improving Federal/state/
local/private coordination, setting priorities, ensuring cross boundary 
coordination, reducing the liability risk of burning, maintaining the 
excellence of our firefighters and their assets, all while we implement 
the goals of the Cohesive Strategy. The farm bill could play a role in 
these important conservation activities.
    I suppose in some sense, you could say my time to be of significant 
influence in this debate about conservation, forestry, and wildfire has 
passed. I retired from active duty with the USFS. However, I look into 
the faces of my dear little granddaughters and I know what I want for 
them. I want them to enjoy the fruits of our efforts in wildland fire 
management and natural resource conservation. I want them to have the 
benefit of water and timber and scenery and wildlife which comes from 
the private and publics lands which comprise our nation's forests and 
grasslands. If they are so inclined, I want them to be able to follow 
in the footsteps of their Grandpa, their Smokejumper Dad/Uncle, and be 
a professional in wildland fire. But I'm here today because if we don't 
make some important changes, if we think today is ``good enough'', and 
if we don't take this opportunity with the farm bill, our forests will 
be forever changed and wildfire will be even more dangerous.

    The Chairman. Thank you very much. The chair would like to 
remind Members that they will be recognized for questioning in 
the order of seniority for Members who were here at the start 
of the hearing, and after that, Members will be recognized in 
order of arrival. I appreciate Members' understanding.
    And with that, I recognize myself for 5 minutes.
    Before we touch on fire, Mr. Geissler, let's touch for a 
moment on the 2014 Farm Bill that took steps to address insect 
and disease issues by having the Governors identify treatment 
areas. What has the effect of that been?
    Mr. Geissler. Well, it is a program that could do some 
fairly amazing things. A lot of states did participate in this. 
The Forest Service is working through it. Like the example that 
I gave you earlier, within our own state we took the time to do 
this and the result by having these designated areas, it 
allowed for just a quicker process to get the work 
accomplished.
    All across the U.S., we have insect and diseases issues. We 
have wildfire issues, and using this type of a process allows 
us to address them much quicker with less red tape.
    The Chairman. Along that line, the additional categorical 
exclusions, has that been effective in helping to address these 
issues also?
    Mr. Geissler. Yes, sir.
    The Chairman. Okay. Let's turn for a moment just to the 
fire issues, because you were very kind to leave the field in 
northwest Oklahoma to come here for today, and I see you are 
going back this evening.
    Mr. Geissler. Yes, sir.
    The Chairman. Between what has occurred in the 3rd 
Congressional District and in Mr. Marshall's district in 
western Kansas, and Congressman Thornberry's district in the 
Northern Plains, we have had, what, approximately 1 million 
acres of rangeland go up in the last week. Could you discuss 
with the Committee just for a moment, when you have a fire of 
that magnitude what the response is, state, Federal, local, how 
we address these issues, just for a few minutes?
    Mr. Geissler. Yes, sir. About 1.4 million acres. The bottom 
line for us is that in this part of the state, there are no 
Federal lands, as is most of the State of Oklahoma. We are a 
private land state. The response to this is you have the 
initial attack done by local fire departments. These are the 
fire departments that the first one there was Slapout. 
Slapout----
    The Chairman. Volunteer department, for the record.
    Mr. Geissler. Which is a volunteer fire department. A lot 
of these departments receive volunteer fire assistance through 
Federal programs.
    Once it was recognized that this fire was going to be as 
big as it was, the request comes in and then states get 
involved. We brought in aircraft, we brought in our own 
personnel, which you have there appearing on scene. These are 
all programs that are part of state fire assistance, but it is 
also part of the state's commitment to doing the suppression.
    In addition to what we had there just between local and 
state, we also have cooperative agreements with all of our 
Federal partners. Additional aircraft were brought in that were 
U.S. Forest Service aircraft, being single-engine air tankers, 
as well as type one helicopters. And then we have since called 
in type one incident management team, which is a Federal asset, 
to manage that fire.
    Basically what you take from this is it all starts 
initially with the locals, but it is a system that goes across 
the United States, and it involves all of these organizations 
working together through cooperative agreements to get it done.
    The Chairman. I would just note from my perspective, while 
we have not had any injuries amongst the responders, 
volunteers, the professional firemen, the various county agency 
involved, six good citizens in the three states lost their 
lives, and that is just tragedy.
    Mr. Geissler. Yes, sir.
    The Chairman. But the coordination and the training and 
skill of the folks in the field, the actual firefighters, 
considering the magnitude of this fire, it is just amazing. One 
of the issues that I would bring up, reliving in the community, 
not in the fire zone itself, the incredible fuel load that we 
were addressing: 11 to 14 were in this drought from the 
Southwest United States. Dramatic drop in not only the number 
of cattle grazing, but also reduction in wildlife. The drought 
starved them out. Then we had rebound weather last year, 
unusually good rains, fewer animals to utilize the grasslands, 
so we have had this tremendous dry over-winter grass growth and 
plant growth, reminiscent in some ways of the forestry issues 
where if you are not able to manage your assets efficiently, it 
would appear to me, when you do have a fire, there is just 
nothing to hold it back. While grazing patterns will get back 
to normal at home, nonetheless, I can personally see some of 
the similarities in some of the issues in the forestry areas. 
If you don't manage that fuel load, once you have that 
lightning strike or that accident that is just unintentional, 
then as we have had in the three state area in the Southwest, a 
heck of a mess, right, George?
    Mr. Geissler. Yes, we have.
    The Chairman. Heck of a mess.
    With that, my time has expired and I will turn to the next 
acting Ranking Member for her 5 minutes.
    Ms. Kuster. Thank you very much, Mr. Chairman, and I want 
to thank you for holding this hearing. I associate myself with 
those remarks. Last year, I mentioned a few times during the 
similar hearings that I have a brother who lives out in 
Washington State in the Cascade Mountains in a town called 
Twisp, and he not only lived in the town with some of the worst 
fires and several deaths, but he lived on the road where those 
deaths occurred. These were neighbors of his, friends in the 
community, and the fire literally circled his house, but due to 
the incredible courage of the crew that came out and was able 
to soak the land around, he was able to keep his house. But I 
have been out there to visit a few times this year, and there 
is still a lot of trauma that has lasted.
    I want to thank you for your testimony today, and I am sure 
we will get into this at another time, but I would be remiss if 
I didn't mention that the President has just submitted his 
budget with a dramatic 21 percent decrease for 2017 annualized 
continuing resolution for the Department of Agriculture, and 
more specifically, reducing funding for lower priority 
activities in the National Forest System, such as Federal land 
acquisition and the budget focusing on maintaining existing 
forests and grassland, and then it goes on eliminating the 
duplicative water loan and grant programs. There are a number 
of things that have to do with conservation with our forests 
and the health of our forests, and ultimately can lead to fire, 
and I am concerned about that.
    I want to talk about this issue about the money that comes 
out of the budget to deal with fire, and then is not available 
for other purposes. My state, New Hampshire, is the second most 
densely forested state in the country, and last year we had a 
town, Milan, New Hampshire, small town just over 1,000 people. 
We received a grant for planning a community forest project, 
$400,000. But it was then put on hold because the funding in 
the Forest Service was redirected to fire suppression 
activities.
    Can any of you comment on the impact and what you would 
recommend our Committee consider working with Appropriations on 
how to better manage these funds?
    Mr. Geissler. Basically you are discussing fire borrowing 
that occurs, and you are right. The amount that is pulled aside 
during these periods of high fire expenses can have a dramatic 
impact. Basically by doing a fire funding fix, what you are 
doing is freeing up money within the Forest Service that goes 
within the Forest Service as well as goes to programs like the 
state agencies and our partners that are actually doing the 
mitigation work ahead of time to try to keep the amount of fire 
that we have on the ground and the damaging effects of fire to 
a minimum, or at least reduce the risk.
    It is kind of a chicken and the egg theory. You have big 
fires so you have to spend more money, so you take away funding 
from the programs that help eliminate the big fires. Going in 
and trying to fix that funding, that is why we discussed this 
as being so important to the overall picture.
    Ms. Kuster. Well I thank you for that.
    One last question. Mr. Geissler, in your testimony you 
touch on how important NRCS conservation programs are to 
forestry, and can you tell me how State Foresters engage with 
NRCS, what the relationship is like, and is there anything 
different that NRCS could be doing in regard to helping 
forestland owners?
    Mr. Geissler. Yes, ma'am. Right now, State Foresters are 
typically engaging with NRCS through a lot of different 
mechanisms. In our own state, we deal just on a state level 
actually having discussions individually with our State 
Conservationists, making arrangements so that forestry can be 
included as part of EQIP and forestry practices are included in 
EQIP.
    In many cases, where the difficulties lie is this paperwork 
between the different programs and making sure that we don't 
have duplicative efforts. In some states, we do have issues 
related to that. I am very lucky in my own state in that we 
have been able to come to one plan which goes across both NRCS 
programs, as well as U.S. Forest Service and state programs. 
But there are some things that were within the farm bill which 
would allow that to occur, just with a little bit of tweaks.
    Ms. Kuster. My time is up, but I am sure the Committee 
would appreciate your advice, going forward, with the farm bill 
if there is anything that we should be doing to adopt that 
model that you are suggesting. Thank you.
    Mr. Geissler. And through the State Foresters, we will be 
glad to submit some of that information.
    Ms. Kuster. Thank you. I yield back.
    The Chairman. The gentlelady's time has expired. The chair 
now recognizes the gentleman from Pennsylvania, for 5 minutes.
    Mr. Thompson. Thank you, Mr. Chairman. Thanks for all the 
witnesses for your leadership, your expertise related to 
healthy forests, and healthy rural economies when we do that 
and do that right. It is very much appreciated.
    I just wanted to share some good news to start with before 
I ask my first question. We have heard some reflections on the 
President's budget. The President's budget fully funds wildfire 
preparedness and suppression activities at $2.4 billion. That 
is 100 percent of the 10 year average for suppression 
operations to ensure the resources necessary to protect life, 
property, and hopefully prevent that large sucking sound coming 
out of the rest of our National Forests in order to respond to 
those terrible fires that we see in different parts of the 
country, and specifically in the western part of the United 
States. Mr. Chairman, I just wanted to share a little good news 
to begin with, relative to the President's proposed budget 
already submitted.
    I want to start with Ms. Benedict. Thank you so much, 
Susan. It is good to see you and your husband, and thank you 
for being great tree farmers. It is always a privilege and an 
honor to walk the mountains at your tree farm.
    You had mentioned in your testimony that timber markets 
aren't what they used to be, and I too am concerned about the 
loss of mills, that infrastructure across the country. That is 
one of the many reasons why I was happy to support and be one 
of the sponsors to introduce the Timber Innovation Act, along 
with a number of my colleagues from both sides of the aisle. As 
you know, this bill aims to codify activities the Forest 
Service is already doing in an effort to promote timber 
research and development, as well as new markets specifically. 
I have always said there are three aspects that we need for 
timber. One is take the barriers away from proper management. 
We need to do what we can to increase the value of timber, and 
increase markets. And this, I hope, will serve that.
    Susan, how might such research and development and new 
markets help landowners like yourself and your family?
    Ms. Benedict. Currently, it is very difficult to access 
some markets. With the tall buildings research that is going 
on, that would be a great market for timber, and particularly, 
the type of timber that we grow. However, there is no cross 
laminate factories anywhere near our area. I worked for a real 
estate development company and they are looking at a large 
project in State College, and they asked me about using wood in 
it, but we don't have access to those cross laminate timbers 
that would be needed. Unfortunately, that project is probably 
going to be built with steel.
    So research and development support for those new 
factories, anything we can do to get them up and running and 
getting those kinds of things out where they can be utilized 
would be very beneficial.
    Mr. Thompson. Thank you. In the 2014 Farm Bill, and this is 
for anyone who would want to respond, there are a number of 
categorical exclusions that we provided to the Forest Service 
to encourage flexibility and better management. And so my 
question is very straightforward. Do you support these 
categorical exclusions, and in your view, does the application 
of such CEs undermine environmental stewardship in any way?
    Mr. Neiman. I can sure step in on that, if I could.
    Mr. Thompson. Go ahead, Mr. Neiman.
    Mr. Neiman. From my perspective as a company, it does not, 
and if there is some limited concern, I would love to sit down 
with any of the communities and address those.
    When you look at the issues in the Black Hills and in 
Colorado and look at the landscapes, you have hundreds of 
thousands of acres of dead pine from beetle or spruce and lodge 
pole, and you have complete valleys dead and you are limited to 
3,000 acres. Look at the efficiencies you could create and how 
you could go in and do a landscape treatment. There are some 
discussions of a 10,000 acre CE or broader landscapes have been 
suggested. There is just way more benefits there, and I hope we 
could sit down with any of the environmental community and work 
our way through that to make sure there are no environmental 
concerns. If you look at the long-term health, it is of 
benefit.
    Mr. Thompson. Thank you. Ms. Humphries?
    Ms. Humphries. Yes, I would like to add categorical 
exclusions by their very definition are routine, reoccurring 
actions with very little impact, and we have seen the Forest 
Service over the years erode their ability and use of 
categorical exclusions as intended under the National 
Environmental Policy Act.
    It was a good first step in the last farm bill to try and 
define those and get more use of categorical exclusions. We 
need to spend more time and effort on actually carrying out the 
plans we spend so much time developing with the Forest Service, 
so that we get good management on the ground. I think it was a 
good first step, but more needs to be done.
    Mr. Thompson. Thank you. Thank you, Mr. Chairman.
    The Chairman. The gentleman's time has expired. I now 
recognize my next acting Ranking Member, the gentleman from 
Arizona, for 5 minutes.
    Mr. O'Halleran. Thank you, Mr. Chairman.
    I have a couple of questions for Mr. Harbour, and I want to 
start, though, by saying that from my front window, I have seen 
four fires in the last few years. I live in the Sedona, Arizona 
area. We almost lost the entire Oak Creek Canyon watershed the 
other year. I have worked at and with many groups in the state 
to come together to deal with stewardship projects on the 
forests. The underlying issue has always been that we don't 
have enough funding to work on these issues, and I would just 
like to know what programs specifically if we were able to 
change the way we fund firefighting, what specific programs are 
available, do you think, that would help us prevent fires?
    Mr. Harbour. I would say one of the big things that has to 
happen there is making sure that the State Forester, in your 
case, Mr. Jeff Whitney and the local folks, along with the 
Forest Service get together. Setting priorities in these times 
is really critical. I have seen probably more effective work 
done where we could just get agreement across a broad spectrum. 
It is so easy today to stop things. It is hard to actually do 
things. The Forest Service is anxious. I know it hasn't changed 
in the 17 months I have been out. The Forest Service is anxious 
in southern Arizona, northern Arizona, all across the 
Southwest, to work with State Foresters and local folks to 
accomplish meaningful projects. That is why the Good Neighbor 
Authority that you adopted in the 2014 Farm Bill was so 
important to note.
    Mr. O'Halleran. Thank you. A little follow up on that. We 
already have a project, Four Fry Project it is called, four 
forests in northern Arizona to be able to thin those forests 
out. And yet, time and time again we run into problems, there 
is agreement, Center for Biological Diversity, the cattlemen, 
from one extreme to the other extreme are on board.
    What my question is, since we have these agreements, but 
our problem is always either, first, funding; or second, the 
inability of the Forest Service to be able to let out contracts 
in an extended process out past 5 year or 10 year cycle. Do you 
have any comment about that?
    Mr. Harbour. And I am going to throw him under the bus 
because I know he is my friend, but sitting behind me here is a 
guy that is the Deputy Regional Forester for the Southwestern 
Region, and specifically how Four Fry operates in the current 
issues and opportunities they have with Four Fry, I am sure Mr. 
Jim Upchurch, who is in town for a couple of months, would be 
more than happy to talk to you. Because I know, again, I was 
the fire guy. There are lots of other disciplines in the Forest 
Service, but the importance of active forest management so we 
can have a better place for our firefighters to be safe, it is 
very, very important.
    Mr. O'Halleran. This is just a statement: when we have 
these programs and we have the ability to get appropriate 
management and thinning in the forests completed, time and time 
and time again, and we find that we just don't have the funding 
or we don't have the regulatory environment in which to do it. 
It is frustrating for the citizens that live in these areas. I 
live in the middle of a National Forest, and luckily, I decided 
to have a fire-wise house, but people like Wally Cubbington 
from Northern Arizona University have been stating this time 
and time and time again. Rodeo Trudeski, which is the fire you 
were referring to, 550,000 acres, that fire was preventable, 
although it was set by people. It is a preventable fire because 
of the issues involved.
    I just had a fire in my district and the White Mountain 
Apache were able to thin out a forest near one of our 
communities, and that fire got close to that community and just 
laid down on the ground because of the thinning that took 
place. If we are going to try to save communities and create 
jobs, we need to have a working process, going forward.
    I yield back, Mr. Chairman.
    The Chairman. The gentleman yields back the balance of his 
time. The chair now recognizes the gentleman, Congressman 
Kelly, for 5 minutes.
    Mr. Kelly. Thank you, Mr. Chairman, and thank you, 
witnesses, for being here.
    First of all, to Ms. Humphries, I am disappointed because 
my friends in the northeast Mississippi Hill Country Strutters 
are having their banquet tonight, and I am here instead of 
being there. That being said, I want to thank the National Wild 
Turkey Federation for what you do and being so conservation-
minded, but also providing family and recreational 
opportunities for so many. I just want to thank you, and I 
truly mean I would rather be there than here.
    Ms. Humphries. Thank you.
    Mr. Kelly. Now in general, and any of you can answer, in 
many of your written testimonies, several of you mentioned the 
need to provide private landowners with regulatory assurance if 
they manage for at-risk or listed wildlife. I know there is one 
program, the Healthy Forest Reserve Program, that provides 
landowners with safe harbor protections, but what else can we 
do through conservation programs to provide this regulatory 
relief?
    Mr. Neiman. And your question is in reference to private 
landowners only?
    Mr. Kelly. Yes.
    Mr. Neiman. Well, our company is 80, 90 percent dependent 
on Federal land in some states, but we do a fair amount of work 
on private, and some of the references to SIP and FIP programs 
that we see come along in the past clearly can help some of 
those areas. Change in the culture, some of the ranches that 
look at that being a product that they are selling and figure 
out to help them look like the Forest Service needs to out over 
the next 25 and 50 years, and what do we want this landscape to 
look like for the next generation? To thin, they are going to 
need some support for thinning projects and stuff, whether it 
is Forest Service or private, to thin some of those acreages. 
Looking at what kind of programs, including FIP and SIP and 
others that can help that private landowner to create healthy 
forests, forest resiliency needs to be what we look at on our 
Federal lands, and hopefully we can start educating our private 
lands out West to look at that and look at the resiliency as a 
very key part. What is their carrying capacity? They understand 
that term, when you look at carrying capacity on their land, 
and with the drought and other issues, we have less carrying 
capacity. We have to recognize what kind of volume can we put 
on these acreages, what can it withstand? Just like the 
excellent examples earlier when there is nobody grazing the 
grasslands, our forest is very much related to that.
    Mr. Kelly. Mr. Neiman, this is for you, but any of the rest 
can answer. The National Environmental Policy Act, in your 
opinion, why does the NEPA process currently take so long, and 
what can we do to speed it up? I think that is important. If we 
do the controlled burns, we wind up not having as many 
wildfires, so what can we do to speed that process up?
    Mr. Neiman. Well, we clearly have talked a little bit about 
CEs and expanding in those, but we really need to get the 
decision making to the lowest level possible, instead of these 
national standards with heavy weight from D.C. and the regional 
level. Get the decision level and give them some protection 
down at the forest level, if you can.
    But unfortunately, the Forest Service has the most 
extravagant process of doing EIS work of any agency. How we can 
get them to be more standardized, and rightfully so with the 
environmental community attacking timber sales and so many 
lawsuits, they have had to come away with a perfectionist 
attitude. They have to be 100 percent right. Nobody can be 
perfect, so we have to take the handcuffs off. And then 
internally, the Forest Service since the 1990s has started 
putting their own handcuffs on too, beyond what the House and 
Senate has done. We have to encourage them to take some risks, 
and then give them support so we can move ahead. You can't do 
it any other way. They can't be perfectionists and write 
policy. You have to find more doers.
    Mr. Kelly. I wholeheartedly agree, and it is better to do a 
controlled burn and put too much smoke or pollution in the air 
than to have an out of control wildfire which does much more 
harm to the environment in the long run than controlled burns. 
I agree. We need to get it at a local level.
    Thank you, Mr. Chairman. I yield back.
    The Chairman. The gentleman yields back, and in order to 
maintain the custom for Ranking Member, the chair now notes 
that the gentleman from California, Mr. Panetta, is not a 
Member of the Subcommittee but has joined us today. I have 
consulted with the Ranking Member, the various ones, and 
pursuant to Committee Rule XI(e)(2), we are pleased to welcome 
him to join us in the questioning process. And with that, you 
are recognized for 5 minutes, sir.
    Mr. Panetta. Thank you very much, Mr. Chairman. I 
appreciate this opportunity. Thanks for squeezing me in.
    First of all, thank you to all the witnesses who came, 
prepared their testimony, and actually took the time to testify 
today. Thank you very much. But I will let four of you off the 
hook. A lot of my questions are going to be directed at Mr. 
Harbour today.
    That being said, the reason for that is because I represent 
the central coast of California, Monterey, Salinas, Santa Cruz 
area, and Mr. Harbour, as you probably know, this past summer 
we had the most expensive wildfire in the history of our nation 
called the Soberanes Fire. And it burned over 132,000 acres 
along the Big Sur area where it started, kind of went south 
down in the Monterey County area towards actually my home in 
Carmel Valley where myself, my wife, and my two daughters could 
actually look out our window and see the flames up in the hills 
burning, fortunately quite a ways away.
    One bulldozer operator during the fighting of that fire 
lost his life, unfortunately, and there was a lot that was 
asked about not just how to fight it, obviously, although that 
was a big question, considering the steep terrain that it was 
in and the fact that it burned so long, and how difficult it 
was to battle. But also what could be done to prevent it?
    And so obviously, that is what my questions are going to be 
tailored around, Mr. Harbour. In regards to something like 
this, in relation to management programs of Federal areas like 
that area which I am sure you are familiar with, what can be 
done to lessen the chance of a fire?
    Mr. Harbour. Well, aggressive prevention programs certainly 
are important, despite Smokey Bear's enduring message, still 
nationwide 90 percent of fires are caused by humans, and you 
need to keep the Bear active and his message going. The Los 
Padres National Forest and the area in southern California 
represents a special concern, because the vegetation is 
flammable. The vegetation depends upon fire to regenerate and 
reproduce in a natural sense, and much like the example, Mr. 
Chairman, about too much grass, where we have over the last 
several decades done what we thought was good public policy at 
the time, we kept putting fires out. What we inadvertently did 
in many of these areas, and it happens in the timber ground 
too, is there is too much fuel. There is too much to burn on 
those lands. And so when you get the right type of ignition in 
the right place where the fire wants to go, you get these high 
intensity fires that take lives, that threaten communities.
    I would say in addition to the prevention efforts, we 
certainly have to learn about what is reasonable for Cal Fire, 
the Forest Service, the state agencies in general to do, 
because it is wrong to put them all out all the time. In fact, 
I am here to tell you we can't do it. We shouldn't be putting 
them all out all the time. Mr. Kelly mentioned the importance 
of prescribed fire and low intensity fire, and the kinds of 
ecological regimes that happen around Carmel are important.
    So there are complex issues complicated by Endangered 
Species Act, complicated by wilderness, complicated by smoke 
concerns, but we have the tools, sir. It is simply getting 
local, state, and Federal folks together to agree to apply 
those tools. I know Mr. LaMalfa has been particularly vocal 
about how easy it is to stop projects, and I will tell you that 
in the case of some of what has happened on the Los Padres 
National Forest, Bob Berry, the forest supervisor there has 
wanted to do more. It is tough sometimes to get those projects 
actually off the ground.
    Mr. Panetta. Thank you. I appreciate that. Within 10 
seconds, please.
    Mr. Neiman. Okay.
    The Chairman. The gentleman has time to respond.
    Mr. Neiman. It is okay, in a related story, and there are 
some similarities to what you are seeing in Oklahoma and Kansas 
and in California. In the Black Hills, on the north slopes of 
the Black Hills, once they cut the grazing permits back to 
about \1/3\ of what they were from historical highs in the 
1960s and 1970s on the National Forests, we are now developing 
huge understory brush, particularly, and of course with no 
predators, the sheep have all left and the grazing permits on 
cattle are cut back to about \1/3\, we are seeing understory 
now getting into the 10, 15, 20 height. That should have had 
some landscape controlled burns years ago, but now you have 
three levels of ladder fuels into the overstory of old growth 
forests that there is no way you are going to stop it without 
going in with some kind of a treatment.
    We have similar problems now with the dry conditions and 
now you will have a wet spring, the grass gets 1 to 2 tall. 
You have the 5 to 10, 15 understory of the shrubs and 
everything, and then the ponderosa pine, and we have a disaster 
waiting. Similar story to what you see. You nailed it on the 
head. We need to figure out some way to have some controlled 
burns on your hillsides in California.
    I just visited San Diego a few weeks ago. I have been down 
there seeing what the fires are doing north of there. It is 
scary.
    Mr. Panetta. Thank you. Thank you, Mr. Chairman.
    The Chairman. The gentleman's time has expired. The chair 
now turns to the gentleman from Georgia, Mr. Allen, for 5 
minutes.
    Mr. Allen. Thank you, Mr. Chairman, and thank you, all of 
you, for being with us today.
    Several of you mentioned in your testimony that the 
conservation programs are important to forest owners, just like 
farmers. I know in my home State of Georgia, a lot is being 
done there on these programs to provide landowners support and 
tools to do conservation practices on their lands, like tree 
planting, fire breaks, and improvement for wildlife habitat and 
water quality.
    Of course, the biggest thing that we have talked about here 
today, which Mr. Harbour, in your testimony you were saying, I 
was not surprised but the damage that we have had over the past 
few years in our forest fires, wildlife fires and things like 
that. Obviously, you mentioned ways to fix that problem. What 
is keeping us from actually fixing it? Because it seems like 
that if you tried to take care of this problem, you get on 
somebody else's turf. You mentioned the wildlife and things 
like that, but obviously, a forest fire is not good for 
wildlife either. What is the answer to this problem?
    Mr. Harbour. I wish I knew. I have been thinking about this 
for 47 years. I do suggest that perhaps in concert with State 
Foresters and others, maybe more of the answer now lies on 
private land. Maybe more aggressive incentives and help for 
tree farmers and private lands are going to be a significant 
part of the solution, because we have been for decades trying 
to figure out what we do, especially on National Forest system 
lands. And we haven't fixed it, even though we know there is a 
significant problem.
    Mr. Allen. Ms. Humphries, I am from Augusta, and you are my 
neighbor over there. And of course, you said that the cost of 
wildfire, you described in your testimony, no, excuse me, I am 
going to the EQIP program, as far as adequate flexibility to 
meet the conservation and wildlife needs for our private forest 
owners, what can you tell us about that and how can we improve 
that program?
    Ms. Humphries. Well, the EQIP program has been very 
helpful, but it is really important, moving forward, that we 
get on the ground technical assistance and that we look at ways 
to get active management out on the ground on private lands.
    Mr. Allen. And Ms. Benedict, in my district, we have, well, 
everybody is buying all our sawmills, and I saw where you said 
that you didn't have available sawmills to harvest your timber. 
How did that take place, because I am a little concerned that 
everybody wants to buy our sawmills now and I don't want them 
to disappear. What happened there in your area?
    Ms. Benedict. Well, there are a lot of factors at play. 
Part of the problem is that during the economic recession that 
began in 2008, there just wasn't enough activity to support a 
hardwood market. A lot of that goes for furniture and fixtures 
and paneling and so forth, and so the housing downturn really 
hit that market. That, of course, puts a lot of economic 
pressure on mill owners and loggers and everybody else, and so 
investment, it just becomes too costly to maintain the 
investment. The other thing that happens also is that there is 
not enough--it would be helpful for landowners to have 
technical assistance to be able to do appropriate land 
treatments and then get that wood to a market.
    Mr. Allen. Right.
    Ms. Benedict. And when that market is evaporating, that is 
where we have problems. The Timber Innovation Act that is 
looking to build markets for timber would be very helpful in 
that.
    Mr. Allen. Mr. Geissler, you were shaking your head. Do you 
have any comments in regard to that?
    Mr. Geissler. Yes, sir. Bottom line----
    Mr. Allen. How do we deal with cyclical economies?
    Mr. Geissler. I know, and I have heard the other members 
here on this panel describe it of getting additional technical 
assistance on the ground, but a lot of it really involves with 
the fact that if there are no markets out there, management of 
private lands really does fall off. And so there are ways and 
things that we can do to encourage the use of forest products 
and to actually site mills.
    One of the things which is not directly within the farm 
bill, though, is the Forest Inventory and Analysis Program, 
where we inventory all of our Federal and private lands, and 
even that, though, is giving industry an opportunity to site 
these mills around the United States in places where 
sustainable forestry occurs. When you have a market for stuff, 
you definitely get management in place, and that is where a lot 
of what the state agencies do, as well as a lot of the folks at 
this table, is when we are in the position where maybe there is 
not a mill close enough yet, but looking for a market and still 
maintaining the technical assistance with the idea that the 
wood is there to encourage greater development in the future.
    Mr. Allen. Good. Thank you for your testimony.
    I yield back.
    The Chairman. The gentleman's time has expired. The chair 
now recognizes the gentleman from California, for 5 minutes, 
Mr. LaMalfa.
    Mr. LaMalfa. Thank you, Mr. Chairman, and thank you, 
panelists, for being here today.
    I come from the way north part of California where we have 
a lot of mountain country and a lot of fires too, on the 
eastern side of the Sierra and at the top of the state, so I 
will try and get several questions here in my 5 minutes.
    Mr. Geissler, again, thank you for being here. Obviously 
California has so many dead and dying trees, over 100 million 
or something, in our forest inventory there. We see insect 
infestation, we have suffered from drought. We don't have 
drought anymore. I can see the broken spillway from my front 
window, to borrow a phrase from Ms. Palin, but the situation is 
very, very fluid, changing all the time. There are a lot of 
ways we can be going with this. We have trouble in California 
even getting after salvage when there is a fire. We had \1/4\ 
million acres burn in the top part of the state in 2014. It was 
a year and a half later before we could actually get through 
the nonsense to start processing and getting some of that value 
out of there while it still has value, instead of a negative.
    So please just elaborate for a minute, what things do you 
think we should be doing, especially since U.S. Forest Service 
owns so much of the land in the West, so much of the land in 
northern California. What can we break through, especially in 
conjunction with what we are talking about with the good things 
that were passed in the 2014 Farm Bill?
    Mr. Geissler. Right. Well thank you. Like you said, the 
bottom line for it is we do have insects and disease issues, we 
have drought issues, we have wildfire issues that are out 
there. We have a glut of wood that potentially is out there 
that needs to be harvested and salvaged. It all comes down to 
the need for having a mechanism in place. There are not enough 
markets for this wood, and in a lot of cases throughout the 
West, not just in California, the mills have left. If you look 
at California and Wyoming, there are two mills in some of these 
states for the entire state.
    Mr. LaMalfa. Let's talk about markets now. We can even talk 
about whole logs going on ships export, but let's look at the 
whole picture, please, on that, export.
    Mr. Geissler. Yes. What I was going to get to is that the 
idea of developing these markets that are out there, but there 
are also the limitations that are placed with even getting the 
wood off, and that is where some of the things that are in the 
farm bill related to the Good Neighbor Authority, insect and 
disease areas, as well as if there was something related to 
wildland fire, similar to the insect and disease, to 
potentially shorten the timeframe that is necessary to get this 
product off the----
    Mr. LaMalfa. How much of this is California unique, because 
I have colleagues that tell me like in other states that 
salvage is a fairly simple operation to get to without this 
much paperwork.
    Mr. Geissler. I am sorry, sir?
    Mr. LaMalfa. Well, this much paperwork, in other states, 
they can actually get salvage done timely.
    Mr. Geissler. Exactly.
    Mr. LaMalfa. It is a California----
    Mr. Geissler. California does have some rather extensive 
laws related to that, but some of the things can be taken out 
with red tape, just being clipped, if you want to know. There 
are both state issues there, as well as Federal stuff that can 
be addressed through Good Neighbor and some of the other 
programs that are available.
    Mr. LaMalfa. Yes, Good Neighbor Authority. All right.
    Mr. Geissler. The capacity is there. State forestry can 
provide assistance. Forest Service can provide assistance. 
There is never going to be just purely enough money to 
accomplish that.
    Mr. LaMalfa. I would like to see the money come to the 
private-sector by making money off the products than having to 
come from the Treasury.
    Mr. Harbour, again, thank you for being here and for your 
many, many years of service dedicated to stopping wildfire and 
limiting it, et cetera.
    One of the things I am really interested in as well is 
biomass, which just seems to be a huge opportunity for us to 
have renewable power with something that puts jobs right in our 
backyard, not importing wind mills or solar panels from 
somewhere else, to have that be the renewable energy. Biomass 
seems to be the key towards healthier forests, cleaner air: 
many positive things. Jobs in our backyard, jobs trucking the 
material from there to the power plants, the power plants we 
could be building, and meeting these renewable mandates that 
keep popping up and getting higher and higher. California wants 
to go 100 percent renewable by 2050. They are throwing some 
ideas around, and I don't even know where I am going to live 
anymore after a while.
    Would you touch on that a little bit, please, and also more 
use of the Good Neighbor Authority? Is there more room for 
Tribes, Indian Tribes to be able to be part of that Good 
Neighbor Authority with compacts? Are you aware of that? Please 
touch on those two things.
    Mr. Harbour. Sure. Well first, let me talk about small 
woody biomass. I am no scientist and I told folks for a long 
time, I am interested in getting the small stuff off the ground 
because it is what makes the big stuff burn. And when the big 
stuff burns is when my guys, what used to be my guys, I still 
think of them that way, women and men, that is what causes all 
the problems with the huge conflagrations that we get into. You 
are exactly right. I have listened to presentations on 
nanotechnology. Utilization of biomass, as long as I have been 
a forester, and that was a little ways into my fire career, is 
the pot at the end of the rainbow. We have to take good wood 
product off private and public lands, no question, but getting 
that biomass, that small woody biomass off is just incredibly 
important.
    Two of the things that you did in the 2014 Farm Bill, 
permanent authority of stewardship contracting and Good 
Neighbor were all linked together in terms of this biomass 
issue, and yes, Good Neighbor Authority needs to be expanded 
and certainly, biomass needs to be a focus of what we do on 
private and public lands. It is what provides the fuel to get 
them started and sustainable.
    Mr. LaMalfa. Mr. Chairman, are we going to have a second 
round of questions? It is just us.
    The Chairman. The chair would recognize the gentleman for 
an additional 5 minutes.
    Mr. LaMalfa. All right. Let's just keep rolling. Thank you, 
my friend.
    The Chairman. I can be positive sometimes.
    Mr. LaMalfa. Good Neighbor. I see Jim maybe or George wants 
to talk about it too, but it is----
    Mr. Neiman. If you are done on that, I would like to let 
you finish up on the Good Neighbor and anything we are doing on 
biomass.
    Mr. Harbour. And like I said, I want to just emphasize as 
importantly as I can, I think that if you could utilize farm 
bill forestry title incentives to help us on the biomass side, 
it has so many beneficial impacts in terms of the fire program, 
forest health, what can happen on private and public lands. It 
is just an absolute key, but for too long the stuff has been 
worthless. We can't get it off the ground. We got to pay too 
much to get if off the ground----
    Mr. LaMalfa. Let me jump in there, because we are so 
heavily subsidizing solar and wind in this country. Everybody 
is just gaga, ``Oh, it is the biggest thing.'' We have all this 
material in our backyard. Is it going to go up in smoke like my 
colleagues talked about, or it can be done in a controlled 
fashion in a power plant, making green, renewable, anytime 
baseline power you can turn on. You don't have to wait for the 
wind to blow or the sun to come up. It seems like the perfect 
world here to me. Put the jobs in our backyard, clean up 
something that needs to be cleaned up, save the wildlife, save 
the habitat. All those good things are going to come from this. 
Maybe we need to have a subsidy that is directed towards 
getting that material out of the woods to where it needs to go 
where they can make money once it is on the landing at the 
power plants. Is that a reasonable way to go? Anybody on the 
panel, please. Mr. Harbour, you can finish up and anybody on 
that panel.
    Mr. Harbour. I will just say before Jim goes, that is the 
whole key. It is just investing a dollar ahead of time to do 
something like treating biomass so you don't have to pay $100 
or $1,000 per acre in suppression costs. And I will shut up 
here.
    Mr. Neiman. If I could comment?
    Mr. LaMalfa. Please.
    Mr. Neiman. I appreciate it. When I look at the big picture 
and I look at trying to figure out how to treat more and more 
acres, a lot of times our focus is on biomass only, which has 
to be subsidized, and you could be correct in that. But you 
also mentioned how do we do it at the least amount of cost? If 
you could find areas and attach--when that biomass is attached 
to a saw log and you are focusing on highest and best use of 
value of those trees and put the rest into biomass, that is 
your best economic situation, and you can treat four to ten 
times more acres by attaching that biomass. I am really 
perplexed----
    Mr. LaMalfa. You mean by taking a saw log that you are 
making some money off of and the rest of it comes along with 
it?
    Mr. Neiman. Yes, the top or the whole thing. Bring it 
along.
    Mr. LaMalfa. I am all for it.
    Mr. Neiman. Yes. I am perplexed by California, because you 
used to have about 36 power plants and they are shutting down 
right and left throughout the state. I have a lot of friends 
out there, along with companies like SPI and different ones, 
and I am frustrated with the lack of support that they did get 
10 years ago. I like your thoughts there, but when you look at 
biomass in our areas, they are heavily subsidized, whether it 
is a power plant or pellets or whatever. You never know how 
long that funding is going to go on. When you are looking at 
investments for a pellet plant of $10 to $30 million, a co-gen 
plant, 11 to 20 megawatts going to be from $50 to $75 million. 
You have to really look at 20, 30 years minimum to finance 
that.
    Mr. LaMalfa. It is a long-term investment.
    Mr. Neiman. There are a lot of elements here to look at.
    Mr. LaMalfa. And let's really get real about who we are 
subsidizing here. We are taking care of the public's land that 
the U.S. Forest Service is unable to do, and so the cost is 
going to be like the Fram filter guy, ``You can pay me now, or 
pay me later.'' We can burn it all up and have to regenerate 
and have all the stuff that gets in the streams from a 
wildfire, or we can go $1 ahead of time, like you folks are 
saying, and do it on the front end. These dollars are worth a 
lot more in this than in any of the other la-di-da renewable 
power we are talking about here. And so this is the message we 
have to get across is we are saving the people from these 
hundreds of millions of dollars of fire suppression we have to 
pay for each year up front and putting jobs here. This is the 
message we need to be doing. I don't understand why it doesn't 
catch far more.
    Anybody else?
    Mr. Geissler. I would like to say, the idea of putting a 
dollar up front, realize that it is not just the idea that we 
are getting this wood out. We are lowering the risk to the 
people and the property that is around there. Like you are 
saying about whether it is biomass or investments in saw mills 
or sending stuff offshore, getting as many tools as possible. 
There is small scale biomass. There was a Fuels for Schools 
Program. There are all of these different things. There was not 
one single answer to the entire situation that we have found 
ourselves in. But anything that can be done within the farm 
bill which increases the number of tools that we have and the 
availability of the markets out there will be a great asset to 
it.
    Mr. LaMalfa. Thank you. It is just one of these things that 
you go hat in hand every year begging for the secure rural 
school funding. Instead, we could be doing the work in the 
forest and not have to do that.
    Mr. Chairman, I thank you for your indulgence. I yield 
back.
    The Chairman. The gentleman has offered many observant 
points, and his time has expired.
    One of the privileges of being the Chairman of a Committee 
or Subcommittee is I get to make the concluding remarks.
    First and foremost, thank you to the panel for your 
insight, your willingness to stay late as we voted on the 
Floor, and to answer our myriad questions and offer your 
observations and opinions and experience. I would be remiss if 
I did not, as a good Oklahoman, note that while I talk many 
times about the lack of trees in northwest Oklahoma, that we 
have substantial forest resources in southeastern Oklahoma, and 
have managed those well for 100+ years, and will continue to do 
so.
    I do observe on the fire issues that our challenge still, 
not only in Oklahoma, but our quadrant, that next month will be 
the 125th anniversary of the Cheyenne and Arapaho area land 
run. Farmers did not come to my neighborhood until 125 years 
ago the next month, and when I visit with my Cheyenne and 
Arapaho and other descendants of Plains Indian Tribes, they 
discuss how in their oral histories, now the written versions 
of their oral histories, think about that for a moment, but 
that is the way it works, their discussions about how before 
Europeans the massive fires that occurred on the Plains in the 
summertime. The fires they lit to attract the buffalo to 
particular grazing areas or they lit as a part of a struggle 
with some other band. Massive fires, and starting with the 
arrival of farmers, we suppressed all of that. And through, 
some might say, the misguided agrarian practices that led up to 
the 1930s Dust Bowl, that were finally turned around in the 
1950s and 1960s through education and the things that we have 
accomplished here, now we are back to the point of addressing 
Mother Nature where she was before we came.
    These issues of fire, whether it is in the grasslands or 
forests, simply won't go away, and it would appear, at least in 
my experience in Oklahoma, we are doing an amazing job of 
fighting the wildfires when they occur. But that underlying 
issue about how to address the fuel load, whether it is to turn 
it into another product or whatever, that is where we are. Just 
having amazing amounts of grass or amazing amounts of timber 
only makes these issues more complicated. In my area, we have 
to duplicate what the buffalo did for eons before the farmers 
arrived.
    And with that, I thank the panel and we will continue to 
move forward in this process of improving the farm bill as we 
prepare for the next draft.
    Under the Rules of the Committee, the record for today's 
hearing will remain open for 10 calendar days to receive 
additional material and supplemental written responses from the 
witnesses to any question posed by a Member. This hearing of 
the Subcommittee on Conservation and Forestry is adjourned.
    [Whereupon, at 3:49 p.m., the Subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]
          Submitted Letter by Kathryn C. Browning, Boulder, CO
  To: The U.S. House Subcommittee on Conservation and Forestry
  From: Kathryn C. Browning
  Date: 26 March 2017
  RE: The Next Farm Bill: Forestry Initiatives Hearing--16 March 2017

    As the Committee begins preparing the 2018 Farm Bill, I 
respectfully urge its Members to fully fund programs that promote 
forest conservation actions and innovation. Specifically I ask that the 
Committee conserve or increase funding for the Conservation Stewardship 
Program (CSP), the Environmental Quality Incentives Program (EQUIP) 
including sufficient funds for the Wildlife Habitat Incentives Program 
(WHIP), the Healthy Forest Reserve Program (HFRP), and the Conservation 
Innovation Grants (CIG).
    The 2014 Farm Bill marked the first decrease in funding for 
conservation since 1985. These cuts decreased expected funding for 
conservation programs by $4 billion and oversaw the consolidation of 23 
different conservation programs into 13. These cuts exceed the 
increases to conservation initiatives gained in the 2008 Farm Bill. 
Further, when the $2.1 billion in automatic sequestration spending cuts 
and changes in mandatory program spending are also considered, the 
funding decrease also cancels out a significant share of the gains in 
conservation funding from the 2002 bill. These funding reductions to 
conservation programs constrain the ability of public and private 
landowners to steward their forested lands in an economically and 
ecologically sustainable manner.
    These cuts have had--and will continue to have--real and tangible 
effects that are felt deeply by landowners across the country. For 
example, decreases in funding for the Conservation Stewardship Program 
(CSP) will cause 28 million eligible acres not to be conserved over the 
coming decade.\1\ This hurts both farmers and the sensitive lands they 
wish to protect. Sufficient funds should be allocated for CSP in the 
2018 Farm Bill and the Committee should take steps to reverse the 
acreage limits from the current 10 million acres back to 12.8 million 
acres or larger.
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    \1\``What is in the 2014 Farm Bill For Sustainable Farms and Food 
Systems?'' National Sustainable Agriculture Coalition What is in the 
2014 Farm Bill For Sustainable Farms and Food Systems Comments. January 
31, 2014. Accessed March 25, 2017. http://sustainableagriculture.net/
blog/2014-farm-bill-outcomes/.
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    The Environmental Quality Incentives Program (EQIP) is also an 
important conservation tool that should be fully funded in the 2018 
Farm Bill. EQIP provides resources to help landowners plan and 
institute conservation practices that improve forest health and 
productivity, such as forest stand improvement, riparian forest buffers 
(5% of the program is used to improve forested land adjacent to 
farmland), and invasive plants control, and provides funding to offset 
the cost of implementing those practices.\2\ The program serves the 
important and increasingly needed role of providing on-the-ground 
technical planning and conservation assistance to help private 
landowners actively manage their lands. As such, the 2018 Farm Bill 
should increase funding for the EQIP program by at least 10% annually, 
and maintain the 75% cost sharing provisions for developing forest 
management plans and for the aforementioned conservation practices. 
Where possible, the bill should place emphasis on long-term incentive 
payments and contracts to encourage sustained management of wildlife.
---------------------------------------------------------------------------
    \2\``Environmental Quality Incentives Program.'' Environmental 
Quality Incentives Program, NRCS. Accessed March 25, 2017. https://
www.nrcs.usda.gov/wps/portal/nrcs/main/national/programs/financial/
eqip/.
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    The Wildlife Habitat Incentives Program, which was rolled into EQIP 
as part of the consolidation of programs in the 2014 bill, should also 
preserve its ability to provide both technical assistance and up to 75% 
cost sharing assistance to private landowners for land stewardship, 
including the establishment and improvement of fish and wildlife 
habitat. The 2018 Farm Bill should make lands capable of production, as 
well as lands already in production, eligible to receive funds, as they 
were in the 2014 bill, and allow private landowners the option of 
managing their forestlands specifically for wildlife habitat.
    The 2018 Farm Bill offers a substantive and unique opportunity for 
the Committee to strengthen the CSP-EQIP linkage. After the passage of 
the 2014 Farm Bill, the NRCS began an administrative ``reinvention'' of 
the CSP, making it more closely aligned with EQIP. As a result of this 
administrative transformation, EQIP's conservation practices are now 
more than ever a logical stepping-stone to the more advanced 
conservation activities available through the CSP. The Committee should 
be mindful and purposeful in realizing and strengthening this 
relationship in order to maximize the benefits of both programs. It 
should also keep a watchful eye on the effects of these recent changes 
to the program to ensure that they achieve the desired effect of 
transforming the program into one that fully supports wildlife and 
forestry. This includes ensuring that rankings and payments reward 
enhancements with higher conservation benefits that are focused on 
sustained conservation outcomes.
    The Healthy Forest Reserve Program (HFRP) is a central forest 
initiative offered through the farm bill. The HFRP assists private 
landowners in restoring, enhancing, and protecting forest resources on 
their lands through easements, 30 year contracts, and 10 year cost-
share agreements.\3\ These provisions have the effect of promoting 
biodiversity, controlling soil erosion, enhancing carbon sequestration, 
improving water quality, and adding value to private lands.\4\ The 2018 
Farm Bill should provide for at least $12 million in mandatory annual 
funding for the HFRP to ensure continued delivery of this important 
value to private landowners.
---------------------------------------------------------------------------
    \3\``Healthy Forests Reserve Program.'' Healthy Forests Reserve 
Program, NRCS. Accessed March 25, 2017. https://www.nrcs.usda.gov/wps/
portal/nrcs/main/national/programs/easements/forests/.
    \4\``Healthy Forests Reserve Program--How to Apply and Benefits.'' 
Healthy Forests Reserve Program--How to Apply and Benefits, NRCS. 
Accessed March 25, 2017. https://www.nrcs.usda.gov/wps/portal/nrcs/
detail/national/programs/easements/forests/?cid=nrcs
143_008410.
---------------------------------------------------------------------------
    Finally, the Committee should strive to sustain or increase support 
for Conservation Innovation Grants (CIGs). CIGs offers competitive 
grant funding to EQIP-eligible non-Federal governmental or non 
governmental organizations, American Indian Tribes, and individuals to 
support the development and adoption of innovative approaches to 
conservation on agricultural lands.\5\ The CIG program promotes 
innovation while also increasing the value of Federal investments in 
environmental restoration and protection. In short, CIGs facilitate 
research into how future conservation investments by the Federal 
Government can go farther and provide greater value to America's 
private landowners, and should be fully funded in the 2018 Farm Bill.
---------------------------------------------------------------------------
    \5\``Conservation Innovation Grants.'' Conservation Innovation 
Grants, NRCS. Accessed March 25, 2017. https://www.nrcs.usda.gov/wps/
portal/nrcs/main/national/programs/financial/
cig/.
---------------------------------------------------------------------------
    The Committee, in developing the 2018 Farm Bill, should take 
seriously the opportunity to strengthen forest conservation programs 
that support America's private landowners. It should work to reverse 
the ill-effects of spending cuts mandated by the 2014 bill and to 
strengthen the conservation initiatives provided in the Conservation 
Stewardship Program (CSP), the Environmental Quality Incentives Program 
(EQIP) including the Wildlife Habitat Incentives Program (WHIP), the 
Healthy Forest Reserve Program (HFRP), and Conservation Innovation 
Grants (CIG).
    Thank you for your important work on the 2018 Farm Bill.


 
                           THE NEXT FARM BILL

                   (NUTRITION DISTRIBUTION PROGRAMS)

                              ----------                              


                        TUESDAY, MARCH 21, 2017

                  House of Representatives,
                                 Subcommittee on Nutrition,
                                  Committee on Agriculture,
                                                   Washington, D.C.
    The Subcommittee met, pursuant to call, at 10:01 a.m., in 
Room 1300 of the Longworth House Office Building, Hon. Glenn 
Thompson [Chairman of the Subcommittee] presiding.
    Members present: Representatives Thompson, Crawford, 
Hartzler, Davis, Yoho, Rouzer, Comer, Marshall, Faso, Conaway 
(ex officio), McGovern, Adams, Evans, Fudge, Lujan Grisham, 
Lawson, Panetta, Soto, and Maloney.
    Staff present: Bart Fischer, Callie McAdams, Jennifer 
Tiller, Mary Rose Conroy, Stephanie Addison, Kellie Adesina, 
Lisa Shelton, Liz Friedlander, Troy Phillips, and Nicole Scott.

 OPENING STATEMENT OF HON. GLENN THOMPSON, A REPRESENTATIVE IN 
                   CONGRESS FROM PENNSYLVANIA

    The Chairman. Good morning, and welcome to today's 
Nutrition Subcommittee hearing on distribution programs. This 
hearing continues the Committee's series where each 
Subcommittee is undertaking a comprehensive review of the 
current farm bill as we move to draft the next. I want to thank 
you, everyone, for taking the time to be here, particularly our 
witnesses for their participation and their respective 
insights.
    USDA's food distribution programs, The Emergency Food 
Assistance Program, TEFAP, the Commodity Supplemental Food 
Program, and the Food Distribution Program on Indian 
Reservations, strengthen the nutrition safety net through the 
distribution of USDA Foods and other nutrition assistance to 
children, low-income families, emergency feeding programs, 
Indian Tribal organizations, and the elderly. These programs 
provide support to populations in need and help decrease food 
insecurity in our low-income communities.
    It is important to have a general understanding of these 
three programs, how they differ from one another, how they 
interact, and how they, along with our nation's largest anti-
hunger program, SNAP, Supplemental Nutrition Assistance 
Program, work together to meet the nutrition needs of our most 
vulnerable citizens. The panel we will hear from this morning 
will offer insight based on their operational and policy 
experience. These on-the-ground perspectives will be critical 
as we look towards the farm bill reauthorization with a focus 
on improving what works and reducing administrative burdens so 
that program benefits reach those most in need in the most 
effective and efficient manner possible.
    The food distribution programs are each designed to meet 
the needs of a particular population. TEFAP helps supplement 
the diets of low-income Americans by providing them with 
emergency food assistance at no cost. CSFP is targeted at 
improving the nutrition of low-income elderly people at least 
60 years of age by supplementing their diets with food 
packages. In both programs, USDA purchases the food and ships 
it to state agencies and provides support for administrative 
costs. TEFAP and CSFP state agencies work closely with local 
agency partners to distribute the USDA Foods in communities.
    FDPIR provides USDA Foods to income-eligible households 
living on Indian reservations, and to American Indian 
households residing in approved areas near reservations or in 
Oklahoma. Many households participate in FDPIR as an 
alternative to SNAP because they do not have easy access to 
SNAP offices or authorized food stores. FDPIR is authorized 
locally by either Indian Tribal organizations or an agency of a 
state government. USDA purchases and ships FDPIR foods to ITOs 
and state agencies based on their orders from a list of 
available foods and provides them with administrative funding. 
These agencies store and distribute the food, determine 
applicant eligibility, and provide nutrition education to 
recipients.
    We will also hear from Diane Kriviski, Deputy Administrator 
for the Supplemental Nutrition and Safety Programs, who will 
provide valuable insight into not only TEFAP, CSFP, and FDPIR, 
but ultimately what is being done to improve access to healthy 
foods.
    I want to thank all of our witnesses for sharing their time 
and expertise today, and making the trip here to Washington.
    [The prepared statement of Mr. Thompson follows:]

Prepared Statement of Hon. Glenn Thompson, a Representative in Congress 
                           from Pennsylvania
    Good morning, and welcome to today's Nutrition Subcommittee hearing 
on food distribution programs. This hearing continues the Committee's 
series where each Subcommittee is undertaking a comprehensive review of 
the current farm bill as we move to draft the next. Thank you to 
everyone for taking the time to be here, particularly our witnesses for 
their participation and respective insights.
    USDA's food distribution programs--The Emergency Food Assistance 
Program, the Commodity Supplemental Food Program, and the Food 
Distribution Program on Indian Reservations--strengthen the nutrition 
safety net through the distribution of USDA Foods and other nutrition 
assistance to children, low-income families, emergency feeding 
programs, Indian Tribal organizations, and the elderly. These programs 
provide support to populations in need and help decrease food 
insecurity in our low-income communities.
    It is important to have a general understanding of these three 
programs, how they differ from one another, how they interact, and how 
they, along with our nation's largest anti-hunger program, the 
Supplemental Nutrition Assistance Program, work together to meet the 
nutrition needs of our most vulnerable citizens. The panel we will hear 
from this morning will offer insight based on their operational and 
policy experience. These on-the-ground perspectives will be critical as 
we look toward farm bill reauthorization with a focus on improving what 
works and reducing administrative burdens so that program benefits 
reach those most in need in the most effective and efficient manner 
possible.
    The food distribution programs are each designed to meet the needs 
of a particular population. TEFAP helps supplement the diets of low-
income Americans by providing them with emergency food assistance at no 
cost. CSFP is targeted at improving the nutrition of low-income elderly 
people at least 60 years of age by supplementing their diets with food 
packages. In both programs, USDA purchases the food and ships it to 
state agencies and provides support for administrative costs. TEFAP and 
CSFP state agencies work closely with local agency partners to 
distribute the USDA Foods in communities.
    FDPIR provides USDA Foods to income-eligible households living on 
Indian reservations, and to American Indian households residing in 
approved areas near reservations or in Oklahoma. Many households 
participate in FDPIR as an alternative to SNAP because they do not have 
easy access to SNAP offices or authorized food stores. FDPIR is 
administered locally by either Indian Tribal organizations or an agency 
of a state government. USDA purchases and ships FDPIR foods to the ITOs 
and state agencies based on their orders from a list of available foods 
and provides them with administrative funding. These agencies store and 
distribute the food, determine applicant eligibility, and provide 
nutrition education to recipients.
    We will also hear from Diane Kriviski, Deputy Administrator for 
Supplemental Nutrition and Safety Programs, who will provide valuable 
insight into not only TEFAP, CSFP, and FDPIR, but ultimately what is 
being done to improve access to healthy foods.
    I want to thank all of our witnesses for sharing their time and 
expertise. I now recognize Mr. McGovern for his opening statement.

    The Chairman. Now I am very pleased to recognize the 
Ranking Member of this Committee, Mr. McGovern, for his opening 
statement.

 OPENING STATEMENT OF HON. JAMES P. McGOVERN, A REPRESENTATIVE 
                 IN CONGRESS FROM MASSACHUSETTS

    Mr. McGovern. Well thank you very much, Mr. Chairman, and 
thank you for calling today's hearing on nutrition distribution 
programs. I want to thank all the witnesses for being here. Mr. 
Chairman, this is your first hearing as Chairman of this 
Subcommittee. I want to congratulate you, and I hope recalling 
the words of that great philosopher, Humphrey Bogart, in the 
movie Casablanca when he said to Claude Raines, ``I think this 
is the beginning of a beautiful friendship.'' I hope.
    Anyway, The Emergency Food Assistance Program, TEFAP, the 
Commodity Supplemental Food Program, and the Food Distribution 
Program on Indian Reservations are all critical to ensuring our 
most vulnerable neighbors have access to food, and they are 
well-deserving of our support. In particular, I would like to 
highlight the incredible work of food banks in my Congressional 
district, the Food Bank of Western Massachusetts, and the 
Worchester County Food Bank, in working to alleviate hunger in 
central and western Massachusetts.
    But with over 42 million Americans, including children, 
seniors, veterans, and yes, some very poor childless adults, 
too, living in food-insecure households, I think we can all 
agree that more needs to be done to address hunger in our 
country. We are the richest country in the history of the 
world, and 42 million of our fellow citizens are hungry or 
food-insecure.
    Last Congress, this Subcommittee held 18 hearings on SNAP. 
We heard more than 30 hours of testimony from over 60 experts. 
We learned from these experts, conservative and liberal, that 
SNAP benefits should not be cut and that current benefits are 
inadequate. We also learned that SNAP does not discourage work, 
and that case management and job training programs can be 
successful in helping to move people out of poverty, but these 
efforts require a well-funded, multi-year commitment.
    Recently, I have read in the press that Chairman Conaway 
will use the White Paper he compiled from these hearings to 
make changes in our anti-hunger safety net. And I am reading 
that a big part of these changes will impact 18 to 49 year olds 
who do not have children, known as ABAWDs, able-bodied adults 
without dependents. And while it is convenient to demonize this 
group of vulnerable adults, the truth of the matter is we do 
not have a clear picture of the ABAWD population. We know it is 
a diverse group. We know that many have limited educational 
experiences, and some have mental health issues, difficult 
histories of substance abuse, or are ex-offenders with nowhere 
else to turn. I now come to learn that up to 60,000 of them are 
veterans, people who served our country.
    Members of this Committee could benefit, I hate to suggest 
another hearing, but I am going to suggest another hearing. But 
maybe we could benefit from a hearing on this vulnerable 
population. Maybe before we start kicking people who fall into 
this ABAWD category off of Medicaid and out of the SNAP 
program, we should have a hearing to explore this vulnerable 
population and work to understand their struggles as opposed to 
belittling them. Kicking vulnerable people off of food 
assistance does nothing to help them find work. It just makes 
them hungry. It is mean-spirited, and it is a rotten thing to 
do.
    If we are serious about ending hunger in this country, we 
need to realize that while our states, charities, local 
providers, and our Federal programs are all doing incredible 
work to alleviate hunger, more needs to be done. Charities, 
even with Federal support, cannot solve hunger alone. We need 
to maintain the structure of SNAP, increase SNAP benefits, and 
boost our anti-hunger safety net to reach those who are still 
facing incredible hardship. And we need to commit to and fund 
programs that provide an economic ladder to those struggling in 
poverty.
    I look forward to the distinguished panel of witnesses, and 
I thank them for being here, and thank you, Mr. Chairman, for 
yielding me the time. I yield back.
    The Chairman. I thank the gentleman. The chair would 
request that other Members submit their opening statements for 
the record so the witnesses may begin their testimony to ensure 
that there is ample time for questions, and I appreciate the 
Members' understanding.
    I would like to welcome our witnesses to the table. Ms. 
Carrie Calvert, Director of Tax and Commodity Policy, Feeding 
America here in Washington, D.C.; Mr. Frank Kubik, CSFP 
Director, Focus: HOPE, from Detroit, Michigan; Mr. Jerry 
Tonubbee, Director, Food Distribution Program, Choctaw Nation 
of Oklahoma, Durant, Oklahoma; and Ms. Diane Kriviski, Deputy 
Administrator, Supplemental Nutrition and Safety Programs, Food 
and Nutrition Service, FNS of USDA located, here in Alexandria, 
Virginia.
    Ms. Calvert, go ahead with your 5 minutes of testimony when 
you are ready.

  STATEMENT OF CARRIE T. CALVERT, DIRECTOR, TAX AND COMMODITY 
           POLICY, FEEDING AMERICA, WASHINGTON, D.C.

    Ms. Calvert. Great, thank you. This is actually my first 
time officially testifying before a Congressional Committee, so 
thank you very much for inviting me.
    Mr. Chairman, Ranking Member McGovern, and Members of the 
House Agriculture Subcommittee on Nutrition, I am thrilled to 
be here today to talk about the nation's food distribution 
programs, in particular, The Emergency Food Assistance Program, 
also known as TEFAP. I represent Feeding America, which is the 
nation's largest anti-hunger nonprofit, serving 46 million 
people each year through our network of almost 200 food banks. 
Our network serves every state in the country as well as the 
District of Columbia, and supports 60,000 local agencies like 
food pantries, after school and summer programs, senior meal 
sites, and soup kitchens, providing four billion meals each 
year to people in need. Our mission is to not only provide 
emergency food assistance to those in need today, but to engage 
the country in the fight to end hunger so that we can reduce 
the number of families that must rely on charitable food 
assistance tomorrow.
    Since its inception in the early 1980s as a program to 
connect surplus commodity products with emergency feeding 
organizations, strangely enough, it was surplus cheese that was 
the first product distributed through TEFAP. TEFAP has served a 
dual purpose of providing nutritious food to the nation's 
charitable community while supporting U.S. grown commodities. 
As the program has proved its efficacy and efficiency, it has 
expanded to become an essential part of how food banks and 
other local organizations provide food to people in need. 
Today, TEFAP has become a backbone of the nutritious food our 
food banks are able to distribute.
    The Feeding America network receives food from Federal 
commodity programs like TEFAP and CSFP, as well as through food 
donation partnerships with thousands of growers, food 
manufacturers, retailers, and food service companies across 
America. We also do purchase some of the food we distribute as 
well when there is a shortfall or to serve specific populations 
or dietary needs.
    Feeding America food banks received 723 million pounds of 
food from TEFAP in Federal Fiscal Year 2016, accounting for 
about 600 million meals. These are meals that go straight into 
the effort to fight hunger and to relieve food insecurity, but 
should be viewed as part of an array of Federal nutrition 
programs. We know the community members that we help are also 
often relying on SNAP, school lunch, WIC, or senior meals to 
meet their families' needs. Our work would not be possible 
without the continued strong support of Federal nutrition 
programs. In fact, Feeding America's entire food distribution 
in 1 year equals only ten percent of the food purchases 
provided by the SNAP program in 1 year.
    We know from Feeding America's Hunger in America 2014 
report that although 55 percent of the people we serve 
participate at some time in the SNAP program, another 45 
percent do not. Some of that population is likely eligible, yet 
not participating, but millions of others make too much to 
qualify for SNAP assistance, yet still need charitable food 
assistance. This is where strong funding for TEFAP is essential 
to our ability to fulfill our mission.
    TEFAP works by directly supplying nutritious food purchased 
by USDA to charities such as Feeding America food banks. In 
addition to the food, USDA also provides funding to defray some 
of the storage and distribution costs of getting the food to 
hungry Americans. As you can see from the pie chart here, which 
I apologize might be hard for you to read from where you are 
sitting, the foods provided through TEFAP are highly nutritious 
and represent household pantry staples, foods that you would 
find in your home. In fact, protein items are the number one 
category purchased, followed by fruits and vegetables. Our food 
banks combine TEFAP foods with other donated and purchased food 
to give food-insecure Americans access to a nutritionally well-
balanced grocery package.
    The farm bill also authorizes funds for storage and 
distribution, which helps defray part of the cost that food 
banks incur getting TEFAP foods to people in need; however, it 
is not mandatory funding and depends on an annual 
appropriation, and unfortunately, the funds that are 
appropriated are only \1/2\ of the authorized amount. There is 
a significant shortfall that many of our food banks are dealing 
with, and frankly, it means that they have to divert funds from 
other valuable programs to meet that shortfall.
    We hope to work with you as the next farm bill process gets 
underway to not only show the significant, strong impact that 
TEFAP foods have had, and the impact that the increase in TEFAP 
foods provided by the last farm bill has had in communities, 
but also to make the case that being able to fully fund TEFAP 
storage and distribution would have a significant impact on our 
ability to invest in other programs that we are doing, such as 
mobile pantries, job training programs, SNAP outreach 
assistance in communities. There are many, many valuable 
programs that our food banks are actively working on, and so we 
would definitely appreciate stronger funding for that.
    And with that, I conclude my testimony. Thank you.
    [The prepared statement of Ms. Calvert follows:]

 Prepared Statement of Carrie T. Calvert, Director, Tax and Commodity 
               Policy, Feeding America, Washington, D.C.
    Mr. Chairman, Ranking Member McGovern, and Members of the House 
Agriculture Subcommittee on Nutrition, thank you for inviting me to 
testify on the importance of The Emergency Food Assistance Program, 
also known as TEFAP. I represent Feeding America, which is the nation's 
largest anti-hunger nonprofit, serving 46 million people each year 
through our network of almost 200 food bank members. Our network serves 
every state in the country as well as the District of Columbia. Our 
food banks support over 60,000 food distribution agencies, such as food 
pantries, after school and summer programs, senior meal sites, and soup 
kitchens. We have a network of two million volunteers and we are proud 
to say that we provide four billion meals annually to people in need. 
Our mission is to not only provide emergency food assistance to those 
in need today, but to engage the country in the fight to end hunger, so 
that we can reduce the number of families that must rely on charitable 
food assistance tomorrow.
    Since its inception in the early 1980's as a program to connect 
surplus commodity products with emergency feeding organizations, TEFAP 
has served a dual purpose of providing nutritious food to the nation's 
charitable community while supporting U.S. grown commodities. As the 
program proved its efficacy and efficiency, it expanded to become an 
essential part of how food banks and other local organizations provide 
food to people in need. Today, The Emergency Food Assistance Program is 
the backbone of the charitable food system with an impact that is felt 
in every state across the country.
    The Feeding America network receives food from Federal commodity 
programs like TEFAP and CSFP, as well as through food donation 
partnerships with thousands of growers, food manufacturers, retailers, 
and food service companies across America. We also purchase some of the 
food we distribute as well when there is a shortfall. Feeding America 
food banks received 723 million pounds of food from TEFAP in FY 2016, 
accounting for about 600 million meals.
    These are meals that go straight into the effort to fight against 
hunger and to relieve food insecurity, but should be viewed as part of 
an integral array of Federal nutrition programs. We know the community 
members we help are also often relying on SNAP, school lunch, WIC, or 
senior meals to meet their families' needs. Our work would not be 
possible without the continued strong support of Federal nutrition 
programs. In fact, Feeding America's entire food distribution in 1 year 
equals only 10% of the food provided by the SNAP program. We know from 
Feeding America's Hunger in America 2014 report that although 55% of 
the people we serve participate at some time in the SNAP program, 
another 45% do not. Some of that population is likely eligible yet not 
participating, but millions of others make too much to qualify for SNAP 
assistance, yet still need charitable food assistance. This is where 
strong funding for TEFAP is essential to our ability to fulfill our 
mission.
    TEFAP works by directly supplying nutritious food purchased by USDA 
to charities, such as Feeding America food banks. In addition to the 
food, USDA also provides funding to defray some of the storage and 
distribution costs of getting the food to hungry Americans. As you can 
see from the pie chart, the foods provided through TEFAP are highly 
nutritious and represent household pantry staples, foods that you would 
find in your kitchen. Our food banks combine TEFAP foods with other 
donated and purchased food to give food-insecure Americans access to a 
nutritionally well-balanced grocery package.
Feeding America: TEFAP Food Categories FY 2016


    There are two categories of TEFAP commodities, mandatory and bonus 
commodities. Mandatory commodities are paid for through mandatory 
funding authorized directly in the farm bill. Food banks, working with 
their state agencies, order food directly from USDA, which contracts 
with food producers to achieve significant cost savings. This is a 
highly efficient purchasing program. Each pound of nutritious food by 
USDA costs about 64.\1\ Food banks select these foods from a long menu 
of options made available by USDA. Mandatory spending is essentially 
demand driven.
---------------------------------------------------------------------------
    \1\Based on Feeding America analysis of USDA delivery order 
reports.
---------------------------------------------------------------------------
    TEFAP Bonus commodity purchases are driven by the need for 
commodity support as prices for commodity foods fluctuate. When the 
price of an agriculture commodity falls so low that the market for it 
is in danger, the Department of Agriculture spends money to purchase 
enough of that commodity to stabilize the market. These purchased foods 
are then distributed through the TEFAP program to those who need a 
helping hand. This is a highly-efficient public-private partnership, 
supporting agricultural markets, while allowing for the purchase of 
nutritious food when it is at a very low price point. In FY 2016, USDA 
made additional purchases under its market support authority of $297.44 
million worth of food.\2\
---------------------------------------------------------------------------
    \2\USDA FY 2016 Bonus Purchases, published 9/30/16.
---------------------------------------------------------------------------
    The farm bill also authorizes funds to support the storage and 
distribution of TEFAP commodities, although this is not mandatory 
funding and depends on an annual appropriation. These are dollars spent 
to help defray the cost of storing commodities and then moving them to 
the distribution point so they can be accessed by our clients.
    Unfortunately, the funds Congress has historically appropriated for 
the purposes of TEFAP storage and distribution are significantly less 
than the costs incurred by our food bank members. For years now, 
Congress has appropriated these critical funds at around \1/2\ of the 
authorized level of $100 million annually. TEFAP storage and 
distribution's current funding level of $54 million only covers 23% of 
the cost to our food banks of distributing TEFAP commodities--leaving 
food banks to cover the difference. This is especially acute in food 
banks with larger service areas and which are serving rural 
populations.
    Food banks help to make up the shortfall for the storage and 
distribution costs by redirecting funding that would otherwise go to 
other initiatives they run, such as veteran's programs and school 
weekend back pack programs. If Congress were to appropriate the full 
authorized amount of storage and distribution funds, food charities 
would have additional resources to provide services in their 
communities. The chart below illustrates the costs our food banks 
report to us, and the small amount that is offset by TEFAP storage and 
distribution.
TEFAP Storage & Distribution Funding Gap for Feeding America Food Banks 

        
        
    TEFAP foods and funds are distributed to states on the basis of 
relative poverty and unemployment levels. In FY 2016, Congress provided 
$318 million in funding for TEFAP food purchases,\3\ down from $327 
million in FY 2015.\4\ This occurred because the 2014 Farm Bill called 
for the gradual reduction of additional program funding. Because of the 
reduction in funding, most states saw their TEFAP dollars shrink. The 
2014 Farm Bill provided an additional $205 million in TEFAP funding 
over 10 years. The chart below shows the impact this funding has had. 
While we are grateful for the additional funding, the idea behind front 
loading the funds was to provide assistance when demand was highest. As 
our food banks can attest, the economic recovery has been uneven for 
many of the working poor that we serve, and they continue to respond to 
a high degree of demand. We would urge you to consider methods to 
address the need for additional TEFAP support in a more stable manner 
in the next farm bill.
---------------------------------------------------------------------------
    \3\USDA, ``Fiscal Year (FY) 2016 Food and Administrative Funding 
for The Emergency Food Assistance Program (TEFAP),'' published 1/7/16.
    \4\USDA, ``The Emergency Food Assistance Program,'' published June 
2016.
---------------------------------------------------------------------------
2014 Farm Bill: Additional Funding for TEFAP Mandatory Food


    The food charities that distribute TEFAP foods are subject to 
government oversight to ensure that the commodities are reaching low-
income consumers. State agencies develop uniform statewide criteria for 
determining recipient eligibility.\5\ Local charities are required to 
prove that they serve predominantly needy communities. States are 
required to regularly review local charities to ensure effective and 
efficient program operations. USDA conducts Management Evaluations of 
states deemed to be at the highest risk of program deficiency.
---------------------------------------------------------------------------
    \5\USDA, ``The Emergency Food Assistance Program,'' published June 
2016.
---------------------------------------------------------------------------
    In addition to the oversight from USDA and state agencies, Feeding 
America contractually requires all of our food bank members to undergo 
audits by our compliance team to ensure all Federal, state and local 
regulations are complied with and that the food bank is operating in a 
financially responsible manner. We also require a third party food 
safety audit to ensure that we are distributing food in a way that 
protects clients from potential food borne illness, which is especially 
important as the amount of perishable food we distribute has increased.
    The Emergency Food Assistance Program illustrates how a government 
program, nonprofits, and the private-sector can work together to 
provide targeted, accessible, and cost efficient food assistance that 
is responsive to immediate need in local communities. TEFAP is a very 
responsive program, because it can be accessed by struggling families 
and individuals on an as needed basis. After a sudden emergency leaves 
a family without money, there is a place to turn. For many of the 
people we serve, the need for food assistance can be episodic and due 
to unexpected expenses, such as a car breaking down or a sudden layoff. 
TEFAP helps fill the gaps when this happens.
    A story by CBS reported that most Americans said they would be 
unable to handle a sudden $500 car repair bill.\6\ As we have seen, the 
lack of well-paying jobs has left more people living closer to the 
margin than they have ever before. Many are just one bad day away from 
suddenly experiencing that strange sense of going from the middle 
class, to wondering how they will feed their family.
---------------------------------------------------------------------------
    \6\Picchi, Aimee, ``Most Americans can't handle a $500 surprise 
bill,'' CBS News, 1/6/16.
---------------------------------------------------------------------------
    TEFAP provides a stop gap measure by empowering local organizations 
to provide immediate food. This food is there today and is available 
tonight. This sort of immediate response is so important, because 
people live their lives day-by-day and not by government timelines. By 
being there when people need it, TEFAP can be the steadying hand that 
keeps a family stable through an emergency.
    TEFAP food is also very healthy. Research conducted by USDA's Food 
and Nutrition Service found that TEFAP provides extremely nutritious 
foods. In fact, using the Healthy Eating Index, a tool developed by 
USDA to measure diet quality, the food distributed through TEFAP earned 
a score of 89 out of 100. By comparison the overall U.S. food supply 
scored only 55 out of 100.\7\
---------------------------------------------------------------------------
    \7\USDA, ``White Paper on The Emergency Food Assistance Program 
(TEFAP) Final Report,'' Published August 2013.
---------------------------------------------------------------------------
    The availability of nutritious foods is highly important to our 
clients. According to our Hunger in America study, 79% of client 
households report having bought the cheapest food available, regardless 
of its nutritional content.\8\ This is especially concerning, because 
nearly \1/2\ (47%) of our client households that contain seniors have a 
member with diabetes.\9\ Feeding America works hard to provide those we 
serve with food that is healthy and filling.
---------------------------------------------------------------------------
    \8\Weinfield, Nancy, et al., ``Hunger in America 2014,'' Feeding 
America, Published August 2016.
    \9\Ibid.
---------------------------------------------------------------------------
    As the Subcommittee works on a new farm bill, we look forward to 
working with you to demonstrate how strong support for nutrition 
programs and agriculture programs can strengthen communities 
nationwide. We know that for many of America's growers, this has been a 
difficult time with low commodity prices leading to many challenges in 
rural America.
    One of the misconceptions about food insecurity in America is that 
it is only an urban problem; in fact, the counties identified as most 
food-insecure by Feeding America's Map the Meal Gap report are in rural 
areas. We believe that we can achieve a farm bill that helps strengthen 
our agriculture economy, provides support to rural communities, and 
reduces hunger through partnership and collaboration, and look forward 
to engaging with you to achieve these shared goals.

    The Chairman. Thank you very much.
    Mr. Kubik, you are now recognized for 5 minutes.

STATEMENT OF FRANK KUBIK, DIRECTOR, COMMODITY SUPPLEMENTAL FOOD 
               PROGRAM, FOCUS: HOPE, DETROIT, MI

    Mr. Kubik. Good morning, Mr. Chairman and Members of the 
Subcommittee. Thank you for this opportunity you are giving me 
today.
    I work with the Commodity Supplemental Food Program in 
Detroit for an organization called Focus: HOPE, which is a 
human and civil rights nonprofit organization. I also work with 
the National CSFP Association. I appreciate this opportunity to 
speak on behalf of Focus: HOPE and its 41,000 monthly 
participants of CSFP, as well as the 600,000 monthly CSFP 
participants in 48 states, District of Columbia, and two Indian 
Tribal organizations. Since 2010, CSFP has added ten additional 
states. Thank you to Congress and FNS for your continued 
support for the program.
    In the Farm Bill of 2014, CSFP became an elderly-only 
program. We thank the Subcommittee for the legislation that 
enables us to exclusively serve our vulnerable senior 
population.
    CSFP is a discretionary program funded through annual 
appropriations. While it is authorized in the farm bill, it 
receives no mandatory money.
    CSFP is a unique program which brings together Federal and 
state agencies, along with public and private entities. By 
using their buying power, USDA is able to provide the monthly 
nutritionally balanced food package at a cost of less than $24 
per box. That same food package goes for a retail value of 
about $45 to $50. This makes CSFP a cost effective program. In 
Fiscal Year 2016, CSFP provided services to more than 150 
nonprofit community and faith-based organizations at 1,800 
locations across the country.
    State agencies provide administrative oversight in contract 
with local and faith-based organizations to warehouse and 
distribute food, certify eligibility, and provide nutrition 
education to participants. These local organizations build 
collaboration among nonprofits, health providers and their 
agencies on aging, to provide easy access to the program. We 
are able to reach isolated and homebound seniors.
    A 2013 National CSFP Association survey showed that \1/2\ 
of the seniors who responded reported that they lived alone 
with an average income of less than $750 a month. Seventy 
percent of those senior respondents said they choose between 
food and medicine each month.
    Frederick is a 92 year old World War II veteran and 
Tuskegee airman. He honorably served this country at a time of 
its greatest need. We are now honorably trying to serve him at 
a time of his greatest need. For the past 10 years, Frederick 
and his wife have relied on their monthly CSFP food package 
they have picked up at Focus: HOPE. Frederick has said, ``For 
me and my wife, Focus: HOPE means food. It allows us to use our 
fixed income on other needs, like housing and medicine, and 
still eat at the end of the day.'' Frederick did not enroll in 
CSFP until he was 82 years old. He only reached out to us when 
he had no other choice. He needed help, and fortunately we were 
able to provide him and his wife with a monthly food package. A 
year ago, Frederick's son passed away and recently his wife 
passed away as well. For many of us, Frederick is a hero. We 
are privileged to be able to help him, especially for all he 
has done for our country.
    Barbara's story is a familiar one. Seniors who are forced 
to take care of someone else, and in so many cases, 
grandchildren. Barbara has recently signed up for the first 
time to receive CSFP benefits. Her husband passed away 
suddenly. Barbara says, ``At this time I'm at a point where I 
can't afford to pay my medical bills, rent, utilities, and I 
have a mentally challenged adult son who needs medication as 
well as every day necessities.'' CSFP is a lifeline to Barbara 
and other seniors in need.
    Providing food assistance in many cases is not enough. Many 
CSFP agencies network with other health providers and can bring 
additional assistance to low-income seniors. Volunteer services 
are increasing because we are able to partner with health 
organizations and others to bring additional help to our 
seniors. We have regular events at our sites such as blood 
pressure checks, cholesterol screenings, eye exams, seasonal 
flu shots, and mobile mammograms, as well as other screenings. 
We are also increasing our additional help in other Focus: HOPE 
sites. Income tax assistance, utility bill payment assistance 
is also being offered to our community, and we are working with 
our local food bank to provide additional food to our CSFP 
participants, as many other CSFP programs do.
    The stories I have described in this testimony are all too 
typical for many seniors in this country. The lack of access to 
high quality food, reliable public transportation, and adequate 
healthcare and too often unsafe neighborhoods collude to make 
the so-called golden years far less than golden. People who 
have worked all their lives and contributed so much to this 
nation are being neglected and left on their own in a time when 
they need help the most. Indeed, there is much left to be done 
to address the issues of hunger and poverty, both locally and 
nationally.
    On behalf of the nation's Commodity Supplemental Food 
Program participants and volunteers nationwide, thank you for 
this opportunity to present testimony for the record. Thank 
you.
    [The prepared statement of Mr. Kubik follows:]

  Prepared Statement of Frank Kubik, Director, Commodity Supplemental 
                 Food Program, Focus: HOPE, Detroit, MI
    Mr. Chairman and Members of the Subcommittee:

    I am Frank Kubik, the Commodity Supplemental Food Program Director 
at Focus: HOPE, a civil and human rights nonprofit organization in 
Detroit, Michigan. I also work with the National CSFP Association. 
Thank you for the opportunity to speak on behalf of the Focus: HOPE 
CSFP and its 41,000 monthly low-income senior participants in the 
metropolitan Detroit area, as well as the 600,000 monthly CSFP 
participants in 48 states, the District of Columbia, and two Indian 
Tribal organizations.
    The Commodity Supplemental Food Program (CSFP) began in 1969 to 
supplement protein, calcium, iron, and vitamins A and C for low-income 
pregnant and post-partum mothers and children under the age of 6. The 
U.S. Department of Agriculture (USDA) purchases nutrient-rich foods at 
wholesale prices to provide a nutritionally balanced monthly food 
package. Pilot programs in 1982 added seniors as eligible participants. 
In the Farm Bill of 2014, CSFP became an elderly only program. We thank 
the Subcommittee for the legislation that enables us to exclusively 
serve our vulnerable senior population.
    CSFP is a discretionary program funded through annual 
appropriations. While it is authorized in the farm bill, it receives no 
mandatory money. As the issue of hunger among our elderly has grown, 
more and more states have become interested in CSFP. In 1999, CSFP was 
in 17 states, the District of Columbia, and two Indian Tribal 
organizations. As a result of the work of interested states and local 
agencies, Congress has increased the funding to allow expansion into 
new states, and today CSFP is in 48 states, the District of Columbia 
and two Indian Tribal organizations (Red Lake, Minnesota and Oglala 
Sioux, South Dakota). Each month 697,865 participants are authorized to 
receive a nutritionally balanced food box. The National CSFP 
Association is working with the two remaining non-CSFP states to submit 
their plans of operation to USDA and with the support of Congress they 
will be able to provide CSFP food packages to their low-income seniors 
in the near future.
    CSFP is a unique program which brings together Federal and state 
agencies, along with public and private entities. In FY 2016, CSFP 
provided services through more than 150 nonprofit community and faith-
based organizations at 1,800 locations across the country. State 
agencies provide administrative oversight and contract with local and 
faith-based organizations to warehouse and distribute food, certify 
eligibility, and provide nutrition education to participants. These 
local organizations build broad collaboration among nonprofits, health 
providers, and area agencies on aging to provide easy access to the 
program. These partnerships reach even homebound seniors in both rural 
and urban settings with vital nutrition and remains an important market 
for commodities supported under various farm programs.
    The 2013 supplemental report by Ziliak and Gundersen for the 
National Foundation to End Senior Hunger: The State of Senior Hunger in 
America 2011: An Annual Report, demonstrated that seniors continue to 
face ever increasing food insecurity challenges despite the end of the 
recession. For example, recent data from USDA's Economic Research 
Service (ERS), Household Food Security in the United States in 2015, 
Table 2, shows that 2.9 million (8%) households with seniors age 65 and 
older experienced food insecurity while more than 1.2 million (9%) of 
households composed of seniors living alone experienced food 
insecurity.
    A 2013 National CSFP Association survey showed that \1/2\ of the 
seniors who responded reported that they lived alone with an average 
income of less than $750 a month. One-half of respondents from two-
person households reported an income under $1,000 per month. Twenty-
five percent were enrolled in the Supplemental Nutrition Assistance 
Program (SNAP) and 50% said that they ran out of food during the month. 
Seventy percent of senior respondents said that they choose between 
food and medicine.
    Many national studies have indicated that malnourished elderly 
patients experience more medical complications, have longer hospital 
stays, and incur higher hospital costs than well-nourished elderly 
patients. It should come as no surprise that proper nutrition promotes 
good health, treats chronic disease, decreases hospital length of stay, 
and saves health care dollars. Studies indicate that seniors are our 
fastest rising group of hungry in this country. Programs like CSFP can 
make a difference in fighting hunger among our elderly.
    I have been with Focus: HOPE's CSFP since 1981. We provide CSFP 
food packages to 41,000 senior citizens each month and distribute over 
700 tons of food annually. We have four primary distribution centers in 
our four county service areas, but we also work with almost 300 
volunteer distribution agencies as well as individual volunteers to 
reach those seniors who are unable to make it to our food centers. 
Community outreach such as this allows us to reach many seniors who 
would be unable to access the CSFP program and receive the nutritional 
assistance that they need to maintain their independence and a 
healthier lifestyle, thus lowering the need for assisted living and 
increased medical care.
    Unfortunately, many of our senior citizens find themselves 
struggling to make ends meet. Low-income seniors living on fixed 
incomes are facing an increasingly difficult time making their limited 
resources stretch to meet all of their daily needs, particularly with 
getting enough food to eat. They are making daily choices between 
whether to eat, buy medication, or pay their utility bills because 
their severely limited income does not allow them to adequately provide 
for themselves. The average income for a senior on our program is under 
$700 a month. Many of these individuals worked long and productive 
lives as cooks, maids, janitors, and other low wage jobs but did not 
have employers who paid into the [S]ocial [S]ecurity [S]ystem on their 
behalf. Still others find that the companies that they retired from are 
no longer in business and the pensions that they thought would be there 
for retirement no longer exist. Many of our seniors are forced to buy 
lower priced items at the supermarket, which by itself is difficult 
considering the food deserts that exists in cities like Detroit, items 
that are not as healthy for them as the higher priced items that are on 
the same shelves in the store. Fortunately, USDA has done an 
outstanding job in making the foods in CSFP healthier by lowering the 
sodium, sugar, and fat content and that goes a long way to keeping our 
seniors healthier and independent.
    Frederick is a 92 year old World War II veteran and Tuskegee 
Airman. He honorably served his country, at a time of its greatest 
need. We are now honorably trying to serve him at a time of his 
greatest need. For the past 10 years Frederick and his wife have relied 
on their monthly CSFP food package that they have picked up at Focus: 
HOPE. Frederick has said, ``For me and my wife, Focus: HOPE means food. 
It allows us to use our fixed income on other needs, like housing and 
medicine, and still eat at the end of the day.'' Frederick did not 
enroll in CSFP until he was 82 years old. He only reached out to us 
when he had no other choice. He needed help and fortunately we were 
able to provide him and his wife with a monthly food box. A year ago 
Frederick's son passed away and recently his wife passed away as well. 
For many of us Frederick is a hero. We are privileged to be able to 
help him with CSFP and to be a family to him, especially for all that 
he has done for us and for our country.
    My agency is fortunate that we partner with many others in our 
community to help our senior participants receive the food that they 
need. We are able to utilize businesses, schools, and other community 
volunteers to pack and deliver boxes. Many of the volunteers come in to 
build boxes for home deliveries and end up providing additional support 
for the seniors. We've had food drives, donations of gloves, and 
donations of hats and scarfs in the cold weather months, which are 
really important because so many seniors dial down their homes in the 
winter to keep from paying higher energy bills. Gloves, hats and scarfs 
are not always a given when you have a limited income. Volunteers have 
adopted low-income senior buildings and bought the seniors Christmas 
presents. One volunteer group bought fans for seniors living in an 
apartment building that didn't provide air conditioning to everyone 
living there. We always encourage our volunteers to talk to the 
seniors. That visit is sometimes just as important as the food that 
they are delivering. It shows that someone cares about them and that 
they are not alone. It also helps the volunteers to understand what 
many low-income seniors in this country are going through. Not everyone 
has enough to eat or enough money to pay their medical bills and other 
daily living expenses. Not everyone has a reliable car or family and 
friends to take care of them.
    Barbara's story is a familiar one. Seniors who are forced to take 
care of someone else and in so many cases, grandchildren. Barbara has 
recently signed up for the first time to receive CSFP benefits. Her 
husband passed away suddenly. Barbara says, ``At this time I'm at a 
point where I can't afford to pay my medical bills, rent, utilities, 
and I have a mentally challenged adult son who needs medication as well 
as every day necessities.'' Stretching your own resources to take care 
of yourself is challenging enough, adding someone else makes it almost 
impossible. CSFP sites offer referrals to other programs and many have 
connections with other agencies to provide additional help. As Barbara 
said to us, ``After calling Focus: HOPE I was assured that they could 
help me immediately. Not only did they assist me with food, they 
treated me with respect and gave me resources to call for additional 
assistance. I don't know if I could have made it through another day 
with my crisis. Thank you for understanding and listening to my 
concerns.'' Providing food assistance, in many cases, is not enough. 
Many CSFP agencies network with other help providers and can bring 
additional assistance to low-income seniors, but as Barbara said it's 
also understanding and listening to concerns. Too many seniors are by 
themselves and have no one to talk to. We stress how important it is 
for our staff to listen and be respectful to the seniors we interact 
with. Life is very difficult for too many of our seniors. Sometimes 
they just need to be able to tell somebody their story.
    As I stated earlier, volunteers play a crucial role in our program. 
Volunteer services are increasing because we are able to partner with 
health organizations and others to bring additional help to our 
seniors. We have regular events at our sites such as blood pressure 
checks, cholesterol screenings, annual eye exams, seasonal flu shots, 
and mobile mammograms, as well as other screenings, which are 
increasing in our food centers. Income tax assistance and utility bill 
payment assistance is also being offered to our community, and we are 
working with our local food bank to provide additional food to our CSFP 
participants. However, without volunteers we would not be able to do 
our jobs and reach as many seniors in need that we do. Many seniors are 
unable to access the additional help that they may need. Reliable 
public transportation is still an issue in Detroit and needs much 
improvement. To make matters worse, there are those who prey on seniors 
in a number of ways. Safety concerns are always a reality for too many 
of our elderly people so they are often times trapped in their homes or 
apartments and can't get out. Our volunteers and staff do an incredible 
job reaching those seniors and bringing them the additional nutritional 
help they need.
    Phyllis is another senior on our food program. Phyllis worked for 
low wages and took jobs that didn't always pay into [S]ocial 
[S]ecurity. She needed work and sometimes those were the only jobs that 
she could find. Now, without a pension and a small [S]ocial [S]ecurity 
check, she worries about how she will make it from day to day. Phyllis 
lives alone and has no one to help her. Phyllis says, ``If Focus: HOPE 
would stop distributing food for seniors, I don't know what I would do 
for food. I can barely afford to pay my household bills, medical bills, 
property taxes, and car insurance. Once I pay my bills I have only a 
few dollars left to my name.'' Phyllis worked all of her life. She did 
everything right. Now she needs a helping hand. CSFP is a lifeline to 
so many seniors like her.
    One of the blessings of doing the work that we do is meeting the 
seniors who are on CSFP and getting to know them. They don't complain, 
they don't blame anyone, they are just grateful that programs like CSFP 
exist. They don't like to ask for help and many times feel that they 
are taking something away from someone that needs it more than them. I 
delivered food each month for years to Annette who lived on Detroit's 
eastside. Annette was legally blind, she couldn't see much of anything, 
but, other than that, for the most part she was in pretty good health 
and was happy to stay in her home by herself. She always loved canned 
peaches and I would make sure that if we had them, she got them. By the 
time I last visited with her she was 92 and sharp as she had ever been. 
We would talk and she was always so grateful for the food and the 
visit, and the truth is I probably got more out of visiting her than 
she did. She would make you feel good about things no matter what was 
going on because she was so positive, but the reality was that she 
needed the CSFP food to get her through the month. Her family lived out 
of state so she truly was by herself, but she didn't let that keep her 
from being upbeat and happy to be alive. The reality is that when you 
get attached to seniors, you know the day is coming when things may not 
be so good for them. They may get sick, or worse, but you try not to 
think about that because we are appreciative for what we have now. One 
day I called Annette to let her know that I was coming by to bring her 
monthly food box. Her phone was disconnected. I drove by her house and 
it was empty. In the 30 days since I last saw her something obviously 
had happened. I would like to believe that she came into a lot of money 
or that one of her relatives from out of state came and moved her out 
to a better situation, but I guess I'll never know. We grow close to 
the seniors that we meet and deliver food to and sometimes we don't 
know what happened to them, but we do it again and again because we 
know what a difference that box of CSFP food makes for them. We know 
that for a brief time they know someone cares for them and it makes 
their day that much brighter. This is the very least that we can do for 
our greatest generation.
    The stories that I have described in this testimony are all too 
typical for many seniors in this country. The lack of access to high 
quality food, reliable public transportation, inadequate affordable 
health care, and too often unsafe neighborhoods collude to make the so-
called golden years far less than golden. This is unconscionable for 
the most prosperous nation in the world. People who have worked all of 
their lives and have contributed so much to this nation are being 
neglected and left on their own at a time when they need help the most. 
Indeed, there is much left to be done to address the issues of hunger 
and poverty locally and nationally.
    Working for others is an honor and a privilege. Thank you, Mr. 
Chairman and Members of this Subcommittee, for allowing us to do our 
part by your support of the Commodity Supplemental Food Program. We are 
deeply appreciative of you, and I know that the seniors who this 
program has impacted share my great appreciation for all that you have 
done and continue to do on their behalf. We ask for your continued 
support of CSFP and for the seniors and others who rely on the program 
for their most basic needs. Your commitment to this nation's most 
vulnerable seniors and the leadership that you have shown in this 
regard will never be forgotten.
    On behalf of the nation's Commodity Supplemental Food Program 
Participants and volunteers nationwide, thank you for this opportunity 
to present testimony for the record.

    The Chairman. Mr. Kubik, thank you so much for your 
testimony.
    Mr. Tonubbee, please go ahead and proceed with your 5 
minutes of testimony when you are ready.

          STATEMENT OF JERRY TONUBBEE, DIRECTOR--FOOD
            DISTRIBUTION PROGRAM, CHOCTAW NATION OF
                      OKLAHOMA, DURANT, OK

    Mr. Tonubbee. Halito; sv hohchifot Jerry Tonubbee. Oklahoma 
Chahta Okla ya Illimpa Ahopela I nushkoboka sia. Himak nittak a 
vla li kvt sv na yukpa. Hello, my name is Jerry Tonubbee. I am 
the food distribution Director for the Choctaw Nation of 
Oklahoma.
    The Food Distribution Program serves 93,000 Native 
Americans each month, about 6,000 in our Choctaw Nation area. 
They are among our neediest families. I know this program well, 
from my own personal experience on the commodity programs as a 
kid. I have come to have a deep respect for this program 
because it provides vital help to people in need. I am 
passionate about serving my fellow Tribal citizens who need 
these services today.
    My last name, Tonubbee, is a Choctaw warrior name. This, 
combined with my other family name of Pistubbee, instill in me 
a strong heritage of fighting for Choctaw people who need the 
help the most.
    On behalf of my chief, the Honorable Gary Batton, thank you 
for the opportunity to testify today on the achievements of the 
Choctaw Nation Food Distribution Program, our challenges, and 
recommendations on improvement.
    The Choctaw Nation serves all eligible Tribal members 
throughout our treaty territory. That is over 11,000 miles in 
southeastern Oklahoma. The Choctaw Nation was designated the 
first Promise Zone in January of 2014. All the 10\1/2\ counties 
located within the Choctaw Nation fell into the USDA's 
extremely high poverty designation. A large portion of this 
area is also classified as a food desert by the USDA. Our 
statistics on poverty, unemployment, educational attainment, 
health, and nutrition are among the worst in America. FDPIR is 
one program that helps to combat those awful statistics. FDPIR 
is intended to be a supplemental program, but for far too many 
of our Tribal members, it is their primary source of healthy 
food. Our FDPIR items have low sodium and low fat content. Our 
participants receive fresh fruit and vegetables, milk, beans, 
lean meats, and other items that can be prepared in full 
nutritional meals.
    Using Choctaw Tribal funds, the Nation has built five 
facilities for food distribution to give our citizens a well-
rounded shopping and learning experience in a grocery store 
setting. Before we built these stores, our people were handed 
food from the back of a truck. We believe our citizens deserve 
a more dignified way of obtaining food, and that is why we have 
invested millions of dollars of Tribal funds to help mold this 
into this program.
    In conclusion, we offer three recommendations that would 
make food distribution more streamlined, as well as give Tribes 
critical access to other Federal feeding programs. First, 
remove the urban place limitations. Some towns within the 
Choctaw Nation are slightly larger than 10,000 residents, and 
we have Choctaws that live outside our treaty lands in Tulsa 
and Oklahoma City. We believe all of our Choctaw citizens 
should have access to nutritional foods in the FDPIR. Removing 
urban place limitation has the unanimous support of the 
National Congress of American Indians.
    Second, fix carryover and funding certainty. FDPIR funding 
can be uncertain and the amounts can change from year to year. 
This forces us to guess as to what the amount of our Tribal 
match will be each year. A carryover provision allowing us to 
carry forward a percentage of our annual FDPIR budget would 
mean better management. This would also help ease the 
uncertainty of late Federal budget approvals.
    Third, allow Tribes to run The Emergency Food Assistance 
Program. Providing nutritious foods to our Tribal citizens is 
of utmost importance to the Choctaw Nation. The TEFAP program 
would be a good fit, but it does not allow for Tribal 
administration. Instead, the Choctaw Nation has to apply to the 
State of Oklahoma. This would subordinate the Choctaw Tribal 
Government to the state government, and creates inefficient and 
an impractical relationship. The Choctaw Nation has continually 
demonstrated our programmatic capacity and our commitment to a 
Tribe-Federal partnership. We should be on par with the states 
for TEFAP.
    Finally, as you prepare for the next farm bill, your 
Subcommittee has a unique opportunity to further improve how 
Indian Country's nutritional needs are met. The Choctaw Nation 
stands with you and is ready to embrace that opportunity. 
Yakoke!
    [The prepared statement of Mr. Tonubbee follows:]

   Prepared Statement of Jerry Tonubbee, Director--Food Distribution 
            Program, Choctaw Nation of Oklahoma, Durant, OK
    Mr. Chairman. Members of the Subcommittee. Halito; sv hohchifot 
Jerry Tonubbee. Oklahoma Chahta Okla ya Illimpa Ahopela I nushkoboka 
sia. Himak nittak a vla li kvt sv na yukpa.
    Hello. My name is Jerry Tonubbee. I am the Food Distribution 
Director for the Choctaw Nation of Oklahoma. It is my pleasure to be 
here today.
    I oversee Choctaw Nation's implementation of the USDA's Indian 
Reservation Food Distribution Program. Nationwide, this program serves 
approximately 93,000 Native Americans each month. In Choctaw Nation 
alone, we serve close to 6,000 Native Americans monthly, including our 
own Tribal citizens and other Indians who reside in our area. This 
program serves our neediest families, providing close to $300,000 worth 
of food each month.
    I am honored to serve my Choctaw Nation in this way. I am very 
familiar with the struggles many of our low-income families go through 
while trying to put food on the table. My family went through difficult 
times while I was growing up, and the USDA Food commodity program, as 
it was called at the time, was very important for my family and me as 
we all worked to put food on the table. If not for this program, my 
family would have had to rely on relatives for food, or maybe even go 
hungry. From my own personal experience, I have come to have a deep 
respect for programs like this that provide real, practical and vital 
help to people in need. This program is very personal to me, and I am 
passionate about serving my fellow Tribal citizens who now need these 
services. My last name, Tonubbee, is a Choctaw warrior name. This, 
combined with my other family name of Pistubbee, both instill in me a 
strong heritage of fighting for Choctaw people. It's my honor to carry 
on that family legacy and standing up for our people who need help the 
most.
    On behalf of my Chief, the Honorable Gary Batton, thank you for the 
opportunity to testify today on the achievements of the Choctaw Nation 
Food Distribution Program, our challenges, and recommendations on how 
to ensure improvements in the implementation of this program to feed 
Tribal members around the country through the next farm bill.
FDPIR and the Choctaw Nation
    Choctaw Nation is proud to be a partner with the USDA's Food and 
Nutrition Service to administer the Food Distribution Program on Indian 
Reservations (FDPIR).
    In administering FDPIR, the Choctaw Nation serves all eligible 
Tribal members throughout our treaty territory--over 11,000\2\ miles in 
southeastern Oklahoma. This is one of the largest, most rural, and 
highest need Tribal areas in the country. Because of this, the Choctaw 
Nation was designated as the first Tribal Promise Zone in January 2014. 
At the time of our application, all of the 10.5 counties located within 
the Choctaw Nation fell into the USDA's extremely high poverty 
designation. A large portion of this area is also classified as a food 
desert by the USDA. No matter how we are measured, our statistics on 
poverty, unemployment, educational attainment, health, and nutrition 
are among the worst in America. However, through the leadership and 
record success of Choctaw Nation, we are using the Promise Zone 
designation to improve our situation by establishing strong 
partnerships with Federal, state, and local governments, community 
leaders, and nonprofits. FDPIR is one program that helps to combat our 
awful statistics and is crucial to our continued success as a Promise 
Zone.
    FDPIR is intended to be a supplemental program, but for far too 
many of our Tribal members, it is their primary source of food. When 
compared to other Federal feeding programs, FDPIR is a healthier choice 
for our people. Food supplies our citizens receive monthly adhere to 
strict nutritional guidelines. The food has low sodium and low fat 
content, and little to no sugar. Things like cakes, pies, and sodas are 
not available through FDPIR. Our participants receive healthy 
ingredients each month like fresh fruit and vegetables, milk, beans, 
lean meats, and other items that can be prepared into full, nutritional 
meals.
    Choctaw Nation has five locations around the Choctaw Nation for 
food distribution. The Choctaw Nation has used Tribal dollars to build 
these facilities, in order to provide our citizens a well-rounded 
shopping and learning experience as they get their family's food 
supplies for the month. Our five stores are top-notch facilities and 
provide a real grocery store experience for our citizens. There are 
also kitchen facilities and cooking classes offered on a regular basis 
to help teach our citizens how to prepare nutritional meals. Before the 
Choctaw Nation built these stores, food was shipped to designated 
locations around Choctaw Nation and program participants were handed 
their food from the back of a truck. We believe our citizens deserve a 
more dignified way of obtaining food, and that's why we have invested 
millions of Tribal dollars to help mold this program into a well-
rounded experience for our citizens.
Food and Nutrition Recommendations for the Next Farm Bill
    The Choctaw Nation works diligently to administer FDPIR and serve 
thousands of Tribal citizens each month. However, there are challenges 
we and other Tribes face in administering this program. We offer for 
your consideration the following recommendations that would make food 
distribution more streamlined and efficient in serving our Tribal 
citizens. We also offer a recommendation on how Tribal nations should 
be given access to administer other Federal feeding programs to meet 
nutritional needs in Indian Country.
1. Urban Place Limitation
    The USDA bars us from providing FDPIR to residents of any `urban 
place', which USDA defines as any city or town with a population over 
10,000. By and large, Choctaw Nation is very rural. However, we have 
some bustling communities that exceed the 10,000 population threshold. 
We have to apply for a waiver from USDA to serve our Tribal members in 
each of these communities. We see this as an unnecessary burden that 
delays service to some of our neediest citizens. This limitation also 
excludes our Tribal citizens from receiving services who live outside 
our treaty territory. Choctaws live in every single state in the U.S., 
and we also have a large population of Choctaws who live in Oklahoma, 
but outside our treaty territory. So the large number of our Tribal 
citizens who live in and around Tulsa or Oklahoma City and need food 
assistance cannot access FDPIR. They may be eligible to access other 
Federal programs, but programs like SNAP don't have the same 
nutritional focus as FDPIR. Removing the urban place limitation from 
FDPIR would enable Choctaw Nation to better serve those of our citizens 
who reside in slightly larger communities, as well as Tribal members 
who live in and around Tulsa or Oklahoma City for whom the Choctaw 
Nation provides other Tribal services.
    The Choctaw Nation has received broad support for this request from 
other Tribal nations around the country. In 2016, Choctaw Nation passed 
a resolution with the National Congress of American Indians (NCAI), and 
it passed unanimously. NCAI is the largest and oldest group of its kind 
representing Indian Country and its interests. (See Addendum) The urban 
place limitation is a barrier to serving our citizens, even in 
relatively small communities. Thank you for considering our request 
that you eliminate this barrier through the next farm bill.
2. Carry-Over and Funding Certainty
    FDPIR funding can be uncertain and the amounts can change from year 
to year. This requires us to seek Choctaw Nation Tribal Council 
approval for a Tribal dollar match often before we know what the 
Federal funding amount will be. We ask you to consider a carry-over 
provision for FDPIR funding in the next farm bill that would allow us 
to carry forward a certain percentage of our annual FDPIR amount so we 
can always be good stewards of the funds we are given. This would 
better enable us to serve our Tribal citizens in a continuous and 
consistent manner that effectively manages both Tribal and Federal 
funds. Additionally it would be helpful if we could get annual Federal 
FDPIR budgets approved in a little more timely fashion. We are often 
halfway through the fiscal year before we know the final approved 
budget. A carry-over process would help ease that uncertainty, and 
forward funding a year ahead of expenditures would greatly assist us in 
administering FDPIR.
3. The Emergency Food Assistance Program and Tribes
    Providing nutritious food to our Tribal citizens is of utmost 
importance to the Choctaw Nation of Oklahoma. We are looking beyond 
FDPIR to see how else we can serve our people, and The Emergency Food 
Assistance Program (TEFAP) would be a good fit for the Choctaw Nation. 
However, TEFAP does not currently allow for Tribal administration of 
the program. Under current rules, the Choctaw Nation would have to 
apply to the State of Oklahoma in order to become an eligible recipient 
agency. This would subordinate the Choctaw Nation to the state, which 
would create an unacceptable, impractical and complicated relationship. 
The Choctaw Nation has continually demonstrated our programmatic 
capacity and our commitment to a Tribe-Federal partnership through our 
administration of FDPIR. We ask this Subcommittee to consider amending 
and expanding TEFAP to allow for Tribal administration, on par with 
states. The previous farm bill called for USDA-FNS to examine which 
Federal feeding programs, other than FDPIR, would be a good fit for 
Tribal administration. However, when this study was done, it focused on 
programs like SNAP to the exclusion of TEFAP and other programs. We 
know TEFAP is a much better fit for Tribal communities due to its 
nutritional guidelines. We recommend that the Congress authorize Tribal 
administration of TEFAP in the next farm bill.
    As you prepare the next farm bill, your Subcommittee has the unique 
opportunity to further support and improve how Indian Country's 
nutritional needs are met. The Choctaw Nation is honored by this 
opportunity to testify before you, and we appreciate your time. We look 
forward to engaging with you as you develop the next farm bill.

    Yakoke!
                                Addendum


          Groundbreaking ceremony on the new Choctaw Nation Food 
        Distribution Center in Broken Bow.
        
        
          Tribal citizen shopping at a Choctaw Nation Food Distribution 
        Center.
        
        
          Demonstration and teaching kitchen at a Choctaw Nation Food 
        Distribution Center.
The National Congress of American Indians Resolution No. SPO-16-022
Remove the ``Urban Place'' Limitation in USDA's Food Distribution 
        Program on Indian Reservations
    Whereas, we, the members of the National Congress of American 
Indians of the United States, invoking the divine blessing of the 
Creator upon our efforts and purposes, in order to preserve for 
ourselves and our descendants the inherent sovereign rights of our 
Indian nations, rights secured under Indian treaties and agreements 
with the United States, and all other rights and benefits to which we 
are entitled under the laws and Constitution of the United States, to 
enlighten the public toward a better understanding of the Indian 
people, to preserve Indian cultural values, and otherwise promote the 
health, safety and welfare of the Indian people, do hereby establish 
and submit the following resolution; and
    Whereas, the National Congress of American Indians (NCAI) was 
established in 1944 and is the oldest and largest national organization 
of American Indian and Alaska Native Tribal governments; and
    Whereas, The U.S. Department of Agriculture (USDA) Food 
Distribution Program on Indian Reservations (FDPIR) program classifies 
an ``Urban Place'' as a town or a city with a population of 10,000 or 
more people; and
    Whereas, Tribal citizens who reside in urban areas can only be 
served in this program through a waiver process; and
    Whereas, Tribal citizens living in slightly larger communities and 
the metropolitan areas are excluded from receiving nutritious food 
through the FDPIR program due to the ``urban place'' definition; and
    Whereas, Tribal communities are growing and expanding due to 
increased economic development to include more Tribal citizens from 
many Tribal nations; and that there are thousands of Tribal citizens 
who live in urban areas who are excluded from receiving nutritious and 
culturally relevant food supplies from the FDPIR program; [and]
    Whereas, the FDPIR, which is administered by over 270 Tribes, is a 
vital program which provides feeding program services and food packages 
for the most food-insecure Tribal citizens and should be allowed to 
reach all Tribal citizens in need.
    Now Therefore Be It Resolved, that NCAI asks the U.S. Department of 
Agriculture to remove the ``Urban Place'' definition and limitation to 
a population of 10,000 people for the Food Distribution Program on 
Indian Reservations, allowing Tribal nations and the USDA to work 
collaboratively to serve even more Tribal citizens who need nutritious 
food, regardless of where they live.
    Be It Further Resolved, that this resolution shall be the policy of 
NCAI until it is withdrawn or modified by subsequent resolution.
Certification
    The foregoing resolution was adopted by the General Assembly at the 
2016 Midyear Session of the National Congress of American Indians, held 
at the Spokane Convention Center, June 27 to June 30, 2016, with a 
quorum present.


Brian Cladoosby, President.

    Attest:
    
    
Aaron Payment, Recording Secretary.

    The Chairman. Thank you, Mr. Tonubbee, for your testimony.
    Ms. Kriviski, please go ahead and proceed with your 5 
minutes of testimony whenever you are ready. Thank you.

STATEMENT OF DIANE KRIVISKI, DEPUTY ADMINISTRATOR, SUPPLEMENTAL 
NUTRITION AND SAFETY PROGRAMS, FOOD AND NUTRITION SERVICE, U.S. 
                         DEPARTMENT OF
                  AGRICULTURE, ALEXANDRIA, VA

    Ms. Kriviski. Thank you. Thank you, Chairman Thompson and 
Ranking Member McGovern for this opportunity to appear before 
you today. I am pleased to share information regarding the 
commodity distribution programs, which are part of the nation's 
safety net of nutrition assistance programs administered by the 
Food and Nutrition Service. As a Deputy Administrator for the 
Supplemental Nutrition and Safety Programs, I am the career 
senior executive overseeing the commodity distribution 
programs. I have served at FNS for over 30 years at all levels 
in the organization.
    We commonly call the commodity distribution program the 
USDA Foods programs to emphasize the fact that these programs 
provide 100 percent domestically produced high quality and 
nutritious foods. USDA Foods are distributed to a variety of 
organizations and nutrition assistance programs. Today, I will 
focus my remarks on the smaller but critical portion of USDA 
Foods programs that are distributed to low-income households 
through three farm bill authorized programs: The Emergency Food 
Assistance Program, or TEFAP, the Food Distribution Program on 
Indian Reservations, known as FDPIR, and the Commodity 
Supplemental Food Program, known as CSFP. Additionally, USDA 
Foods are distributed through FNS' National School Lunch 
Program and Child and Adult Care Food Program, which make up 
the bulk of our purchases of USDA Foods.
    In Fiscal Year 2016, over 200 USDA Food items, valued at 
over $2 billion, were purchased from food producers in almost 
every state, and distributed to program operators across the 
country. These purchases not only support our agriculture 
producers and farm economy, they ensure the most vulnerable 
people have access to nutritious foods through our programs. 
USDA Foods are 100 percent American grown, meeting the highest 
safety and nutrition standards, and including high quality 
fruits, vegetables, dairy products, whole grains, lean meats, 
poultry, and fish that contribute to a healthy diet.
    TEFAP helps supplement the diets of low-income people by 
providing them with food at no cost. Through TEFAP, USDA offers 
a variety of food items to state distributing agencies in sizes 
appropriate for household distribution. States then order food 
items from the list of available USDA Foods, and provide it to 
local agencies they have selected, usually food banks, which in 
turn distribute the foods to local organizations such as soup 
kitchens and food pantries that directly serve the public. 
States may also provide USDA Foods to local organizations which 
distribute foods directly to low-income households.
    The Food Distribution Program on Indian Reservations, or 
FDPIR, provides a monthly package of USDA Foods to low-income 
households living on Indian reservations and to low-income 
American Indian households residing in approved service areas 
near reservations or in Oklahoma. It serves as an alternative 
to the Supplemental Nutrition Assistance Program, or SNAP, for 
households residing in areas where food stores may not be 
readily accessible.
    The last program I would like to mention is the Commodity 
Supplemental Food Program, or CSFP. The 2014 Farm Bill amended 
the eligibility requirements for CSFP, phasing out Women, 
Infants, and Children, and transitioning it to a program 
focused on providing nutrition assistance to the elderly. The 
program works to improve the health of low-income persons age 
60 and over by providing a monthly food package comprised of 
specific nutritious USDA Foods, which supplement their diet.
    Each of these programs are operated as a Federal-state 
partnership. The Federal Government provides the resources, 
USDA Foods, and administrative funding to state agencies or 
Indian Tribal organizations. They are then responsible for 
submitting orders for USDA Foods and establishing a 
distribution system to local program operators. To procure the 
food ordered by our program operators, FNS works closely with 
USDA's Agricultural Marketing Service, or AMS, who serve as our 
procurement office. AMS follows Federal procurement 
requirements to purchase and provide USDA Foods in the 
quantities and the varieties needed to meet the demands of our 
programs. AMS also identifies and approves food manufacturers, 
issues and accepts bids, and ultimately awards contracts for 
the purchase and delivery of USDA Foods ordered by the states.
    While the Food and Nutrition Service provides 
administrative funding as appropriated by Congress to states 
and Indian Tribal organizations for the operation of these 
programs, I want to recognize that many state and local 
organizations, as well as Indian Tribal organizations, also 
provide financial and in-kind support to help maximize the 
administrative resources available from the Federal Government. 
I am proud of the dual mission of the Food and Nutrition 
Service and USDA Foods program, supporting domestic agriculture 
and supplementing the nutrition needs of low-income people. 
These programs play an important role in stimulating the 
agricultural economy and ensuring the most vulnerable 
populations have access to high quality, safe, and nutritious 
foods. I look forward to your questions on the operational 
aspects of these programs. As you know, I am unable to answer 
questions on forward looking policy at this time.
    [The prepared statement of Ms. Kriviski follows:]

      Prepared Statement of Diane Kriviski, Deputy Administrator, 
Supplemental Nutrition and Safety Programs, Food and Nutrition Service, 
                                  U.S.
               Department of Agriculture, Alexandria, VA
    Thank you, Chairman Thompson and Ranking Member McGovern for this 
opportunity to appear before you today. I am pleased to share 
information regarding USDA's Food, Nutrition, and Consumer Services' 
(FNCS) commodity distribution programs, which are part of the safety 
net of nutrition assistance programs administered by the Food and 
Nutrition Service (FNS). As the FNS Deputy Administrator for the 
Supplemental Nutrition and Safety Programs, I am the career Senior 
Executive leading the commodity distribution programs. I have served 
FNS for over 30 years at all levels of the organization.
    Let me begin by expressing my appreciation to you, Chairman 
Thompson and Ranking Member McGovern, along with other Members of this 
Subcommittee, for your ongoing support for Federal nutrition programs. 
I appreciate you taking the time today to highlight these programs that 
support American agriculture and meet the supplemental nutrition needs 
of low-income people.
    Our programs, which operate as partnerships with state, Tribal, and 
local service providers across the country, work to prevent hunger and 
improve nutrition, while also supporting American farmers. We commonly 
call the commodity distribution programs the ``USDA Foods Programs'' to 
emphasize the fact that these programs provide 100 percent 
domestically-produced, high quality, and nutritious foods purchased by 
USDA. USDA Foods are distributed through a variety of organizations and 
nutrition assistance programs. USDA helps families stretch their food 
budgets and puts healthy foods within reach by distributing USDA Foods 
to schools, food banks, disaster feeding organizations, Indian Tribal 
Organizations, charitable institutions and other feeding organizations. 
In Fiscal Year (FY) 2016, over $2 billion in USDA Foods were purchased 
from food producers in almost every state and distributed to program 
operators across the country. These purchases for our programs not only 
support our agricultural producers and farm economy; they ensure that 
the most vulnerable Americans have access to nutritious food. USDA 
Foods are 100 percent American Grown, meeting the highest safety and 
nutrition standards. They include high quality fruits, vegetables, 
dairy products, whole grains, lean meats, poultry, and fish that can 
contribute to a healthy diet.
    Today, I will focus my statement on a critical portion of USDA 
Foods that are distributed through three farm bill authorized programs: 
The Emergency Food Assistance Program or TEFAP; the Food Distribution 
Program on Indian Reservations, known as FDPIR; and the Commodity 
Supplemental Food Program, known as CSFP. USDA Foods are also purchased 
and provided for use in the FNS' child nutrition programs, such as the 
National School Lunch Program and the Child and Adult Care Food 
Program.
TEFAP
    The Emergency Food Assistance Program, or TEFAP, helps supplement 
the diets of low-income people by providing them with food assistance 
at no cost. Through TEFAP, USDA offers a variety of food to state 
distributing agencies. States order the food from FNS and provide it to 
local agencies selected by the state agencies, usually food banks, 
which in turn distribute the food to local organizations, such as soup 
kitchens and food pantries that directly serve the public. States may 
also provide the food to other types of local organizations, such as 
community agencies, which distribute the foods directly to low-income 
households. Recipients of TEFAP commodity assistance must meet income-
based program eligibility criteria set by the state.
    USDA offers states a variety of healthy, domestically grown foods 
for TEFAP including fresh fruits and vegetables, fruit canned in extra-
light syrup, dried fruits, low sodium and no salt added canned 
vegetables, dried and low sodium canned beans, canned and frozen meats, 
cereal, rice, pasta, peanut butter, oats, shelf stable milk, and eggs. 
State and local agencies count on the stability of the TEFAP food 
offerings. They fill a gap in the variable array of donated foods, 
supplementing both the quantity and quality of private food donations, 
which vary greatly throughout the year. TEFAP foods are important to 
these operations, though USDA Foods only make up approximately 20 
percent of foods provided to food banks and other local organizations.
    USDA Foods distributed through TEFAP are purchased by USDA using 
funds appropriated specifically for TEFAP food benefits. In addition, 
FNS also directs foods from USDA's marketing programs to TEFAP; these 
are known as bonus foods. USDA purchases these domestically grown bonus 
foods with funds authorized by Section 32 of the Agriculture Act of 
1935. Each purchase is analyzed by USDA and approved by the Secretary 
to ensure they support American agriculture. These products are then 
provided to FNS and directed to the TEFAP program, helping to provide 
larger food inventories for distribution. In FY 2016 USDA Foods donated 
through TEFAP include chicken, catfish, salmon, eggs, shelf stable 
milk, cheese, pinto and great northern beans, walnuts, dates, 
blueberries, cherries, cranberries, grapes, grapefruit, oranges, and 
potatoes.
    In total, FNS provided USDA Foods valued at $623.5 million for 
distribution through TEFAP in FY 2016. Of that, USDA was appropriated 
$318 million by Congress and purchased approximately $305.5 million in 
bonus foods.
    During the same period, FY 2016, $54.4 million was appropriated for 
TEFAP administrative funds, a slight increase from previous year 
funding levels. TEFAP administrative funds are provided to states to 
support the storage and distribution of USDA Foods which in turn are 
provided to local providers, supplementing their operating budget. It 
is worth noting that many local TEFAP agencies are faith-based 
organizations and most depend significantly on volunteers to operate 
their local programs.
    The allocation of both TEFAP food and administrative grants to 
states is based on a statutory formula that considers the states' 
unemployment levels and the number of persons with income below the 
poverty level. Each state is responsible for selecting organizations to 
participate in the program, allocating foods and administrative funds 
among such organizations, and establishing eligibility criteria for 
recipients.
    I know TEFAP meets a critical and unique need in the nation's food 
safety net. In 2013, FNS published a white paper that described the 
impact of TEFAP and found that it fills nutrition assistance gaps for 
those extremely vulnerable households and individuals who do not 
typically participate in other USDA nutrition assistance programs. 
Research found that more than \1/3\ of TEFAP participants who used soup 
kitchens and about \1/5\ who used food pantries to obtain emergency 
food assistance did not report participating in other FNS nutrition 
assistance programs. Additionally, a report published in 2003 by USDA's 
Economic Research Service found that households where TEFAP was their 
only source of food assistance were more likely to face homelessness, 
have very low food security, and suffer greater hardships relative to 
other households.
FDPIR
    The Food Distribution Program on Indian Reservations, or FDPIR, 
provides a monthly package of USDA Foods to low-income households 
living on Indian reservations, and to low-income Indian households 
residing in approved service areas near reservations or in Oklahoma. 
FDPIR serves a very food-insecure population, primarily living on 
Tribal lands; many households participate in FDPIR as an alternative to 
SNAP because they do not have easy access to SNAP offices or authorized 
food stores. A report published in December 2014 by USDA's Economic 
Research Service, Measuring Access to Healthful, Affordable Food in 
American Indian and Alaska Native Tribal Areas, found that American 
Indian and Alaska Native (AIAN) populations have about twice the rate 
of nutrition-related health conditions, including cardiovascular 
disease, diabetes, and obesity, as non-Hispanic White Americans. The 
authors also found likely sources of healthful, affordable food to be 
limited in many Tribal areas, a factor that may influence diet and food 
choices. A USDA study of the characteristics of FDPIR participants 
completed by the Urban Institute in 2016 found that the percent of 
FDPIR households with low food security was more than four times U.S. 
households as a whole (34 percent compared to 8 percent). The percent 
of FDPIR households with very low food security was also much higher, 
22 percent compared to six percent.
    FDPIR is administered locally by either Indian Tribal organizations 
(ITOs) or an agency of a state government. Currently, approximately 276 
of the 567 federally recognized American Indian and Alaska Native 
Tribes and villages receive benefits under FDPIR through 102 ITOs and 
three state agencies. The ITOs and state agencies that administer FDPIR 
have to work under unique and often difficult circumstances to provide 
food and nutrition education to FDPIR participants. Program directors 
and managers tailor warehouse hours, distribution options, and product 
selection to the circumstances and preferences of participants. Due to 
the remote nature of much of the Tribal lands in the United States, 
program sites often use large trucks to drive food out to central 
distribution sites and/or provide home delivery for their participants. 
This allows FDPIR to reach more households in need and effectively 
deliver FDPIR services to eligible participants that otherwise face 
transportation challenges. In smaller or less remote locations, some 
FDPIR programs set up their distribution sites like grocery stores, 
allowing participants the opportunity to select a variety of nutritious 
food.
    Each month, households participating in FDPIR receive a food 
package to help them maintain a nutritionally balanced diet. The FDPIR 
food package allows participants to select from more than 100 
domestically grown, nutritious foods in a variety of categories 
including meat, poultry, fish, dairy, grains, fruits, and vegetables. 
FDPIR participants also select from about 40 different types of fresh 
produce through an agreement between USDA and the Department of Defense 
(DOD), which maximizes efficiencies as DOD produce vendors are already 
delivering to defense installations in rural or remote areas. In many 
FDPIR locations, a variety of quality and affordable fresh produce 
would not otherwise be readily accessible.
    The food package also consists of a selection of traditional foods 
including bison, blue cornmeal, wild sockeye salmon, and traditionally-
harvested wild rice. The 2008 Farm Bill first introduced the FDPIR 
Traditional and Locally-Grown Food Fund. This provision, subject to 
appropriations, authorized $5 million for use in purchasing traditional 
foods for FDPIR for FY 2015 and FY 2016. Using the funds appropriated, 
along with additional FDPIR food funds, USDA purchased over $17 million 
in healthy, traditional foods for FDPIR participants, much of it from 
Native American-owned businesses. For example, the Leech Lake Band of 
Ojibwe and White Earth Nation received awards to provide traditionally 
harvested wild rice to FDPIR participants. Both ITOs currently 
administer FDPIR on their reservations. Tribal partners were 
instrumental in developing first-of-their-kind product specifications 
that facilitated the purchase of traditional foods for FDPIR as well as 
sharing information on the USDA Vendor approval process for new 
Tribally-owned businesses to provide traditional foods to FDPIR. 
Traditional foods are important to maintaining the appeal of this 
nutritious food package as well as supporting Native American 
economies. USDA and FNS leadership meet regularly with elected Tribal 
leaders as well as FDPIR program directors to review the individual 
food items in the FDPIR food package.
    In FY 2016 FDPIR received a total of $145.2 million to support the 
program's projected participation levels and food costs and support the 
acquisition of traditional foods for participants. Since FY 2013, FDPIR 
has seen an increase of 23 percent in program participation (from 
75,600 individuals in 2013 to 93,038 in FY 2016). Participation 
increases may be attributed, at least in part, to relatively recent 
policy changes in both FDPIR and SNAP. In FY 2013, USDA published a 
final rule which expanded the medical deduction for FDPIR and permitted 
a new income deduction for shelter or utility expenses. Both changes 
more closely aligned FDPIR to SNAP eligibility requirements. In FY 
2014, a temporary increase in SNAP benefits received from the American 
Recovery and Reinvestment Act of 2009 expired which may have also 
caused some SNAP participants to switch to FDPIR. High program 
participation continues into FY 2017 with the program serving 
approximately 93,250 individuals in an average month as of November 
2016.
    USDA provides FDPIR state agencies with administrative funding to 
support program administrative costs such as eligibility determination, 
food warehousing and transportation, and nutrition education activities 
such as individual nutrition counseling, group cooking demonstrations 
and distribution of recipes for preparing USDA Foods. FNS also annually 
awards approximately $1 million in Food Distribution Program Nutrition 
Education (FDPNE) grants in order to enhance the nutrition knowledge of 
FDPIR participants. Since FY 2008, ITOs that received funding have 
conducted programs designed to increase fruit and vegetable consumption 
and physical activity.
CSFP
    The next program I would like to talk about serves primarily the 
elderly. The Commodity Supplemental Food Program, or CSFP, works to 
improve the health of low-income persons ages 60 and over by providing 
a nutritious monthly food package that supplements their diets. The 
2014 Farm Bill amended the eligibility requirements for CSFP, phasing 
out women, infants, and children and transitioning it to a program 
focused on providing service to the elderly. The elderly population 
faces unique health, social, and nutrition challenges, which can 
include decreased mobility, limited shopping and cooking ability, and 
health challenges related to food insecurity. In a 2008 USDA report, 
the Urban Institute found that CSFP can be a significant source of 
nutritional assistance for low-income seniors and provide a substantial 
portion of the food they need each month.
    Seniors represent a particularly vulnerable demographic to food 
insecurity, and the number of food-insecure seniors has increased in 
recent years. While some seniors may be eligible for SNAP, many are not 
participating or are receiving very minimal SNAP benefits. In FY 2015, 
approximately 4.8 million seniors (age 60 and older) participated in 
SNAP, which represents about 42 percent of seniors eligible to 
participate in the program.
    Through CSFP, USDA distributes both food and administrative funds 
to participating states and ITOs. CSFP food packages are supplemental 
and the foods provided are good sources of the nutrients typically 
lacking in the diets of the elderly population. Food packages include a 
variety of foods, such as nonfat dry and shelf-stable fluid milk, 
juice, farina, oats, ready-to-eat cereal, rice, pasta, peanut butter, 
dry beans, canned meat, poultry, or fish, and canned fruits and 
vegetables. State agencies that administer CSFP are typically 
departments of health, social services, education, or agriculture. 
State agencies store CSFP food and distribute it to public and 
nonprofit private local agencies. Local agencies determine the 
eligibility of applicants, distribute and may store the foods, and 
provide nutrition education. Local agencies also provide referrals to 
other programs, such as SNAP, Medicaid, and Medicare.
    With the funding provided by Congress over the last 3 years, FNS 
has added nine additional states to CSFP. CSFP now operates in 48 
states, the District of Columbia, and on two Indian reservations. Two 
states, Alabama and Wyoming, do not participate in CSFP and have not 
submitted a request to do so. If these states choose to participate, 
additional funds would be required to support such a request without 
reducing available funding and caseload to other states. CSFP 
Regulations require FNS to prioritize the caseload needs of currently 
participating states over requests from new states to begin operating 
the program. Based on the level of funding currently available in FY 
2017, CSFP provides for a participation level of 697,865 nationally.
Conclusion
    The impact of these programs is vast. They serve some of the most 
vulnerable people in our country and directly support American farmers 
across the country. Without access to these critical programs, many 
recipients would face higher levels of food insecurity and farmers 
would have fewer outlets for their products.
    The economic impact of these programs is also large. In FY 2016, 
USDA purchased USDA Foods from 43 individual states contributing $2.2 
billion to these states' economies and 2.5 billion pounds of food to 
families in need across the United States.
    While my testimony has focused on the important Federal-state 
relationships of these programs, I want to recognize and highlight the 
critical role of volunteers at the local level that make these programs 
operate effectively. Local organizations, including faith-based 
organizations, play a key role as local-level providers for many of the 
programs. Many state and local organizations, as well as ITOs, also 
provide financial and in-kind support to help maximize the resources 
available.
    In closing, I am proud of the dual mission of the Food and 
Nutrition Service and the USDA Foods programs--supporting domestic 
agriculture and meeting the supplemental nutrition needs of low-income 
people. These programs play an important role in keeping local 
agriculture strong, stimulating the agricultural economy and ensuring 
the most vulnerable populations have access to high-quality, safe and 
nutritious food.
    Thank you for the opportunity to join you today and I look forward 
to your questions.

    The Chairman. Ms. Kriviski, thank you so much for your 
testimony. Thank you to all the panel that is here for sharing 
your expertise.
    The chair would like to remind Members that they will be 
recognized for questioning in order of seniority for Members 
who were here at the start of the hearing. After that, Members 
will be recognized in the order of arrival. I appreciate the 
Members' understanding. I am going to recognize myself 
initially here for 5 minutes of questions.
    I want to start with Ms. Kriviski. This Committee has had 
numerous hearings about SNAP, and today, we have had a chance 
to talk about several commodity distribution programs. I want 
to understand if there is any overlap in the programs that we 
have discussed here, and why these three programs are needed in 
addition to SNAP?
    Ms. Kriviski. Thank you for your question.
    As you know, our programs at the Food and Nutrition 
Service, 15 nutrition assistance programs, really work to 
complement each program. Where there is a direct overlap really 
is in FDPIR and SNAP. You do need to choose as a participant 
what program that you want to go into. They may choose to 
participate in FDPIR. They may go out of FDPIR and choose to 
receive SNAP benefits. You are only allowed to be in one of 
those programs at a time.
    The other two programs, CSFP and TEFAP, serve a unique 
population and serve to fill the gaps that a person receiving 
SNAP may have. I know you have heard stories of recipients of 
SNAP running out of food before the end of the month. That is 
exactly when you would see them going to a food bank or a food 
pantry and picking up a bag of food stuffs that would help them 
get through the month until that next SNAP benefit arrives. We 
also know that seniors participate in SNAP at much lower 
levels. Right now, we are happy to report we think we have 
about a 40 percent coverage rate of seniors in SNAP; however, 
there is a minimum benefit for seniors that is fairly small, 
$16. You would see those same seniors being able to supplement 
their SNAP purchases by going through and enrolling in CSFP and 
receiving a box, as we mentioned, valued at close to $50 of, 
again, nutritious, healthy food produced by U.S. farmers that 
they can take home and help them get through the month.
    While we know that there is some thought abroad that these 
are duplicative programs, we would assert that they are there 
supporting each other and weaving the nutritional safety net 
that everybody needs to get through the month.
    The Chairman. Thank you very much.
    Ms. Calvert, both your testimony and the white paper on the 
TEFAP program mentioned that nearly \1/2\ of households 
participating in TEFAP and report that they are not 
participating in SNAP, and while some of those may be 
ineligible, can you speak to why households in need may rely on 
TEFAP and not pursue SNAP? And do you think that households are 
more likely to access TEFAP on a one time or episodic basis, or 
are they obtaining TEFAP benefits to meet an ongoing need?
    Ms. Calvert. Sure. I am happy to address that.
    First, when we did our last Hunger in America survey, we 
asked clients how many were in a household receiving SNAP 
benefits? Fifty-five percent of them were, and if we look at 
the reported income levels of people we are serving, we would 
estimate that potentially up to an additional ten to 15 percent 
above that are eligible but not participating. There are many 
reasons for that. They may be unaware. They might have family 
assets that make them ineligible, even though their reported 
income seems like SNAP should be an option for them. Most of 
our food banks operate either SNAP outreach, or many of them 
now are doing SNAP application assistance, so it is our goal 
when people come to us for help to figure out how we can 
provide services to them, including figuring out what Federal 
programs they may be eligible for. But as Ms. Kriviski said in 
her answer to your earlier question, many people are turning to 
us for food distributions that include TEFAP foods when their 
SNAP benefits are running out. They are just not lasting long 
enough, and without enough income coming into the family, they 
need charitable food assistance to fill that gap.
    We saw a big change after 2007, 2008 with a lot of families 
coming to us for longer episodes of need rather than, we 
certainly still do see families that come to us because of a 
short-term economic situation, but 54 percent of the clients 
that we serve have visited a food pantry for at least 6 months 
or more when we look at our frequency of use data, and 
certainly, we don't see that trend abating.
    The Chairman. Thank you. Mr. Kubik, Actually, at this point 
my time has expired. I will try to follow back around. I have a 
question that maybe we can talk one-on-one about transportation 
barriers. I belong to Howard Area Lions Club, I am very proud 
of it. We operate the food bank in my area, and as a Lion, we 
do a lot of delivery for folks who have transportation issues. 
But I will circle back with you individually on that.
    My time has expired. I am pleased to recognize the Ranking 
Member, Mr. McGovern, for 5 minutes of questioning.
    Mr. McGovern. Well thank you, Mr. Chairman.
    Ms. Calvert, as I mentioned in my opening statement, I am 
concerned about this group called ABAWDs, or able-bodied adults 
without dependents, and I am reading from an agriculture report 
that the Chairman of this Committee spoke to their farm bill 
summit, and he basically called it the current law that allows 
able-bodied adults without dependents to collect SNAP benefits 
for 90 days out of a 3 year period, and he is quoted as saying, 
``If they are able to work, why would they have 90 days?''
    And as I mentioned in my opening, this group is very 
difficult to define, but extremely vulnerable to food 
insecurity, and under SNAP rules, are held to a very strict 
time limit on the benefits. I suspect that your network serves 
a lot of ABAWDs, and there is a surprisingly small amount of 
information on this group. Many of them have barriers to 
employment like illiteracy or undiagnosed mental illness, or 
drug dependence, or homelessness, as I mentioned earlier, we 
know that there are a number of them that are returning 
veterans who are struggling to reintegrate into society.
    So given the nationwide work that your network does for 
this group, what kind of information do you have on ABAWDs? Who 
are they, why are they so difficult to reach, and just as a 
follow up, as I understand it, there are limitations in some 
places as to how many times per month people can access food 
packages from food banks. Can you speak to that as well? And if 
ABAWDs are kicked out of SNAP and there is a limit to the food 
they can access from food banks, where do these vulnerable 
adults turn to?
    Ms. Calvert. Thank you for your question.
    I would agree that serving able bodied adults without 
dependents and assessing what their challenges and barriers to 
employment is a very, very difficult task.
    First, it is important to realize that, as you stated 
earlier, most childless adults on SNAP who can work do so, but 
there are multiple challenges, including homelessness, physical 
and mental health limitations, language barriers, lack of 
educational attainment, as well as unstable employment 
histories or criminal records that can really complicate the 
path to employment for many able-bodied adults without 
dependents. Some of the best data that we have on that is 
coming from our Food Bank State Association in Ohio, so I would 
be happy to connect all of the Subcommittee Members with those 
findings, since it might take some time to go into it here.
    [The information referred to is located on p. 629.]
    Ms. Calvert. It is very important that as the Committee 
looks at this population in the next farm bill, that you really 
take a look at what data is there on how do we assess what 
intervention will help an unemployed adult obtain a job, 
because sometimes it is really not that simple, as you know. 
Many of our food banks are involved in job training programs. 
Those are very costly to do right, so there is a lot of work to 
collectively be done here to address this population.
    On the subject of pantries, most pantries that our food 
banks serve do restrict the number of times people can come to 
around two or three times a month for food distributions. 
Frankly, it is because there is not enough food to distribute 
to everyone coming. There is a real challenge for people when 
they lose SNAP benefits, because they are going to have limited 
avenues for that food.
    Mr. McGovern. I appreciate that.
    Mr. Kubik, there have been rumored proposals for the next 
farm bill that would change the age of those eligible under the 
ABAWD rule from 59 to, for example, 65. Given your experience 
with the older population, are there many low-income hungry 
Americans between 60 and 65 who can find a job in a 3 month 
time period so as to maintain their SNAP benefits, and how 
would such a change affect your organization?
    Mr. Kubik. Well I can speak for the area I live in. I live 
in Detroit. We represent the metropolitan Detroit area. It is 
difficult to find work for people under 60 at this point in our 
area, so the lack of skilled workers is a real problem in 
Michigan that we can't provide workers for the jobs that are 
there. I can only imagine that those seniors that are over 60 
would have difficulty filling those jobs as well. But even 
finding the jobs that unskilled workers qualify for, so that 
would be difficult for our seniors to even try to find jobs 
like that. Those that can work, do work.
    Mr. McGovern. Right.
    I will just conclude by saying that this population doesn't 
fit into a stereotype or a neat generalization. It is a 
complicated population, and we need to be very careful in this 
Committee before we start going down a road that may end up 
adversely impacting many Americans in a way where they will 
literally go hungry, and there aren't many options available to 
them when they get cut off of this benefit. I hope we can do a 
hearing. I hope we better understand who we are talking about, 
before we do something that we are going to regret.
    I thank you.
    The Chairman. The gentleman yields back. I am pleased to 
recognize Mr. Marshall, for 5 minutes.
    Mr. Marshall. All right. Thank you, Mr. Chairman.
    My first question is for Ms. Calvert. Ms. Calvert, my 
family has been very involved in this issue on a personal 
basis. My wife volunteered for the food bank for years. We 
helped with soup kitchens, Meals on Wheels, taking my kids on 
the Meals on Wheels trips. Our senior centers are so, so 
important in rural Kansas, often these are the only meals that 
they have. We all work together. The grocers work together. It 
is a beautiful thing. And what I see is that the big success of 
that is local people helping each other, and that is what I 
love about the program.
    What can we do to accentuate the positive? What can we do 
to help empower those local people to do more and do what they 
love doing that we are not doing now?
    Ms. Calvert. I would agree that volunteerism and the 
commitment to giving back is part of what makes this country 
great. We see that all the time in our network. In fact, two 
million volunteers each year are helping at our food banks, and 
it is significant, I will be honest with you. It is a 
significant part of the manpower that helps keep a lot of these 
smaller agencies in local communities going. We know that there 
is no way that we could do what we do without that, that 
volunteer army of support.
    In terms of supporting volunteerism, I think something that 
comes up, and I hesitate to raise it because it is not in the 
jurisdiction of this Committee. The volunteer mileage 
reimbursement rate is fairly low, and so there have been 
proposals in past tax bills to raise that, the allowable 
volunteer mileage reimbursement rate to a higher rate, because 
a lot of our volunteers are delivering meals. They are helping 
provide an extra set of hands to deliver things in local 
communities, whether it is mobile pantries or Meals on Wheels, 
and the reimbursement rate can be an impediment to volunteers 
doing more of that.
    Mr. Marshall. Okay. All right.
    My next question is for Ms. Kriviski. In my own 
communities, it is hard to believe that we have food 
insecurities. We have mountains of wheat we can't sell, 
mountains of sorghum we can't sell. They are just sitting there 
and rotting. In years of plenty like this, is there any type of 
storage opportunities so we can use this in the future?
    Ms. Kriviski. What I would say is that FNS and AMS work 
together to identify both the needs from our participants as 
they order the food on our approved food list. We have over 200 
items of foods that they can order, and to the degree that 
those foods are on that food list, that is an opportunity. But 
it is not going to be easy for us to reach down to a food that 
we are not currently offering and offer assistance. The other 
aspect of USDA's food purchases rests with purchases under 
Section 32, which would be looking to do market support 
purchases for crops in excess, to the extent that the Secretary 
of Agriculture makes those decisions and provides those foods 
to AMS, who then turn around and ask FNS if they are suitable 
to be distributed for households in TEFAP. That is another 
avenue that it could go.
    Mr. Marshall. Okay. Probably the two biggest concerns I 
have now with food insecurity issues in my state are; first, 
preschool age kids that are not getting adequate nutrition for 
their brains to develop to their full potential, and weekends, 
weekends for our kids and the summers to some extent. What are 
we doing to help reach preschool kids and the weekend kids? I 
don't know who wants to answer the question first. Ms. Calvert, 
go ahead.
    Ms. Calvert. Well I will jump in and just talk about the 
challenge of surveying kids in the summertime. There is a huge 
gap between the number of children that are participating in 
the National School Lunch Program for free and reduced price 
lunch during the school year, and children that are receiving 
food during the summer. And certainly there are a lot of 
barriers to that. One of the things that our food banks find, 
especially in larger service areas, even in the suburbs, but 
also in rural areas, is that there aren't a lot of waivers to 
the congregate requirement. This might be an area where some 
additional regulatory flexibility would enable many, many more 
food banks to actually participate and be reimbursed through 
the summer food program, especially in Kansas. This can be a 
problem. The Kansas Food Bank serves a significant amount of 
really rural counties there. It costs a lot of money to do 
that. It is hard to operate a summer meal site if you have 20 
kids in one community, 30 in another. It is a little cost 
prohibitive.
    The Chairman. The gentleman's time has expired. I now 
recognize the gentlelady from Ohio, Ms. Fudge, for 5 minutes.
    Ms. Fudge. Thank you very much, Mr. Chairman. Let me just 
first thank my colleagues, Representatives Davis and Goodlatte, 
for joining me on our annual TEFAP appropriations letter where 
we requested $329 million for TEFAP, and another $100 million 
for storage and distribution. I want to thank my colleagues for 
that.
    Mr. Chairman, as I look at where we are and try to pull all 
this together, if I look at the effects of what TrumpCare is 
going to do, which is going to make elderly, poor, and sick 
people pay an awful lot more for their healthcare, they are 
going to pay a lot more for their prescription drugs. 
Healthcare may actually send them into bankruptcy. When I look 
at the elimination of the Community Development Block Grant, 
which is going to do away with Meals on Wheels, when I look at 
the fact that we are going to cut $6 billion from HUD, which is 
going to put more veterans on the street, more seniors on the 
street, and more children will become homeless, so if they are 
homeless, they probably don't have any food either. If I look 
at the cuts to after school programs that are being proposed in 
this budget, and the cuts to school nutrition, I am trying to 
figure out how our Chairman could this morning say that he is 
willing, ``Food aid is one of the things I would cut.'' Please 
tell me how you think all of those other cuts that are proposed 
are going to affect food in this country. Anybody? Let's just 
start with Ms. Calvert and go down the line.
    Ms. Calvert. Sounds great.
    It is a little hard to comment on something when we just 
have high level details without the specific line items, but 
there are many valuable programs funded through Community 
Development Block Grants, Meals on Wheels being one of them, 
that we would see having a domino impact on communities that we 
operate in if those funds were cut.
    There has been a long standing tradition to fund 
international food aid through the McGovern-Dole, right.
    Ms. Fudge. What I am really trying to get to is all of 
those other programs are either eliminated or cut. Certainly it 
is going to put more strain on the food programs.
    Ms. Calvert. Absolutely. When we look at the number of 
people that have been able to obtain health coverage and we 
look at our data on the tradeoffs people say they are making, 
they are already making tradeoffs between food and utilities, 
food and medicine. It is not a far jump to realize that a lot 
of the changes that Congress is considering right now could 
potentially increase food insecurity and will add to the 
burdens that many of our organizations feel.
    Ms. Fudge. Thank you. I would like to just try to get 
everybody a little time to answer. Please, Mr. Kubik?
    Mr. Kubik. When I hear about cuts like this and I think 
about the seniors that I deal with and we deal with across the 
country who are making do already on limited resources, they 
are not always able to access some programs that they could 
possibly use because of transportation issues, isolation, not 
being able to get out. We know the strain that we are under 
when folks come and they need more food than we can provide for 
them. We can refer them to other networks, but it is difficult.
    Any problems in that chain, anything where something 
disappears and is not there that is there now, just would 
compound the problem for seniors. The choices, as Carrie said, 
``about choosing between medicine and food, that is a reality 
for so many people.'' If we are going to remove some part of 
that system, that support system, it is going to be devastating 
to seniors, making them go to work when they have health issues 
is going to be difficult. It would be catastrophic to a lot of 
seniors.
    Ms. Fudge. Thank you. Yes, sir.
    Mr. Tonubbee. Yes, I agree. These cuts would affect things 
like the summer food programs or the after school feeding 
programs that our Tribe is just starting to get involved in 
some of these things and setting up places where we can feed 
our children during the summer or after school, sending 
backpacks home with kids. Cuts to these programs are going to 
affect those, and not only that, but training programs that are 
trying to get people back to work, if we make cuts where that 
would affect those, then it is going to increase our load as 
far as the number of participants we are going to be trying to 
serve, because people are not able to find jobs if they are not 
able to get trained.
    Ms. Fudge. Thank you very much. I am not going to put you 
on the spot, Ms. Kriviski, but if you would like to respond, go 
right ahead.
    Ms. Kriviski. I would just say the Federal nutrition safety 
net depends on all the strands being there. Once those strands 
are gone, there are gaps. And when those gaps need to be 
filled, they turn to our programs, and I would expect an impact 
on both TEFAP and the mandatory side with the mandatory 
formula, it would actually ratchet up the need for additional 
funding. For FDPIR, the same aspect would occur, and on a 
discretionary side for CSFP, which is entirely discretionary, 
it would make it very difficult for that program to grow under 
constraining discretionary spending.
    Ms. Fudge. Thank you very much. I yield back, Mr. Chairman.
    The Chairman. The gentlelady's time has expired. I now 
recognize the gentleman from Arkansas, Mr. Crawford, for 5 
minutes of questions.
    Mr. Crawford. Thank you, Mr. Chairman.
    Mr. Kubik, in your testimony you mentioned both home 
delivery and pick up of CSFP food packages. Can you talk about 
the distribution process and give us a little more detail on 
that?
    Mr. Kubik. Yes, thank you for the question. Yes, a lot of 
our seniors can't get to our sites. We have four fixed sites, 
but we cover four counties so it is hard to expect folks to 
drive to our sites. A lot of them don't have reliable 
transportation and public transportation in our areas is 
limited. We work with groups, and not only our volunteer groups 
and ourselves, to get our food to our seniors who are 
homebound, or take it to their apartment building. We are 
fortunate that we have a lot of support in the community from 
some of the businesses there, because our organization doesn't 
have the resources by itself to reach all these homebound 
seniors. We are able to reach them through the volunteer groups 
and through our own staff. And once that senior is signed up, 
we can also assign a proxy. That senior can choose a proxy to 
pick up the food for them during the certification period. If 
that senior has health issues, doesn't have good 
transportation, they can have a proxy pick up the food. But it 
is important that we get that senior initially the first time, 
so we get a lot of calls from folks who may be blocks away from 
our sites. You get approximately 30 pounds of food. If you 
don't have a car, like I said, our public transportation is 
lacking in our area. It is difficult for seniors to get out. 
There are safety concerns as well because so many people prey 
on seniors, take advantage of them. We have a network in place 
working with the other groups in the area, not only, again, 
nonprofit groups, but businesses who step forward, some of the 
schools will help out also with getting the food to the 
homebound seniors and those in apartment buildings. We are very 
fortunate we have a network in place that can get to those 
seniors.
    Mr. Crawford. Are there any particular policy changes you 
would advocate for us to consider?
    Mr. Kubik. I can just speak from, again, my program on this 
one, but the process is pretty fair with that proxy allowance 
for the seniors. If that wasn't in place, that would be 
difficult to allow those seniors to get to us because they just 
couldn't physically come to our site. As long as that proxy is 
there and we can send the trained volunteers or staffer to that 
senior's home, we can sign the person up and get the food to 
them.
    Mr. Crawford. Excellent.
    Ms. Kriviski, in your testimony you mentioned the various 
types of commodity foods available in each of the programs. How 
does USDA evaluate the nutritional value of the foods provided 
through CSFP, TEFAP, and FDPIR? What I am asking, are there 
ways the Department is working to improve nutritional quality?
    Ms. Kriviski. We have undertaken a 10 year review of all 
the offerings of USDA Foods, and we are very pleased to report 
that of our 200+ USDA Foods, what we offer today to all of the 
programs that use USDA Foods are lower in salt, sugar, and fat. 
We have completely changed the nutritional profile of our 
offerings. As some of our witnesses testified today, we have a 
number of nutritionists on staff at FNS that continue to 
provide technical guidance and advise as needed. We also 
produce a number of nutrition education products that are 
available to the public at no cost. This is a continuous 
process. We will continue as we look at additional foods to add 
or subtract to look at the nutritional profile to make sure 
that it fits within the nutritional standards for the Dietary 
Guidelines for Americans and other nutritional advice.
    Mr. Crawford. Okay, thank you.
    Anybody who wants to comment on this: in many cases, food 
preparation is just as important as the type of foods selected 
or distributed, so I am interested to hear from the panel about 
current efforts underway, educational efforts that have shown 
to have been effective. Ms. Calvert, it looks like you want to 
weigh in on that, and can you give us your views on practical, 
easy to understand, nutrition education recommendations and how 
they benefit your constituents?
    Ms. Calvert. Sure. We have really focused on trying to 
involve the entire family in either the food distribution or 
nutrition education process. We know that when families are 
able to--actually, there are a bunch of models here in D.C. 
that all of our food banks operate this, especially in your 
state as well. They have been really active in implementing 
Share Our Strength's, Cooking Matters, a nutrition education 
module that I think has made a real difference. But by 
involving the entire family having a demonstration of here is 
how to cook the meal, everyone tastes it, here is the recipe 
card, here is the food distribution from the food bank to take 
this home so that you can cook this meal yourself, it is a lot 
easier to educate people on the fruits and vegetable that we 
are distributing. We are distributing over 1 billion pounds of 
fresh fruits and vegetables every year. I know how much effort 
it has taken my children to be willing to even look at 
spaghetti squash covered in meatballs and spaghetti sauce, so 
certainly our food banks are really, really aware of the need 
to focus on this.
    Mr. Crawford. Thank you. My time has expired. I yield back.
    The Chairman. The gentleman yields back. I am pleased to 
recognize the gentleman from Florida, Mr. Soto, now for 5 
minutes.
    Mr. Soto. Thank you, Mr. Chairman. As we all know, since 
1996 there has been a work requirement in the SNAP program, 
able-bodied adults without dependents have to work. The only 
exception is with age or disability or other specific reasons 
that are proved. All we are talking about in the potential 
reform is about whether able-bodied adults without dependents 
can qualify for a limited exception of 3 months in a 3 year 
period. And so my question for Ms. Calvert and Mr. Kubik is do 
you know what the percentage of SNAP recipients are that are 
able-bodied adults without dependents, and based upon that, do 
we know what the savings would be in benefits and the 
additional costs if we were to take this segment and limited 3 
month exception out of the program?
    Mr. Kubik. Thank you for the question. That question is 
kind of difficult for me to answer in that a lot of our 
seniors, the qualifications are different for CSFP and SNAP. 
Without knowing every senior's financial state, I couldn't tell 
you whether they all qualify. I don't know what impact this 
would have particularly on CSFP. But as I mentioned earlier, it 
just seems it would be very difficult for seniors to be in the 
workforce, and I said those that can work are working that need 
a job, but jobs are hard to find and, realistically, it would 
be difficult for our program's participants.
    Ms. Calvert. I would just add that one of the most 
important things to look at when you are focusing on that is, 
what are the barriers, how recent have the able-bodied adults 
without dependents that are on SNAP been employed? About 75 
percent have either been working in the year before or after 
they have received SNAP, so one of the things when we look at 
this population, we realize that most of them are living in 
extreme poverty, averaging, in fact, less, and are not eligible 
for many other government supports. I think that is the thing 
that I would like to focus on there. There is a real need to 
examine what meaningful employment and training means, and what 
the barriers are to obtaining employment for this population.
    Mr. Soto. Thank you.
    Ms. Kriviski, since you are the numbers person from USDA, 
what is the percentage of SNAP recipients that are able-bodied 
adults without dependents?
    Ms. Kriviski. While I am the senior executive in charge of 
programs we are talking about today, I am not overseeing SNAP, 
but I can certainly go back and get that number for you.
    Mr. Soto. And so we don't know today what the savings would 
be and the benefits or the additional costs to the program if 
we exempted out this limited 3 month every 3 years exception?
    Ms. Kriviski. Thank you.
    Mr. Soto. I would just say, Mr. Chairman, these are numbers 
that we would have to have in order to make an informed 
decision on whether we can eliminate this limited exception to 
the work requirement for the 3 month every 3 years period so 
that we can make this decision with all the information.
    And I yield back the remainder of my time.
    The Chairman. The gentleman yields back. I would also note 
that we are really here looking at these three programs, and 
quite frankly, I don't think we are drawing any conclusions. 
That is the purpose of hearings, to try to flush out details 
and good information so that, going forward, we can set good 
policy based on good information.
    So I am pleased to recognize the gentleman, Mr. Davis, for 
5 minutes.
    Mr. Davis. Thank you, Mr. Chairman, and thank you to all of 
my colleagues who are talking about an issue that has been very 
important to me over my 4\1/2\ years as a Member of this 
Committee. I am very appreciative of my good friend, Ms. Fudge, 
who is one of my co-leaders in trying to ensure that our TEFAP 
funding is stable for those who need it the most, those in 
districts all throughout this country who use this program, and 
we need to continue to make sure the funding is there to get 
that food to those who can't afford to get it themselves.
    Ms. Calvert, you spoke to the Committee about the need for 
additional TEFAP support in a more stable manner in the next 
farm bill. Can you maybe just elaborate on that point?
    Ms. Calvert. Sure. The 2014 Farm Bill included an 
additional $205 million over 10 years for TEFAP. Now most of 
that funding was front-loaded, in Fiscal Year 2015 there is an 
additional $50 million for TEFAP, then the next year $40 
million, then it went down to $15 million. The idea behind that 
was to hopefully as the economy improved and more people were 
obtaining full-time employment, food banks would be seeing an 
alleviation of demand for their services as the TEFAP funding 
went down. Unfortunately, we haven't seen that. A lot of people 
that have gone back to work, it has been more part-time or 
seasonal employment, and since it is not in the baseline, we 
are really starting over in terms of advocating for more TEFAP 
funding in the next farm bill.
    Based on the demand patterns we are seeing at our food 
banks, we feel that it would be definitely a much more reliable 
source of support for our food banks if the baseline funding 
for TEFAP was increased per year, rather than a one-time 
infusion that is scaled down. If we are not seeing demand scale 
down, then that might not be the best policy approach.
    Mr. Davis. Okay. You also note that currently TEFAP 
administrative funding is appropriated at about \1/2\ of its 
authorized level, and that provided funds account for just 23 
percent of the cost of distribution of food banks.
    Ms. Calvert. Yes.
    Mr. Davis. And my good friends in Springfield, Illinois and 
Champaign, Illinois, Pam and Jim do an excellent job of 
advocating on behalf of Feeding America. I want to ask on their 
behalf if additional funds were appropriated for TEFAP 
administration, what improvements or changes could the food 
banks in your network make?
    Ms. Calvert. Sure. TEFAP storage and distribution, to find 
out that 23 percent number, we really look at, food banks 
report to us their operating expenses for all sorts of things. 
We black out all the other expenses that aren't related to 
TEFAP and what is your staff, your refrigerated trucks, your 
storage costs, your gas, it costs money to get food to people, 
obviously. The fact that it is only covered at 23 percent, that 
means the food bank is using privately raised dollars that 
could be going into backpack programs, SNAP outreach, job 
training, weekend feeding or summer feeding programs, and 
instead, they are needing to use those funds for that 
shortfall.
    So I definitely don't want to put words in Jim's mouth 
because he has----
    Mr. Davis. Oh, you don't have to.
    Ms. Calvert.--an excellent food bank, and I know he is not 
afraid to tell you what those additional funds would mean to 
him, but those are some of the tradeoffs that a lot of our food 
banks have to make. Road Runner Food Bank in New Mexico, they 
have their own long haul truck because it costs so much to get 
food across the state. I mean, a significant amount of money 
that they are having to make up there.
    Mr. Davis. Obviously, you have some experience working with 
many of the individuals that I serve who serve our communities 
with very important programs, so thank you for your willingness 
to work with those food banks in the district I serve, and 
thank you for your willingness to work on these issues, and to 
each of you for being here today. I yield back.
    The Chairman. The gentleman yields back. I am pleased to 
recognize the gentleman from California, Mr. Panetta, for 5 
minutes.
    Mr. Panetta. Thank you, Mr. Chairman. I appreciate that. 
And thanks to all the witnesses for being here and taking the 
time to prepare and actually coming here and testifying. Thank 
you very much.
    I hail from the central coast of California. As my 
colleagues are going to get sick of me saying, we are the salad 
bowl of the world. A number of diverse crops, fruits, 
vegetables, you name it, we got it. Obviously our food banks 
there have pretty easy access to these fruits and vegetables 
that are there; first, because of the geography, and second, 
because the growers have actually stepped up and donated a 
significant amount of their products to these food banks, which 
is fantastic.
    But I would imagine there are other places throughout our 
country that don't have as easy of access to fresh fruits and 
vegetables, and so my question to anybody who would be willing 
to answer it would be: are there any steps that have been taken 
recently in order to make sure that fresh fruits and vegetables 
are accessible to seniors or other people who qualify for these 
programs?
    Mr. Tonubbee. No, the Choctaw Nation and the FDPIR program, 
we are provided fresh fruits and vegetables through a DOD 
program that is shipped directly to our stores. We order weekly 
and allow our clients to come as often as they want to our 
stores to shop so they are able to get fresh fruit and 
vegetables on a weekly basis. Seniors, whoever, all of them 
have the availability of fresh fruits and vegetables.
    Mr. Panetta. Good.
    Ms. Calvert. We have really found that USDA does a great 
job, especially when there are bonus commodity opportunities. 
If there is an easy way to distribute that as a fresh fruit and 
vegetable to the food banks or the TEFAP agencies in the area, 
they definitely will. But, the nutrition profile of many of the 
fruits and vegetables that are offered through TEFAP, fresh is 
great, but just access to fruits and vegetables is amazing. And 
especially if our food banks are able to combine that with 
locally sourced fresh fruits and vegetables, I think that 
really makes for a powerful combination.
    Mr. Panetta. All right.
    Mr. Kubik. What we do at our agency is we are fortunate the 
local food bank does give us about 1 million pounds of fruits 
and vegetables every year. It is not enough to serve all of our 
participants, but it is nice to have that for those who are 
there when the trucks arrive from the food bank. But we also 
encourage our participants to use, if they are participating in 
SNAP and CSFP, consider using CSFP for the goods that we can 
provide and use SNAP for the fresh produce and the items that 
we don't have. We also work with our farmers' market in Detroit 
so that during the summer season, they come to our site once a 
week and they do accept the SNAP card, the bridge card in 
Michigan, which you can use that to get your produce also.
    We are trying to come up with ways to bring produce into 
the community. We are in a food desert. We are hoping that 
working with our partners like our food banks, our farmers' 
market, that we can get fresh produce into the hands of 
seniors.
    Mr. Panetta. Great.
    Ms. Kriviski. I just want to mention the DOD program. We 
are very proud that we are in partnership with DOD to provide 
fresh fruits and vegetables, both to the National School Lunch 
Program, as well as FDPIR. We are up to offering over 42 kinds 
of fresh fruits and vegetables to our Tribal members. In 
addition, we purchase, as Carrie mentioned, large truckloads of 
fresh apples and different fresh produce that can go into 
TEFAP, and then last, another one of those programs that 
supports CSFP is the Senior Farmers' Market Program, and that 
is a good connection between CSFP and the Senior Farmers' 
Market Program.
    Mr. Panetta. Outstanding, great. Thank you all again. I 
yield back my time. Thank you, Mr. Chairman.
    The Chairman. I thank the gentleman. I am now pleased to 
recognize the gentleman from Florida, Mr. Yoho, for 5 minutes.
    Mr. Yoho. Thank you, Mr. Chairman. I appreciate you all 
being here, and I appreciate the work you do. Being a recipient 
of food stamps a long, long, long time ago, I understand the 
importance of that and I appreciate the outreach that you guys 
do and the education.
    Ms. Kriviski, as we have talked about many times in this 
hearing about we have had multiple hearings on SNAP, and today 
we have had a chance to talk about several commodity 
distribution programs. I want to understand if there is any 
overlap in the programs we have discussed here, and why these 
three programs are needed in addition to SNAP? What are your 
thoughts on that?
    Ms. Kriviski. First let me start with the three programs. 
There is a choice to be made for our participants between 
participating in the SNAP program and FDPIR, so it is either 
one or the other. It is not both together. The other two 
programs, CSFP and TEFAP, can be used in conjunction with the 
SNAP program, and in fact, what we know is that the SNAP 
benefit, as it goes through the month, we have families and 
individuals running out of food and they would access the TEFAP 
program to fill that short food gap, maybe for a week or 2. It 
may be a one-time hit or it may be that they go to the food 
bank almost monthly towards the end of the month when they run 
out of food.
    Similarly, the senior participation in the SNAP program is 
fairly low, and the minimum benefit is around $16. And so we 
would see CSFP as supplementing and complementing the SNAP 
program, and being able to provide 100 percent domestic foods 
to our seniors to be able to take home, shelf stable, would 
last a little longer.
    Mr. Yoho. Thank you.
    Mr. Tonubbee, did I say that right? What programs did you 
say gives funding for the fresh fruits and vegetables?
    Mr. Tonubbee. Sorry, it is the DOD program, Department of 
Defense.
    Mr. Yoho. That is what I thought. I wasn't aware of that.
    And then again, Ms. Kriviski, it is my understanding that 
there are differences in types of products allowed under each 
of the three commodity distribution programs that have been the 
focus of today's hearing. Can you describe why there are 
differences and what commodities are available?
    Ms. Kriviski. Certainly. I do want to clarify that the 
funding for the DOD program is actually our funding. We pull it 
off of the funding that FNS receives, and it is set aside for 
our Tribes to order fresh fruits and vegetables through DOD.
    The reason that there are: first let me point out that 
there are over 40 types of products that are available to all 
three programs. In addition, the programs both have a specific 
population they are trying to reach, and they have specific 
construction. CSFP and FDPIR is a defined food box with 
categories of food that need to fit in it. FDPIR actually has 
the most offerings from our food, because we are trying to 
replace what they might have accessible in a food store. They 
have a wider variety to be able to fit into a fuller package. 
For CSFP, the package contents have evolved over time and 
historically. Both CSFP and FDPIR package have a very high 
nutritional profile. Our Healthy Eating Index at USDA suggests 
that it is over 70 percent in terms of the nutritional profile. 
For a normal American, we are usually around 50 percent.
    And then finally, TEFAP is a completely demand driven 
system. We offer foods that states can choose to take or not 
take, so they really have a shopping list that they can go 
through. And a lot of their choices depend on what they know 
they are already getting or they anticipate getting in the 
public side of donations.
    Mr. Yoho. Thank you.
    Ms. Calvert, one of the things I have seen in our district 
is the big food trucks, the semi tractor trailers will show up 
and they will go to an area that there is a lot of homeless 
people, and they will give out frozen chickens or frozen goods, 
but people don't have ovens or refrigeration to store them in. 
When you look at a program like that, we want to be as 
efficient as we can. Have you guys got safeguards to prevent 
those kinds of things?
    Ms. Calvert. Yes. This might be dangerous to make this 
statement, but I feel fairly----
    Mr. Yoho. We do that all the time.
    Ms. Calvert.--confident that our food banks in your 
district are not distributing frozen chicken out of a truck to 
a population that does not have the facilities to cook them.
    Mr. Yoho. I have seen that. I have been there, and it was 
like come on, guys.
    Ms. Calvert. Right. No, and I don't doubt that there are 
some food distribution programs that do that, and they mean 
well, but it is very important to know who you are serving. 
Certainly, many of our food banks, the food we would distribute 
to a homeless population through a mobile pantry would be a lot 
different than the food we would distribute like in a school 
setting or to a family.
    Mr. Yoho. I agree. Okay.
    Ms. Calvert. All of our food banks are required to undergo 
a third party scored food safety audit with us. They have a 
contract with us. There are plenty of regulatory safeguards in 
place with the TEFAP program as well, and we audit our food 
banks every year to make sure they are in compliance with it.
    Mr. Yoho. Thank you.
    Ms. Calvert. Yes.
    The Chairman. The gentleman's time has expired.
    The chair wants to take a point of personal privilege, 
given the fact that nutrition matters and farmers feed, we have 
been joined at least for a short time by members of the 
Pennsylvania FFA leadership, so we welcome them and thank them 
for being a part of our future of being able to grow this food 
that we are talking about how we get it to Americans in need.
    And keeping with the Pennsylvania theme, it is an honor to 
welcome my colleague from Pennsylvania and recognize him for 5 
minutes of questioning. Mr. Evans.
    Mr. Evans. Thank you, Mr. Chairman. I would like to start 
off with a question and go to the three organizations, starting 
with Feeding America. What is the typical profile of the people 
that your networks serve, and how has that profile changed over 
the recent years?
    Ms. Calvert. Thank you for your question.
    In some ways, there is no typical profile, but we do know 
some things about our network and who we are serving. There are 
46 million people that we are serving, 12 million children, 
seven million seniors. Thirty-nine percent of people we are 
serving have a child in the household under the age of 18. One 
in three households that we serve has a household member that 
is a senior over 60 years of age. Many people that we serve are 
working. I think that is what I really want to focus on. More 
than \1/2\ of the households we serve have had one or more 
people in the household employed in the last year. Nearly \3/4\ 
of people we are serving live at or below the poverty line. I 
want you to realize that many of the people we are serving are 
working or want to work.
    The other challenge that we see is that many people might 
be making too much to qualify for Federal help and they may not 
qualify for SNAP nutritional assistance, and so they may need 
to turn to the food banks. You have some great ones in your 
district. Philabundance is one of our members in Philadelphia, 
and I know they serve many of the working poor that may not 
qualify for SNAP.
    Mr. Kubik. Our program serves seniors 60 and over. The 
typical senior has the income on our program of about $750 a 
month or less, and about \1/2\ of them live alone. Their 
challenges are trying to make ends meet on a limited income, 
choosing between food, medicine, utilities. One of the biggest 
calls we get for help is for utility assistance, which is why 
we have a utility provider now who is on our site offering that 
assistance. But even in home repairs, there are so many 
challenges seniors have, transportation issues. Food is just 
one of many, and so we try to inform people either through 
advocacy or through our volunteer network. A lot of volunteers 
come in and want to package food or do a home delivery, and 
they sometimes think that may be the only issue seniors have is 
not having enough food. We try to let the senior talk to that 
person and say what their needs are beyond food. And so many 
seniors, we find out, that food is just one of many issues that 
they have.
    Mr. Tonubbee. Obviously as a Tribal organization, our 
profile is 100 percent Native Americans, or at least there has 
to be one household member that has to be a Native American. 
There can be a child in the household or a mother that is not 
Native, but there has to be at least one Native in the 
household. Most of the time their employment is challenged in 
our area. It is a high unemployment area for our Tribal 
members. We run anywhere from 25 to 75 percent higher 
unemployment rate than the state does. It is just low-income 
people that are having difficult times, basically are the 
profiles of our people.
    Mr. Evans. Ms. Calvert, can you shed light on Feeding 
America's work on food waste and the importance of Federal 
incentives for food and fund donations?
    Ms. Calvert. Yes, I would love to talk about that.
    I like to say that we have been involved in trying to 
reduce food waste since it became a hip issue for people to 
focus on, but it is really a matter of how do we use our 
resources wisely. With 70 billion pounds of food being wasted 
every year, obviously there is a lot at stake to try to get 
this nutritious food to people in need, especially when you 
look at where a lot of the available food is. There are a lot 
of nutritious fruits and vegetables, dairy products that are 
being produced that are not being connected with people in 
need, so we have been really focused on what are the 
improvements that we need to do with programs or Federal 
policies to help strengthen that connection.
    Oftentimes it might cost a grower actually more money to 
donate food than it would to till it under. In Pennsylvania you 
have a lot of dairy, so it can cost money to get it pasteurized 
and bottled and to a food bank if you have excess fluid milk. 
Federal incentives, either tax incentives or making it easier 
for additional food to be donated can have a big role to play 
there.
    Mr. Evans. Thank you, Mr. Chairman.
    The Chairman. I thank the gentleman. I am pleased to 
recognize the gentleman from Kentucky, Mr. Comer, now for 5 
minutes.
    Mr. Comer. Thank you, Mr. Chairman. Before I ask a 
question, I just want to address something that was mentioned 
earlier in the Committee about the President's proposed budget 
cuts, specifically Meals on Wheels. That is something that is 
very important in my district. I represent a poorer district. I 
have parts of Appalachia all the way to the river counties on 
the Mississippi River, in a very gerrymandered district that is 
6 hours from east to west in the district.
    One good thing that happened when that cut was announced 
was Meals on Wheels got a record amount of private donations 
overnight, and I think that is because people recognize that is 
a good program. It is a needed program. But in the future, we 
are going to have to tighten our belts in Congress. I mean, the 
debt rapidly approaching $20 trillion, that is not sustainable. 
It is immoral what Congress in the past has done to our 
children and grandchildren.
    So having said that, I support the SNAP program, but I am 
wondering, Ms. Kriviski, are there duplications of services? 
Are there things that we can do to make this more efficient? 
And let me add this. I was Kentucky Commissioner of 
Agriculture. One of our divisions was commodity distribution. 
We had a commodity distribution program, and knowing how that 
was administered, knowing who was eligible, who was not 
eligible, is there a duplication of services? Are there things 
that we can do to be more efficient when we craft the next farm 
bill?
    Ms. Kriviski. Well, as I have said, I believe that our 
programs are designed to complement and support each other, and 
not overlap or duplicate each other. The programs that we are 
talking about today, FDPIR, cannot be duplicated with SNAP. You 
have to choose to either be in one program or the other. It is 
a very clear line there.
    For CSFP and TEFAP, they really do support the gaps in 
somebody's ability to get through the month on a SNAP benefit. 
We know that we see an increase in food stamp lines, frankly, 
towards the end of the month when they run out of food, and in 
CSFP, we know that seniors don't participate at a very high 
rate and they are actually more encouraged to take a box of 
food that is grown by American farmers. We know some of the 
challenges for seniors participating in SNAP, and one of them 
is the stigma of receiving a cash benefit. But they feel like 
they are supporting American agriculture by participating in 
CSFP and getting domestic food.
    Mr. Comer. Okay. Thank you, Mr. Chairman. I yield back.
    The Chairman. I thank the gentleman. The gentleman yields 
back. I am now pleased to recognize Ms. Lujan Grisham, for 5 
minutes of questioning.
    Ms. Lujan Grisham. Thank you, Mr. Chairman, and thank you 
to the panelists.
    I ran in New Mexico the then-State Unit on Aging or state 
agency, and it became a Department, I was the Cabinet Secretary 
of Aging and Long-term Services for 14 years, over several 
different gubernatorial Administrations. I remember being in 
your position and talking to legislators and realizing as 
somebody who knew the aging services, that while we were 
receiving funding from a different Federal Government entity 
and through the Older Americans Act, and it does home delivered 
meals for seniors and it does congregate meals, that I quickly 
realized that the seniors who were coming in for a congregate 
meal were often getting that one meal a day. And for the home-
delivered meals, they were getting one lunch and no breakfast, 
no dinner, and no weekend meals. And I proposed that if we were 
really trying to address hunger, then we should be providing 
three meals a day. But I don't get funding for three meals a 
day, so I asked the state legislature to fund that. And I spent 
year after year after year trying to explain how the number of 
individuals served was ``X,'' but the amount of money we were 
spending on those meals was ``Y,'' was much larger than they 
anticipated. Until they actually met these folks, right, who we 
were for years and years and years not talking about, that we 
were just under this program giving them one meal a day. And so 
literally they are starving.
    I think about how we want to make sure that we don't have 
redundant programs. We don't want there to be any 
administrative waste. I actually go nuts about that. And that 
we all recognize that we have to make tough choices, but there 
is a sense that there are so many easy ways and that it is all 
duplicated, and that in fact we are overfeeding or over-
providing. And I live in a state, as you mentioned, Ms. 
Calvert, that since I have been in Congress is either the 
hungriest state in the nation, or it has the hungriest children 
in the nation, or is second or third. All untenable and all 
unacceptable. And in fact, today while in Congress, because we 
also have the highest unemployment, and some of the most 
difficult challenges of any state in the country, the state 
dollars that I got appropriated are all gone. We are back to 
the same situation that we resolved to the degree that we could 
where people get, if they are lucky, one meal a day and the 
next person on the waiting list gets a meal when that person 
goes to a nursing home, their family moves them away, or they 
die, which is terrible.
    I am really grateful that we are as a Committee, as a 
whole, talking about ways to make sure that food is getting to 
who we need it to go to. I also appreciate that we are doing 
lots in private donations, but it is not sustainable, and 
people want food, and you made some very practical points, Ms. 
Calvert, about sometimes you can't even get food, fresh food, 
but we are not getting cash and we are not getting distribution 
and storage efforts by grocery stores and by farmers, because 
they can't do that. And so I am delighted to hear that we have 
at least one Member, one of my colleagues, who is interested in 
figuring out what we do with $100 million authorized in TEFAP, 
but only $50 million appropriated.
    I had a bill, H.R. 4967, the Food Bank Assistance Act of 
2016 that we are reintroducing again this year that says spend 
the $100 million, because now you are addressing hunger, 
because you are getting food to the places that you need it to 
get. I have a state with many, many Tribal nations, 22. You 
have opportunities to deal in these remote and rural areas, and 
in addition, I want there to be more food because without 
changing the amount appropriated in TEFAP for actual food, we 
are not meeting the need.
    I am in favor of at least a 57 percent increase. Instead of 
$338 million, it ought to be $500 million. And we really need 
to be leveraging, and then we can talk about the impacts we are 
having at reducing hunger, and helping folks move.
    I haven't left anybody any time, which is typical for me 
and I don't mean to, but I get a sense that the whole panel 
sees the benefit of making sure that we can store and 
distribute food, and that the bulk of our money is getting to 
food purchases that are getting into the hands and bellies of 
the people that we want to make sure don't go hungry. Yes?
    Ms. Calvert. I would agree. Thank you for your past 
support. Obviously we are big supporter of the Food Bank 
Assistance Act of 2016. We think it is a great way to augment 
what the other Federal nutrition programs do in fighting 
hunger, and I can just say that I am 100 percent confident that 
our food banks can safely receive and distribute any additional 
allocation that is provided.
    Ms. Lujan Grisham. I guess everyone is yes. Thank you, Mr. 
Chairman.
    The Chairman. The gentlelady's time has expired, and she 
did get at least one opportunity to hear from a witness.
    Ms. Lujan Grisham. I am getting better.
    The Chairman. You are getting better, absolutely, and I 
appreciate it.
    I am pleased to recognize the gentleman from New York, Mr. 
Faso, now for 5 minutes.
    Mr. Faso. Thank you, Mr. Chairman. I hadn't thought to ask 
this question, but I noted in terms of Ms. Calvert's 
organization that you have over 200 food banks in your 
organization, and many other local organizations are 
affiliates. And one of the more satisfying things I did as a 
private attorney a few years ago, obviously before I got 
elected to Congress, was to set up a 501(c)(3) for a local food 
bank in my area. And it just occurred me, I wonder are most of 
your 200 food banks incorporated as 501(c)(3)?
    Ms. Calvert. Thank you for your question.
    Feeding America is the national network. We are a 501(c)(3) 
association. Our member food banks are also 501(c)(3). They 
have a contractual relationship with us as part of our network, 
but they are also all their own individual 501(c)(3) 
organizations.
    Mr. Faso. Good. Okay, and Ms. Kriviski, I am particularly 
interested in the commodity program that you mentioned in your 
testimony in terms of your dealings with the states and the 
distribution. It mentions that you have enough money for 
approximately just under 700,000 participants annually. How 
much was appropriated for the program in the last fiscal year?
    Ms. Kriviski. The last fiscal year we were provided a total 
of $222 million, and $45 million of that was for administrative 
costs and $176 million of that was for food purchases. In the 
ongoing CR, there was an anomaly that provided some additional 
funding for 2017, so our total funding stream is now up to 
about $236 million.
    Mr. Faso. And that $45 million that you mentioned for 
administration, is that at both the Federal and state level?
    Ms. Kriviski. No, that goes directly to our state agencies 
who turn around and pass it down to the local area agencies.
    Mr. Faso. I see, and are you satisfied that that level of 
administrative spending is appropriate?
    Ms. Kriviski. I would turn to Mr. Kubik for that answer, 
but I would say that it has been stabilized over many, many 
years. That is not an amount that has grown over the past 10 
years.
    Mr. Faso. And are the almost 700,000 participants that you 
mentioned in your testimony, what do you think the actual need 
would be out there compared to the 700,000 who are receiving 
it?
    Ms. Kriviski. The issue about CSFP is it is neither 
statewide or nationwide, and so while we are serving about 
700,000 participants, we know that many of our states, we have 
48 states participating right now. Many of our states, if they 
felt funding was available, would be putting in additional 
requests for additional caseloads. We have been fortunate in 
that the funding has allowed us to add, we are at that number 
of 700,000 is up from about 588,000, just a couple of years 
ago. We are able to meet some demands for new states 
participating. Over the last 2 years, over nine states have 
come into the program. They are just getting the program 
started. We would anticipate those states would need additional 
caseload as they grow their infrastructure.
    Mr. Faso. Yes, it struck me that the 700,000 was actually 
fairly low across the nation. Could you provide the Committee 
for the record some information on the state-by-state 
participation, and areas where they are fulfilling the need and 
other areas where perhaps there are gaps? Because I certainly 
would like to know that for New York State, and I know there is 
a significant need out there. I would appreciate if you could 
provide that to the Committee.
    Ms. Kriviski. I would be happy to.
    Mr. Faso. Thank you, Mr. Chairman. I yield back.
    The Chairman. The gentleman yields back. I am now pleased 
to recognize Mr. Lawson, for 5 minutes of questioning.
    Mr. Lawson. Thank you very much, and first, I would like to 
compliment you all in the area that you work in. It is so very 
important to people to sustain life. Three weeks ago, I had the 
opportunity to do two things with USDA. One was to visit a 
middle school where 100 percent of the students were on free 
and reduced lunch, and that was an incredible experience, even 
though it was right in my back yard. And then to go to Second 
Harvest Food Bank, where I can see the operation that was going 
on. In fact, that was the first time I had ever been in a 0 
freezer. It didn't take long to get out, and most of the people 
there were volunteers. There were volunteers that had careers 
that were coming in to work with people there. I know the 
importance. What I really want to do is piggyback on the 
question--not the question that I wanted to ask, but the 
question from the gentlelady from New Mexico, and that is what 
is a wish list that you all did not get a chance to respond to 
in terms of funding, and what would it do to alleviate hunger 
in this country? And I guess we can just go down the line. She 
spoke, but she did not get a chance for all of you all to 
respond. In this coming budget, what would be the wish list 
that you need in terms of providing resources for people?
    Ms. Calvert. In the coming budget or the coming farm bill? 
Well just very quickly, we have all really talked about the 
strength of the Federal commodity programs. There is a lot that 
could be done to make those much stronger: 700,000 seniors 
served on CSFP, yet we are serving seven million seniors that 
are food-insecure. There is an argument for expansion and 
greater funding right there. As you saw at the Second Harvest 
Food Bank of Central Florida, they do a great job and 
distribute a lot of food but there is a lot that additional 
TEFAP funding would provide them. There are a lot of 
opportunities to strengthen the SNAP program, which is although 
not the subject of the hearing today, is a source of 
significant support for millions of food-insecure Americans.
    Mr. Kubik. A start with my wish list would be an end to 
hunger in this country. That would be my first wish. But in 
terms of the seniors we represent, I would like to see those 
seniors who need CSFP to have access to it. As we have heard, 
it is a smaller program in the FNS budget with the 700,000 
caseload. We know that there is more of a need within our 
country for that. There are two more states we would like to 
see come on board. The last two would be Alabama and Wyoming to 
join our community. But we would like to see the program 
available to those who need the program. And if there are some 
regulatory changes, we thought about perhaps Medicare. The 
Medicare portion is considered income that comes out of a 
Social Security check. We would like to see maybe that being 
addressed to remove it as a portion of income, because some 
seniors don't quality for CSFP, and their Medicare portions put 
them over it. Without the Medicare portion, which isn't really 
actual dollars, in their account, they would qualify. And we 
know from seniors, the story that I told of Frederick. He was 
82 years old when he signed up for CSFP. They only apply for it 
when they need it.
    Thank you.
    Mr. Tonubbee. My first thing on the wish list would be a 
carry forward provision on our budgets. Too many times at the 
end of the year you have plans on doing something with your 
budgeted funds; however, a snafu may occur that you can't spend 
that money. And if you don't get it spent by the end of the 
fiscal year, it has to go back to the government. If we had a 
carry forward provision, I could go forward with the planned 
projects that we had for the program without having to return 
those funds and then turn around the following year and ask for 
them again, and not know if I would get them because we don't 
know what the budget is going to be for the following year.
    Ms. Kriviski. While I can't share my personal wish list 
with you, I do want to point out that the TEFAP mandatory 
formula imbedded in the farm bill can actually result in a 
decrease of food funding, as well as an increase of food 
funding. It actually depends on the state of the economy, and 
so the last farm bill recognized the additional need for TEFAP 
on top of the mandatory formula, adding additional amounts 
appropriated over the next 5 years, which is getting ready to 
expire. In the absence of action, there is a possibility that 
our current law right now on the funding formula would cause 
the amount of funding to go down.
    The Chairman. I thank the gentleman. I am now pleased to 
recognize the gentlelady from North Carolina, Ms. Adams, for 5 
minutes.
    Ms. Adams. Thank you, Mr. Chairman, and I want to thank all 
of our witnesses for being here today.
    The Emergency Food Assistance Program is very important for 
food banks and soup kitchens that help feed our most vulnerable 
populations in the 12th District of North Carolina that I 
represent. Funding for storage and distribution costs are 
needed to help food banks store food items until they can be 
distributed to partner feeding organizations and families in 
need of assistance.
    Ms. Calvert, there are several members at this hearing that 
would like for storage and distribution funds within The 
Emergency Food Assistance Program to be fully funded at their 
authorized level of $100 million. How would fully funding 
storage and distribution funds enhance Feeding America's 
capacity to provide food assistance?
    Ms. Calvert. Thank you for your question. We certainly 
would support that as well, and having had the pleasure of 
working with the food banks that serve your district and 
talking with them about many of the unmet needs, I know that 
part of that funding they used to partner with the ag industry 
so that when there is surplus food, they are able to reimburse 
the grower for the costs to get the food to the food bank. That 
is a big deal. North Carolina grows a lot of fruits and 
vegetables, and it makes no sense that we can't help a lot of 
these smaller agencies connect nutritious food with people in 
need. They do a lot of mobile pantries and a lot of work in 
schools. I know that that is really important to your food bank 
members, and many of our other food banks to increase the 
programs that we are able to provide in schools to help 
children that are food-insecure.
    Ms. Adams. Thank you. Ms. Kriviski, one thing this 
Committee has examined over the past 2 years is the need for 
improved coordination at the state and Federal levels with the 
administration of programs. Is there anything that we can do to 
assist you in making sure that funding for all the distribution 
programs, including the School Meal Programs, are working 
together?
    Ms. Kriviski. What I would say is that we do have referral 
requirements in most of our programs, so when somebody walks in 
seeking assistance in CSFP, there is very likely to be 
additional information connecting those seniors to other 
services around the state. In food banks around the country, 
that same aspect exists in that I think our partners do a 
really great job of trying to connect people in need with the 
other programs. Our School Lunch Program is used to actually 
help confer eligibility to some of our other nutrition 
assistance programs, so if you participate in the School Lunch 
Program, for many of the food banks they operate a backpack 
program, and by virtue of being a recipient of a free reduced 
price meal, you are going to also receive a backpack to go home 
over the weekend.
    We do a fairly good job of connecting the dots, but I am 
very happy to discuss at a later date other ways that I think 
we could be more effective.
    Ms. Adams. Thank you. Ms. Calvert, many nutrition advocates 
are concerned at the end of waivers to work requirements for 
able-bodied adults in the SNAP program will put more pressure 
on food banks. As waivers from SNAP work requirements continue 
to expire, are you seeing more demand for your services at 
partner agencies?
    Ms. Calvert. We are, and actually I wanted to highlight a 
study that was done in Maine by our food banks there. The state 
decided to make some changes and to remove work waivers, and so 
they surveyed the people that they were effected, and they 
found that 25 percent of those surveyed who lost SNAP benefits, 
that it was due to a time limit. Eighty percent of those 
individuals reported that they are using the food pantry more 
this year than in the past. Many others actually shouldn't have 
been kicked off the program. In Maine, 13 percent of those that 
lost their SNAP benefits due to the time limit actually had 
health and care giving barriers that should have made them 
exempt from that. I would just highlight that there is going to 
be significant, if changes were made to work waivers for able-
bodied adults without dependents, there is a significant amount 
of implementation challenges that would come with that. 
Thirteen percent losing benefits when they shouldn't have in 
this population that already is not eligible for other 
benefits, that is kind of unconscionable that that happened, 
and we worry that that is jut the tip of the iceberg if work 
waivers are done away with.
    [The information referred to is located on p. 651.]
    Ms. Adams. Thank you very much. My time has expired.
    The Chairman. I thank the gentlelady. I want to take this 
time to really thank all the members of the panel for your 
travels, for your expertise, for your passion. It is certainly 
a passion that I share, and Members of this Subcommittee share, 
of making sure that we are providing the right type of 
assistance to meet the nutritional needs of individuals.
    It is a team effort. There is no doubt about it. It is 
about personal resources and family support and community 
programs and SNAP and our TEFAP, the commodities program, and 
what we do on our Tribal lands, all part of the formula of not, 
as I like to say, not leaning left or right, but standing 
squarely behind American citizens and their nutritional needs.
    I want to thank my colleagues for being here. We had a 
great turnout. As you notice, Members come and go. That is just 
kind of part of the wear and tear and the responsibilities 
here, but we saw the interest. We had almost close to 100 
percent participation today by Committee Members. Finally, I 
just want to thank the staff. It is your hard work that keeps 
us on track and helps us to put together such great hearings.
    Under the Rules of the Committee, the record of today's 
hearing will remain open for 10 calendar days to receive 
additional material and supplementary written responses from 
the witnesses to any question posed by a Member. This hearing 
of the Subcommittee on Nutrition is adjourned.
    [Whereupon, at 11:46 a.m., the Subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]
 Supplementary Material Submitted by Carrie T. Calvert, Director, Tax 
                 and Commodity Policy, Feeding America
Insert 1
          Mr. McGovern. Well thank you, Mr. Chairman.
          Ms. Calvert, as I mentioned in my opening statement, I am 
        concerned about this group called ABAWDs, or able bodied adults 
        without dependents, and I am reading from an agriculture report 
        that the Chairman of this Committee spoke to their farm bill 
        summit, and he basically called it the current law that allows 
        able bodied adults without dependents to collect SNAP benefits 
        for 90 days out of a 3 year period, and he is quoted as saying 
        if they are able to work, why would they have 90 days?
          And as I mentioned in my opening, I mean, this group is very 
        difficult to define, but extremely vulnerable to food 
        insecurity, and under SNAP rules, are held to a very strict 
        time limit on the benefits. I suspect that your network serves 
        a lot of ABAWDs, and there is a surprisingly small amount of 
        information on this group. Many of them have barriers to 
        employment like illiteracy or undiagnosed mental illness or 
        drug dependence or as I mentioned earlier, we know that there 
        are a number of them that are returning veterans who are 
        struggling to reintegrate into society.
          Given the nationwide work that your network does for this 
        group, what kind of information do you have on ABAWDs? Who are 
        they, why are they so difficult to reach, and just as a follow 
        up, as I understand it, there are limitations in some places as 
        to how many times per month people can access food packages 
        from food banks. Can you speak to that as well? And if ABAWDs 
        are kicked out of SNAP and there is a limit to the food they 
        can access from food banks, where do these vulnerable adults 
        turn to?
          Ms. Calvert. Thank you for your question.
          I would agree that serving able bodied adults without 
        dependents and assessing what their challenges and barriers to 
        employment is a very, very difficult task.
          First, it is important to realize that, as you stated 
        earlier, most childless adults on SNAP who can work do so, but 
        there are multiple challenges, including homelessness, physical 
        and mental health limitations, language barriers, lack of 
        educational attainment, as well as unstable employment 
        histories or criminal records that can really complicate the 
        pass to employment for many able bodied adults without 
        dependents. Some of the best data that we have on that is 
        coming from our Food Bank State Association in Ohio, so I would 
        be happy to connect all of the Subcommittee Members with those 
        findings, since it might take some time to go into it here.
A Comprehensive Assessment of Able-Bodied Working Adults Without 
        Dependents and Their Participation in the Work Experience 
        Program in Franklin, Ohio Report: 2015
Table of Contents
  Executive Summary
  Program Regulations
  Assessment Data
  Able-bodied
  Age, Veteran Status
  Dependents, Education
  Criminal History
  Transportation
  Forms of ID, Employment
  Ohio Means Jobs, Additional Barriers
  Monthly Clinics
  Placements
  WEP Outcomes
  Recommendations
  Appendix
Executive Summary
    Franklin County is one of the 72 Ohio counties that did not receive 
a waiver to exempt able-bodied adults without dependents (ABAWD) 
receiving benefits through the Supplemental Nutrition Assistance 
Program (SNAP) from participating in the Federal work requirement to 
ensure they are able to maintain their food assistance benefits.
    Under Contract No. 25-14-9000, in partnership with Franklin County 
Department of Job and Family Services (FCDJFS), the Ohio Association of 
Foodbanks has implemented the Work Experience Program (WEP) to assist 
with the fulfillment of the monthly work requirement for ABAWDs in 
Franklin County.
    The Work Experience Program began at the Ohio Association of 
Foodbanks in December of 2013 and expanded quickly to accommodate the 
increasing number of ABAWD referrals. Hundreds of ABAWDs meet with an 
Ohio Association of Foodbanks WEP Assessment Specialist each month to 
complete a comprehensive assessment at their local FCDJFS Opportunity 
Center. Clients are then required to attend one three-part clinic to 
receive a background check and are offered a variety of valuable job 
related opportunities. After clients complete the assessment and have 
attended the clinics, they are placed at a qualified partner 
organization to complete their monthly work requirement which allows 
them to maintain their SNAP benefit eligibility for the duration of 
their participation.
    Our interest in the ABAWD population does not end when they exit 
our program. We are concerned about the well-being and long term 
outcomes of our clients. We conducted a post-WEP client study to 
examine the course of clients after they have exited the program. The 
findings of this report provide information about post-participation 
employment status and the most common causes of failure to comply with 
FCDJFS mandated WEP involvement. This study has also helped us 
understand from where some of the discrepancies in our program stem, 
which has influenced how we conduct business and communicate with our 
clients, our host sites, and FCDJFS. As we continue to innovate and 
improve the program we seek to offer more necessary resources and work 
related opportunities to our clients. One of our many goals in hosting 
WEP is to assist ABAWDs with finding sustainable employment to become 
economically self-sufficient.
    The data we have collected through ABAWD assessments has allowed us 
to identify transportation, criminal records, education, and health 
problems as key barriers for ABAWDs struggling to find stable long term 
employment. Our deeper understanding of these issues has led us to 
partner with organizations that can help ABAWDs navigate through many 
of their challenges, giving our clients a better chance at improving 
their lives and supporting themselves. The data has prompted many 
recommendations to FCDJFS including but not limited to: providing 
additional funding for programs that support WEP participants and low-
income households, expanding enrollment of nationally certified 
educational programs as well as programs for youth aging out of foster 
care, and creating an employment pipeline into strategic aspects of the 
job market.
Program Regulations
    The Work Experience Program (WEP) is a platform that provides 
experience and training for employable participants, who are currently 
unemployed or underemployed, to enhance their ability to secure 
sustainable work.
    While this program is largely regulated by the USDA due to Federal 
guidelines, the Franklin County Department of Job and Family Services 
(FCDJFS) has additional defining requirements which must be met by the 
Ohio Association of Foodbanks, ABAWDs, and host-site organizations.
USDA Guidelines for Serving ABAWDs
    According to the USDA Food and Nutrition Service, ``the Personal 
Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA) 
limits the receipt of SNAP benefits to 3 months in a 3 year period for 
able-bodied adults without dependents (ABAWDs) who are not working, 
participating in, and complying with the requirements of a work program 
for 20 hours or more each week, or a workfare program.''\1\ ABAWDS risk 
losing their SNAP benefits if they do not diligently comply with the 
work requirement.
---------------------------------------------------------------------------
    \1\More information can be found at http://www.fns.usda.gov/sites/
default/files/Guide_to_Serving_ABAWDs_Subject_to_Time_Limit.pdf.
---------------------------------------------------------------------------
USDA ABAWD Exclusions
    Individuals are not considered ABAWDS and are not subject to the 
work requirement provision if they are:

   Under 18 years old or 50 years of age (or older).

   Responsible for the care of a child or incapacitated 
        household member or relative.

   Medically certified and documented as physically or mentally 
        unfit for employment, or pregnant.

   Already exempt from other general SNAP work requirements.
FCDJFS Work Requirement
    FCDJFS mandates that an ABAWD must serve 23 WEP hours a month to 
remain compliant with the work requirement. This timeframe is the 
result of dividing a household's food assistance allotment by the 
higher of the applicable Federal or state minimum wage.
Ohio Association of Foodbanks Responsibilities
    The following information outlines the exact responsibilities of 
the Ohio Association of Foodbanks as the operator of the Work 
Experience Program. This information has been outlined in the grant 
under contract with FCDJFS, and the association has diligently adhered 
to the standards with strict compliance.
Multi-Strategy Approach to Serving ABAWDs
    To remain compliant with the program guidelines referenced in the 
WEP contract with the Ohio Association of Foodbanks and FCDJFS, the 
association is responsible for the following:

   Meeting with ABAWDs to assess their work capabilities and 
        any other issues they may be experiencing.

   Working with ABAWDs to create resumes and register clients 
        on the Ohio Means Jobs website.

   Developing and maintaining viable work sites and activities 
        to support ABAWDs. However, due to the size of the population, 
        the association will document all attempts and strategies 
        employed if limited work sites are available in specific areas.

   Placing ABAWDs at community, social service, faith-based, 
        and government agency partners to be placed in a work 
        experience opportunity to work for up to 23 hours per month\2\ 
        to maintain their food assistance benefits.
---------------------------------------------------------------------------
    \2\Effective January 2015, with the increase in minimum wage for 
the state of Ohio, the work requirement to maintain food stamp 
eligibility decreased from 24 hours per month to 23 hours per month.

   Attempting to employ numerous site development strategies in 
        order to address the various barriers exhibited by ABAWDs, such 
        as difficulties with transportation, encounters with the 
---------------------------------------------------------------------------
        criminal justice system or limited job skills.

   The Ohio Association of Foodbanks makes every effort to 
        place clients no more than an hour bus ride from their 
        residential address. FCDJFS offers a monthly $62 travel stipend 
        issued to ABAWDs for the purposes of travel to and from work 
        sites or other WEP related activities. The Food and Nutrition 
        Service regulations insist that workfare participants are able 
        to request a hardship when asked to travel more than 2 hours to 
        a worksite.
Assessment Data
    The Ohio Association of Foodbanks developed the Work Experience 
Assessment Portal, an online form used to interview ABAWDs. Through a 
series of questions we are able to ascertain the employability of the 
individuals we serve in Franklin County. This information is used to 
help us place clients in WEP positions that fit their aptitude and 
increases their work experience to broaden their employability.
Ohio Association of Foodbanks WEP Assessment Process
    When Franklin County Job and Family Services caseworkers make the 
determination that a client is an ABAWD and is considered work 
required, the client is referred to their local opportunity center to 
be assessed by an Ohio Association of Foodbanks WEP Assessment 
Specialist. Each specialist completes an in-depth interview with the 
clients using a series of questions on the Work Experience Assessment 
Portal.

------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                     Assessment Question Development
    An able-bodied adult without dependents is defined by the USDA as a
 physically and mentally fit (able-bodied) person between the ages of 18-
 49 (adult), who is not responsible for the care of a dependent child
 (without dependents). This criterion was the basis for a portion of our
 questions as they could potentially exempt any person that may have
 been overlooked in the original processing of their status as an ABAWD.
 The questions used to screen for physical and mental health are
 mirrored from validated questions from the ``Hard to Serve'' scientific
 study developed by a cohort of researchers through Freestore Foodbank
 in Cincinnati, Ohio.
    All other relevant questions collect job skills, and other important
 information which identifies the challenges our clients encounter while
 they strive to meet the work requirement as they attempt to secure
 stable employment.
------------------------------------------------------------------------

Assessment Data Findings
    During the Ohio Association of Foodbanks WEP pilot period from 
December 10, 2013 through February 23, 2015, WEP Assessment Specialists 
were able to complete 4,145 ABAWD assessments. Some of this information 
was collected online through self-assessments for clients who were 
unable to report to a regionally located Franklin County Job and Family 
Services Opportunity Center. The following data reflects who our 
clients are, their background, and their job skills. Our findings 
include undiagnosed mental and physical disabilities, inadequate access 
to transportation, previous encounters with the criminal justice 
system, previous work experience and training, differing levels of 
education, veteran status, participation in other government programs 
(Medicaid, SSI/SSDI, and unemployment compensation), knowledge of and 
registration with Ohio Means Jobs, and caregiver or non-custodial 
parent status.
  Staff Experiences
          Going out to the Job and Family Services opportunity centers 
        to do in person assessments help me put a face to the data. I 
        find that it is natural to be more empathetic when I know my 
        clients, and it makes the process of placing them at sites 
        easier.
                                                             A. Potter,
                                             WEP Assessment Specialist.
Unpacking the Data
    We find out so much more about our clients through the assessments. 
Something as simple as an address does not just tell us where to send 
mail, it can also tell us if a client is experiencing homelessness or 
if they are currently displaced.
Gender
    While collecting demographics on the basis of gender we noticed 
that a disproportionate amount of ABAWDs are male.


Able-Bodied
    To evaluate the abilities of clients both mentally and physically, 
they are asked if they are disabled, or if they have any physical or 
mental limitations we should know about. If they indicate they suffer 
from any physical or mental health condition they are then asked if the 
limitations affect their ability to work.

   30.8% of clients reported they have a physical or mental 
        health limitation.

   17.8% of clients reported that they had filed for 
        Supplemental Security Income (SSI), or Social Security 
        Disability Insurance (SSDI).\3\
---------------------------------------------------------------------------
    \3\After September 9, 2014 we began screening self-reported 
disabled clients if they were able to work and earn more than $1010 per 
month. This question identifies whether the client could potentially 
qualify for SSI/ SSDI. The earned income amount is determined by the 
Social Security Administration's definition of a substantial gainful 
activity, which could disqualify a person from being considered 
disabled for the purposes of SSI/SSDI.
---------------------------------------------------------------------------
  Client Stories
          The stress of being unemployed for a long time, my recent 
        divorce, the death of my parents, and watching my debt grow out 
        of control has finally taken a toll on my mind and my body. I 
        had a nervous breakdown and went to North Central Mental Health 
        for services because I could no longer deal with all of it on 
        my own. I was diagnosed with depression and severe anxiety.
                                                                Eric W.
 WEP client, interviewed during an assessment at the North Opportunity 
                                                                Center.

    Clients who self-report they are disabled with a physical or mental 
condition that renders them unable to work may need more outreach and 
supportive services to complete an application for SSI or SSDI.
    Just over \1/2\ of the clients (54 percent) have applied for 
Medicaid, although all qualify for recently expanded necessary health 
coverage due to their low-income status. This potentially shows why so 
few clients are under a doctor's care (21.3 percent), and only 24.9 
percent of clients are on medication. Many clients explicitly report 
not taking medication because they are unable to afford the medication 
they have been prescribed.

    Most common mental health limitations reported:

   13.7% other, (multiple mental/physical limitations).

   4.2% depression.

   3.5% bipolar disorder.

   2.9% anxiety.

   1.5% learning and mental disabilities.

   1.3% Post Traumatic Stress Disorder (PTSD).

   5.5% other, including schizophrenia and addiction.

    Most common physical health limitations reported:

   7.7% problems with standing and heavy lifting.

   5.9% back problems and back pain.

   5.3% leg problems including severe pain.

   2.5% breathing problems such as asthma or COPD.

   1.5% high blood pressure.

   1.5% diabetes.

    8.2% of clients requested special accommodations which included 
requests for work assignments that require no heavy lifting, or no 
standing/walking for long periods of time.
  Staff Experiences
          While completing an assessment, a client explained she has a 
        social anxiety disorder that made it difficult to leave her 
        home and contributed to her lack of employment. I encouraged 
        her to sign up for Medicaid so she could get some help. I saw 
        her on the bus a few months later and she hugged me and said 
        that having healthcare has allowed her to get the medication 
        she needs to feel more comfortable in public.
        
        
                                                           Anjanette P.
                                             WEP Assessment Specialist.
Age
    The average age of the ABAWDs assessed in this program is 34 years 
old. While ABAWDs must be between the ages of 18-49, over 60 referrals 
were made for clients over the age of 50 years old. These clients 
should have been screened out of the referral process and exempted from 
participating in WEP.
Veteran Status
    Only 3% of clients are veterans. We inquire about veteran status to 
determine if eligible clients may be able to participate in programs 
designed to assist veterans, or if they qualify for veteran specific 
services.
Dependents
    According to the USDA definition of an ABAWD, it is assumed that 
all clients do not have dependents.

   24.4% of clients reported having children not in their 
        custody.

   17.7% disclosed that they owe child support.

   1.9% of clients who responded also reported they need 
        childcare.
  Client Stories
          I've been home from prison for 34 days. I'm a hard worker, 
        but I don't know what jobs are available besides the work I can 
        get through a temp service. I have five kids and want to be 
        able to take care of them. With all of my felonies I don't know 
        if I will be able to do that.
                                                           Dominique R.
  WEP client, interviewed during an assessment at the West Opportunity 
                                                                Center.

    Having the status of caregiver to a relative should potentially 
exempt an individual from participating in WEP. Caregivers can often 
replace the services of a Medicaid or Medicare home-healthcare 
provider. Caring for children is not the only form of dependent care 
examined.

   13% of clients are caregivers for a parent, relative, or 
        friend.
Education
    While the unemployment rate in Ohio is declining, clients in this 
population may not meet the educational standards for the jobs becoming 
available. Analyzing the statistics we have collected on education, we 
find how limited the prospects are for clients to enter the workforce 
in a position that will pay a sustainable living wage.

   30% of clients have no high school diploma or GED.

    Although 68.5% of clients have graduated from high school or have 
earned a GED, only 38.1% have attended college. A very small portion of 
clients (10.5 percent) who have attended college went on to earn a 
degree.

    In speaking with clients during assessments we have noticed some 
clients appear marginally and functionally illiterate. This prompts a 
deeper examination of social promotion policies that may exist in 
schools, and inquiry about undiagnosed learning disorders, mental 
disabilities, and autism.
Criminal History
    As part of the assessment clients are asked if they are willing to 
complete an FBI/BCI background check. An overwhelming 98.6% of clients 
agree to comply with this request. Clients who declined a background 
check do not qualify to participate in WEP with the Ohio Association of 
Foodbanks.
    Domestic violence can happen in any household regardless of 
socioeconomic status, race, age or any other demographically defining 
factor. Studies show that domestic violence is three times as likely to 
occur when couples are experiencing financial strain.\4\ More than 
11.1% of clients assessed reported having domestic violence charges.
---------------------------------------------------------------------------
    \4\Michael L. Benson & Greer Litton Fox, Department of Justice, NCJ 
193434, Economic Distress, Community Context and Intimate Violence: An 
Application and Extension of Social Disorganization Theory, Final 
Report (2002).
---------------------------------------------------------------------------
    A history of criminal activity or previous incarceration can have a 
tremendously negative impact on someone. They miss out on many 
opportunities, job related or otherwise. The stigma of a felony 
conviction can follow someone for a lifetime, even if their release is 
meant to suggest that they have been rehabilitated. Over 35.3% of the 
clients in our program have felony convictions; some clients have 
multiple felonies, or a combination of felonies and misdemeanors. Close 
to 12.1% of clients are on probation or parole which means they may not 
qualify for services offered through legal aid, such as record sealing.
  Staff Experiences
          I noticed a client hanging around after one of the monthly 
        clinics. I let him know he had completed his hours for the day. 
        We began talking about how his old criminal background has been 
        holding him back. He said, ``It's been over 10 years and I am 
        still judged on my past.'' I placed him at one of our sites 
        that works with mostly ex-felons. The site supervisor called to 
        say, ``He is one of my hardest workers and I am really glad to 
        have him as a volunteer.''
        
        
                                                            Mechelle D.
                                Client was placed at Welcome Home Ohio.

    This area warrants further analysis to determine the full 
repercussions of a criminal record and the future it creates for 
individuals.
    A recent report from the Kirwan Institute found that one in four 
people incarcerated in the State of Ohio were between the ages 18 to 
24. The incarcerated population from the 18 to 24 age group in Ohio has 
grown nearly 70% in recent years. Prison intake data from Franklin 
County indicate that the median age of first arrest for those entering 
the state correctional system in 2012 was 19 years old.
Communication
    Maintaining a reliable form of communication with clients has 
proven to be a massive challenge. While clients offer contact 
information, they rarely respond to communications. This could be 
happening for a number of reasons. Although 95.3% of clients reported 
having phone numbers, this does not mean that they have continuous 
access to a phone. We often call clients and find out they have run out 
of minutes before the end of the month (this is often the case with 
government provided cell phones), their phone has been disconnected, or 
their phone number has changed due to using prepaid cellular devices. 
We can only assume that if we are unable to contact clients, potential 
employers are also unable to reach them.
    Mailing addresses appear to be as transient as phone numbers. A lot 
of mail is returned to our office on a regular basis. Over 89.2% of 
clients reported having mailing addresses, but many of them are in 
short-term housing situations. In many cases, the phone number or 
address given to us by clients does not belong to them, but is that of 
a friend, family member, or homeless shelter.
    Even if we attempt to communicate with clients via e-mail, we 
cannot guarantee that all clients will have reliable or readily 
available community based access to the Internet. Only 37.5% of clients 
reported having an e-mail address. The Ohio Association of Foodbanks 
would like to increase this number by offering to help clients sign up 
for an e-mail address and encouraging clients to visit their local 
libraries to check their messages as this can be a viable alternative 
to having a phone number.
Types of Communication


Transportation
    Clients are supposed to receive a monthly travel stipend from their 
FCDJFS caseworker. Many clients call Ohio Association of Foodbanks to 
report that they have not received the stipend. This could be due to an 
inaccurate mailing address, the inability to contact their caseworker, 
or a delay in dispersing of funds. Some clients report that the travel 
stipend is not enough to cover travel to and from work sites. Some 
clients do not have bank accounts and have to pay a service fee to cash 
the check they receive from FCDJFS, leaving an insufficient amount to 
purchase a monthly bus pass which the stipend should cover.
    More than 56% of clients report they have reliable access to 
transportation. This can be a personal vehicle, public transit, or 
utilizing friends and family members for transportation. It is 
important to note that the use of a friend or family member's vehicle 
may not always be reliable. Owning a vehicle may pose its own 
challenges for low-income populations, as the car could break down and 
the client may not have the means to fix it.
    Only 38.8% of clients have a valid driver's license, which 
indicates that clients are either using public transportation or are 
driving without a license. Some clients may not be able to obtain a 
driver's license if they owe child support and have had their driving 
privileges suspended, or if they have outstanding tickets or unpaid 
fines which they may be unable to resolve with their limited income. 
Additionally, only 17.5% of clients report having car insurance, 
inferring that some are driving without insurance which can be 
attributed to a variety of factors, including affordability. More than 
72% of clients report they live near a bus stop, which leaves 28% in a 
tough situation if they do not have reliable transportation to their 
work site.
    Having a DUI/OVI on an individual's driving record can affect their 
ability to obtain employment or housing, it can result in higher car 
insurance which they may be unable to afford, or loss of driving 
privileges.
  Staff Experiences
          At 15 years old, a client was sentenced to 15 years in 
        prison. Now, at 30 he has been released and is eager to start 
        his life over. He was nervous during the assessment, but I was 
        able to get him to relax as he told his story. Later, he called 
        our office to thank me for being so sweet during the assessment 
        and for also believing in him. He was thrilled to tell me that 
        he learned to drive and is now enrolled at Columbus State 
        Community College. I'm very proud of him!
        
        
                                                               Kelly R.
                                             WEP Assessment Specialist.

   14.6% of clients report they have been documented as Driving 
        Under the Influence (DUI) or Operating a Vehicle Impaired 
        (OVI).
Forms of Identification
    To apply for jobs, housing, government benefits, vote, or obtain a 
driver's license most agencies usually require two forms of 
Identification (ID). More than 71.1% of clients report having a state 
ID, 90.2% of clients report having a [S]ocial [S]ecurity card, and 
81.4% of clients report having a birth certificate.
Forms of Identification


Employment & Job Seeking Needs
    Working 20 or more hours of paid employment per week, every week 
can exempt an ABAWD from participating in WEP. Close to 10.6% of 
clients are currently working. Many clients were unable to identify how 
many hours they work per week because they are employed through a 
temporary employment agency (including day labor and labor pool 
agencies), which means clients may not have consistent work on a weekly 
basis. About 10.3% of clients reported working in-kind for rent or 
housing, and 240 clients report they work more than 20 hours per week 
in-kind, which can exempt them from the work requirement if the client 
has adequate documentation.
    Clients were asked if they had ever been dismissed from a job, and 
24.4% of clients reported they had been dismissed from a job. When this 
question appears on a job application it can be a deterrent for 
employers to hire an applicant that has previously been fired from a 
position.
    A recipient of unemployment compensation benefits is exempt from 
fulfilling the work requirement.\5\
---------------------------------------------------------------------------
    \5\According to Ohio Revised Code 5101:4-3-11 Food assistance: work 
registration and exemptions: a person receiving unemployment 
compensation benefits. A person who has applied for, but is not yet 
receiving, unemployment compensation benefits is also exempt if that 
person is complying with the requirements of the unemployment 
compensation application process.

   78.5% of clients have never been eligible for unemployment 
---------------------------------------------------------------------------
        compensation benefits.

    When asked what the most recent year of employment was, the answers 
ranged from 1980-2015. On average, a client's last year of employment 
was 2014. Having gaps in a resume can influence an employer's decision 
in the hiring process, which can negatively impact a client's chances 
of obtaining employment.
  Staff Stories
          Under the leadership of Franklin County we were given the 
        opportunity to hire several staff members directly from the 
        affected ABAWD population. One of our first employees came to 
        us very timid and quiet, and was obviously frustrated after 
        months of looking for work. Over the past few months I have 
        seen her grow into an amazing employee! The diligence, hard 
        work, and the empathy that our team holds for our clients has 
        helped this program become a tremendous success. My experience 
        with them speaks to the great opportunity and latent talent to 
        be found within the ABAWD population.
        
        
                                                           Tyler Davis,
                                                   WEP Program Manager.

    94.4% of clients listed their job skills and training in the 
following fields:

   Warehouse work (32.6%).

   Customer service (20.7%).

   Fast food/restaurants (18.9%).

   Cooking and food preparation (15%).

   Janitorial and cleaning (14.7%).

   Computer skill (13.2%).

   Construction/building (10.1%).

   Office/clerical work (9.6%).

   Landscaping/lawn care (9.5%).

   Cashier (9.4%).

   Retail/sales (8.6%).

   Healthcare [nurse, aide, etc.] (7.7%).

   Forklift operation (7.6%).

   Pick & Pack (7.2%).

   Management (6.2%).
Ohio Means Jobs Registration
    In an effort to offer more job seeking resources to clients, they 
are referred to Ohio Means Jobs (www.ohiomeansjobs.com). When asked if 
clients were already registered with Ohio Means Jobs 74.1% reported 
they were not registered, and most clients reported they have never 
heard of the website. This shows that the outreach for the Ohio Means 
Jobs website has been ineffective in reaching this population.
  Staff Experiences
          We haven't needed assistance in over 20 years. My husband got 
        sick and lost his job, which brought me to SNAP. The volunteer 
        position I had led to a job I actually like, and has helped me 
        catch up on all of our bills. When I tell WEP clients my story 
        they relate to me, and when they tell me what they are going 
        through I can certainly relate to them.
        
        
                                                             P. Lehman.
                                             WEP Assessment Specialist.
Additional Barriers
    To ensure a client is able to perform the duties assigned to them, 
we inquire about any supportive services they may need to successfully 
complete their work assignment. Over 15.8% of clients report needing 
supportive services. The most common services requested were language 
interpretation (especially for Somalian refugees) and help with 
transportation.
    Clients experiencing homelessness, health problems, language 
barriers and a lack of stable employment to fit their skill set make up 
nearly 12.7% of clients who reported other barriers standing in the way 
of employment.
Monthly Clinics
    Beginning in May of 2014, the end of each month marked the start of 
a three part monthly clinic for newly assessed WEP clients. Three days 
of consecutive clinics allow first month WEP participants to gain their 
required work hours through a series of purposeful activities. There is 
a job skills clinic, a benefits clinic, and a background check and 
legal aid clinic.
WEP Monthly Clinics
    Because the WEP placement process requires a background check, the 
monthly clinics were initially developed to offer background checks to 
hundreds of clients in a convenient location. They expanded to include 
other resources found to be helpful to clients. The clinics also serve 
to ensure that assessed clients can complete their hours if they are 
waiting to be placed at a WEP host site.
2014 Clinic Attendance Growth over a Nine Month Period


          WEP clients signing up for Adult Continuing Education 
        (A.C.E.) at a monthly clinic.
        
        
          WEP client visiting vendor booth at monthly job skills 
        clinic.
Partners & Clinic Content
    Each clinic serves a unique purpose. The background check clinic is 
usually paired with representatives from the Legal Aid Society of 
Columbus. Recognizing that criminal records are a major barrier to many 
of our clients, we invite legal aid to the clinics each month to answer 
questions and offer services.
    Understanding how education can impact a person's ability to access 
sustainable income, we found it necessary to include education programs 
in the monthly clinics. Job skill clinic days boast a wide network of 
adult education opportunities. Clients can learn more about certificate 
programs, or enroll in classes that will help them earn a GED. We work 
with many workforce development partners such as the Columbus Urban 
League (My Brother's Closet) and Dress for Success. These partners 
offer job readiness training courses and gives clients business suits 
to wear for interviews.
    At the monthly benefits clinic, clients are able to access the 
services of The Ohio Benefit Bank with certified counselors and 
healthcare navigators. Knowing that our clients qualify for SNAP, means 
they may qualify for other programs available to low-income individuals 
like the Home Energy Assistance Program (HEAP) or Ohio Medicaid.
Monthly Clinic Outcomes
    As a result of our monthly clinics over 90% of attendees receive 
background checks.\6\ Clients can even request a copy of their 
background check from the Ohio Association of Foodbanks if an employer 
requires one. About 16% of clients apply for Medicaid at each monthly 
clinic, with an Ohio Benefit Bank Counselor, or a Certified Application 
Counselor. Over 30% of clients also utilize other services offered 
through The Ohio Benefit Bank, such as filling out Home Energy 
Assistance Program (HEAP) applications or completing their taxes.
---------------------------------------------------------------------------
    \6\Clients must present a valid driver's license or state ID to 
successfully complete a background check.
---------------------------------------------------------------------------
Placements
    Our growing network of nonprofits, workforce development partners, 
and faith-based organizations make it possible for Franklin County 
ABAWDs to obtain their required work hours through volunteer service or 
job readiness, while also offering work experience.

    Placements are made at these organizations after clients have 
completed a background check at the WEP monthly clinics. Ohio 
Association of Foodbanks requires clients to have a background check to 
ensure that we are not placing clients in situations that may 
compromise the integrity of our partners, and to protect their clients 
and staff in the event of a known conflict of interest.
WEP Host Sites
    At the program's inception there were less than ten host-sites. In 
3 short months that number grew to over 50 sites, and has expanded to 
more than 126 sites as of February 23, 2015.
    The recruitment process for developing new sites involves calling, 
mailing, and emailing numerous nonprofit and faith-based organizations 
in Franklin County. The Ohio Association of Foodbanks has contacted 
over 19,711 potential new sites, but only 0.64% of organizations were 
willing to host WEP volunteers. The low number of interested sites may 
be due to a lack of incentive for organizations to participate in the 
program. By October of 2014 recruitment outreach decreased as most 
organizations had previously been contacted.
Sites Contacted 2014-2015


Host-Site Memorandum of Agreement (MOA)
    All host sites must sign and agree to the terms and conditions set 
out by the Ohio Association of Foodbanks and FCDJFS when hosting WEP 
volunteers. This partnership agreement covers all requirements and 
expectations of both the site and the Ohio Association of Foodbanks.
    Host sites must work with WEP clients to arrange a schedule that 
will meet the 23 hour per month work requirement. Clients are to 
receive an on-site orientation and supervised training that meets 
Occupational Safety and Health Administration (OSHA) standards for 
their volunteer assignment.
    As part of the MOA, sites also agree to maintain attendance records 
for all WEP participants who volunteer with their organization. In 
addition they agree to report all hours for which the client was 
actively volunteering throughout the month.
  Host-Site Stories
          ``We were able to hire one of our WEP volunteers. She had all 
        of the qualifications we needed for someone to work in our 
        kitchen. She has worked out great and we really appreciate her 
        hard work.''
                                                             Marilyn O.
                                  Site Supervisor at Community Kitchen.
Host-Site Volunteer Restrictions (MOA)
    To ensure civil rights, and to guarantee that WEP volunteers are 
not engaged in unauthorized activities while they are volunteering, the 
MOA explicitly states all restricted activities as defined by the Ohio 
Association of Foodbanks and FCDJFS.
    Sites are informed that WEP participants cannot be used to assist, 
provide or participate in partisan and nonpartisan political activities 
associated with a candidate, including voter registration. They are 
unable to make direct or indirect attempts to influence passage or 
defeat of legislation or proposals by initiative petition. Clients are 
also restricted from participating in labor [union] or anti-labor 
organization or related activities.
    Due to the number of faith-based organizations we recruit as host-
sites, the association clearly outlines all religious activities WEP 
volunteers cannot complete as part of their duties. These provisions 
include providing religious instruction, leading worship services, 
proselytization, or any other religious activities.
    Other restrictions outlined in the MOA are to ensure that WEP 
volunteers are not displacing paid staff or being used to fill existing 
vacant positions, or performing work which reduces the number of hours 
by regular or part-time employees or reduces the number of positions 
that would otherwise be filled by regular employees. Host-sites are 
encouraged to consider hiring qualified WEP volunteers for vacant 
positions if the individual has displayed good work habits and has met 
the site's expectations throughout the assignment.

    *To read the MOA in its entirety, reference the Appendix.
  Staff Experiences
          I was discouraged from trying to find a job. I was convinced 
        that joining the workforce was no longer for me. Medical bills 
        made me seek out Medicaid which led me to SNAP. Due to the work 
        requirement I found full time work and really enjoy my job. 
        When I speak to upset clients I tell them, ``I have been on the 
        other side of this phone and in your seat, I will do everything 
        I can to help you.'' I feel so blessed to be in a position to 
        help others every day.
                                                              M. Darby.
                                             WEP Assessment Specialist.
Placement Barriers
    It can be very difficult to place clients at a volunteer site if 
their location is not on the bus line or if it is not easily accessible 
by public transportation. Some host-sites require a college education 
or degree, which many of our clients do not have. Some sites have a 
list of restricted felonies which would limit a large portion of our 
clients from volunteering with those sites. The same is true for 
workforce development programs. Many clients do not meet the minimum 
education requirements to enroll in such programs, or struggle with 
passing an entrance exam. Additionally, clients are not eligible to be 
placed at a host site until their FBI/BCI background check is received.
    The Ohio Association of Foodbanks makes every effort to place all 
clients, no matter how limiting their personal situations may be. Not 
all clients report to their assigned placements each month. Between May 
2014 and January 2015, exactly 1,790 clients had been placed at host 
sites, with a 58.7% rate of compliance.
Volunteer & Workforce Development Opportunities
    Volunteer experience through WEP is intended to give participants 
training, education, or experience that would be beneficial in an 
ABAWD's search for future employment. A list of possible volunteer 
roles could include but is not limited to janitorial duties, painting, 
grounds maintenance, warehouse positions, office work, manual labor, or 
any position providing valuable experience for future employment.
    Workforce development partners offer a variety or resources 
including but not limited to job readiness programs, resume and cover 
letter writing workshops, interview suiting, certification programs 
such as State Tested Nursing Assistant (STNA) certificates, and adult 
education courses.
Type of WEP Host Sites


WEP Outcomes
    The short term goals of WEP are to actively ensure viable 
opportunities for ABAWDs in Franklin County to fulfill the work 
requirement to maintain their SNAP benefits and prepare ABAWDs for 
reentry into the workforce. The long term goals and objectives for WEP 
are focused on decreasing unemployment among Franklin County ABAWDs to 
break systemic cycles of poverty and hunger, and ensuring clients can 
become economically self-sufficient.
Program Outcomes
    The WEP grant under contract with FCDJFS explicitly states that the 
Ohio Association of Foodbanks will assess and place clients at 
qualified worksites during the program pilot period. Ohio Association 
of Foodbanks was expected to assess and place 1,000 ABAWDS. The 
association has exceeded this expectation and has assessed over 4,143 
clients and has placed over 1,796 clients at sites.
Rate of Compliancy
    In order for a client to remain compliant with WEP they must report 
to their worksite for 23 hours per month. An estimated 50% of clients 
are sanctioned each month due to noncompliance. When clients are 
sanctioned they lose their monthly SNAP benefits. Clients can restore 
their benefits by talking to their caseworker to get an exemption on 
the basis of good cause, or they can reapply for SNAP benefits and 
reenroll in WEP.
Noncompliant Clients Exited WEP


    Good Cause Exemptions

    Clients can be excused from a work assignment if they have a ``good 
cause'' exemption, determined by their FCDJFS caseworker. Good cause 
may not be granted prior to a failure to complete hours, and is 
determined subjectively. Good cause is intended to recognize that 
temporary barriers may be present during a specific timeframe. A lack 
of work sites or assignments is not good cause.

    Regaining Eligibility

    An ABAWD who fails to meet the requirement and loses eligibility 
may attempt to regain eligibility any time during the 3 year period by 
meeting the work requirements for 30 consecutive days, or if they are 
no longer considered an ABAWD. An ABAWD who regains eligibility during 
the 3 year period and then stops meeting the work requirement may 
receive an additional 3 months of eligibility. The additional 3 months 
must be used consecutively and will be granted only once during the 3 
year period.
Program Expenses
    The total grant award for WEP has been applied to two categories, 
participant expenses and operational expenses. Participant expenses 
include everything from background checks to equipment needed for 
clients to perform their duties at their work assignment. Operational 
expenses cover staff needs for assessments, placements, sanction 
reporting, and other administrative needs.
Benefits Retained
    In calculating the amount of SNAP benefits retained in Franklin 
County's economy by WEP participants we took the total number of 
clients who reported to their placements or attended a monthly clinic 
from March 2014 to January 2015, and multiplied by the maximum SNAP 
benefit\7\ for an ABAWD. We found that over $ 856,200 in SNAP benefits 
have been retained through WEP.
---------------------------------------------------------------------------
    \7\From March 2014 to September 2014, the maximum SNAP benefit for 
a single person household was $189. Effective October 2014 the maximum 
SNAP benefit for a single person household increased to $194. More 
information can be found by visiting http://www.fns.usda.gov/snap/cost-
living-adjustment-cola-information.
---------------------------------------------------------------------------
2014 Post-WEP Client Survey Findings
    In an effort to learn more about the outcomes of clients after they 
exit WEP, we conducted a comprehensive study to examine program 
effectiveness, job prospects, income, and food access. The findings of 
this study have helped us to better understand our program from a 
client perspective, the effects of this program on clients who exited 
due to noncompliance and lost their benefits, and the type of jobs an 
ABAWD can expect to find in Franklin County.
    Over 900 former clients were contacted, but only 247 clients 
elected to participate in the full survey.
Quantitative Analysis
    When asked why a client exited WEP, the most common responses were:

   44.1% Failed to Complete Hours (Sanctioned).

   25.1% Found Employment.

   23.1% Miscommunication with the Ohio Association of 
        Foodbanks.

   21.1% Found to be Exempt.

   17% Miscommunication with Caseworker.

   11.3% Transportation Stipend Not Received.

   11.3% Difficulty with Transportation (Unrelated to 
        Transportation Stipend).

   8.5% Time Barrier.

   8.5% Miscommunication with Host Site.

   4.5% No Desire to Continue Participation

    A miscommunication with Ohio Association of Foodbanks, a FCDJFS 
caseworker, or a host-site highlights the importance of clear 
communication from start to finish of the program. Any misstep can 
place a client in the position of potentially losing their benefits.
Found to be Exempt
    Clients were given the option to offer multiple answers to this 
question, on average clients gave 2.05 reasons for exiting WEP. Clients 
who indicated that they were found to be exempt gave the following 
reasons for exemptions:

   38.5% Physical Disability.

   25% Employment 20+ Hours per Week.

   9.6% Mental Disability.

   9.6% In-Kind Work 20+ Hours per Week.

   5.8% Responsible for Dependents
Found Employment
    One in four WEP participants listed ``Found Employment'' as their 
reason for exiting the program, the highest percentage listed aside 
from not completing hours. Some clients have had help finding 
employment through WEP workforce development partners; others have 
found employment on their own.
    One in three clients reported having taxable employment from 
February to August. The average length of employment reported by the 86 
clients who answered positively to this question was 79 days (11.3 
weeks). The average hourly wage reported was $10.23. The average number 
of hours worked per week was 29.49 hours. This means the average number 
of dollars generated per employed individual over the 7 month period 
was $3,409.01. It is estimated that clients generated close to $293,175 
during this time period.
    Of the 86 clients who reported some kind of employment, the 
following were the most common occupations reported:

   4.9% Warehouse.

   4.5% Temp Agency.

   4.5% Fast Food/Restaurant.

   2.8% Retail/Sales.

   1.6% Shipping & Receiving.

   1.2% Landscaping.

   1.2% Elderly Care.

   1.2% Cooking/Food Prep.

   1.2% Automotive.

   0.8% Office Clerical.

   0.8% Hotel/Hospitality.

          In just these 11 occupations, there were an estimated 126 
        jobs obtained by WEP participants over the past 7 months. These 
        findings point to an estimated one in three success over the 
        past 7 months.
Churn Rate
    When a client is no longer a participant in WEP due to a sanction, 
they may need to have a state hearing to overturn their sanction. 
Nearly 66% of clients reported taking this step to overturn their 
sanction, or reapplied for food assistance in another way after exiting 
WEP. It is estimated that there is a 3 month churn window, which is the 
average amount of time it takes for WEP participants to reenter SNAP 
after exiting the program.

    The amount of churn generated by the most common causes of 
noncompliance creates increased work for both FCDJFS and the Ohio 
Association of Foodbanks, as an average two out of every three 
participants, including those who identified some form of employment, 
must restart the entire process by reapplying through their case worker 
for SNAP benefits.
Food Sources
    If a client is not receiving food assistance due to a loss of SNAP 
benefits, they look for food elsewhere. When asked, ``How are you 
providing food for yourself in the absence of food benefits,'' clients 
gave multiple answers to the question:

   81% Food Pantry.

   80% Family Support.

   18.1% Asking (Getting Food from Strangers, Panhandling, 
        Dumpster Diving, etc.).

   18.1% Soup Kitchen/Meal Line.

   10.5% Homeless Shelter.

   10.5% Church.

    Many clients are utilizing the services of local emergency feeding 
programs in Franklin County. It is unclear why 42.5% of clients choose 
not to answer this question.
Recommendations
    The following recommendations are supported by the findings of the 
WEP assessment data and the post-program client report. These 
recommendations have been presented to FCDJFS and are meant to 
encourage other government organizations to consider a further 
examination of the implication of programs like WEP.
Program Next Steps
    The specific program needs of the Ohio Association of Foodbanks 
will enhance the overall client experience while strengthening 
relationships with our partners.

   Coordinate with other Departments of Job and Family Services 
        statewide in an effort to replicate the positive results we 
        have seen in Franklin County, to expand this program to other 
        metro and rural areas.

   Increase the efficiency of our program in order to enhance 
        client satisfaction and success while working with very limited 
        resources.

   Coordinate with Franklin County to offer more opportunities 
        for clients to connect with available employment and training.

   Improve quality assurance measures and outcomes as well as 
        communication channels between the Ohio Association of 
        Foodbanks, clients, host sites, and Franklin County Department 
        of Job and Family Services.

   Improve relationship with new ABAWD specific units at 
        FCDJFS.

   Improve our ability to assist clients with resumes and other 
        work support initiatives.
Provide Additional Funding to Organizations Supporting WEP
   Accor[di]ng to the findings in our post-program client 
        survey, over 80% of former WEP participants are utilizing the 
        services of their local emergency food programs. This warrants 
        more emergency funding to be provided to Mid-Ohio Foodbank to 
        support the purchase, acquisition and distribution of 
        additional food for Franklin County food pantries, soup 
        kitchens, shelters and churches who are feeding the individuals 
        affected.

   Provide additional funding to the Ohio Association of 
        Foodbanks to support the cost of emergency vouchers for 
        transportation, travel vouchers and basic needs.

   To increase interest in becoming a part of the host-site 
        network, there needs to be more incentive for organizations to 
        serve ABAWDs through WEP. By offering operating support to the 
        nonprofit and faith-based organizations that are providing WEP 
        services and slots we can motivate more sites to partner with 
        the Ohio Association of Foodbanks, while current sites may be 
        able to effec[ti]vely increase their capacity to serve more 
        ABAWDs.

   Provide supplemental support for the continuation, expansion 
        and analysis of YouthCorps, a program of the Ohio Association 
        of Foodbanks for Young Adults Aging out of the Foster Care 
        System. All youth who have successfully completed this program 
        were either enrolled in school or working, which exempts from 
        partic[i]pating in WEP as ABAWDs.

   Improve the funding and training of a specialized unit 
        dedicated to the implementation of this work requirement and 
        the ABAWD population's specific needs.
Increase Oversight To Improve Effectiveness
   Ensure that the foundation of the statewide grant 
        application for the 2015 Pilot Project to Reduce Dependency and 
        Increase Work Requirements and Work Effort Under the 
        Supplemental Nutrition Assistance Program (SNAP) is based upon 
        this project and the data collected in these studies. 
        Furthermore, assign specific staff and help lead the 
        application and implementation of this grant

   Analyze the expenditures of Workforce Development Programs 
        funded by FCDJFS compared to outcomes. WEP at the Ohio 
        Association of Foodbanks has proven a 24% success rate, 
        compared to a 16% success rate of similar government funded 
        workforce programs in Franklin County.
Provide More Work Support Opportunities for ABAWDs
   Expand enrollment, participation, and successful completion 
        of nationally certified programs such as the FastPath program 
        at Columbus State Community College, including ServSafe, 
        customer service, advanced logistics, and STNA.

   Create an employment enterprise or pipeline into strategic 
        aspects of the job market. This will help harder to employ 
        individuals find opportunities to gain sustainable employment.

   Prioritize Workforce Investment Act funding to provide 
        education, training, and supportive services to ensure a 
        seamless delivery of services.

   Establish a relationship with the Ohio Department of 
        Reentry, Rehabilitation, and Corrections in order to address 
        the specific concerns of the employer community in regards to 
        the future employment of felons.

   Examine opportunities to secure additional USDA/SNAP 
        Employment and Training funds to enhance service delivery.
Study the Social and Economic Impact of WEP
   Monitor and report on the impacts to well-being, health and 
        safety of clients, WEP host-site staff/volunteers and the 
        community at-large.

   Conduct an Economic Impact Analysis on the loss of food 
        assistance/SNAP benefit issuance on the Franklin County 
        economy.

   Provide funding for comprehensive case-management, 
        longitudinal tracking of employment, wages, public assistance 
        participation, and well-being of the ABAWD population.
Examine and Evaluate the Needs of Special Populations
   Provide support and funding for a study on the mental and 
        physical health status and outcomes of the ABAWD population and 
        their utilization of Medicaid.

   Fund person-centered community-based case management of 
        ABAWD applying for SSI/SSDI, and supportive services including 
        Legal Aid Assistance to non-custodial parents and individuals 
        with criminal charges and felony convictions.

   Convene a study group to examine the impact of temporary and 
        day labor employment services and its effects on this 
        population.

   The Ohio Association of Foodbanks will continue to analyze 
        assessments and data including current and previous encounters 
        with the criminal justice system, community impact and these 
        associated cost.
Appendix
Host Site Memorandum of Agreement
    Host-sites must sign and return the Memorandum of Agreement (MOA) 
to the Ohio Association of Foodbanks before they are set up to receive 
WEP clients. Without agreeing to the terms and conditions set forth in 
the MOA they are ineligible to participate as a host-site.
Memorandum of Agreement
    This Host Site Memorandum of Agreement, hereinafter referred to as 
``the Agreement,'' between the following two parties: (1) the Ohio 
Association of Foodbanks; hereafter referred to as ``Sponsor'' and (2), 
Host Site, hereafter referred to as ``Host Site,'' sets forth the 
parties' understanding concerning the establishment and operation of a 
local project under Franklin County Department of Job and Family 
Services (FCDJFS) pursuant to Chapter 5107.54 to 5107.69 of the Ohio 
Revised Code and rules promulgated by the Ohio Department of Job and 
Family Services. The primary purpose of this Agreement is for the 
Sponsor to provide the Host Site with Food Assistance Recipients 
recognized as Able Bodied Adults without Dependents (ABAWD) for 
purposes of the Work Experience Program (WEP). These participants will 
have been directly referred to the Sponsor by FCDJFS.

    I. General Provisions

    1. Duration of This Agreement

    This agreement will go into effect the date the Memorandum of 
Agreement is issued and will be null and void as of July 1, 2015, 
regardless of early termination of any WEP participants for any reason.

    2. Status of WEP Participants During Service

    WEP participants, in the course of their service, shall not be 
considered employees of the Host Site, the Sponsor, the Franklin County 
Department of Job and Family Services, or the Ohio Department of Job 
and Family Services. Therefore, the WEP participant is not entitled to 
any benefits and privileges of any employee. WEP participants are not 
covered by unemployment compensation.

    II. WEP Participant Assignment Description

    The Host Site will provide experience and training for WEP 
participants receiving Food Assistance Program benefits (also known as 
SNAP benefits) who are not otherwise able to obtain employment, in 
order to assist them to move into regular employment. Individual WEP 
Participants assigned to the Work Experience Program (WEP) will be 
utilized in various occupations, such as but not limited to: clerical, 
groundskeeper, painter, custodial, building maintenance, and appliance 
repair in an on-the-job training environment. The Host Site shall 
adhere to the WEP Participant Assignment Description, which was 
submitted during the Host Site application process, including but not 
limited to: the description of the work to be performed and the 
schedule for completing the work.
    If at any time, the Host Site deems it imperative to amend the WEP 
Participant Assignment Description, the Sponsor is to be notified 
before any changes are made.

    III. Records and Reporting

    1. The Host Site will:

          a. Maintain such records and accounts, and make such reports 
        and investigations concerning matters involving WEP 
        Participants and the project as the Sponsor may require. The 
        Host Site agrees to retain such records as the Sponsor may 
        require for a period of 1 year after completion or termination 
        of the project, or longer if required for administrative 
        proceedings and/or litigation purposes, and to provide access 
        to such records to the Sponsor for the purpose of litigation, 
        audit or examination.
          b. Work with the Sponsor to schedule a site visit quarterly 
        at times convenient for both the Sponsor and Host Site.
          c. Submit monthly reports of hours served for all WEP 
        participants at your agency no later than the last business day 
        of the month at 5:00 p.m. EST
          d. Report any knowledge of the employment placement and 
        retention of any WEP participants to the Sponsor, including the 
        following information:

                  a. Date of hire.
                  b. Hourly wage.
                  c. Full or part time.
                  d. Employer.
                  e. Whether Health Benefits are available.
                  f. Industry.

    IV. Further Responsibilities of the Parties

    1. Sponsor Responsibilities. The Sponsor will:

          a. Assign WEP participants to the Host Site at its 
        discretion.
          b. Periodically review and assist the Host Site's use of WEP 
        participants to achieve the objectives and perform the task(s) 
        specified in the WEP Participant Assignment Description
          c. Promptly respond to written requests by the Host Site to 
        move any WEP participant from the project.
          d. Ensure that the WEP participant has undergone a FBI/BCI 
        Criminal Background Check prior to assignment.
          e. Ensure that the WEP participant is provided with all 
        necessary tools, equipment, transportation, and supplies 
        required on the worksite for the WEP participant to complete 
        assigned duties.

    2. Host Site Obligations. The Host Site will:

          a. Arrange and be responsible for providing on-site 
        orientation and training for all incoming WEP participants 
        within a week of being contacted by the WEP participant and the 
        Sponsor.
          b. Operate the project in accordance with applicable program 
        policies and regulations, and other Federal laws, regulations, 
        and policies which are, or become, applicable to the program.
          c. Provide opportunities for WEP participants to develop 
        existing skills or learn new skills to enhance their chances 
        for securing unsubsidized employment and to assign WEP 
        participants duties that are consistent with their WEP 
        Participant Assignment Description.
          d. Agree to ensure that WEP participants work 24 hours per 
        month, but no more than 24 hours per month, or the required 
        number of hours as established by the FCDJFS, and to allow WEP 
        participants to observe those holidays which are observed by 
        the WEP Host Site.

                  i. Limitations regarding hours of participation are 
                exclusive of:

                          1. Travel time to and from the worksite.
                          2. Travel time to and from the child care 
                        provider.
                          3. Mealtime for which regular employees of 
                        the WEP Host Site are not compensated.

                  ii. The Sponsor shall not require WEP participants to 
                report to the worksite if a strike or other labor 
                dispute develops after the start of the work 
                assignment.

          e. Provide the Sponsor with a list of necessary tools, 
        equipment, transportation, and supplies required on the 
        worksite for the WEP participant to complete assigned duties.
          f. Provide training or orientation and supervision vital to 
        the WEP participant's efficient performance of the work 
        assignment.

                  i. Provide on-the-job training, if necessary, to 
                improve the skills of WEP participants for the type of 
                WEP assignments provided.
                  ii. Ensure the WEP participants are knowledgeable of 
                the work standards they are expected to meet.

          g. Agree that WEP participants shall not engage in activities 
        which result in the displacement of other persons. Should an 
        employee of the WEP Host Site feel he/she has been displaced 
        due to the activities of a WEP participant, he/she may file a 
        complaint with the Sponsor. Displacement occurs when a WEP 
        participant's assignment results in removing or discharging 
        employees or individuals or otherwise denying such assignment 
        to persons who:

                  i. Are already employed as regular full-time or part-
                time employees.
                  ii. Are or have been employed full-time or part-time 
                as WEP participants in publicly subsidized employment 
                and training programs.
                  iii. Are or have been involved in a dispute between a 
                labor organization and the WEP Host Site.
                  iv. WEP participants shall not be used to fill 
                existing vacant positions or to perform work which 
                reduces the number of hours by regular or part-time 
                employees or reduces the number of positions that would 
                otherwise be filled by regular employees.

          h. Understand that the Sponsor shall investigate all 
        complaints that a violation may have occurred. If it is 
        determined that a violation exists:

                  i. No WEP participant shall be assigned to the WEP 
                Host Site until the violation(s) have been corrected 
                and
                  ii. And such violation(s) cannot be corrected to the 
                satisfaction of the FCDJFS, this agreement is null and 
                void.
                  iii. Further, the Sponsor will administer a complaint 
                procedure available for regular employees of the WEP 
                Host Site who feel displacement has occurred because of 
                a WEP participant assignment.

          i. Agree that if as a party to a collective bargaining 
        agreement which is in effect at the worksite, the WEP Host Site 
        will notify the union that WEP participants are being assigned 
        to the worksite and provide the Sponsor with documentation that 
        such notification has been given. The FCDJFS will inform the 
        WEP participant of the existence of a collective bargaining 
        agreement when one exists at the worksite.

                  i. The Host Site further agrees that the WEP 
                assignments and positions will not have been developed 
                in response to, or are in any way associated with the 
                existence of a strike, lockout, or bona fide labor 
                dispute; also they do not violate any existing labor 
                agreement, or interfere or conflict with the collective 
                bargaining agreement.

          j. Agree to consider for hire qualified WEP participants when 
        the individual has displayed good work habits and has met the 
        Host Site's expectations throughout the WEP assignment period.
          k. Understands that penalties are provided under law for any 
        WEP Host Site who knowingly obtains a benefit to which he/she 
        is not entitled. If such violation occurs, this agreement shall 
        be null and void. This agreement may be terminated at any time 
        upon thirty days written notice by either party.

                  Termination notice should be sent to:

                          Attention: Work Opportunity Coordinator,
                          Ohio Association of Foodbanks,
                          101 East Town Street Ste. 540,
                          Columbus, OH 43215

          l. Agree that in any publicity release or other public 
        reference including media releases, information pamphlets, etc. 
        on the services provided under this agreement, it will be 
        clearly stated that the services are funded by the Ohio 
        Department of Job and Family Services administered by the 
        Franklin county Department of Job and Family Services through 
        its Employment Opportunities Program.
          m. Understands that the FCDJFS will pay premiums which are 
        assessed by coverage of WEP participants for work related 
        injuries or disabilities under public work relief compensation 
        administered by the Bureau of Worker's Compensation. Benefits 
        under public work relief compensations differ from those under 
        regular worker's compensation. Detailed provisions of coverage 
        are found in Chapter 4127 of the Ohio Revised Code.
          n. Make every reasonable effort to ensure that the health and 
        safety of WEP participants are protected during the performance 
        of their assigned duties.
          o. Report to the Sponsor, within 24 hours, the unscheduled 
        departure of WEP participants, and otherwise keep the Sponsor 
        timely informed of unscheduled changes of status and conditions 
        of WEP participants, such as arrests, hospitalization, and 
        absence without leave. The Host Site must also indicate to the 
        Sponsor the actual departure date(s) of WEP participants(s) who 
        leave prior to completion of service date(s) when requested.
    3. Nondiscrimination

          a. General Prohibition

                  No person with responsibilities in the operation of 
                the project, whether affiliated with the Sponsor or the 
                Host Site, shall discriminate against any WEP 
                participant, or member of the staff of, or beneficiary 
                of the project, with respect to any aspect of the 
                project on the basis of race, religion, color, national 
                origin, sex, sexual orientation, age, disability, 
                political affiliation, marital or parental status, or 
                military service.

          b. Sexual Harassment

                  Sexual harassment is a form of discrimination based 
                on sex, which is prohibited as addressed directly 
                above. The Host Site must prohibit sexual harassment 
                and take immediate corrective action and/or 
                disciplinary action if violations occur. Such sexual 
                harassment violations include:

                          (1) Acts of ``quid pro quo'' sexual 
                        harassment where a supervisor demands sexual 
                        favors for service benefits, regardless of 
                        whether the Host Site, its agents or 
                        supervisory employees should have known of the 
                        acts.
                          (2) Unwelcome sexual advances, requests for 
                        sexual favors and other verbal or physical 
                        conduct of sexual nature which have the purpose 
                        or effect of creating an intimidating, hostile 
                        or offensive service environment.
                          (3) Acts of sexual harassment toward fellow 
                        WEP participants or non-employees, where the 
                        Sponsor or Host Site, its agent or its 
                        supervisory employees knew or should have known 
                        of the conduct, unless it took immediate and 
                        appropriate corrective action.

    4. Prohibitions of Use of WEP Participants By Sponsor and Host Site

          The Sponsor and Host Site both agree that no WEP participant 
        assigned to the Host Site, under this Agreement, shall be used 
        to assist, provide or participate in:

                  a. Partisan and nonpartisan political activities 
                associated with a candidate, including voter 
                registration.
                  b. Direct or indirect attempts to influence passage 
                or defeat of legislation or proposals by initiative 
                petition.
                  c. Labor or anti-labor organization or related 
                activities.
                  d. Religious instruction, worship services, 
                proselytization, or any other religious activity as an 
                official part of their duties.

    5. The Sponsor and Host Site further agree not to:

          a. Carry out projects resulting in the identification of such 
        projects with partisan or nonpartisan political activities, 
        including voter registration activities, or providing voter 
        transportation to the polls.
          b. Assign WEP participants to activities that would result in 
        the hiring of or result in the displacement of employed 
        workers, or impair existing contracts for service.
          c. Approve the involvement of any WEP participants assigned 
        to it in planning, initiating, participating in, or otherwise 
        aiding or assisting in any demonstration whatsoever.

    6. Amendments

          This Memorandum of Agreement may be amended at any time, in 
        writing, executed by authorized representatives of the Sponsor 
        and Host Site.
Franklin County Leadership
    This project could not have been possible without the high degree 
of cooperation from the Franklin County Department of Job and Family 
Services, who have been essential in every step of the process.

 
 
 
     Anthony Trotman, Director Franklin County Department of Job
     and Family Services.
     Amiee Bowee, Deputy Director--Development Support Services.
     Dawn Carson, WFD Director.
     Jaime Brown, Information Technology.
     Jeremy Holland, WFD Administrator.
     Lashawn Capito, Social Program Developer.
     Lavinna Banner, Work Activity Supervisor.
     Lawrance Spann, Director--Northland Community Opportunity
     Center.
     Maurice Miller, ABAWD Unit Supervisor.
     Vivan Turner, Administrative Officer.
 
  A Special Thank You To:
 
     The Franklin County Board of Commissioners
 

Opportunity Center Leadership

 
 
 
   Opportunity Center             Opportunity Center Supervisors
     Administrators
 Christy          Aimee Knouff     Keyna
 Hentschel                                         Stephens
 Daniel           Alicia Jones     LaNae Rhodes
 Vaccarella
 Darren           Alison           Latonya
 Henderson                Franklin                 Truett
 Denise Hughes    Althea Letang    Leandra Coles
 Curtis
 Erin Heinzman    Angela Wagner    Lisa McGowan
 Jodi Lanthorn    Arnita Mason     Margaret
                                                   Wright Rolland
 Kristin          Bernadette       Mark Rodgers
 Retherford               Wilson
 Lavina Banner    Brandy Mays      Mary Milner
 Lawrence Spann   Christina        Melissa Clark
                          Rumpel
 Lynette          Chuck Haggins    Michael
 Bennett                                           Hampton-Simpkins
 Melissa France   Comfort Kenneh   Michelle
                                                   Taylor
 Sherri Herrell   Darnell Doaks    Pamela Hall
                          Denise Hensley   Pamela Ware
                          Dwand            Rick Evans
                          Montgomery
                          Gbesreport       Sandra
                          Jusu                     Langston
                          Heather Mackey   Som Opma
                          Jacqueline       Stan
                          Sorrell                  Daugherty
                          Jessica Henry    Tony
                                                   Richardson
                          Joyce Danflous   Twila Lucas
 

Volunteer Host Site Partners
    Without the support of our wonderful network of nonprofit and 
faith-based organizations we could not offer so many meaningful 
volunteer opportunities to ABAWDs in Franklin County. We extend our 
sincere gratitude to each organization for their continued partnership 
and dedication to serving the community.

 
 
 
 A&L Afterschool Literacy     Isabelle Ridgway Care
 and Institute                        Center
 Advanced Recovery Services   Jerusalem Tabernacle MBC
 Agora Christian Ministries   J. Jireh Development Corp
 African American             JLG Academy
 Alzheimer's and Wellness
 Association
 Authority of the Believers   Jewish Family Services
 Ministries, Inc.
 Big Brothers Big Sisters     Kingdom Alive Word Church
 Boy Scouts of America,       Libraries for Liberia
 Exploring Program                    Foundation
 Brice United Methodist       Licking Heights Steering
 Church                               Committee
 Broad Street Food Pantry     Life Church at Easton
 Broad Street United          Long Lasting Community
 Methodist Church                     Development
 Cat Welfare                  Loving Hands Learning
                                      Center
 Community Development for    Lutheran Social Services
 All People and Freestore             Ohio Benefit Bank--South Location
 Central Community House      Lutheran Social Services
                                      Ohio Benefit Bank--West Location
 Central Ohio Youth           Magic Johnson Bridgescape
 Advocacy Program
 Central Ohio Youth for       Metro Columbus Christian
 Christ                               Job Corps
 Charitable Pharmacy of       Mid-Ohio Foodbank
 Central Ohio, Inc.
 Christ Harvest Church        Mock Rd University for
                                      Children
 Christian Assembly Church    National Parkinson
                                      Foundation
 City of Whitehall            Near East Side Cooperative
                                      Market
 Clintonville Beechwold       New Directions Career
 Community Resource Center            Center
 Colony Cats & Dogs           NNEMAP Inc
 Columbus Humanities, Arts,   New Salem Baptist Church
 and Technology Academy Day by Day    and Community Development
                                      Corporation
 Community Kitchen            Ohio Empowerment Coalition
 COVA                         One Hope Community Church
                                      of the Nazarene
 Covenant Presbyterian        Pri-Value Foundation
 Church
 EL Hardy Center              Reaching Higher Heights 4-
                                      Life
 Family Missionary Baptist    RF Hairston
 Church
 Franklinton Board of Trade   Reeb Hossack
 Franklinton Gardens          St. Dominic Roman Catholic
                                      Church
 Genesis of the Good          Seven Baskets CDC
 Samaritans
 The GLORY Praise and Help    Shiloh Christian Center
 Center
 Godman Guild                 Short North Stage
 Greater Ebenezer Cathedral   Somali Bantu Youth
 of Praise and Kingdom Kids Daycare   Southeast Inc.
 Greater Linden Development   St. Philip
 Corp.
 Grove City--Parks and        The Center for Family
 Recreation                           Safety and Healing
 Habitat for Humanity's       The CORE Resource Center
 ReStore
 HandsOn Central Ohio         Thurman Avenue United
                                      Methodist Church
 Heart Food Pantry            Trinity Assembly of God
                                      Church
 Heart of Christ Community    Trinity UCC
 Church
 Heart of Ohio Family         Twin Valley Behavioral
 Health Centers                       Healthcare
 Holy Family Soup Kitchen     Unity of Columbus
 Homes on the Hill CDC        Upper Arlington Public
                                      Library
 House of Refuge for All      Welcome Home OHIO
 People
 HUB Community Development    Wesley Church of Hope
 Corporation                          United Methodist Church
 Ibnu Taymiyah Masjid and     YouthBuild Columbus
 Islamic Center                       Community School
 IMPACT Community Action
 Agency
 

Workforce Development Partners
    Our workforce development partners make education and career 
planning a priority. Their partnership affords ABAWDS easy access to 
programs and services, which connects our clients to opportunities that 
open doors to future employment.

 
 
 
 Center for Vocational        IMPACT Community Action
 Alternatives (COVA)
 Columbus City Schools--ACE   Jewish Family Services
 Columbus Literary Council    Legal Aid Society of
                                      Columbus
 Columbus Urban League        Metro Columbus Christian
 (CUL)                                Job Corps
 Delaware Area Career         New Directions Career
 Center                               Center
 Dominican Learning Center    Oakland Park School of
                                      Technology
 Dress for Success            Per Scholas
 Eastland Fairfield Career    Salvation Army
 Center
 Ethiopian Tewahedo Social    Tolles Career and
 Services                             Technical Center
 Global to Local Language     Vocational Guidance
 Solutions                            Services (VGS)
 Godman Guild                 Westerville Area Resource
                                      Ministry (WARM)
 Goodwill                     WrightChoice, INC
 

Insert 2
          Ms. Adams. Thank you. Ms. Calvert, many nutrition advocates 
        are concerned at the end of waivers to work requirements for 
        able bodied adults in the SNAP program will put more pressure 
        on food banks. As waivers from SNAP work requirements continue 
        to expire, are you seeing more demand for your services at 
        partner agencies?
          Ms. Calvert. We are, and actually I wanted to highlight a 
        study that was done in Maine by our food banks there. The state 
        decided to make some changes and to remove work waivers, and so 
        they surveyed the people that they were surveying, and they 
        found that 25 percent of those surveys who lost SNAP benefits, 
        that it was due to a time limit. Eighty percent of those 
        individuals reported that they are using the food pantry more 
        this year than in the past. Many others actually shouldn't have 
        been kicked off the program. In Maine, 13 percent of those that 
        lost their SNAP benefits due to the time limit actually had 
        health and care giving barriers that should have made them 
        exempt from that. I would just highlight that there is going to 
        be significant, if changes were made to work waivers for able 
        bodied adults without dependents, there is a significant amount 
        of implementation challenges that would come with that. 
        Thirteen percent losing benefits when they shouldn't have in 
        this population that already is not eligible for other 
        benefits, that is kind of unconscionable that that happened, 
        and we worry that that is jut the tip of the iceberg if work 
        waivers are done away with.
Hunger Pains
Widespread Food Insecurity Threatens Maine's Future
Executive Summary
February 2017
    Roughly 203,000 Mainers struggle with hunger, more than the total 
number of people living in Portland, Lewiston, Bangor, South Portland, 
Auburn, and Biddeford combined.\1\ Since the Great Recession officially 
ended in 2009, much of the nation has experienced recovery and relief, 
but Maine is moving against the national trend, and high rates of 
poverty and hunger continue to harm our state.
---------------------------------------------------------------------------
    \1\Population and Housing Unit Estimates, U.S. Census Bureau. 
www.census.gov/programs-surveys/popest/data/data-sets.html.

          ``If I'm working as hard as I do, I want to have the right to 
        survive and live instead of going hungry.''
                                          Senior man in Hancock County.

    One in six Mainers is food-insecure, while the rate among Maine 
children is even higher: nearly one in four children in Maine 
experiences food insecurity.\2\
---------------------------------------------------------------------------
    \2\Alisha Coleman-Jensen, Matthew P. Rabbitt, Christian A. Gregory 
& Anita Singh, Household Food Security in the United States in 2015, 
USDA, September 2016, p. 7. https://www.ers.usda.gov/webdocs/
publications/err215/err-215.pdf?v=42636; Map the Meal Gap 2016, Feeding 
America, 2016. http://www.feedingamerica.org/hunger-in-america/our-
research/map-the-meal-gap/2014/ME_AllCounties_CDs_MMG_2014.pdf.

    Very low-incomes for roughly \1/3\ of the Maine workforce are an 
important factor underlying food insecurity; Maine's employment 
structure provides a livable wage for only about \2/3\ of its roughly 
620,000 workers.\3\
---------------------------------------------------------------------------
    \3\MIT Livable Wage Calculator. http://livingwage.mit.edu/states/
23/locations; Maine Center for Economic Policy, ``Restoring the Value 
of Work,'' August 2016. http://www.mecep.org/wp-content/uploads/2016/
08/Minimum-wage-brief_final_08-17-16.pdf.

------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                             Defining Terms
 
    What we commonly refer to as ``hunger'' is termed ``food
 insecurity'' by the United States Department of Agriculture (USDA) and
 divided into two categories: low-food security is characterized by a
 reduction in the quality and variety of diet, and very-low-food
 security by ``disrupted eating patterns and reduced food intake.''
------------------------------------------------------------------------

    Nevertheless, over the last 2 years, Maine instituted both a time 
limit and an asset test for the Supplemental Nutrition Assistance 
Program (SNAP), which reduced the number of households eligible for the 
federally funded food assistance benefits.\4\ In November 2016, the 
state's Department of Health and Human Services reported 188,425 
Mainers were participating in SNAP, a substantial decline from 2013 
when 249,119 Mainers were receiving benefits.\5\
---------------------------------------------------------------------------
    \4\Childless adults aged 18 to 49 lose benefits after 3 months 
unless they can find work, job training, or volunteer opportunities. 
Assets of more than $5,000 disqualify adults without children, 
including seniors and those with disabilities.
    \5\Geographic Distribution of Programs and Benefits for November 
2016, Maine Department of Health and Human Services, p. 25. http://
www.maine.gov/dhhs/ofi/reports/2016/GeoDistrib_Nov.pdf; Profile of SNAP 
Households, USDA, March 2015. https://www.fns.usda.gov/sites/default/
files/ops/Maine.pdf.
---------------------------------------------------------------------------
    Preble Street Maine Hunger Initiative and Good Shepherd Food Bank 
sought to look beyond the numbers to gain a clearer understanding of 
who is struggling with hunger in Maine and what challenges they face in 
their attempts to attain food security. The research team surveyed 
2,053 food pantry users across all 16 Maine counties, held focus 
groups, and conducted interviews in an effort to gather both 
qualitative and quantitative information.
    Survey respondents ranged in age from 15 to 95, with an average age 
of 52. The average household size was 2.7 people. Eighty-seven (87) 
percent of households contain a child, a senior, or a person with a 
disability.
What Did the Study Find?
b Emergency Food System Has Become Everyday Means of Survival
    Food pantries were conceived as a source of emergency food 
assistance. Instead, they have become a regular source of food for many 
low-income Americans, including thousands of Mainers. Most survey 
respondents (86 percent) report using the food pantry at least once a 
month, with 29 percent visiting a pantry every week and 15 percent 
visiting a pantry every 2 weeks.

          ``The pantry helps us out a whole lot. We're getting some 
        food stamps, but they cut them back, so we never know from 
        month to month what they're going to do. They don't give you 
        much, that's for sure.''
                                        Senior man in Aroostook County.

    Fifty-nine (59) percent of respondents report that they are using 
the food pantry more this year than they did last year.
b SNAP Benefits Offer Limited Assistance
    Fifty-seven (57) percent of survey respondents indicated that they 
receive monthly SNAP benefits. Of these respondents, 83 percent report 
that benefits last 2 weeks or less, and 49 percent reported that 
benefits last just 1 week or less.

          ``When they are establishing the amounts for the food stamps, 
        they need to check the regular grocery stores, because those 
        prices are going up, and it may take years to get an increase 
        in food stamps.''
                                  Middle-aged man in Cumberland County.

    The SNAP benefit received each month depends on the size of the 
household. The vast majority of survey respondents who received SNAP 
benefits reported receiving between $16 and $200 a month.
b SNAP Policy Changes Have Increased Reliance on Food Pantries
    One in four respondents (486 people) reported they had lost SNAP 
benefits in the past year. Nearly \1/3\ of this group said they were 
removed from the program because of the time limit (24 percent) or the 
asset test (7 percent). The remaining \2/3\ were dropped from the 
program for reasons including increased earnings, marriage, lost 
application paperwork, and being unable to schedule a required 
interview with a DHHS caseworker.

          ``The whole point of these benefits, after you have served 
        your country, is to be able to rely on them. Then I find myself 
        having to jump through hurdles to achieve them and it doesn't 
        work.''
                                      U.S. Navy veteran in Knox County.
    Of the respondents who lost benefits because of the time limit,

   13 percent reported health and caregiving barriers that 
        likely should have made them exempt from the time limit.

   59 percent reported being unable to find work or not having 
        transportation to get to work.

   79 percent report using the food pantry more this year than 
        they did last year.

    Of the respondents who lost SNAP benefits as a result of the asset 
test, 63 percent have a household member over 60 years old, and 44 
percent have a household member with a disability. Fifty-eight (58) 
percent report using the food pantry more this year than last.
b Low-Wage Jobs with Limited or No Benefits Keep Maine Families in 
        Poverty
    When asked about the highest hourly wage at their last job, the 
median response was $10 per hour--below the Federal poverty level for a 
family of four. A very small portion of respondents reported receiving 
employee benefits. For example,

   only 15 percent have had access to health insurance through 
        their current or most recent employer.

   13 percent currently have or previously had sick days.

    With the collapse of manufacturing in many rural areas, Mainers 
struggle to find work. Of those respondents who were looking for work 
but having a hard time finding it, fully half faced significant 
barriers, such as mental or physical health problems, lack of 
transportation to get to work, or lack of needed schooling or training 
to qualify for a job.

          ``The work is all fast food and jobs that don't pay them 
        enough.''
                                        Senior man in Aroostook County.
b Paying for Food Means Making Trade-offs
    When asked whether they have to sacrifice other necessities in 
order to be able to afford food, 73 percent of respondents said yes. 
The trade-offs that were reported most often were between buying food 
and paying utilities and other bills, paying for medication and health 
care, and paying for transportation.

          ``My biggest concern is insurance. Elderly people are 
        dropping their medicines, to keep money for them to survive . . 
        . It's either the medication or they don't buy food.''
                                         Senior man in Kennebec County.

    Trade-offs are even more acute for those who lost SNAP benefits 
because of the recent policy changes, of whom 86 percent report making 
difficult choices between getting food on the table and paying for 
rent, heat, health care, and transportation.
State Policies Should Help Rather Than Hurt Mainers in Need
    When Mainers have access to nutritious food, our communities thrive 
and grow. When our neighbors struggle with hunger, the impacts on our 
state are dire and wide-reaching.

          ``People have this image of what a person on assistance looks 
        like. It's affecting people who are working . . . it's your 
        neighbor, coworker, lady in line at the grocery store . . . 
        it's everyone around you, and people just don't talk about 
        it.''
                                   Middle-aged woman from Lakes Region.

    Our results show that while SNAP is a critical safety net, it is 
not catching enough people and now fewer than ever. SNAP policy changes 
have forced many Mainers to rely more heavily on charitable food 
assistance programs to meet their basic food needs. Just like clean 
water, public safety, and education, making sure everyone has enough to 
eat is an obligation of a just society, not something that should be 
done only when individuals and private donors feel generous.
    We offer the following set of urgent policy recommendations (see 
full report for more details):

  b Preserve and protect the Federal Supplemental Nutrition Assistance 
        Program (SNAP).

  b Restore and bolster access to SNAP in Maine by pursuing waivers and 
        eliminating the asset test.

  b Bolster childhood nutrition programs in schools and invest in more 
        summer meals sites.

  b Support Maine workers and families with adequate benefit policies 
        and job training programs.

  b Invest in public transit statewide and increased access to 
        affordable transportation options.

  b Accept Federal funds to expand MaineCare to more low-income people.

  b Invest in affordable housing and fund Housing First initiatives to 
        end homelessness.

    In addition to ensuring these policies are in place, Maine should 
support the charitable food assistance network to serve as an effective 
emergency food system.

          Preble Street is a social work organization founded on the 
        principles of access for everyone and unconditional positive 
        regard. Since 1975, Preble Street has served some of the most 
        vulnerable people in Maine, working to turn hunger and 
        homelessness into opportunity and hope through 14 low-barrier 
        programs throughout the state. As the hub of services in 
        northern New England's largest urban area, Preble Street 
        provides round-the-clock services 365 days a year to not only 
        meet urgent needs, but to empower people to move beyond the 
        crises in their lives, and to build and advocate for solutions 
        to homelessness, hunger, and poverty. Contact: (207) 775-0026; 
        www.preblestreet.org; www.facebook.com/preblestreet; 
        www.twitter.
        com/PrebleStreet.
          As the largest hunger relief organization in Maine, Good 
        Shepherd Food Bank provides for Mainers facing hunger by 
        distributing nutritious food to more than 400 partner agencies 
        across the state, including food pantries, meal sites, schools, 
        and senior programs. Together with its network, the Food Bank 
        helps combat the root causes of hunger by engaging in advocacy, 
        nutrition education, and strategic partnerships. In 2016, the 
        Food Bank distributed more than 21 million meals to families, 
        children, and seniors in need throughout Maine. Contact: (207) 
        782-3554; www.feedingmaine.org; www.facebook.com/feedingmaine; 
        www.twitter.com/feedingmaine.
          The research team for this project consisted of staff people 
        from Good Shepherd Food Bank and Preble Street Maine Hunger 
        Initiative, AmeriCorps VISTA members serving at the Maine 
        Hunger Initiative, graduate students at the University of 
        Southern Maine overseen by Dr. Michael Hillard, and Jean 
        Bessette, doctoral student at the University of New Hampshire.
Hunger Pains
Widespread Food Insecurity Threatens Maine's Future
Final Report February 2017
    A collaborative project of Good Shepherd Food Bank and Preble 
Street
Introduction
    During the Great Recession, hunger in the United States 
skyrocketed, rising in just a single year from 11.1 percent of 
households in 2007 to 14.6 percent in 2008.\1\ Maine saw a similar 
increase. In the years since the recession officially ended in 2009, 
much of the nation has experienced recovery and relief, but Maine is 
moving against the national trend, and high rates of poverty and hunger 
continue to harm our state. The rate of hunger, or ``food insecurity,'' 
in the United States as a whole dropped to 12.7 percent in 2015. In 
Maine, it remained elevated at 15.8 percent.\2\
---------------------------------------------------------------------------
    \1\Alisha Coleman-Jensen, Matthew P. Rabbitt, Christian A. Gregory 
& Anita Singh, Household Food Security in the United States in 2015, 
USDA, September 2016, p. 7. https://www.ers.usda.gov/webdocs/
publications/err215/err-215.pdf?v=42636.
    \2\Ibid, pp. 7, 21. What we commonly refer to as ``hunger'' is 
termed ``food insecurity'' by the United States Department of 
Agriculture (USDA) and divided into two categories: low food security 
is characterized by a reduction in the quality and variety of diet, and 
very low food security by ``disrupted eating patterns and reduced food 
intake.'' Detailed definitions can be found at https://
www.ers.usda.gov/topics/food-nutrition-assistance/food-security-in-the-
us/definitions-of-food-security.aspx.
---------------------------------------------------------------------------
    According to the United States Department of Agriculture (USDA), 
one in six Mainers is food-insecure, meaning they live without reliable 
access to a sufficient quantity of affordable, nutritious food.\3\ The 
rate of food insecurity among Maine children is even higher: nearly one 
in four children in Maine experiences food insecurity.\4\ Maine also 
ranks third in the nation for the portion of households experiencing 
``very low food security,'' an indication that one or more people were 
hungry at times during the year because they could not afford enough 
food.
---------------------------------------------------------------------------
    \3\Ibid.
    \4\Gundersen, C., A. Dewey, A. Crumbaugh, M. Kato & E. Engelhard, 
Map the Meal Gap 2016: Food Insecurity and Child Food Insecurity 
Estimates at the County Level, Feeding America, 2016. http://
www.feedingamerica.org/hunger-in-america/our-research/map-the-meal-gap/
2014/ME_AllCounties_CDs_MMG_2014.pdf.

          The rate of hunger, or ``food insecurity,'' in the United 
        States as a whole dropped to 12.7 percent in 2015. In Maine, it 
---------------------------------------------------------------------------
        remained elevated at 15.8 percent.

    These statistics mean that every day, roughly 203,000 Maine people 
are struggling with hunger, more than the total number of people living 
in Maine's six largest municipalities--Portland, Lewiston, Bangor, 
South Portland, Auburn, and Biddeford--combined.\5\
---------------------------------------------------------------------------
    \5\Population and Housing Unit Estimates, U.S. Census Bureau. 
https://www.census.gov/programs-surveys/popest/data/data-sets.html.
---------------------------------------------------------------------------
    While hunger rates are high across Maine, the highest rates of food 
insecurity are in some of Maine's less-populated northern and rural 
counties: Washington (17.2 percent), Aroostook (17.1 percent), and 
Piscataquis (16.9 percent). The lowest rates are in the coastal 
counties of Sagadahoc (13.4 percent), Knox (13.6 percent), and Lincoln 
(13.7 percent).\6\
---------------------------------------------------------------------------
    \6\Ibid.
---------------------------------------------------------------------------
    Not surprisingly, the three most populous counties have the largest 
numbers of Mainers facing food insecurity. A 2016 report conducted by 
Feeding America, a national hunger relief charity, identified 40,330 
people as food-insecure in Cumberland County, which includes Portland 
and South Portland; 27,590 in York County, which includes Biddeford; 
and 25,280 in Penobscot County, which includes Bangor, compared to 
2,910 people facing food insecurity in sparsely populated Piscataquis 
County.\7\
---------------------------------------------------------------------------
    \7\Ibid.
---------------------------------------------------------------------------
    Alarmed by the persistence of widespread food insecurity in Maine, 
Preble Street Maine Hunger Initiative and Good Shepherd Food Bank 
sought to look beyond the numbers to gain a clearer understanding of 
who is struggling with hunger in Maine and what challenges they face in 
their attempts to attain food security. This research focuses on people 
who receive food assistance through hunger relief organizations in 
Maine and examines their household demographics, use of charitable food 
assistance, participation in the Supplemental Nutrition Assistance 
Program (SNAP), and employment. The report also examines the effects of 
two recent policy changes in Maine's administration of SNAP and the 
impact on food security for individuals who have lost benefits because 
of the changes.
    The research team for this project consisted of staff people from 
Good Shepherd Food Bank and Preble Street Maine Hunger Initiative, 
AmeriCorps VISTA members serving at the Maine Hunger Initiative, 
graduate students at the University of Southern Maine overseen by Dr. 
Michael Hillard, and Jean Bessette, doctoral student at the University 
of New Hampshire.
Hunger in Maine
    Mainers who face food insecurity look to both charitable 
organizations and Federal and state assistance programs in order to 
access enough food for themselves and their families.
Charitable Food Assistance
    Forty-seven million Americans rely on the charitable food 
assistance system.\8\ Although hunger relief organizations were 
conceived as an emergency service for people who are temporarily in 
need, they have instead become an ongoing source of food support.\9\ In 
1980, there were just 200 food pantries in the entire country. By 2013, 
there were more than 40,000.\10\
---------------------------------------------------------------------------
    \8\Nancy S. Weinfield, et al., Hunger in America 2014, Feeding 
America, August 2014, p. 44. http://www.feedingamerica.org/hunger-in-
america/our-research/hunger-in-america/.
    \9\J. Molnar, P. Duffy, L. Claxton, & C. Bailey (2001). ``Private 
food assistance in a small metropolitan area: Urban resources and rural 
needs,'' Journal of Sociology and Social Welfare, 28: 187-209.
    \10\Peter Pringle (ed.), A Place at the Table (Participant Media, 
2013), p. 137.

          Although hunger relief organizations were conceived as an 
        emergency service for people who are temporarily in need, they 
---------------------------------------------------------------------------
        have instead become an ongoing source of food support.

    Maine has seen a similar expansion of the emergency food system, 
with the number of pantries increasing an estimated tenfold since the 
1980s.\11\ The state's charitable food assistance network consists of 
hundreds of food pantries, soup kitchens, shelters, and other 
community-based organizations that provide for the needs of people who 
lack access to sufficient food. Good Shepherd Food Bank, Maine's only 
statewide food bank, partners with the majority of these local 
organizations to distribute millions of pounds of food throughout the 
state each year. As of December 2016, the Food Bank had 399 partners--
303 food pantries, 50 meal sites, and 46 other organizations, including 
homeless shelters, youth programs, and group buying clubs. Hunger 
relief organizations are spread throughout the state, although there 
are fewer in less densely populated areas.
---------------------------------------------------------------------------
    \11\While statewide figures are not available, historical data for 
southern Maine show four pantries in 1979, 60 in 2005, and 80 in 2010. 
Donna Yellen, Mark Swann, and Elena Schmidt, ``Hunger in Maine,'' Maine 
Policy Review 20.1 (2011): 140-150. http://
digitalcommons.library.umaine.edu/mpr/vol20/iss1/21.
---------------------------------------------------------------------------
    Local food pantries and meal sites are typically small 
organizations with limited resources and cannot meet the food needs of 
all Mainers who are struggling with food insecurity. A 2014 report by 
Good Shepherd Food Bank and Feeding America found nearly \3/4\ of Good 
Shepherd's partners reported employing no paid staff and relying 
entirely on volunteers. Nearly half of the volunteers were over 60 
years old. Local organizations also reported having to scale back their 
programs or turn clients away for various reasons, including lack of 
financial resources and not having enough food to meet the need.\12\
---------------------------------------------------------------------------
    \12\Hunger in America 2014: Report for Good Shepherd Food Bank, 
Feeding America, August 2014. http://www.gsfb.org/wp-content/uploads/
2014/10/FB259_report.pdf.

          Nearly \3/4\ of Good Shepherd Food Bank's partners reported 
---------------------------------------------------------------------------
        employing no paid staff and relying entirely on volunteers.

    The 2014 report counted more than 178,000 Mainers who regularly 
sought assistance at local food pantries and meal sites. This estimate 
does not account for children and families who participate in Good 
Shepherd's school-based initiatives such as school food pantries and 
programs that fill student backpacks with food for the weekend. The 
study found that people were visiting a local hunger relief charity 11 
out of 12 months a year, on average, indicating chronic food insecurity 
and an ongoing need for food to supplement what they could obtain 
through other means.\13\
---------------------------------------------------------------------------
    \13\Ibid.
---------------------------------------------------------------------------
Supplemental Nutrition Assistance Program
    The Supplemental Nutrition Assistance Program (SNAP, also known as 
Food Stamps, or the Food Supplement Program) is an important component 
of the nation's social safety net. The program is designed to help 
individuals and families stretch their food budgets and buy the 
nutritious foods they need to live healthy lives. SNAP provides 
financial assistance for food purchases, on average about $1.40 per 
person per meal, to eligible persons via an electronic benefits 
transfer (EBT) card. These benefits are entirely federally funded.\14\ 
As of October 2016, 43.5 million people were participating in SNAP 
nationally at a cost to the Federal Government of about $75 billion 
annually.\15\
---------------------------------------------------------------------------
    \14\``Policy Basics: Introduction to the Supplemental Nutrition 
Assistance Program (SNAP),'' Center on Budget and Policy Priorities, 
March 24, 2016. http://www.cbpp.org/research/policy-basics-
introduction-to-the-supplemental-nutrition-assistance-program-snap.
    \15\SNAP Program: Number of Persons Participating, USDA, data as of 
January 6, 2017. https://www.fns.usda.gov/sites/default/files/pd/
29SNAPcurrPP.pdf.
---------------------------------------------------------------------------
    Nationally, \1/2\ of SNAP recipients participate for just 10 months 
or less, until they get back on their feet or find higher-paying 
employment. Fifty-eight (58) percent leave the program within 1 
year.\16\ Since 1980, households with full-time, year-round workers 
have grown as a share of SNAP recipients more than any other group.\17\ 
This means that more people who are working full time are not paid a 
wage high enough to sustain their families.
---------------------------------------------------------------------------
    \16\``A Review of Strategies to Bolster SNAP's Role in Improving 
Nutrition as well as Food Security,'' Food Research & Action Center, 
updated January 2013.
    \17\James P. Ziliak, ``Why Are So Many Americans on Food Stamps? 
The Role of the Economy, Policy and Demographics,'' in J. Bartfield, C. 
Gunderson, T. Smeeding, & J. Ziliak, SNAP Matters: How Food Stamps 
Affect Health and Well-Being (Stanford University Press, 2015), p. 27.
---------------------------------------------------------------------------
    In Maine, SNAP is administered by the state Department of Health 
and Human Services (DHHS), with the Federal Government sharing \1/2\ of 
the administrative cost. SNAP enables participants to shop at a local 
grocer when and where it is convenient, like any other Maine family. 
The program provides a step toward a sense of normalcy and stability 
for families struggling to make ends meet.

          SNAP is not only our nation's first line of defense against 
        hunger, but it also stimulates the economy through a multiplier 
        effect.

    In November 2016, DHHS reported 188,425 Mainers were participating 
in SNAP, a decline from the previous year and a substantial decline 
from 2013 when 249,119 Mainers were participating.\18\ Thirty-six (36) 
percent of SNAP households in Maine are families with children, 25 
percent have one or more people 60 years and over, and 35 percent have 
one or more people with a disability.\19\
---------------------------------------------------------------------------
    \18\Geographic Distribution of Programs and Benefits for November 
2016, Maine Department of Health and Human Services, p. 25. http://
www.maine.gov/dhhs/ofi/reports/2016/GeoDistrib_Nov.pdf; Profile of SNAP 
Households, USDA, March 2015. https://www.fns.usda.gov/sites/default/
files/ops/Maine.pdf.
    \19\Characteristics of Supplemental Nutrition Assistance Program 
Households: Fiscal Year 2015, USDA, November 2016. https://
www.fns.usda.gov/sites/default/files/ops/Characteristics
2015.pdf.
---------------------------------------------------------------------------
    SNAP is not only our nation's first line of defense against hunger, 
but it also stimulates the economy through a multiplier effect. During 
Fiscal Year 2015, SNAP brought $282,015,650 in Federal funds to grocery 
stores and other retailers throughout Maine.\20\ With $5 in SNAP 
generating $9 in the local economy, these funds could be expected to 
generate more than $500 million in total economic activity.
---------------------------------------------------------------------------
    \20\Supplemental Nutrition Assistance Program, State Activity 
Report, Fiscal Year 2015. http://www.fns.usda.gov/sites/default/files/
snap/2015-State-Activity-Report.pdf.
---------------------------------------------------------------------------
SNAP Policy Changes in Maine
    Maine recently enacted a time limit on receipt of SNAP benefits for 
childless adults aged 18 to 49. After 3 months of receiving benefits, 
members of this group become ineligible for SNAP unless they can find 
work, job training, or volunteer opportunities. Since Maine instituted 
the time limit in early 2015, more than 9,000 food-insecure individuals 
have lost access to SNAP benefits, and the state's economy has lost the 
economic benefits Federal SNAP dollars provide.\21\
---------------------------------------------------------------------------
    \21\``APNewsBreak: More than 9,000 fewer Mainers receiving food 
stamps under new work requirements,'' March 24, 2015. http://
www.usnews.com/news/us/articles/2015/03/24/apnewsbreak-9-000-mainers-
lose-food-stamps-under-new-rules.
---------------------------------------------------------------------------
    Since 1996, Congress has recognized the difficulty of finding work 
in areas with high unemployment and given states the option to waive 
the 3 month limit on SNAP in those areas. Congress has also provided 
for discretionary waivers from the time limit for certain vulnerable 
populations, including veterans and the homeless. Maine has 
consistently sought these waivers in the past as factories, in 
particular paper mills, and fisheries downsized and/or shut their 
doors. Under these past policies, Maine has offered critical food 
assistance to those struggling to find livable wage jobs, so they have 
the basic sustenance they need to survive. Beginning in 2015, Maine no 
longer requested these waivers even though there are still many Mainers 
in need and high unemployment areas in the state that would qualify for 
the time-limit waiver.
    There is no evidence that dropping people from SNAP leads them to 
find jobs, particularly in regions with high unemployment. While some 
argue that the 3 month time limit functions as an incentive for SNAP 
participants to enter the workforce, according to the Center for Budget 
and Policy Priorities, ``Many able-bodied SNAP participants aren't 
working because they can't find a job or enough job training, or 
because they face challenges that prevent them from getting or keeping 
a job, such as health issues or homelessness.''\22\
---------------------------------------------------------------------------
    \22\Brynne Keith-Jennings, ``Limiting SNAP Doesn't Boost 
Employment,'' Center on Budget and Policy Priorities, August 18, 2015. 
http://www.cbpp.org/blog/limiting-snap-doesnt-boost-employment.

          There is no evidence that dropping people from SNAP leads 
        them to find jobs, particularly in regions with high 
---------------------------------------------------------------------------
        unemployment.

    Many who are willing and able to work are in need of job training, 
but such programs are not consistently available. A person who needs 
job training, but for whom a placement in a job training program is not 
available, still loses all SNAP benefits after the 3 month period. A 
qualifying disability can exempt a person from the SNAP time limit, but 
low-income people often lack access to a regular health care provider 
who could certify a disabling condition. For many in this group, 
obtaining necessary treatment or getting documentation to qualify for a 
waiver from the time limit can be an uphill battle.\23\
---------------------------------------------------------------------------
    \23\Ed Bolen, et al., ``More Than 500,000 Adults Will Lose SNAP 
Benefits in 2016 as Waivers Expire,'' Center on Budget and Policy 
Priorities, March 18, 2016. http://www.cbpp.org/research/food-
assistance/more-than-500000-adults-will-lose-snap-benefits-in-2016-as-
waivers-expire.

          Nearly all states have eliminated asset tests for seniors and 
        those with disabilities, making Maine an extreme outlier as one 
        of only five states that apply an asset test to these two 
---------------------------------------------------------------------------
        groups.

    In 2016 Maine also instituted an asset test to reduce the number of 
adults eligible for SNAP. Previously, Mainers with income at or below 
185 percent of the Federal poverty line were eligible for SNAP 
regardless of assets. With the recent policy change, many Mainers are 
ineligible for SNAP benefits if they have more than $5,000 in assets. 
Disqualifying assets for households now include most second cars, any 
property other than a primary home (like a lot used for harvesting wood 
for heating), and any money in savings.
    Families with children are not subject to the asset test, but 
seniors and those with disabilities are. Nearly all states have 
eliminated asset tests for seniors and those with disabilities, making 
Maine an extreme outlier as one of only five states that apply an asset 
test to these two groups.\24\ Asset tests can disqualify needy retirees 
who rely on income from modest retirement savings.\25\
---------------------------------------------------------------------------
    \24\USDA Categorical Eligibility for SNAP, USDA, updated August 
2016. https://www.fns.usda.gov/sites/default/files/snap/BBCE.pdf.
    \25\``Press Release: Government Programs Penalize Retirement Saving 
By Low- and Moderate-Income Households,'' Center on Budget and Policy 
Priorities, June 21, 2005.
---------------------------------------------------------------------------
Summer Challenges for Families
    Low-income parents face an additional challenge in the summer 
months when school-based meals may be unavailable or inaccessible.\26\ 
During the school year, schools often provide children who are eligible 
for free or reduced-price meals with both breakfast and lunch. A family 
with two school-age children must provide an estimated 200 additional 
meals over summer vacation.
---------------------------------------------------------------------------
    \26\Rachel L. Wilkerson, Durwesh Khalfe, and Kathy Krey (2015), 
``Associations Between Neighborhoods and Summer Meals Sites: Measuring 
Access to Federal Summer Meals Programs,'' Journal of Applied Research 
on Children: Informing Policy for Children at Risk, Vol. 6: Iss. 2, 
Article 9.
---------------------------------------------------------------------------
    While the Summer Food Service Program (SFSP), funded by the USDA, 
offers meals for eligible children, many families do not have access to 
summer meal sites. In 2015, SFSP reached only 25 percent of eligible 
Maine children with summer meals.\27\
---------------------------------------------------------------------------
    \27\Hunger Doesn't Take a Vacation: Summer Nutrition Status Report, 
Food Research & Action Center, June 2016, p. 6. http://frac.org/wp-
content/uploads/2016_summer_nutrition_report.pdf.
---------------------------------------------------------------------------
    During the summer recess, children from low-income families often 
lack access to recreational and academic enrichment opportunities as 
well as adequate nutrition. Learning loss that occurs during the summer 
months, the so-called ``summer slide,'' accounts for about \2/3\ of the 
achievement gap in reading between low-income ninth graders and their 
higher-income peers.\28\ When summer meals are offered together with 
summer learning programs, these initiatives can provide necessary 
nutrition and help address the achievement gap.
---------------------------------------------------------------------------
    \28\Karl L. Alexander, Doris R. Entwisle, and Linda Steffel Olson, 
``Lasting Consequences of the Summer Learning Gap,'' American 
Sociological Review, April 2007, Vol. 72: 167-180. http://www.ewa.org/
sites/main/files/file-attachments/summer_learning_gap-2.pdf; National 
Summer Learning Association infographic, undated. http://
summerlearning.org/wp-content/uploads/2016/06/
TheAchievementGapInfographic.pdf.
---------------------------------------------------------------------------
Transportation
    Access to reliable transportation is important for employment 
options as well as food access. Getting to and from work can be a 
challenge for low-income workers. The expense and the time involved in 
commuting to low-wage jobs can be daunting, and coordinating available 
transportation options to accommodate both family and work obligations 
is often difficult.

          Car ownership can be critical to the ability of low-wage 
        workers to maintain employment, especially in areas where 
        public transit is minimal or nonexistent.

    A 2006 study of a rural welfare-to-work program identified the lack 
of reliable transportation as an impediment to employment among low-
income adults. In the study region, as in most of Maine, public transit 
was extremely limited. Approximately \1/3\ of the study sample did not 
own a car or have reliable access to one or have access to public 
transportation.\29\
---------------------------------------------------------------------------
    \29\Alicia Meckstroth, et al., ``Paths to Work in Rural Places: Key 
Findings and Lessons from the Impact Evaluation of the Future Steps 
Rural Welfare-to-Work Program,'' Mathematica Policy Research, March 22, 
2006. https://www.acf.hhs.gov/sites/default/files/opre/
paths_to_work.pdf.
---------------------------------------------------------------------------
    Numerous studies have found that car ownership can be critical to 
the ability of low-wage workers to maintain employment, especially in 
areas where public transit is minimal or nonexistent. For recipients of 
public assistance, car ownership is associated with higher rates of 
employment and higher earnings.
    Research has also shown that car ownership has a greater impact on 
low-skilled workers than it does on higher-skilled workers. In 
addition, individuals who have access to a car are likely to be 
unemployed for shorter periods.\30\
---------------------------------------------------------------------------
    \30\``Shifting into Gear,'' National Consumer Law Center, April 
2014, p. 2. http://www.workingcarsforworkingfamilies.org/images/files/
shifting-into-gear.pdf.
---------------------------------------------------------------------------
Hunger and Maine's Labor Market
    The national recession of 2007-2009 caused the loss of tens of 
thousands of Maine jobs, especially in rural Maine, and was followed by 
a slow jobs recovery. Maine lost about 30,000 jobs during the 
recession, and 3 years into the recovery, had regained only 5,900 of 
the jobs lost. Employment has now recovered to about \3/4\ of its 
prerecession peak. While economic recovery overall has been hampered by 
both population and labor force stagnation, there are still large 
numbers of discouraged workers (not technically in the labor force but 
who would take a job if available) and part-time workers in Maine who 
would prefer full-time work but can't find it.\31\
---------------------------------------------------------------------------
    \31\Maine employment peaked at 621,000. At the end of the recession 
in summer 2009, Maine employment had contracted to 592,100; in August 
2012 it had recovered to only 598,000. Maine employment reached 617,800 
in July 2016. Maine Department of Labor, Center for Workforce Research 
and Information. http://www.maine.gov/labor/cwri/ces.html. On 
discouraged and involuntary part-time workers, see ``Policy Basic: 
Maine's Unemployment Rate, More than Meets the Eye,'' Maine Center for 
Economic Policy, May 2016. http://www.mecep.org/wp-content/uploads/
2016/05/Unemployment-calculation-5-18-2016-Final_final.pdf.

          Maine lost about 30,000 jobs during the recession, and 3 
        years into the recovery, had regained only 5,900 of the jobs 
---------------------------------------------------------------------------
        lost.

    Very-low-incomes for roughly \1/3\ of Maine workers are an 
important factor underlying food insecurity; for many, having a job 
does not liberate them from persistent hunger. Maine's employment 
structure provides a livable wage for only about \2/3\ of its roughly 
620,000 workers. Full-time work at $10 an hour provides annual income 
of about $20,000, less than even the most conservative estimate of a 
livable wage for a single adult.\32\
---------------------------------------------------------------------------
    \32\Projections for the impact of the state's new minimum wage law 
show some 181,000 Maine workers benefitting from the increase to $12. 
Recent estimates of a livable wage in Maine range from approximately 
$10.38 per hour for a single adult up to $26.87 per hour for a 
household with a single adult and two children, benchmarks that assumes 
full-time, year-round work. MIT Livable Wage Calculator, http://
livingwage.mit.edu/states/23/locations; Maine Center for Economic 
Policy, ``Restoring the Value of Work,'' August 2016. http://
www.mecep.org/wp-content/uploads/2016/08/Minimum-wage-brief_final_08-
17-16.pdf.
---------------------------------------------------------------------------
    Simply put, a huge portion of Maine's labor market does not provide 
wages adequate for meeting basic needs for food, housing, utilities, a 
vehicle, and health care. Low wages make workers and their families 
economically insecure; a car repair or eviction notice can easily rob 
them of the stability and means to maintain employment and avoid even 
more dire poverty.
    Ongoing changes in the structure of the Maine labor market also 
exacerbate the inability of the Maine economy to provide access to 
employment and sufficient wages to avoid food insecurity. Economists 
considering structure look at changes in the mix of employment by 
occupation, industry, and the location of jobs. On the employment side, 
rural Maine continues to see the loss of manufacturing jobs, most 
visibly with serial and permanent shutdowns of the state's historic 
paper mills in Millinocket and East Millinocket, Bucksport, Lincoln, 
Madison, and elsewhere. From 2007 (4th quarter) to 2016 (2nd quarter), 
Maine lost 8,672 manufacturing jobs, a 12.8 percent decline. 
Manufacturing employment fell by 40.7 percent in Penobscot County (East 
Millinocket was home to now-shuttered Great Northern Paper); by 30.3 
percent in Oxford County (home to historic Rumford paper mills); by 
17.5 percent in Franklin County (Jay was home to the former 
International Paper mill); and a 17.3 percent decrease in Aroostook 
County (home to a number of small paper mills and the former Fraser 
Paper mill in Madawaska).\33\
---------------------------------------------------------------------------
    \33\Maine Department of Labor, Center for Workforce Research and 
Information. http://www.maine.gov/labor/cwri/qcew1.html.
---------------------------------------------------------------------------
    With the exception of health care, growth in better-paid service 
employment is concentrated far away from where rural Mainers losing 
factory jobs are located. The ongoing decline of employment options in 
rural Maine is so strong that rim counties (Oxford, Franklin, Somerset, 
Piscataquis, Aroostook, and Washington) are seeing sizable losses of 
population and labor force participants, as many flee to southern Maine 
or out of state seeking employment, or move into a premature semi-
retirement.\34\
---------------------------------------------------------------------------
    \34\Population in rim counties alone decreased by 8,522 between 
2010 and 2015. Personal e-mail communication with Glenn Mills, Chief 
Economist, Maine Department of Labor, Center For Workforce Research, 
January 3, 2017.
---------------------------------------------------------------------------
    Compounding the loss of jobs is the aging of Maine's labor force; 
older workers face more challenges in gaining new skills when they lose 
jobs and are more likely to have injuries or other disabilities that 
make them unattractive to employers. The cost-benefit profile for older 
workers seeking retraining is relatively poor, as they have fewer years 
to benefit from the higher wage.

          With the exception of health care, growth in better-paid 
        service employment is concentrated far away from where rural 
        Mainers losing factory jobs are located.

    Southern Maine's economy is relatively prosperous, and it is where 
better-paying service jobs (health care, law, banking and insurance) 
are concentrated. One-third of Cumberland County employment is in low-
wage retail and service occupations, however. Data for 2015 show that 
32.8 percent of the Portland/South Portland labor market's 195,055 jobs 
were concentrated in low-wage industries, with annual earnings ranging 
from $20,611 to $26,366.\35\ While employment growth in southern 
Maine's economy has been strong, for many the combination of low wages 
and rising rents threatens their ability to feed themselves.
---------------------------------------------------------------------------
    \35\These low-wage sectors include retail trade, leisure and 
hospitality, along with health care/social services industries 
(residential mental health facilities, continuing care assisted living 
facilities, social assistance, individual and family services, and 
childcare).
---------------------------------------------------------------------------
    In sum, the realities of Maine's labor market for up to \1/3\ of 
our workforce are that low wages mean vulnerability to hunger. Despite 
the state's current low unemployment rate, the decline of Maine's rural 
manufacturing employment and the concentration of employment growth in 
low-wage service occupations mean that gaining employment does not 
ensure an end to food insecurity.
The Research
Methodology
    To achieve a holistic understanding of the problem of hunger in 
Maine, we employed both quantitative and qualitative methods of data 
collection. We administered a four-page paper survey at food pantry 
sites across Maine. We then conducted a series of focus groups in 
various geographic locations, and several in-depth follow-up interviews 
with people who participated in either the survey or the focus groups, 
whose comments help to illustrate the quantitative data.
Administering the Survey
    Surveys were administered at hunger relief organizations, including 
food pantries and meal sites, in all 16 Maine counties. Members of the 
research team visited organizations over a 4 month period and handed 
out surveys to be completed on-site. Respondents were offered 
assistance if needed to fill out the survey. Copies of the survey were 
also mailed to hunger relief organizations across the state. 
Organization staff administered the survey during food distributions, 
collected completed surveys from clients, and mailed them to the 
research team. As it was not feasible to develop a random sample of 
food pantry users, the research team set general targets for the number 
of surveys to be collected from each county in order to reflect the 
approximate distribution of food-insecure individuals across the state. 
The survey tool is provided in Appendix A.
Focus Groups
          Surveys were administered at hunger relief organizations, 
        including food pantries and meal sites, in all 16 Maine 
        counties.

    We held six focus groups to gather qualitative data about 
respondents' experiences with food insecurity in Maine. Two focus 
groups were held in Portland at a food pantry with an on-site soup 
kitchen; the other four were held at food pantries in Bridgton, 
Ellsworth, Waterville, and Presque Isle. Focus group participants were 
recruited through contact information they voluntarily provided on the 
completed paper surveys and by food pantry directors who sought out 
pantry clients willing to participate. Members of the research team 
conducted the focus groups using a standard set of facilitation 
questions. The conversations were audio recorded, transcribed, and 
analyzed. The focus group protocol is provided in Appendix B.
Interviews
    University of Southern Maine graduate students supervised by Dr. 
Michael Hillard conducted in-depth follow-up interviews with three 
people, and Preble Street staff conducted an additional seven in-depth 
interviews. Interviewees were identified by Preble Street staff who 
were familiar with their circumstances. The students developed a set of 
interview questions related to food acquisition, experience with public 
assistance programs, work history, transportation issues, and public 
perceptions of low-income citizens in Maine. The conversations were 
audio recorded and then summarized by the students. The interview 
questions are provided in Appendix C.
Study Results
Demographics of Survey Respondents
    In total, 2,053 people responded to the survey.\36\ Respondents 
came from 244 different towns spread across all 16 Maine counties. The 
geographic distribution of survey respondents is shown in Figure 1.
---------------------------------------------------------------------------
    \36\Since respondents did not always answer all survey questions, 
the totals in this section may not equal 2,053.
---------------------------------------------------------------------------
Figure 1. Surveys Collected by County


          Food Pantry Survey, July 2016, (n = 2,027).

    One-third of food-insecure Mainers reside in just two counties: 
Cumberland County is home to 20.1 percent and Penobscot County to 12.6 
percent.\37\ The research team collected surveys in these two counties 
at similar rates: 22.2 percent of surveys were collected from 
Cumberland County residents, and 12.6 percent of surveys were collected 
from Penobscot County residents.
---------------------------------------------------------------------------
    \37\Gunderson, et al., Map the Meal Gap 2016.

          One-third of food-insecure Mainers reside in just two 
        counties: Cumberland County is home to 20.1 percent and 
---------------------------------------------------------------------------
        Penobscot County to 12.6 percent.

    Figures 2, 3, and 4 present selected survey respondent and 
household characteristics. All demographic data collected are available 
in Appendix D.
    Respondents ranged in age from 15 to 95, with an average age of 52. 
One in five respondents was 65 or older. Two-thirds of respondents were 
female, and 93 percent were white (see Figure 2).
Figure 2. What is your age, gender, ethnicity/race?


          Food Pantry Survey, July 2016 (Age n = 1,991), (Gender n = 
        1,903), (Ethnicity/race n = 1,758).

    The majority of households had one or two members. Average 
household size was 2.7, with a range of one to 14 household members 
(see Figure 3).
Figure 3. How many people are living in your household?


          Food Pantry Survey, July 2016, (n = 1,969).

    Thirty-five (35) percent of respondents indicated that they had a 
child under 18 living in their household. Nearly \1/2\ of respondents 
(49 percent) reported a person with a disability living in the 
household. Thirty-eight (38) percent reported a senior over the age of 
60 living in the household. In total, 87 percent of households surveyed 
(n = 1,785) contain a child, a senior, or a person with a disability, 
and some contain members of more than one of these groups (see Figure 
4).
Figure 4. Respondent households with . . . 


          Food Pantry Survey, July 2016, (n = 2,053).

    Focus group participants offered insights into the kinds of issues 
that Mainers face. They spoke about a wide array of disabilities and 
health problems, from autism, diabetes, depression, and heart attacks 
to a rare eye disease and a bone infection linked to surgery after a 
broken limb.

          ``Last year right before Christmas we had to dish out almost 
        $600 because my husband has a disease in his eye that runs in 
        the family. So we had to sit down with the kids and say, `We 
        can't do Christmas because Dad's got to have surgery to correct 
        this.'''
                                             Mother in Kennebec County.

          ``Right now I am so exhausted because I have a bipolar son. I 
        tried to get him help and the police threw him in jail. If you 
        have a bipolar child and are poor, most everybody ends up in 
        jail--that is just the way you get any treatment at all.''
                                            Mother in the Lakes Region.
Use of Charitable Food Assistance
    Figure 5 shows how frequently survey respondents visit food 
pantries. Eighty-six (86) percent of respondents report using a food 
pantry at least once a month. More than 40 percent of households use a 
food pantry monthly, and an additional 44 percent are using a pantry 
every week or every 2 weeks.
Figure 5. How often do you utilize a food pantry now?


          Food Pantry Survey, July 2016, (n = 1,844).

    Many food pantries only distribute food once a month, so for those 
visiting the pantry monthly, that frequency may reflect the pantry's 
limited operations. The household may be in need of assistance more 
often than once a month. Households reporting more frequent use may be 
visiting multiple pantries to meet their needs.
    Among households with children, 40 percent use a pantry more than 
once a month; among households with a member who has a disability, 46 
percent use a pantry more than once a month; \1/2\ of households with a 
member 60 years or older use a pantry more than once a month.
    Fifty-nine (59) percent of respondents report that they are using 
the food pantry more this year than they did last year, including eight 
percent who reported that they did not use a pantry at all the previous 
year.
    Many focus group participants noted their reliance on food 
pantries, along with a patchwork of other resources, including meal 
sites, SNAP, Special Supplemental Nutrition Program for Women, Infants, 
and Children (WIC), Social Security, Meals on Wheels (for homebound 
seniors and individuals with disabilities), afterschool and summer 
meals for children, and more.

          ``The pantry helps us out a whole lot. We try to budget the 
        best we can. We're getting some food stamps, but they cut them 
        back, so we never know from month to month what they're going 
        to be. They don't give you much, that's for sure.''
                                        Senior man in Aroostook County.

          ``I don't know what we would do without the food pantry. It 
        is something I think about a lot because I do not know where we 
        would be.''
                                Middle-aged mother in the Lakes Region.

    The limitations of charitable food assistance are evident to those 
who rely on it. Focus group and interview respondents spoke about the 
difficulty of relying on food pantries and other charities for food on 
an ongoing basis. Problems included the amount or variety of food 
offered, the hours of distribution, and the fact that in some cases you 
can only receive assistance once a month.

          ``I do rely on the food pantries and soup kitchens a lot of 
        the time around here, and it has been very hard for me to 
        eat.''
                                      U.S. Navy veteran in Knox County.

          ``For nutrition, I used to use canned vegetables and fruits. 
        With my husband being diabetic, he has to watch what he eats 
        and it is very difficult--pantries mostly offer pasta and 
        carbs.''
                                Middle-aged mother in the Lakes Region.
          ``Coming here [to the pantry], it helps a lot. We go to the 
        evening program [meal site], and it does help, but we try not 
        to go there all the time because it's always the same thing--
        sandwiches. After a while, you get tired of sandwiches. You 
        want a home-cooked meal.''
                                             Mother in Kennebec County.

    Food-insecure Mainers, including the veterans we interviewed, 
report skipping meals because they can't get the food they need. One 
U.S. Navy veteran in Knox County describes eating one soup kitchen meal 
per day and meeting the rest of his food needs by stretching the food 
from the one pantry box he receives each month. He often only has the 
resources to eat one meal per day. A veteran of the U.S. Marines in 
Androscoggin County similarly skips breakfast and supper because he 
must rely solely on the limited soup kitchens and food pantries in his 
area.
Supplemental Nutrition Assistance Program (SNAP)
    Fifty-seven (57) percent of survey respondents indicated that they 
receive monthly SNAP benefits. Of the respondents who receive SNAP, 83 
percent report that their benefits last 2 weeks or less, as seen in 
Figure 6.
Figure 6. How long do monthly SNAP benefits last?


          Food Pantry Survey, July 2016, (n = 1,216).

    The amount of SNAP received each month depends on the number of 
people in the household. The vast majority of survey respondents 
reported SNAP benefit amounts of between $16 and $200 a month (see 
Figure 7).
Figure 7. How much money in food stamps do you receive each month?


          Food Pantry Survey, July 2016, (n = 953).

          ``When they are establishing the amounts for the food stamps 
        they need to check the regular grocery stores, because those 
        prices are going up, and it may take years to get an increase 
        in food stamps.''
                                           Middle-aged man in Portland.
Loss of SNAP Benefits
    One in four survey respondents (486 people) indicated that they had 
lost SNAP benefits in the past year. Nearly \1/3\ of this group said 
they were removed from the program because of recent state policy 
changes, specifically the 3 month time limit (24 percent) and the asset 
test (7 percent). The remaining \2/3\ who lost SNAP benefits were 
dropped from the program for a variety of reasons including increased 
earnings, marriage, lost application paperwork, and being unable to 
schedule a required interview with a DHHS caseworker.
Time Limit
    Maine's time-limit policy applies only to childless adults aged 18 
to 49 who do not have a documented disability. Of the 100 respondents 
who lost benefits because of this time limit, 13 percent reported 
health and caregiving barriers that likely should have made them exempt 
from the time limit and eligible to continue receiving SNAP assistance.
    A veteran of the U.S. Marines living in Androscoggin County 
explained in an interview that he is disabled and receives a disability 
pension from the Veterans Administration (VA) due to an injury incurred 
during the Gulf War. Even though specific guidance from the USDA makes 
it clear that this should exempt him from the time limit, his benefits 
were cut when Maine made the policy change. His benefits were only 
restored in January 2017 after several years without access to SNAP.
    A veteran of the U.S. Army living in Waldo County who has disabling 
medical conditions was dropped from SNAP because of the time limit 
until he could get connected to VA health care and linked with a 
provider. During the months it took him to make this happen, he 
struggled to get the food he needed.
    Of the 100 respondents who lost benefits because of the time limit, 
59 percent reported looking for work and not being able to find it or 
not having transportation to get to work.
    A U.S. Navy veteran in Knox County who was dropped from SNAP 
because he couldn't find work explained in an interview, ``It's been a 
6 year struggle to get back on my feet. I have a whole list of skills, 
if I brought my resume it would shock you.'' Despite his extensive job 
search, he cannot find work and was dropped from SNAP due to the time 
limit policy's work requirements. He frequently skips at least one meal 
a day, regularly experiences hunger, and cannot make ends meet. As he 
explains, ``The whole point of these benefits, after you have served 
your country, is to be able to rely on them. Then I find myself having 
to jump through hurdles to access them and it doesn't work.''
          Seventy-nine (79) percent of those who lost SNAP benefits 
        because of the time limit report using the food pantry more 
        this year than they did last year.
Asset Test
    Of the 27 respondents who lost SNAP benefits as a result of the 
asset test, 63 percent have a household member over 60 years old, and 
44 percent have a household member with a disability. (Families with 
children are exempt from the asset test.)
    Of those who lost SNAP benefits due to the asset test, 58 percent 
report using the food pantry more this year than last.
Summer Hunger
    Respondents with children under age 18 in the household reported 
overwhelmingly that their supplemental food needs increase in the 
summer (see Figure 8).
Figure 8. Does your need for food go up in the summer when your kids 
        are out of school?
        
        
          Food Pantry Survey, July 2016, (n = 493).
Trade-offs and Challenges
    When asked whether they have to sacrifice other necessities in 
order to be able to afford food, 73 percent of respondents said yes. 
The trade-offs that were reported most often were between paying for 
food and paying for utilities and other bills, medication and health 
care, and transportation.
    The necessity of making trade-offs because of limited income is 
amplified for people who have lost access to SNAP. Of those who lost 
SNAP benefits because of the time limit, 86 percent report making 
difficult choices between getting food on the table and paying for 
rent, heat, health care, and transportation. Similarly, of those who 
lost benefits because of the asset test, 86 percent said they have to 
make trade-offs between buying food and paying for necessities.
    Focus group participants echoed these survey findings, reporting 
that they have to skip bills, pay for expensive car repairs, and choose 
between buying food and buying medications.

          ``You can have the grocery money to go to the store, but not 
        have the gas to get there.''
                                Middle-aged mother in the Lakes Region.

          ``I feed my children before I feed myself. And I hate this, 
        but I have to limit the portions that [my children] can have 
        for a meal.''
                                Middle-aged mother in the Lakes Region.

          ``We are on a strictly tight budget. My other half works . . 
        . I'm here [at the pantry] every 2 weeks. I don't work. I'm 
        disabled. I have three kids, so it's hard . . . If we have to 
        skip a bill, we skip a bill, to put food on the table. If that 
        means that Dad and I don't eat, to make sure our family is 
        provided [for]--as parents, you have to do what's right for 
        your kids.''
                                             Mother in Kennebec County.

          ``My biggest concern is insurance, because insurance is even 
        hard for the elderly. Elderly people are dropping their 
        medicines, to keep money for them to survive . . . It's either 
        the medication or they don't buy food.''
                                         Senior man in Kennebec County.

    Transportation was cited as a major obstacle for Mainers trying to 
obtain the food they need. In rural areas particularly, commute times 
can be long, and cars are often necessary for work, school, health 
appointments, and food acquisition. But cars require frequent repair 
and maintenance, as well as registration, inspection, and insurance, 
and the expenses compound. One respondent indicated that he/she can 
only afford gas money by collecting and redeeming returnable bottles 
and cans.

          ``I cannot get my car inspected, and the sticker is expired. 
        I am just crossing my fingers every time I see a trooper.''
                                Middle-aged mother in the Lakes Region.

          ``I had a [car] and things kept going wrong with it. I needed 
        to repair it because I needed to get to work . . . then my 
        brake line went, then this, and that, and I had to spend it all 
        to get it fixed so I could go to work. The day that I had it 
        fixed I couldn't work, so I was out money that day plus the 
        cost to fix it.''
                               Young single mother in the Lakes Region.

    Respondents who live in more densely populated areas, including 
Portland, Waterville, and Rockland, find that public transportation 
routes do not always link residential neighborhoods with supermarkets 
and food pantries. Getting food home can be a major difficulty, 
especially for people who are elderly or disabled.

          ``South Portland has some places [to get food], but I can't 
        get there on the buses, and walking is hard because I have to 
        carry all of the stuff by myself.''
                                             Single mother in Portland.

          ``For food it will take me about an hour to just get there, 
        then walk back in the rain, sleet or snow, with my groceries 
        the same distance.''
                                      U.S. Navy veteran in Knox County.

          ``We're fortunate because he's got the truck. But you leave 
        here [the pantry] with five or six bags and you've got to carry 
        it home? When I was living a mile or so out of town, I was just 
        hoping that my little rolling bag didn't give out. It's one 
        thing to get here, but to haul everything home, it's hard.''
                                  Middle-aged woman in Kennebec County.
Labor Market Participation
    When asked to describe their work ethic, 96 percent of survey 
respondents responded positively, using words such as good, excellent, 
hardworking, dependable, timely, and honest. A senior man from Hancock 
County explained, ``If I'm working as hard as I do, I want to have the 
right to survive and live instead of going hungry.''
    When the survey asked about the highest hourly wage at respondents' 
last job, the median response was $10 per hour--below the Federal 
poverty level for a family of four.
    A very small portion of respondents reported receiving benefits at 
their current or last job. Only 15 percent reported having access to 
health insurance through their current or most recent employer. 
Thirteen (13) percent currently have or previously had sick days, and 
15 percent have or had vacation days.
    Of those currently working either full time or part time, 78 
percent still have to make difficult trade-offs between buying food and 
paying for rent, health care, and other expenses.

          ``Jobs that are here just aren't paying. The standards, the 
        pay rates are not keeping up with the rest of the country. 
        Minimum wage has to be livable for the area that you're in.''
                                  Middle-aged woman in Kennebec County.

          ``Many of the women that I work with . . . they're in that 
        position . . . if they don't have the means to feed their 
        family it might keep them in the abusive situation longer. That 
        fear of not keeping a roof over their heads or being able to 
        feed their kids is a big thing.''
                                 Middle-aged woman in the Lakes Region.

          ``I consider my family low- to middle-income, but we struggle 
        every day.''
                                            Mother in the Lakes Region.

    With the collapse of the manufacturing industry in rural areas, 
Mainers struggle to find work.

          ``I'm 67 years old, and if they brought a mill back, I'd go 
        back to work in a heartbeat.''
                                         Senior man in Kennebec County.

          ``Back when he started, you had six guys on a paper machine. 
        Now you might have five guys on the entire floor, but they're 
        not on the floor . . . now it's all computer screens . . . you 
        don't need workers anymore.''
                                    Working-age man in Kennebec County.

          ``The work is all fast food and jobs that don't pay them 
        enough.''
                                        Senior man in Aroostook County.

    Of those who were looking for work but having a hard time finding 
it, fully \1/2\ faced significant barriers, such as[:]

   schooling, training, or experience in the field in order to 
        prepare them for a job.

   resources to improve their mental and/or physical health.

   a driver's license, functioning car, or access to a vehicle 
        or public transportation in order to get back to work.

    Some people need a job that accommodates special family 
circumstances, e.g., a ``part-time night job so I can be home with my 
kids because I'm a single parent.''
Survey Respondents' Thoughts on Ending Hunger in Maine
    Ninety (90) percent of respondents agreed that Maine has a high 
rate of hunger. Respondents point to three key factors: the ailing 
labor market, lack of access to SNAP benefits, and lack of 
transportation options. Maine jobs with livable wages are hard to come 
by, and the seasonal and temporary nature of many jobs also contributes 
to hunger. One respondent explained, ``Seasonal work is high in this 
state, so a lot of people suffer in the winter.''
    Many respondents noted that the closing of factories and mills, 
which once provided lifetime employment for many Mainers, makes it hard 
to get by in rural areas. For those who are lucky enough to have found 
work, low wages in Maine keep people hungry. Respondents said that the 
pay is insufficient to keep up on expenses while also buying food.
    Lack of transportation also contributes to hunger. Respondents said 
that lack of transportation not only makes it difficult for them to get 
to food pantries and grocery stores, but also poses a major barrier to 
getting to work. Respondents explained that transportation is 
expensive: bus passes, gasoline, and upkeep for a vehicle all add up.

          Respondents want to strengthen community and to form networks 
        for people to help one another. As one respondent said, 
        ``people have to look after one another.''

    When asked about solutions to hunger, respondents called for 
livable wage jobs, increased availability of SNAP benefits, and 
improved access to transportation. Many anticipate that boosting the 
minimum wage will ease rates of hunger. Mainers want increased access 
to public assistance programs like SNAP. One respondent asserted that 
people should ``get more food stamps until you're stable on your 
feet.'' Respondents called for eliminating both the time limit and the 
asset test and for expanding access for all struggling Mainers to 
participate in SNAP.
    Mainers care for each other. One respondent said we need to ``find 
a way to dispel the stigma of people who use public assistance,'' while 
another says we must ``treat everyone equally,'' and another suggests 
we should ``pay more attention to the needy and homeless'' to end 
hunger. Respondents want to strengthen community and to form networks 
for people to help one another. As one respondent said, ``people have 
to look after one another.''
Discussion and Policy Recommendations
    In Maine, we are both independent and interdependent people. When 
Mainers have access to nutritious food, our communities thrive and 
grow. Hunger hurts us all. When one Mainer experiences hunger, there is 
a ripple effect: these are our friends, neighbors, grandparents, and 
children.
    Hunger has reached epidemic proportions in Maine. Our results show 
that while SNAP is a critical safety net, it is not catching enough 
people. SNAP policy changes have forced many Mainers to rely more 
heavily on charitable food programs to meet their basic food needs, but 
charity alone can't feed everyone who's hungry. Just like clean water, 
public safety, and education, making sure everyone has enough to eat is 
an obligation of a just society, not something that should be done only 
when individuals and private donors feel generous.
    Food pantries and soup kitchens are typically run by small, 
grassroots groups struggling to meet the ongoing needs of communities 
facing economic hardships. Churches, nonprofits, and other private food 
charities have already been stretched too thin and are not the answer 
to ending hunger in our nation. Charity is not enough, and Maine 
families go without.
    The trend toward reducing access to SNAP and forcing Mainers to 
rely on charitable resources moves us toward a two-tiered food delivery 
system: food pantries and soup kitchens for people living in poverty 
and grocery stores for everyone else. Federal nutrition programs like 
SNAP are the single fairest and most efficient way to feed low-income 
Americans. When people get food from a food pantry, while it's a 
laudable community effort, it is not a success. It's a failure of 
American policy.

          In the 1970s, the United States succeeded in virtually 
        eliminating hunger.

    We must focus on the underlying problems of poverty and inequality. 
Ending poverty could be within our reach; we just need to harness the 
political will to do it. In the 1970s, the United States succeeded in 
virtually eliminating hunger. Livable wage jobs and increased access to 
USDA programs like SNAP and child nutrition programs in schools to fill 
the gaps made ending hunger possible. Since the 1970s, Maine has been 
on a steady decline: loss of manufacturing jobs, growing income 
inequality, high rates of hunger and poverty.
    Maine is at a crossroads. Will our state continue to rely on an 
ever-expanding charitable food assistance system that cannot stem 
rising food insecurity? Or will Maine start to turn the tide and, like 
other states across the country, commit to ending hunger in our state?
    We offer the following set of urgent and immediate policy 
recommendations:

  b Protect and preserve the Federal Supplemental Nutrition Assistance 
        Program (SNAP)[:]

     Maintain SNAP's effective programmatic structure, which 
            enables it to[:]

       respond to increased need in economic downturns.

       meet the needs of increasing numbers of older 
            Mainers as our population
              ages.

       provide access to essential nutrition to those in 
            our communities who can-
              not afford an adequate diet.

  b Restore and bolster access to SNAP in Maine[:]

     Pursue geographic waivers to the time limit in areas that 
            qualify for a Federal waiver because of high unemployment.

     Pursue an exemption from the time limit for veterans.

     Follow USDA guidance to ensure that exemptions for those 
            with work-limiting disabilities and those experiencing 
            homelessness are correctly and uniformly administered.

     Join the vast majority of states in eliminating the asset 
            test for SNAP.

  b Bolster childhood nutrition programs in schools[:]

     Require high-need schools to serve breakfast after the 
            bell.

     Invest in more summer meal sites across the state.

     Eliminate the reduced-price category for school meals.

     Create a statewide online application for school-based 
            meals.

  b Support Maine workers and families[:]

     Require basic benefits for all employees including sick 
            time and paid family leave.

     Invest in job training and education programs for workers.

  b Invest in transportation[:]

     Develop programs that provide access to affordable 
            transportation for low-income Mainers through taxi fare 
            assistance, car donation, or subsidized lease or loan 
            programs.

     Improve public transportation options statewide and 
            provide free or discounted bus passes to low-income people.

  b Expand health care coverage[:]

     Encourage legislators to accept Federal funds to make 
            MaineCare (Maine's Medicaid program) available to 75,000 
            Maine people with low-incomes who need health care and 
            can't afford it.

  b Invest in affordable housing[:]

     Build more permanent, affordable housing.

     Fund Housing First initiatives to end homelessness in 
            Maine[:]

     Increase access to housing vouchers.

     Create a housing voucher option for TANF families.

    In addition to implementing these policies, Maine should[:]

  b Strengthen the charitable food assistance network to serve as an 
        effective emergency food system[:]

     Invest in Maine's network of hunger relief charities as a 
            public-private partnership to ensure all Mainers have 
            access to nutritious food when and where they need it.

          Preble Street is a social work organization founded on the 
        principles of access for everyone and unconditional positive 
        regard. Since 1975, Preble Street has served some of the most 
        vulnerable people in Maine, working to turn hunger and 
        homelessness into opportunity and hope through 14 low-barrier 
        programs throughout the state. As the hub of services in 
        northern New England's largest urban area, Preble Street 
        provides round-the-clock services 365 days a year to not only 
        meet urgent needs, but to empower people to move beyond the 
        crises in their lives, and to build and advocate for solutions 
        to homelessness, hunger, and poverty. Contact: (207) 775-0026; 
        www.preblestreet.org; www.facebook.com/preblestreet; 
        www.twitter.com/PrebleStreet.
          As the largest hunger relief organization in Maine, Good 
        Shepherd Food Bank provides for Mainers facing hunger by 
        distributing nutritious food to more than 400 partner agencies 
        across the state, including food pantries, meal sites, schools, 
        and senior programs. Together with its network, the Food Bank 
        helps combat the root causes of hunger by engaging in advocacy, 
        nutrition education, and strategic partnerships. In 2016, the 
        Food Bank distributed more than 21 million meals to families, 
        children, and seniors in need throughout Maine. Contact: (207) 
        782-3554; www.feedingmaine.org; www.facebook.com/feedingmaine; 
        www.twitter.com/feedingmaine.
Appendix A
The Survey
    The Maine Hunger Initiative and Good Shepherd Food Bank of Maine 
want to hear about your experiences with getting your food needs met. 
Your participation in this survey is voluntary and confidential. There 
is no right or wrong answer to these questions and you may choose not 
to answer a question at any time. Your answers will not affect your 
ability to get food from the food pantry or other food assistance 
programs.

 
 
 
                             Your Background
------------------------------------------------------------------------
    1. What town do you live in?         9. If you lost your benefits
 ____                                 because of the work requirements.
    2. How many people are living     check all that apply:
 in your household that share            {time}  I looked for work but
 meals? ____                              couldn't find it
    3. Check if someone in your          {time}  I was not able to find
 household is:                            a volunteer placement
      {time}  A child under the age      {time}  I wanted more education
       of 18                              or training but couldn't get
      {time}  Age 60 or older             it
      {time}  Has a disability that      {time}  I am not able to work
       limits their ability to work       but lost benefits anyhow
    4. What is your age? --------        {time}  I don't have
    5. What is your gender? ----          transportation to get work/
                                          volunteer
    6. Do you currently receive          {time}  Other ____
 Food Supplement (Food Stamps/SNAP)      10. If you lost your benefits
 benefits?                            because of the work
    {time}  Yes      {time}  No        requirements and participated in
                                      a food supplement
    6a. How much money in food         employment and training program
 stamps do you receive each month?    did those services help you?
 ____                                 Please describe:
    7. Did you or someone in your      _________________________________
 household lose food stamp benefits   _______________
 any time in the last year?            _________________________________
                                      _______________
    {time}  Yes      {time}  No        11. How often do you utilize a
                                      food pantry now?
    8. If yes, why did you (or           {time}  Once a week
 they) lose benefits?
      {time}  I lost my benefits         {time}  Every 2 weeks
       after 3 months because of         {time}  Once a month or more
       the new work rule
      {time}  I had more than            {time}  Once every few months
       $5,000 in assets
      {time}  I tried to reapply         {time}  I don't use a food
       for benefits but my                pantry
       paperwork got lost                12. Did you use the food pantry
                                      more this year
      {time}  I was not able to do     than last year?
       my interview in-person or         {time}  Yes
       over the phone
      {time}  Other ____                 {time}  No
                                         {time}  I didn't use a food
                                          pantry last year
 
    13. If you have asked for help from Maine's Department of Health and
 Human Services recently, please tell us about your experience. Are
 these statements true or not true?
 


------------------------------------------------------------------------
    True       Not True       N/A                  Statement
------------------------------------------------------------------------
                                           DHHS staff helped me get the
                                        information and help I needed.
------------------------------------------------------------------------
                                           I was able to get through on
                                        the phone to DHHS and get the
                                        information I needed in a
                                        reasonable amount of time.
------------------------------------------------------------------------
                                           I was treated respectfully in
                                        my interaction(s) with DHHS
                                        staff.
------------------------------------------------------------------------
                                           I discontinued my application
                                        process/benefits because of my
                                        experience.
------------------------------------------------------------------------
                                           I experienced delays in
                                        getting the help I needed.
------------------------------------------------------------------------
                                           I received inconsistent
                                        information from different DHHS
                                        staff
------------------------------------------------------------------------


 
 
 
                         Cost of a Healthy Diet
------------------------------------------------------------------------
    14. When do you use all of your      16. Do you ever have to make
 food stamps?                         choices between spending money on
    {time}  On the first day I get    food and spending money on other
     them                             needs? (such as medications,
    {time}  During the first week I   heating fuel, rent, car repairs,
     get them                         etc.)
    {time}  Within the first 2
     weeks after I get them
      {time}  They usually last 3-4      {time}  Yes
       weeks
    15. Does your need for food go       {time}  No
 up in the summer when your kids
 are out of school?
      {time}  Yes                        17. If yes, what sacrifices
          {time}  No                  have you had to recently make to
                                      put food on the table?
      {time}  Not applicable           _________________________________
                                      ______________
                                       _________________________________
                                      ______________
------------------------------------------------------------------------
                              Work History
------------------------------------------------------------------------
    18. Are you or anyone in your        24. Did any of your previous
 household currently employed?        three jobs last more than a year?
      {time}  Yes, full time             {time}  Yes
      {time}  Yes, part time             {time}  No
      {time}  No                         25. What was your highest
                                      hourly wage at your
    19. If you are not working,        current or last job?
 would you take a job if one were     _________________________
 available?
      {time}  Yes                        26. Which benefits do/did you
      {time}  No                      have at your current/last job:
    20. If No, why not?                  {time}  healthcare
 ________________________
    _______________________________      {time}  paid sick days
 ______________
    If no, skip to question 28           {time}  vacation
    21. How would you describe your      {time}  childcare
 work ethic?
    _______________________________      {time}  none
 ______________
    _______________________________      27. What services would be most
 _______________                      useful to help you find a job:
    _______________________________      _______________________________
 ________________                     _________________
    22. If you had appropriate           _______________________________
 support or training, what would      _________________
 your dream job be?
    _______________________________      _______________________________
 ________________                     _________________
    _______________________________      28. What is your citizenship
 ________________                     status?
    _______________________________      _______________________________
 ________________                     _________________
    23. If you aren't working right      29. What is your ethnicity/
 now, what do you think you need to   race?
 re-enter the labor market?              {time}  White
    _______________________________      {time}  Black
 ________________
    _______________________________      {time}  Hispanic/Latino
 ________________
    _______________________________      {time}  Middle Eastern
 ________________                        {time}  Asian
                                         {time}  Other: ____
    30. Do you agree with this statement? Maine has a high rate of
 hunger
      {time}  Yes
      {time}  No
    If yes, why do you think there is so much hunger in Maine?
    ____________________________________________________________________
 ________________
    ____________________________________________________________________
 ________________
    31. What changes are needed to make sure that you and others you
 know have enough to eat?
    ____________________________________________________________________
 ________________
    ____________________________________________________________________
 ________________
    ____________________________________________________________________
 ________________
    ____________________________________________________________________
 ________________
    32. Would you like to receive the results of this survey and
 information about what we are doing to end hunger and how you can help?
    If yes, please fill out the information below:
    Name: ___________________________
    Phone: ___________________________
    E-mail: ___________________________
------------------------------------------------------------------------
                    Thank you for your participation!
------------------------------------------------------------------------
 

Appendix B
Focus Group Questions
    Thank you for being here today. We are interested in finding out 
the experiences of people in Maine struggling to make ends meet. We'll 
be using this information to educate the public and inform policy 
change. We appreciate your time and input. We plan to create a report 
from this information and hold events moving forward. We would love for 
you to be part of that. Please fill out the demographic form, the 
consent form, and let us know if you'd like to stay involved. Your 
answers today will remain completely confidential.

  1.  Please tell us your name and a little about yourself.

  2.  What do you do to get enough food for yourself and your family?

        (What is a typical day for you? What is that like?)

  3.  What are some of the things that make it difficult to make ends 
            meet and get enough food? Can you explain?

        (E.g., wages too low, not enough jobs, disability that limits 
            your ability to work, or disability in the house that 
            limits household income, rent too high, number of people in 
            the household sharing food, cost of childcare, lack of 
            transportation, other expenses--medical, rent, 
            transportation, etc.?)

  4.  What works about SNAP (Food Supp/Food Stamps)? Is there anything 
            you would change?

        (Tell us experiences you or people you know have had with SNAP? 
            Have you lost SNAP? Do you know people who have lost SNAP?)

  5.  What would make it easier for you and others you know to have 
            enough to eat without having to come to a food pantry?

  6.  When you watch television, read the newspaper, or hear Maine 
            politicians speak, how do they portray Mainers living in 
            poverty?

        (Do you think this is accurate? How does that make you feel?)

  7.  What do you think your life will be like in 5 years?

  8.  Is there anything else you think we should know that we didn't 
            think to ask?
Appendix C
In-Depth Interview Questions
    Food:

          Describe what you eat over the course of a week. What are the 
        ways you get your food?

    Benefits:

          What benefits are currently available to you? How do these 
        benefits affect your life? Your ability to get food (SNAP 
        status, been cut, why)?

    Work:

          Are you able to work? Can you describe your current work 
        situation (barriers, part-time, full-time, wages)? What kinds 
        of jobs did you have in the past?

          What are the barriers to working faced by other people you 
        know?

    Transportation:

          In your daily life, how do get around? (get food, get to job, 
        public transportation, walking, biking, cabs, own or borrow 
        car)

          How do you get to your food sources?

    Perceptions:

          In your view, how do the media and politicians depict Mainers 
        in poverty? In general, how well do you feel supported by 
        society?
Appendix D
Survey Respondent Demographics

                   Table 1. Respondent Characteristics
------------------------------------------------------------------------
 
------------------------------------------------------------------------
                        Number of        Percent of           Mean
                       respondents       respondents
------------------------------------------------------------------------


 
 
 
                    Age (n = 1,991)                            52
 


------------------------------------------------------------------------
 
------------------------------------------------------------------------
           <18                   5              0.25
         18-24                  88              4.42
         24-44                 565             28.38
         45-64                 875             43.95
         65-84                 434              21.8
           85+                  24              1.21
------------------------------------------------------------------------
                           Gender (n = 1,903)
------------------------------------------------------------------------
        Female               1,265             66.47
          Male                 628             33.00
         Other                  10              0.53
------------------------------------------------------------------------
                       Race/ethnicity (n = 1,758)
------------------------------------------------------------------------
         White               1,634             92.95
         Black                  62              3.53
      Hispanic                  29              1.65
         AI/AN                  21              1.19
         Other                  12               .69
------------------------------------------------------------------------


                   Table 2. Household Characteristics
------------------------------------------------------------------------
 
------------------------------------------------------------------------
                        Number of        Percent of           Mean
                       respondents       respondents
------------------------------------------------------------------------


 
 
 
                  Number in household                          2.7
 


------------------------------------------------------------------------
 
------------------------------------------------------------------------
           One                 545             27.68
           Two                 563             28.59
         Three                 326             16.56
          Four                 247             12.54
          Five                 159              8.08
   Six or more                 129              6.55
                   -----------------------------------------------------
  Total...........           1,969
------------------------------------------------------------------------
                    Households with children under 18
------------------------------------------------------------------------
           Yes                 725             35.31
            No               1,328             64.69
                   -----------------------------------------------------
  Total...........           2,053
------------------------------------------------------------------------
                 Households with member with disability
------------------------------------------------------------------------
           Yes               1,009             49.15
            No               1,044             50.85
                   -----------------------------------------------------
  Total...........           2,053
------------------------------------------------------------------------
               Households with member over 60 years of age
------------------------------------------------------------------------
           Yes                 777             37.85
            No               1,276             62.15
                   -----------------------------------------------------
  Total...........           2,053
------------------------------------------------------------------------



 
                           THE NEXT FARM BILL

                   (LIVESTOCK PRODUCER PERSPECTIVES)

                              ----------                              


                        TUESDAY, MARCH 21, 2017

                  House of Representatives,
         Subcommittee on Livestock and Foreign Agriculture,
                                  Committee on Agriculture,
                                                   Washington, D.C.
    The Subcommittee met, pursuant to call, at 2:02 p.m., in 
Room 1300 of the Longworth House Office Building, Hon. David 
Rouzer [Chairman of the Subcommittee] presiding.
    Members present: Representatives Rouzer, DesJarlais, 
Marshall, Conaway (ex officio), Costa, Bustos, Plaskett, Evans, 
and Peterson (ex officio).
    Staff present: Caleb Crosswhite, Mykel Wedig, Patricia 
Straughn, Stephanie Addison, Mary Knigge, Matthew MacKenzie, 
Troy Phillips, and Carly Reedholm.

  OPENING STATEMENT OF HON. DAVID ROUZER, A REPRESENTATIVE IN 
                  CONGRESS FROM NORTH CAROLINA

    The Chairman. This hearing of the Subcommittee on Livestock 
and Foreign Agriculture entitled, The Next Farm Bill: Livestock 
Producer Perspectives, will come to order.
    I would like to welcome everyone here this afternoon, and 
thank all of you for gathering here again as the Committee 
continues its work to reauthorize the farm bill prior to its 
expiration next fall.
    Last month this Subcommittee held a hearing on the 
importance of USDA's trade promotion and market development 
programs, and the benefits they bring to the agricultural 
sector as a whole. Today, we will highlight a variety of issues 
facing the livestock industry.
    From wildfires across the Plains, to recently confirmed 
cases of High-Path Avian Influenza in Tennessee, to an ongoing 
battle against cattle fever ticks in south Texas, there is no 
shortage of challenges facing America's livestock producers. On 
top of that, there are a host of ill-conceived and burdensome 
Federal regulations to contend with, including the so called 
GIPSA rules that threaten producers' longstanding marketing 
arrangements and the National Organic Program standards that go 
well beyond the scope of the law by mandating animal welfare 
practices. Now, I know that livestock producers are a resilient 
bunch, but I am hopeful that the new Administration will 
continue efforts to roll back these regulations, just as they 
have, for example, with the disastrous Waters of the United 
States regulation.
    I am eager to hear from those of you here today about how 
all of these issues are affecting your operations, which USDA 
programs and initiatives have proven most beneficial in 
mitigating those effects, and what sort of tweaks or 
modifications might be needed to be made to those programs in 
the next farm bill. In addition to enhancing and supporting 
existing programs, I understand that that there is widespread 
interest, and I certainly have an interest in it as well, in a 
new provision designed to bolster the United States' ability to 
respond to the potential outbreak of devastating animal 
diseases; namely foot-and-mouth disease, or FMD, as we call it. 
In exploring the linkages between agriculture and national 
security last Congress, this Subcommittee developed a better 
understanding of the devastation that would result from such an 
outbreak, and the need to improve our response capability. I 
look forward to hearing more specifics today about your 
proposals for establishing and funding such an effort.
    Again, thank you all for being here.
    [The prepared statement of Mr. Rouzer follows:]

 Prepared Statement of Hon. David Rouzer, a Representative in Congress 
                          from North Carolina
    Good afternoon, and thank you all for gathering here again this 
afternoon as the Committee continues its work to reauthorize the farm 
bill prior to its expiration next fall.
    Last month this Subcommittee held a hearing on the importance of 
USDA's trade promotion and market development programs and the benefits 
they bring to the agricultural sector as a whole.
    Today we will highlight a variety of issues facing the livestock 
industry.
    From wildfires across the Plains, to recently confirmed cases of 
high path avian influenza in Tennessee, to an ongoing battle against 
cattle fever ticks in south Texas, there is no shortage of challenges 
facing America's livestock producers.
    On top of that, there are a host of ill-conceived and burdensome 
Federal regulations to contend with, including the so called ``GIPSA 
rules'' that threaten producers' longstanding marketing arrangements 
and the National Organic Program standards that go well beyond the 
scope of the law by mandating animal welfare practices.
    I know that livestock producers are a resilient bunch, but I am 
hopeful that the new Administration will continue efforts to roll back 
these regulations, just as they did with the disastrous Waters of the 
United States rule.
    I am eager to hear from the industry leaders here today about how 
all of these issues are affecting your operations, which USDA programs 
and initiatives have proven most beneficial in mitigating those 
effects, and what sort of tweaks might need to be made to those 
programs in the next farm bill.
    In addition to enhancing and supporting existing programs, I 
understand that that there is widespread interest in a new provision 
designed to bolster the United States' ability to respond to the 
potential outbreak of devastating animal diseases--namely Foot-and-
mouth disease (FMD).
    In exploring the linkages between agriculture and national security 
last Congress, this Subcommittee developed a better understanding of 
the devastation that would result from such an outbreak and the need to 
improve our response capability. I look forward to hearing more 
specifics today about your proposals for establishing and funding such 
an effort.
    Again, thank you all for being here. I now yield to the Ranking 
Member for his remarks.

    The Chairman. I now yield to the Ranking Member for his 
remarks.

   OPENING STATEMENT OF HON. JIM COSTA, A REPRESENTATIVE IN 
                    CONGRESS FROM CALIFORNIA

    Mr. Costa. Thank you very much, Mr. Chairman. And I want to 
welcome our witnesses to this Subcommittee hearing, and Members 
of the Subcommittee.
    The next farm bill, obviously, is what we are focused on, 
and livestock producer perspectives are an interest to the 
entirety of this Subcommittee, certainly with the livestock 
producers that I represent in California. We understand the 
important role you play every day in putting dinner on 
America's dinner table.
    As we begin the process of formulating the farm bill, this 
hearing and other hearings like it play an important role in 
giving us the opportunity to hear from you as to what changes, 
modifications we ought to be considering in the reauthorization 
of the farm bill. At a time when there are many voices that are 
calling to increase the production of American products, we 
have before us today representatives that are very capable at 
increasing that production, not only by raising domestic 
products consumed by Americans, but also creating the 
opportunity for more jobs and being able to export those 
products around the world.
    Our livestock producers, all of you represented here, from 
beef to poultry, to the other commodities, represent 42 percent 
of our domestic and global markets that are increasingly a 
significant part of this effort, and people understand the high 
quality of the products you produce. Nobody does it better.
    Today's hearings, I know the Chairman and I believe, will 
cover issues that we have been working on in the past so that 
you can continue to maintain that high-level productivity, and 
be able to compete in those foreign markets.
    We hear about the importance that animal health plays in 
stabilization of markets globally, and the effect regulations 
can have on the livestock industry. One such regulation in 
which there is bipartisan support is the U.S. Department of 
Agriculture Grain Inspection, Packers and Stockyards 
Administration's, otherwise known as GIPSA, proposed rule. We 
are very concerned about the potential interruption of 
livestock and poultry industries, and the massive costs that 
could be added as a result of that. Last year, the Congress 
responded to prevent that rule from taking effect. If it were 
to, it would fundamentally, as the Chairman said, negatively 
change the way livestock industry and poultry industry has been 
able to market in this country for decades, and also the value-
added, and value-added is an important part of everything you 
do.
    These agreements are important, they help producers get 
more return on their animals, and the last thing we want to do 
is open up a situation to a flood of baseless litigation. 
Clearly, if USDA does not withdraw this rule, Congress must 
continue to act legislatively.
    As important as marketing is here at home, our producers' 
ability to export their goods is very important in California. 
We obviously produce more than we can consume in so many of the 
commodities we produce, and that is why I feel very strongly we 
must not, not retreat from international trade agreements. And 
I am very concerned about the Administration's comments as it 
relates to NAFTA, its impacts with our trading partners in 
Mexico and in Canada, and our ability to work with our partners 
in Asia. Last week, the Trans-Pacific Partnership met in South 
America without us. I think that was a mistake for us.
    Obviously, we have other markets where we need to have fair 
and level playing fields as it relates to the Europeans, and so 
we must be working with you as a partnership to ensure access 
to those markets remains and improves. The vast growth 
potential for our livestock products resides overseas, and 
trade agreements help open those doors to these markets.
    With growing production comes growing demand for labor, and 
let me just be plainspoken here, as Sergeant Friday used to 
say, ``Just the facts, ma'am.'' Seventy percent of our 
agricultural labor force in California is undocumented. That is 
the reality. They came to this country for a lot of different 
reasons, but primarily to seek a better life for themselves and 
their families, and provide the necessary labor to care for all 
these various kinds of agricultural productivity that we see in 
the various commodities that we produce. However, because the 
livestock production is not seasonal, producers are not 
eligible to use the H-2A visa system, and that is a problem. We 
know we have a broken immigration system in this country, and 
we must figure out how to go about fixing it in a bipartisan 
manner. I get calls from students, from families, from 
farmworkers, from labor contractors, and from farmers and farm 
organizations, in which there is a shortage of the necessary 
labor to do the work. And clearly, we need to do something 
about this in a constructive, positive sort of way, that does 
not bring further fear in so many of the farming communities 
that I represent.
    Mr. Chairman, I look forward to hearing the testimony of 
our witnesses. And I thank you for convening this hearing.
    The Chairman. I thank the Ranking Member. I noticed that 
the Chairman of the full Committee has joined us. And, Mr. 
Chairman, I don't know if you have an opening statement you 
would like to make?

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

    Mr. Conaway. I am just glad to be here and participate in 
the hearing, and look forward to what our witnesses have to 
say.
    The Chairman. The chair would request that other Members 
submit their opening statements for the record so the witnesses 
may begin their testimony, and to ensure that there is ample 
time for questions.
    I would like to welcome our witnesses to the table. And, 
Mr. Chairman, I understand there is one in particular that you 
would like to introduce.
    Mr. Conaway. Well, I do. Bob is here, Bob Buchholz from 
Eldorado, Texas. Bob is a good, long time friend of mine. I 
used to get to represent that community for the first 8 years I 
was in Congress, and Bob and I have had more than several 
occasions to have conversations. He is here today representing 
the American Sheep Industry Association, and while I don't 
represent the home, I represent part of the ranch, and I hope 
it is the tropical part of the ranch that gets most of the 
rain, but the rest of his place is in Will Hurd's district. So, 
Bob, thanks for being here today. I appreciate you coming up.
    The Chairman. Thank you, Mr. Chairman.
    We also have Mr. Craig Uden, President of the National 
Cattlemen's Beef Association. Thank you for being here. We have 
Mr. Carl Wittenburg, Chairman of the National Turkey 
Federation. And then we have my good friend, Mr. David Herring, 
Vice President, National Pork Producers Council, from Newton 
Grove, North Carolina, right around the corner from where I 
reside. And, David, great to have you here again.
    Mr. Uden, please begin when you are ready.

          STATEMENT OF CRAIG UDEN, PRESIDENT, NATIONAL
          CATTLEMEN'S BEEF ASSOCIATION; PARTNER, DARR
                FEEDLOT, INC., JOHNSON LAKE, NE

    Mr. Uden. Thank you. Chairman Rouzer, Ranking Member Costa, 
thank you for allowing me to testify on behalf of the United 
States beef industry today.
    I am Craig Uden, a fourth generation cattleman from Johnson 
Lake, Nebraska, and current President of NCBA. I am a partner 
in Darr Feedlot, Inc., a commercial cattle feeding operation, 
and my wife, Terri, and I own and operate 3 cow/calf 
operations. Today I would like to discuss the 2018 Farm Bill, 
and the cattle industry's priorities as you all begin to 
assemble this important legislation.
    We oppose agricultural policies that pit one industry 
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. We continue to oppose attempts to narrow business 
options or limit the individual freedom of livestock producers 
to market their product. We will oppose the inclusion of a 
livestock title as we believe the items with industry-wide 
support can be included in the miscellaneous title. The vast 
majority of cattle producers also oppose the involvement of the 
Federal Government in determining how their cattle are 
marketed.
    The NCBA is in opposition of the Grain Inspection, Packers 
and Stockyards Administration, GIPSA, interim final rule on 
competitive injury. The rule has been opposed by cattle 
producers since it was first introduced in 2010, and they 
continue to oppose it today.
    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 they will not be willing to open themselves up to 
these frivolous lawsuits that this change in the competitive 
injury standard would create. We believe this rule would 
eliminate value-based marketing programs, and negatively impact 
producers and ultimately consumers.
    In that same vein, NCBA also opposes any attempts to 
restrict the ownership of livestock. In the past, a handful of 
Members of Congress have proposed language placing restrictions 
on packer ownership of livestock, commonly referred as the 
packer ban. These types of restrictions would limit the 
marketing options available to our producers, and would 
represent interference in the marketplace by the Federal 
Government.
    NCBA would also like to reiterate its opposition to 
mandatory government-run COOL. Repeal of the previous mandatory 
program was necessary since, after 6\1/2\ years of 
implementation, it provided no market benefit to beef producers 
or consumers.
    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. I would also like to mention today 
a need for a stronger, more adequate foot-and-mouth disease, 
FMD, vaccine bank. Estimates show 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 the livestock producers, auction markets, 
slaughterhouses, food processors, as well as consumers. NCBA 
would be requesting the support of this Committee for dedicated 
funds of $150 million a year for 5 years, to develop a more 
robust bank.
    Research is another topic that is of great importance to 
the beef industry. We support increased funding for research on 
production practices, genetics, animal diseases, economics, 
nutrition, food safety, and environmental impacts. Trade is 
vital to the beef industry, and protecting trade promotion 
programs such as Foreign Market Development and Market Access 
Programs within the 2018 Farm Bill are extremely important.
    As 96 percent of the world's consumers live outside the 
U.S., we recognize the growth and profitability of the U.S. 
cattle and beef industry is closely tied to our ability to 
market our products to those customers.
    Finally, I ask that you help us protect the national beef 
check-off. This check-off is a producer-led and funded research 
and promotion program that has helped our industry with food 
safety, nutrition, recipe development, and the successful Beef, 
It's What's for Dinner advertising campaign. The success of the 
check-off is why the majority of beef producers in this country 
still support it.
    On behalf of all cattle producers, thank you for allowing 
me to come testify today. We look forward to working with each 
of you on the development of the 2018 Farm Bill.
    [The prepared statement of Mr. Uden follows:]

Prepared Statement of Craig Uden, President, National Cattlemen's Beef 
       Association; Partner, Darr Feedlot, Inc., Johnson Lake, NE
    Chairman Rouzer, Ranking Member Costa, thank you for allowing me to 
testify on behalf of the United States Beef industry today. I am Craig 
Uden, a fourth-generation cattleman from Elwood, Neb. and I am a 
partner in Darr Feedlot Inc., a commercial cattle feeding operation.
    My wife Terri and I also own and manage three commercial cow/calf 
operations. My daughter Blair and her husband are involved in 
agribusiness and they own a registered Red Angus operation in 
Minnesota. My son Andrew lives in Lincoln, NE and owns a high tech 
agriculture company that runs data analytics, and he still finds time 
to run cattle. I have always been active in helping to shape the ever-
challenging and changing beef industry. I believe in giving back to an 
industry that has been good to me, and while I have stepped aside from 
the day to day management, I still enjoy buying and selling cattle and 
building relationships within this industry. People in the cattle 
business work towards a common goal to improve and learn so that their 
industry is sustainable for future generations.
    I am currently serving as NCBA President, and I have been involved 
in a number of positions on the local and state level, including past 
Chairman and elder of Trinity Lutheran Church in Lexington, Nebraska, 
member and past chair of the Dawson County Cattlemen, and a 4-H leader. 
Along with serving on the Nebraska Beef Council, I have served on the 
Nebraska Cattlemen's Board of Directors as a Committee Chairman and 
Vice Chairman, the Nebraska Cattlemen's Research & Education 
Foundation, and am involved in the Nebraska Feedlot Council. I am also 
a member of Nebraska Ag Builders and sit on the Foundation Board of 
Alpha Gamma Rho Fraternity.
    Today I would like to discuss the 2018 Farm Bill and the cattle 
industry's priorities as you all begin to assemble this important 
legislation. Development of this next farm bill is an important process 
for livestock producers. Whether directly or indirectly, the programs 
that are included in this farm bill have lasting effects, and sometimes 
a dramatic impact on livestock producers. We 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.
    We also oppose inclusion of a ``livestock title'' in the next farm 
bill. Items with industry-wide support can be included in the 
``miscellaneous title.'' I ask for the support of Members of this 
Committee in opposing a livestock title in the next farm bill.
    The vast majority of 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 their consumers and their specific needs and requests. 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 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.
    In that same v[e]in, NCBA also opposes any attempts to restrict the 
ownership of livestock. There have been times previously that a handful 
of Members of Congress have proposed language placing restrictions on 
packer ownership of livestock, commonly referred to as the ``packer 
ban.'' These types of restrictions would limit the marketing options 
available to our producers and would represent interference in the 
marketplace by the Federal Government which we adamantly oppose. 
Furthermore, attempts to put a ``packer ban'' in place have been tried 
in the past and have failed under both Republican and Democrat control 
of Congress.
    NCBA would also like to reiterate its opposition to country-of-
origin labeling (COOL) and any mandatory COOL programs. Repeal of the 
previous mandatory program was necessary since, after 6\1/2\ years of 
implementation, it provided no market benefit to beef producers. 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. 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 Nebraska, 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 testified about 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. The economic consequences also include trade disruptions and 
decreased tourism.
    NCBA will be requesting the support of this Committee 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 the amount of 
$150 million a year for five years. In addition, we support more work 
around Foreign Animal Disease preparedness that will continue to shed 
light on our response plans that recognize the limitations of current 
vaccination capabilities in an FMD outbreak.
    Research is another topic that is of great importance to the beef 
industry. We support increased funding for research on production 
practices, genetics, animal diseases, economics, nutrition, food 
safety, and environmental impacts. The research components of USDA and 
our land-grant universities continue to provide critical knowledge to 
our industry allowing us to be the most efficient and effective 
producers possible. The impact of environmentally sensitive lands and 
species on agricultural operations is a critical component in advancing 
animal agriculture. Increased investment in this type of research is 
vital to the security and viability of our agricultural industry and 
overall food supply.
    Trade is vital to the beef industry, and protecting trade promotion 
programs such as the Foreign Market Development and the Market Access 
Programs within the 2018 Farm Bill, are important to us. Ninety-six 
percent of the world's consumers reside outside U.S. borders. We 
recognize that the growth and profitability of the U.S. cattle and beef 
industry is closely tied to our ability to market our products to those 
consumers. We support international trade policies that aggressively 
pursue expanded market access for U.S. beef, enforce trade agreements 
that are based on internationally recognized standards and guidelines, 
and hold our trading partners accountable for their international trade 
commitments.
    Since I am here testifying on behalf of the cattle industry, I 
wanted to briefly mention an item of great concern to our producers 
down in Texas, and that is the ongoing problem of Cattle Fever Ticks. 
These ticks carry and spread a blood parasite that causes Bovine 
Babesiosis commonly known as Texas Cattle Fever or Cattle Fever, a 
devastating disease for the industry. Symptoms of Cattle Fever include 
anemia, seizures, high fever, aggressiveness and jaundice, resulting in 
decreased milk production, poor weight gain, damaged hides and leading 
to death in 90% of cattle not previously exposed. They were effectively 
eradicated from the United States in 1943, after which a Permanent 
Fever Tick Quarantine Zone was established along 500 miles of Texas' 
southern border with Mexico, to contain natural fever tick movements to 
the United States/Mexico border.
    NCBA is working closely with USDA-APHIS Veterinary Services to 
adequately respond to current fever tick outbreaks and protect against 
further outbreaks in the United States. The hope is to improve current 
technologies and develop new ones, and also to encourage all public 
lands to be required to comply with the same regulations as private 
landowners, for the prevention and treatment of cattle fever tick. NCBA 
would encourage continued work between USDA-APHIS, the Texas Animal 
Health Commission, and any other interested parties to work in 
collaboration to eradicate this pest.
    I wanted to also take a moment to mention our support for the 
programs established under the permanent disaster provisions of the 
2014 Farm Bill. Currently we do not have any suggestions on ways to 
improve these programs. However, with the ongoing rangeland fires 
occurring in the Midwest and Texas, barring any concerns that may arise 
from these tragic events, we will not seek any changes within the 2018 
Farm Bill.
    Finally, I ask that you help us protect the national beef check-
off. The check-off is a producer-led and funded research and promotion 
program which has helped our industry with food safety, nutrition, 
recipe development, and the successful ``Beef, It's What's For Dinner'' 
advertising campaign. The success of the check-off is why the majority 
of beef producers in this country still support it. In fact, several 
states have passed local referendums to increase their state check-offs 
because they know it is a sound investment in our future. The check-
off, however, has come under attack by a small minority who don't want 
to pay or support the check-off. We will fight any attempt to attack, 
change, or kill the national beef check-off. We have a model that is 
working well, and we need to let it continue its positive work for the 
beef industry.
    Thank you again for the opportunity to provide testimony today on 
behalf of NCBA and the beef industry. We look forward to working with 
this Committee and a wide range of interested stakeholders to help 
craft a bill that helps agriculture move forward in the best possible 
way. Working towards conservation program improvements, protecting 
research funding, keeping the government out of cattle marketing, and 
allowing producers to manage decisions regarding the check-off, are 
issues of critical importance. On behalf of all cattle producers, thank 
you and we look forward to working with each one of you on the 
development of the 2018 Farm Bill.

    The Chairman. Thank you, Mr. Uden.
    Mr. Wittenburg.

    STATEMENT OF CARL WITTENBURG, CHAIRMAN, NATIONAL TURKEY 
                   FEDERATION, ALEXANDRIA, MN

    Mr. Wittenburg. Good afternoon, Chairman Rouzer, Ranking 
Member Costa, and Members of the Subcommittee.
    My name is Carl Wittenburg, and I am the current Chairman 
of the National Turkey Federation, as well as President of the 
Protein Alliance in Alexandria, Minnesota. My wife, Sharlene, 
and I raise 100,000 turkeys annually for Northern Pride on our 
family farm in Wyndmere, North Dakota.
    I appreciate the opportunity to testify before you today on 
the turkey industry's priorities for the upcoming farm bill, 
and we look forward to working with this Committee.
    After suffering through the worst animal disease outbreak 
in U.S. history in 2015, the turkey industry has made 
significant strides in recovering from Highly Pathogenic Avian 
Influenza. As an industry, we learned many lessons from the 
outbreak; however, the road ahead remains long, and as an 
industry, we will need continued support from Congress to 
assist APHIS to reduce the long-term impacts. High-Path AI is 
not going away overnight, it is a global problem, and the time 
is now to start an international discussion on limiting trade 
impacts when using vaccination as an eradication strategy.
    While we fully understand and respect the implications, we 
cannot shy away from this timely discussion. Recent High-Path 
AI outbreaks in Tennessee and Alabama remind us all this 
disease is still a danger and can strike at any time.
    As the Committee begins writing the farm bill, NTF is 
asking for the addition of a forward-looking, mandatory animal 
pest and disease prevention program, and a foot-and-mouth 
vaccine bank designed to limit the impacts of foreign diseases 
on American livestock and poultry producers.
    As partners in the Animal Ag Coalition, we hope to further 
the concept that an ounce of prevention is worth a pound of 
cure, and focus Federal dollars on targeted efforts that reduce 
foreign diseases' ability to gain a foothold here in the United 
States.
    There are 4 key areas of focus for our proposal. First, the 
Animal Pest and Disease Disaster Prevention Program, 
administered by APHIS, would build upon the 2014 Farm Bill's 
authorization of NAHLN Network. This aims to provide crucial 
resources to prepare and prevent a crisis, bringing together 
the Federal Government, states, industry, and universities to 
provide rapid detection and response capabilities, develop 
mitigation technologies including vaccines, identify and 
support critical research needs. Second, it would establish a 
long-needed foot-and-mouth vaccine bank strategy. Third, it 
would provide for the development of a block grant system that 
allows states to strategically target areas of concern. Fourth 
and final, this program would be structured to take full 
advantage of science generated by the National Institute of 
Food and Agricultural program in order to protect our 
investment in this vital sector of the economy. We will be 
asking Congress to support our request for this new program.
    International trade is a major engine in the U.S. growth, 
therefore, it is critically important to the economic health of 
the U.S. agriculture and food industry to continue to support 
the North American Free Trade Agreement. As an industry, our 
trade relationships with Mexico and Canada are extremely 
important.
    The turkey industry continues to support the establishment 
of an Under Secretary for Trade and Foreign Agricultural 
Affairs at USDA, a provision which was contained in the 2014 
Farm Bill. Such a position will bring unified, high-level 
representation to key trade negotiations with senior officials 
and within the Executive Branch.
    Finally, over 6 years ago, USDA proposed sweeping rule 
changes on farmer contracting. With the expiration of a 
Congressional prohibition on implementing those changes, USDA 
pressed forward in the final months of the Obama Administration 
to reattempt a fundamental change to the rules by which our 
members operate. Congress should reaffirm its opposition to 
this rulemaking, and USDA should withdraw the rule.
    Thank you for the opportunity to testify today on the 
turkey industry's key farm bill priorities, and the issues 
impacting our business. I will be happy to answer any 
questions.
    [The prepared statement of Mr. Wittenburg follows:]

   Prepared Statement of Carl Wittenburg, Chairman, National Turkey 
                       Federation, Alexandria, MN
    Good afternoon, Chairman Rouzer, Ranking Member Costa, and Members 
of the Subcommittee. My name is Carl Wittenburg, and I am the current 
Chairman of the National Turkey Federation, as well as President of 
Protein Alliance in Alexandria, Minnesota. My wife Sharlene and I raise 
100,000 turkeys annually for Northern Pride on our family farm in 
Wyndmere, North Dakota. Protein Alliance is the exclusive sales 
representative for Northern Pride, a 27 farmer-owned cooperative that 
processes 3 million turkeys annually in Thief River Falls, MN, located 
in Congressman Peterson's district. I appreciate the opportunity to 
testify before you today on the turkey industry's priorities for the 
upcoming farm bill. The turkey industry raises approximately 238 
million turkeys annually, and provides employment to over 63,000 people 
nationwide, directly associated with breeding, hatching, raising and 
processing turkeys. 2017 turkey production is forecast at 6.4 billion 
pounds, up 7.3% from 2016. Those of us in the turkey business continue 
to be challenged with a multitude of issues, and we look forward to 
working with this Committee to address some of our concerns through the 
2018 Farm Bill.
Animal Disease and Disaster Prevention Program
    Since 2015, the turkey industry has made significant strides in 
recovering from Highly Pathogenic Avian Influenza (HPAI), after 
suffering through the worst animal disease outbreak in U.S. history. 
The losses from HPAI were personal and weighed heavily upon farmers, 
rural communities, and companies from the West coast to the Midwest. As 
an industry, we learned many lessons from the outbreak, and the way we 
quickly contained a similar case of HPAI in Indiana last year indicates 
the industry is applying those lessons to reduce the chances of a 
future outbreak. However, the road ahead remains long and as an 
industry we will need continued support from Congress to assist USDA/
Animal Plant Health Inspection Service (APHIS) to reduce the long-term 
impacts. HPAI is not going away overnight; it is a global problem and 
the time is now to start an international discussion on limiting trade 
impacts when using vaccination as an eradication strategy for HPAI. 
While we fully understand and respect the implications of the U.S. 
using this tool without first getting agreement from our trading 
partners, we cannot shy away from this timely discussion. In the past 
year alone, we have seen large poultry producing countries in Europe, 
Asia, Africa, North and South America all have to deal with devastating 
bouts of the disease. The global spread of HPAI illustrates that no 
country is immune and the U.S. must be a leader to begin this difficult 
discussion--there is technology that can ensure that we safeguard our 
exports to trade partners. Additionally, we are reminded by the recent 
HPAI outbreak in Tennessee that this disease is still very much a 
danger and can strike at any time. This is why; NTF is still concerned 
with the ill-advised Organic Rule's outdoor access requirements as it 
simply mandates more un-necessary risk of contact with other animals 
carrying the disease that could have far reaching impacts. We just do 
not need to take this risk.
    As the Committee embarks on the reauthorization of the farm bill, 
NTF is asking for the addition of a forward-looking, mandatory Animal 
Pest and Disease Prevention Program and Foot and Mouth Vaccine Bank 
designed to limit the impacts of foreign diseases on American livestock 
and poultry producers. As partners in the Animal Ag Coalition, which 
represents all facets of animal ag production, we hope to build upon 
the concept that ``an ounce of prevention is worth a pound of cure'' 
mantra and focus Federal dollars on targeted efforts that reduces 
foreign diseases ability to gain a foothold here in the first place.
    Animal agriculture is a major economic driver for our nation and 
this program will have a huge impact on protecting the industry from 
foreign diseases. According to the Farm Income Atlas administered by 
USDA's Economic Research Service, total cash receipts for animals and 
animal products was over $212.2 billion in 2014. This represents over 
fifty percent of all farm cash receipts. In addition, a recent study 
commissioned by the United Soybean Board found that the total economic 
impact of the livestock and poultry industry in the United States was 
$440.7 billion in 2014. In order to protect our investment in the vital 
sector of the economy, we will be asking Congress to support our 
request for this new program.
    In recent years, disease outbreaks have cost billions in production 
losses and response costs. According to APHIS, the 2015 avian influenza 
outbreak cost taxpayers $1 billion in response, clean up, and indemnity 
costs. That doesn't include lost export markets, temporary shortages, 
or price increases for certain poultry products.
    There are four key areas of focus of our proposal: First, the 
Animal Pest and Disease Disaster Prevention Program, administered by 
APHIS, would build upon the 2014 Farm Bill's authorization of the 
National Animal Health Laboratory Network (NAHLN) that provide crucial 
resources to prepare, prevent, and respond before and during times of 
crisis. This support will bring together the Federal Government, 
states, industry, universities, as well as other interested groups to 
reduce the impact of high-consequence animal diseases, provide rapid 
detection and response capabilities, develop disease prevention and 
mitigation technologies including vaccines, prevent the entrance and 
spread of foreign animal diseases into the United States, and identify 
and support critical research needs.
    Second, it would establish a long-needed Foot-and-Mouth Vaccine 
Bank strategy. Third, it would provide for the development of a block 
grant system that allows states and other key players to strategically 
target areas of concern. Finally, it is envisioned that this program 
would be structured to take full advantage, through support and 
collaboration, of the science generated by the National Institute of 
Food and Agriculture (NIFA) program. Federal investments using 
mandatory funding mechanisms available through the farm bill would play 
a critical role in building capacity to meet evolving needs in animal 
disease prevention.
Trade
    International trade is critically important to the economic 
vitality of the U.S. agriculture and food industry, and is a major 
engine of U.S. economic growth. I should start by restating our support 
for the North American Free Trade Agreement (NAFTA). Mexico accounts 
for more than \1/2\ of all turkey exports, and almost 10 percent of all 
turkey produced in the United States is shipped to Mexico. Ironically, 
the agreement as originally written was not overly favorable to the 
industry, but it created a framework by which we were able to negotiate 
additional shipments to Mexico prior to the agreement's ultimate 
removal of all tariff and quota barriers. As an industry that relies on 
healthy and productive trade relationships, we in the turkey business 
would be severely impacted if access to this market were in any way 
damaged. The turkey industry is the fourth-largest protein supplier in 
the United States which plays a critical role in the rural communities 
and states that rely on a thriving and growing industry and this 
agreement supports those people directly.
    NTF recognizes the need to keep American industry competitive, add 
jobs, and grow the U.S. economy, but we should do this while keeping in 
mind areas where we have excelled. Meat and poultry processing is an 
example of this agreement's success. We look forward to working with 
Congress and the new Administration in preserving and expanding upon 
the gains our sector has achieved within the North American market 
while strengthening our competitiveness around the globe.
    To that end, the turkey industry continues to support the 
establishment of an Under Secretary for Trade and Foreign Agriculture 
Affairs at USDA, a provision contained in the 2014 Farm Bill. Such a 
position will bring unified high level representation to key trade 
negotiations by senior officials within the Executive Branch. It will 
also allow the Administration to recruit an Under Secretary who has 
extensive experience in international trade negotiation and policy 
issues. We believe it is vitally important for U.S. agriculture to 
fully capitalize on the long-term, increased global demand of U.S. farm 
and food products in an increasingly competitive world marketplace.
USDA's Grain Inspection, Packers and Stockyards Administration (GIPSA)
    Finally, over Six years ago, USDA proposed sweeping rules changes 
on farmer contracting. With the expiration of a Congressional 
prohibition on implementing those changes, USDA, under the Obama 
Administration, pressed forward in the final months of office to once 
again threaten a fundamental change to the rules by which our members 
operate and will create a greater legal and regulatory risk. We 
continue to believe that the changes would increase costs, reduce 
productivity, and possibly lead to increased live production ownership 
by integrated poultry companies, to the detriment of independent 
farmers. Congress should reaffirm its opposition to this rulemaking and 
USDA should withdraw the rule.
    Thank you for the opportunity to testify today on the turkey 
industry's key farm bill priorities and the issues impacting our 
business. I will be happy to answer any questions.

    The Chairman. Thank you, Mr. Wittenburg.
    Mr. Buchholz.

           STATEMENT OF BOB BUCHHOLZ, REPRESENTATIVE,
          EXECUTIVE BOARD FOR REGION V, AMERICAN SHEEP
               INDUSTRY ASSOCIATION, ELDORADO, TX

    Mr. Buchholz. Chairman Rouzer, Ranking Member Costa, and 
Members of the Livestock Subcommittee, thank you for the 
opportunity to speak with you today.
    I am Bob Buchholz, a third-generation sheep and meat goat 
producer from central Texas, a Member of the Board of Directors 
of the American Sheep Industry Association, past President of 
the Texas Sheep and Goat Raisers' Association. I am here today 
representing the nation's 88,000 sheep producers.
    My testimony today will focus on ASI's farm bill 
priorities. My written testimony will offer a deeper view of 
the general state of the sheep industry and challenges outside 
the scope of the farm bill.
    American sheep producers support rural communities, the tax 
base, local businesses, providing both lamb and wool. From the 
farm and ranch to the retail level, the sheep industry has a 
total annual economic impact of $2.7 billion, and supports 
nearly 98,000 sheep industry-related jobs.
    First, I would like to talk about the fires in Oklahoma, 
Texas, Kansas, and New Mexico, which have burned almost 1\1/2\ 
million acres, and forced many farmers and ranchers to move or 
sell their livestock. I understand the devastation and droughts 
and wildfires have caused to the livestock producers. During 
the drought in 2011, I was also a victim of wildfires. My ranch 
was part of a 252,000 acre fire that burned part of Crockett 
and Val Verde Counties. Fences and improvements were burned to 
the ground. Without disaster programs that helped me and my 
fellow livestock producers, I would not be ranching today. The 
Emergency and Conservation Program and Wildfire Mitigation 
Program, funded in part by the USDA EQIP Program, helped in 
rebuilding miles of burned-out fences for the producers in my 
area. I did not lose livestock from this fire, but many 
producers in the recent fire did lose some or all of their 
animals. The Livestock Indemnity Program will help producers 
recover part of the value of those lost livestock. The value of 
these programs to the producers devastated by natural disaster 
is a financial savior, and will allow many of them to continue 
ranching. I personally thank all the people involved in 
creating and implementing the FSA and NRCS programs that saved 
me and my fellow operators during our trying times.
    It is also important that in this farm bill we consider 
protection from another sort of farm disaster, and that threat 
posed by the introduction of foot-and-mouth disease, either 
inadvertently or intentionally. While we must do everything we 
can to eliminate the risk of reintroduction of foot-and-mouth, 
we must also be prepared in the event of an outbreak. It is 
critical that the U.S. producers have immediate access to a 
viable vaccine bank. We join with other livestock industries to 
support the creation and maintenance of a foot-and-mouth 
disease vaccine bank, and continued research to protect the 
U.S. livestock industry from a foot-and-mouth outbreak.
    We support risk management for sheep producers, and pledge 
our assistance and strong support for the Wool Marketing 
Assistance Loan Program at an adequate level. The current 
program is operating on a loan rate that was established in 
2002, but has not kept pace with markets and production 
expenses of the 15 years since. In recent years, actual outlays 
on this program have been nonexistent, meaning that it has 
provided very little risk management. It is time to re-evaluate 
the loan rate and guarantees for this program. ASI looks 
forward to continuing conversations with the Subcommittee to 
ensure these programs provide producers effective risk 
management. We support programs that provide benefits beyond 
the ranch gate, and the farm bill as well. ASI is a cooperator 
with USDA for rural exports, and can speak firsthand to the 
value of the Market Access Program, the Foreign Market 
Development Program, and Quality Sample Program, and support 
their reauthorization in this farm bill. The sheep industry 
benefits greatly from funding provided to the National Sheep 
Industry Improvement Center through the Sheep Production and 
Market Grant Program. Established in the 2008 Farm Bill, the 
NSIIC is instrumental in providing funding that aids in the 
marketing of both lamb and wool. For example, the NSIIC 
provides for the development of the LRP Lamb Insurance Product, 
which is the only risk management tool available to the lamb 
producers, as neither lamb nor wool are traded in the 
commodities futures market.
    In summary, the nation's sheep producers are eager for the 
upcoming farm bill discussions. Thank you for your past support 
of the livestock industry, and for allowing me to visit with 
you about our priorities.
    [The prepared statement of Mr. Buchholz follows:]

Prepared Statement of Bob Buchholz, Representative, Executive Board for 
      Region V, American Sheep Industry Association, Eldorado, TX
2018 Farm Bill_State of the Sheep Industry
Introduction
    Chairman Rouzer, Ranking Member Costa, and Members of the 
Subcommittee, thank you for the opportunity to speak with you today. I 
am Bob Buchholz, a third-generation sheep and meat goat rancher from 
central Texas, a Member of the Board of Directors of the American Sheep 
Industry Association (ASI), and past President of the Texas Sheep and 
Goat Raisers' Association. I am here today to represent the nation's 
88,000 sheep producers. America's sheep producers continue a strong 
tradition of supporting wildlife habitat, natural resources, and open 
space across the country--all enabled by careful resource management 
while grazing our flocks on private and Federal lands. Our members 
support rural communities, the tax base, and local businesses providing 
safe domestic lamb and wool. In fact, the economic impact of sheep and 
wool production on our nation's economy is immense. From on the farm 
and ranch to the retail level, the sheep industry has a total retail 
impact of $2.7 billion and supports nearly 98,000 sheep-industry 
related jobs.
    My operation runs across several counties in central and 
southwestern Texas. Our operation was hit hard with the drought 
starting in 2011 and a devastating wild fire that forced us to severely 
cut back our livestock numbers. We are still working to rebuild our 
flocks and recover, six years later. Like others testifying today, a 
strong farm program, including disaster assistance, is critically 
important to our nation's sheep producers.
Ongoing Challenges and Concerns
Bighorn Sheep in Domestic Sheep Grazing Allotments
    Nationally, about \1/2\ of all domestic sheep spend time grazing on 
Federal lands, including rangelands managed by the U.S. Forest Service 
(USFS). Over the years, the USFS has been systematically removing 
domestic sheep ranchers from Federal lands in the name of bighorn sheep 
management, despite the fact that there are reasonable, science-based 
solutions to accommodate domestic sheep grazing while protecting the 
health of bighorn sheep populations. In mid-2016, the USFS announced 
that it may close some allotments in the Ashley National Forest and the 
Uintah-Wasatch-Cache National Forest in Summit County, Utah due to 
bighorn sheep concerns. This is being done without any offer of 
alternative allotments. In total, three allotments will be closed and a 
fourth allotment will be reduced. The ranchers on these allotments have 
letters from the USFS detailing that when they introduced bighorn sheep 
to the area, there would not be an impact to the domestic sheep 
population. There are many examples of these egregious actions.
Mandatory Price Reporting
    In September 2015, the President signed into law the Agriculture 
Reauthorization Act of 2015 which included an extension of the 
Livestock Mandatory Reporting Act of 1999 (MPR). Unfortunately for 
sheep, this reauthorization has not lived up to our expectations when 
it was passed. Of particular concern is the implementation of current 
confidentiality rules followed by the U.S. Department of Agriculture 
(USDA) and its chilling effect on price reporting. Further complicating 
the issue, is the effect on insurance products available to the sheep 
industry which rely on the USDA price reporting. ASI has reached out 
numerous times to USDA and is in ongoing discussions with USDA to 
resolve this issue. Although MPR has not been a farm bill issue in the 
past, if progress cannot be made administratively on the 
confidentiality guidelines, ASI will support including language in the 
farm bill to address this issue legislatively.
FDA Minor Use Animal Drug Program
    It is also critical that producers have continued access to key 
technologies. We strongly support the Food and Drug Administration 
(FDA) Minor Use Animal Drug Program and its historic collaboration with 
USDA's National Institute of Food and Agriculture (NIFA). The targeted 
use of biologics and pharmaceuticals within a veterinary-client-patient 
relationship is key to our ability to maintain flock health and provide 
a safe wholesome product. We urge the creation of a mechanism for NIFA 
funding for minor use animal drug research through the National 
Research Support Project No. 7 (NRSP-7); NRSP-7 has an established 
record with Land-grant universities and has demonstrated excellent 
results for minor use drug research for nearly 40 years.
Wildlife Services Funding
    Coyotes, mountain lions, wolves, and bears kill tens of thousands 
of lambs and calves each year. Livestock losses attributed to these 
predators cost ranchers and producers more than $137 million annually, 
according to surveys by the USDA National Agricultural Statistics 
Service (NASS). For years, ASI has led the aggressive defense of 
livestock protection by bringing together a diverse coalition of 
supporters in the areas of aquaculture, aviation, forestry, livestock 
production, range/forage management, and state departments of 
agriculture to ensure the programs' survival. Earlier this month, ASI 
led a coalition of 206 organizations to sign a letter supporting 
Wildlife Services funding.\1\
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    \1\2017 Wildlife Services Letter: http://www.sheepusa.org/
IssuesPrograms_GovernmentPro
grams_WildlifeServices.
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    Every dollar spent on predation management returns $3 in livestock 
value saved. This has a tremendous impact on sheep and cattle producers 
and the rural economies they support. Predator management also supports 
abundant wildlife, hunting, and recreation activities on private and 
Federal land. We ask Congress to ensure USDA Wildlife Services is fully 
funded and has the resources needed to carry out their livestock 
protection efforts.
H2-A Temporary Agricultural Workers
    The American sheep industry has a decades long history of a 
reliable, consistent, and legal workforce. Sheep ranchers depend on the 
H-2A sheepherder program to help care for more than \1/3\ of the ewes 
and lambs in the United States. To meet those needs, the industry has 
largely participated in temporary visa programs (in various forms) 
since the 1950s. As a result, sheep producers employ a legal labor 
force with an estimated eight American jobs created/supported by each 
foreign worker employed.
    Increased regulation with ambiguous policies and enforcement have 
made the H-2A sheepherder program very costly for employers. In the 
2015 re-write of the sheepherder provisions, our program now 
constitutes over half of all pages of regulations governing the entire 
H-2A program, even though we are only a small percent of total H-2A 
employees in the United States. A workable temporary foreign labor 
program is essential for the sheep industry and our nation's ability to 
produce a secure food supply.
Emergency Conservation Program (ECP)
    The Emergency Conservation Program (ECP), administered by the USDA 
Farm Service Agency (FSA), provides emergency funding and technical 
assistance to farmers and ranchers to rehabilitate farmland damaged by 
natural disasters. As determined by FSA county committees, ECP 
participants may receive cost-share assistance of up to 75 percent of 
the cost to implement approved emergency conservation practices, such 
as rebuilding fences.
    The recent fires in Oklahoma, Texas, Kansas, and New Mexico have 
burned more than 2,300\2\ miles in the four states, and forced many 
farmers and ranchers to move their livestock. The fires have also 
devastated critical infrastructure, including fencing, on farms and 
ranches in our states. The ECP provides critical financial resources to 
affected farmers and ranchers to rebuild fences. ASI strongly supports 
the expedited implementation of the Emergency Conservation program in 
affected states.
    The Livestock Forage and Livestock Indemnity Programs are utilized 
in some regions by sheep producers each year and are very important to 
these operations in periods of extreme drought or devastating storms.
U.S. Sheep Experiment Station (USSES)
    The domestic sheep industry relies heavily on the work of the U.S. 
Sheep Experiment Station (USSES) and the Animal Disease Research Unit 
(ADRU). Both facilities work collaboratively and are critical 
components of the USDA's Agriculture Research Service. As our nation's 
only experiment station primarily dedicated to sheep production, the 
work carried out by these researchers and faculty are critical to our 
ability to remain productive and push back against flawed science on 
the range and in the area of animal health. In the past, administrative 
action has worked to limit the scope of these facilities. Such action 
not only threatens the viability of this resource for producers, but 
also threatens the USSES' unparalleled historic sage grouse data. We 
support the merger of the USSES and ADRU and encourage growth in their 
roles in food-animal science, rangeland systems, and animal health 
programs. These stations have a dedicated history of careful use of 
taxpayer funds to solve issues and challenges for our producers and 
counter flawed science from those wishing to remove livestock and 
multiple uses from our nation's public lands.
Scrapie Eradication
    Working collaboratively with the USDA APHIS and state partners, the 
American Sheep Industry has nearly eliminated scrapie from the United 
States. Official identification, surveillance, and traceability of both 
sheep and goats are critical to continuing and maintaining these 
efforts in order to preserve and enhance current and future export 
markets. Continued and increased funding of the National Scrapie 
Eradication Program should be a part of the next farm bill.
2018 Farm Bill Priorities
    ASI strongly supports the reauthorization of the Agricultural Act 
of 2014 (2014 Farm Bill). The first and most important national 
security concern is the ability of a country to clothe and feed its 
citizens. Given the small investment made in agriculture by the farm 
bill when compared to the Federal budget and the safe, affordable, and 
abundant food supply enjoyed by the U.S. illustrates the wise 
investment farm bills provide. Of particular note and support by ASI 
are the following:
National Sheep Industry Improvement Center (NSIIC) and the Sheep 
        Production and Marketing Grant Program (SPMGP)
    The National Sheep Industry Improvement Center (NSIIC) was 
originally established in the 2008 Farm Bill. The nine-member board 
reviews grant proposals, recommends funding, and submit final 
recommendations to AMS for approval. The purposes of these grants are 
to--

  (1)  promote strategic development activities and collaborative 
            efforts by private and state entities to maximize the 
            impact of Federal assistance to strengthen and enhance 
            production and marketing of sheep or goat products in the 
            United States;

  (2)  optimize the use of available human capital and resources within 
            the sheep or goat industries;

  (3)  provide assistance to meet the needs of the sheep or goat 
            industry for infrastructure development, business 
            development, production, resource development, and market 
            and environmental research;

  (4)  advance activities that empower and build the capacity of the 
            United States sheep or goat industry to design unique 
            responses to the special needs of the sheep or goat 
            industries on both a regional and national basis; and

  (5)  adopt flexible and innovative approaches to solving the long-
            term needs of the United States sheep or goat industry.

    NSIIC is intimately connected to the Sheep Production and Marketing 
Grant Program (section 209 of the AMA of 1946). The Sheep Production 
and Marketing Grant Program (SPMGP) was authorized in the 2014 Farm 
Bill and provided $1.5 M for Fiscal Year 2014 (to remain available 
until expended) of CCC funding to AMS for the SPMGP. The SPMG provided 
funds on a competitive basis to national organizations whose mission is 
to strengthen and enhance the production and marketing of sheep and 
sheep products in the United States including the improvement of 
infrastructure business, resource development, and the development of 
innovative approaches to solve long-term needs. Only national 
organizations with similar missions were eligible to apply. The NSIIC 
was awarded funding by the SPMG which has allowed it to identify and 
fund industry improvements.
    NSIIC is considered instrumental in the development of the LRP Lamb 
Insurance product and the wool superwash capability in the United 
States. Superwash or shrink proofing of American wool which is critical 
for washable wool socks was not available in the United States until 
2011 when NSIIC funds significantly contributed to the presence of 
equipment stateside. LRP lamb insurance is the only risk management 
tool for lamb producers as neither lamb nor wool are traded in the 
commodity futures market.
    ASI strongly supports providing mandatory funding for the SPMGP.
Wool Marketing Assistance Loan and Loan Deficiency Payment Program
    The 2014 Farm Bill authorizes nonrecourse marketing assistance 
loans (MALs) and loan deficiency payments (LDPs) for wool to eligible 
producers who produce and shear wool for the 2014 through 2018 crop 
years. The LDP program is available to eligible producers of nongraded 
and graded wool.
    The national loan rate for graded wool is $1.15/pound. Nongraded 
wool is $0.40 per pound. When the 2014 Farm Bill was enacted, CBO 
estimated that the cost of the MAL/LDP was $4 million for wool 
annually. Recent actual outlays have been nonexistent. With the recent 
low levels of producer income, ASI supports a re-examination of the 
wool loan rate and supports an adjustment to a more appropriate level. 
ASI looks forward to continuing conversations with this Subcommittee to 
ensure these programs provide producers the safety net needed.
Foot-and-Mouth Disease (FMD) Vaccine Bank
    An outbreak of a foreign animal disease has the ability to cripple 
the entire agricultural sector and would have long-lasting 
ramifications for the economic viability of the livestock industry. It 
is critical that USDA Animal and Plant Health Inspection Service 
(APHIS) work collaboratively with state animal health officials to be 
able to rapidly respond to any such outbreak. Of particular concern is 
the threat posed by the reintroduction of FMD, either inadvertently or 
intentionally. While we must do everything we can to eliminate the risk 
of reintroduction of FMD, we must also be prepared in the event of an 
outbreak. It is critical that U.S. producers have immediate access to a 
viable vaccine bank. We join with others in the livestock industry in 
supporting the creation and maintenance of an FMD vaccine bank and 
continued research. We also urge Congress to provide the authority and 
$150 million a year in mandatory funding for USDA APHIS to protect the 
U.S. livestock industry from an FMD outbreak.
Trade
    Continued strength in the international marketing of lamb and wool 
requires a commitment to the promotion and export of U.S. wool to 
export markets through strong USDA Foreign Agricultural Service (FAS) 
Program funding.
    ASI is the cooperator with the FAS for wool and finds success every 
year in securing customers with the Market Access Program, the Foreign 
Market Development Program, and the Quality Samples Program. In 2001, 
ASI relaunched an export program for wool and significant improved the 
competition of American wool. We now export 50 percent of American 
wool, on average, and have at least doubled the number of U.S. firms 
that offer wool to overseas markets
Conclusion
    In summary, the nation's sheep producers are eager for the upcoming 
farm bill discussions. Thank you for your past support of the livestock 
industry and for allowing me to visit with you about our priorities.
            Sincerely,
            
            
Bob Buchholz,
American Sheep Industry Association.

    The Chairman. Thank you very much.
    Mr. Herring.

STATEMENT OF DAVID D. HERRING, VICE PRESIDENT AND BOARD MEMBER, 
NATIONAL PORK PRODUCERS COUNCIL; VICE PRESIDENT, TDM FARMS/HOG 
                  SLAT, INC., NEWTON GROVE, NC

    Mr. Herring. Good afternoon, Chairman Rouzer, Ranking 
Member Costa, and Members of the Subcommittee.
    I am David Herring, a hog farmer from North Carolina, Vice 
President of the National Pork Producers Council, and Vice 
President of Hog Slat, Incorporated, which supplies equipment 
to pork operations globally.
    Like all pork producers, in the next farm bill I would like 
to see provisions that help strengthen my industry's 
competitiveness, and I would hope it doesn't contain provisions 
that would restrict my ability to raise and sell animals or to 
compete in the global marketplace.
    The U.S. pork industry's top priority for the next farm 
bill is establishing a foot-and-mouth disease vaccine bank. If 
this country ever had an FMD outbreak, it not only could 
devastate my farm and the whole livestock industry, but the 
entire U.S. economy.
    An Iowa State University study estimated that an outbreak, 
which would immediately shut off our meat exports, would cost 
the U.S. pork, beef, corn, and soybean sectors $200 billion 
over 10 years. We need the capacity to produce enough FMD 
vaccine to quickly control, then eradicate the disease, and we 
need the funds to make that happen. Specifically, we want the 
farm bill to direct the USDA to contract for an offshore 
vendor-maintained vaccine bank that would have antigen 
concentrate to protect against the 23 most common FMD strains 
currently circulating in the world; a vendor-managed inventory 
of 10 million doses, which is the estimated need for the first 
2 weeks of an outbreak; and an international vaccine 
manufacturer with the capacity to produce at least 40 million 
doses. This does not exist currently.
    An important element of combating FMD or any foreign animal 
disease is the ability to monitor and detect disease. That is 
why we need mandatory increased funding for the National Animal 
Health Laboratory Network.
    While an FMD vaccine bank would protect the U.S. pork 
industry from a future FMD outbreak, a current issue are 
efforts to regulate the buying, selling, and raising of 
animals. Chief among those efforts, which was pushed by the 
last Administration, is the Farmer Fair Practice Rules, 
specifically, an interim final rule that is set to take effect 
in about a month. We also have issues with the pending Organic 
Livestock and Poultry Practice Rules. The Farmer Fair 
Practice's interim final rule would make it easier to sue and 
win Packers and Stockyards Act cases which carry triple 
damages. Livestock industry experts have said this will lead to 
an increase in lawsuits and an increase in legal risks for the 
meat industry which, no doubt, will take steps to reduce that 
risk. That likely would mean consolidation of the livestock 
industry, which would reduce, not increase, competition.
    Actually, the market is working today. We see it working 
now in our industry. Five new producer-owned packing plants 
will be coming online over the next 2 years, and no doubt, 
those plants will be looking for hogs, meaning producers like 
me should be getting some good prices for our animals.
    Another important issue for pork producers is trade. While 
farm bills don't address this subject directly, Members of this 
Subcommittee no doubt know the importance of trade to all of 
U.S. agriculture. Most of the U.S. pork industry's export to 
other countries with which the United States has a free trade 
agreement. In fact, we export more pork to our 20 FTA partner 
countries than to the rest of the world combined. Last year, we 
exported almost $6 billion of U.S. pork. That was 26 percent of 
our total production, and added more than $50 to the price 
producers received for each hog marketed. All of that should be 
kept in mind as Congress and the Trump Administration consider 
any modernized trade agreement with Mexico and Canada.
    U.S. pork producers cannot afford any disruptions in trade 
with our number 2 and our number 4 export markets, and that 
means any new deal must maintain the zero tariff on pork trade 
among the United States, Canada, and Mexico.
    The bottom line on this farm bill, Congress should craft 
legislation that helps farmers like me remain competitive, and 
should avoid provisions that would make it difficult for us to 
compete in the global marketplace.
    Thank you for this opportunity to testify, Mr. Chairman, 
and I will be happy to answer any questions.
    [The prepared statement of Mr. Herring follows:]

   Prepared Statement of David D. Herring, Vice President and Board 
Member, National Pork Producers Council; Vice President, TDM Farms/Hog 
                      Slat, Inc., Newton Grove, NC
Introduction
    The National Pork Producers Council (NPPC) is an association of 43 
state pork producer organizations that serves as the global voice for 
the nation's pork producers. The U.S. pork industry represents a 
significant value-added activity in the agricultural economy and the 
overall U.S. economy. Nationwide, more than 60,000 pork producers 
marketed more than 118 million hogs in 2016, and those animals provided 
total cash receipts of nearly $240 billion. Overall, an estimated $23 
billion of personal income and $39 billion of gross national product 
are supported by the U.S. pork industry.
    Iowa State University economists Daniel Otto, Lee Schulz and Mark 
Imerman estimate that the U.S. pork industry is directly responsible 
for the creation of more than 37,000 full-time equivalent pork 
producing jobs and generates about 128,000 jobs in the rest of 
agriculture. It is responsible for approximately 102,000 jobs in the 
manufacturing sector, mostly in the packing industry, and 65,000 jobs 
in professional services such as veterinarians, real estate agents and 
bankers. All told, the U.S. pork industry is responsible for nearly 
550,000 mostly rural jobs in the United States.
    U.S. pork producers today provide 25 billion pounds of safe, 
wholesome and nutritious meat protein to consumers worldwide, and 
exports add significantly to the bottom line of each U.S. pork 
producer. U.S. exports of pork and pork products totaled 2.3 million 
metric tons--a record--valued at $5.94 billion in 2016. That 
represented almost 26 percent of U.S. production, and those exports 
added more than $50 to the value of each hog marketed. Exports 
supported approximately 110,000 jobs in the U.S. pork and allied 
industries.
Next Farm Bill
    Obviously, pork producers have a strong interest in the next farm 
bill. NPPC has formed a Farm Bill Policy Task Force to gather input 
from producers from around the country. The task force will hold 
several meetings to review and evaluate many of the farm bill issues 
that will affect the U.S. pork industry. NPPC is committed to working 
with Congress to help craft the 2018 Farm Bill.
    As it has requested in every farm bill on which it has weighed in, 
the U.S. pork industry asks that Congress in the next farm bill 
maintain the U.S. pork industry's competitive advantage, strengthen its 
competitiveness and defend the industry's competitiveness by supporting 
provisions that would be beneficial to agriculture and by opposing 
unwarranted and costly provisions and regulations that would negatively 
affect America's farmers and ranchers.
    There are several issues pork producers would like Congress to 
address in the next farm bill that could help U.S. pork producers.
Foot-and-Mouth Disease Vaccine Bank
    Foot-and-Mouth Disease (FMD) is one of the most economically 
devastating foreign animal diseases affecting animal agriculture. It is 
an infectious and sometimes fatal viral disease that affects cloven-
hooved animals, including pigs and cattle. It is easily spread through 
a number of ways, including through the air, contact with contaminated 
equipment and by predators. An outbreak today of the disease, which 
last was detected in the United States in 1929, likely would cripple 
the entire livestock sector. In addition to causing harm to production 
animal agriculture, the economic consequences undoubtedly would ripple 
throughout the entire rural economy, from input suppliers to packers 
and from processors to consumers.
    FMD is endemic in Africa, Asia, some South American countries and 
the Middle East. The FMD virus has seven viral serotypes and more than 
60 subtypes, with wide strain variability. Sporadic outbreaks with 
different types continue to pop up in countries around the world.
    Increased travel and trade between affected countries make the 
United States increasingly vulnerable to introduction of the disease. 
Now, the country must confront the possibility of terrorists using FMD 
as a weapon to inflict significant damage to the U.S. economy and 
affect food availability.
    In the U.S. Department of Agriculture's Foreign Animal Disease 
preparation strategy document on the phases and types of an FMD 
outbreak, Dr. James Roth, professor and researcher at Iowa State 
University, identified four phases of the disease: (1) confirmation of 
an outbreak (typically three days); (2) surveillance and 
epidemiological work necessary to provide timely evidence of the extent 
of an outbreak to support decision making by government officials; (3) 
recovery from the disease; and (4) freedom from the disease (possibly 
with vaccination).
    He categorized FMD outbreaks as having six types: Small Focal, 
Moderate Regional, Large Regional, Widespread or National, Catastrophic 
U.S. and Catastrophic North American, which includes Canada and Mexico.
    Given the structure of the U.S. livestock industry, the likelihood 
of having a Small Focal or Moderate Regional outbreak is remote. The 
livestock industry estimates there are approximately 1 million pigs and 
400,000 cattle moved daily in the United States, some over long 
distances. In addition, there are numerous auctions, fairs and exhibits 
that concentrate large numbers of animals in a single location, 
providing the opportunity for one infected or exposed animal to spread 
the disease to many animals. Thus, it seems unlikely that, if the 
United States had an outbreak, it would be on the smaller end of Roth's 
scale.
    The World Organisation for Animal Health (OIE) sets standards for 
managing and determining a country's disease status. Those standards 
range from ``stamping out'' (killing all infected and exposed animals) 
to being free of FMD, or ``free with vaccination.''
    After watching countries such as the United Kingdom, Korea and 
Japan, whose livestock populations pale in comparison to the United 
States, struggle to manage FMD outbreaks by killing large numbers of 
animals, USDA's Animal and Plant Health Inspection Service (APHIS) 
changed its policy on managing the disease from ``stamping out'' to 
using vaccine to limit the spread.
    This policy change was endorsed by the U.S. livestock industry as a 
cheaper and more practical alternative given the enormous size of the 
U.S. livestock herd and the movement of livestock around the country. 
The United States simply cannot ``kill'' its way out of an FMD 
outbreak.
    The problem, though, is the United States does not have enough FMD 
vaccine available nor could a sufficient quantity be obtained in time 
to implement an effective control program.
    U.S. law prohibits storing live FMD virus on the U.S. mainland, so 
foreign production companies are the only source of finished vaccines. 
The United States is the only country in the world that maintains its 
own vaccine antigen bank, which is maintained at the Plum Island Animal 
Disease Center on Plum Island, N.Y., and which has a limited number of 
antigens.
    Currently, if there were an FMD outbreak in the United States, 
antigen would be shipped to a vaccine manufacturer in either Pirbright, 
England, or Lyon, France, to be turned into finished vaccine and 
shipped back to the United States. After three weeks, the process would 
produce only 2.5 million doses of vaccine.
    Iowa State's Roth estimates that at least 10 million doses would be 
needed during the first 2 weeks of an outbreak. Currently, there is no 
surge capacity to produce additional doses of vaccine; all the vaccine 
production capacity in the world currently is in use by other 
countries.
    Additionally, it must be noted that the vaccine antigen bank serves 
as the North American Bank and thus includes Canada and Mexico.
    Over the past several years, the United States has made significant 
progress in FMD preparedness through the development of secure supply 
plans for milk, pork and beef, and APHIS continues to work with the 
livestock industry to improve its preparedness capability. Fixing the 
antigen bank capacity and improving vaccine availability must be a 
priority in future preparedness efforts.
    Establishing a more robust FMD vaccine bank will require a 
significant increase in budget outlays. (The current FMD efforts are 
funded at just $1.9 million.) But the cost pales in comparison to the 
economic cost of an FMD outbreak in the United States.
    Because North America is free of FMD, an outbreak of the disease in 
the United States would immediately shut off all exports of U.S. 
livestock, meat and dairy products, creating a precipitous drop in 
livestock markets. Since U.S. consumers have little knowledge of the 
disease, which cannot affect people, there also likely would be serious 
disruptions in the domestic market because of decreased demand for 
those products. According to one recent study, prevention of FMD is 
estimated to be worth $137 million a year to the U.S. pork industry.
    Iowa State University economist Dermot Hayes estimates the 
cumulative impact of an FMD outbreak on the beef and pork industries 
over a 10 year period would be $128.23 billion. The annual jobs impact 
of such a reduction in revenue would be 58,066 in direct employment and 
153,876 in total employment. Corn and soybean farmers over a decade 
would lose $44 billion and nearly $25 billion, respectively, making the 
impact on those four industries alone almost $200 billion.
    The history of government involvement in disasters like an FMD 
outbreak is that, once a problem occurs, unlimited resources are 
committed to getting control of the situation. In the case of FMD, 
there is a clear opportunity to invest in a robust vaccine bank that 
would limit the economic impact on producers, feed suppliers and 
consumers and reduce the government's cost for control and eradication 
of the disease.
    A recent study by Kansas State University estimated the cost to the 
U.S. Government of eradicating FMD would be $11 billion if vaccination 
is not employed. But costs could be cut significantly if vaccination is 
used, and, the study estimated--depending on the strategy--losses to 
consumers and producers could be cut by 48 percent.
    Congress should work with the Trump Administration to address the 
alarming gap in the government's preparedness for an FMD outbreak. 
Whether the disease introduction is the result of terrorism, careless 
travelers or carried on traded commodities, the calamitous result would 
be the same: devastation to the U.S. livestock industry and a 
significant hit to the U.S. economy.
    NPPC urges Congress to provide the authority and $150 million a 
year in mandatory funding for USDA APHIS to protect the U.S. livestock 
industry from an FMD outbreak. Specifically, the farm bill should 
direct APHIS to:

   Contract for an offshore, vendor-maintained vaccine antigen 
        bank that would have available antigen concentrate to protect 
        against all 23 of the most common FMD strains currently 
        circulating in the world.

   Contract for a vendor-managed inventory of 10 million 
        doses--the estimated need for the first two weeks of an 
        outbreak.

   Contract with an international manufacturer(s) for the surge 
        capacity to produce at least 40 million doses.
Disease Surveillance
    An adjunct to a robust FMD vaccine bank is a world-class disease 
surveillance system. Being able to detect and identify any disease that 
could affect the U.S. food supply is vital to the continued viability 
of the U.S. pork industry.
    The United States faces an increasing threat from the introduction 
of a foreign animal disease (FAD) into the U.S. livestock herd, but 
there is evidence that the safety net in place to prevent such an 
introduction needs to be improved.
    Late last year, the House Agriculture Committee held a hearing on 
American agriculture and national security, which highlighted the 
vulnerability of the U.S. food supply to the potential for FAD 
introduction by terrorists or by accident.
    Additionally, in October 2015, the bipartisan Blue Ribbon Study 
Panel on Biodefense, co-chaired by former Department of Homeland 
Security Secretary Tom Ridge and former Sen. Joe Lieberman, released a 
report that highlighted the need for improving the U.S. system for 
protecting the U.S. livestock herd and the nation's food supply from 
FADs.
    Disease surveillance is the foundation of disease prevention and 
preparedness. The threat of new and emerging diseases continues to 
grow, with scientists continually warning the public and animal health 
authorities about the increasing risks. In May 2013, for example, the 
first case in the United States of Porcine Endemic Diarrhea virus was 
identified on an Ohio hog farm. That disease, which USDA determined 
likely came from China, spread quickly throughout the Midwest and 
killed between 8 million to 10 million mostly young pigs over an 18 
month period.
    Other bacterial and viral diseases are lurking around the world, 
and that is the reason the U.S. pork industry has devoted significant 
resources to endemic and foreign animal diseases, funding more than 120 
research projects and spending more than $5 million for studying, 
monitoring and addressing swine diseases over the past 10 years.
    The outbreak of H1N1 influenza in 2009 demonstrated the 
interrelationship of human and animal health when combating new and 
emerging diseases. From that experience, the U.S. pork industry learned 
that a Comprehensive and Integrated Surveillance System (CISS) is 
needed to ensure the capture of data about a broader range of diseases.
    The industry has been working with USDA APHIS and the Centers for 
Disease Control and Prevention (CDC) to develop a CISS, including 
continuation and expansion of ongoing swine influenza surveillance. 
Completion of this is critical to maintaining the pork industry's known 
disease status, which, in turn, is vital to maintaining and expanding 
U.S. pork exports. The CISS is designed to provide an ``early warning 
system'' and to allow for development of response plans ahead of an 
epidemic.
    The U.S. pork industry is collaborating with APHIS to test 
implementation of a CISS and to determine how it can be connected to an 
animal traceability system. Currently, the most significant shortcoming 
is funds to build the infrastructure to accommodate a more robust 
system of surveillance.
    The ability to expand and strengthen surveillance to include other 
diseases will help increase exports. Reducing surveillance, however, 
would give other countries justification to restrict U.S. exports 
because of inadequate surveillance data.
    U.S. pork producers also support USDA's animal traceability system. 
An effective traceability system is critical to the national animal 
health infrastructure and is required for certification by the OIE. The 
ability to quickly trace diseased and exposed animals during a foreign 
animal disease outbreak would save millions of animals, lessen the 
financial burden on the industry and save the American taxpayer 
millions of dollars.
    With support from all sectors of the pork industry, approximately 
95 percent of U.S. pork producers' premises already are registered 
under the USDA livestock identification program. Premises 
identification is the key to meeting a goal of tracing an animal back 
to its farm of origin within 48 hours, which would allow animal health 
officials to more quickly identify, control and eradicate a disease; 
prevent the spread of a disease; and make certifications to trading 
partners about diseases in the United States.
    NPPC requests that Congress include in the farm bill authority for 
$30 million a year for the National Animal Health Laboratory Network, 
which conducts diagnostics on animal diseases, and $70 million a year 
for block grants to the states for disease surveillance and other 
support.
Agricultural Research
    NPPC supports expanding Federal funding for research, education and 
extension programs by improving the quantity and quality of USDA 
research through the agency's Agriculture and Food Research Initiative 
(AFRI). Basic, competitive agricultural research allows America's 
farmers to remain globally competitive in the face of a growing world 
population, improves public health and strengthens national security.
    AFRI is the USDA's premier competitive research program and makes 
peer-reviewed, competitively-awarded research grants. The grants fund 
basic and applied research, education and extension to colleges and 
universities, agricultural experiment stations and other organizations 
conducting research in priority areas that are established partially in 
every farm bill.
    The 2008 Farm Bill required AFRI to make available 60 percent of 
grant funds for basic research and 40 percent for applied research. 
Despite being authorized for $700 million in the 2008 Farm Bill and 
reauthorized in the 2014 Farm Bill, the program never has received 
anywhere near full funding in the appropriations process. In fact, 
USDA's overall research funding has decreased by 30 percent since 2009.
    While other Federal research and development budgets have grown 
over time, agricultural research funding has stagnated. This stagnation 
has occurred despite studies consistently reporting high social rates 
of return--between 20 percent and 60 percent annually. The United 
States is falling behind developing nations in its commitment to 
funding agricultural research, which has created rapid increases in the 
country's productivity. Amid growing challenges, such as the threat of 
new diseases, maintaining the position as the world leader in 
agricultural research and technology should be an overarching goal.
    NPPC supports increasing the funding for agricultural research to 
ensure that the U.S. livestock industry maintains its competitiveness 
in the global marketplace.
Production and Marketing Regulations
    NPPC works on behalf of America's pork producers to ensure that 
laws and rules don't impose unnecessary costs on the U.S. pork 
industry, restrict it from meeting consumer demands in an economical 
manner or prevent market-based solutions to issues. The structure of 
the pork production and packing sectors should be allowed to change 
with the demands of the growing global marketplace. This includes 
allowing producers and packers to adopt new technologies and pricing 
and marketing mechanisms that enable the former to reduce their risks 
and the latter to capture economies of scale.
    The U.S. pork-packing sector is the envy of the world in terms of 
efficiency and food safety, and legislation and regulation should not 
take away or hamper that source of international advantage. Allowing 
producers and packers the freedom to develop new ways of doing business 
will enhance the value of U.S. pork products at home and abroad and 
reduce costs and risks.
    The U.S. pork industry, which has developed a wide variety of 
marketing and pricing methods, including contracts, to meet the 
changing needs of a diverse marketplace, strongly opposes any provision 
that would eliminate or restrict such mechanisms. Limiting producers' 
options could force the livestock markets to revert to an inefficient 
system used more than half a century ago in which animals were traded 
in small lots and at prices determined in an open-market bid system.
    Dictating how U.S. pork producers sell and raise their animals and 
how packing companies buy livestock would severely cripple the 
competitiveness of the U.S. pork industry. Mandates--whether pushed by 
lawmakers or activists--must not stand in the way of the free market.
    Of particular and immediate concern to the U.S. pork industry is 
the Farmer Fair Practices Rules, specifically an Interim Final Rule, 
which was issued in the final weeks of the Obama Administration.
    Written by USDA's Grain Inspection, Packers and Stockyards 
Administration (GIPSA), the Interim Final Rule broadens the scope of 
the Packers and Stockyards Act (PSA) of 1921 related to the use of 
``unfair, unjustly discriminatory or deceptive practices'' and ``undue 
or unreasonable preferences or advantages.''
    USDA in 2010 proposed a number of PSA provisions--collectively 
known as the GIPSA Rule--which Congress mandated in the 2008 Farm Bill. 
But the agency was blocked by Congress through amendments to annual 
agricultural appropriations bills from implementing a provision that 
would eliminate the need to prove a competitive injury to win a PSA 
lawsuit.
    Protecting competition is the heart of the PSA. In fact, eight 
Federal appeals courts have held that harm to competition must be 
proved for an action to be a violation of the PSA. But the Interim 
Final Rule would eliminate the need to prove injury to competition, 
which would prompt an explosion in PSA lawsuits by turning nearly every 
contract dispute into a Federal case subject to triple damages.
    The inevitable costs associated with increased lawsuits and the 
legal uncertainty they would create likely would lead to further 
vertical integration of the pork industry and drive packers to own more 
of their own hogs--reducing competition for producers of all sizes, 
stifling innovation and providing no benefits to anyone other than 
trial lawyers and activist groups that will use the rule to attack the 
livestock industry.
    (An Informa Economics study found the GIPSA Rule, including the 
Interim Final Rule, now would cost the pork industry more than $420 
million annually, with most of the costs related to PSA lawsuits 
brought under the ``no competitive injury'' provision.)
    The U.S. pork industry recently endured its fair share of 
headwinds. It does not need more of them in the form of the Interim 
Final Rule of the Farmer Fair Practices Rules.
    NPPC urges Congress to work with the Trump Administration to 
rescind the Interim Final Rule and to ensure that any USDA rule to 
amend the Packers and Stockyards Act not restrict producers' ability to 
sell or packers' ability to buy animals and not limit their ability to 
use technologies and pricing and marketing mechanisms that work for 
their mutual benefit.
    Likewise, Federal mandates on production practices, including ones 
that would dictate animal housing systems, would add to producers' 
costs and weaken the U.S. pork industry's competitiveness vis-a-vis 
foreign competitors.
    Nearly 3 decades ago, the U.S. pork industry developed and 
implemented strict standards for animal care and judicious use 
guidelines for use of animal drugs. These standards and guidelines are 
part of the industry's Pork Quality Assurance Plus and Transport 
Quality Assurance programs, which require producers and handlers to be 
trained and certified in caring for and transporting animals.
    Pork producers do not support Congress including animal care and 
handling provisions in the farm bill--a piece of legislation that has 
been aimed for more than 80 years at maintaining the competitiveness of 
the U.S. agriculture and livestock sectors.
Trade and USDA Export Programs
    Expanding foreign markets for U.S. pork products increases 
producers' bottom line and contributes significantly to the U.S. 
economy, fostering job growth and increasing the U.S. gross domestic 
product.
    Pork represents 37 percent of global meat protein intake, more than 
beef and poultry, and world pork trade has grown significantly over the 
past decade or so. The extent of the increase in global pork trade in 
the future will hinge heavily on continued efforts to increase 
agricultural trade liberalization.
    For the U.S. pork industry, free trade agreements (FTAs) have 
increased exports by 1,550 percent in value and nearly 1,300 percent in 
volume since 1989--the year the United States began using bilateral and 
regional trade agreements to open foreign markets.
    The importance of FTAs to U.S. pork producers is underscored by one 
fact: The U.S. pork industry now export more pork to the 20 countries 
with which the United States has FTAs than to the rest of the world 
combined.
    Last year, the U.S. pork industry exported nearly $6 billion of 
product, which represented 26 percent of total production and supported 
more than 50,000 jobs. It is estimated that the price U.S. pork 
producers received on each hog marketed was $50.20 higher last year 
than it would have been in the absence of exports.
    It is important to strengthen the ability of U.S. agriculture to 
compete in the global marketplace. But the downside of growing exports 
is, of course, the larger economic impact on producers and the U.S. 
economy should there be any disruption in trade. Pork producers 
understand this dynamic and recognize that it would be devastating for 
the U.S. pork sector.
    And while interruption in any one market would be troublesome, it 
would be catastrophic if there were a disruption in trade with Mexico 
and/or Canada, the U.S. pork industry's No. 1 and No. 4 markets by 
volume, respectively and No. 2 and No. 4 by value. This should be kept 
in mind when considering ``modernization'' of the North American Free 
Trade Agreement (NAFTA).
    NPPC strongly urges the Trump Administration and Congress to 
maintain NAFTA's zero tariff on pork trade among the United States, 
Canada and Mexico.
    While the best way to increase U.S. pork exports is through FTAs 
that eliminate all tariff and non-tariff barriers on pork, programs run 
by USDA's Foreign Agricultural Service and authorized under the farm 
bill also are important to U.S. agricultural exports.
    The Market Access Program (MAP) uses funds from the Commodity 
Credit Corporation to help producers, exporters, private companies and 
other trade organizations finance promotional activities for 
agricultural products of the United States. The Foreign Market 
Development Program, also known as the Cooperator Program, helps 
create, expand and maintain long-term export markets for U.S. 
agricultural products.
    NPPC supports funding levels that will sustain those important 
programs.
Environment
    Protecting the environment is a top priority of the U.S. pork 
industry. Pork producers are committed to running productive pork 
operations while protecting the environment and meeting or exceeding 
environmental standards. Pork producers have fought hard for science-
based, affordable and effective regulatory policies that meet the goals 
of today's environmental standards. To meet strict environmental 
criteria while maintaining production, they support the Federal 
Government providing through conservation programs within the farm bill 
cost-share support to help defray some of the costs of compliance.
    For many farmers, USDA conservation financial assistance funds 
through the Environmental Quality Incentives Program (EQIP), the 
Conservation Stewardship Program (CSP) and the Conservation Reserve 
Program (CRP) are integral to making investments in environmental 
protection practices and technologies possible. Certainly, there will 
be advances made by many farmers without Federal funding assistance, 
but conservation financial assistance is critical for many, and it will 
help build a foundation of practices that can sustain conservation 
improvements for the long term.
    Under the EQIP program, however, pork producers have not received 
enough support to meet all the challenges they face related to 
conservation and the environment. Producers who use EQIP would like to 
see the scope of projects covered by the program widened.
    NPPC wants in the next farm bill funding maintained for EQIP and 
the other critical working lands conservation programs, and on CRP, it 
supports the current limit on acreage that may be enrolled in the 
program.
Conclusion
    The U.S. pork industry is the lowest-cost producer and No. 1 
exporter of pork in the world, and U.S. pork producers continue to 
produce the most abundant, safest, most nutritious pork in the world. 
Pork producers have proved very resilient over the past years, 
weathering financial crises and diseases as well as the vagaries of a 
supposedly free-market economy pushed and pulled in various directions 
by government intervention and regulation. All the while, they have 
invested in and adopted new technologies that have promoted animal 
health, protected the environment and added thousands of jobs and 
billions in national income to the American economy.
    For America's pork producers to continue as leaders in the 
international and domestic economies, for them to take advantage of the 
opportunities and meet the challenges presented to them, Congress and 
the Administration, through the next farm bill, should pursue policies 
and regulations that support the U.S. pork industry rather than hinder 
its ability to continue producing safe, lean and nutritious pork and 
pork products for the global marketplace.

    The Chairman. Thank you, Mr. Herring.
    The chair would like to remind Members that they will be 
recognized for questioning in order of seniority for Members 
who were here at the start of the hearing. After that, Members 
will be recognized in order of arrival. I appreciate Members' 
understanding.
    I now recognize myself for 5 minutes.
    Mr. Wittenburg, you mentioned the need for an Animal Pest 
and Disease Disaster Prevention Program in the next farm bill. 
Can you give a brief overview of how that would be structured 
and funded, and I am particularly interested in having a better 
understanding of how that state block grant would actually be 
utilized?
    Mr. Wittenburg. The funds would come through the USDA. And 
in particular you are looking for the vaccine, is the question?
    The Chairman. Yes. You referred to the Animal Pest and 
Disease Disaster Prevention Program and a block grant to the 
states, and I am just curious what you are envisioning in terms 
of that block grant, how that block grant would be utilized, 
the particulars of that.
    Mr. Wittenburg. Yes. One idea would be to critically expand 
upon the great work done as many of the labs around the 
country, such as the NVSL Lab in Ames, Iowa, or the Southeast 
Poultry Lab in Athens, Georgia. They are understaffed and 
ultimately cannot get all the areas they need as to be 
proactive, as they might want to due to their funding 
restraints.
    When it comes to prevention techniques, interventions and 
control vectors, there is still a lot of information about how 
the disease spreads, what methods worked in lowering the 
severity of an outbreak, all legitimate questions that need 
research and the smart minds to help limit economic impacts to 
the poultry sector of our economy, which many people depend for 
their livelihoods.
    The Chairman. Mr. Herring, I want to focus in on this FMD 
vaccine bank, which I am very much in support of. The majority 
of the Subcommittee, if not all the Subcommittee, is very 
interested in this particular topic. You mention the idea of 
having a vendor-maintained offshore vaccine bank, enlighten us 
as to why we couldn't just increase capacity at Plum Island.
    Mr. Herring. Well, Mr. Chairman, currently, as most of us 
know, Plum Island is set to be closed down in the next few 
years, and the facility that is going to take its place, NBAF, 
there are no provisions for a vaccine bank in their plans 
currently. We also think it would be more economical to have an 
offshore vendor vaccine bank, would be a lot faster turnaround 
if we had an outbreak because the vendor that would produce the 
vaccine would already have the antigen available. And 
currently, the way we understand at, at Plum Island we only 
have about 10 of the 23 strains that circulate through the 
globe, and we are asking to have all 23 available.
    The Chairman. The $150 million per year, how was that 
figure settled upon?
    Mr. Herring. Well, Professor James Roth at Iowa State 
University put the numbers together, and basically it breaks 
down to provide at least 10 million doses of each of the 23 
strains circulating currently, as well as estimates for the 
needs for surge capacity in the case of an outbreak. The main 
difference we think between our estimate or Mr. Roth's estimate 
is we are saying we need 10 million doses of all 23 strains, 
instead of 10 million doses of 10 strains. As well as this 
Committee, last year we talked about agroterrorism, some of the 
most virulent strains of foot-and-mouth is possessed in some of 
these countries that don't like us very much today. But the 
overall cost, and the one thing I would like this Committee to 
hear today, the overall cost of this program is because this 
program does not exist today. When USDA made the decision that 
we would not euthanize animals in case of an outbreak, that we 
would vaccinate, and we concur with that decision, they did not 
put any appropriations or anything in place for vaccinations.
    The Chairman. I see my time is just about to expire, so let 
me transition over to Mr. Costa, if he has any questions.
    Mr. Costa. Thank you very much, Mr. Chairman.
    Mr. Uden, you said in your testimony about the importance 
of the farm bill, and clearly a Market Access Program that we 
initiated about two farm bills ago with the Foreign Market 
Development Program, could you describe what the benefits have 
been for the beef industry in those two areas?
    Mr. Uden. Yes. As we look to our future and the growth of 
our industry, we have to have access, and we have to have ways 
and means of working with these other countries to get our 
product abroad. And what they have done is the industry has 
contributed a lot of dollars towards like the U.S. Meat Export 
Federation, those MAP dollars, those matching dollars have 
bolstered that and actually given us access to a lot of foreign 
markets to where we have increased our sales abroad. It is 
vitally important that we have those funds to keep opening 
markets because that is the future.
    And as we look to the future of our business, we have to 
have export growth because there are only so many people that 
live within our borders. Ninety-six percent of all people live 
outside of our borders. And as we grow our industry and 
preserve it, and have all these young people that are entering, 
we must have access to move our product.
    Mr. Costa. Right. Mr. Uden, I work very closely with some 
of your colleagues or friends, I believe Mr. Wood and Mr. 
Harris out there in our part of the cattle country in 
California, and they worked very hard to penetrate markets in 
Asia and Japan and South Korea, and they tell me of the 
benefits of these efforts, and clearly, you underline that 
importance.
    Mr. Wittenburg, I want to add you have some very fine 
representation behind you there who come to our offices all the 
time to advise us of challenges facing the turkey industry. 
Outbreaks of various diseases, the avian flu and other things, 
have been challenging out in the West. A lot of these 
contaminations occur not so much even necessarily within your 
flocks, as I understand it, but as a result of migratory 
patterns of wildlife. Are there ways in which we can provide 
additional support for you in the farm bill?
    Mr. Wittenburg. Thank you for that question. First, it is 
important that Congress signal support for this concept as it 
could have a huge economic impact in limiting trade 
restrictions in the future. It does not hurt to begin an in-
depth conversation about how the world will operate should the 
need to use vaccines arise for High-Path AI. The fact that the 
rest of the world has High-Path AI should be a big factor in 
bringing them to the table to see if there is a more logical 
policy that we can be agreed upon.
    Mr. Costa. I appreciate that. And I want to all get some 
head-nodding among you here, because I talked about trade in my 
opening comments and all of you referenced it. Did all of your 
associations support the TPP agreement that we had been working 
on? I see head nods.
    Mr. Uden. We did.
    Mr. Costa. Yes. As I said, it was unfortunate that they met 
last week and we weren't there. Do any of you have concerns 
that I have, I know the California agricultural industry does, 
on the potential retaliatory effects by either Mexico or 
Canada? We saw that with the COOL issue last year with Canada 
and Mexico, and I am wondering whether or not--what people 
don't understand is, a trade agreement, to be effective, has to 
be fair both sides. If it is I win and you lose, then you are 
not going to be a part of the deal. Right? And we saw this 
occur back in 2010 in Mexico with a host of retaliatory tariffs 
that were put in place on table grapes and cheese and other 
products. Any of you want to share those concerns or fears? Mr. 
Uden?
    Mr. Uden. Yes, I would address that. Going back to country-
of-origin labeling, if that was to be circulated again, we 
would still have that retaliatory trade with those 2 countries. 
Canada and Mexico represent 31 percent of our exports.
    Mr. Costa. It is big.
    Mr. Uden. It is huge.
    Mr. Costa. Nebraska provides 42 percent of Mexico's----
    Mr. Uden. Right. As you commented on TPP it would have 
added $378 million automatically to Nebraska's trade in 
general.
    Mr. Costa. Yes. All right, well, we are going to need your 
continued efforts and support. Thank you, Mr. Chairman.
    The Chairman. Mr. DesJarlais.
    Mr. DesJarlais. Thank you, Mr. Chairman. I appreciate the 
witnesses for being here today.
    Mr. Uden, you mentioned in your testimony the possible 
reinstatement of mandatory country-of-origin labeling. 
Considering its failure last time around, and its negative 
impact on cattlemen, is there a real possibility of 
implementing this program again, perhaps with new criteria, and 
how would we ensure this program does not incur more regulatory 
costs and burdens on producers?
    Mr. Uden. Do not bring it back. We, as producers, are 
better equipped to market our product, and we have shown time 
and time again that adding value through a mandatory program 
that has a generic label absolutely does no benefit to the 
producer. Voluntary labels that have certain attributes for 
certain qualities of the product, going back to value-based 
marketing, has a lot more reach.
    Also the other thing when you look at the COOL legislation, 
it only addresses the retail counter. I know a lot of people 
think it has some issues when we address imports, but it has no 
bearing, usually because those would go into the food service 
sector. It is an outdated law, and I would really like to 
continue to focus on things that will benefit the industry 
versus hashing old tried ideas that do nothing for the producer 
other than add costs and confuse the consumer.
    Mr. DesJarlais. I thank you for your perspective on that.
    Mr. Wittenburg, I represent Tennessee's Fourth District, 
which encompasses Lincoln County, the location of two outbreaks 
of the Highly Pathogenic Avian Influenza this month which 
resulted in the depopulation of over 73,000 birds. I am 
concerned, we don't know a whole lot about exactly how High-
Path AI is transmitted. What steps can poultry producers take 
to protect their flocks more adequately, and are there steps 
that we can take to protect flocks from wild carriers and 
ensure that a low pathogenic virus doesn't mutate into a highly 
pathogenic case?
    Mr. Wittenburg. Yes, thank you for the question. High-path 
AI is something we are all getting educated to here 
domestically in the United States, but we must admit it has 
become a global issue, so it is spreading throughout the U.S., 
and it seems to be connected to the flyway system. I think that 
is the first and foremost is that the carriers--we live by a 
simple motto, and that is: ``If it moves it can carry.'' And so 
when you really think about that, there are a lot of moving 
parts to animal production. Biosecurity is a simple word. It is 
like quality. What does it mean? And at the end of the day, we 
have really got to get a hold on the immunity system of the 
birds and build on that, and minimize the impact of these High-
Path AI outbreaks.
    Mr. DesJarlais. Okay. We have about a minute and a half 
left. I am also concerned with how the Organic Livestock and 
Poultry Practices rule could affect organic markets. The 
outdoor access requirement for egg producers would create a 
barrier to entry for our producers, and potentially eliminate 
current suppliers from the marketplace who can't afford to 
build outdoor facilities. Do you think that organic production 
standards are beginning to favor animal welfare to an extent 
that harms our producers' ability to compete in the 
marketplace?
    Mr. Wittenburg. Yes. Again, it is, commonsense. Having 
access to outdoors, you are exposing those animals to the wild, 
and if there is a common denominator that the migratory birds 
are a potential carrier of a High-Path AI, then you should be 
careful on what the rules state for organic production and 
birds having access to the outdoors.
    Mr. DesJarlais. Thank you. And, Mr. Chairman, I yield back 
the balance of my time.
    The Chairman. The distinguished Ranking Member of the full 
Committee is here with us, and so I recognize Mr. Peterson.

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

    Mr. Peterson. Well, thank you, Mr. Chairman.
    Mr. Wittenburg, sorry I wasn't here earlier, I have been 
running around in meetings. Your testimony, you referenced the 
need to start a conversation with our trade partners regarding 
the use of vaccines and to minimize the impacts of High-Path 
AI. When we were ground zero of the problem in Minnesota. I had 
many, many of my friends and producers who were impacted by 
this. And you acknowledge that the trade impacts associated 
with the decision to look at vaccines has made it almost 
impossible. Since this is a global disease, and I am convinced 
it is being spread by ducks and geese and that was our 
experience in Minnesota, what do you think we can do to move 
the discussion forward. My guys would like to see a vaccine, 
what do you think we can do to help make that happen?
    Mr. Wittenburg. Well, I think the time is now. We had the 
initial onset in 2015 here domestically. We continue to watch 
the globe endure High-Path AI. Globally, we are at a perfect 
time to sit down and have a discussion in what vaccine 
ramification might look like for keeping poultry in a healthy 
and marketable status. I believe the time is now. To continue 
to indemnify and euthanize poultry globally is not a good long-
term approach. I would suggest it probably starts with APHIS 
and that division, and we bring the world together and use the 
WTO as a potential standard, but it is time to just have the 
discussion and bring them to the table.
    Mr. Peterson. Are there other countries that are willing to 
look at this?
    Mr. Wittenburg. I believe so. There was a time back in 2015 
when Dr. Clifford went to China and it appeared China was 
real----
    Mr. Peterson. Yes, I remember that.
    I thought he had had positive meetings over there. But we 
have people within the poultry business in the United States 
that are not in favor of this, right?
    Mr. Wittenburg. Correct. And it is the trade ramifications 
that go with it is that is the issue.
    Mr. Peterson. Yes. Well, there are people that are 
concerned about that, but it just seems to me, I think is what 
you said that this is not going to be just confined to 
Minnesota, for example, this is going to be something that is 
going to be impacted all over the world. If anybody has had to 
deal with this up-close and personal, I don't know how you 
could be against vaccinating. It is just something that makes 
sense.
    Mr. Wittenburg. Correct. It is commonsense.
    Mr. Peterson. I am going to a trade meeting now at 3 
o'clock with Wilbur Ross and the new acting trade rep, talking 
to us about what they are going to be doing with trade 
agreements, going forward, if they know. Have you had any 
discussions with any of these folks that are coming in as to 
what their position is or what their idea would be?
    Mr. Wittenburg. Yes. Yes, Congressman Peterson, I haven't 
personally. We did meet with the FAS director this morning and 
he had some comments, our staff would probably have better 
insight to that, but me personally, no.
    Mr. Peterson. Well, I hope we can figure out a way to make 
progress on this issue. And if I get a chance at the meeting, 
here in another 15 minutes, I will try to bring it up.
    Mr. Wittenburg. Yes. Please do.
    Mr. Peterson. Yes.
    Mr. Wittenburg. Thank you.
    Mr. Peterson. I yield back.
    The Chairman. Mr. Marshall.
    Mr. Marshall. Thank you, Mr. Chairman.
    My first question is for Mr. Herring. Mr. Herring, Kansas 
alone has 12 million hogs, 8 million cattle, on a given day. Do 
you feel that APHIS would have sufficient quantities of vaccine 
to deal with a situation, and kind of talk me through that 
timeline of going from the 10 million to the 40 million 
vaccinations that we would build up to perhaps.
    Mr. Herring. Well, in short, there is no current bank that 
is totally adequate, the current bank is inadequate to respond 
to an FMD outbreak, other than a very small focal outbreak. In 
today's industry, we have anywhere from a million pigs a day 
with wheels under them, and for cattle, almost \1/2\ that many 
cattle with wheels under them, and it is likely by the time we 
detected that we have an outbreak, it would be a major 
outbreak.
    So given that scenario, we need a vaccine bank with a 
minimum of 10 million doses from the get-go, from the start, 
and then we need the surge capacity that it would depend on the 
outbreak, but we think as many animals that are on the road 
within a couple of weeks, that we would be looking at 30 to 40 
million doses.
    If we back up and look at, in 2014 on what happened with 
PEDv, I would give that analogy to the old map on Bonanza, the 
way it just burned.
    Mr. Marshall. Yes.
    Mr. Herring. I mean we couldn't have spread it faster if we 
would have tried.
    Mr. Marshall. Okay. My next question is for Mr. Buchholz. 
Mr. Buchholz, like your state, my state has been devastated by 
the wildfires, 650,000 acres, what does 650,000 acres looks 
like, it is about an area of 50 by 10 miles, it is bigger than 
the size of Rhode Island. Over 5,000 head of cattle died. We 
are very grateful for the many, many people that have 
contributed hay and fence supplies. But there are some 
challenges, going forward, for these people, which I am sure 
you have experienced. One is the limit is $125,000 per person. 
That doesn't take many cattle or many miles of fence to add up 
plus that. And the other concerns as I have been out there on 
the ground dealing with the situation, is some of the fencing 
issues. The NRCS has a 15 page fencing document, and one of the 
concerns is 2\7/8\" inch pipe versus 3" pipe. I am not sure in 
Texas, but in Kansas we have been building fences for 5 
generations or 6 generations, and these men and women know how 
to build fence.
    Did you run into any problems with some of your past 
experience with wildfires and trying to help people get back on 
their feet?
    Mr. Buchholz. The payment limit is certainly an issue, 
especially when you reach that level of devastation. I haven't 
done the math, but it doesn't take much livestock now to hit 
that cap. And when you add fencing and other things, it quickly 
adds up.
    I am not sure on the NRCS recommendations on fencing and 
such as that. In our area, it depends on if you build pipe 
fencing or wood fencing, but the recommendations on spacing, on 
H-braces and such as that is fairly accepted throughout the 
agricultural community of anyone that builds fence. I don't 
know that that would be that big of an issue.
    The personnel in our counties were very timely. NRCS and 
FSA, it did not take them long to assess the total devastation 
and get on that. And there were--interesting enough, there were 
some special funds that were available. We were lucky enough 
there were several fires in Texas at that time; ours of 
252,000, another one of 400,000, still does not reach the size 
and scope of what we have experienced recently.
    I am sorry that I can't answer that more. And I was 
impressed with our personnel in our local offices, and how they 
responded and how quick we were able to start getting boots-on-
the-ground and getting things recovered. But again, the payment 
limitation is a big, big deal, especially the level of those 
fires. There are fairly large western operations and it doesn't 
take long to hit that cap. I don't know if there is some way 
that the Committee or a group of individuals could look at that 
and because in my incident, it is a very life-changing 
experience. One day we were good, the next day literally we 
were just trying to prop up the fence to hold the livestock to 
get them shipped out of there. We had trailer truck after 
trailer truck of hay coming before the embers even stopped 
falling. You are good one day and the next day you are burned 
out. You don't even have fences to hold them.
    So I am sorry I can't address that to a greater level.
    Mr. Marshall. I yield back.
    The Chairman. Mrs. Bustos.
    Mrs. Bustos. Thank you, Mr. Chairman.
    This question will be addressed to the entire panel, but I 
know it was specifically Mr. Uden and Mr. Herring who had 
pointed out the need for more dollars for research, in your 
opening comments, and I could not agree more with you.
    My question to each of you, and maybe we will start from my 
left to the right, in this proposed budget that was just 
released within the last several days by President Trump, it 
called for drastic cuts to the U.S. Department of Agriculture 
to the tune of 21 percent. That concerns me a great deal. That 
equates to almost $5 billion in cuts. This will, no doubt, have 
an impact on what we can and cannot research, going forward. 
And what I would like you to address, I mean you are the folks 
on the ground, we are Members of Congress, and you are in a 
position where you can drill down a little bit. But, I was 
wondering if you would share those concerns about cuts to that 
level, and how specifically if those cuts were to go through, 
how you would see that impacting research and the end result of 
that. Mr. Uden, do you want to start?
    Mr. Uden. Okay. I will start. Research is vitally important 
to move these industries forward. Every day we have more and 
more to deal with, more and more challenges, and without viable 
research, we can look at beef safety research and all the 
issues that we deal with as far as E. coli, Salmonella, and 
some of these, we constantly need better techniques to find 
some of our challenges, we have to find more robust research to 
deal with those challenges as an industry. And a lot of what we 
have done with those dollars in the past has furthered the 
industry along, whether it be technology or different methods 
of production, from all facets of the beef industry. It is 
vitally important that we--we have shrank those dollars over 
the last several years. We don't need to shrink those any more, 
because research is what we deal with to face our challenges 
and improve our product. Consequently, we continue to advance 
the industry. And the research that we have conducted 
throughout is why we are the global leader in livestock 
production, in my opinion.
    Mrs. Bustos. Thank you.
    Mr. Wittenburg. I concur that the research is extremely 
important to our animal livestock and poultry industry. And 
what I would suggest is, like anything, is balance your budget. 
You might have to shift dollars from one department to the 
other, but in the end it is critical with the two various 
things we are talking about here today in foot-and-mouth 
disease and High-Path AI. I would suggest we try to find the 
dollars.
    Mr. Buchholz. In the sheep industry in the last number of 
years there has not been a whole lot of money spent on research 
to begin with. We have one station in Idaho that is totally 
devoted to research, and we would hate to see that closed. Our 
research throughout the livestock industry is probably, to me, 
one of the most important places that the nation can spend 
money. Anybody would hate to give up programs that they are 
used to, but I would hate to see us as a nation cut research on 
livestock.
    Mr. Herring. Well, I am sitting in kind of an awkward 
situation today because usually when the pork industry comes to 
this meeting, we are not asking for anything, but just get out 
of our way and let us do our business. But we have a global 
challenge. By 2050 they were saying the world population is 
going to be almost--the food needs are going--we will have to 
double the food production in this country. Research plays a 
vital part for doubling the food production in the world, 
research plays a vital part of that. The pork industry has done 
some amazing things in the last 25 years. We have reduced our 
carbon footprint, we have reduced water consumption raising a 
pound of pork by 40 percent. All that has come through 
research. The ARS Division of USDA is just about the only 
entity able to do long-term, large-scale production research, 
and without Federal support it just won't happen.
    So we have to keep getting better at what we do, and 
research is a part of that. Thank you.
    Mrs. Bustos. Thank you, gentlemen.
    And I yield back the non balance of my time.
    The Chairman. Mr. Evans.
    Mr. Evans. Thank you, Mr. Chairman.
    There has been a lot of discussion about trade agreements, 
and you hear a lot of conversation and particularly about 
NAFTA. However, some say that agriculture was the big winner in 
that agreement. Can you discuss how renegotiating NAFTA would 
have an impact on your industry?
    Mr. Buchholz. I am sorry----
    Mr. Evans. The question is how would renegotiating NAFTA 
have an impact on your industry? Go down the line, each one of 
you. Give us some perspective of that.
    Mr. Buchholz. In particular----
    Mr. Evans. Yes.
    Mr. Buchholz. Well, thank you. In the past, we have had an 
unusual relationship with Mexico and our sheep imports/exports, 
exports. Mexico is an interesting individual to deal with in 
the sheep industry, as they can open permits and close permits, 
it doesn't matter whether we have NAFTA or not. One day we are 
able to export all our cull ewes into Mexico at a good price to 
the producers, and the next day they are somewhat fickle, and 
they close that market.
    NAFTA, as far as the wool industry and such as that, right 
now, a question that I would just have to glean a little more 
information and get back to the Committee on some of that. My 
expertise does not lie how NAFTA would affect the whole 
industry. I am well aware how Mexico can be very fickle with 
some of our older ewes going into there. I appreciate the 
question, and I will try to get that better answered.
    Mr. Evans. Okay.
    Mr. Herring. Mexico is a tremendous trade partner with the 
pork industry. Actually, it is our number two market. We are 
very nervous over the rhetoric coming out of Washington over 
NAFTA. I actually spent last week in Mexico City on a trade 
mission. I would tell you that I had several people ask me what 
did I learn, and I would tell you that our trading partners 
down there are cautiously optimistic. They are not against 
modernizing NAFTA, but the product that we send to Mexico is 
very important to them.
    Now, on the flipside of it, my company does a lot of work 
in Mexico. We build farms. Their domestic production in Mexico 
is growing. It is going to grow, their sow numbers are going to 
grow over 30 percent over the next 4 years. They have a growing 
pork industry, and they are importing about 30 percent of the 
pork that they are consuming. It has been a very, very good 
deal not only for their country, but also for the United 
States.
    Mr. Uden. The beef industry would agree with a lot of these 
comments. Again, we are shipping 31 percent of our product as 
far as our exports. Exports represent about 12 percent of beef 
throughout the world, so this is a great concern with us when 
we go to having this rhetoric out there.
    The one thing I might point out, every country is 
different, and one real benefit with Mexico is the types of 
products that they take that we normally wouldn't consume in 
the U.S. so they are very vital to the bottom line of our 
producers. It is a huge impact on the U.S. beef supply if we 
lost almost \1/3\ of our export markets or jeopardized them.
    Mr. Wittenburg. I would concur with all three of the 
colleagues here at the table. The turkey industry exports 8 
percent of its total product outside the United States, and of 
that 8 percent in total volume, 65 percent of it goes to 
Mexico. Mexico is a very important trading partner. I would 
concur that we don't screw up NAFTA.
    Mr. Evans. I yield back the balance of my time. Thank you, 
Mr. Chairman.
    The Chairman. Thank you all very much. I really, really 
appreciate the benefit of your testimony here today. I will 
invite the Ranking Member, if he wants, or I guess you are on 
your way.
    Mr. Costa. No, no, I concur.
    The Chairman. If the Ranking Member would like to make a 
closing comment or so, he is welcome to, but if he needs to 
move on his way, that is good too.
    Mr. Costa. I just want to say thank you. Thank you. Thank 
you all.
    The Chairman. Yes, thank you all very, very much. This has 
been very, very helpful. We have a tremendous amount of work 
ahead of us, and this is very instructive and going to go a 
long way, I believe, to helping us make the right decisions as 
we move forward.
    Under the Rules of the Committee, the record of today's 
hearing will remain open for 10 calendar days to receive 
additional material and supplementary written responses from 
the witnesses to any question posed by a Member.
    This hearing of the Subcommittee on Livestock and Foreign 
Agriculture is adjourned.
    [Whereupon, at 3:10 p.m., the Subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]
 Submitted Statement by Barb P. Glenn, Ph.D., Chief Executive Officer, 
        National Association of State Departments of Agriculture
Statement of Interest
    Chairman Rouzer, Ranking Member Costa, and distinguished Members of 
the Subcommittee on Livestock and Foreign Agriculture, the National 
Association of State Departments of Agriculture (NASDA) applauds the 
Committee's work to reauthorize the farm bill prior to its expiration 
in 2018, and NASDA appreciates the Subcommittee holding a hearing on 
``The Next Farm Bill: Livestock Producer Perspective'' on March 21st. 
NASDA stands ready to assist Congress in developing a robust and 
comprehensive farm bill prior to the expiration of the Agricultural Act 
of 2014 to ensure our farmers, ranchers, and rural communities have the 
tools and infrastructure necessary to continue to produce the world's 
food, fiber, and fuel.
About NASDA
    NASDA represents the Commissioners, Secretaries, and Directors of 
the state departments of agriculture in all fifty states and four 
territories. As elected and appointed officials, our members serve as 
strong advocates for American agriculture and are partners with a 
number of Federal agencies in regulating, marketing, and providing 
services to the agricultural community. As the chief agriculture 
officials in their states, NASDA members are keenly aware of the 
changing dynamics, increasing challenges, and new opportunities in 
agricultural production across the country and have a deep appreciation 
for the important contribution agriculture makes to our nation's 
security and economy.
NASDA Farm Bill Perspective & Animal Diseases
    Agricultural producers, the rural economy, and communities of every 
size rely upon a forward looking and fully funded farm bill. NASDA 
calls for enhanced investment in American agriculture that provides 
producers the tools they need to succeed. The farm bill is also vital 
to providing consumers access to the safest, highest quality and 
affordable food supply, which is essential for our nation's economy and 
security.
    One of NASDA's 2018 Farm Bill priorities is to implement a 
proactive, multi-faceted animal disease program, which is needed to 
safeguard animal agriculture, promote sustainable economic development 
and prevent catastrophic events that could threaten our nation's food 
supply. An outbreak of a foreign animal disease has the ability to 
cripple the entire agricultural sector and have long-lasting 
ramifications for the economic viability of U.S. livestock production. 
It is essential that the U.S. Department of Agriculture's Animal and 
Plant Health Inspection Service (APHIS) working cooperatively with 
state animal health officials have a robust response capability in the 
form of a rapidly deployable animal vaccine bank, sufficient laboratory 
capacity for disease surveillance and rapid response capability at the 
state level.
    NASDA calls on Congress, in the 2018 Farm Bill, to establish a 
multi-tiered program to deliver the sufficient development and timely 
deployment of all measures necessary to prevent, identify and mitigate 
the potentially catastrophic impacts an animal disease outbreak would 
have on our country's food security, export markets, and overall 
economic stability.
    Modeled after the highly successful plant pest and disease 
management and disaster prevention programs, a new Animal Pest and 
Disease Disaster Prevention Program, administered by APHIS, would 
provide a proactive and concerted preventative ``boots-on-the-ground'' 
effort focusing on early detection and rapid response to protect the 
nation's animal agriculture industry. It is envisioned that this 
program would be structured to take full advantage, through support and 
collaboration, of the science generated by the National Institute of 
Food and Agriculture (NIFA) program established under section 1433 of 
the National Agricultural Research, Extension and Teaching Policy Act 
of 1977, the Continuing Animal Health and Disease Research Program.
    Building upon the 2014 Farm Bill's authorization of the National 
Animal Health Laboratory Network (NAHLN), the Animal Disease and 
Disaster Prevention Program will help support NAHLN and bring together 
the Federal Government with states, industry, universities, and other 
interested groups to reduce the impact of high-consequence animal 
diseases, provide rapid detection and response capabilities to respond 
to animal diseases, develop disease prevention and mitigation 
technologies including vaccines, prevent the entrance and spread of 
foreign animal diseases into the United States, and identify and 
support critical research needs.
    Additional investments are requested to establish and maintain a 
rapidly deployable vaccine bank for high consequence animal diseases. 
The ability to rapidly vaccinate against diseases, such as Foot & Mouth 
Disease (FMD), is central to the U.S. disease control strategy should 
an outbreak occur. Currently, the U.S. does not have access to enough 
FMD vaccine, and the current vaccine bank arrangement has several 
problems in addition to insufficient funding. U.S. livestock groups 
have requested that APHIS contract for an offshore FMD vaccine bank and 
capacity for domestic stockpiling of other animal disease vaccines. 
Such an arrangement would, at minimum, provide vaccine antigen 
concentrate for all FMD strains currently circulating in the world. 
Additionally, it would ensure resources are in place for production 
capacity (including surge capacity) that would produce in the shortest 
amount of time sufficient vaccine to meet needs in the early stages of 
an outbreak.
Conclusion
    NASDA requests the Committee carefully consider the immediate needs 
and challenges with addressing animal diseases. NASDA stands ready to 
work with the Committee to expand on the authorization for the National 
Animal Health Laboratory Network (modeled after the aforementioned 
invasive species programs) to help bring together the Federal 
Government with states, industry, universities, and other agricultural 
stakeholders to reduce the impact of high-consequence animal diseases, 
provide rapid detection and response capabilities, develop disease 
prevention and mitigation technologies, support a vaccine bank 
infrastructure, prevent the entrance and spread of foreign animal 
diseases into the U.S., and identify and support critical research 
needs.
    Thank you for your consideration of this testimony, and please 
contact Dudley Hoskins ([Redacted]) if you have any questions.
                               attachment
We Need A Farm Bill.
    Good Food. More Jobs. Conservation. Thriving communities.

    These are all things we can get behind.

    As the chief agriculture officials in their states, members of the 
National Association of State Departments of Agriculture (NASDA) are 
keenly aware of the changing dynamics, increasing challenges, and new 
opportunities in agricultural production across the country and have a 
deep appreciation for the important contribution agriculture makes to 
our nation's security and economy.

    The farm bill impacts everyone.

    Agricultural producers, the rural economy, and communities of every 
size rely upon a forward looking, and fully funded farm bill. NASDA 
calls for enhanced investment in American agriculture that provides 
producers the tools they need to succeed. The farm bill is also vital 
to providing consumers access to the safest, highest quality and 
affordable food supply, which is essential for our nation's economy and 
security.
Priorities
   Conservation.

   Trade Promotion.

   Specialty Crops.

   Invasive Species.

   Animal Diseases.

   Research.

   Food Safety.
Our Priorities for the Next Farm Bill
Trade Promotion
    The Market Access Program (MAP) promotes American-grown and 
produced food and ag products that are in competition with heavily 
subsidized foreign products. For every $1 invested in export market 
development programs, $24 is returned in export revenue. This means 
significant positive effects for farmers & ranchers like increased 
income and more American jobs in the farm and food sector. Funding for 
the Market Access Program (MAP) should be increased from $200M to $400M 
to better promote America's food and ag products in demand across the 
globe.
Conservation
    Conservation programs provide financial and technical assistance 
needed to conserve our nation's natural resources and meet increasing 
regulatory demands. The next farm bill must make substantial 
investments in voluntary locally-driven, flexible, and efficient 
conservation programs. Additional investments are needed to continue 
targeted conservation, address water quality challenges and face 
regulatory pressures.
Specialty Crop Block Grants
    The Specialty Crop Block Grant (SCBG) Program provides important 
tools to enhance specialty crop production, while also advancing foods 
with critical health benefits to the American people. To the extent 
additional funding is available, funding for the SCBG Program should be 
increased and Congress should ensure a flexible, locally responsive, 
and state-led program.
Invasive Species
    Invasive plants and pests are an often catastrophic threat to 
farmers and ranchers. To address this increasing threat, bold action is 
required. Building on the successes of the invasive species programs 
created by the 2014 Farm Bill, Congress should bring additional tools 
to bear on this serious economic threat. Funding for the highly 
successful ``Plant Pest and Disease Management & Disaster Prevention'' 
and the ``National Clean Plant Network'' should be increased to in 
order to provide additional tools for domestic invasive species issues. 
Enhanced funding and coordination of invasive species under the 
direction of the USDA Office of Pest Management Policy and involving 
other departments and agencies of the Federal and state governments 
should be considered to strengthen programs and maximize the value of 
the Federal funding.
Animal Diseases
    A proactive, multi-faceted animal disease program is needed to 
safeguard animal agriculture, promote sustainable economic development 
and prevent catastrophic events that could threaten our nation's food 
supply. Expanding on the authorization for the National Animal Health 
Laboratory Network, and modeled after the aforementioned invasive 
species programs, this program will bring together the Federal 
Government with states, industry, universities, and other agricultural 
stakeholders to reduce the impact of high-consequence animal diseases, 
provide rapid detection and response capabilities, develop disease 
prevention and mitigation technologies, support a vaccine bank 
infrastructure, prevent the entrance and spread of foreign animal 
diseases into the U.S., and identify & support critical research needs.
Research, Education, and Economics
    Robust funding for agricultural research and extension programs, 
and infrastructure, particularly within our nation's many outstanding 
agricultural colleges and universities, is vital to ensuring producers 
remain competitive domestically and globally. The farm bill must also 
ensure adequate funding for research focusing on the safety and 
security of the food system and improving and protecting our natural 
resources.
Food Safety
    The Food Safety Modernization Act (FSMA) is a landmark bill which 
has overhauled American food safety regulation from response-driven to 
preventive and farm-focused. Congress should address the variety of 
implementation challenges with the final FSMA rules. The next farm bill 
should provide resources to assist producers in complying with FSMA, 
especially via low-cost loans for infrastructure upgrades.
          Contact Us: Nathan Bowen D [email protected] D (202) 296-9680 
        D 4350 N. Fairfax Drive, Suite 910, Arlington, VA 22203
          www.nasda.org @NASDANews @NASDADC
                                 ______
                                 
Submitted Statement by Roger Johnson, President, National Farmers Union
    On behalf of the family farmer, rancher, and rural members of 
National Farmers Union (NFU), thank you for holding this hearing 
examining the livestock and poultry sector as we head into deliberation 
and consideration of the next farm bill.
    NFU is a grassroots general farm organization with nearly 200,000 
family farmer, rancher, and fishermen members nationwide. Since 1902, 
NFU has supported family agriculture and rural communities through 
advocacy, education, and cooperative development. Delegates to NFU's 
annual convention, through a vigorously debated and democratic process 
establish NFU's policies. NFU policy states support of ``Clarification 
of the Packers and Stockyards Act to allow individual producers to seek 
recourse for abuse of market power without having to prove competitive 
injury to the entire marketplace.''\1\ The interim final rule on the 
scope of 202(a) and (b) directly addresses NFU's concerns. 
Additionally, NFU policy supports, ``Modifications to regulations under 
the Packers and Stockyards Act that govern integrator fair-trade 
practices and strengthen the enforcement mechanisms therein.''\2\
---------------------------------------------------------------------------
    \1\National Farmers Union, Policy of the National Farmers Union, 
(March 2016), henceforth ``NFU Policy''.
    \2\NFU Policy.
---------------------------------------------------------------------------
    The Packers and Stockyards Act of 1921 was passed in response to 
the 1919 Report of the Federal Trade Commission on the Meat-Packing 
Industry, that stated, ``The power of the Big Five in the United States 
has been and is being unfairly and illegally used to manipulate 
livestock markets; restrict interstate and international supplies of 
foods; control the prices of dressed meats and other foods; defraud 
both the producers of food and consumers; crush effective competition; 
secure special privileges from railroads, stockyard companies, and 
municipalities; and profiteer.'' In 1916, the ``Big Five's'' percentage 
of interstate slaughter was 82.2 percent for cattle and 61.2 percent 
for hogs. The passage of the Packers and Stockyards Act in 1921 
followed the Sherman Antitrust Act of 1890, the Federal Trade 
Commission Act of 1914, and the Clayton Act of 1914. The basic premise 
of the core antitrust laws was to protect competition for the benefit 
of consumers.
    The P&S Act was passed in order ``to regulate the sale of livestock 
by farmers to the more economically powerful livestock buyers.''\3\ 
Congress passed the Act with recognition that the previous antitrust 
[A]cts did not adequately protect farmers and consumers from the 
monopolistic practices of the meatpacking industry. The Act set out to 
regulate meatpackers engaging in unfair or deceptive practices that 
harm individual farmers.\4\ While the P&S Act has some typical 
antitrust components (Sections 202(c) through (f)), the law is broader 
than just antitrust in that it also establishes statutory trusts for 
the benefit of all unpaid cash sellers and delivery of full amount due, 
for example. These are not antitrust components of the P&S Act and were 
designed for the benefit of individual farmers and ranchers.
---------------------------------------------------------------------------
    \3\See Van Wyk v. Bergland, 570 F.2d 701, 704 (8th Cir. 1978).
    \4\Stumo, Michael J., and Douglas J. O'Brien. ``Antitrust 
Unfairness vs. Equitable Unfairness in Farmer/Meat Packer 
Relationships.'' Antitrust Unfairness vs. Equitable Unfairness (2003): 
n. pag. The National Agricultural Law Center.
---------------------------------------------------------------------------
    One hundred years after passage of the P&S Act, the concentration 
ratio among the top four meatpacking companies is 85 percent for beef, 
74 percent for pork, and 54 percent for poultry.\5\ Farmers and 
ranchers are subject to both monopolistic practices in the agricultural 
inputs sector and monopsonistic practices in the agricultural 
production sector. Due to a lack of competition across the agricultural 
sector, farmers are subject to both the bargaining power of sellers of 
agricultural inputs and the bargaining power of buyers of the products 
farmers grow.
---------------------------------------------------------------------------
    \5\Scope of Sections 202(a) and (b) of the Packers and Stockyards 
Act, 81 Fed. Reg. 92565, (December 20, 2016).
---------------------------------------------------------------------------
    The development of contract farming as the model in the poultry and 
hog sector has institutionalized the ``monopsony/monopoly relations 
between farm and agribusiness and the ability of the latter to capture 
value by the producer through price manipulation.''\6\ The two parties 
that negotiate the contract are not equal. This asymmetrical power 
results in undue influence over contract farmers.
---------------------------------------------------------------------------
    \6\Jyotishi, Amalendu. ``Monopsonistic Exploitation in Contract 
Farming: Articulating a Strategy for Grower Cooperation.'' Journal of 
International Development.
---------------------------------------------------------------------------
    Contract poultry growers are often required to invest hundreds of 
thousands of dollars for poultry houses and equipment that have a 
single purpose--raising birds. Farmers often invest with loans 
amortized over decades. Because of the lack of competition in the 
meatpacking sector, farmers may only have access to one to two 
processors in their immediate area. The poultry houses and equipment 
are sunk costs, which puts farmers at a tremendous disadvantage when 
negotiating contracts. As one farmer stated at the U.S. Department of 
Justice and USDA Public Workshops Exploring Competition in Agriculture: 
Poultry Workshop, ``And when you have that kind of debt load over you, 
of course you're going to choose to sign the contract. You feel that 
there's no other option when you owe $\1/2\ million or $1 million.''\7\
---------------------------------------------------------------------------
    \7\USDOJ & USDA Public Workshops Exploring Competition in 
Agriculture (2010), Normal, Alabama. Print.
---------------------------------------------------------------------------
    For years, USDA has attempted to address the anti-competitive 
behaviors of the meatpacking industry by promulgating rules that would 
help clarify the P&S Act and its scope. Blocked by Congressional riders 
fueled by outrage from the meatpacking companies, USDA has, thus far, 
been unable to promulgate rules. The status quo system of indentured 
servitude by contract growers who are subject to increasingly offensive 
demands by integrators is simply unacceptable. NFU strongly supports 
the interim final rule on Scope of Sections 202(a) and (b) of the 
Packers and Stockyards Act and the proposed rules on Unfair Practices 
and Undue Preferences in Violation of the Packers and Stockyards Act 
and Poultry Grower Ranking Systems.
    Thank you for the opportunity to submit a statement for the record 
on the state of the livestock sector. The Farmer Fair Practices Rules 
are long overdue. Family farmers and ranchers operating in an extremely 
consolidated marketplace should have the full protection of the Packers 
and Stockyards Act of 1921. Over the last few decades, judicial 
decisions have weakened the original Act, providing farmers and 
ranchers with less protection in a more challenging marketplace. These 
rules will go a long way to make sure that farmers and ranchers can 
continue to operate with basic protections under the law.
            Sincerely,

Roger Johnson,
President.
                                 ______
                                 
         Submitted Statement by Livestock Marketing Association
    Subcommittee Chairman Rouzer and Members of the House Committee on 
Agriculture Subcommittee on Livestock and Foreign Agriculture:

    These comments are provided on behalf of the Livestock Marketing 
Association (LMA), which is the leading national trade organization for 
more than 800 livestock marketing businesses located throughout the 
United States. LMA represents more than 75 percent of the regularly 
selling local livestock auction markets in the U.S. Livestock auction 
markets serve two important purposes: (1) they sell livestock for 
producers in a competitive bidding environment and (2) they stimulate 
the economies in local communities.
    A primary concern of livestock markets is the amount of devastating 
risk sellers of livestock and markets are exposed to when a buyer fails 
to pay.
    In 2010, Eastern Livestock, the largest livestock dealer in the 
U.S., defaulted on payment and was forced into bankruptcy owing 
approximately $112 million to creditors, including hundreds of 
livestock producers, other dealers, and markets. The Eastern Livestock 
default is not a one-time, isolated occurrence in the industry. Since 
2010, there have been several instances of dealer defaults. In the fall 
of 2015, a major dealer failed to pay two livestock markets (owing 
$980,000 to a market in Kansas and $2.9 million to a market in 
Nebraska), as well as several producers who sold to the dealer 
directly.
    Producers who sell through a livestock auction market are protected 
by both the market's surety bond and by the market's custodial account 
(trust account). Producers who sell directly to packers are protected 
by both the packer's surety bond and by the Packer Statutory Trust 
under 7 U.S.C. 196. Producers who sell directly to dealers are provided 
little protection. Under the current law, dealers do not have a 
custodial account or a trust.
    Markets are placed in a highly vulnerable position when it comes to 
payment. Pursuant to 7 U.S.C. 228b, markets are required to pay sellers 
of livestock by no later than the close of the next business day after 
the sale, even if the markets are not paid by the buyer of those 
livestock. When livestock markets are not paid, they are usually left 
with no feasible way to collect. If the dealer has resold the livestock 
to a good faith purchaser, that second purchaser has clear title to the 
livestock, even if the dealer has not paid for them. In addition, a 
dealer's bank usually will have a blanket security interest on all of 
the dealer's livestock inventory, which, under current law, will give 
the bank a perfected security interest in the livestock even though the 
dealer never paid for them and the bank never loaned the dealer any 
money for those specific livestock. A producer selling directly to a 
dealer is in a similar poor position when the dealer fails to pay.
    When a dealer mails a check, as the law allows, it may be several 
days before the seller (whether livestock market or producer) even gets 
the check or discovers that a check is not coming. In many parts of the 
country, mail has slowed down significantly, further stretching this 
critical time period. In some cases, a buyer may buy multiple times 
before a payment problem is discovered.
    Although the P&S law attempts to provide financial protection for 
sellers of livestock by requiring dealers to maintain surety bonds, 
bond claims rarely make up for any significant loss. P&S dealer bond 
claims return, on average, about 15 for every dollar claimed (1999-
2013 data). This does not include Eastern Livestock claims where payout 
was 4.37 on the dollar.
    Additional protection is needed for producers and markets who sell 
to dealers. Financial protection already exists for those dealing with 
packers (Packer Statutory Trust), markets (custodial account), and in 
other agriculture sectors (statutory trust under the Perishable 
Agricultural Commodities Act).
    Simply raising bond amounts is not an acceptable alternative 
because it would push legitimate buyers, particularly young and 
beginning market participants, out of the marketplace due to the 
significant assets needed to obtain this type of bond.
    Instead, a possible solution to this problem with the least amount 
of disruption to the industry would be amending the Packers and 
Stockyards Act to establish a dealer statutory trust. A dealer trust 
would provide livestock producers and markets financial protection in 
the event of a dealer default by giving unpaid sellers of livestock 
(producers or markets) first priority to receive livestock and accounts 
receivable.
    A dealer statutory trust could be modeled after the existing Packer 
Statutory Trust that Congress added in 1976 to address packer defaults. 
The trust requires packers to hold all livestock purchased from cash 
sellers, and all inventories of, or receivables or proceeds from meat, 
meat food products or livestock products derived from such livestock, 
in a trust fund for the benefit of unpaid sellers.
    By adding a Dealer Statutory Trust to the P&S Act, business would 
continue as usual until a dealer defaults on payment for livestock. In 
the event of a default, the priority would help ensure the producers 
and markets that have sold to the defaulting dealer are paid first. 
After all, it is their livestock that was sold for compensation. A 
Dealer Statutory Trust would not change how the dealer conducts 
business or any other requirement of the P&S Act. For example:

   A dealer trust would not require dealers to maintain a 
        separate bank account.

   A dealer trust would not affect any of the dealer's other 
        assets.

   A dealer trust would not require a government account be set 
        up for payment of claims.

   A dealer trust would not change a dealer's bonding 
        requirements.

    We appreciate this opportunity to provide written testimony and 
thank the Committee for its ongoing interest in helping the livestock 
industry succeed. The need for protection against livestock payment 
defaults is more important than ever with slowing mail service 
delivering checks, increased value of livestock at times, and 
volatility within the market. We look forward to working together to 
face the challenge of dealer payment default within the livestock 
industry.


 
                           THE NEXT FARM BILL

                             (DAIRY POLICY)

                              ----------                              


                       WEDNESDAY, MARCH 22, 2017

                  House of Representatives,
                                  Committee on Agriculture,
                                                   Washington, D.C.
    The Committee met, pursuant to call, at 10:00 a.m., in Room 
1300 of the Longworth House Office Building, Hon. K. Michael 
Conaway [Chairman of the Committee] presiding.
    Members present: Representatives Conaway, Thompson, 
Goodlatte, Lucas, Gibbs, Crawford, Hartzler, LaMalfa, Davis, 
Allen, Bost, Rouzer, Abraham, Kelly, Comer, Marshall, Bacon, 
Faso, Dunn, Arrington, Peterson, David Scott of Georgia, Costa, 
Fudge, Vela, Kuster, Nolan, Plaskett, Adams, Evans, Lawson, 
O'Halleran, Panetta, and Blunt Rochester.
    Staff present: Bart Fischer, Callie McAdams, Emily Wong, 
Matthew S. Schertz, Mykel Wedig, Stephanie Addison, Anne 
Simmons, Lisa Shelton, Liz Friedlander, Mary Knigge, Matthew 
MacKenzie, Troy Phillips, John Konya, Nicole Scott, and Carly 
Reedholm.

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

    The Chairman. Good morning. This hearing of the Committee 
on Agriculture entitled, The Next Farm Bill: Dairy Policy, will 
come to order. Please join me in a quick prayer.
    Dear Heavenly Father, thank you, Lord, for the privilege of 
living in this country, and all the blessings that that bestows 
upon us. Be with us this morning during our deliberations. 
Please grant us the wisdom and discernment that we need to be 
able to make hard decisions in the area we work with. We are 
asking you this in Jesus' name, Amen.
    Good morning. Welcome to today's hearing. You may have 
noticed something a little different about the room. There is a 
different portrait in the back, at the behest of our Ranking 
Member. While we are gathered here today to talk about dairy 
policy, I would be remiss if we did not take a moment to 
reflect on the fact that we lost a great friend of American 
agriculture last week. Congressman Kika de la Garza served 
every year of his distinguished 37 year career in Congress on 
this Committee, and he spent 14 years, from 1981 to 1994, as 
the Chairman. As I noted in our release last week, Chairman de 
la Garza was a true public servant in every sense of the word. 
From serving our country in the military, to representing his 
constituents back home in Texas, and here in the nation's 
capital, to advocating for farmers and ranchers across the 
country, he had a significant and lasting impact. I have long 
admired his commitment to bringing various groups together, all 
in an effort to build broader support for American agriculture, 
and, frankly, his approach is one that we strive to emulate 
today.
    Today, we take a small tip to honor the man, and remember 
his contributions to this great country, and the industry that 
we all love. And before I turn it over to Ranking Member 
Peterson, I would note that Mr. Goodlatte and Mr. Lucas, will 
be offering comments as well, and I would ask that any other 
Member wishing to offer tribute to Chairman de la Garza to 
please submit their comments for the record.
    And, with that, I turn to the Ranking Member, Mr. Peterson, 
for any remarks about Kika that he has.

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

    Mr. Peterson. Well, thank you, Mr. Chairman, when I came to 
this Committee in 1991, Kika had already been Chairman for 10 
years, and he was the second longest serving Chairman of the 
Agriculture Committee in history. He was elected in 1981. When 
Tom Foley, who had been Chairman, moved up to Majority Leader, 
and then eventually Speaker, Kika ran against Ed Jones. This is 
all ancient history. You may not even know these guys, and was 
elected Chairman.
    The thing I appreciated about Kika was that he was a 
bottom-up guy. And the Subcommittee Chairman, back in the days 
under Kika, had the power of the Committee Chairman, and they 
ran the show. And he let them do their thing, and it worked 
pretty well. The people on the Subcommittee had a lot to say 
about what happened, and they wrote some good farm bills during 
a time that was very challenging. The 1980s, if you remember, 
was not a good time to be Chairman of the Agriculture 
Committee, or to be Secretary of Agriculture, or to be a 
farmer.
    Kika had a lot of things that he did, and I am going to let 
Frank Lucas talk about the submarine story when he gets to his 
turn, and I won't go into that now, but the other thing is Chip 
Connelly was the economist for many, many years, and they had 
this chart. And this was before Kent Conrad made charts famous 
over in the Senate. Kika had this chart that Chip had made up 
that showed how much the ag budget was in relation to the rest 
of the budget. He would print that line on there, and you 
couldn't even see it. He would show that chart all over the 
place, all over the Hill, when he traveled to other countries 
he would show it to people. That was one of the things I 
remember a lot about Kika. Yes, I would say it was a good 
chart.
    And he, as I said, went through some tough times, and he 
fought off people that were out to get production agriculture, 
including your good friend, Mr. Dick Armey from Texas, and 
others. But the bottom line, he was a consummate gentleman. He 
treated everybody with respect, and he ran the Committee in a 
very judicious way. And, bottom line, what Kika cared about was 
the producers. He listened to everybody, that is who he really 
cared about. You could see that in the work that he did.
    He started the Hispanic Caucus. He did all kinds of great 
things while he was here in the House, and he was a pioneer 
before his time, and he will be much missed by myself, I think 
by anybody that knew him, and he will be greatly missed by 
American agriculture, and the people of south Texas. Thank you 
for giving us a chance to talk about him a little bit today.
    The Chairman. Well, that portrait in the back is Kika, and 
he was from south Texas. Mr. Goodlatte, you are recognized for 
comments.

 OPENING STATEMENT OF HON. BOB GOODLATTE, A REPRESENTATIVE IN 
                     CONGRESS FROM VIRGINIA

    Mr. Goodlatte. Well, thank you, Mr. Chairman. I want to 
thank you and the Ranking Member for being inspired to remember 
former Chairman de la Garza. His final 2 years as Chairman of 
this Committee were my first 2 years in the Congress. And I 
remember early on in my experience here, in the dead of winter, 
taking us all up to Newport, Rhode Island, an unusual place for 
an agriculture retreat in the middle of the winter, for an ag 
retreat that was beneficial. It got us all together, and we 
discussed a number of issues.
    And the Ranking Member is correct when he says that he gave 
his Subcommittee Chairmen some latitude. Sometimes they 
exceeded the authority that he gave them. In one case, in that 
first 2 years, when he was the Chairman, and we were in the 
Minority, a hearing was held on a bill that I had, my very 
first bill in the Congress, and not many people showed up for 
the hearing that was held on the bill. And the Chairman had to 
leave, and I was the only other Subcommittee Chairman, it was 
Harold Volcker, had to leave, so he asked me to take the Chair. 
The word got back to Chairman de la Garza that this was taking 
place, and he soon appeared to take over.
    His portrait, that you noted, hung in that spot the entire 
4 years that I had the honor to serve as Chairman of the 
Committee, and I always loved what former Chairman, and now 
Senator, Pat Roberts had to say about that painting. 
Congressman de la Garza was not as tall as that painting might 
appear. That is right, Pat Roberts referred to that as the 
shortest fence post in Texas. But Congressman de la Garza was a 
great champion for American agriculture, and I enjoyed serving 
with him, and I am glad we are remembering him here today. 
Thank you, and I yield back.
    The Chairman. Mr. Lucas, you are recognized.

 OPENING STATEMENT OF HON. FRANK D. LUCAS, A REPRESENTATIVE IN 
                     CONGRESS FROM OKLAHOMA

    Mr. Lucas. Thank you, Mr. Chairman, and I too appreciate 
you and the Ranking Member for taking time to honor our 
colleague. There are three of us left on the Committee who 
served with him. Mr. de la Garza was strictly old school. He 
ran the Committee with authority. He conducted himself in a 
very dignified fashion. And in those days, prior to 1995, we 
still operated under the proxy system. Remember that, 
gentlemen? And when I was elected in a special election on May 
of 1994, Ranking Member Roberts took me in to see the Chairman. 
He said, ``Now, it is a very important, and you will be 
respectful, and you will be understanding, and you will agree 
to whatever he says.'' Thank you, Pat.
    So we go in, and Mr. de la Garza quizzes me a little bit 
about the district, and was I indeed taking my predecessor's 
place. And he looks me in the eye and says, ``Have you signed 
my proxy form yet?'' And I looked at Pat, and Pat went, 
``Absolutely, Mr. Chairman. The proxies went to the party 
Member on each side that was in leadership.'' But the thing 
that de la Garza may well be remembered the most for, and you 
can always tell a Member, or a staffer, or a person who has 
been in this crowd for any period of time, that Mr. de la Garza 
had something that we all referred to as the submarine story.
    Kika had been in the Navy years earlier, and Kika liked to 
tell the story that, when he became Chairman of the Agriculture 
Committee, he had an opportunity to go and tour a nuclear 
submarine out at sea. And that, as an old, I believe, ensign, 
he was quizzing the captain of the boat about all the things 
that it would do, and all the incredible stuff. And the captain 
kept saying, ``Congressman, that is classified. Congressman, 
that is classified. We can't discuss all of these various 
things.''
    And finally Kika, in his story, and I am paraphrasing 
rather loosely, Kika looked him in the eye and said, ``So, let 
me see now, you have an atomic submarine, so you have unlimited 
power. You can make your water, and you can make your air, and 
you can stay underwater for years and years at a time.'' And 
the captain smiled. And he said, ``Well, it would seem to me, 
therefore, captain, the one thing that limits this massive 
weapon's ability to defend the United States of America, the 
only thing that you can't make on board, is your food supply. 
Obviously, captain, the limiting factor on the ability of this 
powerful nuclear submarine to defend the country, and the 
world's freedom, is its ability to feed itself, the food 
supply. Therefore, what is the most important element in the 
defense of freedom, and the United States, in the world? It is 
the food supply.'' And if you were in Mr. de la Garza's 
presence, you would cheer. That was an automatic given. But he 
was right. And the Agriculture Committee does defend the 
freedom of the entire world.
    With that, Mr. Chairman, I thank you for the opportunity to 
reminisce about the Chairman, they don't make them quite like 
that anymore.
    The Chairman. I understand. I appreciate that. Other 
Members are requested, if they want to make comments in 
reference to Mr. de la Garza for the official record, to put it 
in.
    Today's hearing continues our marathon series of hearings 
examining all aspects of the next farm bill. As I noted 
earlier, dairy policy is the focus of today's hearing. Dairy is 
a unique industry. It is present in all 50 states. Harvest 
comes 7 days a week, 365 days a year, milk is highly 
perishable, and it is processed into a range of products. These 
factors, combined with the fact that dairy markets are 
increasingly globally integrated, make crafting an effective 
dairy policy particularly challenging.
    While the entire agriculture industry has been experiencing 
low prices, leading to a 50 percent drop in net farm income 
over the past 4 years, the dairy industry is in an unenviable 
position. After hitting $24 per hundredweight in 2014, the 
price of milk fell to $16 per hundredweight in 2016. While we 
often say that the farm safety net is designed for times like 
these, the Margin Protection Program in the 2014 Farm Bill has 
provided virtually no assistance. Under-performance by the MPP 
has resulted in very few producers purchasing buy-up coverage 
levels in 2017, leaving producers even more exposed to market 
volatility. While the industry is to be commended for making 
the fundamental shift away from farm support to margin 
protection, that will only be sustainable if MPP actually 
provides sufficient risk management, going forward.
    In addition to an inadequate safety net, the dairy industry 
is facing other headwinds here and abroad. While many of our 
customers are now oversea, with Mexico being the most 
significant outlet for U.S. dairy exports, the industry has 
been consistently hampered by barriers to entry into the 
Canadian markets, including the latest example designed to keep 
U.S. ultra-filtered milk out of Canadian processing facilities, 
and that is just scratching the surface.
    While our nation works to tackle nearly $20 trillion in 
debt, we must remind folks that America's farmers and ranchers 
have repeatedly answered the call for deficit reduction. In 
fact, latest estimates put 2014 Farm Bill savings at just over 
$100 billion, four times the savings estimated at passage. Now, 
while we don't yet know the resources that we will have 
available to craft the next farm bill, we do know that 
America's farmers and ranchers feel like they have given at the 
office, as they say. As we work through the tough decisions of 
how to allocate available resources, it is important that we 
have a very clear picture of what is and is not working.
    To that end, I look forward to hearing from our witnesses 
today about their vision for the next farm bill, and discussing 
other issues of importance to the dairy industry.
    [The prepared statement of Mr. Conaway follows:]

  Prepared Statement of Hon. K. Michael Conaway, a Representative in 
                          Congress from Texas
    Good morning and welcome to today's hearing. This hearing continues 
our marathon series of hearings examining all aspects of the next farm 
bill.
    The focus of today's hearing is on dairy policy. Dairy is a unique 
industry. It is present in all 50 states. Harvest occurs 7 days a week 
and 365 days a year. Milk is highly perishable. And, it's processed 
into a range of products. These factors--combined with the fact that 
dairy markets are increasingly globally integrated--make crafting an 
effective dairy policy particularly challenging.
    While the entire agricultural industry has been experiencing low 
prices--leading to a 50% drop in net farm income over the past 4 
years--the dairy industry has been in an unenviable position. After 
hitting $24 per hundredweight in 2014, milk prices fell to around $16 
per hundredweight in 2016.
    While we often say that the farm safety net is designed for times 
like these, the Margin Protection Program in the 2014 Farm Bill has 
provided virtually no assistance. Under-performance of MPP has resulted 
in very few producers purchasing buy-up coverage levels in 2017, 
leaving producers even more exposed to market volatility. While the 
industry is to be commended for making the fundamental shift away from 
price support to margin protection, that will only be sustainable if 
MPP actually provides sufficient risk management, going forward.
    In addition to an inadequate safety net, the dairy industry is 
facing other headwinds here and abroad. While many of our customers are 
now overseas--with Mexico being the most significant outlet for U.S. 
dairy exports--the industry has been consistently hampered by barriers 
to entry in the Canadian market, including the latest example designed 
to keep U.S. ultra-filtered milk out of Canadian processing facilities. 
And that's just scratching the surface.
    While our nation works to tackle nearly $20 trillion in debt, we 
must remind folks that America's farmers and ranchers have repeatedly 
answered the call for deficit reduction. In fact, latest estimates put 
2014 Farm Bill savings at just over $100 billion--four times the 
savings estimated at passage. While we don't yet know the resources 
that we will have available to craft the next farm bill, we do know 
that America's farmers and ranchers feel like they have given at the 
office. As we work through the tough decisions of how to allocate 
available resources, it is important that we have a very clear picture 
of what is and isn't working.
    To that end, I look forward to hearing from our witnesses today 
about their vision for the next farm bill and discussing other issues 
of importance to the dairy industry.
    With that, I turn to Mr. Peterson for any comments he would like to 
make.

    The Chairman. With that, I turn to Mr. Peterson for any 
comments he would like to make.
    Mr. Peterson. Thank you, Mr. Chairman, and thanks for 
holding this hearing. The Margin Protection Program, we spent a 
lot of time on in the last farm bill, working with the National 
Milk Producers and others to come up with a new system. The 
MILC Program had been around for a while, and it paid out some 
payments to producers, but it wasn't really a safety net. And 
then we were clobbered in 2009, we got payments, but it did not 
go anywhere near what we needed to do to alleviate the problem. 
And we had a lot of producers go out of business, and it was a 
terrible situation.
    Because of that, we went to work, and came up with a new 
idea, and that was the Margin Protection Program, that we would 
have an insurance program that would float off of feed cost. 
The USDA has been calculating feed cost for years, and so it 
would be a margin above that feed cost that we would allow 
people to buy protection against that margin. And so we put it 
together with long meetings with National Milk, and Jerry Kozak 
hardly had any hair left by the time it was done, but they 
finally came to a resolution, and that was introduced, and 
became part of the bill. We did have a fight over this 
stabilization fund, and myself and the Speaker got into it over 
that, and it was quite a fight that went on there for a year. 
And, at the end, the Speaker won, surprise, surprise.
    And we were concerned at the time that we had set the sweet 
spot at $6.50 above feed cost, so that the most affordable rate 
was that amount. When you went above that, you could buy up to 
$8. That is pretty expensive. We were concerned that this might 
be too good, and that we would take too much risk out of the 
system, and there would be over-production, and so we wanted 
the stabilization fund. Well, that disappeared. And it turned 
out we shouldn't have had a fight over that, because it wasn't 
even remotely necessary, because it was not needed at all.
    In fact, what happened is CBO, who still is having a very 
difficult time, in my opinion, scoring dairy, they came in with 
a score that I didn't agree with, and they forced us to take a 
reduction in the feed cost. And, because of that, there was 
only one bi-monthly since the bill has been in effect, there 
was only 1 month that actually paid out, because of this new 
feed cost calculation. If we would have had the original feed 
cost, we might have four or five times it might have paid out, 
depending on what your level of coverage was.
    What happened is hardly anybody has signed up for this, 
because they signed up the first year, they got burned, and 
didn't get anything out of it. As you look at the future price, 
and look at what you have to pay, and look at what the 
situation is with this feed cost, they are not buying it. 
Basically, we have people sitting out there with no protection 
when things collapse, and they will collapse at some point.
    One of the things that you will hear from the industry 
today is that they want to go back to the original feed cost 
calculation which was in there at the start, which would have 
solved a lot of this problem. We also have to look at what we 
charge the small guys for buy-up so that they have better 
protection. And the problem is that this is going to cost 
money. We have had the CBO score this, these are not the 
overall package, but the feed cost change, the original score 
they gave us is over $2 billion, which I don't know where we 
are going to find that. If we would have had it in the original 
bill, we would have it in the baseline. They wouldn't have 
forced us to take it out.
    The point is I don't see how they can come with a score of 
$2.2 billion, when I have sheets here that show that that is 
not going to be even remotely close to what it is going to be. 
This year there are not going to be any payments at all. They 
are already showing $17+ milk, so I don't know how the heck 
they are doing this. We are going to have to do some work with 
them to try to get this back into reality. But the bottom line 
is it is the right idea. The Margin Protection Program is the 
right idea. We just have to get it tweaked so that it works, 
especially for the small guys. I am not sure the big guys want 
it and need it that much. As long as they have catastrophic, 
that is the main thing that they want.
    We need to tweak this thing, and hopefully we can come up 
with a way to get this done, and we can get CBO within the 
range of reality, and be successful soon. Thank you.
    The Chairman. I thank the gentleman. The chair requests 
other Members to submit their opening statements for the record 
so the witnesses may begin their testimony, and to ensure there 
is ample time for questions.
    [The prepared statement of Ms. Lujan Grisham follows:]

Prepared Statement of Hon. Michelle Lujan Grisham, a Representative in 
                        Congress from New Mexico
    Thank you, Mr. Chairman, for holding this hearing. Dairy is a 
particularly important industry for my state, New Mexico, which is the 
ninth largest dairy producer in the country. We are home to roughly 150 
dairies, our average herd size of 2,357 milk cows is largest in the 
country, and we are second in United States in milk production per cow. 
Therefore, it should come as no surprise that New Mexico is ranked 
fifth in the nation for cheese production. In fact, Clovis, New Mexico, 
is home to the largest cheddar cheese plant in the world!
    The economic impact of dairy on New Mexico cannot be understated. 
Dairy farms and processing plants are responsible for $26 billion of 
the state's economy, provide 25,000 jobs, and in 2012 dairy was the 
state's top agricultural export worth $195 million. Maintaining the 
strength of the dairy industry is especially important to the rural and 
frontier areas of my state, which are still struggling with the highest 
unemployment rate in the nation at 6.8%.
    Unfortunately, it is no secret that dairy farmers both in my state 
and across the country are facing significant financial challenges. 
Since 2014, milk prices have fallen 40% causing dairy farmers to see 
their incomes cut in half. A reduction in export values of U.S. dairy 
from $9.5 billion in 2014 to $7.1 billion last year hit particularly 
hard. This was compounded by the strengthening of the U.S. dollar and 
an uptick in global milk supply. Furthermore, the Margin Protection 
Program (MPP) did not work as well as expected to protect dairy farmers 
from low milk prices.
    That is why holding this hearing to address issues facing this 
critical job-supporting industry is so important. As we begin to write 
the next farm bill, we need to ensure that dairy farmers have the 
resources and support they need to thrive. Whether they are large or 
small, these farms make up the backbone of the rural economy. I look 
forward to working with my colleagues to fix the MPP and address the 
difficulties facing American dairy farmers in accessing international 
markets like Canada. I am confident that we will make it through these 
difficult times and ensure that the dairy industry is strong for 
generations to come.

    The Chairman. I would like to welcome to our witness table 
today Jim Mulhern, President and CEO, National Milk Producers 
Federation here in Arlington, Virginia, and Dr. Michael Dykes, 
President and CEO, International Dairy Foods Association, 
Washington, D.C.
    Mr. Mulhern, you are recognized for 5 minutes when you are 
ready.

        STATEMENT OF JAMES MULHERN, PRESIDENT AND CHIEF
           EXECUTIVE OFFICER, NATIONAL MILK PRODUCERS
                   FEDERATION, ARLINGTON, VA

    Mr. Mulhern. Let me start by commending both your opening 
comments. Frankly, the statements you have laid out well 
capture the point of view expressed in my written statement. I 
have submitted a written statement for the record that goes 
into a number of issues. I will confine my comments this 
morning to our views on the Margin Protection Program.
    If I could take just a second to mention that it is 
poignant for me to be here this morning as you honor Chairman 
de la Garza. My first farm bill goes back to 1985. Working on 
dairy policy back then, it was a very troubling time, and the 
comments from the Chairman, Mr. Peterson, Mr. Goodlatte, Mr. 
Lucas honoring the Chairman are quite apt. He was a great 
leader, he leaves a great legacy for American agriculture, and 
we are all better with our farm policy because of the 
leadership that he provided.
    In terms of where we are at with the situation facing dairy 
producers today, we continue to be on the challenging roller 
coaster ride that we have faced for the last more than 15 
years. And we are once again in a downward slump in our 
industry. While 2014, as you said, Mr. Chairman, was a very 
good year for dairy, the 2 years since then have been very 
challenging for many, many dairy farmers across the country. 
And in just the past 2 weeks, the outlook for milk prices and 
margins has deteriorated again at an unusually rapid pace.
    Looking to future policy needs, I want to commend the 
comments, Mr. Chairman, you and Mr. Peterson, in your letter 
earlier this month to the Budget Committee, where you laid it 
out clearly that the challenge before the Committee, and before 
the Congress, is first establishing what policies are required 
to effectively address the conditions in farm and ranch 
country, and then establish what resources will be required to 
achieve them. Mr. Peterson, your comments on the CBO situation 
is apt. That is the situation we face. The reality is we have a 
dairy program today that is an ineffective safety net. And I 
will talk a little bit about that in my comments, but the 
bottom line is we have a program today that is a program in 
name, but not in effect, and we need to address that in this 
upcoming farm bill.
    It is because the opposite approach to what you have 
outlined in your letter was what we ended up pursuing in the 
2014 Farm Bill that we find ourselves today with a program that 
is not working. It has really been one that, as I said, doesn't 
provide an effective safety net for our dairy industry. Over 
the course of the last 18 months we have been examining 
potential improvements in the program, and I am pleased to 
present to the Committee today our recommendations for changes 
in MPP that will make it the effective safety net that we have 
been looking for.
    The first area we must address to make MPP effective is to 
address the feed cost calculation in that margin formula. And, 
Mr. Peterson, you spoke to that in your comments. The current 
formula is failing because of changes that were made during the 
deliberations in the 2014 Farm Bill, and the issue is that we 
developed the original formula to capture accurate feed costs 
on dairy farms, working with dairy science experts on the types 
of feed, the volumes of feed, needed to produce a hundredweight 
of milk. And in the course of the discussions in the farm bill, 
due to deficit reduction reasons, that formula that we had 
proposed, and, Mr. Peterson, that you had in your original 
legislation, that formula was changed. You got the calculation 
right the first time, Mr. Peterson. The major change we have to 
do is go back to that. If we do that, we will have an effective 
program.
    The second aspect of MPP in need of revision are the 
payment rates. And I am specifically talking about the rates 
for supplemental coverage. While the feed cost reforms that are 
outlined in my testimony are essential to reflecting true 
producer costs, in order to have an effective program, farmers 
must be able to afford the coverage. And adjusting those 
premium rates, especially the rates at the lower levels of milk 
production, will help ensure that MPP provides the safety net 
coverage that we need for our industry.
    A third area of improvement that we are recommending 
relates to some technical changes designed to make the program 
more responsive to producers. The first one would be to change 
from this 2 month tranche that we have currently for 
calculation of the margin. Right now it is a January/February, 
March/April, May/June, June/July 2 months averaging, which 
doesn't really reflect what is happening on a monthly basis on 
dairy operations. We need to go back to an annual monthly 
calculation of that. And the other change in this area would be 
to move the sign-up date for the program back toward the end of 
the calendar year preceding the year for which you are signing 
up. In the law it is set up a little bit earlier. We have asked 
USDA the past 3 years to move that date back. They have done 
so, and that has been helpful in getting producers making more 
informed decisions for the program.
    Finally, we urge the Committee to make changes on the 
Livestock Gross Margin Program. More risk management is better 
for farmers than less, and my testimony goes into some detail 
on changes in LGM. In the interest of time, I will not go into 
that in my oral statement, but I am happy to discuss it in 
questions.
    In sum, Mr. Chairman, if we make these changes, four broad 
areas in the MPP Program, we think those changes will have the 
desired effect, and make MPP the effective dairy program for 
the future that was envisioned in 2014. We are not quite there, 
but it is not a lot to do to make it work for us in the future. 
Thank you.
    [The prepared statement of Mr. Mulhern follows:]

  Prepared Statement of James Mulhern, President and Chief Executive 
       Officer, National Milk Producers Federation, Arlington, VA
Introduction
    Chairman Conaway, Ranking Member Peterson, Members of the 
Committee, my name is Jim Mulhern and I serve as President and Chief 
Executive Officer of the National Milk Producers Federation (NMPF), the 
voice of America's dairy cooperatives and their farmer-members for over 
100 years. I appreciate the opportunity to testify before you today as 
the Committee begins work on the 2018 Farm Bill.
Economic Situation
    Mr. Chairman, as you have noted in recent weeks, we are beginning 
work on this farm bill in the midst of a very challenging farm economy. 
This certainly includes America's dairy community. The past decade has 
generally been a roller coaster for our producers. World dairy markets 
collapsed in the worldwide recession of 2008-2009, taking U.S. farm 
milk prices with them. At the time, the milk price-feed cost margin for 
dairy farmers fell to a truly catastrophic level of $2.25 per 
hundredweight of milk. Three years later, in 2012, widespread drought 
sent feed prices skyrocketing to historic highs, once again dropping 
dairy margins to catastrophic levels.
    Many dairy farmers were unable to survive this period, and many of 
those that did are still struggling to recover fully. While 2014 was a 
record year for milk prices, it generated no significant gains in milk 
production, as would typically follow periods of high prices. In fact, 
production at the national level grew by an average of just 0.8 percent 
annually between June 2015, when milk prices had just returned back 
down to average levels, and May 2016. This was almost a full percentage 
point below the 1.7 percent average production growth from 2010 through 
2016. Dairy farmers have explained to us that even the record prices of 
2014 did not fully restore their financial condition from the battering 
it suffered in 2009 and 2012. In particular, they still needed to make 
replacement purchases of vehicles and equipment that were delayed since 
2009 and were therefore not able to invest in growing their operations 
and recover financially at the same time.
    Then global markets collapsed once again in 2015 and 2016, 
negatively impacting U.S. milk prices and gross dairy farm income in 
the process. The global collapse was due to a combination of China 
discontinuing the massive dairy purchases that caused the 2014 world 
price spike, together with the extremely large volumes of dairy 
products which the European Union (EU) added to world markets in the 
aftermath of that price spike. In the year following the removal of its 
milk production quotas in April 2015, the EU expanded milk production 
by 14 billion pounds, equal to nearly seven percent of total U.S. milk 
production that year. Almost all of this additional milk production 
came into world markets as demand was contracting, on top of the large 
volumes of EU dairy exports that were earlier displaced from Russia 
following the import embargo it imposed in August 2014.
    All told, the value of the fresh milk produced by America's dairy 
farmers in 2016 was down fully 32 percent from its 2014 high, and 19 
percent less than what it averaged over the previous 5 years. In all, 
these difficult economic conditions facing our industry over the last 
decade have resulted in the loss of more than 20,250 family dairy farms 
across the United States, or nearly \1/3\ of our total farms since 
2006.
    While the U.S. Department of Agriculture (USDA) projects small 
gains in milk prices for this year relative to last year, recently 
those small gains are being challenged by large and growing levels of 
dairy product inventories. USDA recently projected that milk production 
for all of 2017 will increase at an annual rate of 2.4 percent. By 
contrast, during 2015 and 2016, total commercial use of milk in 
domestic and export markets grew at an annual rate of only 1.8 percent. 
This expansion in production has the potential to outpace demand, which 
will weigh heavily on milk prices yet again. In just the past few 
weeks, the outlook for milk prices and margins has deteriorated at an 
unusually rapid pace. Domestic cheese prices, which play a critical 
role in establishing milk prices received by U.S. dairy farmers, have 
dropped in the daily cash market in recent weeks and are currently 
lower than they have been during all but three percent of the time 
since the beginning of 2010. World prices for skim milk powder have 
also shown significant weakness. These prices directly determine U.S. 
prices for nonfat dry milk, which also play a critical role in 
establishing farm milk prices. Nonfat dry milk prices in the domestic 
cash market are now lower than they have been during all but four 
percent of the time since the beginning of the year 2000. This 
deterioration has been reflected in the dairy futures market as well. 
Under the changes that NMPF is proposing to make the MPP a more 
effective safety net program, as I detail below, the program would now 
be projected to make payments to participating producers in the coming 
months. It is amidst this challenging economic climate that work is 
beginning on the upcoming farm bill.
Dairy Policy Overview
    As we begin this process, Mr. Chairman, Ranking Member Mr. 
Peterson, I want to voice my strong support of your well-articulated 
position that getting the policy right must be the focus of the farm 
bill deliberations process, not starting with arbitrary, and often 
inaccurate, budget projections and trying to shoe-horn policy into 
those numbers. As you pointed out in your March 1, 2017 Budget Views & 
Estimates letter to the House Budget Committee, it is critical that 
this Committee take the approach of ``first establishing what policies 
are required to effectively address the conditions in farm and ranch 
country and then by establishing what resources will be required to 
achieve them.''
    In fact, it is precisely because the opposite of this approach 
drove the deliberations on dairy in the 2014 Farm Bill that I am here 
today to tell you what we all know--the Dairy Margin Protection Program 
is not working. While MPP was, and is, the right approach for the 
future of Federal dairy policy, the program today, in its current form, 
does not provide meaningful safety net support to the nation's dairy 
farmers. And it cannot become the effective safety net policy it was 
envisioned to be without action by this Congress to move it closer to 
the program it was originally proposed to be by this Committee's 
Ranking Member, Rep. Peterson, in 2011. The current program is not 
working because of changes that were made to Mr. Peterson's original 
proposal in response to cost projections of that proposal by the 
Congressional Budget Office--projections that have since proven to be 
incorrect.
    As the Chairman and Ranking Member further noted in your letter to 
the House Budget Committee, the shortcomings in the dairy program (as 
well as cotton and others) ``must be addressed if the Committee is to 
craft a farm bill that can be successfully enacted into law and 
effectively respond to current conditions. America's farmers and 
ranchers can hardly be expected to rally around a farm bill that will 
fail them in hard times, nor can this Committee in good conscience 
advance such legislation.''
    Members of the Committee, the nation's dairy farmers wholeheartedly 
agree with you. We appreciate this clear and unequivocal message, and 
we look forward to working with you to craft policy changes that will 
provide the effective dairy safety net that was originally envisioned 
in the previous farm bill debate.
    Our organization has been working continuously since the MPP was 
first established in 2014 to monitor its implementation and seek 
changes to improve its operations. During 2015 and 2016 we urged the 
U.S. Department of Agriculture to address a number of program 
provisions that needed attention--from providing dairy farmers more 
time to make decisions on annual sign-up to flexibility in premium 
payment schedules and clarifying the interaction between catastrophic 
and supplemental coverage levels. We were pleased that USDA worked 
closely with us and took appropriate and necessary administrative steps 
to address our concerns.
    As helpful and important as the Department's actions were, MPP 
still is not providing effective safety net protection to dairy farmers 
because of the problems with the program's feed cost calculations and 
premium structure--problems that can only be addressed by Congress 
through legislation.
    We have identified a series of steps that Congress can take that 
will address these problems and make the MPP the effective dairy safety 
that we--and many on the Committee--were seeking in the current farm 
bill. In order to better understand the need for the changes we 
propose, it is important to recall the context in which the Margin 
Protection Program was originally proposed, and to review its 
functioning to date.
    Following the worldwide economic collapse of 2008-2009 that led to 
the disastrous milk prices that dairy farmers endured in 2009, NMPF 
proposed to Congress a new risk management tool that would offer 
protection against catastrophic income-over-feed-cost margin declines. 
In the 2014 Farm Bill, Congress authorized the Margin Protection 
Program for Dairy. MPP is a voluntary program run by the Farm Service 
Agency (FSA) designed to provide support when the difference between 
farm milk prices and feed costs fall below certain levels. The program 
enables dairy farmers to annually decide the level of margin coverage 
they want for their operations, ranging from a so-called catastrophic 
floor coverage level of $4.00 per hundredweight of milk, up to a 
maximum level of $8.00/cwt. The $4.00/cwt. basic catastrophic level is 
available for a $100 administrative fee paid annually to USDA. Coverage 
above that level is available in $.50/cwt. increments (up to the $8.00/
cwt. maximum), with escalating premiums for each higher level of 
coverage.
    Approximately 23,000 dairy producers, slightly more than \1/2\ the 
nation's dairy farmers, are currently participating in MPP. The 
participating producers represent 80 percent of the overall U.S. milk 
supply. During the program's first full year of operation in 2015 
farmers paid roughly $70 million in premiums and fees to USDA for the 
basic and supplemental coverage. But during that same year, USDA paid 
out to participating dairy farmers only $730,000 under the program. Due 
to the program's meager supplemental coverage performance in 2015, many 
producers reduced their coverage for 2016, choosing to only purchase 
coverage at the catastrophic ($4.00/cwt.) coverage level, which in turn 
further reduced MPP payments to producers from USDA when margins shrunk 
last year. As a result, last year farmers paid in $20 million while 
USDA paid out only $13 million. In total, MPP has generated a 
significant profit to the Federal Government and provided no meaningful 
support to dairy farmers since its inception--greatly harming farmer 
support and trust in the program as an effective safety net.
    The reason that MPP has not performed as an effective safety net 
for our nation's dairy farmers, as I noted earlier, is because of the 
arbitrary changes in the formula used to calculate dairy farm feed 
costs that were deemed necessary to meet the Congressional Budget 
Office (CBO) score.
    While we strongly believe the MPP is, as NMPF Chairman Randy Mooney 
told this Committee last year, the right program for the future, that 
will only be the case if Congress improves the program so that it 
offers the effective risk management for our dairy producers that it 
was originally envisioned to provide. We are not seeking, and do not 
want, a program designed to make the good times even better, nor one 
that would incentivize production. We simply want, and need, an 
effective Federal safety that will protect dairy farmers from margin 
losses that could put them out of business. We advocate targeted and 
specific changes in MPP so that it better reflects the true feed costs 
that dairy producers face, and that will enable farmers to purchase the 
level of coverage needed for their individual operations. In other 
words, we believe that MPP must be improved so that it functions as it 
was originally intended during the tough times.
Proposed MPP Changes
    Over the course of the last 18 months, NMPF has been working to 
examine potential improvements in the program. NMPF Chairman Randy 
Mooney appointed an Economic Policy Committee consisting of NMPF 
producer members from around the country to discuss a wide range of 
possible changes that could be made to improve MPP. The Committee 
deliberated in multiple meetings since last fall, and unanimously 
developed a series of recommended improvements in MPP that were 
presented to our full Board of Directors earlier this month. In turn, 
our Board unanimously voted to support the Committee's recommendations. 
I am excited to come before you today to discuss our proposal that has 
broad consensus support within the dairy cooperative and producer 
community nationwide.
    Our review encompassed every aspect of the Margin Protection 
Program. After examining all the issues that were raised throughout our 
discussions, the Board adopted recommendations that encompass four 
areas. I'd like to briefly review each of these areas with the 
Committee.
    The first area that must be addressed in order to make MPP a 
functioning risk management safety net relates to the feed cost 
calculation in the margin formula. It is this feed cost formula that is 
the central reason the program is currently failing. The current 
formula reflects harmful changes from the one we initially proposed, 
again changes that were made at the behest of an incorrect CBO score.
    In developing MPP, NMPF worked closely with dairy economists, 
veterinarians, nutritionists, and farmers to develop a model for 
calculating the cost of feeding dairy cows. We worked to develop an 
approach that would calculate feed costs on a per hundredweight of milk 
basis, and reflect the nutritional needs of a lactating cow that 
produces the U.S. average quantity of milk per year. The index accounts 
for changes in the cost of key feed ingredients like corn, soybean 
meal, and alfalfa as well as changes in the cost of feeding an entire 
dairy herd, including all lactating cows, dry cows, and replacement 
heifers. This careful process took nearly a year and the end result 
closely aligned with monthly feed cost data reported by USDA since 
2005.
    However, during the farm bill deliberations process, Congress 
reduced the originally proposed MPP feed ration by ten percent due to 
the aforementioned CBO scores. This one change had major, outsized and 
significant negative financial implications for the monthly Margin 
Protection Program calculations, and for all dairy farmers who 
participated in MPP. Specifically, the change had the effect of 
arbitrarily raising the reported MPP margins under the formula by 
approximately $1 per hundredweight. For one illustrative example, in 
May and June of last year, the MPP margin was calculated under the 
existing formula to be $5.76 per hundredweight. But under the more 
accurate, real-world formula from our original proposal, the true 
national average margin was really $4.77 per hundredweight. This nearly 
$1.00 difference in the calculation demonstrates why the current 
program is ineffective--using the true feed costs calculations would 
have provided coverage to a larger group of producers suffering through 
a difficult year.
    The ten percent reduction to the feed cost calculation has not only 
skewed the program arbitrarily, it also severely damaged farmers' 
perception of the program. Producers understood that MPP would not pay 
out when margins were relatively average, but they did expect the 
program would provide support at specific levels when margins were 
compressed. Unfortunately, because of the arbitrary change made to the 
feed formula in the 2014 Farm Bill process, the expected level of 
safety net support didn't happen in 2015 or 2016. As a result, most of 
the farms and the milk enrolled in the program today are only covered 
at the catastrophic $4 coverage level.
    To remedy this problem, NMPF is seeking restoration of the original 
feed cost formula that we put forward several years ago. Mr. Peterson, 
your proposed legislation from 2011 got this calculation right the 
first time and we implore the Committee to restore that original 
formula to make MPP more effective and improve program integrity--these 
steps will improve producer confidence in the program and, in turn, 
encourage greater participation in the program moving forward.
    This fix is fundamentally necessary to repair the program. In 
addition, there are a few other changes to the particular data series 
that USDA has chosen to use for calculating the MPP feed cost formula, 
which will better reflect the true costs of feed for the nation's dairy 
farmers. Specifically, we support the use of the corn price series 
compiled by USDA's Agricultural Marketing Service (AMS), which 
calculates the prices paid by farmers to purchase corn, as opposed to 
the series compiled by USDA's National Agricultural Statistics Service 
(NASS) that is currently used in MPP, which uses the price received by 
farmers for corn they sell. AMS reports this price at a large number of 
specific locations throughout the United States, and NMPF will work 
with that agency to select a representative sample of those pricing 
points to develop an accurate U.S. average price for corn purchased by 
farmers throughout the country. We also support changing the source of 
the MPP soybean meal price from the current single Decatur-Central 
Illinois price point to the average of all pricing points also reported 
by AMS. The impact of this change would increase average soybean meal 
prices in the MPP feed cost calculation by about $9 per ton, and is 
more consistent with the national average calculations that are 
reflected in the MPP feed and milk price formulas. Finally, we request 
that Congress direct USDA to develop a more detailed U.S. average price 
for dairy quality alfalfa hay. The current U.S. average price for 
alfalfa hay reported by NASS is an average of all grades and qualities 
of hay. Our members have consistently indicated to us that the single 
NASS price is well below that of the price for minimum quality alfalfa 
hay required to productively feed dairy cows. Taken together, these 
formula changes will help MPP more realistically reflect the feed costs 
borne by dairy farmers.
    The second aspect of MPP in need of revision relates to the 
producer rates for buy-up supplemental coverage While the feed cost 
reforms I have outlined are essential to having a program that reflects 
true producer costs, in order to make MPP an effective safety net 
program that farmers can afford to participate in, we believes that 
Congress must adjust the premium rates, especially the rates at the 
lower level of milk production. Today, commercial programs like the 
Livestock Gross Management (LGM) run by the Risk Management Agency 
(RMA) are more attractive than MPP, a title I program. In order to 
provide an effective dairy safety net, it is important to incentivize 
participation in MPP. That will require affordable premium rates that 
offer adequate levels of needed coverage for producers without 
stimulating additional milk production. Higher levels of supplemental 
coverage are especially important for small and medium-sized producers, 
and can be provided with less risk of increasing production.
    We look forward to working with the Committee to determine 
appropriate supplemental coverage rates in a manner that balances 
producer needs and program costs. Given the disappointment and 
frustration that many dairy farmers have felt regarding the program's 
initial performance, there will be work to do in reintroducing dairy 
farmers to a reformed MPP. Adjusting premium rates in a balanced manner 
will be an important part of our effort to maintain a working program 
for dairy producers of all sizes and in all regions.
    A third area for improvement in the operation of MPP relates to 
technical changes designed to make the program more responsive to 
producers on a functional level. First, the program can be strengthened 
by calculating the MPP margin on a monthly basis, rather than using a 
bi-monthly average basis. Using a bi-monthly calculation dilutes the 
timeliness and level of safety net support of the program for dairy 
farmers, so moving to a monthly calculation would be more accurate for 
risk management support purposes. In addition, we urge Congress to 
maintain the level of flexibility shown by USDA for coverage sign up 
each year so that producers have adequate time and ability to make 
informed coverage decisions. Each year since enactment, USDA has moved 
the sign-up period to a date late in the year prior to the start of the 
next coverage period.
    Finally, NMPF urges the Committee to enact policy changes that 
permit the Livestock Gross Margin-Dairy (LGM) insurance program, run by 
the Risk Management Agency (RMA), to work in a complementary manner 
with MPP. Almost every title I commodity has the ability to participate 
in both base programs and title XI insurance programs. Prohibiting 
dairy from having that ability not only discourages participation in 
the program, it further exposes milk, our nation's third largest 
commodity by cash receipts, to unwarranted levels of risk.
    Specifically, the LGM cap for dairy should be expanded so that more 
producers can participate. LGM is a sophisticated tool that works very 
well for specific producers during specific times, in particular when 
futures prices are high enough to allow farmers to protect a high 
margin, well above MPP levels. Unlike MPP's fixed premiums, LGM's 
premiums change as futures markets change, and producers have the 
ability to make numerous decisions to help customize their risk 
management for their farm.
    Even though the two programs offer fundamentally different kinds of 
protection, the 2014 Farm Bill required producers to make a one-time 
choice at the start of the farm bill between MPP and LGM. This put 
dairy farmers at a disadvantage within agriculture, as producers of 
other commodities are not required to choose between title I farm 
programs run by FSA and crop insurance programs run by RMA. Moreover, 
an analysis of 2014 Farm Bill outlays under title I demonstrates that 
dairy program costs are min[u]scule when compared to other major 
commodities.
Average Farm Program Payments per Base Acre
ARC, PLC, MPP


          Source: Congressional Budget Office, January 2017.

    The above chart demonstrates the importance of not only improving 
MPP, but also of ensuring that dairy producers have the ability to use 
a variety of different risk management tools to weather challenging 
financial times like the ones experienced during the last decade.
    Collectively, NMPF has proposed four areas for reform in the 
upcoming farm bill that we believe will strengthen MPP for the future 
and give producers the flexibility enjoyed by farmers of other major 
commodities. We look forward to working with this Committee to enact 
these changes in the next farm bill.
Immigration Reform
    While the need to improve the MPP economic safety net remains top 
of mind, we are heading into this farm bill process against a backdrop 
of other very significant challenges confronting the dairy community. 
Our current immigration system is failing America's dairy farmers.
    The importance of immigrant workers to the United States dairy 
industry cannot be overstated. Independent estimates indicate that at 
least fifty percent of the U.S. dairy farm workforce is comprised of 
foreign-born workers. Simply put, the dairy industry today cannot 
operate without immigrant workers.
    As our economy has become more services-oriented, our dairy farmers 
have found it harder to hire Americans to work on their farms. Even in 
times of high unemployment, our producers universally report an 
inability to find enough American workers to fill dairy jobs even if 
they pay more than other local jobs. Dairies all around this country 
consistently seek American workers from their local communities, at 
highly competitive wages, but sufficient numbers of local workers are 
simply not available or not interested in working on dairy farms.
    According to a study NMPF commissioned with Texas A&M University 
that was released in August 2015, 51 percent of all dairy farm workers 
are immigrants, and the farms that employ them account for 79 percent 
of the milk produced in the U.S.
    The dairy industry has some unique qualities that set it apart from 
other sectors of the agricultural industry. Dairy production is a 7 day 
a week, year-round endeavor. Our cows require constant, daily care and 
handling. Unlike most other agricultural production, there is no 
``season'' in dairy production. Unfortunately, this nation's single 
agricultural visa program, the H-2A program, focuses on a seasonal or 
temporary need for workers, and generally excludes dairy farms from 
participation. Although the Department of Labor has made exceptions to 
this seasonal requirement for others in agriculture, such as 
sheepherders, the Department refuses to provide a similar accommodation 
for dairy.
    Therefore, the dairy industry is facing the same shortage of 
domestic workers that is faced by the rest of agriculture, but with one 
glaring difference: we are unable to utilize the H-2A agricultural 
worker visa program to hire legal foreign workers. While we believe the 
current H-2A program is deeply flawed, our exclusion from the only 
option for hiring foreign workers under a visa program, brings 
heightened business and legal risks for our member farms. The fact that 
an agency of the U.S. Government consciously treats one sector of 
agriculture differently is simply, fundamentally unfair.
    As the President enacts his new Executive Orders, new enforcement 
mechanisms have come with a great deal of uncertainty and confusion 
about the scope of the enforcement actions, and how broad the impact 
will be. The uncertainty is creating a significant level of anxiety and 
distress in farm country.
    Without access to a steady and reliable workforce, our industry 
will not be able to survive, let alone thrive, in the future. It is 
imperative for Congress to act soon to address the needs of American 
agriculture and, in particular, the dairy industry. It is critical that 
we maintain our current workforce, and create a sensible, workable 
means of filling farm jobs in the future.
    We recognize the need for secure borders and enforcement efforts to 
remove criminal aliens, but such steps must be accompanied by the 
establishment of a system providing dairy and other agricultural 
enterprises with access to a stable, legal workforce. If Congress is 
going to enact a nationwide E-Verify requirement, then it also needs to 
provide agriculture with a workable guest worker program to meet our 
future needs and a means to allow those who are currently working in 
undocumented status to be eligible for such a guest worker program. 
Failure to do so risks severely damaging the economic vitality of the 
nation's entire agriculture sector.
    We will be working closely with the Judiciary Committee and the 
leadership in the House and Senate as well as Members of the House and 
Senate Agriculture Committees to address the inability of the dairy 
industry to participate in the H-2A temporary agricultural worker 
program, and the need to address current workers with improper 
documentation.
Trade
    The dairy industry also has made great strides on trade since the 
turn of the century. Our nation has gone from exporting dairy products 
valued at less than $1 billion in 2000 to exporting a record $7.1 
billion in 2014, an increase of 625 percent. Although the depressed 
world markets I spoke of earlier reduced that number closer to $5 
billion last year, we remain the largest exporter of skim milk powder, 
whey products, and, depending on the month, the number one exporter of 
cheese in the world. This is a tremendous increase not simply on a 
value basis, but also in the percentage of U.S. milk production that 
finds a home overseas. Fifteen years ago, we exported roughly five 
percent of our production, while today we export three times that level 
even as overall U.S. milk production has continued to grow. Put simply, 
today, the equivalent of 1 day's domestic milk production each week 
ultimately ends up overseas.
    It is not coincidental that the enormous growth in dairy exports I 
mentioned earlier occurred during a period when the U.S. began 
negotiating market-opening free trade agreements (FTAs) and the Uruguay 
Round Agreement reduced export subsidies and created the first Sanitary 
and Phytosanitary Agreement (SPS Agreement). The FTAs implemented since 
the early 1990's lowered and in the vast majority of cases ultimately 
remove tariffs on our exports and in many cases they gave our products 
a preferential advantage over other supplying countries. They also 
helped remove technical and regulatory barriers to trade. Over this 
period, exports of dairy products to FTA partners grew by 685 percent 
as compared to 338 percent to non-FTA countries. But it is important to 
note that, while our exports to non-FTA countries contracted by 32 
percent, they fell by only 20 percent to our FTA partner countries.
    FTAs have created important new market access opportunities for us 
and we have worked very hard through our market development efforts to 
ensure that we are taking full advantage of them. Two to 3 decades ago 
our industry feared trade agreements. Now, we embrace the benefits that 
trade agreements can offer as a vehicle for tearing down foreign 
barriers to our products and effectively enforcing the terms of U.S. 
agreements. Well-negotiated trade agreements are essential to ensuring 
that we do not lose out to competitors who are themselves cutting FTA 
deals around the world. Poorly negotiated agreements risk forsaking 
critical opportunities to level the playing field for U.S. exporters. 
It is evident that the United States has fallen behind in expanding 
trade agreements compared to our competitors who are negotiating trade 
agreements all over the globe. When it comes to trade, those who stand 
still lose market share.
    We are encouraged by the President's call for greater enforcement 
of our existing trade agreements. Unfair import barriers remain in 
place and new ones are erected all the time. A good example is the 
relatively recent and extremely protectionist effort by the European 
Union (EU) to prevent the use of common cheese names around the world--
by misusing Geographical Indications to give their producers a lock on 
international markets. If we aren't in the game actively negotiating on 
these issues, we are ceding ground to our competitors and those looking 
to make it tougher for us to do business in their markets. We thank 
this Committee and Congress for strongly rejecting the EU's blatant 
protectionist efforts to claw back common food names like parmesan and 
feta, which belong to everyone, not just a handful of producers in 
Italy and Greece.
    Another major enforcement challenge is Canada--a country that has 
consistently erected barriers to U.S. dairy products. Canada has been 
actively pursuing every available opportunity to constrain dairy 
imports that begin to gain ground into its market, thereby repeatedly 
nullifying and impairing the value of dairy market access concessions. 
There has been case after case of Canada altering its regulations and 
policies to erect barriers to dairy trade.
    A few examples have been actions by Canada to prevent imports of 
milk ingredients, ultra-filtered milk, pizza preparations and even 
simple products like mozzarella sticks. In addition to its use of 
regulatory and policy tools to impair dairy trade, in the course of its 
FTA negotiations with the EU, Canada completely disregarded its own 
intellectual property laws in order to bow to EU pressure to impose 
restrictions on several generic cheese names. This decision was not 
only counter to Canadian IP policies and principles, but also existing 
international obligations.
    Finally, the most recent Canadian policy shift, which has already 
led to a drop in U.S. dairy exports, is another under-handed milk 
pricing policy maneuver. The first version of this policy was 
implemented in Ontario last spring, but as of last month is reportedly 
being implemented nationally. This new program has been developed to 
discourage the use of imported dairy ingredients and milk, while 
specifically encouraging use by Canadian processors of domestic dairy 
inputs. Collectively, these recent milk pricing programs aimed at 
displacing imports have already led to tens of millions of dollars in 
U.S. dairy export losses, an impact that comes at a particularly bad 
time for U.S. dairy farmers given the current depressed dairy market 
situation.
    Actions of this sort that unjustly attack the investments U.S. 
companies have made in servicing export markets cannot be tolerated and 
must be met with clear consequences. In the case of ultra-filtered milk 
in particular, U.S. companies--supplied by American dairy farmers--have 
made significant investments to seize the targeted opportunities in the 
Canadian market that were granted by the North American Free Trade 
Agreement (NAFTA) and the Uruguay Round.
    For Canada to now put in place policies designed to directly 
undermine and impair those investments harms employment in rural U.S. 
communities, impacts the supplying dairy farms and risks undermining 
support for the value of trade agreements. This is a significant blow 
to many companies in the United States, but it is not the worst 
consequence that this program will impose on our members.
    As part of this new policy, Canada will be disposing of significant 
quantities of milk protein in the form of skim milk powder into the 
world markets, lowering U.S. producer prices even more while at the 
same time maintaining its supply management system. The U.S. dairy 
industry has jointly urged this Administration, as well as the previous 
one, to clearly and publicly reject Canadian actions at both the 
provincial and Federal levels as inconsistent with their trade 
obligations. NMPF is also asking U.S. Governors of border states that 
have been affected by Canadian actions to begin taking immediate action 
in response to Canada's new barriers to dairy trade.
    We urge Congress to put Canada on notice for its continued 
violation of trade agreements and for offloading dairy products into 
the world market despite its supply management system. We urge the 
Administration to begin evaluating a potential WTO or NAFTA case with 
respect to not only the new special Class VII, but also the EU-Canada 
FTA agreement on GIs, as both are blatant violations of Canada's 
commitments to the U.S. and to its other trading partners.
    By contrast, the other NAFTA party, Mexico, has been a steadfast 
and reliable partner to the U.S. dairy industry. Where problems have 
arisen, both governments have, in general, been willing to work 
together to find ways to resolve them. As a result of this partnership, 
trade in dairy products to Mexico is now operating fairly smoothly. We 
consider Mexico not only to be our best foreign market but also a very 
good trading partner. Today we sell over $1.2 billion in a variety of 
dairy products to Mexico, making it our number one foreign market.
    The U.S. dairy industry has communicated in a united voice, as 
recently as last week on a trip we took to speak before Mexican 
producers, processors and government officials, where we expressed our 
desire to remain a reliable partner and supplier of dairy products, 
ensuring that there are no disruptions to our trade relationship. 
National Milk cannot stress enough the importance of the Mexican market 
to rural economies. Trade with Mexico means good-paying manufacturing 
jobs for tens of thousands of Americans. To that end, it is critical 
that Congress protects the progress we have made as the Administration 
updates existing trade agreements with Mexico.
    Finally, I would like to stress that when it comes to trade, our 
industry has built markets both close to home and overseas. We need to 
protect those markets and increase sales in regions as diverse as Asia, 
Latin America, and the Middle East. To make that possible, we need 
well-negotiated trade agreements and the necessary tools to implement 
them. As such, we urge the Administration to begin negotiations in the 
near term with Japan and Vietnam to ensure that we maintain our global 
competitiveness in years to come. What was achieved in TPP should be 
the starting point for negotiations with those partners, particularly 
with Japan in light of the reality that TPP all but excluded new access 
for two of the largest dairy commodities into Japan: milk powder and 
butterfat.
    As the Administration evaluates potential FTA partners, we urge it 
to keep in mind which countries would prove to be good candidates for 
an investment of U.S. negotiating resources. Not all trading partners 
will meet this benchmark and we will look forward to consulting with 
Congress and the Administration on helping to select those partners 
best positioned to yield net positive dairy and agricultural results in 
an FTA.
    In addition, we encourage increased funding for two tools under 
this Committee's jurisdiction that are designed to help encourage 
trade: the Market Access Program and the Foreign Market Development 
program. The value of the investment in these programs has eroded over 
time and must be significantly bolstered in light of our trading 
partners' aggressive investments in similar promotional programs. 
However, we strongly urge the Committee to ensure that USDA reviews the 
present distribution of new funds, so that those sectors such as dairy 
that have expanded exports significantly in the last decade, and are 
matching funds with their marketing efforts, are awarded with enough 
resources to continue this critical work.
Child Nutrition
    Another major issue for our industry is nutrition. This issue 
should be of concern to all of us given its impact on dairy farmers 
and, more importantly, our nation's children. In recent years, fluid 
milk consumption has continued to decline in schools due in part to 
restrictions on the types of milk that can be provided. Since these 
restrictions were put in place, food waste and reduced consumption of 
milk has only worsened.
    Let me remind you that milk is the primary source of nine essential 
nutrients in children's diets, and studies have shown that if children 
are not getting those nutrients at school, they may not be getting them 
at all. It is vital that Congress expand fluid milk options for school 
meal programs to ensure that our children are getting the nutrients 
they need. These changes are consistent with the 2015 Dietary 
Guidelines for Americans that determine school food options and have 
received bipartisan, bicameral support in Congress.
Environmental Sustainability
    Farmers are the original environmentalists. Our dairy farmers care 
deeply about the land, air and water that helps sustain their cows and 
their farm operations. Our farms are our homes; it's where we raise our 
families. In recent years, Federal and state regulators have applied 
significant pressure to improve water quality with a focus on reducing 
nutrient output in dairy-producing regions across the country. We, as 
an industry, have invested significant resources to proactively respond 
to this challenge, and we continue to work to embrace the best 
environmental practices.
    In a demonstration of continued leadership, the dairy industry is 
seeking proactive policy solutions that will help turn what can 
sometimes be a potential environmental liability, such as manure, into 
a valuable asset. To that end, NMPF supports the bipartisan Agriculture 
Environmental Stewardship Act which was introduced in both houses of 
Congress last year. This legislation creates an Investment Tax Credit 
to aid farmers with the up-front capital costs of nutrient recovery and 
biogas systems. These systems can play an important role in reducing 
the environmental impacts of dairy farming, and the ITC will 
incentivize voluntary action to address this rather than add additional 
regulatory burdens and higher costs onto the backs of already 
financially-strapped farm operations. We look forward to working with 
many of you to enact this legislation in this Congress as part of a 
broader tax package.
DAIRY PRIDE Act
    Another issue of great importance to dairy farmers as well as to 
consumers is the accurate and appropriate labeling of foods in 
accordance with established Federal standards of identity. 
Unfortunately, the U.S. Food and Drug Administration has been negligent 
in its enforcement of dairy food standards that clearly stipulate, in 
the Code of Federal Regulations, that a product labeled as ``milk'' 
comes from a cow, and that other similar products, including cheese, 
ice cream and yogurt, are likewise made from the milk from animals--not 
from beans, seeds, nuts and grains.
    Yet our grocery store shelves today are filled with all manner of 
copycat ``milk'' products that ignore government standards of 
identity--and mislead consumers about the nutritional equivalence, or 
lack thereof, to real milk. Milk has numerous vitamins, minerals and 
nutrients essential to human health, and it is the number one source of 
nine nutrients in children's diets. The 2015 Dietary Guidelines for 
Americans found that most Americans are not meeting the recommended 
intake for the dairy foods group.
    Plant foods processors go to great lengths to take a handful of 
seeds or grains, grind them into a powder, add whiteners and 
emulsifiers, blend in some vitamins, and then package the resulting 
concoction to resemble milk. Perhaps this imitation is meant as a form 
of flattery, because calling these products ``milk'' is clearly a 
subtle effort to trade on the healthy halo of real milk. Yet these 
imitators are engaged in misleading marketing because their products 
don't have the same consistent nutritional offerings as real milk, 
certainly not across the many types of imitation beverages on the 
market. Most will fortify their offerings to an extent, but they still 
do not offer the same extensive nutrition package that real milk does. 
You would never know this from the marketing claims of dairy imitators, 
which can mislead people into thinking these products are comparable 
replacements for milk, when in fact most are nutritionally inferior and 
thus not suitable substitutes.
    NMPF has repeatedly raised concerns with FDA that the agency is 
failing to enforce this long-standing, clearly-defined law when non-
dairy products co-opt terms like ``milk'' and ``cheese.'' We are 
greatly encouraged now that members of Congress are also becoming aware 
of this problem, and have introduced legislation to prompt FDA into 
taking action. H.R. 778, the DAIRY PRIDE Act, was introduced in January 
by Reps. Peter Welch, Mike Simpson and Sean Duffy. A companion Senate 
measure, S. 130, has been introduced by Sen. Tammy Baldwin. This 
legislation doesn't create a new law, but rather lays out explicit 
conditions by which FDA must explain how and when it will enforce dairy 
food standards of identity. I encourage members of this Committee to 
support this legislation.
    Let me be clear: we do not oppose the sale of imitation dairy 
products, but we do oppose their use of dairy terms specified in the 
Code of Federal Regulations. Dairy farmers are not seeking to eliminate 
competition from these products, they just want the enforcement of 
regulations that exist to prevent the marketing of inferior copies of 
established food products. Most other countries take this same 
approach, which is why you will not find a product labeled as ``almond 
milk'' in Canada, the United Kingdom, or the 28 nation European Union, 
although almond-based beverages are still sold in those nations.
    The promoters of dairy alternatives claim that the DAIRY PRIDE Act, 
as well as an overall increase in the enforcement of existing dairy 
labeling standards, will interfere with the marketing of other common 
foods such as coconut milk, milk of magnesia, and peanut butter. But 
these are nothing more than absurd straw man arguments meant to deter 
any enforcement of the current regulations.
    The difference is that these other products do not market 
themselves as replacements for real dairy foods. Peanut butter, and 
other nut butters, are not functional replacements for butter made with 
real cream. In fact, butter makers first dealt with this issue 80 years 
ago, when plant-based spreads began appearing. They were not then 
called, nor are they today labeled, ``soy butter'' or ``vegetable 
butter.'' They're called margarine, precisely because government 
standards dictate that butter comes from milk, not plant sources.
    In fact, peanut butter, like real milk, has a Federal standard of 
identity, specifying its composition. The imitation milks do not have 
standards of identity--that's the major problem.
    This line of argument is just another attempt to blur the issue, 
which is that a growing number of plant-based products are positioning 
themselves as alternatives to milk, even though they are not suitable 
substitutes from a nutritional standpoint. It is past time for this 
deception to end.
Closing
    Mr. Chairman, I want to once again thank you and the Ranking Member 
for holding this hearing today. NMPF is grateful for your emphasis and 
focus on policy in the upcoming farm bill process, and we look forward 
to working closely with you to see that MPP reforms become a reality.

    The Chairman. Thank you, Mr. Mulhern. Dr. Dykes, 5 minutes.

  STATEMENT OF MICHAEL D. DYKES, D.V.M., PRESIDENT AND CHIEF 
   EXECUTIVE OFFICER, INTERNATIONAL DAIRY FOODS ASSOCIATION, 
                        WASHINGTON, D.C.

    Dr. Dykes. Thank you, Mr. Chairman, Ranking Member 
Peterson, and Members of the Committee. I am pleased to be here 
today. The recognition for Chairman de la Garza brings back 
memories for me as well. I wasn't here in Washington, D.C. in 
the 1980s. I was a practicing dairy veterinarian during the 
time, and we experienced some gut wrenching financial times 
during that era. The late 1980s were tough for everyone, and I 
remember those very vividly today. We saw foreclosures, we saw 
strife in agriculture that was quite significant. Those are 
vivid memories for me of the late 1980s as well.
    Thank you all for holding this hearing today. I am honored 
to be here. I appreciate the challenges facing this Committee 
as you begin to draft a new farm bill, and you are doing that 
under very different economic circumstances than you did for 
the last farm bill.
    I grew up on a dairy farm, having been a practicing dairy 
veterinarian, I have always had a special interest in dairy 
policy. IDFA is a national trade organization representing a 
$125 billion a year manufacturing and marketing industry, with 
525 members. We are part of the U.S. food and grocery 
manufacturing industry, which employs nearly two million 
people. Two million American jobs. Our companies market and 
retail milk, dairy products, yogurt, cheese, ice cream, infant 
formula, and many other products.
    As this Committee begins to consider the next farm bill, 
the dairy industry needs better mechanisms for risk management. 
And that is on both the farmer side, as you just heard Jim 
explain, and on the processor side as well. Farmers are now 
looking to improve the Margin Protection Program and the 
Livestock Gross Margin insurance program to provide them with 
some access to effective risk management tools in this farm 
bill. We are looking at those proposals. We are studying those 
proposals, and we are supportive of fine tuning the farmer 
safety net so that it functions effectively for farmers, and it 
is not market distorting.
    At the same time, we would ask that the 2018 Farm Bill 
provide better risk management tools for processors to manage 
price volatility through the extension and expansion of the 
current forward contracting program, which includes all dairy 
products, except fluid milk, at this time. Forward contracting 
has provided an important mechanism for manufacturers to 
directly contract with individual farmers, or their 
cooperatives, at a fixed price to reduce price volatility. We 
believe this program should now be made permanent, and the same 
opportunity should be afforded to fluid milk manufacturers so 
that they too can help manage price volatility in the 
marketplace. We intend to work with National Milk to develop a 
consensus proposal, and my hope is that we can work 
collaboratively to find a solution. We pledge to keep this 
Committee apprised of our progress.
    I would also like to briefly mention five additional policy 
areas that we are looking to you for support. First, we watch 
closely the success of the SNAP pilots authorized in the 2008 
and the 2014 Farm Bill to increase fruit and vegetable 
purchases. We believe adding voluntary incentives to SNAP 
participants to increase their consumption of milk and dairy 
foods would be nutritionally sound, and a wise use of taxpayer 
dollars. We request that the Food Insecurity Nutrition 
Incentive Program be reauthorized and expanded to include milk 
and dairy foods in the next farm bill.
    Second, milk is not only under-consumed in all U.S. 
households, but also in schools. We have seen 6 straight years 
of declining school milk consumption, even as overall school 
enrollment has increased. We are actively working with National 
Milk, and the Subcommittee Chairman Thompson, to lift the 
restrictions and expand the options on the types of milk 
offered in school cafeterias. We believe these changes to SNAP 
and school milk programs are important, given that nine out of 
every ten Americans are not consuming the recommended three 
servings of dairy a day, according to the 2015 Dietary 
Guidelines.
    Third, IDFA, and the entire food and beverage industry, 
recently asked Secretary Price to extend the compliance 
deadline from July 2018 to May of 2021 for FDA's new nutrition 
facts and serving size rules. Without the extension from FDA, 
our companies may redesign all product labels by next year, 
only to learn they must do it all over again to comply with 
USDA's GMO labeling requirements, which are on a different 
compliance schedule.
    Fourth, dairy foods represent the second largest, and 
fastest growing, category of organic foods, totaling $6 
billion, or 15 percent of all organic sales. We believe 
maintaining the National Organic Program as it is currently 
managed will ensure that consumers have access to organic dairy 
products, and accommodates continued growth over the organic 
dairy industry.
    Fifth, exports are driving growth and demand for U.S. farm 
milk, and we are well positioned to achieve even more growth. 
We have industry and regulatory standards to assure consumers 
that our products are safe. We have the technology to innovate, 
and we have the infrastructure to deliver the products to our 
consumers. Mexico is the number one export market for U.S. 
dairy, accounting for \1/4\ of our total dairy exports. We need 
to ensure that re-negotiation of NAFTA preserves this important 
market. Recent Canadian efforts to prevent U.S. exports of 
ultra-filtered milk from Wisconsin and New York will cost our 
industry approximately $150 million. We need to address this 
issue immediately, and obtain increased market access for dairy 
in Canada.
    Finally, the Asia-Pacific region is the world's largest 
market for food and agriculture, and is expected to double by 
2050. Reducing and eliminating tariffs and other restrictive 
agriculture policies in this region will allow our dairy 
industry to compete.
    Mr. Chairman, there is a common thread to all the issues 
that I raised here today, and that is enhancing the demand for 
U.S. dairy products. With the proper tools, and proper 
policies, such as expanding the options for the type of milk 
offered in school cafeterias, obtaining greater market access 
in Canada, and opening new markets in Asia, maintaining our top 
export market in Mexico, offering more dairy foods through 
SNAP, and providing better mechanisms for risk management for 
both farmers and processors, I am confident our industry will 
meet and increase the demand for milk and dairy products, and 
provide economic prosperity and stability to American dairy 
companies, American dairy farmers, and their communities 
throughout the country.
    Thank you, Mr. Chairman, and the Members of the Committee, 
for the opportunity to testify today. I look forward to 
answering your questions.
    [The prepared statement of Dr. Dykes follows:]

  Prepared Statement of Michael D. Dykes, D.V.M., President and Chief 
 Executive Officer, International Dairy Foods Association, Washington, 
                                  D.C.
    Chairman Conaway, Ranking Member Peterson, Members of the 
Committee,

    Thank you for holding this important hearing today and for inviting 
me to testify about dairy policy.
    My name is Michael Dykes and I am the President and CEO of the 
International Dairy Foods Association. As the new leader of this great 
organization, I am following two distinguished individuals, Tip and 
Connie Tipton, both of whom I have had the pleasure of knowing and 
working with for nearly 20 years. I plan to continue building this 
great organization by working collaboratively on shared interests with 
all stakeholders to realize a bright future for the U.S. dairy 
industry.
    Let me begin by sharing a brief bit of personal background: I grew 
up on a small dairy and tobacco farm in the great Commonwealth of 
Kentucky. I milked my first cow at age 5--and kept milking until age 17 
when I became the first member of my family to attend college. After 
studying animal science and ag economics at the University of Kentucky, 
I attended veterinary school at Auburn University. I was an owner in a 
six-person veterinary practice for a number of years in Illinois and am 
still a licensed veterinarian.
    I left the veterinary practice and joined the grain and feed 
industry, where I worked with farmers in the United States and all over 
the world--especially Europe, South America and China--during my career 
at Continental Grain and Monsanto. During those years, I saw firsthand 
just how important international trade and competitive global markets 
are for U.S. agriculture and our dairy industry. Although the U.S. 
dairy sector entered the global marketplace later, the development of 
exports over the last 10 years has been a primary contributor to 
several periods of prosperity and represents the single most 
significant demand-growth opportunity for our members and the dairy 
farmers who supply them.
    I've worked in the world of agricultural policy and regulation for 
the past 2 decades, and during my time in Washington, I've seen and 
learned a lot--about politics, about the value of collaboration, about 
policy and about the industry that we all so dearly love, American 
agriculture. Before I joined IDFA, I thought I had a pretty good 
understanding of what this association does--and who it represents. But 
in my short tenure I've learned that IDFA is so much more.
    I'd like to share briefly what I've learned since joining IDFA so 
there is a broader context to my testimony--one that I hope will help 
guide your perspective on what our industry has to say about the 
upcoming farm bill.
    IDFA is a national trade association representing a $125 billion a 
year dairy manufacturing and marketing industry with 525 member 
companies. We are part of the U.S. food and grocery manufacturing 
industries which directly employ over two million Americans.
    IDFA members are manufacturers, marketers and retailers of milk and 
dairy products, including beverage milk (Class I), yogurt (Class II), 
ice cream (Class II), cheese (Class III), and butter and dry products 
(Class IV). Our members range from the nation's largest farmer-owned 
dairy coops to multinational corporations to family-owned, single-plant 
operations. We also have member companies that supply the dairy 
industry with everything from ingredients to packaging to equipment.
    IDFA members include national and regional grocery retailers that 
make their own dairy products; international food service chains; and 
innovative processors that produce ultra-filtered, high-protein, 
lactose free, fat free and low-sugar milks with extended shelf life. We 
represent every kind of ice cream company you can imagine; yogurt 
companies; infant formula companies; and cheese makers--all supplying 
customers around the globe. Other members are pioneers in providing 
innovative dairy ingredients that offer health and nutritional 
functions in foods, which are increasingly in demand. And speaking of 
increasing demand, we also have members in the rapidly growing organic 
dairy sector.
    IDFA is governed by board members who represent leaders across the 
spectrum of the dairy industry. We are fortunate that this diversity 
provides our organization with a very broad view of the overall dairy 
industry. We know that to continue our success, we must innovate to 
keep up with the market, and to innovate, we must collaborate along 
every stage of the supply chain, from farmer to processor to retailer 
to consumer.
Consumers Crave New Products
    Listening to consumers is a good place to start, and we know they 
crave new products. That's why American consumers today have far more 
choices in the dairy aisle and on grocery shelves than ever before. 
Greek-style yogurt, string cheese, shelf-stable milks and high-protein 
beverages and snacks have become consumer favorites in the past few 
years. But these products are just the tip of the iceberg.
    When you think of traditional dairy, the terms ``wholesome,'' 
``good for you,'' ``most perfect food,'' ``does a body good,'' 
``reliable,'' ``affordable'' and ``tasty'' all come to mind. But we're 
far more than a gallon of milk today. In fact, milk contains protein, 
as well as eight other essential nutrients, lactose, and calcium. These 
milk components can be used to make an ever-increasing range of 
specialized dairy products and ingredients for infant formula, protein 
drinks and many other specialty products.
    How did we move from a gallon of milk to powerful protein beverages 
and more? Let's take a quick look at the U.S. dairy industry and its 
evolution over the years.
Evolution of U.S. Dairy Industry
    Before World War II, the dairy industry was dominated by more than 
4.5 million small, widely scattered farms and 22,000 processing plants. 
With the growing use of refrigeration and cross-country transportation, 
the U.S. agricultural sector realized that local production wasn't a 
necessity and economies of scale were a good thing. Today the dairy 
industry has approximately 47,000 dairy farms and slightly more than 
1,500 processing plants that are much larger and serve a broader 
market.
    Where does all this farm milk go? More than 40% is used to make 
cheese and just over 20% is used for beverage milk and cultured 
products like yogurt. That is a significant change from 1960, when just 
10% went into cheese production and almost half was used for fluid milk 
products. As U.S. cheese production has increased, so has production of 
dairy ingredients from whey, (which is a protein-packed cheese 
byproduct), and other milk components.
    Cheese production reached a record high in 2016, as per capita 
consumption of cheese kept growing. Americans, on average, are eating 
35 pounds of cheese annually, which is twice the amount we ate in 1980. 
Per capita consumption of yogurt has increased even more dramatically 
during this time period, growing from 2.5 pounds in 1980 to almost 15 
pounds in 2015.
    Overall, domestic demand for dairy products is growing, but the 
growth is not where it should be when you consider that the 2015 
Dietary Guidelines for Americans state that ``intakes of dairy foods 
are far below recommendations.'' Per capita consumption of fluid milk 
products has been on a downward trend for decades as Americans have 
shifted to other beverages. USDA estimates that Americans, on average, 
drink 37% less milk today than they did in 1970. Forty years ago, per 
capita consumption was nearly 1\1/2\ cups per day; now it's closer to 
\3/4\ of a cup. Per capita production of frozen dairy products has also 
trended downward for more than 20 years.
    While our companies will continue to innovate and provide new 
products, new packaging and a variety of portions to gain the attention 
of American consumers, we're increasingly looking to the global market 
for additional growth opportunities. Here's why.
    The United States is the single largest cow's milk producer in the 
world. U.S. farm milk production has grown from 170 billion pounds in 
2003 to 212 billion pounds in 2016, and more than 52% of that 
additional farm milk is exported to other countries in the form of 
various finished products. Indeed, exports are driving growth in demand 
for U.S. farm milk, and the potential for further global demand is 
huge.
    As the world population grows by another two billion people by 2050 
and continues to develop economically, the demand for protein and 
improved diets will increase the demand for dairy products. Dairy foods 
are uniquely positioned to meet the nutritional needs of a growing 
world with more disposable income and an appetite for higher-protein 
products. This will mean increased opportunities for global trade in 
dairy.
    The International Dairy Federation estimates that world demand for 
milk and dairy products would double by 2030 if dairy consumption grew 
to match the actual nutritional needs of all global diets. That number 
would triple by 2050. The Australian Bureau of Agricultural and 
Resource Economics (ABARE) estimates that dairy consumption in the 
Asia-Pacific region alone--driven by China, India and Japan--should 
double by 2050.
    Those estimates represent an amazing opportunity for American dairy 
processors, American dairy farmers and members of Congress to 
collaborate to bring enhanced nutrition to a growing world and new 
opportunities and prosperity to our industry. Ensuring that the U.S. 
dairy industry is globally competitive to capture this growing demand 
is imperative.
    We are well positioned to achieve export growth: We have industry 
and regulatory standards to assure consumers that our products are 
safe, we have the technology to innovate and we have the infrastructure 
to deliver to our customers. Most importantly, we are blessed with the 
natural resources to expand milk production. On the milk supply side, 
we know the United States is incredibly competitive. To cite USDA, milk 
production in pounds per cow has increased by more than 20% since 2004. 
To emphasize this point, I would like to point out that the average cow 
in 1950 produced 5,500 pounds per year, and today it is nearly 23,000 
pounds per year. American agriculture has a tremendous capacity to 
produce!
    As these facts demonstrate, globalization provides important 
opportunities for the U.S. dairy industry. At the same time, global 
demand has also increased volatility in dairy markets. The question is: 
What do we do about it?
    First and foremost, the dairy industry needs better mechanisms for 
risk management--and that's on both the farmer and processor side. The 
2014 Farm Bill overhauled the farmer safety net, replacing the dairy 
product purchase program with the Margin Protection Program, a margin 
insurance program, in recognition of this new global environment. 
Farmers are now looking to improve the Margin Protection Program and 
the Livestock Gross Margin insurance program to provide them with 
access to effective risk management tools in this farm bill. We are 
looking forward to reviewing the details of their proposal but are 
supportive of fine-tuning the farmer safety net so that it functions 
effectively and is not market distorting.
    At the same time, the 2018 Farm Bill should provide better 
mechanisms for processors to manage price volatility through the 
extension and expansion of the current forward contracting program. 
Both domestic and international demand is negatively impacted by price 
volatility. Global customers are accustomed to buying dairy products at 
fixed prices that cover multiple months of deliveries and are reluctant 
to take on the price volatility generally associated with the U.S. 
dairy industry. Domestic buyers, whether food formulators for consumer 
packaged goods or food service or restaurant menu designers, also 
prefer to use ingredients for which prices are less volatile or for 
which they can better manage the price risk. If dairy cannot meet that 
need, the industry loses that demand. And we risk permanently losing 
retail consumers who migrate away from fluid milk and dairy products 
during high price cycles.
    The minimum regulated milk price provisions of the Federal Milk 
Marketing Orders (FMMO) translate the price volatility of the dairy 
commodities directly into the regulated milk prices. The establishment 
of the forward contracting program for manufacturers of dairy products 
other than fluid milk has provided an important mechanism for 
manufacturers to directly contract with individual farmers or their 
cooperatives at a fixed price, but the finite timeframe allowed in the 
program challenges its use as we approach each farm bill. This program 
should be made permanent and the same opportunity should be afforded to 
fluid milk processors so that they, too, can curb the negative demand 
impacts of price volatility.
    The current forward contracting program allows farmers and 
cooperatives to voluntarily enter into forward price contracts with 
handlers for milk that is used to make ice cream, yogurt, cheese, 
butter and powder (Class II, III or IV milk). The program allows 
handlers regulated under the FMMO and farmers to agree on the terms of 
the contract, without having to pay the minimum Federal Order blend 
price. However, regulated handlers are still required to make payments 
or distributions from the farmer settlement fund into the Federal Order 
pool. To ensure that the program is voluntary, the farmer or 
cooperative is required to file a disclosure agreement with the FMMO 
market administrator.
    In addition to proposing that all milk (Class I, II, III, IV), be 
eligible to establish forward price contracts, many other aspects of 
the current milk pricing regulatory system should be reviewed in the 
context of today's consumer trends and global marketplace. The system's 
underlying assumption that beverage milk can bear a significantly 
higher price burden may no longer be accurate in today's highly 
competitive beverage market in which fluid milk sales continue to 
decline.
    Many of the milk pricing issues that are negatively impacting my 
members flow through in the form of decreased demand which negatively 
impacts farmers as well. We intend to start a dialog with NMPF and 
other farmer stakeholders about these concerns in an attempt to develop 
a consensus proposal. Although my hope is that we can work 
constructively through that process, I would be remiss not to highlight 
to the Committee that these issues are important to address on a timely 
basis. We pledge to keep this Committee apprised of our progress to 
develop a comprehensive solution to these issues that advances the 
interest of the entire dairy industry.
    Mr. Chairman and Members of the Committee, I'd also like to briefly 
mention some additional policy areas that we are looking to you for 
support.
SNAP and USDA Nutrition Programs
    I congratulate the Chairman and the members of this Committee for 
your thorough, top-to-bottom review of the Supplemental Nutrition 
Assistance Program (SNAP). This was an important undertaking from both 
a fiscal and nutrition policy perspective. We have watched closely the 
success of the SNAP pilots authorized in the 2008 and the 2014 Farm 
Bills to increase fruit and vegetable purchases. The 2008 Farm Bill 
authorized $20 million for the ``Healthy Incentives Pilot''; and the 
2014 Farm Bill authorized $90 million for the ``Food Insecurity 
Nutrition Incentive (FINI)'' grant program to test incentives at the 
point of sale.
    Given that only one out of ten Americans consumes the recommended 
three servings of dairy a day, according to the 2015 Dietary 
Guidelines, we believe adding voluntary incentives to encourage SNAP 
participants to increase their consumption of milk and dairy foods 
would be nutritionally sound and a wise use of taxpayer dollars. We'd 
like the FINI program to be reauthorized and expanded to include milk 
and dairy foods in the next farm bill so SNAP participants would have 
even more incentives to purchase milk and dairy products.
    Milk is not only under consumed in all U.S. households but also in 
schools. We've seen a disturbing decrease in school milk consumption 
over the past few years, and we are actively working with NMPF and 
Subcommittee Chairman Thompson on solutions that will help move the 
needle in the right direction. The same approach holds for other 
programs as well, including the Women, Infants and Children (WIC) 
program. Currently, USDA regulations limit milk options--and we'd like 
to see these regulations changed to expand milk options to encourage 
increased consumption, which addresses the 2015 Dietary Guidelines 
recommendations that point to significant under consumption of milk and 
dairy.
Product Labeling Changes
    Product labeling for the entire food and beverage category is 
currently undergoing enormous change, and multiple compliance deadlines 
are placing a massive regulatory burden on the industry. Approximately 
400,000 new products have been introduced since the original Nutrition 
Labeling and Education Act rules were established more than 20 years 
ago. To change essentially every food package in the United States 
requires adequate time, careful planning, significant resources, 
testing and analyzing of products, entering of ingredient information 
into databases, new label and packaging designs, new printing plates 
and queuing up with printing companies. The process requires 
coordination among software vendors, ingredient suppliers, graphic 
designers, printing companies and others on a magnitude of scale never 
before executed.
    IDFA and the entire food and beverage industry recently asked 
Health and Human Services Secretary Price to extend the compliance 
deadline to May 2021 for FDA's new Nutrition Facts and Serving Size 
rules. Additional time will help companies avoid wasting billions of 
dollars on duplicative relabeling schemes. FDA's own Regulatory Impact 
Analysis found that the cost associated with a 2 year compliance 
deadline could be as high as $4.6 billion, and the cost of a 4 year 
compliance deadline could reach $2.8 billion. Unfortunately, FDA chose 
the option that is 39% more expensive, providing only 2 years for all 
but the smallest companies. The current compliance deadline is July 26, 
2018.
    Our request for more time to comply will also allow USDA to 
complete its work on the GMO labeling rule, which requires a standard 
format for disclosing ingredients produced with biotechnology. Without 
the extension from FDA, companies may redesign all product labels by 
next year only to learn they must do it again to comply with USDA's 
requirements.
    Given the lead times required to comply with the Nutrition Facts 
label and the opportunity for complying with both FDA and USDA 
regulations with one set of label changes, we need immediate action on 
this request.
Organic Dairy Products
    Dairy foods represent the second-largest and fastest-growing 
category of organic foods sales, totaling about $6 billion, or 15% of 
all organic sales, according to the Organic Trade Association. The 
National Organic Program (NOP) at USDA has provided a consistent and 
reliable platform for the organic industry to grow and thrive. We 
believe maintaining the NOP program as it is currently managed will 
ensure that consumers have access to organic dairy products that meet 
their expectations. We also support the current structure and functions 
of the NOP and the resources to ensure that the program accommodates 
continued growth of the U.S. organic dairy industry.
Trade
    IDFA and our member companies look forward to working with the new 
Administration and Congress to achieve trade policy goals that will 
preserve and grow dairy exports. As I said previously, global trade 
represents the single most significant demand growth opportunity for 
our members and the dairy farmers who supply them.
    Mexico is the number one export market for U.S. dairy, accounting 
for \1/4\ of our total dairy exports. The United States has a 73% 
market share of Mexico's dairy imports, and we need to ensure that a 
renegotiation of the North American Free Trade Agreement preserves this 
important market.
    I recently traveled to Mexico City with Jim Mulhern and former 
Secretary Vilsack to meet with Mexican dairy farmers, processors and 
government officials. NAFTA is very successful for both the United 
States and Mexican dairy industry; it provides exactly the type of 
``win-win'' business opportunities that each country needs. We found 
support to preserve the current market relationship from the dairy 
farmers, processors and the Government of Mexico.
    Unfortunately, we haven't had the same success with our trading 
partner to the north. The Canadian Government is violating its trade 
commitments with the United States under NAFTA and the World Trade 
Organization with respect to dairy. Recent Canadian efforts to create a 
new Class of milk effectively prevents U.S. exports of ultra-filtered 
milk from Wisconsin and New York and will cost the industry at least 
$150 million, while threatening U.S. jobs on farms, in processing 
plants and throughout the supply chain. Canada recently expanded this 
new pricing initiative, and we need to address this issue immediately 
before further damage is done.
    Finally, the Asia-Pacific region is the world's largest market for 
food and agriculture and is expected to grow rapidly in the years 
ahead. Reducing and eliminating tariffs and other restrictive 
agricultural policies in this region will allow our dairy industry to 
compete, creating an opportunity to supply Asian markets with high-
quality dairy products. With more than 95% of our potential customers 
living outside our borders, expanded access to the Asia-Pacific region 
is critical if we are to attain our future export potential.
Conclusion
    In summary, IDFA represents a broad cross section of the U.S. dairy 
industry. Our views are based on what is good for all our members and 
our entire dairy industry, from farmer to processor to input provider 
to wholesaler to retailer to the consumer. With our policy goals, we 
aim to ensure that our industry remains competitive and strongly 
positioned for growth, both domestically and internationally, to meet 
the demand for our nutrient-rich products in a way that benefits all 
our stakeholders and contributes so importantly to the health of 
Americans and our nation's economy.
    Mr. Chairman, there is a common thread to all the issues I have 
outlined: enhancing demand for U.S. dairy products. The opportunities 
are clearly out there, and the U.S. dairy industry is poised to take 
full advantage.
    With the proper policies and tools--such as lifting restrictions on 
the types of milk offered in school cafeterias, obtaining greater 
market access in Canada and opening new markets in Asia, maintaining 
our top export market in Mexico, offering incentives to purchase more 
dairy foods through SNAP or providing better mechanisms for risk 
management for both farmers and processors--I'm confident our industry 
will meet and increase the demand for milk and dairy products and 
provide economic prosperity and stability to American dairy companies, 
American dairy farmers and their communities throughout the country.
    IDFA's board members will be meeting next month to take official 
policy positions on a number of the issues I've just outlined, and we 
will work collaboratively with NMPF on our many issues of mutual 
interest as we approach the upcoming farm bill. We look forward to 
working with the Committee on the various programs and policy 
recommendations under the purview of the farm bill.
    Thank you, Mr. Chairman and Members of the Committee, for the 
opportunity to testify at today's hearing. I look forward to answering 
your questions.

    The Chairman. Well, I thank the gentleman. The chair would 
remind Members they will be recognized for questioning in order 
of seniority for Members who were here at the start of the 
hearing. After that, Members will be recognized in order of 
arrival. I appreciate Members' understanding, and I recognize 
myself for 5 minutes.
    Thank you both for being here, I appreciate it. It is 
pretty clear that the MPP Program didn't work as intended, and 
we are going to work to try to fix that. I am hard pressed to 
understand how the ten percent increase in the feed cost would 
trigger a $2 billion score. Maybe the math is fuzzy, but that 
would seem to say the overall program would cost $20 billion, 
and I don't think that is the case either, so we are continuing 
to work with the CBO.
    I am concerned that expectations within the dairy industry, 
looking at that number, will be hurt if we don't come in near 
that, and that is not rational, to be able to add those kind of 
resources to the program. Collin and I are committed to finding 
the solution, but I don't want your members, and the producers 
out there, to feel like we didn't do our job because we 
couldn't deliver on that number. I don't think that number is 
right, but we are going to work to get this fixed. But I don't 
want misplaced expectations among your teams that that is the 
fix. And we are going to work on it, and we are committed to 
making that happen.
    Jim, with that, talk to us a little bit about the 
differential between the MPP as it applies to small herds 
versus larger producers. In your testimony you said we have had 
a significant drop in dairies since 2006. Can you walk us 
through how you think MPP could be used to slow that down, or 
stop it, or should we slow that down and stop it? Walk me 
through the differential between the two; size of farm versus 
MPP.
    Mr. Mulhern. Sure, Mr. Chairman. One of the beauties of MPP 
is the differential rates that were set up, in terms of the 
coverage below the first 4 million pounds of production, which 
is about 175, 180 cow herd, and production above 4 million 
pounds. And all farms get that rate on the first 4 million, and 
a higher rate for higher levels of coverage. MPP can be 
especially effective in protecting smaller farms because of the 
rate differential, and the ability, if it is affordable, to get 
higher levels of coverage.
    And that really is the key. The rates for $7.50, $8 
coverage, which, frankly, some of our small farms probably need 
coverage at that level, today it is too expensive, so we need 
to address those rates so they can buy up higher levels of 
coverage. Mr. Peterson was right in his comments. It is the 
same feedback we have gotten from our members, our larger 
members. They want to make sure they have the MPP as a 
catastrophic safety net. If we go through another 2009 
situation, those situations that are completely out of our 
control, they want to know that we have a floor under that 
price. It was devastating to go through that in 2009, and 2012 
was another bad year for our industry.
    But the beauty of MPP is it does have the ability to 
provide safety net support for all size operations. And by 
having the ability to have higher rates of coverage for the 
smaller operations, that will actually provide budget 
protection, Mr. Chairman. It won't be as high a cost if we do 
that.
    The Chairman. All right. Is the 4 million pounds an 
appropriate cut between the two? Should we raise that, lower 
that? Is the industry really okay with economics associated 
with herds smaller than that?
    Mr. Mulhern. Yes, it is an issue that we have looked at and 
had discussion, but our members are satisfied with the current 
4 million pound threshold level. There have been discussion, 
and there were some back in the last farm bill debate, of 
having three levels of coverage. We think we netted out pretty 
well on the 4 million pound above and below. That has worked 
well. We have not had a lot of concern from our membership 
about raising that. And, of course, that goes to the point, Mr. 
Chairman, if you adjust that, it does have budget implications, 
and we were trying to guard against that.
    I want to be clear in our presentation, the dairy industry, 
dairy producers of America, do not want a costly program. We 
have been back in the days when Kika de la Garza was Chairman 
of this Committee, back in 1985, we had not a $2 billion cost 
to the program over a 10 year score, we had a $2 billion cost 
to the dairy program in 1 year, and that is not helpful. We 
have gotten away from that. We want this program to be a safety 
net, and not to generate excess production. That was one of the 
reasons we had the battle we had in the last farm bill. There 
was concern and the whole battle over market stabilization was 
our industry's desire not to have too much milk coming out. The 
lesson we have seen is this program is not going to do that. It 
can be an effective safety net, if it is adjusted.
    The Chairman. Yes. Quickly, Michael, what is the scientific 
reason why Canada would refuse to take ultra-filtered milk?
    Dr. Dykes. I don't think they have given a scientific 
reason, sir. They are advantaging their own in-country 
processors to use their skim milk products for cheese 
production there, rather than taking our ultra-filtered milk 
from the U.S.
    The Chairman. Okay. With that, I will yield to Mr. Peterson 
for 5 minutes.
    Mr. Peterson. Thank you, Mr. Chairman. Mr. Mulhern, have 
you had discussions with CBO about these scores at all?
    Mr. Mulhern. No, I have not had discussions with CBO about 
them.
    Mr. Peterson. Well, I have, and I have put together a chart 
here that has a month by month breakdown of what the margin 
was, and I have done it based on what the current law is, and 
what it was originally. And there is only one bi-monthly period 
since the bill has gone into effect that we have had a payment, 
and is part of the reason we don't have participation.
    [The information referred to is located on p. 773.]
    Mr. Peterson. So this year we are not going to need it, 
$17+ they are projecting for milk. I just don't get it, how 
they are coming up with this score. One of the things that I 
have done is I have asked Langley, over at CBO, to give me a 
month by month printout of how he came up with this, and I 
would like to see what months he is saying it is going to cost 
this much money that we are going to come up to $2 billion. 
Whatever you guys can do to help him, I have Scott Brown 
working with him, and we are making some progress, but this 
thing is way out of line. And, having dealt with CBO in 2008, 
when I was Chairman, it is a big problem. And if you don't get 
them to move, I don't see how we are going to be able to do 
what needs to be done on the feed cost, unless we get them to 
bring it into reality.
    On the other hand, we have had this scored on the small 
producers of the 4 million pounds, and that is in the range, it 
will go to $7.50 at current 9, which is what it is for $6.50. 
To go to that level, we are talking $150 million over 10 years. 
It is not a huge amount of money to get the small producers 
better coverage which we need to do if we are going to get 
participation. And what I have been concerned about all along 
is that we will allow them to sign up month by month, and year 
by year we are going to have a situation one year where they 
are projected to have some kind of a price, and it turns out 
wrong, and we have a collapse, and they don't have any 
coverage, because they are not responding to the system. At a 
minimum, we have to get that done and go to the monthly 
coverages. It is only $21 million over 10 years to go to 
monthly coverage, but the feed cost, you guys are right, and 
what we had in the bill originally was right. But, we have some 
education to do. I don't know if you have any other ideas about 
what we can do to get them to the right numbers here.
    Mr. Mulhern. Well, I would say, Mr. Peterson, having some 
now white hair, remember the days back in the 1985 Farm Bill, 
when it was blonde? I have been dealing with CBO budget scores 
on dairy for a long, long time, and I have often seen them be 
inaccurate. And, frankly, it is a challenge. The score, these 
programs, this industry, because of the dynamic nature of it, 
it has been challenging. That stochastic model that they use in 
this scoring is a bit of a problem. It is a probability model, 
so they take all kinds of permutations, my understanding, and 
weigh those, and come up with a best guess, if you will. I have 
rarely seen them be very accurate in their scoring, and the 
experience we have had these last 2 years, where what the MPP 
was scored at when it came out of the Congress, scored for 
Fiscal Year 2016 and 2017 and what we have experienced, they 
were far off. And the fact is, in the first year of operation, 
first full year, the Federal Government made money on the MPP.
    Mr. Peterson. Right.
    Mr. Mulhern. Dairy farmers paid $70 million into the 
Federal Treasury for coverage, and the program paid out less 
than a million dollars: $730,000 was the payment out. Last 
year, because people had that bad experience the first year, a 
lot of people dropped down just to the catastrophic coverage, 
paid the $100 administrative fee, did not buy supplemental 
coverage. The fees collected dropped from $70 million to $20 
million. And, as you pointed out in your comments, there was a 
2 month period last year where USDA paid only to those 
producers who bought the higher level of coverage, which wasn't 
very many producers. It is a problem. The scoring is a 
challenge. It is one thing that we would like to continue 
working with you and the Committee to come up with more 
realistic and accurate budget projections.
    Mr. Peterson. Thank you, and as we said earlier, we do have 
parts of the country that have too much milk right now, as you 
know. But, Dr. Dykes, I just want to say, for my constituents 
and myself, that we want whole milk in the school.
    Dr. Dykes. We would appreciate that.
    Mr. Peterson. All right. We are right there with you.
    Dr. Dykes. And Jim would as well.
    Mr. Peterson. We are right there with you.
    The Chairman. The gentleman's time has expired. Mr. 
Goodlatte, 5 minutes.
    Mr. Goodlatte. Thank you, Mr. Chairman, and I want to 
second that motion from the Ranking Member with regard to the 
options that should be available in our schools.
    Mr. Peterson. Is that unanimous?
    Mr. Goodlatte. Mr. Mulhern, I would like to follow up on 
the gentleman from Minnesota's questions about the MPP premium 
rates. In your testimony you discuss adjustment to those rates, 
and your concerns regarding feed factor calculations. If feed 
factors were set at the original level that you mention in your 
testimony, I am curious about your opinion as to whether the 
cost of the program's premiums would be viewed as affordable or 
manageable by dairy farmers?
    Mr. Mulhern. It is a very good question, Mr. Goodlatte. I 
would say that the rates under 4 million pounds clearly need to 
be adjusted, because even if we fix the feed calculation, it is 
going to be difficult for them to buy coverage on that first 4 
million pounds at the current rates. Our experience the first 2 
years has been that small operations have a higher cost of 
production. They need a little bit higher level of coverage 
there. Adjusting those rates would be prudent to encourage more 
producer participation in the program to provide the safety net 
that it was designed to do.
    Above 4 million pounds, we want to look at those rates. We 
didn't propose specific rates because it is something we want 
to keep looking at. But, again, the feedback we have gotten 
from most of the larger producers is they view the importance 
of MPP as that catastrophic floor, the $4. Some will buy up 
some coverage, but are not looking to have higher levels of 
coverage under the program. Yes, rates need to be adjusted, 
especially on that first 4 million pounds.
    Mr. Goodlatte. Thank you. Dr. Dykes, you mentioned forward 
contracting in your testimony for Class II, III, and IV milk. 
Can you provide insight as to the logic of excluding fluid milk 
from forward pricing, and forward contracting? And why was this 
done, and should we change that?
    Dr. Dykes. This was done in the last farm bill, was 
excluding fluid milk from the ability to forward contract. I 
think it should be changed. We should look at that. We want to 
work with the National Milk Producers Federation to come up 
with a solution to that issue, and we think it should be 
afforded to----
    Mr. Goodlatte. It is a voluntary program, right? People can 
decide whether they want to forward contract or not?
    Dr. Dykes. It is a voluntary program. It takes two to make 
it work. It takes both the buyer and a seller. And it is not an 
effort to reduce the price, it is an effort to stabilize the 
price, or bring predictability to the price and reduce the 
volatility. That is why we are advocating it be extended to all 
four classes of milk, sir.
    Mr. Goodlatte. And farmers who forward contracted might 
have been helped through some of the fluctuations that we have 
been talking about here in recent times.
    Dr. Dykes. We believe that has been the case across 
agriculture. It helps bring predictability to a price at some 
point in time in the future.
    Mr. Goodlatte. And you would like to see Class II, III, and 
IV. Is that program working, in your opinion?
    Dr. Dykes. We think it is, and we also think that if it was 
made permanent, therefore, we take some additional uncertainty 
out of that, because when you are contracting, as you get near 
the end of the farm bill, then you have to have it renewed 
again before you know if it is going to be around or not.
    Mr. Goodlatte. Thank you. Mr. Mulhern, does the National 
Milk Producers Federation agree that forward pricing should be 
available for fluid milk, or are you looking at it? What is 
your position on that?
    Mr. Mulhern. Mr. Goodlatte, we think that forward 
contracting has worked well, in terms of Class II, III, and IV. 
There are some issues with Class I. There are some challenges 
there. However, Michael and I, this is an issue that we have 
discussed, and our groups are going to sit down and discuss 
this. One of the challenges, just to your initial question, is 
Class III and IV are competitively determined prices. They are 
determined in the marketplace for prices paid for milk going 
into cheese, butter, powder. Class I is calculated as a 
differential, added to the higher of Class III or IV price on a 
monthly basis.
    Mr. Goodlatte. Let me cut you off, because I only have 30 
seconds left. I just want to make two points.
    Mr. Mulhern. Sorry.
    Mr. Goodlatte. First, I know there is concern on the part 
of many dairy producers with regard to labor, and I just want 
you to know that I have, and continue to work on, as Chairman 
of the Judiciary Committee, an agricultural guest worker 
program, an H-2A program, that would include taking into 
account that dairy producers need workers throughout the year, 
and there are ways to help address that.
    And, second, going back to our first comment about schools, 
I just want to say that one of the issues with the decrease of 
milk consumption is the issue of taste, and that we ought to 
allow dairy producers and dairy processors to offer products in 
schools that meet that demand of young people who still like 
the taste of milk.
    Mr. Mulhern. We agree.
    Mr. Goodlatte. Whole milk.
    Mr. Mulhern. Thank you, sir.
    The Chairman. The gentleman's time has expired. Mr. Scott, 
5 minutes.
    Mr. David Scott of Georgia. Thank you very much. It is very 
important for us to continue this line of discussion about our 
children not getting whole milk, the fatty part of milk, that 
clearly is very helpful for them. I have a study here that was 
published in the medical journal Circulation, and here is what 
it says. It says that children who have a higher intake of 
whole milk, or two percent milk, gain less weight. I mean, that 
alone right there ought to Amen everything that my Chairman and 
Democratic leader said. Here is something else it said, that 
the research shows that the dairy fats found in milk, yogurt, 
and cheese help protect against Type 2 diabetes.
    So here we have this dilemma. One of the biggest issues 
facing us right now is obesity of our children, and especially 
because of how our society has changed. I often say they no 
longer go to the playground, we no longer have physical 
education as a requirement in schools, and we are getting fat. 
And here we have the golden product of milk, with all these 
blessings.
    Mr. Mulhern. Yes.
    Mr. David Scott of Georgia. What can we do to get this 
message out, and to come up with a procedure to do it? I love 
milk, and I got other people to enjoy milk, young people, 
because, as I would give my younger cousins, and brothers, and 
sisters milk, I would just dip into the sugar jar and put a 
little sugar in it.
    Mr. Mulhern. Yes.
    Mr. David Scott of Georgia. They loved it. If we did that, 
we would be doing a great blessing for our children. What do 
you guys say about that? I mean, you are out there in it. What 
can we do to get our young people to drinking more whole milk?
    Dr. Dykes. Can I start, Michael?
    Mr. Mulhern. Yes.
    Dr. Dykes. Thank you, sir. We would agree, and I believe 
that the reason so many of us drink milk today is we drank milk 
in school.
    Mr. David Scott of Georgia. That is right.
    Dr. Dykes. And we believe in that setting it is the right 
thing to do. Also, if we have milk in school that doesn't taste 
good, as has been mentioned in this Committee, we are not 
likely to drink it as we become adults.
    Mr. David Scott of Georgia. Yes. Like I say, put a little 
sugar in it.
    Dr. Dykes. We totally agree with you. One of the things 
that we are doing on the processor side is we have an education 
program that we are running, and we are going to target it, it 
is called Kids First.
    Mr. David Scott of Georgia. Great.
    Dr. Dykes. We are going to explain, and try to educate to 
both moms and kids, and school nutrition folks, the value of 
milk, and the value of getting milk that tastes good, that the 
kids will actually drink, back into the school systems.
    Mr. David Scott of Georgia. Are there any rules, both of 
you can comment on that, that need to be changed from our 
perspective here? We are rule makers. We are legislators. That 
is what we do. Is there something we can do?
    Mr. Mulhern. Well, the major rule to be addressed is the 
regulations with the school meal program, where, under the 
Healthy, Hunger-Free Kids School Act, Congress passed 
legislation directing the milk served in school to be low fat 
or non-fat. When those regulations were put into effect, for 
unflavored milk, schools can serve one percent or non-fat. On 
flavored milk, which is about 70 percent of the milk consumed 
in schools, because of the very point you mentioned, 
Congressman, kids like the taste, of chocolate milk, it can 
only be non-fat. And that is not a good tasting product for 
many people, especially if you drink two percent or whole milk 
at home. Two percent is the leading milk consumed in the family 
home. You are getting a different milk served at school. No 
wonder kids don't quite like it. Turning that around, which the 
Child Nutrition Act had the provision in it to raise it to one 
percent, we would like to get it to two percent.
    This has been a 50 year demonization of dairy fat, going 
back to the 1960s, to 1950s and 1960s, actually more than 50 
years if I do the math, and it is starting to turn around. The 
Circulation article you mentioned is one of many, many research 
articles out there demonstrating the importance of dairy fat in 
the diet and its impact on things like Type 2 diabetes, 
satiety. It is beginning to turn. I am heartened to hear this 
mentioned from the Committee, we need to do more, and the Child 
Nutrition Act would be one place to start with that.
    Mr. David Scott of Georgia. Thank you.
    The Chairman. The gentleman's time has expired. Mr. Gibbs, 
5 minutes.
    Mr. Gibbs. Thank you, Mr. Chairman. I want to talk a little 
more about the small versus the large producers. And you talk 
about the 175 cow dairies, which included the 4 million pound 
production, I have been searching my brain, thinking in my 
neighborhood, we don't have any herds that size anymore. They 
are all 500, and they are still family farms.
    Mr. Mulhern. Yes.
    Mr. Gibbs. Okay? And they are still producing their own 
feed, okay? Now, I guess one of my questions is, obviously, 
when you talk about the larger farms, and I don't count the 500 
cow dairies as the larger farms anymore. They are the norm. We 
are on the same page there. You talk about the larger farms 
only wanting catastrophic coverage, and that goes to what I am 
going to try to say here, is the larger farms, the big farms 
that are way over 500 cows, is it true that probably most of 
them buy their feed, they don't produce their feed? Is that 
kind of the norm?
    Mr. Mulhern. You are talking about the largest farms, 1,000 
and more?
    Mr. Gibbs. Yes.
    Mr. Mulhern. Yes, you would find that most of the large 
farms buy a large percentage of their feed. Grow some, but 
probably buy more than----
    Mr. Gibbs. Yes. Here is my contention: When you are talking 
this margin price difference for the MPP, the larger farms, 
since we have seen a drop in commodity prices overall, so their 
feed cost has actually come down, because the price of corn and 
all that has come down, where the smaller farms, that produce 
their own feed, they have those fixed costs in land and 
equipment and so they are really losing money on that side of 
the operation, but their cost hasn't come down.
    Mr. Mulhern. Right.
    Mr. Gibbs. I just wanted to get this out; because, when you 
are talking about a differential here for a margin, you have 
two things going on here. And that is evident why you see the 
larger farms only wanting catastrophic coverage, because their 
costs, their bottom line, is actually lower, obviously, you 
pick up some deficiencies too.
    Mr. Mulhern. Right.
    Mr. Gibbs. Now, if we were in a different dynamic, where 
price of milk was in the basement, but price of corn and beans 
didn't drop, a different phenomenon would be happening.
    Mr. Mulhern. And that was 2009. That was the situation in 
2009.
    Mr. Gibbs. Okay. Would you agree, whatever we are trying to 
do to figure this out, because it really triggered my mind here 
when the Ranking Member was talking about this. That is really 
critical when we are developing this program, because you have 
two things happening, depending on the size of the farm.
    Mr. Mulhern. Right.
    Mr. Gibbs. It is important to keep in mind that 500 cow 
dairy farm is your norm now, at least in the Midwest.
    Mr. Mulhern. Yes.
    Mr. Gibbs. Maybe up there, I don't know, Collin, in 
Minnesota and Wisconsin maybe you still have the 1,500 cow 
dairies. I don't know. But, I mean, all my 1,500 cow dairies, 
they either went out of business, or they are actually raising 
heifers for the bigger dairies now, and the bigger dairies are 
milking their 500+, every one. And I just think in my area my 
10 mile radius where I live, and I live in agricultural 
country.
    Mr. Mulhern. Yes.
    Mr. Gibbs. When you guys are developing this, I think that 
is important to keep in mind what is really happening there. I 
have another question, I just heard, I don't know if I heard it 
right, on the school lunch program with milk, and I totally 
agree with you that, in the family, at home, it is two percent 
milk, okay, and you said that. What are we serving in the 
schools?
    Mr. Mulhern. In schools, for unflavored milk, schools can 
serve one percent or non-fat. For flavored milk, which is the 
majority of milk served in schools today, it has to be non-fat 
only.
    Mr. Gibbs. Is that, like, skim milk? I am kind of----
    Mr. Mulhern. I am sorry?
    Mr. Gibbs. That would be skim milk?
    Mr. Mulhern. Skim milk, yes. Exactly.
    Mr. Gibbs. Yes?
    Mr. Mulhern. And that is the problem. We had urged USDA to 
provide one percent flavored. And, actually, our position in 
the rule making process was to have one percent, and put a cap 
on the sugar amount, 22 grams of sugar. Put that cap in, but 
keep it at one percent, because kids like the taste of milk 
when it is----
    Mr. Gibbs. Yes.
    Well, that is just common sense. If you are drinking two 
percent at home--and we used to drink regular milk, 3.5, I 
guess, and now it is two percent. I am used to that. I like it. 
But I would probably have a problem going down to skim milk, so 
the kids for sure, so that is an important point. You can't 
serve them something in school and it is like, this doesn't 
taste like what I am drinking at home.
    Mr. Mulhern. Right.
    Mr. Gibbs. Anyway. Well, thanks for being here. Thanks, Mr. 
Chairman. I yield back.
    The Chairman. The gentleman yields back. Ms. Adams, 5 
minutes.
    Ms. Adams. Thank you, Mr. Chairman, and thank you to the 
witnesses for your testimony. Mr. Mulhern, in the last farm 
bill, dairy producers and processors were significantly split 
on dairy policy. At the time, there was a proposal to manage 
milk supply, and many in the industry had concerns with that as 
well. I know that this time around we are not talking about 
that kind of approach, but can you discuss what you have done 
to build support across the industry for changes to the dairy 
program?
    Mr. Mulhern. Sure, that is a great question. And the 
proposal presented to the Committee today is one that has come 
through an 18 month process of engagement on our part with our 
members across the country, talking to them about what is not 
working with the Margin Protection Program. We looked at every 
single issue that we heard from the countryside on issues that 
were not working, and we tried to reflect as many of those as 
we could into a proposal that balances the needs of the 
industry across the country.
    So what we are presenting to the Committee does reflect the 
input and the views of dairy farmers from across the country, 
and our membership, and we think will go a long ways to address 
the problems that we are seeing in the program today.
    Ms. Adams. Okay. Thank you. As you know, we have to operate 
within certain budget constraints as we begin to write the farm 
bill. Our districts and states have multiple priorities that 
need to be funded in this bill. For example, my district in 
North Carolina, the 12th District, is in desperate need of a 
strong nutrition title and the SNAP program remaining intact. 
What are your thoughts about how to address the budget 
challenges as we move forward?
    Mr. Mulhern. Well, the budget challenges are real, and I 
again want to commend the position of this Committee, and the 
Chairman and Ranking Member, in their communication to the 
House Budget Committee earlier this month, that the focus for 
agriculture, and for the next farm bill, has to be let us get 
the policy right, and then address the cost of it. I can say 
for dairy, we are not looking to have an expensive program. We 
just want an effective safety net for those down times.
    In terms of the nutrition programs, those are very 
important to all of us in agriculture. There is a strong 
consensus view that this package of farm programs and 
nutritional programs together is critically important. I will 
say, for the dairy industry, for dairy farmers and dairy 
processors, we are well aware that folks utilizing the SNAP 
program spend a lot of those dollars on dairy products. 
Estimates that we have seen for Fiscal Year 2015, the latest 
numbers I have seen, were about $8.4 billion of the total SNAP 
expenditures went for dairy products. These programs are 
important. They have a need, and we want to see a balanced 
package, but we think the Committee has it right. Let us get 
the program needs set, and then have the budget to address 
those.
    Ms. Adams. Right. Thank you very much. Mr. Chairman, I am 
going to yield the rest of my time back.
    The Chairman. The gentlelady yields back. Let's go now to 
Roger Marshall, Mr. Marshall.
    Mr. Marshall. Thank you, Mr. Chairman. Let me add, with 
everyone else's conclusions here, my grandfather would deliver 
milk twice a week to my family in great big containers like 
this. We would take the cream for the cereal, and my dad would 
use it for the coffee. I didn't even know that there was 
anything but whole milk until decades later. Is it just that 
simple? Why is consumption going down in schools? When I went 
to school, we got two cartons of milk at 10:00 a.m., we got two 
milks at lunch, come home and had two glasses of milk for 
supper. Dr. Dykes, is it just that simple? It is just taste, or 
are schools just not offering it, or what else is going on?
    Dr. Dykes. We think a lot of it is the options aren't 
offered in school. Some of it is taste as well. But we have an 
educational effort, and Jim mentioned it as well, dairy 
products have been demonized for a long time on the fat side. 
There are concerns about the obesity epidemic. However, if we 
think about the difference between 1 cup of two percent milk 
and 1 cup of one percent milk, we are talking 20 calories. We 
just think we have an educational effort, and we also have to 
expand the options. Our research says kids will drink the milk 
if it tastes good, and we make it available to them. We think 
that is the next first step, is to change the rules, and expand 
the options.
    Mr. Marshall. I am a physician. I am supposed to know 
something about nutrition. Is there anything more nutritious 
for a drink than milk? You could talk about juices having 
different qualities. What is in second place?
    Mr. Mulhern. I don't know what is in second, but I will say 
your premise is spot on. There is no more nutritious drink you 
can have than milk. Milk is the number one source of nine 
nutrients in the diets of children, number one source, so kids 
who aren't drinking milk are getting a shortfall in terms of 
their consumption of calcium potassium, phosphorus, magnesium, 
Vitamin A, Vitamin D, and on. It is critically important, and 
it is an issue. It is a challenge that we are dealing with. I 
don't know what would come in number two, but it is going to 
drop off a long ways from milk.
    Mr. Marshall. Yes. Kansas has the fastest grown dairy herd 
in the country, and I don't understand how we could have food 
insecurity issues in Kansas, and I can't imagine what it would 
be like in other states, where they don't have the abundance of 
grains and milk that we have.
    I just finished 2 weeks of town halls, nine town halls, and 
I was a little bit surprised, as I went to the southwest 
Kansas, that health care was not the number one topic. It was 
the labor force.
    Mr. Mulhern. Yes.
    Mr. Marshall. And it is not unique to the dairy industry. 
The feedlots, and slaughterhouses, all those types of things, 
packing plants. Sorry, we don't say slaughterhouses anymore, 
packing plants, it is a big issue, and we have 20,000 open jobs 
in Kansas right now. And even when there has been unemployment, 
we still have problems. And I am just wondering is this unique 
to Kansas? Jim, you want to go first and just kind of describe 
what you are seeing from workforce issues in your industry?
    Mr. Mulhern. No, unfortunately, Congressman, it is not 
unique to Kansas. It is a critical issue facing dairy farmers, 
and, frankly, all of agriculture all across the country. I will 
tell you, from my conversations with our members, the single 
biggest limiting factor on their ability to grow is an adequate 
workforce. They can't find enough workers. And it is not a 
question of finding workers in the local community, people who 
have grown up there. Our industry does rely upon an immigrant 
workforce. Fully 51 percent of the employees on America's dairy 
farms are immigrant workers. Those farms are producing almost 
80 percent of our total milk supply. Many of the workers we 
know are undocumented, so this is a critical issue, getting 
immigration reform right. I was heartened to hear the comments 
from Mr. Goodlatte. We have been working with him and his staff 
for some time on this issue, and are hopeful that we can get a 
workable system.
    Our members understand the importance of border security, 
and enforcement, and support that, but along with that has to 
come a system of legal status for workers on our farms so that 
they have an ability to have a legal permit to do work, and to 
be able to move back and forth, and a system for the future as 
well, so we have a pathway to future workers.
    Mr. Marshall. And how is dairy different than some of the 
other agriculture? I am stating the obvious here.
    Mr. Mulhern. Well, it is a huge issue. H-2A, the program 
that exists for agricultural workers, is a program focused on 
seasonal temporary workers. Our jobs are anything but. Our jobs 
are, as the Chairman said in his opening comments, 365. We are 
milking these herds two and three times a day. On many farms, 
it is an around the clock labor force. It is anything but 
seasonal, temporary. H-2A does not work for us. We don't have a 
program for dairy workers in this country, and never have had 
one.
    Mr. Marshall. And I would just add, these are good jobs. 
These jobs are paying $40,000, $60,000 a year that are going 
unfilled. Thank you, Mr. Chairman, I yield back.
    The Chairman. The gentleman yields back. Mr. Costa is 
recognized for 5 minutes.
    Mr. Costa. Thank you very much, Mr. Chairman, and it is 
appropriate that you and the Ranking Member paid tribute to 
Kika de la Garza, who was a real force not only in American 
agriculture, but spent a lot of time in California, where I got 
to know him. And certainly our thoughts, and prayers, and 
condolences go to his family.
    It is nice to see the two of you at the same table. I 
remember times when that was not always the case. Maybe this 
bodes well for the farm bill. Both the Ranking Member and I 
have worked with all of you in the past, and through a lot of 
variations in the last two farm bills, and so maybe this is a 
Kum bay ya moment.
    I might take issue with my friend from the Midwest about 
feed prices and differentials there. While we have the larger 
dairies in California, clearly we have to compete with feed 
prices all around the country, and California has about a 60 
day feed supply out of 12 months. In other words, we are 
importing about 10 months of our feed supply, if you want to 
average it that way. And so feed comes in from all over the 
country, the Midwest and everywhere else, and we have to 
compete on those margins, which is one of the criticisms I have 
had, and I am glad to hear you agree, the Margin Protection 
Program just hasn't worked, in my view, and it is one of the 
things we have to look at.
    We were talking about prices of fluid milk, and I would 
like to kind of drill down a little bit. What changes in milk 
pricing regulations would be needed to allow for contracting 
for fluid milk?
    Dr. Dykes. What I propose is we need to sit down and talk 
to both the farmers and the processors, decide to see if we 
could work that out. As Jim mentioned earlier, fluid milk 
prices--it is a complicated formula, but it basically is a 
price predicated on what the higher of Class III or Class IV 
milk, with some differentials added to it. In my view, if we 
get people that buy and sell milk from each other every day 
sitting around the table, we could find a way to make that 
happen, to bring some stability and predictability into 
pricing, remove some of the volatility.
    Mr. Costa. Well, the predictability, the whole dairy 
industry has been so volatile over the last 15 years, and the 
amount of equity that we have lost out of dairy farms across 
American has been significant.
    Dr. Dykes. Yes.
    Mr. Costa. Mr. Mulhern, do you want to comment on how that 
might work?
    Mr. Mulhern. Certainly, Congressman. I would agree with 
Michael, and we, frankly, support efforts to reduce volatility 
on both the producer and processor side, and recognize that 
partially in the past, through the agreement on forward 
contracting on Class II, III, and IV. There are some issues 
around Class I. Forward contracting, because of that settlement 
obligation of Class I handlers into the producer payment pool, 
the issue becomes would forward contracting reduce pay prices 
to producers?
    Mr. Costa. Would there need to be changes in the FMMO 
pricing system?
    Mr. Mulhern. That is something we have to look at.
    I don't think it would. It would require monitoring by the 
Federal Milk Market Administrator's Office to make sure that 
there is information on those forward contracts. But, as you 
noted, we do have forward contracting approved, currently in 
place in the farm bill, and it does expire at the end of the 
current farm bill. At this point we support extending that. We 
are going to talk with IDFA about this issue of forward 
contracting on Class I.
    Mr. Costa. What recommended changes do you think we ought 
to be looking at with the new farm bill? I mean both the 
Ranking Member and I have worked with you folks for a long 
time, and other Members of the Committee on some version of a 
supply side management. We know the problems with Canada, as 
they have become very predatory. It is not a level playing 
field, in my view.
    Mr. Mulhern. Right.
    Mr. Costa. I only have 54 seconds left. Be quick.
    Mr. Mulhern. In terms of supply management, if that is the 
tone of the question, Congressman, we are not proposing any 
supply management features in our farm bill proposal for the 
2018 discussions. Our focus is on improving Margin Protection 
Program. Frankly, as Mr. Peterson mentioned, had we the Market 
Stabilization Program put in place in the 2014 Farm Bill, we 
have come nowhere near even needing that over the last few 
years because of where we are, in terms of the markets. Our 
focus really is having that producer safety net on MPP.
    Mr. Costa. Yes. Dr. Dykes, I want to shift the question, 
because you and I spoke about your trip last week to Mexico, 
and I am very concerned about the proposed conversation with 
the Administration on restructuring NAFTA. Could you tell us 
the potential implications to the American dairy industry about 
one of our big trading partners?
    Dr. Dykes. Mexico is our number one export market, taking 
about \1/4\ of our exports, which is a little over $1 billion. 
We have developed an excellent partnership with Mexico. It is 
free market access. It is seen as a win-win situation in both 
Mexico and the U.S. We had quite positive conversations last 
week with the Secretary of Agriculture, with the Minister of 
Economy, and with the Under Secretary for the Minister of 
Foreign Affairs, the former Mexican Ambassador to the U.S. They 
want to see this program continue, and we will be working 
with--hopefully Secretary Purdue, and Ambassador Lighthizer, 
and this Administration to make sure that we preserve that 
market access with Mexico during the NAFTA----
    Mr. Costa. Well, that is critical. And, Mr. Chairman, my 
time has expired, but it is important to note that, depending 
on how we approach that, retaliatory issues could take place by 
Mexico and Canada if we go down the wrong road on this thing. 
And the repercussions to American agriculture, let alone 
California agriculture, will be big.
    Dr. Dykes. That is why we wanted to make the trip to 
Mexico, to visit with our number one customer.
    Mr. Costa. Thank you.
    The Chairman. The gentleman's time has expired. I now 
recognize the gentleman from California, Mr. LaMalfa, for 5 
minutes of questioning.
    Mr. LaMalfa. Thank you, Mr. Chairman. Welcome, gentlemen. 
We love our dairy. I did want to drill down, though, on the 
pending legislation, the DAIRY PRIDE Act a little bit with you. 
I love the acronyms, the way they get named around here. 
Defending Against Imitations and Replacements of Yogurt, Milk, 
and Cheese To Promote Regular Intake of Dairy Everyday Act. 
That is a heck of an acronym. It is very creative. Again, we 
know some of the conditions that dairy has been going through 
here, with good prices a couple years ago, and then 
international factors on pushing down price, and exports, and 
all that. And at the same time, we are seeing pretty much a 
record production in that window as well.
    I am wondering if the effort to crack down on products that 
are in the labeling process that are not directly from a cow, 
from dairy, such as soy milk, almond milk. Perhaps as a 
consumer protection. I am a little mystified at the direction 
the DAIRY PRIDE Act is going, because when we are talking about 
the non-dairy alternatives that people are looking at, they are 
using the word milk. We are talking about less than ten percent 
of the entire market share, or a little under $2 billion in 
sales. It really comes down to consumers in the market looking 
at what type of a product they are going to be using to fill 
that desire, that consumer choice.
    To me it seems pretty clear, and easily differentiated by 
what you are buying in the dairy case as a milk product from a 
cow, or something like almond milk, or one of the other 
alternatives too. I will throw it to Dr. Dykes first on this. 
Is that where consumers do bother to read labels, do you think 
there really is a problem with differentiating between dairy 
milk and the other alternatives out there, almond milk, and 
other types?
    Dr. Dykes. This is a very difficult issue for our 
membership. We have members on both sides of this issue. We 
have members that are bottling milk, alternative milks, juice, 
water, tea, so it is a difficult issue. I go back to FDA 
labeling policy, and FDA labeling policy says that foods need 
to be labeled to be both truthful and not misleading. So far, 
the FDA has not concluded these are misleading, and there have 
been court challenges, and the courts have not concluded that 
they have been misleading. It has been going on for quite some 
time, as you have pointed out. It kind of tends to pit farmer 
against farmer, when we think about almond farmers versus a 
dairy farmer, or a soybean farmer versus a dairy farmer.
    So it is a very difficult issue for our membership. The 
beverage case is very competitive, as you note, so we think 
this is probably an issue that needs to be resolved in the 
marketplace, is our position.
    Mr. LaMalfa. Yes. Okay. I understand. Would you look at 
that as a consumer protection issue? Do you think that is what 
is being pursued here, or is it more of a marketing deal?
    Dr. Dykes. Well, it is trying to market to the consumers to 
what they want, and what they will drink, offering choice, 
innovation, and products. Adding milk proteins to water so we 
increase the protein content is a new innovative product for 
the beverage case. It has some dairy stuff in it. It is not 
totally milk. It is a competitive space. Offering choice is the 
bedrock of what we are, and competing in the marketplace.
    Mr. LaMalfa. Yes. Certainly. Okay. Again, it seems like you 
have people that have different needs too. If there is a 
lactose intolerance by some consumers----
    Dr. Dykes. Or they may be vegans, and may not want to----
    Mr. LaMalfa. Or vegans, yes. I guess just the intervention 
with a piece of legislation, taking that word away from the 
alternatives of using the word milk just seems like a step 
beyond, especially since you talk about the legal issues. It 
has been held up in court. It is pretty obvious on a container 
it says almond milk, or the other types, I don't know. Your 
organization isn't really one way or the other on the DAIRY 
PRIDE bill, then?
    Dr. Dykes. We have made some comments on it, but, as I 
said, this is a very difficult issue for our members, and we, 
at this point in time, think this is probably best resolved in 
the marketplace, yes. I know the producers have a different 
view of that, and Jim has a different view, but it is a tough 
issue for our membership.
    Mr. LaMalfa. Yes, certainly. Okay. Well, I appreciate the 
sincerity on that, and I yield back. Thank you.
    The Chairman. The gentleman's time has expired. Mr. 
Panetta, 5 minutes.
    Mr. Panetta. Thank you, Mr. Chairman. Gentlemen, thank you 
for being here. I appreciate your preparation, your expertise, 
as well as your testimony. I apologize for being late. In 
regards to your testimony, it seems that you want to 
incentivize dairy consumption through the FINI Program. With 
FINI, though, it seems that that was designed with fruits and 
vegetables in mind, and I highlight that based on where I am 
from, the Salinas Valley, that has a lot of fruits and 
vegetables, known as the salad bowl of the world, and it has 
one dairy farm, the Scope Family Farms.
    And so my question to you is, by incorporating dairy into 
FINI, what would the impact be on purchasing fruits and 
vegetables through FINI?
    Dr. Dykes. I will take that one. We have not looked at that 
aspect of it. Where we are coming from is that, for Americans, 
only one out of ten are consuming the recommended three 
servings a day of dairy products. That has been our comment 
about school cafeterias. That is our comment on SNAP. That is 
our comment on all these other programs, is the increased 
consumption, because milk is the most nutritious product we 
have, nine essential nutrients. We are trying to get nutrient 
rich products to consumers.
    So our thought is, and what we have observed is, that FINI 
has worked well on fruits and vegetables. We think that could 
be expanded to include dairy, to make the same offerings 
available, and the same incentive programs available, to 
increase that number above one.
    Mr. Panetta. Understood. Mr. Mulhern, anything on that?
    Mr. Mulhern. Mr. Panetta, I would just add, our goal would 
be to grow these programs, not to have them in competition.
    Mr. Panetta. Fair enough. Thank you.
    Mr. Mulhern. Yes.
    Mr. Panetta. I appreciate that. The dairy farm that I do 
have, the Scope Family Farm, they have taken a hit with the 
falling milk prices, when I know of them, but they have also 
done, which a lot of people do in agriculture, and that is they 
have pivoted. They pivoted to organic, and that has actually 
helped them out quite a bit. And actually, I saw them the other 
day at a farmers' market, and they were selling not just milk, 
but cheeses as well, is what they have pivoted to, and organic 
cheeses. And I know that right now organic is about ten percent 
of dairy sales. Do you see that growing as well? Do you see 
more people pivoting, more dairy farmers pivoting to organic?
    Mr. Mulhern. There hasn't been as much growth in dairy 
farmers moving toward organic as one might think. Certainly 
those who have made the shift are growing their production. It 
is a difficult shift because of the 3 year transition rules, it 
does present a barrier. And a lot of the members that I talk to 
consider it. Some have made the shift, mainly for economic 
reasons, because the price of organic milk is so much higher 
than conventional milk. A lot of farmers are disinterested in 
making that shift because they believe in what they are doing. 
They believe in the conventional production they are engaged 
in. It is a mixed bag overall.
    Mr. Panetta. Fair enough.
    Mr. Costa. Would the gentleman yield?
    Mr. Panetta. Sure.
    Mr. Costa. Part of the problem is not only the issue of the 
3 year conversion, but also of being able to obtain a secure 
feed supply for your dairy cows.
    Mr. Mulhern. Yes.
    Mr. Costa. Because, once you convert, you have to get 
organic feed, and you have to be able to have that reliable 
over 12 months a year. Those cows have to be fed twice a day. 
And therein lies the other problem.
    Mr. Panetta. Understood. Thank you. The third question I 
have, Mr. Mulhern, I completely appreciate very much your 
discussion about immigration, and immigration reform, and how 
it affects not just the dairy producers, but especially my 
growers in the Central Coast, when it comes to picking their 
fruits and vegetables, so it is huge. It is a big issue. And I 
believe that we can have a two track approach to this. First, 
as Mr. Goodlatte said, in regards to helping out the H-2A 
program; and second, my focus will also be making sure that 
there is enough room there to mechanize. And I was wondering if 
you could elaborate, if possible, on the efforts when it comes 
to mechanization, any sort of research and development in that 
area when it comes to the dairy field?
    Mr. Mulhern. Well, my own personal view is that if we don't 
resolve this issue pretty soon, you are going to see increased 
mechanization in dairy. Robots are moving into dairy production 
now, robotic milking, they are expensive. But as you get more 
of them into the marketplace the price point comes down. It is 
really an issue of cost balance, and farmers are going to make 
the rational decision, like any other business person. But if 
we don't resolve this pretty soon, we are going to increase, 
you are going to see the increased mechanization, increased use 
of robotics. It is going to happen anyway, but the failure to 
have a stable labor supply is going to likely increase that. At 
higher cost, though, in some respects.
    Mr. Panetta. Understood. Gentlemen, thank you. I yield back 
my time.
    The Chairman. The gentleman's time has expired. Mr. Dunn, 5 
minutes.
    Mr. Dunn. For Mr. Mulhern, I have question. We know that 
the actual dairy production margin fails to reflect the actual 
farm profitability. It is a misnomer as we use it there, 
because it excludes a lot of the overhead costs of producing 
milk, the labor capital, veterinary services, depreciation. And 
I know that some of these factors are very difficult to nail 
down. They are not readily available numbers at a national 
level. Can Congress help the dairy farmers by including some of 
these production costs in that formula simply so that we would 
more accurately reflect to profitability, or lack of 
profitability, on the farms?
    Mr. Mulhern. Well, it is a good question, Mr. Dunn. I would 
say that historically, looking back to the formation of this 
Margin Protection Program, what we have focused on was trying 
to address those variable costs, which is feed. It is the 
largest component for most dairy farmers. In fact, in some 
areas of the country, 75 percent of your total costs are with 
feed. It really is a focus, in that program, on the variable 
costs, because they kind of go up and down. You don't have much 
control over what happens on feed costs. Fixed costs tend to be 
relatively, using the term, fixed over time.
    There is the issue, which you mentioned, of adequate data. 
If you are going to try to put some of these things into a 
formula, the factors we have in MPP are the ones we use because 
there is a price series that USA reports on a monthly basis 
nationally for those figures. It is something we could look at, 
in terms of looking at other variables, but our focus has been 
on feed because it is the largest variable cost of production.
    Mr. Dunn. The margin, however, we are ending up with a 
number that says, and here is the margin that this farm makes, 
and that is in no way, shape, or form reflective of the margin 
that the actual farmer has?
    Mr. Mulhern. And it is not an indication of profitability, 
because to your point, that margin is to cover all the fixed 
costs that you have. When the margin is $5 per hundredweight, 
that is not much money to cover land, rents, labor, and all the 
other capital costs you have in running the dairy operation.
    Mr. Dunn. It is not. Yes. That is when a dairy operation 
becomes a beef cattle operation.
    Mr. Mulhern. Good point.
    Mr. Dunn. Thank you very much, Mr. Chairman. I yield back.
    The Chairman. The gentleman yields back. Al Lawson, 5 
minutes.
    Mr. Lawson. Thank you, Mr. Chairman, and I apologize for 
being late, and this question might have already been answered, 
but my concern is that Canadian dairy has enjoyed a supply 
management system that prevents the U.S. from exporting any 
meaningful amount of dairy products into Canada. They are using 
new tools to restrict imports from the U.S. What is U.S. dairy 
industry doing to respond to these actions?
    Mr. Mulhern. Mr. Lawson, this is a real issue, and a real 
challenge for us. As we look at renegotiation of NAFTA, which 
is on the agenda now, to Michael's comments earlier, we think 
things are working great, in terms of the U.S. relationship 
with Mexico when it comes to dairy, and, frankly, for much of 
agriculture. We do have real problems, to your question, with 
our relationship with Canada, where access is granted in one 
agreement, and then they find a way to work around it. The 
ultra-filtered milk issue that Michael mentioned earlier, and 
is in my testimony, is one of the problems, where they are 
blocking our access to the market. We have been selling $150 
million into Canada. They change the system to prevent that 
from coming in.
    The newest thing they are doing on this Class VII, special 
ingredient Class, is going to price their skim milk powder, 
because they have a surplus of it as a result of their program, 
they have a surplus, they are going to price it at the world 
level. Which, frankly, is in contravention to their WTO 
obligations, in our view, and this is an issue that we are 
going to ask the Administration to focus on in the NAFTA 
negotiations. We need enforcement. We need the U.S. to raise 
concerns with Canada with respect to dairy. I am very pleased 
that Speaker Ryan did raise those concerns when he met with 
Prime Minister Trudeau about 6 weeks ago, a month ago, whenever 
that was. We do need this to be a focus of any discussions with 
Canada to stop the dairy industry there from taking these steps 
that have negative impacts not only on us, but this special 
ingredient Class VII will hurt dairy exporters all around the 
world.
    Dr. Dykes. I would add to that as well, I agree with 
everything Jim said, and we have also written letters, both my 
organization and Jim's organization, to all of the national 
associations, State Departments of Agriculture, U.S. Dairy 
Export Council. We have written letters to this Administration 
expressing our concern with this program. Also, letters have 
gone in from the EU, Australia, New Zealand, the U.S., and 
Mexico, expressing concerns over what Canada is doing. In 
addition, I have also done two TV interviews with Canadian TV 
expressing our concern over what is happening in Canada. We are 
working jointly to try to address that issue.
    Mr. Mulhern. If I could add, we are also reaching out to 
governors along the border states to encourage them to engage 
in this issue as well.
    The Chairman. The gentleman yields back. Mr. Allen, 5 
minutes.
    Mr. Allen. Yes, sir. Thank you, Mr. Chairman, and thank you 
for being here today. As far as the supply and demand issue 
that we are faced with, obviously farm income is down some 55 
percent over the last 3 years, dairy included, and we have 
talked about the pricing, and how that relates--and, of course, 
we are involved in a world trade situation. It looks like, from 
what I am hearing, that in Mexico that we are doing fine there. 
Canada is a problem. Where else in the world are we, down in my 
region, we grew a lot of peanuts and pecans, and we are sending 
those to China. What are some of the other markets that we are 
dealing with that are maybe a problem that we need to address, 
as far as the trade situation goes.
    Mr. Mulhern. I will take that first. We have a great focus 
on developing markets in Asia. While we were reluctant 
supporters because of TPP because we didn't think the market 
access openings in dairy were as much as we wanted to see, the 
agreement had very strong improvements in other areas, which 
led us to support it. But Japan is one of those markets where 
we would like to see increased access. It is a very good 
market, but it could be better for us with more access.
    Asia, obviously, because of the growth in middle class, 
what we find is a growing middle class, increase for demand for 
protein is very good for increased milk consumption. I would 
say Asia is probably the number one target for us, but South 
America, Middle East, North Africa, are all areas that we are 
looking at. But we are not doing so without competition.
    Mr. Allen. Yes.
    Mr. Mulhern. We are competing with the European Union, and 
New Zealand, Australia, when we pursue those markets. That is 
why trade agreements are important for us, and it is why, 
frankly, it is one of the reasons we need the MPP program, 
because the competition we are facing, they have some ability 
to influence milk price, within the EU for example, that we 
simply don't have. They can sell their exports at a lower 
price. We have to compete with that in the world market. It is 
a challenge for us.
    Mr. Allen. Yes. Go ahead.
    Dr. Dykes. I was just going to add, the Asia Pacific 
region, as Jim mentioned, the countries that were involved in 
TPP, that is a tremendous growth area for us. China, India, 
Japan, that market is expected to double between now and 2050.
    Mr. Allen. Okay.
    Dr. Dykes. We need to get our policies in place so that 
U.S. dairy is able to compete in that marketplace.
    Mr. Allen. Right, and that is obviously one way that we can 
help you, as far as dealing with consumption, because, as I 
read here, production is down, like, 32 percent, as far as from 
its 2014 high. And, of course, we talked about the Margin 
Protection Program, in its current structure paid out very 
little, as far as that is concerned.
    And, again, on the MPP, producers seem dissatisfied in its 
current state, and you are certain that the MPP adjustments you 
suggest can make this program into an effective safety net for 
our dairy producers?
    Mr. Mulhern. Yes, we are confident of that, Mr. Allen. We 
have taken feedback from producers across the country, and the 
recommendations we are making to the Committee for improvement 
in the program will address those problems. The problem with 
the program is one of integrity and cost for a producer. 
Integrity because the bi-monthly margin reported under the 
program today does not accurately reflect the cost that dairy 
farmers are facing. And the cost issue is was one of making 
those rates a little bit more affordable to encourage higher 
levels of supplemental coverage.
    We address those issues, and the other more technical 
aspects of our proposal, and we think we will have a program 
that will meet the needs for the dairy industry, the dairy 
community, for the long-term.
    Mr. Allen. Okay, good. Thank you. And I am just about out 
of time. I yield back.
    The Chairman. The gentleman yields back. Ms. Kuster, 5 
minutes.
    Ms. Kuster. Thank you, Mr. Chairman, and thank you for 
holding this hearing. It is an important issue in my district 
in New Hampshire, where we lost almost ten percent of our dairy 
farms this past year. We saw 19 dairy farms go out of 
commercial business in 2016 alone. We had sort of a perfect 
storm between the low milk prices, the international market 
instability, and then a severe drought that hit my district 
last year, causing a record number of dairies to close their 
barn doors.
    But part of the problem was that the Margin Protection 
Program, as we are discussing today, simply was not helpful. We 
held an emergency meeting with our New Hampshire dairy farmers, 
and learned that it just hadn't worked for virtually any of 
them. They had paid in with premiums, but had not received the 
benefits. Our dairy industry generates $141 million in economic 
activity, which is a lot for our state, and 3,500 jobs, which 
is significant. Just to give you the scale, I only have one or 
two employers in my district of that size, and so this is the 
equivalent of really a major international company coming to 
our district. $10 million in labor income, I am sorry, $19 
million.
    So my fear is that if we don't make significant policy 
changes, we are going to risk losing all of the dairy farms. 
And I want to direct my first question for Mr. Mulhern. You 
have discussed this during this hearing, I apologize I had to 
come late, but I am wondering, what do we say to the farmers, 
and how do we fix the program to convince them to try it again, 
to come into it again next time around? I am concerned that 
they will simply walk away from it. First, how can we help; and 
second, how can we convince them that it will work the next 
time around?
    Mr. Mulhern. It is a great question, and it is one we are 
focused on. I would say first that the concerns that you 
expressed, both from your constituents, and the situation in 
New Hampshire is not unlike the same message I hear from dairy 
farmers across the country. The program hasn't worked as 
intended. The fixes that we are proposing will do that. But it 
is going to take time to get people back into the program. It 
is the combination of things.
    First, we need to get the feed cost adjustment right, 
demonstrate that we understand the current formula is not 
working, it is not working because of cuts that were made 
arbitrarily in the budget cutting process while the Committee 
was deliberating on the previous farm bill. We get that right, 
but that is another reason to look at those rates. The other 
concern I have heard from producers is the cost of coverage is 
not affordable. And so adjusting those premium rates to make it 
more affordable, to encourage higher levels of buy-up coverage, 
would go a long ways to convincing producers that these changes 
are real, and that they will be helpful.
    Frankly, all it is going to take is 1 year of the program 
working for people to realize it is the safety net that we 
wanted and needed. And we hope it doesn't come to that, but 
once we get people back in, they will see that these changes 
will make the program the safety net that we have all wanted.
    Ms. Kuster. Thank you. And my focus is on higher feed 
costs. We are literally at the end of the road here, in terms 
of the U.S., and the transportation and labor costs associated 
with bringing the feed to New Hampshire is very high. How can 
the MPP better incorporate these increased costs. Do you have a 
formula in mind that would take into account those regional 
differences? And how would you help New England farmers?
    Mr. Mulhern. Yes, that is one of the changes, the 
adjustments in the feed formula that we are recommending will 
help address. For example, right now the soybean meal formula, 
which is a big part of the index, soybean meal is a large cost, 
and a major component of a dairy ration. We use one central 
basing point, in Decatur, Illinois, reported by the 
Agricultural Marketing Service of the USDA. There are, frankly, 
a number of basing points around the country that have 
reported, so it would be more accurate to take all those basing 
points and average those into the index, because it is a 
national index. And by doing that, adjusting on the corn price 
as well as on to an average, both of those changes will help 
reflect the true cost, the actual cost, that producers are 
paying.
    I will say, in terms of this regional issue, which your 
question gets at, we looked at it very, very closely. And in 
the analysis that we have done, the reality is that while the 
cost of production, and the margin is different in every part 
of the country, keep in mind that the MPP is a national index. 
It is the average U.S. milk price, the average feed cost, and 
we have looked at regional feed cost, regional milk prices, and 
what you find is they move in tandem. There is a spread, but 
they move in tandem, and so the correlation between the MPP 
index and any regional index is almost perfect. It is .98, 
which is almost perfect correlation. This index does reflect 
the true cost that farmers are facing, and we don't need to 
have a regional program because of the accuracy of the formula 
that goes into MPP.
    Ms. Kuster. That is very helpful. Thank you very much. I 
yield back.
    The Chairman. The gentlelady's time has expired. John Faso, 
5 minutes.
    Mr. Faso. Thank you, Mr. Chairman, and I would associate 
myself with the questions of Ms. Kuster just now. Being in the 
Northeast as well, my dairy farmers in the Hudson Valley, and 
Catskills, and central New York, are feeling this very acutely, 
and they believe that some type of regional variation might be 
useful for them, and I would like to explore that further with 
you after this hearing.
    Dr. Dykes, you had mentioned the letters that you had sent, 
you and Mr. Mulhern jointly, relating to the Canada issue, and 
that is one that also has raised concern for dairy farmers in 
New York State.
    Dr. Dykes. Yes.
    Mr. Faso. And I would appreciate if you could make that 
available to members of the Committee, and to me those 
correspondence.
    Dr. Dykes. We will do that, sir.
    [The letters referred to are located on p. 777.]
    Mr. Faso. What is the precise regulatory change or device 
that the Canadians are using to exclude certain U.S. products 
from that nation? Can you explain that in more detail?
    Mr. Mulhern. There are two changes that are underway. One 
has to do with ultra-filtered milk. For the last several years 
quite a bit of ultra-filtered milk, which is basically farm 
milk that is put through a filtering process to concentrate it 
some, it is a higher protein, higher solids product, shipped 
into Canada, and used in cheese manufacturing. Canada has 
changed the pricing structure to discourage cheese makers in 
Canada from purchasing ultra-filtered milk from the U.S. That 
is one problem.
    Mr. Faso. How do they----
    Mr. Mulhern. That is the loss----
    Mr. Faso. How precisely do they do that, when you say they 
change the pricing mechanism?
    Mr. Mulhern. Canada has a very highly regulated milk 
pricing system. If you think U.S. milk prices are highly 
regulated, you have seen nothing until you have seen Canada's, 
and a supply management system. With that supply management, 
farmers are limited in the amount of milk they can produce for 
the market. It is pretty much a closed market. Under WTO 
obligations there has been some opening. Ultra-filtered milk we 
have been able to ship in there as a result of WTO agreements. 
The change being made is within the pricing structure. They 
will sell milk to cheese makers at a lower price, which will 
make the milk they have been buying from the U.S., this ultra-
filtered milk, non-competitive, uneconomic.
    A similar change, different, but similar in concept, with 
this new special ingredient Class VII, which is a provincial 
change, now was put in place, I believe in Ontario first, and 
maybe adopted across Canada, will price skim milk powder at the 
world price, which really is not consistent with Canada's 
overall supply management system.
    Mr. Faso. On that point, how does a change effectuated by a 
province within Canada comply with WTO and NAFTA obligations, 
since we have made these agreements with the Nation of Canada, 
not with a Province of Canada. And wouldn't those type of 
changes done at the regional level within Canada run afoul of 
NAFTA and WTO standards?
    Mr. Mulhern. We think it does, and we think it is in 
contravention to Canada's NAFTA obligations, and that is the 
case that we are discussing with the Administration, and hope 
that they will push that issue.
    Dr. Dykes. And they are also expanding that from the one 
province across all the provinces as well. It is going to 
become a nationwide issue, if it isn't already.
    Mr. Faso. Yes. It would seem quite troublesome if a state 
government in the United States were acting similarly, it would 
seem to be against international agreements that we have 
signed. I would like to explore those issues further with you. 
And for the members, the benefit of the Committee, it is 
important that we address it. Thank you, Mr. Chairman. I yield 
back.
    Mr. Mulhern. Right.
    The Chairman. The gentleman yields back. I would also like 
to get on the record the fact that Canada mis-grades our wheat 
going north. They automatically downgrade the quality of our 
wheat just arbitrarily and capriciously, and we have raised 
that issue with them often. Mr. Davis, 5 minutes.
    Mr. Davis. Thank you. I don't have nothing to yell at the 
Canadians about. As a matter of fact, some Canadians just 
walked in the door. You missed some great debate on trade. Dr. 
Dykes, I am glad you have a lid on that water.
    Dr. Dykes. Yes, so I don't spill it this time.
    Mr. Davis. It was a great first meeting a few years ago.
    Dr. Dykes. Yes, it was, sir.
    Mr. Davis. I actually have a question for you, sir. Your 
group has asked the FDA to extend the new nutrition facts and 
serving size deadline from July of next year until July of 
2021, which would save the industry billions by synchronizing 
those changes with the USDA's GMO labeling scheme. Why has FDA 
not agreed to extend that deadline yet?
    Dr. Dykes. We are not exactly clear on why they haven't 
done that yet. It is a significant issue for the entire food 
and beverage industry, when you think about 700,000 products to 
be labeled. If we look at where we are currently, one would be 
required July 26, 2018, and then the GMO disclosure would 
target to be completed July 29, 2018. We would have 3 days, we 
turn around, do it all again. We think we need more time. We 
are not opposed to doing it. We just need more time.
    We have asked for that to be extended to May 2021, thinking 
then by the time the GMO disclosure rule is finalized, and 
there is an implementation phase of that, we will be able to 
sync the two up so that the industry can only label once. I 
have members that have estimated that this will cost them 
individually, as one company, $35 million. I have another one 
that is estimated it at $17 to $18 million. To think about 
doing that twice is just totally cost prohibitive.
    Mr. Davis. Well, thank you, and let us know how we can--or 
let me know how I can advocate on your behalf with the FDA. 
That is just too cost prohibitive for many of our companies, 
and many of your producers, that will eventually be a cost to 
our consumers.
    Dr. Dykes. In fairness to Secretary Price, we just sent the 
letter to him, so we will ask for a meeting, and ask for a 
deeper understanding of where they are, and hopefully they will 
see the compelling argument we are making.
    Mr. Davis. Well, I will text him, tell him to speed it up 
when we are done here, okay?
    Dr. Dykes. Thank you.
    Mr. Davis. No, I appreciate your comments, they are very 
timely. And I actually appreciate the comments on the school 
nutrition program. This is an issue that I have talked about in 
this Committee for the 4 years that I have been here. We want 
to increase the amounts of healthy foods that are served in our 
school cafeterias. We want more fruits, and we want more 
vegetables. But I also agree that we have to serve products 
that not only taste good, where sometimes we have seen 
limitations, and the debate has shown here clearly today that, 
when we were growing up, the two percent chocolate milk was 
much preferred to a non-fat chocolate milk, and I would call it 
chocolate water.
    Dr. Dykes. Yes.
    Mr. Davis. I may like the taste of it; but, and the 
cafeteria workers know, when those go in the trash, that is not 
a good use of funds for the school district, or for the 
program, and it is not achieving the goals that we need. But it 
is cost. Cost of the main driver for so many of my school 
districts who are under-funded in Central Illinois right now to 
where they are spending so much more on their school nutrition 
program, and we can have more new innovative products. But 
until the Federal Government allows them the flexibility to be 
able to serve what is healthy, and what is going to be consumed 
by their students, I feel that we have a long way to go.
    One question for you, Mr. Mulhern, is yogurt treated the 
same way as milk in the school nutrition program?
    Mr. Mulhern. Yogurt is not treated the same way as milk.
    Mr. Davis. Why not?
    Mr. Mulhern. Well, milk is one of the required components 
on the list of foods, offer versus serve. It used to be milk 
was required at each meal.
    Mr. Davis. Yes.
    Mr. Mulhern. Offer versus serve, it is offered with each 
meal. We have worked to increase yogurt offerings in school. 
Expansion of the school breakfast program has been very good 
for increasing yogurt consumption. We have tried to work with 
the local school food officials to get more smoothie bars into 
schools, not just salad bars, but smoothie machines. In fact, 
the check-off program has worked to even provide some machines 
to schools. It is an area we are working on. There has been 
some improvement in yogurt positioned as a protein component, 
but more could be done there.
    Mr. Davis. Well, thank you. And I just want to commend both 
of you. I know during the last farm bill it seemed that your 
two organizations may not have had such an amicable 
relationship, and it seems to me that you are all working well 
together here as we move into the next one. Mr. Chairman, I 
yield back. Thank you.
    The Chairman. The gentleman yields back. Mr. Thompson, 5 
minutes.
    Mr. Thompson. Thank you, Mr. Chairman. Thank you, both of 
you gentlemen, too, for your organizations and your leadership. 
I greatly appreciate it. I want to thank you both for being 
here today and testifying before the Committee. Additionally, I 
would like to thank you both for working with me, and your 
organizations, on my School Milk Nutrition Act, in an effort to 
get nutrition and flavor introduced back into the school. 
Sounds like I have a bunch of cosponsors in this Committee. The 
way they were all talking, the need to take action on that, and 
the only thing I could think of is I could drink to that, as 
long as it is a good glass of cold milk.
    Mr. Mulhern, as you mentioned in your testimony, dairy 
farmers are struggling. We have heard a lot of questioning on 
that, in terms of Margin Protection Program, that needs some 
reform. And I appreciate all the work that you have done to 
develop recommendations to make the MPP a more effective risk 
management tool for dairy farmers. And while we don't know yet 
what the budget situation is going to be, I am very interested 
in focusing our efforts on the areas that will best improve the 
program.
    One idea I frequently hear about is the need to reform the 
feed side of the program. We have heard that today commented 
on. With that in mind, can you talk a bit more about the feed 
formula that you all developed, and additionally, can you walk 
us through the proposed changes to corn and soybean price 
points?
    Mr. Mulhern. Sure. First of all, Congressman, let me 
commend you for your leadership on the school nutrition issue. 
Your leadership, with the language to change the provisions in 
the child nutrition bill on school milk have been very, very 
important, and I was remiss in not indicating that in my 
earlier comments. We very much appreciate all your work on 
that.
    In terms of the changes we are recommending in the feed 
formula, in some they are designed to reflect the true cost of 
feed that dairy farmers experience on the farm. I have talked 
about the ten percent cut that was made to the overall formula 
as part of the deficit reduction process in the last farm bill. 
That needs to be restored. The other changes really are 
designed to make sure that we are getting accurate pricing on 
the components, there are really three components to the feed 
calculator. It is corn price, soybean meal, and alfalfa.
    On the soybean meal price, as I had mentioned in earlier 
comments, rather than use one basing point, because there are 
transportation differentials around the country, so different 
costs, we should be averaging the cost of soybean meal at 
different points in the country. That will get a more accurate 
reflection of the national cost to dairy farmers for soybean 
meal.
    On corn, a similar change is to move, the current index 
uses the prices received by a corn farmer for sale of corn. 
That is not always the price paid by a dairy farmer. We want to 
move from prices received and mass index to the AMS prices paid 
index, which really is going to be more accurate of what dairy 
farmers are actually paying for corn, because the prices 
received could be shipment of large amount of corn to a grain 
elevator, may not reflect what a dairy farmer is having to pay 
for feed.
    On the alfalfa side, it is a little bit more complicated, 
because there are a lot of ranges in quality of alfalfa hay. 
Dairy farmers do feed higher quality alfalfa, which costs more 
than some of the lower grades. We are trying to capture that, 
if we can, so that this index really does truly accurately 
reflect the cost to a dairy farmer of feeding a dairy cow.
    In sum, we make those changes, and we will have a much more 
accurate index, going forward.
    Mr. Thompson. Thank you. And when it comes to dairy policy, 
obviously there are so many different approaches to make sure 
that we maintain dairy security, which is good for Americans, 
and nutritious; but, obviously, making sure we are taking care 
of our farm families, who are working so hard. And part of that 
is in this Committee. Part of it, like the school nutrition 
program, where I am a senior Member on the Education and the 
Workforce Committee there. But another one, Dr. Dykes, that 
falls under that jurisdiction is with the WIC program, and so I 
just wanted to touch base. Your testimony says that USDA 
regulations limit milk purchasing options under the WIC 
program, or Women, Infant, and Children, which is very 
important program.
    Dr. Dykes. Yes.
    Mr. Thompson. When we were first married, my wife and I, we 
had our first child, we were WIC eligible. We used those 
opportunities to be able to purchase nutritional food for my 
wife, and for our newborn son, 30 years ago. What are the 
limitations with WIC?
    Dr. Dykes. Thank you, sir. The latest changes were 
eliminating the two percent milk option out of the WIC program. 
And what we are hearing anecdotally is that some of the WIC 
directors are saying in public meetings that WIC participants 
are now using SNAP dollars to purchase their two percent milks, 
because they are accustomed to drinking two percent milk. I 
also think there was, in Texas, the change from two percent to 
only one percent resulted in a 17 percent drop in milk 
consumption. Mr. Conaway may have heard more on that during 
some of his extensive hearings on SNAP.
    But it comes back, Mr. Thompson, to the overall 
conversation we have had here today. Whether it be school lunch 
program, whether it be SNAP, whether it be WIC, we need to 
think about the nutritional value of milk, and endeavoring to 
make sure that we move that number from only one out of ten 
Americans consuming the recommended three servings a day, and 
we need to work to increase that.
    Mr. Thompson. Yes, we certainly need a policy that is 
driven by science, specifically food and ag science, and not by 
what seems like political correctness.
    Dr. Dykes. Yes, sir.
    Mr. Thompson. Thank you, Mr. Chairman.
    The Chairman. The gentleman's time has expired. Mr. 
Arrington, 5 minutes.
    Mr. Arrington. Thank you, Mr. Chairman, and thank you, Mr. 
Mulhern, and Dr. Dykes, for being here. We love our dairy 
farmers in west Texas, and they are a big part of our economy. 
In fact, over the last, I don't know if it is a decade or 2 
decades, there has been a tremendous migration of dairy 
operations from around the country to west Texas. I don't know, 
something about west Texas is the greatest place in the world 
to live. Something like that. I am sure the Chairman could give 
me a big Amen on that.
    We want to make sure, and it is not just our economy. I 
grew up in Plainview, and the Bowma family, and other families 
that are producers, they contribute a lot to our communities, 
and invest a lot in our communities. These God-fearing, freedom 
loving Americans, we need to make sure that they have the same 
risk management tools as every other farm, and that there is a 
responsible and effective safety net. I join my colleagues, and 
our fearless leader and Chairman, in making sure that that is 
the outcome.
    A couple of more controversial issues when I am talking 
about agriculture, and dairy farmers, is immigration, and then 
the Renewable Fuel Standard, because I also represent a lot of 
corn producers. Let us start with immigration. I don't think 
there is tension here. I think that our dairy producers support 
legal immigration, and they want to stop illegal immigration, 
like most Americans.
    Mr. Mulhern. Right.
    Mr. Arrington. But we know that there is a shortage in 
labor force, and so they need this mechanism of work visas. 
Help me be very specific on what we can do to fix the problems 
of legal immigration to supply labor where Americans won't do 
the jobs.
    Mr. Mulhern. Mr. Arrington, I will take that question, and 
I agree completely with your assessment of the situation with 
respect to our members, and the need for a stable, reliable 
workforce. The key, in our view, is while policy proceeds along 
with a focus on border security and enforcement, that we have 
to have a system providing legal status for farmworkers. We 
would support providing a program where farmworkers have a 
permit that is for an extended period of time, 3 years, 5 
years. And we are going to need a system for the future as 
well, because it isn't enough to fix the problem for today if 
you don't want to be back in the same problem in 10 or 15 
years.
    So the types of jobs in agriculture that immigrant labor is 
filling are very good jobs. They are challenging jobs, and we 
have had a hard time getting employees for those jobs on dairy 
farms, make no bones about that. We do need the system, and we 
need to have a legal status for those workers. It can be, along 
with an e-Verify system, as long as we have some legal status 
for those workers, that can all be worked out.
    We are working with the Judiciary Committee, and that would 
be with Mr. Goodlatte as Chairman of that, and he has been a 
great leader on the issue. We are hoping that, through this 
process, that we can have not only secure borders, and 
enforcement of existing immigration laws, but legal status for 
workers who are here.
    Mr. Arrington. Yes, see, I don't see the two as mutually 
exclusive. I am for border security, I am for preventing 
illegal immigration, I am for rule of law, and staunchly so, 
but there has to be a way to fix a legal process to support our 
dairy farmers, and our producers across the board.
    Mr. Mulhern. I agree.
    Mr. Arrington. What are some reasonable ways that producers 
could help prevent illegal immigration? I am just throwing that 
out there. I don't want them to be de facto immigration 
enforcement officers, but what are some ways they can help in 
that process?
    Mr. Mulhern. It comes back to having options. You have to 
have options to have a legal workforce, and that really is the 
problem. I will tell you that farmers today, some know that 
they have workers with either undocumented or questionable 
papers, and there is concern about what may happen with that 
workforce. Those cows need to be milked at least twice a day, 7 
days a week, so this is a real and pressing issue for our 
members. We hope it can be resolved as quickly as possible.
    Mr. Arrington. I won't get to RFS, so I am going to yield 
back to the Chairman. Thank you.
    The Chairman. The gentleman's time has expired. Mr. Comer, 
5 minutes.
    Mr. Comer. Thank you, Mr. Chairman, and, Dr. Dykes, it is 
an honor to have you here today. I have to say this about Dr. 
Dykes, he was born and raised in my Congressional district from 
a very good family.
    Dr. Dykes. Thank you, sir.
    Mr. Comer. In fact, I took a picture of you sitting here 
and texted it to your brother, and he told me to drill you hard 
when it got to my turn.
    Dr. Dykes. Don't listen to those guys.
    Mr. Comer. But both those guys are good, hard workers there 
in Adair County, and I appreciate them. And I appreciate all 
that you do, and will continue to do, to help rural dairy 
farmers in Kentucky. I know you are passionate about that, and 
I appreciate your work with that.
    Dr. Dykes. I am, sir.
    Mr. Comer. What is the current status of the dairy export 
market? And the reason I ask, we have a big dairy processor 
around home that drives milk, and sells it to Kraft, all these 
food processors all across the world, but they constantly have 
trouble getting in the China market. And I was just curious, 
what is the status of the dairy export market right now?
    Dr. Dykes. Exports for dairy have been a relatively recent 
thing the last 10, 12 years or so. We have gone from exporting 
about five percent of our milk production to about 15 percent 
of our milk production in a few years. That is roughly about 1 
day a week of milking is exported. Mexico is the number one 
market, we are the fourth. But if we look at the increase in 
milk production in the last few years, about \1/2\ of our 
increased milk production has gone to exports. I give you those 
kind of numbers for context. Exports are a big part of where we 
are with U.S. dairy production today, and it will be a bigger 
part of where we go with U.S. dairy production in the future.
    Mr. Comer. Yes.
    Dr. Dykes. We think our dairy farmers have everything they 
need to compete. We have the natural resources, we have the 
standards, we have the distribution. We can do those kinds of 
things. And we have to work to make sure we have a level 
playing field. And that is why these trade agreements become so 
important for dairy.
    Mr. Comer. Yes.
    Dr. Dykes. And that is why fixing Canada, as a part of the 
NAFTA re-negotiation, is important. That is why preserving what 
we have currently with Mexico, where \1/4\ of production, $1.2 
billion of dairy goes to Mexico every year. That is why 
preserving Mexico, fixing Canada, gaining market access in Asia 
Pacific, around the world, is extremely important.
    Mr. Comer. All right. Kentucky is no different than any 
other state. Listening to my colleagues ask questions about the 
status of the dairy industry, we have lost a lot of dairies.
    Dr. Dykes. Yes, we did.
    Mr. Comer. And when I talk to dairy farmers, they are 
always unhappy with the formula. And I am always thinking in 
the back of my mind, would dairy not be better off without a 
formula, without price support, without the government 
involvement, like beef, and pork, and poultry? I know that is a 
tough question to----
    Mr. Mulhern. You may get different answers from the two of 
us.
    Mr. Comer. Right.
    Dr. Dykes. That is a tough question, and Jim will want to 
talk about that. It is a very tough one. How do we think about 
that, and how do we think about the future of dairy.
    Mr. Comer. Yes.
    Dr. Dykes. When I was a kid growing up in Adair County, 
every single neighbor milked cows.
    Mr. Comer. That is right.
    Dr. Dykes. And the last couple times I went home, the last 
neighbor sold their dairy cows.
    Mr. Comer. There is one listed in the Farmer's Pride seems 
like every month, another dairy going out of business in Adair 
County, which is the second biggest dairy county in the state.
    Dr. Dykes. Yes. And it just, it hurts when you see that 
happen.
    Mr. Comer. Yes.
    Dr. Dykes. Having been a practicing veterinarian, I watched 
them sell herd as well, and it hurts. It also hurts, though, 
when you see them just work so hard, I used to tell my clients, 
when you are selling cows to pay the feed bill, you and I could 
calculate how much longer you are going to be milking here. You 
have to think about what your other options are out there for 
you. It is a very tough question. That is why I am pleased to 
work collaborative with Jim. I have known Jim for 20 years, 
worked with the National Milk Producers Federation, to think 
about, where are we going to be in the out-years with this 
thing called dairy, and what are the things we could do today 
that will maybe make it better for some of the younger people 
that are coming in, and trying to make a living, and make a 
business out of milking cows and processing milk.
    Mr. Mulhern. If I could, Mr. Comer, I would point out that 
we have made tremendous progress in evolving dairy programs in 
this country over the last 10, 15 years, and it has been an 
evolution. We don't have the kind of intervention in the 
marketplace that we used to have. What dairy farmers today need 
is a safety net to deal with those situations we can't control.
    We couldn't control Russia invading Crimea, and then the 
U.S. and the EU responding to that, and Russia stopping 
importing dairy products from the EU, so the EU has to move 
those products into the world markets. We couldn't control 
China over-buying in 2014, and then pulling out of the world 
market in 2015, and having prices collapse. We now are exposed 
to these world markets, and they are difficult. It is a 
challenging time.
    The MPP is a safety net program. We don't want intervention 
in the marketplace, but we do need support because, unlike beef 
and pork, we are harvesting every single day.
    Mr. Comer. Yes.
    Mr. Mulhern. Dairy farmers are price takers. We get what 
the market provides. And so that kind of situation we face does 
mandate the need for some sort of safety net to help deal with 
those highs and lows.
    Dr. Dykes. That is one of the other reasons another part of 
that answer is: what is one of the incremental ways that we do 
that? That is one of the reasons we are asking to expand 
forward contracting for Class II, III, and IV, make that 
permanent, and expand it to include Class I milk, and we will 
work with Jim and National Milk on that. But it is to help take 
some of the volatility out of that, and to put some 
predictability around a price at a future point in time. I 
think back to my brothers in Adair County. Our beef cattle are 
sold before they ever leave the farm, and they have been sold 
for several months before.
    Mr. Comer. Yes.
    Dr. Dykes. Sometimes we are on the good side of that, and 
sometimes we are not, but at least we know where we are going 
to be down the road, and we can lock in a profit on those 
things.
    Mr. Comer. Thank you.
    The Chairman. The gentleman's time has expired. I thank our 
witnesses for being here today. It has been a very productive 
hearing. I too want to add my thanks for the emerging 
partnership between some competing folks that in the past have 
maybe not seen eye to eye. I hope the rest of production 
agriculture can see your example as we walk this hard path. 
This Committee is deeply committed to trying to address and fix 
the problem that has emerged out of the 2014 Farm Bill with the 
Margin Protection Program. How we go about that, we want you at 
the table. I know you want to be at the table. You will be.
    As I mentioned in my comments earlier, I don't want 
expectations to outrun what we can actually get done, but 
Collin and I, and the rest of this Committee, as you have heard 
from our comments today, are deeply committed to make that 
happen, and I appreciate you working together to work on risk 
management tools. These aren't revenue sources, these are risk 
management tools, whether crop insurance or this one, allow the 
farmers to know where their risks are, and to hedge, in effect, 
against that. We want this tool to work. It has not worked. I 
am deeply troubled by CBO's scoring of what appears to be a 
relatively straightforward change to the program that was 
originally intended to be there, and we will continue to work 
on all this.
    Under the Rules of the Committee, today's hearing will 
remain open for 10 calendar days to receive additional 
material, supplementary written responses from the witnesses to 
any question posed by a Member. This hearing of the Committee 
on Agriculture is adjourned. Thank you.
    [Whereupon, at 12:08 p.m., the Committee was adjourned.]
    [Material submitted for inclusion in the record follows:]
    Submitted Chart by Hon. Collin C. Peterson, a Representative in 
                        Congress from Minnesota
          Mr. Peterson. Well, I have, and I have put together a chart 
        here that has a month by month breakdown of what the margin 
        was, and I have done it based on what the current law is, and 
        what it was originally. And there is only one bi-monthly period 
        since the bill has gone into effect that we have had a payment, 
        and is part of the reason we don't have participation.

                                                         MPP Payments for Margin Coverage Levels
--------------------------------------------------------------------------------------------------------------------------------------------------------
                          MPP-Dairy
   Year        Month       Margin        $8.00       $7.50      $7.00      $6.50      $6.00      $5.50      $5.00      $4.50      $4.00    MILC Payments
--------------------------------------------------------------------------------------------------------------------------------------------------------
    2000        Jan.          $7.04       $0.96       $0.46      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00
    2000        Feb.          $6.66       $1.34       $0.84      $0.34      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00
    2000        Mar.          $6.54       $1.46       $0.96      $0.46      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00
    2000        Apr.          $6.56       $1.44       $0.94      $0.44      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00
    2000         May          $6.41       $1.59       $1.09      $0.59      $0.09      $0.00      $0.00      $0.00      $0.00      $0.00
    2000        Jun.          $7.15       $0.85       $0.35      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00
    2000        Jul.          $7.98       $0.02       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00
    2000        Aug.          $7.96       $0.04       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00
    2000        Sep.          $8.09       $0.00       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00
    2000        Oct.          $7.32       $0.68       $0.18      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00
    2000        Nov.          $7.14       $0.86       $0.36      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00
    2000        Dec.          $7.46       $0.54       $0.04      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00
    2001        Jan.          $7.54       $0.46       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00
    2001        Feb.          $7.82       $0.18       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00
    2001        Mar.          $8.66       $0.00       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00
    2001        Apr.          $9.27       $0.00       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00
    2001         May         $10.16       $0.00       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00
    2001        Jun.         $10.90       $0.00       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00
    2001        Jul.         $10.61       $0.00       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00
    2001        Aug.         $10.82       $0.00       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00
    2001        Sep.         $11.45       $0.00       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00
    2001        Oct.         $10.21       $0.00       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00
    2001        Nov.          $8.91       $0.00       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00
    2001        Dec.          $8.04       $0.00       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.77
    2002        Jan.          $8.22       $0.00       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.78
    2002        Feb.          $7.82       $0.18       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.78
    2002        Mar.          $7.25       $0.75       $0.25      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.93
    2002        Apr.          $7.12       $0.88       $0.38      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $1.00
    2002         May          $6.56       $1.44       $0.94      $0.44      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $1.09
    2002        Jun.          $5.97       $2.03       $1.53      $1.03      $0.53      $0.03      $0.00      $0.00      $0.00      $0.00          $1.20
    2002        Jul.          $5.18       $2.82       $2.32      $1.82      $1.32      $0.82      $0.32      $0.00      $0.00      $0.00          $1.38
    2002        Aug.          $5.04       $2.96       $2.46      $1.96      $1.46      $0.96      $0.46      $0.00      $0.00      $0.00          $1.44
    2002        Sep.          $5.24       $2.76       $2.26      $1.76      $1.26      $0.76      $0.26      $0.00      $0.00      $0.00          $1.45
    2002        Oct.          $6.05       $1.95       $1.45      $0.95      $0.45      $0.00      $0.00      $0.00      $0.00      $0.00          $1.59
    2002        Nov.          $6.01       $1.99       $1.49      $0.99      $0.49      $0.00      $0.00      $0.00      $0.00      $0.00          $1.39
    2002        Dec.          $6.09       $1.91       $1.41      $0.91      $0.41      $0.00      $0.00      $0.00      $0.00      $0.00          $1.43
    2003        Jan.          $5.99       $2.01       $1.51      $1.01      $0.51      $0.01      $0.00      $0.00      $0.00      $0.00          $1.41
    2003        Feb.          $5.40       $2.60       $2.10      $1.60      $1.10      $0.60      $0.10      $0.00      $0.00      $0.00          $1.56
    2003        Mar.          $5.11       $2.89       $2.39      $1.89      $1.39      $0.89      $0.39      $0.00      $0.00      $0.00          $1.75
    2003        Apr.          $5.00       $3.00       $2.50      $2.00      $1.50      $1.00      $0.50      $0.00      $0.00      $0.00          $1.82
    2003         May          $4.77       $3.23       $2.73      $2.23      $1.73      $1.23      $0.73      $0.23      $0.00      $0.00          $1.79
    2003        Jun.          $4.86       $3.14       $2.64      $2.14      $1.64      $1.14      $0.64      $0.14      $0.00      $0.00          $1.78
    2003        Jul.          $6.36       $1.64       $1.14      $0.64      $0.14      $0.00      $0.00      $0.00      $0.00      $0.00          $1.76
    2003        Aug.          $7.56       $0.44       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $1.22
    2003        Sep.          $8.59       $0.00       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2003        Oct.          $9.04       $0.00       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2003        Nov.          $8.17       $0.00       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2003        Dec.          $7.57       $0.43       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2004        Jan.          $6.65       $1.35       $0.85      $0.35      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.83
    2004        Feb.          $6.76       $1.24       $0.74      $0.24      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.95
    2004        Mar.          $8.08       $0.00       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.79
    2004        Apr.         $10.36       $0.00       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.02
    2004         May         $11.50       $0.00       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2004        Jun.         $10.80       $0.00       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2004        Jul.          $9.37       $0.00       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2004        Aug.          $8.87       $0.00       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2004        Sep.          $9.97       $0.00       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2004        Oct.         $10.53       $0.00       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2004        Nov.         $11.15       $0.00       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2004        Dec.         $11.18       $0.00       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2005        Jan.         $10.83       $0.00       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2005        Feb.         $10.09       $0.00       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2005        Mar.          $9.89       $0.00       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2005        Apr.          $9.47       $0.00       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2005         May          $8.79       $0.00       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2005        Jun.          $8.36       $0.00       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.03
    2005        Jul.          $8.53       $0.00       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2005        Aug.          $8.92       $0.00       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2005        Sep.          $9.96       $0.00       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2005        Oct.         $10.29       $0.00       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2005        Nov.          $9.83       $0.00       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2005        Dec.          $9.22       $0.00       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.04
    2006        Jan.          $8.84       $0.00       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.11
    2006        Feb.          $7.87       $0.13       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.11
    2006        Mar.          $6.97       $1.03       $0.53      $0.03      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.41
    2006        Apr.          $6.07       $1.93       $1.43      $0.93      $0.43      $0.00      $0.00      $0.00      $0.00      $0.00          $0.84
    2006         May          $5.86       $2.14       $1.64      $1.14      $0.64      $0.14      $0.00      $0.00      $0.00      $0.00          $0.92
    2006        Jun.          $5.96       $2.04       $1.54      $1.04      $0.54      $0.04      $0.00      $0.00      $0.00      $0.00          $1.00
    2006        Jul.          $5.77       $2.23       $1.73      $1.23      $0.73      $0.23      $0.00      $0.00      $0.00      $0.00          $0.80
    2006        Aug.          $6.36       $1.64       $1.14      $0.64      $0.14      $0.00      $0.00      $0.00      $0.00      $0.00          $0.92
    2006        Sep.          $7.05       $0.95       $0.45      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.97
    2006        Oct.          $6.67       $1.33       $0.83      $0.33      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.43
    2006        Nov.          $6.27       $1.73       $1.23      $0.73      $0.23      $0.00      $0.00      $0.00      $0.00      $0.00          $0.44
    2006        Dec.          $6.56       $1.44       $0.94      $0.44      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.43
    2007        Jan.          $6.59       $1.41       $0.91      $0.41      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.03
    2007        Feb.          $6.50       $1.50       $1.00      $0.50      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.10
    2007        Mar.          $7.28       $0.72       $0.22      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2007        Apr.          $8.70       $0.00       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2007         May          $9.73       $0.00       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2007        Jun.         $11.67       $0.00       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2007        Jul.         $13.90       $0.00       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2007        Aug.         $13.85       $0.00       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2007        Sep.         $13.70       $0.00       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2007        Oct.         $13.00       $0.00       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2007        Nov.         $12.85       $0.00       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2007        Dec.         $11.82       $0.00       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2008        Jan.          $9.97       $0.00       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2008        Feb.          $8.02       $0.00       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2008        Mar.          $6.69       $1.31       $0.81      $0.31      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2008        Apr.          $6.17       $1.83       $1.33      $0.83      $0.33      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2008         May          $6.04       $1.96       $1.46      $0.96      $0.46      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2008        Jun.          $5.40       $2.60       $2.10      $1.60      $1.10      $0.60      $0.10      $0.00      $0.00      $0.00          $0.00
    2008        Jul.          $5.89       $2.11       $1.61      $1.11      $0.61      $0.11      $0.00      $0.00      $0.00      $0.00          $0.00
    2008        Aug.          $6.42       $1.58       $1.08      $0.58      $0.08      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2008        Sep.          $6.30       $1.70       $1.20      $0.70      $0.20      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2008        Oct.          $8.34       $0.00       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2008        Nov.          $8.00       $0.00       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2008        Dec.          $6.71       $1.29       $0.79      $0.29      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2009        Jan.          $3.91       $4.09       $3.59      $3.09      $2.59      $2.09      $1.59      $1.09      $0.59      $0.09          $0.00
    2009        Feb.          $2.55       $5.45       $4.95      $4.45      $3.95      $3.45      $2.95      $2.45      $1.95      $1.45          $1.49
    2009        Mar.          $2.60       $5.40       $4.90      $4.40      $3.90      $3.40      $2.90      $2.40      $1.90      $1.40          $2.01
    2009        Apr.          $2.53       $5.47       $4.97      $4.47      $3.97      $3.47      $2.97      $2.47      $1.97      $1.47          $1.58
    2009         May          $1.42       $6.58       $6.08      $5.58      $5.08      $4.58      $4.08      $3.58      $3.08      $2.58          $1.42
    2009        Jun.          $1.00       $7.00       $6.50      $6.00      $5.50      $5.00      $4.50      $4.00      $3.50      $3.00          $1.78
    2009        Jul.          $2.37       $5.63       $5.13      $4.63      $4.13      $3.63      $3.13      $2.63      $2.13      $1.63          $1.43
    2009        Aug.          $3.03       $4.97       $4.47      $3.97      $3.47      $2.97      $2.47      $1.97      $1.47      $0.97          $1.34
    2009        Sep.          $4.31       $3.69       $3.19      $2.69      $2.19      $1.69      $1.19      $0.69      $0.19      $0.00          $0.84
    2009        Oct.          $5.47       $2.53       $2.03      $1.53      $1.03      $0.53      $0.03      $0.00      $0.00      $0.00          $0.60
    2009        Nov.          $6.38       $1.62       $1.12      $0.62      $0.12      $0.00      $0.00      $0.00      $0.00      $0.00          $0.37
    2009        Dec.          $7.52       $0.48       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2010        Jan.          $7.28       $0.72       $0.22      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2010        Feb.          $7.32       $0.68       $0.18      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2010        Mar.          $6.41       $1.59       $1.09      $0.59      $0.09      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2010        Apr.          $6.25       $1.75       $1.25      $0.75      $0.25      $0.00      $0.00      $0.00      $0.00      $0.00          $0.21
    2010         May          $6.46       $1.54       $1.04      $0.54      $0.04      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2010        Jun.          $6.96       $1.04       $0.54      $0.04      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2010        Jul.          $7.05       $0.95       $0.45      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2010        Aug.          $7.43       $0.57       $0.07      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2010        Sep.          $7.60       $0.40       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2010        Oct.          $7.57       $0.43       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2010        Nov.          $6.69       $1.31       $0.81      $0.31      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2010        Dec.          $4.92       $3.08       $2.58      $2.08      $1.58      $1.08      $0.58      $0.08      $0.00      $0.00          $0.00
    2011        Jan.          $4.31       $3.69       $3.19      $2.69      $2.19      $1.69      $1.19      $0.69      $0.19      $0.00          $0.00
    2011        Feb.          $5.98       $2.02       $1.52      $1.02      $0.52      $0.02      $0.00      $0.00      $0.00      $0.00          $0.01
    2011        Mar.          $6.81       $1.19       $0.69      $0.19      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2011        Apr.          $5.48       $2.52       $2.02      $1.52      $1.02      $0.52      $0.02      $0.00      $0.00      $0.00          $0.00
    2011         May          $5.06       $2.94       $2.44      $1.94      $1.44      $0.94      $0.44      $0.00      $0.00      $0.00          $0.00
    2011        Jun.          $6.74       $1.26       $0.76      $0.26      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2011        Jul.          $7.22       $0.78       $0.28      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2011        Aug.          $7.57       $0.43       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2011        Sep.          $7.21       $0.79       $0.29      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2011        Oct.          $6.66       $1.34       $0.84      $0.34      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2011        Nov.          $7.61       $0.39       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2011        Dec.          $6.86       $1.14       $0.64      $0.14      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2012        Jan.          $5.59       $2.41       $1.91      $1.41      $0.91      $0.41      $0.00      $0.00      $0.00      $0.00          $0.00
    2012        Feb.          $4.02       $3.98       $3.48      $2.98      $2.48      $1.98      $1.48      $0.98      $0.48      $0.00          $0.35
    2012        Mar.          $3.29       $4.71       $4.21      $3.71      $3.21      $2.71      $2.21      $1.71      $1.21      $0.71          $0.82
    2012        Apr.          $2.58       $5.42       $4.92      $4.42      $3.92      $3.42      $2.92      $2.42      $1.92      $1.42          $1.25
    2012         May          $1.71       $6.29       $5.79      $5.29      $4.79      $4.29      $3.79      $3.29      $2.79      $2.29          $1.22
    2012        Jun.          $0.89       $7.11       $6.61      $6.11      $5.61      $5.11      $4.61      $4.11      $3.61      $3.11          $1.41
    2012        Jul.         ^$0.17       $8.17       $7.67      $7.17      $6.67      $6.17      $5.67      $5.17      $4.67      $4.17          $1.69
    2012        Aug.          $0.82       $7.18       $6.68      $6.18      $5.68      $5.18      $4.68      $4.18      $3.68      $3.18          $1.48
    2012        Sep.          $2.99       $5.01       $4.51      $4.01      $3.51      $3.01      $2.51      $2.01      $1.51      $1.01          $0.60
    2012        Oct.          $5.38       $2.62       $2.12      $1.62      $1.12      $0.62      $0.12      $0.00      $0.00      $0.00          $0.03
    2012        Nov.          $6.18       $1.82       $1.32      $0.82      $0.32      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2012        Dec.          $4.98       $3.02       $2.52      $2.02      $1.52      $1.02      $0.52      $0.02      $0.00      $0.00          $0.00
    2013        Jan.          $4.38       $3.62       $3.12      $2.62      $2.12      $1.62      $1.12      $0.62      $0.12      $0.00          $0.12
    2013        Feb.          $3.79       $4.21       $3.71      $3.21      $2.71      $2.21      $1.71      $1.21      $0.71      $0.21          $0.52
    2013        Mar.          $3.19       $4.81       $4.31      $3.81      $3.31      $2.81      $2.31      $1.81      $1.31      $0.81          $0.75
    2013        Apr.          $4.69       $3.31       $2.81      $2.31      $1.81      $1.31      $0.81      $0.31      $0.00      $0.00          $0.68
    2013         May          $4.12       $3.88       $3.38      $2.88      $2.38      $1.88      $1.38      $0.88      $0.38      $0.00          $0.72
    2013        Jun.          $3.60       $4.40       $3.90      $3.40      $2.90      $2.40      $1.90      $1.40      $0.90      $0.40          $0.20
    2013        Jul.          $3.38       $4.62       $4.12      $3.62      $3.12      $2.62      $2.12      $1.62      $1.12      $0.62          $0.03
    2013        Aug.          $5.36       $2.64       $2.14      $1.64      $1.14      $0.64      $0.14      $0.00      $0.00      $0.00          $0.00
    2013        Sep.          $7.11       $0.89       $0.39      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2013        Oct.          $9.05       $0.00       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2013        Nov.          $9.85       $0.00       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2013        Dec.          $9.97       $0.00       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2014        Jan.         $11.60       $0.00       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2014        Feb.         $12.44       $0.00       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2014        Mar.         $12.52       $0.00       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2014        Apr.         $11.89       $0.00       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2014         May         $10.63       $0.00       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2014        Jun.         $10.25       $0.00       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2014        Jul.         $11.53       $0.00       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2014        Aug.         $12.26       $0.00       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2014        Sep.         $14.28       $0.00       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2014        Oct.         $15.01       $0.00       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2014        Nov.         $12.15       $0.00       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2014        Dec.          $9.31       $0.00       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2015        Jan.          $7.18       $0.82       $0.32      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2015        Feb.          $6.48       $1.52       $1.02      $0.52      $0.02      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2015        Mar.          $6.39       $1.61       $1.11      $0.61      $0.11      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2015        Apr.          $6.35       $1.65       $1.15      $0.65      $0.15      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2015         May          $6.68       $1.32       $0.82      $0.32      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2015        Jun.          $6.91       $1.09       $0.59      $0.09      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2015        Jul.          $6.13       $1.87       $1.37      $0.87      $0.37      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2015        Aug.          $6.88       $1.12       $0.62      $0.12      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2015        Sep.          $7.85       $0.15       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2015        Oct.          $8.17       $0.00       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2015        Nov.          $8.84       $0.00       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2015        Dec.          $8.00       $0.00       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2016        Jan.          $7.09       $0.91       $0.41      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2016        Feb.          $6.76       $1.24       $0.74      $0.24      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2016        Mar.          $6.34       $1.66       $1.16      $0.66      $0.16      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2016        Apr.          $5.66       $2.34       $1.84      $1.34      $0.84      $0.34      $0.00      $0.00      $0.00      $0.00          $0.09
    2016         May          $4.48       $3.52       $3.02      $2.52      $2.02      $1.52      $1.02      $0.52      $0.02      $0.00          $0.14
    2016        Jun.          $4.36       $3.64       $3.14      $2.64      $2.14      $1.64      $1.14      $0.64      $0.14      $0.00          $0.43
    2016        Jul.          $6.72       $1.28       $0.78      $0.28      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.07
    2016        Aug.          $8.26       $0.00       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2016        Sep.          $8.54       $0.00       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2016        Oct.          $7.79       $0.21       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2016        Nov.          $8.82       $0.00       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2016        Dec.         $10.01       $0.00       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
    2017        Jan.          $9.90       $0.00       $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00      $0.00          $0.00
--------------------------------------------------------------------------------------------------------------------------------------------------------

                                 ______
                                 
    Submitted Letter by Hon. James P. McGovern, a Representative in 
Congress from Massachusetts; on Behalf of Ben Burkett, Board President; 
    Lisa Griffith, Acting Executive Director, National Family Farm 
                               Coalition
March 22, 2017

 
 
 
Hon. K. Michael Conaway,             Hon. Collin C. Peterson,
Chairman,                            Ranking Minority Member,
House Committee on Agriculture,      House Committee on Agriculture,
Washington, D.C.;                    Washington, D.C.
 

    Dear Chairman Conaway and Ranking Member Peterson:

    Thank you for convening a hearing into the vital issues facing 
American dairy farmers today. As Chairman Conaway said in his opening 
statement to the Agriculture Committee on February 1, 2017: ``Over the 
past 3 years, we've seen a 46 percent decrease in net farm income, the 
largest 3 year percentage drop since the Great Depression.''
    Certainly one of the sectors to have experienced that drop in 
income is the dairy sector. Last June, the price paid to dairy farmers 
averaged about $15 per 100 pounds (CWT)--a drop in price of more than 
40 percent from 2014--but the estimated cost to produce that milk was 
$22 per CWT. Is it surprising that the U.S. has lost more than 90 
percent of its dairy farms since 1970, from 640,000 to fewer than 
50,000 today?
    Unfortunately, it appears that legislation passed by various 
sessions of Congress has contributed to this situation. In 1981, 
Congress froze the dairy support price at $13.10 per CWT, and continued 
to lower the milk support price to its last level of $9.90 per CWT. In 
1991, Congress consolidated the Federal Milk Marketing Orders and 
eliminated some of the important provisions found in various Orders 
that provided a necessary safety net to the often perilous volatility 
in farmgate milk prices. The 2014 Farm Bill eliminated the MILC (milk 
price support) program and established the Milk Margin Insurance 
Program, one that has cost taxpayers as well as dairy farmers money 
instead of ensuring a fair milk price.
    NFFC dairy farmers have long promoted (1) a new pricing formula and 
(2) a milk supply management program funded by dairy farmers. The 
Federal Milk Marketing Improvement Act, introduced several times in the 
Senate by Senators Arlen Specter and Bob Casey since 2007, included 
both provisions.
    As Congress prepares to develop the 2018 Farm Bill, the National 
Family Farm Coalition urges the House Agriculture Committee to correct 
some of the inequities facing dairy farmers today by including the 
Federal Milk Marketing Improvement Act in the upcoming farm bill. As 
Senator Casey outlined in his 18 point summary (below), the inventory 
supply management program would be farmer-funded, costing USDA no 
additional monies, and prevent foreign milk products from destroying 
dairy farmer prices. A dairy farmer's reward for funding the program 
would be a fair and stable milk price, the first in many decades. Thank 
you for your consideration.
            Sincerely,
            
            

 
 
 
Ben Burkett,                         Lisa Griffith,
Board President;                     Acting Executive Director.
 

                               attachment
The Following Is a Summary of: ``The Federal Milk Marketing Improvement 
        Act Of 2011''--The Casey Bill: S. 1640
    (1) All milk produced in the United States will be priced on the 
national average cost of producing milk on the dairy farms.
    (2) All milk used for fluid purposes will be classified as Class I.
    (3) All milk used for manufacturing purposes will be classified as 
Class II.
    (4) The Class II price will be the national average cost of 
production. This price will be uniform in all Federal and state Orders 
as well as unregulated areas. The Class I price will be determined by 
using the Class II price plus the existing Class I differentials that 
are currently in place in each Federal Order. The State of California 
and other unregulated areas will be assigned a Class I differential by 
the U.S. Secretary of Agriculture.
    (5) All Federal and State Milk Marketing Orders will remain intact. 
Each Milk Marketing Order will be responsible for determining the 
component value of milk.
    (6) This Proposal prohibits any cost of operating milk 
manufacturing plants (commonly called ``Make Allowance'') to be levied 
on dairy farmers.
    (7) The U.S. Secretary of Agriculture will adjust the value of milk 
four times a year.
    (8) This Proposal calls for an inventory supply management program. 
The program is aimed at preventing a build-up of domestic milk products 
and prevents foreign milk products from destroying dairy farmer prices.
    (9) The inventory management program cannot be implemented unless 
the exports of dairy products exceed the imports of dairy products.
    (10) All dairy farmers will fund the inventory management program. 
If and only if the program is necessary, then all dairy farmers will 
receive a lower price on up to 5% of their production. This price will 
be \1/2\ of the value of manufactured milk. However, the dairy farmers 
will receive the correct price on 95% of their milk. Please remember if 
the inventory management program is not implemented, then the dairy 
farmers will receive the full price. Also, the U.S. Secretary of 
Agriculture may decide that only a reduction of one or two percent of 
total production may be sufficient.
    (11) If this reduction is insufficient to reduce excess production, 
the Secretary shall reduce the price for producers who have increased 
production over the average production of the three (3) previous years. 
This reduction only applies to the volume of increased production.
    (12) A new producer may produce milk up to 3 million pounds in the 
Milk Marketing Order he is regulated under before he is subject to the 
provisions of the inventory management program described in point (11) 
This relates only to his first year.
    (13) The intent of this Proposal is not to tell dairy farmers how 
much milk they can produce. However, over-production will be addressed 
in the inventory management program.
    (14) An inventory management program is necessary to prevent a 
small amount of milk from forcing $20.00 per hundredweight milk down to 
$12.00 per cwt.
    (15) The beauty of this Proposal is that this program will be 
farmer-funded and will not cost the USDA any direct cost. The dairy 
farmer's reward for funding the program (if necessary) is for the first 
time the dairy farmers will receive fair/stable prices for his/her 
efforts.
    (16) Rejection of proposed FMMO amendments will not result in the 
elimination of the FMMO.
    (17) This Proposal allows milk hauling charges to be levied on 
dairy farmers. The cost of production figures by the USDA pick up the 
hauling charges. Again, the dairy farmers' hauling costs are in the 
cost of production figures.
    (18) This Proposal mandates that the Secretary of Agriculture must 
notify both the Senate and the House Agriculture Committees before he 
can implement the supply management provision and/or before he can make 
any adjustment to the milk price paid to dairy farmers.
                                 ______
                                 
Supplementary Material Submitted by Michael D. Dykes, D.V.M., President 
   and Chief Executive Officer, International Dairy Foods Association
Insert
          Mr. Faso. . . .
          Dr. Dykes, you had mentioned the letters that you had sent, 
        you and Mr. Mulhern jointly, relating to the Canada issue, and 
        that is one that also has raised concern for dairy farmers in 
        New York State.
          Dr. Dykes. Yes.
          Mr. Faso. And I would appreciate if you could make that 
        available to members of the Committee, and to me those 
        correspondence.
          Dr. Dykes. We will do that, sir.

September 12, 2016

 
 
 
Hon. Steven Ciobo,                   Mrs. Cecilia Malmstrom,
Minister for Trade, Tourism and      EU Commissioner for Trade,
 Investment,                         European Commission,
Parliament House,                    Belgium;
Canberra ACT;
Hon. Ildefonso Guajardo,             Hon. Todd McClay,
Mexico Secretary of Economy,         Minister of Trade,
Col. Juarez, Del. Cuauhtemoc,        Parliament Buildings,
 Ciudad de,                          Wellington.
Mexico. C.P.;
Hon. Michael Froman,
United States Trade Representative,
Washington, D.C.;
 

    Dear Minister Ciobo, Commissioner Malmstrom, Secretary Guajardo, 
Minister McClay, and Ambassador Froman:
Canada: Access for Dairy Products
    The dairy industries of Australia, the EU, Mexico, New Zealand and 
the USA wish to express our deep concern with the Agreement in 
Principle (``Agreement'') recently concluded between Canada's dairy 
producers and processors.\1\ By adopting this Agreement, Canada is 
contravening both its WTO and NAFTA trade obligations and undermining 
the intent of the pending TPP and CETA trade agreements. The Agreement 
both favors the substitution of Canadian domestic origin dairy 
ingredients for dairy ingredients imported from our countries, and 
subsidizes the export of Canadian dairy products to unfairly compete 
with our products in third country markets. We ask the authorities in 
Australia, the EU, Mexico, New Zealand and the USA to initiate a WTO 
dispute settlement proceeding to challenge this Agreement, once its 
details are announced, given its intended erosion of trading conditions 
in place at the time Canada negotiated prior trade commitments.
---------------------------------------------------------------------------
    \1\Dairy Farmers of Canada, Dairy Processors of Canada and 
provincial processor trade associations , the Canadian Milk Supply 
Management Committee including the Canadian Dairy Commission, and 
provincial Agriculture Ministries.
---------------------------------------------------------------------------
Background
    Canada operates a supply management system, regulated by Canada's 
Federal and Provincial governments, that restricts dairy imports via 
quotas and a set of prohibitive out-of-quota tariffs. In addition, in 
spite of trade agreement obligations, the supply management system has 
embarked on import replacement programs since the 1990s, with two 
related goals. First, to reduce the yearly structural surpluses of 
protein solids which could no longer be exported at subsidized prices 
as a result of Canada's obligations under the Uruguay Round Agreement 
on Agriculture (URAA) and subsequent Appellate Body rulings. And 
second, to limit imports and subsidize exports of further processed 
foods at competitive prices by employing the Special Class program to 
reduce the price of Canadian domestic dairy ingredients.
    Numerous programs have imposed trade limitations over the past few 
years. Some examples of that deeply problematic policy approach by 
Canada include the following:

   Canada's compositional standards for cheese, implemented in 
        2008, which have intentionally limited imports of ingredients 
        including casein, powdered Milk Protein Concentrate (MPC), Milk 
        Protein Isolate (MPI) and Whey Protein Concentrate (WPC) as 
        inputs into cheese making.

   Targeting imported products, such as cheese used on 
        foodservice pizza and chocolate milk, by allowing access to 
        lower-priced Canadian milk for use in processing into such 
        products.

   Ostensibly temporary special classes of milk pricing, such 
        as class [VI] in Ontario which offers Canadian processors non-
        fat milk solids, at subsidized prices well below the domestic 
        cost of production, for ingredient applications like skim milk 
        powder, MPC and ultra-filtered milk. Broadly speaking the 
        Agreement adopts this concept and nationalizes it.

    In addition to these examples, several other programs and policy 
tools have also been instituted in Canada in recent years specifically 
in order to undermine market access secured in previous trade 
agreements.
The Agreement in Principle (``Agreement'')
    The Agreement reached by Canada's dairy producers and processors on 
July 7, 2016 will, among other things, establish a new ingredient milk 
class to be priced at the lowest of the US, EU and Oceania price for 
solids-not-fat (SNF) for 7 years. This below cost pricing will apply to 
the manufacture of skim milk powder, liquid skim milk, liquid MPC (any 
liquid form of milk protein concentrate or milk protein isolate), whole 
milk powder, and similar products approved jointly by the producers and 
processors, dry MPC, casein, sodium caseinate, calcium caseinate, 
blended dairy powders and infant formula at a maximum of 4% of 
butterfat.
    This newly introduced provision of below market price milk for the 
production of the listed dairy ingredients provides both an incentive 
to substitute those ingredients for their imported counterparts and a 
subsidy on the production of the end products containing those 
ingredients. Both of these elements violate Canada's obligations under 
a number of WTO and NAFTA agreement provisions.
    Even more concerning is the prospect that new measures to enable 
the export of Canada's structural surplus of Skim Milk Powder (SMP) at 
below the cost of production reflect an attempt to circumvent the WTO 
Nairobi Ministerial Decision on Export Competition undertaking to 
terminate all export subsidises by the end of 2020, including Canada's 
standstill agreement in the Decision to hold export subsidy quantities 
to the levels achieved in the 2003-05 base period.
Canada's International Trade Agreement Obligations
    The Agreement will undermine the value of our respective TRQ access 
negotiated under WTO, NAFTA, TPP and CETA agreements and otherwise 
impede our dairy trade. Further, our initial analysis of Canada's trade 
obligations against the measures in place and the Agreement lead us to 
conclude that there is ample justification for undertaking a legal 
challenge. In this regard we appreciate the efforts of our respective 
Governments to address the issue in WTO forums. Accordingly, we would 
welcome the opportunity to work with our governments to pursue the most 
effective methods possible to dissuade Canada from its course, 
including the utilization of dispute settlement under existing trade 
agreements. We are determined to seek redress to overturn the use of 
these measures.
Conclusion
    The dairy industries of Australia, the EU, New Zealand and the USA 
believe that the Agreement contravenes Canada's WTO and NAFTA 
obligations and similarly undermines the intent of CETA and TPP 
commitments. Furthermore, we are very concerned that Canada will 
continue to seek out measures to circumvent the Nairobi Export 
Competition Ministerial Decision to terminate all exports subsidises by 
the end of 2020. Canada's increasingly protectionist policies violate 
their international trade obligations, hold out the prospect of trade 
diversion with attendant global price-depressing impacts, and are in 
conflict with the principles of free markets and fair and transparent 
trade.
    We therefore request the authorities of Australia, New Zealand, 
Mexico, the U.S. and the EU Commission to initiate a WTO dispute 
settlement proceeding against Canada, once the Agreement details are 
announced, given its intended erosion of trading conditions in place at 
the time Canada negotiated prior trade commitments.
            With best regards,
            
            

 
 
 
Acting President,                    Secretary General,
Australian Dairy Industry Council    European Dairy Association (EDA);
 (ADIC);
 


 
 
 
Secretary General,                   Secretary General,
European Whey Products Association   European Association of Dairy Trade
 (EWPA);                              (Eucolait);
 


 
 
 
Executive Director,                  President,
Dairy Companies Association of New   U.S. Dairy Export Council (USDEC);
 Zealand (DCANZ);
 


 
 
 
President & CEO,                     President & CEO,
International Dairy Foods            National Milk Producers Federation
 Association (IDFA);                  (NMPF);
 

General Director
Camara Nacional De Industriales de la Leche (Canilec)
Mexico National Chamber of Industrial Milk.

CC:

Hon. Barnaby Joyce MP, Deputy Prime Minister, Minister for Agriculture 
    and Water Resources, Australia;
Phil Hogan, EU Commissioner for Agriculture & Rural Development, 
    European Commission;
Jean-Luc Demarty, Director-General for Trade, European Commission;
Jerzy Bogdan Plewa, Director-General for Agriculture & Rural 
    Development, European Commission;
Hon. Nathan Guy, Minister of Primary Industries, New Zealand;
Martyn Dunne, Director General, Ministry for Primary Industries, New 
    Zealand;
Dr. David Walker, Deputy Secretary Trade and Economic, Ministry of 
    Foreign Affairs & Trade, New Zealand;
Hon. Thomas J. Vilsack, Secretary, U.S. Department of Agriculture;
Hon. Juan Carlos Baker, Deputy Secretary of Trade, Mexico.

January 11, 2017
Canada's Protectionist Policies Will Harm U.S. Economy, Dairy Groups 
        Tell President-Elect Trump
News Release
Contacts:

  Marti Hogan, IDFA: (202) 220-3535
  Christopher Galen, NMPF: (703) 243-6111
  Mark O'Keefe, USDEC: (703) 528-3049
  Amanda Culp, NASDA: (202) 296-9680

    (Washington, D.C.) U.S. dairy organizations and the State 
Departments of Agriculture across the country today told President-
elect Donald Trump that Canada's existing and soon-to-be-expanded 
protectionist policies are intentionally designed to block imports from 
the United States. These policies are in direct violation of Canada's 
trade commitments under the North American Free Trade Act (NAFTA) and 
the World Trade Organization, said IDFA, NMPF, NASDA and USDEC in a 
letter urging the president-elect and his key cabinet members to take 
immediate action.
    The letter to Trump outlined estimates from the U.S. Department of 
Agriculture that show each $1 billion of U.S. dairy exports generates 
more than 20,000 jobs for Americans and almost $3 billion of economic 
output. U.S. dairy suppliers are reporting that they are already losing 
business because of these programs, demonstrating that Canada's actions 
are resulting in lost revenues and jobs for dairy farmers and 
processors across the United States.
    ``This negative impact is conservatively estimated at $150 million 
worth of ultra-filtered milk exports being lost by companies in 
Wisconsin and New York, which are highly reliant on their trade with 
Canada. In fact, the entire U.S. dairy industry is being hurt, as milk 
prices are being driven down nationally by Canada's trade actions,'' 
the groups said. ``Having an even wider impact on America's dairy 
farmers and processors, additional large volumes of skim milk powder 
will be forced onto the thinly traded global market resulting in a 
further depression of prices that will negatively impact the revenues 
of dairy farmers around the world.''
    The letter sent to Trump was signed by the International Dairy 
Foods Association (IDFA), the National Milk Producers Federation 
(NMPF), the U.S. Dairy Export Council (USDEC) and the National 
Association of State Departments of Agriculture (NASDA).
Canada is Flouting Trade Obligations
    The U.S. dairy industry is already restricted by Canada's 
exorbitant tariffs, they said, and only limited market access is 
granted under NAFTA. Canada is one of America's top trading partners, 
yet the country is clearly flouting its trade obligations by 
implementing and enforcing these policies.
    ``The U.S. dairy industry is highly competitive internationally, 
and overseas markets represent a vital source of future growth 
opportunities including thousands of new American jobs,'' the groups 
said. ``Not long ago, the United States was a net importer of dairy 
products, but now our nation benefits from a dairy trade surplus of 
over $2 billion. Enforcement of current trade agreements, whether 
bilateral or multilateral in nature, is central to strengthening the 
U.S. economy.''
    Copied on the letter were several Cabinet nominees, including 
Robert Lighthizer, the Trump Administration's nominee for U.S. Trade 
Representative, along with the leaders and members of the House and 
Senate agricultural committees. Read the letter here.*
---------------------------------------------------------------------------
    *Editor's note: the letter follows as Attachment, and is available 
at http://www.idfa.org/docs/default-source/2017/idfa-nasda-usdec-nmpf-
canada-letter-january-2017-final.pdf.
---------------------------------------------------------------------------
          * * * * *
About IDFA
    The International Dairy Foods Association (IDFA), Washington, D.C., 
represents the nation's dairy manufacturing and marketing industries 
and their suppliers, with a membership of 550 companies within a $125-
billion a year industry. IDFA is composed of three constituent 
organizations: the Milk Industry Foundation (MIF), the National Cheese 
Institute (NCI) and the International Ice Cream Association (IICA). 
IDFA's nearly 200 dairy processing members run nearly 600 plant 
operations, and range from large multi-national organizations to 
single-plant companies. Together they represent more than 85 percent of 
the milk, cultured products, cheese, ice cream and frozen desserts 
produced and marketed in the United States. IDFA can be found online at 
www.idfa.org.
About USDEC
    The U.S. Dairy Export Council (USDEC) is a nonprofit, independent 
membership organization that represents the global trade interests of 
U.S. dairy producers, proprietary processors and cooperatives, 
ingredient suppliers and export traders. Its mission is to enhance U.S. 
global competitiveness and assist the U.S. industry to increase its 
global dairy ingredient sales and exports of U.S. dairy products. USDEC 
accomplishes this through programs in market development that build 
global demand for U.S. dairy products, resolve market access barriers 
and advance industry trade policy goals. USDEC is supported by staff 
across the United States and overseas in Mexico, South America, Asia, 
Middle East and Europe.
About NMPF
    The National Milk Producers Federation, based in Arlington, VA, 
develops and carries out policies that advance the wellbeing of dairy 
producers and the cooperatives they own. The members of NMPF's 
cooperatives produce the majority of the U.S. milk supply, making NMPF 
the voice of dairy producers on Capitol Hill and with government 
agencies. Visit www.nmpf.org for more information.
About NASDA
    NASDA is a nonpartisan, nonprofit association which represents the 
elected and appointed commissioners, secretaries, and directors of the 
departments of agriculture in all fifty states and four U.S. 
territories. NASDA grows and enhances agriculture by forging 
partnerships and creating consensus to achieve sound policy outcomes 
between state departments of agriculture, the federal government, and 
stakeholders.
                               attachment
January 11, 2017
Hon. Donald J. Trump,
Office of the Presidential Transition,
Washington, D.C.

    Dear President-elect Trump:

    Congratulations on your election to serve as the 45th President of 
the United States. We look forward to working with you and your 
administration on issues important to the U.S. dairy industry.
    We are writing today to highlight Canada's latest actions taken in 
direct violation of its trade commitments with the United States with 
respect to dairy. Provincial policies for ingredient class milk 
pricing, adopted last April, are displacing U.S. exports into Canada 
and costing the U.S. thousands of jobs on farms, in processing plants 
and throughout the supply chain. This negative impact is conservatively 
estimated at $150 million worth of ultra-filtered milk exports being 
lost by companies in Wisconsin and New York, who are highly reliant on 
their trade with Canada. In fact, the entire U.S. dairy industry is 
being hurt, as milk prices are being driven down nationally by Canada's 
trade actions. Further, these displaced U.S. dairy exports are also 
depressing global skim milk prices. Moreover, USDA estimates that each 
$1 billion of U.S. dairy exports generates over 20,000 U.S. jobs and 
almost $3 billion of economic output, and U.S. dairy suppliers are 
reporting that they are already losing business because of these 
programs. Thus, Canada's current actions are resulting in lost revenues 
and jobs for dairy farmers and processors across the United States.
    To add insult to injury the Canadian industry has put forward a 
National Ingredients Strategy that in broad terms would take the 
provincial programs and nationalize them, putting further pressure on 
the economies of the American communities that export ultra-filtered 
milk and other dairy products to Canada. Having an even wider impact on 
America's dairy farmers and processors, additional large volumes of 
skim milk powder will be forced onto the thinly traded global market 
resulting in a further depression of prices that will negatively impact 
the revenues of dairy farmers around the world.
    The U.S. dairy industry is already restricted by Canada's 
exorbitant tariffs and the limited market access granted under the 
North American Free Trade Agreement (NAFTA). As one of our top trading 
partners, Canada's flouting of its trade obligations is unacceptable. 
It is clear that these policies were implemented to intentionally block 
imports from the United States and are therefore in direct violation of 
Canada's trade commitments under NAFTA and the World Trade 
Organization.
    The U.S. dairy industry is highly competitive internationally, and 
overseas markets represent a vital source of future growth 
opportunities including thousands of new American jobs. Not long ago, 
the United States was a net importer of dairy products, but now our 
nation benefits from a dairy trade surplus of over $2 billion. 
Enforcement of current trade agreements, whether bilateral or 
multilateral in nature, is central to strengthening the U.S. economy.
    We welcome the opportunity to work closely with your nominees for 
the U.S. Trade Representative Mr. Robert Lighthizer, and for Secretary 
of the Department of Commerce Wilbur Ross, as well as White House 
Advisor Peter Navarro and other key members of your Cabinet. We 
appreciate your consideration of this issue, as resolving it is a 
matter of urgency.
            Sincerely,
            
            

 
 
 
Michael Dykes,     James Mulhern,     Matt McKnight,    Barbara P.
 D.V.M.            President & CEO,   Acting Chief of    Glenn, Ph.D.,
President & CEO,                       Staff,
International      National Milk      U.S. Dairy        Chief Executive
 Dairy Foods        Producers          Export Council    Officer,
 Association        Federation                          National
                                                         Association of
                                                         State
                                                         Departments of
                                                         Agriculture
 

CC:

Robert Lighthizer, Nominee, U.S. Trade Representative.
Wilbur Ross, Nominee, Department of Commerce.
Peter Navarro, Advisor, White House National Trade Council.
Hon. Orrin Hatch, Chairman, Senate Committee on Finance.
Hon. Ron Wyden, Ranking Minority Member, Senate Committee on Finance 
    Committee.
Hon. Kevin Brady, Chairman, House Committee on Ways and Means.
Hon. Richard Neal, Ranking Minority Member, House Committee on Ways and 
    Means.
Hon. Pat Roberts, Chairman, Senate Committee on Agriculture, Nutrition, 
    and Forestry.
Hon. Debbie Stabenow, Ranking Minority Member, Senate Committee on 
    Agriculture, Nutrition, and Forestry.
Hon. K. Michael Conaway, Chairman, House Committee on Agriculture.
Hon. Collin C. Peterson, Ranking Minority Member, House Committee on 
    Agriculture.

January 30, 2017
U.S. Dairy Companies Push Back Against Canada's Protectionist Policies
Group Urges U.S. Governors to Aid in Preserving Export Markets and 
        `Consider All Tools at Their Disposal'
News Release
Contacts:

  Marti Hogan, IDFA: (202) 220-3535
  Christopher Galen, NMPF: (703) 243-6111
  Mark O'Keefe, USDEC: (703) 528-3049

    (Washington, D.C.) The U.S. dairy industry this week continued to 
push back against Canada's protectionist policies that are effectively 
blocking American dairy imports into the country in violation of 
international agreements. A group of 17 dairy companies representing 
dairy farmers and processors from coast to coast asked governors in 25 
states to urge Canadian policymakers to uphold existing trade 
commitments with the United States and halt the imminent implementation 
of a national strategy that would unfairly subsidize Canadian dairy 
products in its domestic and global markets.
    ``[U.S.-Canada] trade cannot be a one-way street with Canada 
expecting to enjoy the benefits of exporting its products of interest 
to our market while denying a sector accounting for hundreds of 
thousands of jobs in rural America reliable access to the Canadian 
market,'' the group said in its letter to the governors. ``[An existing 
provincial] program has already cost U.S. companies tens of millions of 
dollars in exports, thereby harming the dairy farmers, dairy plant 
employees and rural communities that depend on the benefits those 
foreign sales bring.''
    Beginning Feb. 1, Canada is poised to expand the product scope of 
that provincial program while instituting it nationally. It also 
intends to disrupt skim milk powder markets around the world by using 
the new program to dump excess milk powder on global markets.
    The 17 dairy companies sent the letter to governors in states with 
significant numbers of dairy farms and dairy processing companies 
because of the damage Canada's policies have had already or are poised 
to have on these farms and companies, as well as their employees and 
many communities. The letter urges state officials to ``consider all 
tools at their disposal to ensure Canada understands the seriousness of 
this issue.'' The states are Arizona, California, Colorado, Idaho, 
Iowa, Indiana, Kansas, Maryland, Massachusetts, Michigan, Minnesota, 
Missouri, Montana, Nebraska, New Mexico, New York, North Dakota, Ohio, 
Pennsylvania, South Dakota, Texas, Vermont, Virginia, Washington and 
Wisconsin.
    Read the letter here.*
---------------------------------------------------------------------------
    *Editor's note: the letter follows as Attachment, and is available 
at http://www.nmpf.org/files/
Letter%20to%20Governors%20re_Canada%20Dairy%20Trade_013017.pdf.
---------------------------------------------------------------------------
    Earlier this month, U.S. dairy organizations and state departments 
of agriculture across the country sent a similar letter to President 
Donald Trump** that said Canada's protectionist policies are in direct 
violation of its trade commitments under the North American Free Trade 
Agreement (NAFTA) and the World Trade Organization (WTO). The 
organizations urged the president and his key cabinet members to take 
immediate action. The letter to Trump was signed by the International 
Dairy Foods Association (IDFA), the National Milk Producers Federation 
(NMPF), the U.S. Dairy Export Council (USDEC) and the National 
Association of State Departments of Agriculture (NASDA).
---------------------------------------------------------------------------
    **Editor's note: the letter follows the January 11, 2017 News 
Release as Attachment, and is available at http://www.idfa.org/docs/
default-source/2017/idfa-nasda-usdec-nmpf-canada-letter-january-2017-
final.pdf.
---------------------------------------------------------------------------
    ``In the current trade climate across North America, it is 
foolhardy for Canada to continue provoking the United States with a 
course of action that so blatantly violates our trade agreements,'' 
said Jim Mulhern, president and CEO of NMPF. ``We need our nation's 
governors to join in our call for Canada to step back from the brink of 
what it is about to do and take steps to remind Canada how critical 
trade is to its own interests, as well.''
    ``Despite Canada's efforts to distance itself from the 
administration's focus on enforcement and improving how NAFTA 
functions, it is Canada--not Mexico--that has time and again chosen to 
disregard its dairy trade commitments to the United States and 
intentionally dismiss serious concerns from the United States about the 
impact its dairy policies are having on trade,'' said Matt McKnight, 
acting Chief Operating Officer of USDEC. ``Canada should take a page 
out of Mexico's book and hold up its end of the bargain to us on dairy 
trade.''
    ``The U.S. dairy industry is united on this issue because these 
policies and incentives severely hinder U.S. exports to Canada and 
threaten our ability to remain competitive in markets around the 
world,'' said Michael Dykes, D.V.M., president and CEO of IDFA. ``IDFA 
will continue to speak out against Canada's protectionist policies on 
Capitol Hill, with members of the Trump Administration and among state 
governors and legislators, while asking for changes that will force 
Canada to honor its trade commitments and allow more access for U.S. 
dairy products.''
          * * * * *
About NMPF
    The National Milk Producers Federation, based in Arlington, VA, 
develops and carries out policies that advance the wellbeing of dairy 
producers and the cooperatives they own. The members of NMPF's 
cooperatives produce the majority of the U.S. milk supply, making NMPF 
the voice of dairy producers on Capitol Hill and with government 
agencies. Visit www.nmpf.org for more information.
About USDEC
    The U.S. Dairy Export Council (USDEC) is a nonprofit, independent 
membership organization that represents the global trade interests of 
U.S. dairy producers, proprietary processors and cooperatives, 
ingredient suppliers and export traders. Its mission is to enhance U.S. 
global competitiveness and assist the U.S. industry to increase its 
global dairy ingredient sales and exports of U.S. dairy products. USDEC 
accomplishes this through programs in market development that build 
global demand for U.S. dairy products, resolve market access barriers 
and advance industry trade policy goals. USDEC is supported by staff 
across the United States and overseas in Mexico, South America, Asia, 
Middle East and Europe.
About IDFA
    The International Dairy Foods Association (IDFA), Washington, D.C., 
represents the nation's dairy manufacturing and marketing industries 
and their suppliers, with a membership of nearly 525 companies within a 
$125-billion a year industry. IDFA is composed of three constituent 
organizations: the Milk Industry Foundation (MIF), the National Cheese 
Institute (NCI) and the International Ice Cream Association (IICA). 
IDFA's nearly 200 dairy processing members run nearly 600 plant 
operations, and range from large multi-national organizations to 
single-plant companies. Together they represent more than 85 percent of 
the milk, cultured products, cheese, ice cream and frozen desserts 
produced and marketed in the United States. IDFA can be found online at 
www.idfa.org.
                               attachment
January 30, 2017

    This letter has also been sent to the governors of Arizona, 
California, Colorado, Idaho, Iowa, Indiana, Kansas, Maryland, 
Massachusetts, Michigan, Minnesota, Missouri, Montana, Nebraska, New 
Mexico, New York, North Dakota, Ohio, Pennsylvania, South Dakota, 
Texas, Vermont, Virginia, Washington and Wisconsin.

    Dear Governor:

    We write to you regarding a serious trade concern with a country 
that should be our most reliable trading partner: Canada. Our companies 
appreciate the actions multiple governors and state departments of 
agriculture took last year to express concern over Canada's erection of 
barriers to U.S. dairy exports.
    Reports now indicate that despite numerous U.S. exhortations to 
Canada that it should abide by its dairy trade commitments to us, 
Canada plans to proceed with expanding its harmful use of dairy 
policies to impede trade by implementing a new national ingredients 
strategy pricing program next month. We urge you to prepare to take 
direct action at the state level to underscore to Canada that 
deliberately and systematically damaging U.S. exports in this way will 
not be tolerated.
    Every day Canada relies on smooth access for its products to our 
market, access that comes through our northern border states which are 
being forced to bear the brunt of Canada's flagrant disregard for its 
dairy trade obligations to us. However, this trade cannot be a one-way 
street with Canada expecting to enjoy the benefits of exporting its 
products of interest to our market while denying a sector accounting 
for hundreds of thousands of jobs in rural America reliable access to 
the Canadian market.
    Canada's expected approval of a new national ingredients strategy 
pricing program next month will expand an already harmful program 
piloted last year in Ontario that was created specifically to 
discourage Canadian companies from using imported U.S. ultra-filtered 
milk in the production of Canadian dairy products. That Ontario program 
has already cost U.S. companies tens of millions of dollars in exports, 
thereby harming the dairy farmers, dairy plant employees and rural 
communities that depend on the benefits those foreign sales bring.
    Beginning February 1, Canada is now poised to expand the product 
scope of that program while instituting it nationally and in addition 
to disrupt skim milk powder markets around the world by using the new 
program to dump excess skim milk powder on global markets.
    Over the course of the past year, our industry has urged state 
officials to consider all the tools at their disposal to ensure Canada 
understands the seriousness of this issue and the value it derives on a 
daily basis for the numerous Canadian exports that come across the 
borders of northern U.S. states. We now urge you to take action to send 
that message directly to Canada. Canada needs to hold up its end of the 
bargain, not leave American companies--and the workers and farm 
families they support--holding the bag.
            Sincerely,

 
 
 
Agri-Mark, Inc., Methuen, MA         Northwest Dairy Association/
Associated Milk Producers, Inc.,      Darigold, Seattle, WA
 New Ulm, MN
California Dairies, Inc., Visalia,   O-AT-KA Milk Producers Cooperative,
 CA                                   Inc., Batavia, NY
Cayuga Milk Ingredients, Auburn, NY
Dairy Farmers of America, Kansas     Select Milk Producers, Inc.,
 City, MO                             Artesia, NM
DairyAmerica, Fresno, CA             St. Albans Cooperative Creamery,
Grassland Dairy Products, Inc.,       St. Albans City, VT
 Greenwood, WI
Land O'Lakes, Inc., Arden Hills, MN  TC Jacoby & Co., St. Louis, MO
Maryland & Virginia Milk Producers   United Dairymen of Arizona, Tempe,
 Cooperative Association, Reston,     AZ
 VA                                  Upstate Niagara Cooperative, Inc.,
                                      Buffalo, NY
Michigan Milk Producers
 Association, Novi, MI
 

                                 ______
                                 
  Submitted Letter by Roger Johnson, President, National Farmers Union
March 22, 2017

 
 
 
Hon. K. Michael Conaway,             Hon. Collin C. Peterson,
Chairman,                            Ranking Minority Member,
House Committee on Agriculture,      House Committee on Agriculture,
Washington, D.C.;                    Washington, D.C.
 

    Dear Chairman Conaway and Ranking Member Peterson:

    Thank you for holding today's hearing entitled, The Next Farm Bill: 
Dairy Policy. As you are well aware, the farm economy is continuing to 
struggle as a result of low commodity prices, record yields, and a 
strong U.S. dollar. Dairy, in particular, has suffered a great deal, 
not only as a result of high production and tepid demand, but an 
ineffective safety net. As past hearings have highlighted, the Dairy 
Margin Protection Program (DMPP) failed to provide meaningful relief 
for participants, even as farmers paid millions of dollars in premiums 
for the program.
    Putting dairy farmer's contribution to the agricultural economy 
into perspective is especially important as congress weighs changes to 
the safety net. U.S. dairy farms are an important segment of our 
nation's economy. As one of the world's largest dairy producing 
nations, the industry provides roughly $140 billion in economic output, 
$29 billion in household earnings, and more than 900,000 jobs.
    Low prices and volatility have dominated dairy economics over the 
last three years, forcing many producers to shutter dairy farms across 
the country. Milk prices reached $24 per hundredweight in 2014 but 
quickly eroded, falling to $16 per hundredweight in 2016. These prices 
are well below the cost of production. Meanwhile, cash receipts over 
the last three years demonstrate the volatility. In 2009, cash receipts 
were $24.3 billion, shooting up to $49.3 billion in 2014, and quickly 
falling to $34.2 billion in 2016. Despite the unfavorable economic 
conditions faced by dairy producers, U.S. milk production increased for 
the seventh consecutive year and the dairy herd continues to expand.
    DMPP has provided very little relief to struggling dairy producers. 
In 2016, about \2/3\ of milk production, or 140 billion pounds of 
production history, enrolled in DMPP did not sign up for buy-up 
coverage. It is widely recognized that the program has failed dairy 
producers. There must be an acknowledgement, especially during the 
budget process, that producers paid millions of dollars into the 
program and did not receive assistance during troubling economic 
conditions.
    As dairy farmers face such headwinds, congress must develop a 
comprehensive dairy program to allow dairy producers across the nation 
to receive a profitable return on their investment. In order to achieve 
this, the next safety net will certainly have to increase spending. 
DMPP must have a higher dollar value for catastrophic coverage of at 
least $5.00. The feed ration used to calculate payments must more 
accurately reflect cost of production.
    NFU sees commonality with other industry proposals which call for a 
more equitable feed cost formula. Returning to the original feed cost 
formula in the Dairy Security Act is an important first step in 
improving DMPP. Better price data for corn, soybean meal, and alfalfa 
could help improve calculations related to actual feed costs incurred 
by dairy farmers. Harmonization of data between the National 
Agricultural Statistics Service and the Agricultural Marketing Service 
is also important.
    Our members voiced support for additional flexibility within DMPP. 
Dairy farmers should have the ability to enter and exit the program, 
within reason, as this would prevent producers from leaving a 
significant amount of milk production uninsured for the entire year. 
Coverage calculations and payments should be made on a monthly basis to 
better reflect how producers operate. NFU recognizes that there would 
have to be a delay between signup and coverage start dates in order to 
prevent moral hazards.
    Additional premium support, directed to family farms, by the 
federal government is very important from an equity standpoint. Our 
members, while very supportive of the assistance provided to other 
commodities, are frustrated that their sector does not receive similar 
support. Higher premium subsidies for a risk management program are 
very important to our members. There is a fundamental understanding 
that producers have to share in the risk, and our members are prepared 
to do that, but there must be additional sign up incentives.
    NFU dairy members have also expressed interest in the livestock 
gross margin (LGM) program and whole farm revenue protection (WFRP) 
policy in conjunction with DMPP. We understand that the same milk 
cannot be signed up within different programs. We would ask the 
committee to consider allowing producers to use DMPP and LGM in a 
complementary fashion. In order for this to work, the current LGM cap 
would have to be removed for dairy. The removal of the cap would also 
provide dairy producers who are interested in using both DMPP and WFRP 
to adequately cover dairy production.
    Last, NFU policy recognizes overproduction as one of the many 
reasons for low prices. We support exploring an incentives-based 
inventory management program. We also support and encourage voluntary 
producer assessments for an industry-managed program that will 
stabilize and increase producer prices. NFU wants to see a more robust 
effort to reign in overproduction, with wider adoption of practices 
already being employed by some of our largest dairy cooperatives.
    Thank you again for holding this important hearing. NFU stands 
ready to assist this committee as it advances changes to the next farm 
bill for the benefit of American dairy producers.
            Sincerely,
            
            
Roger Johnson,
President, National Farmers Union.
                                 ______
                                 
                          Submitted Questions
Response from James Mulhern, President and Chief Executive Officer, 
        National Milk Producers Federation
Question Submitted by Hon. Glenn Thompson, a Representative in Congress 
        from Pennsylvania
    Question. Mr. Mulhern, you've noted that NASS alfalfa prices don't 
reflect what dairy farmers pay for the quality that they purchase, and 
that you would like to see a new price reporting mechanism for alfalfa 
to be used in the feed cost calculations. Can you suggest what that 
might look like? What are the flaws in prices that are currently 
reported?
    Answer. Thank you for the question, Congressman. The current U.S. 
average price for alfalfa hay reported by NASS is an average of all 
grades and qualities of hay. Our members have indicated that this price 
does not reflect the price for minimum quality alfalfa hay required for 
dairy farmers to productively feed their cows. We are urging Congress 
to direct USDA to develop a more detailed U.S. average price for dairy 
quality hay.
Question Submitted by Hon. Stacey E. Plaskett, a Delegate in Congress 
        from Virgin Islands*
---------------------------------------------------------------------------
    *There was no response from the witness by the time this hearing 
was published.
---------------------------------------------------------------------------
    Question. Thank you, gentlemen, for taking the time to appear with 
us today and present your views on dairy policy as we consider the next 
farm bill. And thank you, Chairman Conaway and Ranking Member Peterson, 
for holding this important hearing.
    As you know well, during consideration of the last farm bill, the 
previous dairy stabilization program was replaced with an insurance-
like margin program, the MPP.
    The basic premise behind this was to give farmers more tools to 
manage risk and provide a safety net without directly interfering in 
dairy markets and raising prices for consumers.
    There was a prevailing view that the previous dairy stabilization 
program penalized those farmers who wanted to expand. Others argued 
that the program was voluntary and was not preventative to growth, and 
stressed more sensitivity to recent challenges facing the dairy sector.
    In your testimony, you say that the MPP does not provide meaningful 
safety net support to dairy producers.
    What specific changes would you like to see to MPP provisions in 
the next Farm Act?
    Answer.


 
                           THE NEXT FARM BILL

                       (COMMODITY POLICY--PART 1)

                              ----------                              


                        TUESDAY, MARCH 28, 2017

                  House of Representatives,
         Subcommittee on General Farm Commodities and Risk 
                                                Management,
                                  Committee on Agriculture,
                                                   Washington, D.C.
    The Subcommittee met, pursuant to call, at 10:00 a.m., in 
Room 1300 of the Longworth House Office Building, Hon. Eric A. 
``Rick'' Crawford [Chairman of the Subcommittee] presiding.
    Members present: Representatives Crawford, Lucas, Gibbs, 
Allen, Bost, Bacon, Dunn, Arrington, Conaway (ex officio), 
Nolan, Walz, Bustos, Blunt Rochester, David Scott of Georgia, 
Maloney, Plaskett, Lawson, O'Halleran, and Peterson (ex 
officio).
    Staff present: Bart Fischer, Callie McAdams, Haley Graves, 
Matthew S. Schertz, Stephanie Addison, Trevor White, Anne 
Simmons, Liz Friedlander, Matthew MacKenzie, Troy Phillips, 
Mike Stranz, and Nicole Scott.

    OPENING STATEMENT OF HON. ERIC A. ``RICK'' CRAWFORD, A 
            REPRESENTATIVE IN CONGRESS FROM ARKANSAS

    The Chairman. This hearing of the Subcommittee on General 
Farm Commodities and Risk Management entitled, The Next Farm 
Bill: Commodity Policy--Part 1, will come to order.
    This is the first hearing of the General Farm Commodities 
and Risk Management Subcommittee in preparation for the next 
farm bill. Over the course of the next year, we will be 
examining policies under our jurisdiction so we can improve 
upon the 2014 Farm Bill, and make sure that the needs of not 
only American farmers and ranchers are being met, but also that 
consumers will continue to benefit from a stable farm policy.
    In agriculture it is often said that the cure for high 
prices is, high prices. This saying has certainly held true in 
the past and we are understanding its true meaning right now. 
When we wrote the legislation that would eventually become the 
2014 Farm Bill, farmers were experiencing record prices, net 
farm income was at all-time highs, and many were led to believe 
that commodity prices had reached a new plateau. But the old 
adage rang true yet again, and 4 years later, net farm income 
has fallen 50 percent, commodity prices are in the tank across 
the board, and producers, especially beginning farmers, those 
highly leveraged, and those that were unable to capitalize on 
high prices, are struggling to get financing so they can 
continue to farm for another year. We are on the verge of a 
real crisis in rural America.
    The current situation in the countryside provides a 
textbook example for why we have farm bills in the first place. 
The farm bill is not meant to provide help when times are good; 
rather, the farm bill helps producers survive the bad times so 
they can farm another year, raise their families, and one day 
pass their operations on to the next generation.
    Today we will examine how the commodity and crop insurance 
provisions are faring for barley, corn, sorghum, soybeans, and 
wheat producers. We will hear many acronyms thrown around like 
ARC, PLC, SCO, and STAX. But let's not lose sight that amongst 
the confusion, amongst the technical speak, there are real-life 
men and women with dirt under their fingernails who are just 
hoping to make it through these tough times. At the end of each 
one of these policies are people that are responsible for 
providing the safest, most abundant, most affordable food 
supply in the world. And that benefits each and every one of 
our constituents.
    I am glad to see that we have such an outstanding set of 
panelists here today. Thank you to each one of you for taking 
the time out of your busy schedules, away from your operations 
to join us. Your commitment to improving farm policy for all of 
your fellow producers does not go unnoticed by the Members of 
this Subcommittee.
    Whether you are from Jonesboro, Arkansas, like myself, the 
Iron Range of Minnesota like the Ranking Member, or even the 
Virgin Islands like Ms. Plaskett, every Member of this 
Subcommittee has a vested interest in making sure that we get 
this policy correct, because we all have people in our 
districts that need to eat. And we need to make sure that 
America's farmers and ranchers are equipped to feed them.
    I look forward to hearing from this panel.
    [The prepared statement of Mr. Crawford follows:]

Prepared Statement of Hon. Eric A. ``Rick'' Crawford, a Representative 
                       in Congress from Arkansas
    This is the first hearing of the General Farm Commodities and Risk 
Management Subcommittee in preparation for the next farm bill. Over the 
course of the next year, we will be examining the policies under our 
jurisdiction so we can improve upon the 2014 Farm Bill and make sure 
that the needs of not only American farmers and ranchers are being met, 
but so that consumers will continue to benefit from a stable farm 
policy.
    In agriculture it is often said that ``the cure for high prices is, 
high prices.'' This saying has certainly held true in the past and we 
are understanding its true meaning right now. When we wrote the 
legislation that would eventually become the 2014 Farm Bill, farmers 
were experiencing record prices, net farm income was at all-time highs, 
and many were led to believe that commodity prices had reached a new 
plateau. But the old adage rang true yet again, and 4 years later, net 
farm income has fallen 50 percent, commodity prices are in the tank 
across the board, and producers, especially the beginning farmers, 
those highly leveraged, and those that were unable to capitalize on 
high prices, are struggling to get financing so they can farm another 
year. We are on the verge of a real crisis in rural America.
    The current situation in the countryside provides a textbook 
example for why we have farm bills in the first place. The farm bill is 
not meant to provide help when time are good. Rather, the farm bill 
helps producers survive the bad times so they can farm another year, 
raise their families, and one day pass their homestead on to the next 
generation.
    Today we will examine how the commodity and crop insurance 
provisions are faring for barley, corn, sorghum, soybeans, and wheat 
producers. We will hear many acronyms thrown around like ARC, PLC, SCO, 
and STAX. But let us not lose sight that amongst the confusion, amongst 
the technical speak, there are real life men and women with dirt under 
their fingernails who are just hoping to make it through these tough 
times. At the end of each one of these policies are people that are 
responsible for providing the safest, most abundant, most affordable 
food supply in the world. And that benefits each and every one of our 
constituents.
    I am glad to see that we have such an outstanding set of panelists 
here today. Thank you to each one of you for taking the time out of 
your busy schedules and away from your operations to join us. Your 
commitment to improving farm policy for all of your fellow producers 
does not go unnoticed by the Members of this Subcommittee.
    Whether you are from Jonesboro, Arkansas like myself, the Iron 
Range of Minnesota like the Ranking Member, or even the Virgin Islands 
like Ms. Plaskett, every Member of this Subcommittee has a vested 
interest in making sure that we get this policy correct, because we all 
have people in our districts that need to eat. And we need to make sure 
that America's farmers and ranchers are equipped to feed them.
    I look forward to hearing from this panel, and I yield to the 
Ranking Member, Mr. Nolan for any opening comments he would like to 
make.

    The Chairman. I now yield to the Ranking Member, Mr. Nolan, 
for any opening comments he would like to make.

 STATEMENT OF HON. RICHARD NOLAN, A REPRESENTATIVE IN CONGRESS 
                  FROM THE STATE OF MINNESOTA

    Mr. Nolan. Thank you, Chairman Crawford, for holding this 
hearing today with respect to the commodity price policy in the 
next farm bill. I want to thank the great panel of witnesses we 
are about to hear from here. I want to extend a special welcome 
to my fellow Minnesotan, Mr. Peter Friederichs. Welcome, Peter. 
I am glad to have you here. Peter, as you may or may not know, 
is President of the National Barley Growers Association.
    In particular, I want to thank all of our witnesses here 
for taking the time to testify. We have an old saying around 
the Congress here that, like it or not, most things, or many 
things in the political world affect your life. I mean the time 
of day is a political decision. The air we are breathing, the 
fabric in your clothing, the chemicals that went into your 
shampoo this morning. We have a saying, if you don't come to 
town and make your case, one of two things can happen. One is 
they don't know you exist. That is not good. But worse yet, 
they know you exist and think you don't care. That is why it is 
so important for you to be here so that we not only know you 
care, but to offer your suggestions and your advice on how we 
can put together the kind of policies that create the kind of 
economy we want. In this particular instance, the kind of 
economy we want in rural America.
    Mr. Chairman, it is clear from the numbers that we have 
seen that times in farming country are tough, they are getting 
tougher, prices are down, the income is down, the debt is going 
up, the cash rents are going up, loans are harder to get. Mr. 
Chairman, with the consent of the Committee, I would like to 
ask unanimous consent that the entirety of my remarks be put 
into the record, and then I will close so that we can get on 
with hearing from our witnesses.
    [The prepared statement of Mr. Nolan follows:]

   Prepared Statement of Hon. Richard M. Nolan, a Representative in 
                        Congress from Minnesota
    Thank you, Chairman Crawford, for holding this hearing today with 
respect to commodity policy and the next farm bill. And thank you to 
the great panel of witnesses we are about to hear from. Welcome to the 
Subcommittee.
    It's abundantly clear from all the numbers and studies we've seen 
that economic times in America's farm country are tough and getting 
tougher. Commodity prices and farm income are down, debt is up, cash 
rents are high in some places, loans are hard to come by and 2017 
promises more of the same.
    Moreover, it is profoundly disturbing that due in large part to the 
collapse in commodity prices, overall net farm income has fallen by 50 
percent since 2013--the largest 4 year percentage drop since the Great 
Depression.
    And today, because the current farm bill was written during a time 
of particularly high commodity prices, our farmers face unique 
challenges in dealing with the financial pressures of the current 
downturn.
    So it's going to be vitally important for this Subcommittee to work 
to ensure the new farm bill contains the risk management tools 
necessary to help our farmers survive these kinds of devastating 
fluctuations in commodity prices.
    The fact of the matter is--we need to do everything we can to put a 
stop to these boom and bust cycles that threaten our farmers, our rural 
communities, our rural businesses and the good paying jobs they support 
all across rural America.
    So with that said, I'm looking forward to hearing from today's 
witnesses and I want to again thank the Chairman for holding this 
important hearing.

    The Chairman. Without objection. I appreciate the Ranking 
Member's comments.
    The chair would request that other Members submit their 
opening statements for the record so the witnesses may begin 
their testimony, and to ensure there is ample time for 
questions.
    We have five witnesses today. I would like to welcome them 
to the table. Mr. Wesley Spurlock, President, National Corn 
Growers Association, Stratford, Texas; Mr. Ron Moore, 
President, American Soybean Association, Roseville, Illinois; 
Mr. David Schemm, President, National Association of Wheat 
Growers, Sharon Springs, Kansas; Mr. Peter Friederichs, 
President, National Barley Growers Association, Foxhome, 
Minnesota; and Mr. Dan Atkisson, Vice Chairman, National 
Sorghum Producers, Stockton, Kansas.
    Mr. Spurlock, you are recognized for 5 minutes.

STATEMENT OF WESLEY SPURLOCK, PRESIDENT, NATIONAL CORN GROWERS 
                   ASSOCIATION, STRATFORD, TX

    Mr. Spurlock. Good morning, Chairman Crawford, Ranking 
Member Nolan, and Members of the Subcommittee. My name is 
Wesley Spurlock and I am a farmer in the Texas Panhandle, where 
our family has farmed and ranched since the late 1800s. We 
raise corn, cotton, wheat, sorghum, and cattle. I currently 
serve as President of the National Corn Growers Association. I 
appreciate the opportunity to share with you the views of our 
commodity programs and Federal crop insurance.
    The farm economy looks very different today than a decade 
ago. From 2006 to 2013, corn prices were in the $4.70 per 
bushel range. Most grain farmers were making a profit. Since 
2013, they have averaged below $4, and with this marketing 
year, at $3.40. At that time, very few corn farmers made a 
profit over net income. One study in Illinois found that net 
farm income declined to an average of $500 in 2015.
    Today, corn farmers face a lot of uncertainty about Federal 
policy on renewable fuel and trade, and how they will impact 
the market access in their bottom lines. Last year, 4.2 billion 
bushels of corn produced more than 15 billion gallons of 
ethanol, and returned more than 1 billion bushels of high-
quality feed back to the livestock industry. Keeping the RFS on 
schedule provides more certainty, which leads to more demand 
for ethanol and corn. We ask you to consider the negative 
consequences regarding changes to all parts of the RFS.
    Trade is also critical to our bottom lines. NAFTA has been 
a huge success for us. Twenty-six percent of U.S. corn exports 
go to Canada and Mexico. In Texas, agricultural exports to 
Canada and Mexico totaled $3.3 billion in 2016. It is vital 
these markets remain open and preserve our duty-free access.
    Our county provided nearly $3.5 billion in payments on 
corn-based acres in 2014, and more than $4 billion in 2015. In 
the same Illinois study, those payments meant making $500 in 
income instead of losing $30,000 or more. Although the 
financial position of corn farmers has deteriorated, few farms 
have had to face liquidating assets or bankruptcy thanks in 
part to the support of the ARC-County. ARC was designed as a 
market-based program, and provides support only when needed. 
And this is the time. By and large, the program is working as 
intended. There are a few administrative concerns and changes 
to ARC-County we hope you will consider for the next farm bill. 
In some situations, the Farm Service Agency switches to crop 
insurance data when NASS is unable to publish a county yield, 
resulting in underpayments. Equitable payments depend on using 
the most accurate, transparent, and consistent data sources. 
Also the program parameters were developed during a very 
different price environment than what we face today, and that 
will need to be reflected in the next farm bill.
    As important as commodity programs are to the farm safety 
net, Federal crop insurance is ranked by NCGA members as their 
most important risk management tool. Eighty-seven percent of 
planted acres are covered by some type of crop insurance. Our 
2015 risk management survey confirmed that corn farmers are 
very price sensitive to insurance. Two areas for improvement 
that we have identified are more consistency in quality loss 
adjustments for indemnities, and more reasonable preventive 
planting provisions.
    In summary, commodity programs and crop insurance address 
two distinct but related risks. Crop insurance has replaced the 
ad hoc disaster assistance and provided same-year risk 
protection, while commodity programs protect against multi-year 
losses. These two programs have helped many farmers weather the 
storm of a weak farm economy and avoid bankruptcy. NCGA 
recognizes the daunting task before you in crafting the next 
farm bill.
    I thank you for your time and your consideration of our 
views.
    [The prepared statement of Mr. Spurlock follows:]

Prepared Statement of Wesley Spurlock, President, National Corn Growers 
                       Association, Stratford, TX
    Chairman Crawford, Ranking Member Nolan, and Members of the House 
Agriculture Subcommittee on General Commodities and Risk Management, on 
behalf of the National Corn Growers Association (NCGA), I appreciate 
the opportunity to share with you our perspectives on the state of the 
corn industry and views on the performance of our current commodity 
programs and Federal crop insurance. My name is Wesley Spurlock, and I 
currently serve as President of the National Corn Growers Association 
(NCGA). I am a farmer in the Texas Panhandle. Our family has farmed and 
ranched there since the late 1800s. We raise corn, cotton, wheat, 
sorghum and cattle on irrigated farms.
    The National Corn Growers Association represents more than 40,000 
dues-paying corn farmers nationwide. NCGA also represents more than 
300,000 corn growers who contribute through check-off programs and 28 
affiliated state corn organizations, for the purpose of creating new 
opportunities and markets for corn growers.
    Before addressing the effectiveness of the 2014 Farm Bill's risk 
management programs, I first want to provide you an overview of the 
corn industry and how it is performing during this extended period of 
low commodity prices. We corn farmers are proud of our ability to 
sustainably produce an abundant crop that helps to feed and fuel a 
growing world. In 2016, we harvested 86.7 million acres that produced 
15.1 billion bushels of corn, a record many thought unattainable just 
10 years ago. To go from an average yield of 127.1 bushels/acre in 1996 
to an average yield of 174.6 bushels this past year is a remarkable 
achievement made possible by advances in seed technologies along with 
innovations in production and conservation practices. However, this 
success story does not come without some significant challenges. With 
the U.S. Department of Agriculture (USDA) estimating 2016 crop year 
ending stocks at more than 2.3 billion bushels, it is more important 
than ever to build upon on our current markets and develop new uses to 
increase demand for our crop.
    When I think about risk management, I consider my entire operation 
and my total risk portfolio. Farmers know we have to look at the demand 
side of the equation. Trade may seem like an external force to some, 
but it has a very real impact on my and other farmers' bottom lines. 
Agricultural exports account for 20 percent\1\ of U.S. farm incomes, 
and for the corn industry that number is closer to 30 percent.\2\ The 
health and growth of those trading relationships, particularly during 
times when commodity prices are lower (like they are now), can 
determine whether I make a profit or a loss. The benefits from trade 
ripple out beyond the farmgate to create economic activity and jobs in 
our rural communities across the country.
---------------------------------------------------------------------------
    \1\USDA.
    \2\USGC.
---------------------------------------------------------------------------
    Corn farmers face a lot of uncertainty right now about how changes 
to our trade policy will impact our market access. U.S. corn counts 
Mexico and Japan as its top two export markets. The North American Free 
Trade Agreement (NAFTA) has been a huge success for the corn industry--
26 percent of U.S. corn exports go to Canada and Mexico.\3\ In 2016 
alone, 13.3 million metric tons of corn were exported to Mexico. In my 
home state of Texas, agricultural export trade to Canada and Mexico 
totaled more than $3.3 billion in 2016 and supported 18,674 jobs, 
according to research conducted by the Center for North American 
Studies at Texas A&M University.
---------------------------------------------------------------------------
    \3\USGC--Calculated using USDA's economic activity multiplier.
---------------------------------------------------------------------------
    As we work with Mexico and Canada to modernize NAFTA, it is vital 
we keep these markets open to preserve our duty-free access for corn 
and corn products, and build on the mutual success realized from this 
partnership. NCGA has also urged the President to engage early with the 
Asia-Pacific region to negotiate new or updated free trade agreements 
that provide U.S. agriculture with greater access to these growing 
markets and reduce non-tariff barriers to trade. We will continue to 
prioritize development of new markets through export promotion 
activities, which increase and diversify demand for our products and 
build valuable trading relationships. USDA's Market Access Program 
(MAP) and Foreign Market Development Program (FMD) function as public-
private partnerships and deliver $28 in exports for every $1 invested. 
NCGA is seeking an increase in funding for these programs.
    In addition to expanding export markets, a robust, growing 
livestock industry is extremely important to building new demand for 
U.S. corn. One of the key benefits from livestock is market 
consistency. While this market ebbs and flows with definitely 
pronounced cycles, they are usually over the course of years. Today, 
feed for livestock accounts for more than 38 percent of corn usage at 
5.6 billion bushels. According to the USDA Economic Research Service, 
U.S. corn feed and residual use is expected to rise to nearly 5.8 
billion bushels in 2016-17. With projections of U.S. meat exports 
forecast to increase in the coming years to meet the rising global 
demand for protein, NCGA is hopeful that this growth will result in 
higher incomes for corn farmers and our livestock customers.
    The other key sector critical to corn farmers' economic security is 
a vibrant renewable fuels industry. In the last crop year, nearly \1/3\ 
of U.S. corn production, or 4.2 billion bushels, was used to produce 
more than 15 billion gallons of ethanol. Moreover, ethanol production 
returned 1.1 billion bushels of corn to feed livestock and poultry in 
the form of distiller dried grains (DDGs).
    Even as ethanol production expanded to an all-time high in 2016, 
corn farmers still produced a large corn surplus. Contrary to 
conventional wisdom, total cropland acres in the United States have 
fallen since the Renewable Fuel Standard (RFS) was expanded, and farmer 
demand for conservation programs remains high. In short, we produce 
more than enough corn to meet our food, feed, industrial and fuel 
needs.
    After 3 years of delays and uncertainty in issuing the annual 
renewable fuel volume levels, corn farmers were pleased to see the EPA 
get administration of the RFS back on track last November with final 
volume requirements for 2017. Keeping administration of the RFS on 
schedule and in line with Congressional intent provides stability and 
certainty, which in turn leads to more investment in the industry and 
more demand for ethanol and corn, exactly what our producers need right 
now.
    Although not under the jurisdiction of the Agriculture Committee, 
when corn growers hear some in Congress talk about the need to reform 
or rewrite the RFS, we ask you to consider the negative consequences of 
such action. With farmers facing consecutive years of low commodity 
prices and an ethanol industry emerging from several years of 
uncertainty caused by EPA actions, we need more stability in the RFS, 
not less.
    Looking forward, corn farmers want to build on the effective volume 
level of 15 billion gallons that EPA set for 2017, in line with 
Congressional intent. With stability in the RFS, corn growers can 
increase demand for home-grown ethanol that saves consumers money at 
the pump, generates 43 percent lower greenhouse gas emissions than 
gasoline, and supports thousands of jobs in our rural communities--all 
while supporting the bottom line of corn farmers nationwide. I cannot 
overemphasize how important ethanol demand is to our industry. It is 
crucial to our farmers and beneficial to our nation's energy security. 
In fact, the renewable fuel industry directly supports nearly 86,000 
jobs and displaced 540 million barrels of foreign oil imports in 2016.
    The precipitous decline in price from a national marketing year 
average of $6.22 per bushel for the 2011 crop to an estimated $3.40/
bushel for the 2016 crop has resulted in a steep decline in corn 
farmers' income as well as a very adverse impact on the rural economy. 
When the annual crop value of corn falls from nearly $77 billion in 
2011 to just over an estimated $51 billion 5 years later, increasing 
financial stress is being experienced from the family farm to the 
employees laid off by agriculture equipment manufacturers.
    Prior to the downturn in commodity markets, according to USDA corn 
prices averaged $4.70 per bushel between 2006 through 2013, a period of 
positive net farm incomes for most grain farms in the United States. 
Since 2013, corn prices have averaged below $4.00 per bushel. In fact, 
the average U.S. market year corn price fell to $3.70 per bushel in 
2014, then slid further to $3.61 in 2015. The 2016 crop market year 
does not end until September 1, 2017, but the February World 
Agriculture Supply and Demand Estimates Report (WASDE) projection 
places the price at $3.40. Long-run projections made by USDA now place 
the 2017 market year price at $3.50 per bushel. Currently, break-even 
levels for corn production are near $4.00 per bushel. As long as corn 
prices are below $4.00, we anticipate incomes to be very low or 
negative.
    As a result of these price declines, revenue from selling a crop, 
hereafter referred to as crop revenue, has significantly decreased. 
USDA has reported that crop revenue from corn in the United States 
averaged $837 per acre in 2011 and $801 per acre in 2012. Gross 
revenues have decreased considerably since that time Crop revenue was 
$719 per acre in 2013, $602 per acre in 2014, and $611 per acre in 
2015. Projections for 2016 place corn revenue at $593 per acre (174.6 
national corn yields  $3.40 price).
    Adding to the financial stress on farm operations is an extended 
lag in expenses declining to the same extent that crop revenues have 
decreased. According to USDA, costs for corn production reached a high 
of $690 per acre in 2014 before falling to $675 per acre in 2015, a 
decrease of only $15 per acre. When we compare this small decrease to a 
sharp revenue decline of $190 per acre between 2012 and 2015, we can 
begin to better understand the difficult transition and drain on equity 
that many corn farmers are experiencing.
    With crop revenue decreasing, net incomes on grain farms are, of 
course, falling. As one example, Illinois Farm Business Farm Management 
(FBFM), a record-keeping service with about 25 percent of the acres 
farmed in Illinois enrolled in its services, estimates that net farm 
income declined to an average of $500 in 2015. The $500 per farm 
average in 2015 was the lowest farm income since FBFM began keeping 
records. Not surprisingly, cash reserves on farms are eroding due to 
successive years of declining income. Although reported incomes for 
2016 have yet to be released, they are expected to be slightly higher 
than in 2015 due to above-average yields and sizable payments from the 
Agriculture Risk Coverage program.
    It is important to note that for the period of 2014 through 2016, 
incomes would have been lower had payments from the Agricultural Risk 
Coverage-county level (ARC-CO) and Price Loss Coverage programs not 
been made. As I explain later, ARC-CO payments have been substantial, 
partially offsetting the revenue declines experienced in 2014 and 2015.
    Overall, NCGA believes the commodity program reforms authorized in 
the 2014 Farm Bill program have performed as designed. These more 
market-oriented policy changes are delivering assistance to producers 
when the need for financial relief is clearly present. During the 
enrollment process for the 2014 Farm Bill, 94 percent of the corn base 
acres were enrolled in ARC-CO with most of the remaining six percent of 
base acres being enrolled in Price Loss Coverage (PLC). As a result of 
high enrollment in ARC, corn farmers will evaluate the 2014 Farm Bill 
based on the performance of ARC-CO.
    ARC-CO has made significant payments to corn farmers in 2014 and 
2015, and will likely make large payments in 2016. In 2014, ARC-CO 
payments were $3.479 billion on corn base acres, for an average payment 
of $39 per base acre. In 2015, ARC-CO made $4.02 billion in payments, 
or $45 per base acre. These ARC-CO payments have cushioned the sharp 
decrease in revenues occurring in 2014 and 2015. On a national basis, 
revenues in 2014 and 2015 were close to $200 per acre below 2011 and 
2012 levels.
    Obviously, ARC-CO payments have helped to reduce the net income 
declines sustained during 2014 and 2015. On Illinois farms, for 
example, net income was $500 per farm in 2015. Without commodity title 
payments, 2015 incomes would have been more than $30,000 lower, 
resulting in an average net income that was negative.
    Reflecting low producer enrollment and the relationship between the 
market year price and corn's reference price of $3.70 per bushel, the 
Price Loss Coverage Program did not make large payments to corn base 
acres in either 2014 or 2015. PLC payments averaged $0 per base acre in 
2014 and $8.07 per base acre in 2015. For most corn farmers, PLC did 
not reduce their exposure to lower incomes in 2014 and 2015.
    Overall, ARC-CO has worked as expected. However, there are several 
issues regarding the Farm Service Agency's implementation of this 
program option and changes in commodity markets we hope this 
Subcommittee will consider as it proceeds with crafting a new farm 
bill.

   In some counties, there has been a need to switch data 
        sources from National Agricultural Statistical Service (NASS) 
        to the Risk Management Agency (RMA) when there is an 
        insufficient number of producer surveys for NASS to publish a 
        yield. In some cases, source switching leads to concerns of 
        ARC-CO underpayments due to differences in yields.

   In other situations, low or zero payments have occurred in 
        one county while surrounding counties receive large payments. 
        While producers should fully expect differences in payments 
        between counties, concerns regarding equity have been raised, 
        particularly with farms close to county lines. NCGA appreciates 
        the efforts of the Farm Service Agency and the NASS to use the 
        most accurate data available from NASS and RMA as well as their 
        consideration of adjustments in payments to address disparities 
        that occurred with the use of yields from a farm's FSA 
        Administrative County rather than the county where the farm is 
        actually located.

   The 86 percent coverage level and ten percent payment zone 
        were developed during a different price environment than what 
        is occurring today. In particular, the high prices during the 
        2010 to 2012 period are not expected to repeat themselves. ARC-
        CO parameters in a lower price environment will be far 
        different from those moving from a high to a low price 
        environment.

    As critical as commodity programs are to the farm safety net, 
Federal crop insurance is consistently ranked by NCGA members as the 
most important risk management tool provided by USDA. U.S. corn farmers 
use crop insurance extensively. Comparison of Risk Management Agency 
(RMA) insured acre data to NASS planted acre data indicate that 87 
percent of the acres planted in 2016 were insured with RMA crop 
insurance products.
    Of the variety of crop insurance products available, corn farmers 
predominately choose to insure with Revenue Protection (RP), a revenue 
insurance using farm yields in setting guarantees and payments. RP has 
an increasing guarantee provision that increases crop insurance 
guarantees if the harvest price is above the projected price. In 2016, 
RP was purchased on 90 percent of the insured acres.
    Moreover, corn farmers typically insure at high coverage levels. 
For RP insurance, 14 percent of the acres are insured at the 70 percent 
coverage level, 39 percent at the 75 percent coverage level, 28 percent 
at the 80% coverage level, and 23 percent at the 85 percent coverage 
level. These four highest coverage levels account for 95 percent of the 
use. Use is geographically related. In the heart of the Corn Belt 
(southern Minnesota, Iowa, northern and central Illinois, northern and 
central Indiana, many western Ohio counties), more than 90 percent of 
the acres are insured with 80 and 85 percent coverage level polices. 
Coverage levels tend to decrease from the heart of the Corn Belt as 
yield risk increases and crop insurance premium rises. For example, in 
my home state of Texas, average coverage levels are well below those 
purchased in Iowa and Illinois. Generally speaking, with higher 
premiums, farmers are purchasing an average coverage level of 65 
percent on smaller optional units.
    The previously cited statistics and NCGA's risk management survey 
conducted in late 2015 indicate that farmers have a strong preference 
for revenue products using enterprise units that protect against 
revenue declines across the farm. Policies that provide protection of 
farm yields are far more popular than those at the county level. Our 
national survey also confirmed that corn farmers are very price 
sensitive to insurance. Increases in crop insurance premiums resulting 
from reduced USDA support for discounts are likely to result in 
purchases of lower coverage levels, just as in the past decreases in 
farmer-paid premiums resulted in higher use.
    Overall, corn farmers seem satisfied with overall crop insurance 
performance. Concerns, though, have been raised over the following 
provisions:

   Price discounts are sometimes difficult to account for in 
        insurance. For example, crop damage due to aflatoxins can 
        result in difficulties in determining indemnity payments.

   Prevented planting payments and related provisions seem to 
        cause concerns in some areas, particularly in areas where 
        flooding is common.

   Producers in areas that are frequently struck by very low 
        yields have expressed concerns with the approved yield setting 
        mechanism. The yield exclusion provision and higher t-yields 
        implemented in past farm bills may have eliminated some of 
        these concerns.
The Need for Farm Policy
    As we have stated before, the marked increases in the corn 
industry's productivity have been achieved in large part by farmers' 
investments in new technologies and more modern production practices. 
NCGA believes that for the corn farmer who faces a high level of 
financial and production risks every year, these investments were made 
possible by a farm safety net that offers sound risk management tools 
and a cost-share Federal crop insurance program that serves as the 
foundation.
    The crop insurance and commodity titles provide risk management to 
corn farmers. Crop insurance provides within-year risk protection 
against low yields or within-year price declines. The importance of 
this insurance was illustrated in 2012, when a major drought hit the 
Midwest and crop insurance provided payments for yield decreases 
occurring in that year. Moreover, crop insurance has replaced ad hoc 
disaster assistance programs. In 2012, a disaster assistance program 
was not passed, unlike in previous years when adversity occurred and 
crop insurance was not as strong or well-used of a program.
    Commodity title programs provide protection against revenue or 
price decreases across years, a set of risks different from those 
addressed by crop insurance. ARC is designed to provide payments when a 
current year's revenue falls below a guarantee based on the five 
previous yields and prices. The importance of this protection is 
illustrated in 2014 and 2015 when ARC made payments were made in the 
face of revenue decreases. Without these payments, net incomes and 
financial deterioration would have been much worse.
    In recent years, the financial posit[i]on of farms has 
deteriorated. However, few farms have faced the need to restructure by 
liquidating assets or have faced bankruptcy, although the incidence of 
farm bankruptcy has increased in recent years. Much of this can be 
attributed to crop insurance payments, particularly those occurring in 
2012, and recent ARC-CO payments. Without these payments, the financial 
posit[i]on of many farms would be more seriously challenged.
    The risk management benefits offered by crop insurance and 
commodity title programs are particularly important to family farms who 
receive the majority of their incomes from farming. In these cases, 
off-farm income may be limited, and any changes to the family's 
financial position is much more directly impacted by farm level 
performance. Without crop insurance and commodity title payments, the 
financial wherewithal of these farms would likely face serious erosion.
    NCGA recognizes the daunting task now before the House Agriculture 
Committee to craft the next farm bill given the multiple and diverse 
needs of U.S. agriculture, particularly at a time of continuing budget 
constraints and increasing financial challenges confronting U.S. 
farmers and ranchers. I thank you for your time this morning and your 
consideration of our views regarding the impacts of the 2014 Farm Bill 
on corn growers.

    The Chairman. Thank you, Mr. Spurlock.
    I would like to yield to the gentlelady from Illinois, Mrs. 
Bustos, to introduce our next witness.
    Mrs. Bustos. Thank you, Mr. Chairman. And good morning to 
all our panelists. It is my pleasure to introduce Ron Moore, 
who happens to come from my Congressional district, the 17th 
District of Illinois, but he is also the President of the 
American Soybean Association. A native of Roseville, Illinois, 
Ron is also the past Chairman of the Illinois Soybean 
Association. With his wife, Debra, and son, Mike, Ron has a 
soybean, corn, alfalfa, and feeder cattle operation. In 
addition to the Soybean Association, he has been involved with 
the Illinois Farm Bureau, the Illinois Beef Association, and 
the Illinois Corn Growers Association, among others.
    I would also like to add that it is fitting to have an 
Illinoisan testify before us at this hearing today. Many of you 
know Illinois because our world champion Chicago Cubs, and also 
because of our deep dish pizza. Everybody can applaud now, in 
addition to Ron. But most of Illinois is rural. And that might 
be a surprise to some people, but most of Illinois is rural. 
And agriculture is still our number one economic driver.
    So I am pleased to welcome Ron because he knows, and I 
know, that the number one state in the country for production 
of soybeans is Illinois. I am pleased to welcome Ron to our 
hearing, and I look forward to hearing your testimony. Thank 
you, Ron.
    The Chairman. I thank the gentlelady. And would make note 
that Cardinal Nation extends well into Illinois, for the 
record, but we don't have to talk about that right now.
    Mrs. Bustos. That is true.
    The Chairman. I know you know that, I am just kidding.
    Mr. Moore, you are recognized for 5 minutes.

      STATEMENT OF RON MOORE, PRESIDENT, AMERICAN SOYBEAN 
                   ASSOCIATION, ROSEVILLE, IL

    Mr. Moore. Well, thank you and good morning. Thank you for 
the introduction, Congresswoman. I appreciate that. Mr. 
Chairman, thank you, and the Members of the Subcommittee.
    As stated, I am Ron Moore, President, and I live in 
Roseville, Illinois. And we commend you for holding this 
important hearing, and appreciate the opportunity to testify 
today.
    It has been only 3 years since enactment of the 
Agricultural Act of 2014, but conditions in the U.S. farm 
economy couldn't be more different. In view of higher market 
returns, Congress decided to eliminate the direct payment 
program to reduce farm bill spending by $23 billion below the 
CBO baseline. Farm programs received most of this cut, and 
agriculture was the only sector to contribute to deficit 
reduction. Today, farm prices are down by 41 percent, and farm 
income is down by 50 percent. Estimates for 2017 show a further 
decline of 7.1 percent. Land rents and input costs remain 
stubbornly high, and producers are having increasing difficulty 
obtaining operating loans.
    While a safety net provided by title I programs and crop 
insurance has cushioned the impact on some farmers, others have 
not fared as well, and the protection these programs provide is 
declining as more low prices are factored into revenue 
formulas.
    ASA's voting delegates approved policy resolutions earlier 
this month to ask Congress to write the 2018 Farm Bill based on 
a very real need by U.S. producers for a stronger safety net 
rather than extending existing programs. We appreciate your 
Committee's recent letter to the Budget Committee, which made a 
strong case against cuts to the current CBO baseline in the 
2018 budget. However, as ASA and 16 other national 
organizations stated in a March 15 letter to the Senate Budget 
and Appropriations Committee, correcting shortcomings in the 
2014 Act, and funding other important programs whose 
effectiveness has diminished over time will require additional 
resources from outside the farm bill.
    We know this will be a difficult task for the Members of 
your Committee as well as your Senate counterparts, but farm 
groups are united and committed to support your efforts through 
discussions with House leadership.
    ASA's recommendations for the 2018 Farm Bill begin with the 
need to maintain the current crop insurance program as a core 
risk management tool for producers of soybeans and other crops. 
The various sign-up options provided under crop insurance have 
proven their net worth in recent years, even as the cost of the 
program is now projected by CBO to decline about $1 billion a 
year. Crop insurance isn't broken, and it doesn't need to be 
fixed.
    Regarding title I, we encourage the Committee to improve 
and build upon current programs under the 2014 Act, rather than 
develop new ones. We believe offering producers a choice 
between price-based PLC and revenue-based ARC programs 
appropriately reflects differences between crops and regions, 
and that another choice should be offered only on a one-time, 
crop-by-crop and farm-by-farm basis.
    ASA strongly supports basing ARC and PLC program benefits 
on base acres planted to crops in recent years, rather than on 
acres planted to crops in their current year. This decoupling 
of payments in the current year planting is critical to 
encourage farmers to base their planting decisions based on 
market signals, rather than on the expectation that a 
particular crop will receive a government payment.
    ASA supports giving farmers the choice to keep their 
existing crop bases, reallocate bases to reflect plantings in 
more recent years, or update bases to include production of all 
program crops on a farm. We also support updating program 
yields to reflect increases since they were last determined.
    ASA believes that RMA data should be the default county 
yield data used when available, as it is generally considered 
more accurate than data based on voluntary surveys.
    These and other title I changes, and the need to increase 
funding for programs and other titles, will require additional 
resources. These resources need to be in addition to the farm 
bill baseline, not redistributed from within the farm bill.
    Attached to my written statement is a document from eight 
national farm organizations identifying issues on which we have 
been able to reach consensus. These include agreements on a 
number of commodity and conservation programs, crop insurance, 
and other provisions. Our organizations will continue to work 
together, and will work with other groups to develop common 
positions on these and other issues in order to provide unified 
input to the Congressional Agriculture Committees as the farm 
bill process goes forward.
    Finally, ASA strongly supports keeping the agriculture and 
nutrition titles together in the farm bill. The only groups 
pushing for them to be split into two bills are critics from 
outside the ag community whose common goal is to defeat rather 
than pass a new farm bill. However the Committee may decide to 
proceed, an affirmation that the next farm bill must include 
programs to support both producers and consumers of food would 
send a strong message to farm bill critics, as well as to the 
farm and anti-hunger organizations that support this goal.
    Thank you for the opportunity to be here today, Mr. 
Chairman, and I would be happy to respond to any questions.
    [The prepared statement of Mr. Moore follows:]

     Prepared Statement of Ron Moore, President, American Soybean 
                       Association, Roseville, IL
    Good morning, Mr. Chairman and Members of the Subcommittee. I am 
Ron Moore, a soybean and corn farmer from Roseville, Illinois, and 
President of the American Soybean Association. ASA represents U.S. 
soybean producers on domestic and international issues. We commend you 
for holding this important hearing, and appreciate the opportunity to 
testify today.
    Mr. Chairman, it's been only 3 years since enactment of the 
Agricultural Act of 2014, but conditions in the U.S. farm economy 
couldn't be more different. In early 2014, farm prices had been at or 
near historic highs for 5 years. Soybeans peaked at over $14 per bushel 
in 2013. In view of higher market returns, Congress decided to 
eliminate the Direct Payment program and to reduce farm bill spending 
by $23 billion below the CBO baseline. Farm programs received most of 
this cut, and agriculture was the only sector to contribute to deficit 
reduction.
    Today, farm prices are down by 41 percent and farm income is down 
by 50 percent. Due to continued low prices, estimates for 2017 show a 
further decline in income of 7.1 percent. Land rents and input costs 
remain stubbornly high, and producers are having increasing difficulty 
obtaining operating loans. While the safety net provided by title [I] 
programs and crop insurance has cushioned the impact on some farmers, 
others have not fared as well. And the protection these programs 
provide is declining as more low prices are factored into their revenue 
formulas. Many producers are asking that the next farm bill be written 
now rather than waiting 18 months or even longer.
    In view of these circumstances, ASA's Voting Delegates approved 
policy resolutions early this month that ask Congress to write the 2018 
Farm Bill based on the very real need by U.S. producers for a stronger 
safety net rather than extending existing programs. We appreciate your 
Committee's recent letter to the Budget Committee, which made a strong 
case against cuts to the current CBO baseline in the FY 2018 budget. 
However, as ASA and 16 other national farm organizations stated in a 
March 15 letter to the Senate Budget and Appropriations Committees, 
correcting shortcomings in the 2014 Act and funding other important 
programs whose effectiveness has diminished over time will require 
additional resources from outside the farm bill. We know this will be a 
difficult task for Members of your Committee as well as for your Senate 
counterparts. But farm groups are united and committed to support your 
efforts through discussions with the House leadership and with your 
colleagues in the House.
    ASA's recommendations for the 2018 Farm Bill begin with the need to 
maintain the current crop insurance program as the core risk management 
tool for producers of soybeans and other crops. The various sign-up 
options provided under crop insurance have proven their worth in recent 
years, even as the cost of the program is now projected by CBO to 
decline by about $1.0 billion per year. Crop insurance isn't broken, 
and it doesn't need to be fixed.
    Regarding title [I], we encourage the Committee to improve and 
build upon current programs under the 2014 Act rather than to develop 
new ones. We believe offering producers a choice between a price-based 
PLC program and a revenue-based ARC program appropriately reflects 
differences between crops and regions, and that another choice should 
be offered on a one-time, crop-by-crop, and farm-by-farm basis.
    Under a new sign-up, CBO expects many farmers who chose county ARC 
for soybeans and other crops will opt for PLC because of the impact 
that successive years of lower prices have had on ARC revenue 
benchmarks. This may happen, but we believe a choice between programs 
should still be offered, just as it was when 94 percent of soybean 
producers chose county ARC under the current bill. And a lower 
estimated participation level in county ARC relative to PLC may allow 
its revenue benchmarks to be enhanced without incurring significant 
additional cost. We also support efforts to improve the attractiveness 
of the individual coverage option under ARC.
    Just as we did during debate on the 2014 Farm Bill, ASA strongly 
supports basing ARC and PLC program benefits on base acres planted to 
crops in recent years rather than on acres planted to crops in the 
current year. This ``decoupling'' of payments from current-year 
planting is critical to encouraging farmers to base their planting 
decisions on market signals rather than on an expectation that a 
particular crop will receive a government payment. Decoupling prevents 
production distortions that, under past farm bills, resulted in growing 
surpluses and a spiral of ever-lower prices for certain crops.
    ASA supports giving farmers a choice to keep their existing crop 
acreage bases, reallocate bases to reflect plantings in more recent 
years, or update bases to include production of all program crops on a 
farm. We also support updating program yields to reflect increases 
since they were last determined.
    Another improvement needed in title [I] is to change the current 
cascade policy for selecting yields under the county ARC program. ASA 
believes that RMA data should be the default county yield data used, 
when available, as it is generally considered more accurate than data 
based on voluntary surveys. In the event a county doesn't have RMA 
yield data, the RMA yield for an adjacent county or counties should be 
used. In cases where there are no adjacent counties with RMA yields, 
the county's NASS yield should then be used. While this approach could 
result in changes in the way benefits are currently distributed, using 
RMA data as the default county yield would be fairer and more 
defensible than the current policy.
    ASA is aware that other crops have programs that have not provided 
an effective safety net for their producers. Cotton farmers are asking 
to replace or supplement the STAX program by making cottonseed an 
``other oilseed'' under title [I]. ASA supports this request, provided 
funding doesn't come from elsewhere in the farm bill and that the 
program is WTO-compliant.
    These changes and the need to increase funding for farm bill 
programs outside title [I] will require additional resources. These 
resources need to be in addition to the farm bill baseline, not 
redistributed from other farm bill programs. As I stated earlier, ASA 
and other farm organizations are united in supporting this effort, and 
are committed to working with your Committee to achieve it.
    Finally, ASA strongly supports keeping the agriculture and 
nutrition titles together in the 2018 Farm Bill. The only groups 
pushing for them to be split into two bills are critics from outside 
the agriculture community whose common goal is to defeat rather than to 
pass a new farm bill. However the Committee may decide to proceed, an 
affirmation that the next farm bill must include programs that support 
both producers and consumers of food would send a strong message to 
farm bill critics, as well as to farm and anti-hunger organizations 
that support this goal.
    Thank you, Mr. Chairman. I'll be happy to respond to any questions.
                               Attachment
Farm Bill Issues on Which We Agree
    On March 15, 2017, farm and commodity organizations sent a letter 
to the Senate Budget and Appropriations Committees pointing to the 
sharp fall in farm prices and income since 2013 and asking Congress to 
provide additional funding in order to develop an effective farm income 
safety net in the 2018 Farm Bill. A number of these organizations have 
met to discuss specific issues that need to be addressed in the next 
farm bill and will continue to work to develop consensus proposals to 
share with the Agriculture Committees on potential ways to resolve 
them. The following organizations are in agreement on the attached 
initial list of positions. To be clear, the beginning of this document 
covers only those issues where there is a consensus on every issue.
    As our discussions continue and as guidance from the Committees is 
provided, we hope to expand this list to cover additional issues 
expected to be considered during negotiation of the new farm bill.

    Overarching Issues:

    Increase funding in the 2018 Farm Bill in order to address the 
significant reductions in farm prices and income incurred since 2013, 
and to meet other critical needs.
    Federal crop insurance and commodity programs are our top funding 
priorities.

    Commodity Programs:

    Continue a counter-cyclical program like the Price Loss Coverage 
(PLC) program and a revenue program like the Agricultural Risk Coverage 
(ARC) program.
    Change the ARC and PLC programs to make them more effective and 
fairer to all farmers.
    If the ARC and PLC programs continue, farmers must be allowed to 
re-elect and re-enroll on a crop by crop basis.
    Commodity program payments should be based on recent historical 
crop production rather than on current year planting.

    Crop Insurance Programs:

    Oppose reducing premium discounts.

    Conservation Programs:

    Maintain strong funding for Federal conservation programs which 
preserve environmental benefits, while continuing the prioritization of 
working lands conservation programs.
    Maintain strong funding of the Environmental Quality Incentives 
Program (EQIP) and the Conservation Stewardship Program (CSP).
    Examine the rental rates of the Conservation Reserve Program (CRP) 
and the Conservation Reserve Enhancement Program (CREP) annually at 
enrollment to ensure they mirror the rental rates of comparable land in 
the immediate area.
    Improve State Technical Committees to make them more ag-friendly by 
encouraging producers' participation and input.

    Other Programs:

    Ensure adequate funding for agricultural research and education.
    Continue work on simplifying procedures, reducing paperwork 
requirements and streamlining interactions between the Farm Service 
Agency (FSA), the Natural Resources Conservation Service (NRCS) and the 
Risk Management Agency (RMA) via the Acreage Crop Reporting 
Streamlining Initiative (ACRSI).
    Continue and work to improve the Young and Beginning Farmer 
Programs implemented in the 2014 Farm Bill.

 
 
 
American Farm Bureau Federation;     National Corn Growers Association;
American Soybean Association;        National Farmers Union;
National Association of Wheat        National Sunflower Association;
 Growers;
National Barley Growers              U.S. Canola Association.
 Association;
 

    Future Farm Policy Work:

    On several other issues, more than a majority of the organizations 
are in agreement, but one or two have conflicting policy statements. We 
plan to continue to work towards agreement, but rather than another 
consensus document, we hope to ``negotiate'' some of those differences 
in future meetings and provide additional input to Congress.
    Note: The National Cotton Council, Southern Peanut Farmers 
Federation and USA Rice have also participated in these discussions but 
do not have sufficient policy yet to support these provisions. All 
three of those groups, as well as those listed on this statement, 
intend to continue to work together to see if we can come to further 
agreements on these and other 2018 Farm Bill issues.

    The Chairman. Thank you.
    I now would like to introduce our next witness, President, 
National Association of Wheat Growers, from Sharon Springs, 
Kansas, Mr. David Schemm. You are recognized for 5 minutes.

 STATEMENT OF DAVID K. SCHEMM, PRESIDENT, NATIONAL ASSOCIATION 
              OF WHEAT GROWERS, SHARON SPRINGS, KS

    Mr. Schemm. Chairman Crawford, Ranking Member Nolan, and 
Members of the Subcommittee, thank you for the opportunity to 
testify today.
    I am David Schemm, the President of the National 
Association of Wheat Growers. I raise wheat and other crops on 
my farm near Sharon Springs in western Kansas.
    A number of factors have caused prices to drop, and are 
expected to remain low for the foreseeable future. Through my 
testimony, I will highlight some of the key examples of how the 
2014 Farm Bill programs have functioned effectively, and some 
areas where tweaks would be helpful. You will find more detail 
in my written testimony.
    Let me start by laying out the economic conditions in wheat 
country. The past couple of years have proven to be 
particularly challenging for wheat farmers. Prices have dipped 
to levels we haven't experienced in a long time. Producers of 
Hard Red Winter wheat in my neck of the woods became eligible 
for LDPs and marketing loans for several months because prices 
dropped below loan rates. Farmers have had to deal with a 
rapidly declining market, and these low prices will make each 
passing year more difficult to get by, particularly for young 
and beginning farmers.
    The low prices have also contributed to this year's winter 
wheat plantings decreasing to the lowest level since 1909; a 
time when farmers were working with a horse and plow. These 
conditions have made farm support programs absolutely critical. 
As the Agriculture Committee begins to write the next farm 
bill, it is important to approach the reauthorization process 
from the perspective of what farmers and rural America need.
    Moving forward, I will lay out a few issues that have 
arisen for your consideration. I have utilized both ARC and PLC 
for my wheat crop, and that is why I can speak from personal 
experience on both of these programs. One issue we encountered 
during implementation was disparities in payment rates in the 
ARC-County program between neighboring counties. We have 
concern about the data that the Farm Service Agency uses to 
make yield determinations. In using NASS statistical data to 
establish yields, there is the possibility that different data 
sources could be used from year to year. To address this issue, 
our producers believe that using RMA data, where available, as 
the first data source would provide more assurances of accuracy 
and subsequently the integrity of the payment rate established 
for ARC-County.
    One additional area where our producers have concern is 
that the current timing of assistance affects their ability to 
get credit. I talked to my banker yesterday. He said that he 
cannot incorporate safety net tools into a producer's cash-flow 
analysis because of the inconsistency and inaccuracy in these 
programs, compounded by the fact that assistance won't go out 
for a year and a half later.
    Shifting now to price loss coverage. A large percentage of 
wheat base acres, 43\1/2\ percent, were enrolled in PLC, and we 
expect more participation if prices remain low, and there is an 
opportunity to re-elect programs which NAWG would support. We 
need to ensure the PLC reference price is set at a level that 
provides a sufficient safety net when prices remain low. NAWG 
urges Congress to increase the PLC wheat reference price to a 
level that is tied to a cost of production.
    In addition to title I programs, crop insurance is the most 
important risk management tool available to our farmers. NAWG 
opposes any efforts that would undermine the current structure 
of the program. We oppose any restrictions on eligibility for 
program participation based on a producer's adjusted gross 
income, any caps on Federal cost-share level, and any 
restrictions on a producer's ability to use the harvest price 
option. Restrictions would cause farmers to lower their crop 
insurance participation, which would cause premiums for all 
producers, big and small, to increase. Crop insurance has 
functioned incredibly well, and NAWG urges you to maintain the 
current structure of this critical program.
    Ultimately, wheat farmers and all of agriculture are 
suffering some of the toughest economic conditions we have had 
to deal with since the 1980s. A strong safety net, risk 
management tools, conservation, and other important titles in 
the farm bill are needed now more than ever. Farmers who have 
the ability have shifted acres to crops that either have better 
returns or better risk protection. The shift of acres away from 
wheat shows that there needs to be tweaks to the program to 
better address the needs of our producers. Many of these tweaks 
are part of the consensus document that has been developed 
collaboratively with several other commodity organizations. 
This document has been included as an attachment to my written 
testimony. Moving forward, I urge you to move quickly in this 
process to ensure a full reauthorization bill can be completed 
prior to September 30 of 2018, so that farmers have certainty 
about the structure of the safety net and other farm bill 
programs.
    With that, I will be happy to answer any questions.
    [The prepared statement of Mr. Schemm follows:]

Prepared Statement of David K. Schemm, President, National Association 
                  of Wheat Growers, Sharon Springs, KS
    Chairman Crawford, Ranking Member Nolan, and Members of the 
Subcommittee, thank you for the opportunity to testify today. I'm David 
Schemm, the President of the National Association of Wheat Growers. I 
raise wheat, corn, grain sorghum, and sunflowers on my farm near Sharon 
Springs in western Kansas. Thank you for holding this hearing as part 
of a larger series of hearings each of the Subcommittees are holding to 
review programs ahead of the next farm bill reauthorization.
    Wheat growers across the country have experienced a multitude of 
challenges the past couple of years, with unfair competition from 
countries like China that have support systems that distort trade, a 
dollar value that is relatively high making our wheat more expensive 
than other major wheat producing-countries, and a bigger than expected 
crop right here at home last year. Wheat prices have been on the 
decline for the past couple of years, and took a significant dive last 
year. Prices are at unreasonably low levels right now and are expected 
to remain low for the foreseeable future. Programs authorized in the 
Agricultural Act of 2014 (the farm bill), and the crop insurance 
program in particular, have served has key tools to enable farmers to 
continue farming.
    As the 2014 Farm Bill programs have been implemented, there have 
been some hiccups along the way. We've worked through them and have 
sought your help in influencing implementation, and we sincerely 
appreciate your help and attention to our concerns along the way. 
Despite those hiccups, the programs have been functioning as they were 
supposed to: as a safety net for producers. Through my testimony, I 
will highlight some key examples of how these programs have functioned 
effectively and some areas where tweaks would be helpful.
    Let me start by laying out the economic conditions in wheat 
country.
Economic Conditions in Wheat Country
    The past couple of years have proven to be particularly challenging 
for wheat farmers across the country. Farmers of most commodities are 
experiencing lower than normal prices. Wheat in particular has dipped 
to levels we haven't experienced in a long time. Producers of Hard Red 
Winter (HRW) wheat in my neck of the woods became eligible for 
marketing assistance loans (MALs) and Loan Deficiency Payments (LDPs) 
for several months for the first time in several years because prices 
dropped below loan rates. When the last farm bill was written, loan 
rates were set at such a low level they were never expected to trigger. 
They have, but MALs and LDPs have functioned as helpful cash-flow 
tools. Farmers have had to deal with a rapidly declining market, and 
months and years of sustained low prices will make each passing year 
more difficult to get by, particularly for young and beginning farmers 
who weren't able to build up reserves during the high price years. This 
is particularly relevant as the average age of a farmer is 58 and 
expected to climb over the coming years.
    There have been a number of different factors that have contributed 
to the low prices, which I will discuss throughout my testimony. One 
additional contributing factor has been market competition from other 
large wheat-producing countries. Though this falls outside the scope of 
title [I], I strongly believe that Congress needs to continue to 
aggressively pursue new markets. Along those lines, NAWG supports 
reauthorizing doubling funding for the Market Access Program (MAP) and 
Foreign Market Development (FMD) program as part of the next farm bill.
    As the chart below laying out the market year average price shows, 
there have been some big swings over the past few years and more 
recently there have been significant drops in prices; the market year 
average price is determined by USDA and is used in setting farm program 
and crop insurance payments. Additionally, as I'll discuss later in my 
testimony, the price that farmers are actually receiving from their 
local elevators is often much lower than what the market year average 
price would show.
Market Year Average Price


    The data in the above chart for 2008 through 2015 shows the Market 
Year Average Price from USDA NASS, and from 2016 through 2027 shows the 
assumptions made by the Congressional Budget Office (CBO) for future 
Market Year Average prices. The low prices have led to farmers needing 
to take on more debt in order to continue operating. As such, 
producers' debt to asset ratio's have grown rapidly recently. The chart 
below lays out the degree to which producers have taken on debt. Over 
eight percent of wheat producers are considered by USDA's Economic 
Research Service to be ``highly leveraged'' and 16 percent are 
considered to be ``extremely leveraged.''
About One in Ten Farms Are Highly Or Extremely Leveraged, But it Varies 
        By Commodity
        
        
          Data: USDA-ERS, Nov. 2016 forecast for 2016.

    The economic conditions of the past few years have also contributed 
to a drop in planted wheat acreage, which is generally predicted to 
continue moving forward. Plantings for 2016-2017 winter wheat are at 
the lowest level since 1909, a time when farmers were working with a 
horse and plow. Spring wheat planting is expected to be down as well, 
and we anticipate overall planted acres of wheat will be at 
historically low levels this year.
Wheat Planted Acres
(Millions of Acres)


    The chart above shows historic and projected future plantings of 
wheat. The 2002-2016 timeframe shows the actual planted acres, as 
published by USDA's National Agricultural Statistics Service (NASS). 
The 2017-2027 data points show the anticipated future plantings of 
wheat as published in the January 2017 Congressional Budget Office 
(CBO) baseline report. CBO anticipates that there will be a small swing 
back up in acreage, but this still exemplifies the challenging 
conditions facing growers of wheat when they pull back their production 
and shift to other crops.
Writing the Next Farm Bill
    The last farm bill was estimated to have reduced spending by $23 
billion over 10 years, at the time of passage. Since then, farm bill 
programs have cost less. The recent CBO baseline estimates that farm 
bill programs cost about $100 billion (over 10 years) below what was 
originally estimated. These programs have performed well. But it also 
means this Committee will have a smaller baseline for writing the next 
farm bill, even though there is a growing need for improving farm 
support programs which will require additional baseline. NAWG recently 
joined with a broad array of organizations, including those represented 
here, in sending a letter to the House and Senate Budget and 
Appropriations Committees laying out the economic conditions in farm 
country and laying out the case for more resources for writing the next 
farm bill than are available under the most recent CBO baseline. We 
want the Agriculture Committees to have the resources necessary to 
write programs that meet producers' needs.
Agriculture Risk Coverage (ARC) program
    One of the higher profile issues we encountered during 
implementation was significant disparities in payment rates in the ARC-
County program between neighboring counties in some areas of the 
country. ARC-County was, of course, designed in a way where there would 
be differences in payment rates as it's a county-based program. Payment 
rates will inherently vary across the countryside depending on the 
growing conditions in particular counties. However, we have concern 
about the data that the Farm Service Agency uses to make yield 
determinations.
    The FSA has administratively taken the approach of first utilizing 
data from the National Agricultural Statistics Service (NASS). This 
data is gathered through voluntary producer surveys, and if NASS is 
unable to obtain at least 30 responses from producers in a county then 
the agency won't publish a yield for that county. If NASS is unable to 
publish a yield, FSA will then utilize a cascade of other data sources, 
including Risk Management Agency (RMA) data, regional NASS data, or a 
determination made by the state FSA director. As this sort of situation 
could happen in a particular county inconsistently over time, that 
could mean that the data used to establish a county's benchmark yields 
and the actual yield for the year in question could come from multiple 
sources; this is like comparing apples to oranges. To address this 
issue, our producers believe that using RMA data as the first data 
source would provide more assurances of the accuracy of the data that's 
being used, and subsequently the integrity of the payment rates 
established for ARC-County. We recognize that there will still be 
disparities in payment rates between counties, but utilizing more 
reliable data will help to instill more confidence in our producers 
that they are getting fair treatment from the program.
    Much of wheat country is in very rural areas with large counties 
where weather and growing conditions can vary widely from one part of 
the county to another. This dynamic was part of the reason the last 
farm bill included ARC-Individual coverage (ARC-IC). As ARC-IC only 
applies on up to 65 percent of a participants' base acres, it is less 
attractive than participating in ARC-County. An option to improve the 
functionality of ARC-County could be to explore smaller-than-county 
sized geographic areas, like crop-reporting districts, that could be 
utilized for establishing payment rates. This approach could enable 
payments to be triggered at a more localized level and to be more 
reactive to the actual experience of producers.
    Our producers acknowledge the political and budgetary 
considerations at play in writing the last farm bill, and the 
subsequent need to shift payments under the title [I] programs until 
after the subsequent fiscal year after the crop year has concluded. 
However, there are multiple negative ramifications at the farm level as 
a result of this budget move. The seed and fertilizer bills don't wait 
until a year after the crop is harvested before they come due. 
Additionally, when I go to the bank to prepare to plant a crop, it's 
nearly impossible to predict a year and a half in advance what the 
assistance I might be eligible for will look like; as a result I can't 
accurately predict my cash-flow. That has a big negative impact on my 
ability to get financing. It would be beneficial for you to explore the 
possibility of moving up the timeframe for program payments, or to 
maybe explore the possibility of making advanced partial payments.
Price Loss Coverage
    A larger percentage of wheat base acres were enrolled in Price Loss 
Coverage (PLC) as compared to some of the other major commodities, like 
corn and soybeans. About 43.5 percent of wheat base acres are enrolled 
in PLC. The recent Congressional Budget Office (CBO) baseline, in 
projecting the costs of USDA programs over the next 10 years, assumes 
that Congress will allow for a producer re-election after the 
expiration of the current farm bill and that 80 percent of base acres 
will enroll in PLC. This is anticipated as lower prices of the past 
couple of years will begin to be incorporated into the ARC benchmark, 
ultimately reducing the benchmark revenue.
    From NAWG's perspective, this means that it will be important to 
adjust the ARC formula to enable it to continue to be functioning as a 
safety net when the need is there. It also means we need to ensure the 
PLC reference price is set at a level that provides a sufficient safety 
net when prices are at perpetually low prices.
    NAWG urges Congress to increase the PLC wheat reference price to a 
level that is tied to cost of production. To make PLC as effective as 
possible, an appropriate measure for a reference price should be what 
it costs to produce the crop. We feel this would be a fair way to set 
support levels and to provide relatively proportional levels of 
support.
Producer Choice
    The 2014 Farm Bill rightly included a producer choice between 
revenue protection and price protection as part of the process of 
replacing the previous direct payments program. NAWG supports 
maintaining a producer choice between revenue and price protection as 
part of the next farm bill.
    In general, the ARC and PLC programs have been working as they were 
intended to work and they have been providing a key safety net for 
producers across the country. We were pleased at the speed with which 
the Farm Service Agency (FSA) was able to implement the new programs 
and to make them available to producers beginning with the 2014 crop 
year. Moving forward, we believe these programs need to be enhanced for 
wheat to address the highly leveraged situation they now find 
themselves in, as indicated in the previous chart.
Other Title [I] Issues
    Wheat growers are heavily reliant upon our export markets, with \1/
2\ of our crop being shipped out. As such, it's critically important to 
our growers that we have a level playing field internationally in which 
to sell our wheat, and that includes ensuring we have an international 
arbiter of rules. The World Trade Organization (WTO) framework isn't 
perfect, but we think it's important that all member countries abide by 
WTO rules, including ourselves. We applaud the work the House 
Agriculture Committee has done to bring attention to the rules 
violations that have been committed by countries like China, whose 
policies have been shown to cause U.S. wheat farmers to lose out on 
roughly $650 million a year. But we also strongly urge you to write 
legislation that provides a safety net that doesn't violate our trade 
commitments. We believe the current system of tying payments to a 
producers' recent historical production should be continued.
Crop Insurance--What's Working and What's Not Working
    The Federal Crop Insurance Program has been and continues to be 
farmers' most important risk management tool. The current structure of 
the program, which requires a farmer to pay a premium, the cost of 
which is shared with the Federal Government, and the producer has to 
suffer an indemnifiable loss before they get any sort of payment.
    Crop insurance is very popular with producers. For the 2015 crop 
year, there 56.8 million acres of wheat grown in the United States 
(according to USDA's Economic Research Service (ERS)), of which 49.4 
million acres (or 87 percent) were insured (according to USDA's Risk 
Management Agency Summary of Business document, as of March 20, 2017). 
This high participation rate is indicative of the effectiveness of the 
program.
    The last couple of years have been particularly difficult for wheat 
farmers. Crop insurance has played an important role in helping 
producers get through the current low prices. Each year there will 
inevitably be producers in some part of the country that experiences 
weather conditions outside of their control that could take out their 
crop. Crop insurance is critically important to enable a producer to 
farm another year after such an experience.
    NAWG opposes any efforts that would undermine the current structure 
of the program. Specifically, we oppose any restrictions on eligibility 
for program participation based on a producer's Adjusted Gross Income, 
any caps on the Federal cost-share level, and any restrictions on a 
producer's ability to utilize the Harvest Price Option (HPO). 
Restrictions on eligibility would cause farmers to lower their crop 
insurance participation which would not only cause the producer to take 
on more risk, but it would also cause premiums for all producers, big 
and small, to increase. If producers lower their coverage or if fewer 
producers are participating, that means there are fewer acres over 
which to spread risk in the program, ultimately requiring premiums to 
increase.
    In addition to supporting the current structure of the producer 
support component of crop insurance, NAWG also opposes any cuts to the 
delivery system. The current public-private partnership for program 
delivery to producers has worked very well and has ensured that 
producers can get timely assistance when economic or weather disasters 
strike. Efforts to reduce the target rate of return or the 
Administrative and Operating (A&O) reimbursements would negatively 
affect crop insurance companies and their ability to deliver programs, 
and would thus have a negative impact on producers. The Federal crop 
insurance has also performed incredibly well, with an improper payment 
rate of just 2.2 percent, which is about \1/2\ the government-wide 
average of 4.39 percent. NAWG urges you to exclude any of these types 
of proposals.
    Wheat producers have experienced a few issues over the past couple 
of years that warrant discussion.
Yield Exclusion
    NAWG was very supportive of the inclusion of the Yield Exclusion 
provision as part of the last farm bill. When the farm bill was being 
written, many producers were suffering periods of prolonged drought. 
The Yield Exclusion provision enables producers in a county that had 
yields with a 50 percent or greater hit to be able to exclude that 
year's yield from their Actual Production History. We were, however, 
disappointed that USDA was unable to implement this provision for the 
2015 winter wheat crop. Members of the House Agriculture Committee were 
true champions of wheat during that time when you raised this problem 
with USDA officials. Though the Department was still unwilling to have 
the provision apply to that year's crop, the Committee's attention to 
this issue undoubtedly drove USDA to quickly move forward with 
implementation for spring-seeded crops that year and subsequently the 
2016 winter wheat crop.
Non-Convergence in the HRW Futures Market
    I'm a Hard Red Winter (HRW) wheat producer in western Kansas. Last 
year, our planted acres were down but we still had a crop that exceeded 
our previous yield record by over 10 bushels per acre. We had a much 
bigger crop than expected. This had a lot of implications for the 
markets. Where were we going to not only ship our wheat, but where were 
we going to store it in the interim? There were and continue to be 
significant logistical issues associated with the huge crop. This was 
just exacerbated by big crops in other large-producing countries, like 
Russia which was the largest producer last year. We had significant 
competition in our export markets from other countries whose wheat was 
relatively less expensive than U.S. wheat in part because of the 
relatively high value of the U.S. dollar. These economic forces have 
been part of the cause of the depressed prices.
    At harvest time, as is the case for any crop, there is generally 
immediate downward pressure on prices because everyone is delivering to 
the market right from the field at the same time. We'll often 
experience a growing divergence in the local cash price as compared to 
the futures market; the difference is referred to as the basis. 
Producers of HRW experienced a much wider basis than what we've 
experience in a long time. Personally, my local basis jumped from $0.70 
a bushel to $1.55 a bushel in just 10 days. This was a dramatic nose-
dive in my local cash price.
    There are several different options that can be explored to address 
this non-convergence issue that I don't need to get into here, but this 
Committee should be aware of the crop insurance implications of this 
problem. For HRW producers with revenue coverage, their contract is 
based on the Kansas City futures price. When the local cash price was 
$1.55 below the futures price, had I sold the crop and tried to pursue 
an indemnity, my contract would've only reflected that I was receiving 
the futures price rather than the actual price. In essence, my 
``actual'' revenue was significantly inflated compared to my real 
experience. There are similar implications for the ARC program, in that 
the ARC formula utilizes a market year average price, which wouldn't 
account for farmers experiencing a wide basis.
    NAWG has been exploring this issue to identify whether there are 
components of the crop insurance program that can be adjusted to make 
the program more reactive to what the farmer is actually getting paid 
for their crop. As we continue with this process, I will keep in touch 
with you and the rest of the Committee.
Quality Adjustments
    Our wheat markets set strict standards for quality. And wheat tends 
to be more susceptible to quality problems than many other commodities. 
There are technologies in place to assist producers in producing the 
best quality of wheat anywhere in the world, but we are still dependent 
upon favorable growing conditions. This year, two of the more high 
profile issues our growers experienced were low Falling Numbers and 
vomitoxin in the northern Plains.
    Many producers have suffered from widespread financial losses due 
to weather-induced problems resulting in poor end-use quality as 
measured by low Hagberg-Perten Falling Numbers. The Falling Number test 
detects starch degradation due to alpha-amylase enzyme activity and 
possibly other factors in wheat flour. This ultimately indicates that 
the flour has poorer quality for baked goods. Farmers experiencing low 
Falling Numbers will likely receive a discount at their elevator, often 
significant depending on the degree to which their load was affected. 
Additionally, with low Falling Numbers, though the quality has taken a 
hit, it isn't a yield issue. In fact, the producers in Washington, 
Idaho, and Oregon that experienced this problem had bigger than average 
yields. However, the way the statute is written, those quality 
discounts are applied to a producer's Actual Production History (APH); 
even though low Falling Numbers doesn't directly affect a producer's 
yield, RMA still requires that their yield be reduced to reflect that 
quality loss. This occurs even if the producer doesn't pursue an 
indemnity. From a fairness standpoint, it would be worth looking into 
whether such quality discounts could be applied to the price side of 
the equation rather than the yield side so that a producer's APH isn't 
affected for 10 years until that year's yield is cycled out.
Conservation Compliance
    NAWG continues to have serious concerns about linkage of 
conservation compliance to crop insurance. NAWG supports a strong crop 
insurance program as part of the farm safety net and believes that 
growers should be encouraged to purchase crop insurance. Additional 
requirements to obtaining crop insurance, such as the conservation 
compliance requirements added in the 2014 Farm Bill serve as a 
disincentive to purchase crop insurance. NRCS continues to have a 
backlog of wetland determinations, with over 2500 awaiting review in 
the prairie pothole region at the beginning of January. NAWG supports 
voluntary conservation programs included in the farm bill that work 
with producers on their land in production to help them adopt 
conservation practices to improve natural resources and farm 
productivity.
Conclusion
    Ultimately, wheat farmers and all of agriculture are suffering some 
of the toughest economic conditions we've had to deal with since the 
1980s. The political and policy dynamics facing Congress this year are 
much different than the process to write the last farm bill. A strong 
safety net and risk management system is needed now more than ever. At 
the same time, it doesn't matter whether farmers are getting record 
prices or if they're bottoming out. The risks that farmers take every 
year in putting a crop in the ground requires there to be an effective 
risk management system and safety net in place to offset some of that 
risk in order to protect against the inevitable weather disaster or 
price drop. Crop insurance and the title [I] programs have proven to be 
effective and good policy in general.
    For many farm bills, Congress has asked commodity groups to work 
together to come up with consensus on policy topics in the farm bill. 
The attached document is the beginning of that collaborative process. 
Farm and commodity organizations sent a letter to the Senate Budget and 
Appropriations Committees pointing to the sharp fall in farm prices and 
income since 2013 and asking Congress to provide additional funding in 
order to develop an effective farm income safety net in the 2018 Farm 
Bill. A number of these organizations have met to discuss specific 
issues that need to be addressed in the next farm bill and will 
continue to work to develop consensus proposals to share with the 
Agriculture Committees on potential ways to resolve them. The following 
organizations are in agreement on the attached initial list of 
positions.* To be clear, the beginning of this document covers only 
those issues where there is a consensus on every issue.
---------------------------------------------------------------------------
    *Editor's note: the document referred to is entitled Attachment, 
and follows the prepared statement of Mr. Moore (located on p. 799). 
For purposes of this publication it is not reprinted here.
---------------------------------------------------------------------------
    As our discussions continue and as guidance from the Committees is 
provided, we hope to expand this list to cover additional issues 
expected to be considered during negotiation of the new farm bill.
    As you continue your series of hearings, I look forward to working 
with you to write the next farm bill. I also urge you to move quickly 
with Chairman Conaway in this process to ensure a full reauthorization 
bill can be completed prior to the expiration of the current farm bill 
on September 30, 2018, so that producers have certainty about the 
structure of the safety net moving forward.
    With that, I'll be happy to answer any questions.

    The Chairman. Thank you.
    I would now like to yield to the gentleman from Minnesota, 
the Ranking Member of our full Committee, Mr. Peterson, for the 
next introduction of our witness.

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

    Mr. Peterson. Well, thank you, Mr. Chairman, and thank you 
for holding the hearing.
    I would like to welcome one of my constituents, Peter 
Friederichs, from just south of me, over in west central 
Minnesota in my district. He is an outstanding leader in 
agriculture in our area. In addition to barley, he grows wheat, 
soybeans, and sunflowers, I guess. And you have a seed 
business, right? He is one of the, as I said, leaders of our 
area. And as you will hear from his testimony, I went through 
many years fighting with the former Staff Director of the 
Committee, since 1992 I tried to raise the barley target 
prices, and I was unsuccessful year after year after year, 
until the staff director retired. And then we were able to get 
the target price raised from, it was $2 something to $4.95. One 
of the arguments I had with him was that, well, if we raised 
it, it was basically more towards the malting barley price 
rather than feed barley, we are going to get too much 
production. Well, that hasn't happened. All these arguments 
that we have about how these target prices are distorting 
production and how, if you use base acres versus planted acres 
you are going to distort production, I don't think hold up when 
you see what happens in the real world.
    So as somebody who used to grow barley, maybe the reason 
that the production is down, it is so miserable to harvest, 
especially if you don't have a cab. You are going with the 
wind.
    But anyway, welcome, Peter. Glad to have you here.
    The Chairman. I thank the gentleman. And, Mr. Friederichs, 
you are recognized for 5 minutes.

  STATEMENT OF PETER FRIEDERICHS, PRESIDENT, NATIONAL BARLEY 
                GROWERS ASSOCIATION, FOXHOME, MN

    Mr. Friederichs. Thank you, Mr. Chairman and Members of the 
Committee, for inviting me here to testify today.
    I am Peter Friederichs, President of the National Barley 
Growers Association. I farm in west central Minnesota, growing 
barley, wheat, soybeans, and sunflowers. Because most barley 
growers also plant several other crops on their farms, I will 
concur with the statements my colleagues are making today, and 
focus for the most part on barley-specific issues.
    Barley is a cool-season crop grown primarily along the 
Canadian border, from Minnesota to Washington State, and down 
into Wyoming and Colorado. This region accounts for 90 percent 
of the 3\1/2\ million acres planted annually. About 75 percent 
of this production is destined to become malting barley, with 
the remainder going into the feed market. Because feed barley 
prices can be \1/2\ of malt barley prices, most growers do not 
plant barley without securing a malt contract. Good production 
and acceptance rates the last 2 crop years have reduced the 
demand for malt barley, and acreage is expected to decline this 
year because fewer contracts are available from the malt and 
beer industry.
    The countercyclical nature of the 2014 Farm Bill is working 
as intended, especially in barley's case. Seventy-five percent 
of barley acres were signed into the PLC program, with the 
remainder going into the ARC program. No PLC payments were 
triggered, and minimal ARC payments were issued for the 2014 
and 2015 crop years because barley prices did not fall as 
sharply as other crops during those years; down just 15 percent 
from their peak in 2012. However, 2016 barley prices are down 
another ten percent and will trigger more payments. And our 
2017 contract prices have fallen an additional ten percent.
    The steep discount for feed barley means planting for the 
malting market is a high risk venture. For that reason, NBGA 
and our industry partners worked with the Risk Management 
Agency to develop a malt barley endorsement to help mitigate 
this risk. Although this option was first available last year, 
there are still issues to be worked out regarding full coverage 
of these quality risks. NBGA is appreciative of RMA's 
willingness to continue working with us on improving this 
endorsement. And for the record, the NBGA is a staunch 
supporter of the overall crop insurance program.
    All farmers are very concerned about the status of 
agriculture trade in the current political climate. For 
instance, Mexico is our number one market for malting barley 
exports, and recent efforts to increase sales to our customers 
south of the border have been put on hold indefinitely due to 
the current uncertainty surrounding our nation's trade policy 
with Mexico. If this export market is lost, agricultural prices 
could fall further and result in even higher commodity title 
payments than currently expected.
    The 2014 Farm Bill has created another challenge that was 
unforeseen at the time it was passed. Farmers are finding it 
increasingly difficult to secure annual operating loans from 
their local banks because of low crop prices, coupled with high 
input costs. Each year, we prepare a financial plan for our 
banks, showing that we can generate a positive cash-flow with 
our expected crop revenue, as well as our expected operating 
expenses. This year, many of these plans are only showing a 
positive cash-flow if the expected 2014 farm program payments 
is included. However, current Federal banking regulations are 
not allowing banks to include this payment that is received a 
year later because the discovery period of the 2017 average 
marketing year price does not begin until after harvest, runs 
for a year, and is, thus, considered too far in the future and 
speculative to be included. If the farmer has working capital 
that can be applied to the deficit the loan can still be 
approved, but in worst case scenarios farmers without adequate 
working capital may be denied operating loans, and ultimately 
forced out of business. If the low crop prices continue as 
predicted and our costs don't go down, the situation will only 
get worse as more and more farmers deplete their working 
capital.
    In closing, the NBGA has recently partnered with the 
malting and beer industries, both large and small craft 
brewers, to ensure that an adequate supply of good quality malt 
barley is grown in the U.S. to produce the 190 million barrels 
of beer brewed annually. Barley acreage has been in perpetual 
decline over the last 2 decades, and it became clear to all 
that a concerted effort to keep the crop viable was needed. As 
the brewers know very well, without barley you have no beer. No 
barley, no beer.
    Thank you, Mr. Chairman, for your time and attention, and I 
will be happy to answer questions the Committee may have for 
me.
    [The prepared statement of Mr. Friederichs follows:]

  Prepared Statement of Peter Friederichs, President, National Barley 
                    Growers Association, Foxhome, MN
    On behalf of the National Barley Growers Association, I want to 
thank the Chairman and Ranking Member as well as the Committee for this 
opportunity to comment on the commodity and crop insurance programs 
from the perspective of U.S. barley growers. I am Peter Friederichs, 
President of the National Barley Growers Association. I operate a 
fourth generation family farm in west central Minnesota near Foxhome, 
growing malt barley, spring wheat, soybeans, and sunflowers; as well as 
a registered seed sales and conditioning facility. Because most barley 
growers also grow a host of other crops on their farms as well, I will 
concur with the statements my colleagues are making here today and 
focus for the most part on barley specific issues.
    Barley is a cool-season crop grown primarily in the Northern Plains 
and Pacific Northwest. This region along the U.S.-Canadian border 
accounts for 90 percent of the 3 to 3.5 million acres planted in the 
U.S. each year. The U.S. produces about 200 million bushels of barley 
annually and roughly 75 percent of this production is destined to 
become malting barley with the remainder going into the feed market. 
Because feed barley values are routinely less than 50 percent of malt 
barley values, most traditional barley growers in recent years do not 
plant the crop without securing a malt contract prior to seeding. The 
combination of good production and acceptance rates the last 2 crop 
years has reduced the demand for malt barley for the coming year. 
Acreage is expected to decline in 2017 because of a reduction in 
contracts available from the malt and beer industry, coupled with the 
depressed price for feed barley. Producers will substitute other crops 
in place of barley in their rotation this year; and for me personally, 
it will likely mean more wheat, soybeans, or sunflower acreage.
What's working with the current farm bill?
    Probably to the dismay of some barley producers who see other crops 
receiving larger payments, the counter-cyclical nature of the 2014 Farm 
Bill is working as intended in barley's case. 75 percent of barley base 
acres were signed into the PLC program, 22 percent into ARC-CO, with 
the remaining four percent into ARC-IC. Because barley prices did not 
decline as sharply as other crops during the 2014 and 2015 crop years--
just 15 percent from their peak in 2012--no PLC payments were triggered 
and minimal ARC-CO payments were issued for the 2 crop years 
respectively. However, prices for the 2016 crop year are down another 
ten percent and will trigger more payments; and 2017 crop year 
contracts have fallen an additional ten percent.
    Challenges facing barley:

  (1)  The aforementioned quality issues and the steep discount for 
            feed barley means planting barley for the malting market is 
            a high risk venture. For that reason, the NBGA and its 
            industry partners worked with the Risk Management Agency to 
            develop a Malt Barley Endorsement for barley's standard 
            crop insurance policy to help mitigate this risk. Although 
            this option was first available for the 2016 crop, there 
            are still issues to be worked out regarding full coverage 
            for these quality risks. NBGA is appreciative of RMA's 
            willingness to continue working with us on improving this 
            needed endorsement. And for the record, the NBGA is a 
            staunch supporter of the overall crop insurance program.

  (2)  While not part of the commodity or crop insurance title, the 
            NBGA would be remiss if this statement did not reference 
            our concern about the status of agricultural trade in 
            general. Mexico is our No. 1 market for malt barley 
            exports, and our recent efforts to increase sales to our 
            customers south of the border has been put on hold 
            indefinitely due to the current uncertainty surrounding our 
            nation's trade policy with Mexico. If this export market is 
            lost, agricultural prices could fall further and result in 
            even higher Commodity Title payments than currently 
            expected.

  (3)  Another challenge facing barley farmers--as well as other 
            producers in all parts of the country--is the increasing 
            difficulty in securing annual operating loans from local 
            financial institutions because of the current depressed 
            commodity prices coupled with still relatively high input 
            costs. Each year, in order to secure operating loans, 
            farmers need to prepare a farm plan for their banks showing 
            their farm will generate a positive cash-flow with the 
            expected revenue from the crop mix they plan to plant as 
            well as what they expect to pay for inputs, rent, machinery 
            and/or land payments, and living expenses. This year, many 
            of these plans are only showing a positive cash-flow if the 
            expected farm program support payment for the 2017 crop is 
            included.

        However, current Federal banking regulations are not allowing 
            banks to include this expected October/November 2018 
            payment because the year-long discovery period for the 2017 
            average marketing year price does not begin until after 
            harvest and is considered too far in the future and 
            speculative to be included. If the farmer has working 
            capital that can be applied to the deficit, the loan can 
            still be approved. However, in worst case scenarios, 
            farmers without adequate working capital may be denied 
            operating loans and ultimately forced out of business. If 
            the current depressed price / high input cost environment 
            continues as predicted, this situation will only get worse 
            as more and more farmers deplete their working capital.

    In closing, the NBGA in recent years has partnered with the malting 
and beer industries--both large and small craft brewers--to ensure that 
an adequate supply of good quality malt barley is grown in the U.S. to 
produce the 190 million barrels of beer that are brewed annually. This 
cooperation came about because barley acreage had been in perpetual 
decline for most of the last 2 decades, and it became clear that a 
concerted effort to keep the crop viable was needed. As the brewers 
know very well--without barley, you have no beer. No Barley--No Beer.
    Thank you Mr. Chairman for your time and attention. I will be happy 
to answer questions the Committee may have for me.

    The Chairman. You are not kidding around, are you?
    And our final witness, the Vice Chairman of the National 
Sorghum Producers, Stockton, Kansas, Mr. Dan Atkisson, you are 
recognized for 5 minutes.

  STATEMENT OF DAN ATKISSON, VICE CHAIRMAN, NATIONAL SORGHUM 
                    PRODUCERS, STOCKTON, KS

    Mr. Atkisson. Chairman Crawford, Ranking Member Nolan, and 
Members of the Subcommittee, thank you for this opportunity to 
come before you and present the views of the National Sorghum 
Producers regarding title I, crop insurance, and our next farm 
bill.
    My name is Dan Atkisson, and I farm near Stockton, Kansas. 
I am a true family farmer; working alongside my father, my 
wife, Amanda, and my 4 year old son, Eli, whom I hope will take 
over our farm one day. We grow sorghum, wheat, and forages to 
support a herd of commercial and registered Black Angus cattle. 
I am honored to serve as the Chairman of the National Sorghum 
Producers Legislative Committee, and I hope and expect to be 
very engaged throughout the process of crafting this next farm 
bill.
    Mr. Chairman, I will give an overview of several positive 
trends in sorghum within my written testimony, from increasing 
productivity to expanding markets within the food sector. These 
are exciting, big-picture developments for sorghum, but any 
positive developments for the long-term are completely 
overshadowed by the current state of our ag economy.
    Since the passage of the 2014 Farm Bill, prices for sorghum 
have fallen from a benchmark of $5.10 a bushel to just $2.69 
per bushel for the 2016 crop; 53 percent of that benchmark. 
Today in farming, it is not a question of how to make a profit, 
but how to minimize our losses and survive until next year.
    Virtually all commodity crops have faced a similar decline 
in prices, but unique to sorghum is an emerging pest, the 
sugarcane aphid, which is driving up cost of productions, 
adding a burden of $430 million in the 2016 growing season 
alone.
    The National Sorghum Producers believes in the need for a 
strong and reliable title I safety net that is balanced and 
provides assistance when needed. One very real problem with the 
current policy is the timing of payments and its impact on 
cash-flow. National Sorghum Producers asks you consider moving 
up farm bill assistance timing, or even making marketing 
assistance loan rates more relevant to help with cash-flow.
    In regard to ARC and PLC, clearly, with the 20/20 vision 
that hindsight offers, PLC is a better safety net for sorghum 
farmers. PLC was very conservative up-front when prices were 
still above $4 per bushel, but the policy is now kicking in to 
provide help when it is desperately needed. In contrast, ARC 
assistance was a virtual certainty when farmer elections were 
being made. With a target revenue generated from $5.10 per 
bushel benchmark, the logic was to take a bird in the hand and 
put it to use. Unfortunately for farmers, markets have not 
rebounded as hoped. Going forward, we are open to the idea that 
the ARC model could be improved. We also believe that PLC could 
be improved, and generally favor this model, coupled with a 
strong crop insurance program. However, NSP pledges to work 
with you in a constructive manner, and ensure proper balance is 
struck and an adequate safety measure is crafted.
    Before moving to crop insurance, I would like to add that 
we urge caution in thinking about how these policies affect 
plantings of commodities, and urge more thoughtful approaches 
to CRP going forward, along with other incentives that can 
encourage crop rotations that promote soil health and other 
conservation benefits.
    Crop insurance is indispensable to sorghum farmers, but 
that does not mean it cannot be improved. For sorghum 
particularly, participation rates and coverage levels are low 
when compared to other row crops. A full 19 percent of sorghum 
acres are not insured. This is the highest among major row 
crops. There are many reasons for this, but the single biggest 
reason is that sorghum insurance is simply too expensive. Over 
the last 10 years, the loss ratio for sorghum has been 0.88, 
lower than corn and the statutory target. Considering this 
window of time includes 3 years of record drought within the 
Sorghum Belt, we believe that the rates for sorghum generally 
should be lowered. We are also working with private partners 
and RMA to explore improving these policies through a 508(h) 
process. We believe this will address some county-by-county 
inequities between sorghum and competing crops.
    Finally, Congressman Ron Kind is again carrying the EWG's 
water with a reintroduction of the AFFIRM Act. NSP firmly 
believes that Kind's bill, with arbitrary limits, means tests, 
and publication of contracts has absolutely no place in the 
business transaction of crop insurance.
    Mr. Chairman, in closing, I want to thank you again. As a 
farmer and member of the National Sorghum Producers, we truly 
appreciate the task you have before you. We consider all 
aspects of the farm bill to be critical; from research to 
conservation, and commodity programs to crop insurance. But 
tough times cause us to focus, and title I and crop insurance 
should rightly take center stage.
    NSP appreciates your attention to these important policies, 
and we stand ready to work with you to make these policies work 
even better, going forward.
    [The prepared statement of Mr. Atkisson follows:]

  Prepared Statement of Dan Atkisson, Vice Chairman, National Sorghum 
                        Producers, Stockton, KS
Introduction
    Chairman Crawford, Ranking Member Nolan, and Members of the 
Subcommittee, thank you for this opportunity to come before you and 
present the views of the National Sorghum Producers regarding the next 
farm bill as it relates to commodity policy and crop insurance. These 
policies are critically important to America's farmers and ranchers, so 
we greatly appreciate the Subcommittee's focus here today.
    My name is Dan Atkisson, and I farm near Stockton, Kansas. I am a 
true family farmer, working alongside my father, my wife, Amanda, and 
our 4 year old boy, Eli, who I hope might also take care of our land 
and make a living from it one day. We grow sorghum, wheat, and forages 
to support herds of commercial and registered Black Angus cattle. I am 
very honored to serve as Chairman of the National Sorghum Producers 
Legislative Committee. I am also Vice Chairman of the NSP board of 
directors and have been very involved since becoming a member of the 
second Leadership Sorghum class just a couple years ago. I am a proud 
graduate of Kansas State University with a bachelor's degree in 
Agricultural Technology Management and a minor in Animal Science. I am 
humbled to be here today, and I hope my testimony as a farmer and on 
behalf of NSP will be helpful to you.
State of Sorghum and the Sorghum Economy
    Although sorghum is considered an ancient grain, it has recently 
gained tremendous popularity for its positive health benefits for both 
people and pets. However, the fact remains most Americans wouldn't 
recognize sorghum if they saw it, and even in the world of agriculture 
where it is more common, sorghum has lost ground over the last 30 years 
to higher value crops.
    Before getting into the specifics of the farm safety net, I want to 
begin by telling you a bit about this very important crop, and then I 
want discuss the current economic realities facing sorghum farmers. 
Sorghum is a highly adaptable crop with many varieties and uses. It 
produces a grain for livestock feed but is also chopped for silage or 
hay or simply used as a forage which is often referred to as hay-
grazer. As a feedstock for renewable fuels, sorghum is uniquely 
positioned as both a source of starch, sugar, and cellulose all in a 
single crop. What makes sorghum really special is that it uses up to 
\1/3\ less water than corn. It is grown throughout the U.S.--even in 
Minnesota and the Dakotas where it makes excellent pheasant habitat--
but its water efficiency, drought tolerance, and soil conditioning 
qualities make it particularly valuable as a low input cash crop in the 
more arid western Great Plains and hotter regions like South Texas. The 
top two sorghum states are in fact Kansas and Texas, followed by 
Arkansas, Oklahoma, Colorado, and Nebraska.
    Due to its health and environmental benefits, we believe sorghum 
has unique advantages and is well suited for growth on more U.S. acres. 
As such, our policies reflect the promise sorghum has as a crop. 
Sorghum acres, nationally, plummeted through the late 1980s and 1990s, 
and have only begun to recover in the last few years. We want to see 
that positive trend continue.
    The first table in my testimony contains average planted acres for 
sorghum in 5 year increments. The steep decline in the late 1980s can 
be directly tied to certain farm policies. For example, the 
Conservation Reserve Program took millions of acres in the western 
Great Plains out of production. Further declines in sorghum acreage 
were the result of economic and agronomic changes coinciding with the 
planting flexibility gained in the mid-1990s. During this time, many 
farms that had previously utilized sorghum in rotation with other crops 
began to focus on producing their highest yielding and grossing crops 
like cotton, corn and soybeans. Please do not misunderstand me. We 
support a targeted CRP and the planting flexibility farmers now enjoy. 
We just need to be careful in the development of farm policy to avoid 
unintended consequences.

------------------------------------------------------------------------
               Period                       Average Planted Acres
------------------------------------------------------------------------
1982-1986                            17,757,000
1987-1991                            11,268,000
1992-1996                            11,074,000
1997-2001                            9,682,000
2002-2006                            7,894,200
2007-2011                            6,707,000
2012-2016                            7,324,400
------------------------------------------------------------------------

    While sorghum has been knocked down over the years, we are not out. 
Recently, sorghum demand and markets have increased significantly. In 
fact, for an extended period in 2015 and 2016, sorghum was actually 
trading at a premium relative to corn. China has accounted for much of 
the increase in demand by importing sorghum to feed geese and ducks for 
their domestic market and to supply distillers who prefer its unique 
flavors. The domestic ethanol and feed markets are also growing. And, 
sorghum is also experiencing greater demand in the high-end food 
markets, catching the eye of top chefs, nutritionists, and bloggers as 
a healthy, versatile whole grain alternative that also meets niche 
consumer requests, being non-GM and gluten-free.
    For years, the sorghum market was roughly as follows: \1/3\ for 
domestic livestock feeding; \1/3\ for biofuels; and \1/3\ to exports, 
with significant volumes used abroad for food aid. However, in the last 
years, the sorghum market has changed dramatically as shown in the 
charts included below.

 
 
 
       2014 Market for Sorghum              2016 Market for Sorghum
 

                                      
                                      
    Seed genetics and productivity are also on the rise for sorghum. In 
fact, 2016 was a record year for sorghum yields with a national average 
production of 77.9 bushels per harvested acre. This is further evidence 
of a real and exciting trend as the 2014 through 2016 average of 73.8 
bushels per acre exceeds the previous 10 year average by 16 percent. 
Our sorghum yield contests are also highlighting remarkable 
productivity gains as winners in the last few years have consistently 
approached or exceeded 200 bushels per acre. This is truly remarkable.
    With this backdrop, you can appreciate why we feel these are 
exciting times for sorghum in the big picture and for the long-term. 
But, as this Subcommittee well knows, times on the farm are not as 
encouraging. Depressed commodity markets are yielding prices below 
cost-of-production. This is a function of many things, including but 
not limited to strong production worldwide, a strong U.S. dollar, 
unpredictable export markets, and predatory trade practices used by 
foreign countries. As is nearly always the case in agriculture, the 
situation we find ourselves in today is not the result of anything that 
we as farmers or ranchers can control. All we can do is develop a good 
strategy for what might work best this year; do our best to implement 
the plan as efficiently as possible, cutting costs wherever we can; and 
pray the rain will fall right, that our crop will be better than we 
could hope for, and prices rebound.
    Since passage of the 2014 Farm Bill, prices received by sorghum 
farmers have fallen precipitously, as is the case with most crops. In 
the 5 years prior to the enactment of the current farm bill, sorghum 
prices averaged $5.10 per bushel. For the 2014 crop, prices fell to 
$4.03 per bushel--a 21 percent drop. For the 2015 crop, it fell even 
further, to $3.31 per bushel--a 35 percent drop compared to the 5 year 
benchmark. Worse yet, for the 2016 crop that was just harvested last 
fall, USDA is projecting the price received by farmers will be $2.70 
per bushel--that is 53 percent of the benchmark price, meaning it takes 
twice the bushels to generate the same revenue for a farm. For the 2017 
crop we are planting this spring, most farmers are again facing the 
sorry prospect of burning through savings or equity. Today, in farming, 
it is not a question of how to make a profit, but how to minimize our 
losses to survive.
    For sorghum specifically, we have also had to battle a very 
significant emerging pest threat. The sugarcane aphid (SCA) is pressing 
up costs of production even as market prices decline. In 2016, the SCA 
reached all sorghum producing regions in the United States, impacting 
over 70 percent of the planted acres. When present, the sugarcane aphid 
increases operating expenses by as much as $40 per acre--an almost 30 
percent spike in production costs. This translates into an additional 
$200 million in expenses, nationally. When added to resulting yield 
losses, we calculate the total burden incurred by U.S. sorghum farmers 
on account of the sugarcane aphid approached $430 million in the 2016 
growing season alone.
    In summary on the state of sorghum and the sorghum economy, there 
are some real reasons for optimism about growing sorghum markets and 
increasing productivity for the crop. But, this positive outlook is 
being over-shadowed by the economic reality facing our farmers right 
now. While this current reality is really taxing farmers, one silver 
lining may be that these conditions are a better lens through which to 
view the importance and purpose of U.S. farm policy.
Title I--What is Working and What is Not?
    Before getting into the details on our thoughts concerning the 
commodity title of the farm bill, I do want to thank the Agriculture 
Committee for its very strong Budget Views and Estimates letter that 
rightly points out that the budget savings and contributions to deficit 
reduction made in the 2014 Farm Bill are more than four times the 
target you were expected to hit when you passed that measure. The 
National Sorghum Producers was proud to add its name to a letter sent 
last week to the Budget Committee asking that a portion of these 
savings be reinvested into this critical sector of the economy. There 
is no more basic, nor important infrastructure that serves this nation 
and the world than the patchwork of independent family farms and 
ranchers that dot the countryside and feed, clothe, and fuel America in 
a manner unrivaled in history.
    The National Sorghum Producers believes in the need for a strong 
and reliable title I safety net that is appropriately balanced and 
provides assistance when and where it is needed. One very real problem 
with the current policy that is felt very acutely in times like this 
has to do with something as simple as the timing of payments and the 
problem this poses for farmers trying to cash-flow. The National 
Sorghum Producers asks you consider moving up the timing of farm bill 
assistance so the support is put in the hands of farmers earlier than a 
full calendar year following the crop year it is meant to cover. For 
money that will be paid either way, there should be no significant 
budget impact. Along these lines, we would also ask that you 
investigate the possibility of raising loan rates to make them more 
relevant, which could also relieve cash-flow burdens in the marketing 
year.
ARC and PLC
    On the choice farmers were given under the 2014 Farm Bill, 5.966 
million acres or 66 percent of the total sorghum acres were enrolled in 
Price Loss Coverage, while 2.998 million or 33 percent were enrolled in 
Agriculture Risk Coverage. In the first 2 years of the farm bill, ARC 
paid an average $12.14 per acre for 2014, and $17.98 per acre for 2015. 
It is expected that a comparable amount will be paid relative to the 
2016 crop, even as crop prices have dropped to 53 percent of the 
original benchmark average. PLC made no payments in 2014 since the 
season average price of $4.03 per bushel was above the reference price 
of $3.95 per bushel. However, for 2015, average payments of $28.23 per 
acre were made, and for 2016 it is expected that relief to farmers will 
increase to more than $50 per acre.
    Clearly, with the 20/20 vision that hindsight offers, PLC is the 
better safety net for sorghum farmers. PLC was very conservative up-
front when prices were still above $4.00 per bushel. But, the policy is 
now kicking in to provide help when the help is desperately needed. In 
contrast, ARC assistance was a virtual certainty when farmer elections 
were being made. With a target county revenue generated from a $5.10 
per bushel previous 5 year average, and futures prices sinking, the 
logic was to take the bird in hand and put it to use, hoping the market 
would turn around in the out-years. Unfortunately for farmers, markets 
have not rebounded.
    When assessing the relative value of ARC and PLC, then, we do not 
look at the dollars generated but rather at the risk management or 
downside protection that is provided. To us, the safety net is more 
about the reliability, fairness and timeliness of help when help is 
most needed. On all these counts, NSP believes PLC provides the better 
safety net for our farmers. Going forward, we are very open to the idea 
that the ARC model could be improved. We also believe PLC could be 
improved, or that a hybrid approach might surface as the best model for 
Title I assistance. What follows is just our frank assessment of how 
these respective policies are working relative to the important goals 
listed above.
    In regard to reliability, ARC misses the mark because of the 
revenue calculations that are used. The reality of PLC is that our 
farmers know that if national prices are below $3.95 per bushel, some 
help is on the way. Farmers can count on this, secure credit, make 
plans, and leverage dollars based on this certainty. In the highly 
uncertain business of farming, any certainty we can get is of 
tremendous value to us. This is also why crop insurance is so 
valuable--because of its rock-solid certainty. With ARC, even in the 
first year where, due to price decreases, it was virtually certain that 
some help would be on the way, no one could really count on it, and 
bankers could not lend on it, because it all hinged on how the county 
performed. In fact, many counties in heavy ARC areas did not receive 
ARC assistance because of strong county yields. Problems of this sort 
are greatly exacerbated for crops, like sorghum, that have variable 
yields. With large sized counties and weather events, such as hail, 
that can decimate one corner of the county while the bulk of the county 
gets a nice rain, even counties that do receive an ARC payment have 
both winners and losers. In short, because ARC is not reliable, it 
cannot hedge risk or leverage dollars in the agricultural community as 
effectively as PLC.
Falling Guarantees
Sorhgum ARC Revenue Guarantees, Maximum Payments, Loss Triggers, and 
        Actual Revenues in Rooks County, Kansas
        
        
    Concerning fairness, ARC again falls short because of county 
variability that does not always coincide with producer experience. PLC 
pays the same rate based on national prices to all farmers based on the 
historic yields they have proven on the farm. While it is not perfect, 
it is fair. For both 2014 and 2015, we have counties that received 
significant ARC payments next to counties that received no ARC payment. 
And, in every county that received a payment, there are producers that 
yielded well above the county average and producers that yielded well 
below. Not to mention, the FSA's arbitrary 25 percent threshold 
requirement for yields to be split between irrigated and non-irrigated 
creates even more frustration. No policy is perfect, and the National 
Sorghum Producers has and will continue to defend ARC against critics 
of U.S. farm policy, but there is no question the county-based model 
creates inequities and frustrations. That is why Congress has rejected 
this kind of approach in the past. Perhaps some of these wrinkles can 
be ironed out. But, as long as ARC remains a county-wide policy, it 
will inherently create these kinds of issues.
    And, finally on the issue of timeliness, our bedrock principle is 
that help under the commodity title should be reserved for when help is 
most needed. And, we believe that PLC better achieves this objective. 
As prices for commodities have continued to collapse, the ARC safety 
net has withered. In my home county of Rooks, Kansas, the ARC revenue 
guarantee was $289.48 for 2014, $267.55 for 2015, and $246.13 for 2016. 
For the 2017 crop to be planted, the revenue guarantee is significantly 
diminished again--to $211.04 per acre--just as the maximum assistance 
per acre has diminished from $33.66 when the fall started to $23.70 
this year. Contrast this to PLC which, by remaining constant, has 
effectively increased in significance to the farmer as the economy has 
weakened. We believe that this is the better and more efficient model 
going forward.
    There are three more issues I would raise relative to the commodity 
title. First is the issue of cotton and generic base. A significant 
number of sorghum farmers throughout the south also have generic base. 
The National Sorghum Producers support the National Cotton Council's 
efforts to designate cottonseed as an oilseed or to otherwise restore 
Commodity Title coverage for this important crop. The second issue is 
that of payment limitations and means testing. Given that the National 
Sorghum Producers believes the safety net should kick in to help cover 
significant losses when times are hard, we also believe the safety net 
that only partially covers losses should not be further reduced by 
arbitrary limits. Third, concerning the issue of the Conservation 
Reserve Program, which we recognize is not a title I policy but yet has 
some implications for commodity policy, we would be open to ideas 
around shorter term CRP contracts that would use cover crops, including 
annual forages, with the caveat that communities and infrastructure can 
suffer due to decreased economic activity when land goes out of 
production for extended periods. We also note that if more sorghum were 
planted around the country, there would be a lot more pheasants and 
quail.
    Finally, let me just reiterate again that the National Sorghum 
Producers strongly support an effective and reliable safety net under 
the commodity title. We are grateful to the Agriculture Committees for 
the diligence and work you put into crafting a reasonable compromise in 
the 2014 Farm Bill that is providing some important help during these 
hard times, putting farmers and ranchers in a better place than we 
would otherwise have been. However, the primary purpose of the safety 
net under the commodity title is to provide a bridge to help 
independent farm and ranch families stay in business through the tough 
times, and we are genuinely concerned that if current price predictions 
for the next few years come to pass, the current safety net in place 
will fail many of our farmers. This is why we so ardently believe the 
farm safety net must be strengthened. This is why we signed the letter, 
referenced above, asking that a portion of farm bill savings be 
reinvested to allow this Committee to patch up its weaknesses. This is 
why we are as frank as we have been today.
    We have witnessed time and again how a struggling farm economy is 
left ailing for too long without a prompt and effective mitigation 
effort through farm policy. And, without exception, the problems that 
could have been fixed fairly cheaply early on mount and mount and so 
does the cost of repair. When it comes to economic trouble in farm 
country, an ounce of prevention is truly worth a pound of cure.
Crop Insurance
    The National Sorghum Producers is strongly supportive of Federal 
crop insurance and urges this panel and Congress to reject any attempts 
to cut or weaken it. Make no mistake, proposals like that introduced by 
Rep. Ron Kind are crafted to kill Federal crop insurance. To struggling 
farmers and ranchers across this great country, there is absolutely 
nothing affirming about Ron Kind's AFFIRM Act.
    Crop insurance is indispensable for sorghum farmers, but that does 
not mean it cannot be improved. For sorghum particularly, participation 
rates and coverage levels are low when compared to other crops. As the 
chart in my testimony illustrates, a full 19 percent of sorghum acres 
are not insured--the highest among major row crops. Moreover, only 25 
percent of acres have coverage at 75 percent or above compared, for 
example, to 66 percent in the case of corn. There are many reasons for 
this, but the single biggest reason is that sorghum insurance is too 
expensive. Over the last 10 years the loss ratio for sorghum has been 
0.88--lower than corn, for instance, and 12 percent lower than the 
statutory target. Considering this window of time includes 3 years--
2011 through 2013--of record drought covering much of the Sorghum Belt, 
we believe the rates for sorghum, generally, should be lowered.
    NSP is very grateful for the improvements that were made to crop 
insurance in the farm bill. Given the epic drought of 2011 through 
2013, many of our producers have benefitted greatly from the Yield 
Exclusion provisions of the Bill, along with the ability to purchase 
different coverage levels between irrigated and non-irrigated farms. 
While some Supplemental Coverage Option policies have been sold, it has 
not met expectations. However, we expect these sales will pick up when 
the pricing options become more attractive, and we would encourage the 
Subcommittee to maintain this option, which can work well in 
conjunction with PLC.
Crop Insurance Coverage As a Percentage of Planted Acres
2016 Crop Year


          Source: RMA, NASS.

    While all these movements are positive for farmers, we need to 
recognize that crop insurance benefits cover what is planted and, 
therefore, can impact plantings based on the relative competitiveness 
of the policies. While we argue that our average rates are too high, 
the real problem becomes obvious when we start comparing county by 
county rates relative to competing crops. This is why NSP is so focused 
on bringing sorghum crop insurance policies up to par with its 
competing crops in all regions. We currently are working with private 
partners and RMA on exploring means of improving the policies via the 
508(h) process or other authorities. This is not a new effort. We have 
worked in the past to increase options for sorghum silage, and more 
recently annual forage crops. We hope to continue these efforts and 
will keep the Committee apprised.
    Finally, NSP recognizes that many of the professional critics of 
agriculture policy who are not actually putting themselves at risk but 
only booing from the sidelines have moved their vitriol from the fixed 
or direct payments that were eliminated in the 2014 Farm Bill to crop 
insurance. Congressman Ron Kind is again carrying their water with the 
reintroduction of the AFFIRM Act. NSP believes Kind's bill has no place 
in the business transaction of crop insurance, as previously noted. 
Crop insurance is very expensive, but I appreciate the fact that I as a 
fa[r]mer can choose to participate at whatever level I need and will 
have bankable and reliable support. The value of crop insurance is not 
the premium discount, or the indemnity, as the critics would have you 
believe, but rather it is the certainty created by this contractual 
arrangement where I have the peace of mind that comes with insurance on 
my crops. NSP is absolutely committed to protecting and improving this 
important tool.
Conclusion
    Mr. Chairman, in closing, I want to say again how much we as farmer 
members of the National Sorghum Producers appreciate the task you have 
before you. We have focused on title I and crop insurance today, but I 
hope from my comments you can see that we consider all aspects of the 
farm bill to be critical, from research issues like the sugarcane 
aphid, to rural development and bioenergy, to trade promotion and 
market development policies. It is all important and a part of a piece, 
but tough economic times like our current reality do cause us to focus 
on the farm and making it through the next season--an area where title 
[I] and crop insurance rightly take center stage.
    NSP appreciates what was accomplished in the 2014 Farm Bill. We 
look forward to working with the House Agriculture Committee and our 
fellow commodity organizations to make it even better going forward.

    The Chairman. Thank you. I appreciate the timely testimony 
of the witnesses. I appreciate all of you being here.
    The chair would like to remind Members that they will be 
recognized for questioning in order of seniority for Members 
who were here at the start of the hearing. After that, Members 
will be recognized in order of arrival. I appreciate Members' 
understanding.
    I would now like to recognize myself for 5 minutes.
    I have a general question that any of you on the panel can 
feel free to weigh in. During the course of the drafting of the 
2014 Farm Bill, it was often said that crop insurance is the 
cornerstone of the farm safety net. However, crop insurance is 
not designed to provide multi-year protection. Have recent 
years shown why we need other tools like ARC and PLC in 
addition to a strong Federal crop insurance, or is insurance 
alone all that is needed to manage risk? Mr. Spurlock, we can 
start with you.
    Mr. Spurlock. Yes, sir. As in my testimony, I was talking, 
and we were visiting the fact that crop insurance is a same-
year risk management tool, as when your crops go through and 
you go through the drought or hail or wind, the grain snaps and 
any other problems in any of our other crops across the world, 
the crop insurance takes care of that problem, that year. We 
have to have the ARC and the PLC to work through the multi-year 
problems that occur in agriculture, and I feel that both 
programs are awfully important and needed.
    The Chairman. Anybody else want to weigh in on that?
    Mr. Moore. Yes, thank you, Mr. Chairman. I would agree that 
they are both needed. There are certain areas of the country 
that crop insurance is not a viable safety net for them, and so 
they rely on ARC-County and PLC. In my opinion, you have to 
have both of them to give safety net capabilities in the farm 
bill.
    Mr. Schemm. Mr. Chairman, thank you. As you referenced, 
crop insurance does, in my area experiencing long-term 
droughts, have an eroding factor on being able to support an 
operation to even keep it viable. And that is where the PLC 
with a price focus and ARC with a yield focus definitely comes 
in and helps be a factor for our areas, for those producers who 
tend to be more either price sensitive or yield sensitive, 
those components help to finish out that tool that simply helps 
the farmer to continue to maintain farming. It is not through 
just crop insurance because of the eroding factor.
    Mr. Friederichs. Crop insurance for barley growers is a 
tough one because the malting doesn't go with the feed. It is 
kind of a confusing situation. We are working on it, that is 
all I can say at this point.
    Mr. Atkisson. Within sorghum we do have an insurance 
product that can help us maintain yield and revenue within a 
year's span, yet we have these programs to average out and to 
help us along. We have low periods, and that is very apparent 
right now with a very dramatic downturn in the farm economy. We 
have crop insurance to take care of some of the major risks, 
but we need a safety net underneath that to support us through 
these major downturns in the economy and through these very 
tough times.
    The Chairman. Thank you.
    Mr. Spurlock, you mentioned in your testimony about 93 
percent of corn base acres were opted into ARC-County program 
and title I. Why was it so lopsided in 2014?
    Mr. Spurlock. As the models that were put together by 
Illinois and Texas A&M, when it came time to sign up for the 
programs you could go to these models, and they ran the 
formulas and they looked at what that year actually was. With 
the later sign up, it worked in, it showed what payments were 
going to come to you in the first year. And so as you looked at 
those payments over what the price loss coverage would have 
done, which there weren't any in the corn industry. It was a 
timing effect and as it has come through, those payments have 
come on and worked. And that formula will change as we go into 
the future, the way it is set up in the ARC program.
    The Chairman. Hindsight being 20/20, do you feel that ARC 
is a program that will work long-term for corn growers?
    Mr. Spurlock. Yes, sir. I think it will work. I also feel 
that there is possibly some need that we may need to do a 
little changing in its formula, and what that is I don't have 
an answer for that, but I hope that you ladies and gentlemen 
will be able to help in that with your research as you go 
through in this farm bill process.
    The Chairman. If given a chance to update, do you think 
most corn growers would again opt in to ARC, their base acres?
    Mr. Spurlock. Since we are in such very different financial 
conditions today on what the markets were, and if you were to 
take them back and take the price of today back to the 
beginning where we were making these decisions, you would see a 
very different process in it.
    The Chairman. Thank you.
    I will now recognize Ranking Member Nolan, for 5 minutes.
    Mr. Nolan. Thank you, Mr. Chairman.
    I have a question for Mr. Friederichs. And when our dear 
colleague, who is as good and strong a champion anywhere in 
America for agriculture, along with my colleague, Mr. Walz, Mr. 
Peterson, said that he made reference to the fact that barley 
production was down, and that he had pulled barley production 
out of his farming unit, I thought he was going to conclude 
that the reason why it is down is because he is not producing 
anymore, but he didn't do that.
    Are there any particular reasons for the relatively stable 
barley prices, as compared to other agriculture commodities? 
Historically, volatility is often the biggest reason for 
financial instability, so it would be helpful to hear from you 
about why barley prices don't seem to be prone to sudden 
movement.
    Mr. Friederichs. Well, as of right now, the barley prices 
are, well, what is going on right now is that the contracts are 
getting less and less every year. You have, like right now, for 
my farm I am a third of what it was last year.
    Mr. Nolan. It is?
    Mr. Friederichs. And the prices are also going down because 
of overproduction at this point is a big thing.
    Mr. Nolan. And is that because, as you referred to in your 
testimony, without a contract, people aren't going to plant? Or 
did I hear that wrongly?
    Mr. Friederichs. Yes, and then if you have a weather scare, 
or a bad weather year, all of a sudden you have feed barley, 
and then there is no malt.
    Mr. Nolan. Yes.
    Well, another quick question relating to barley, in 
addition to creating the agricultural price loss coverage 
programs in the 2014 Farm Bill, the farm bill also made an 
important change in setting a reference price for barley based 
on all barley, not just on feed barley. How has that impacted 
the barley growers, and are there any related adjustments 
needed in the next farm bill with regard to that issue?
    Mr. Friederichs. Boy, you are getting a little over what I 
can even answer at this point in time. It is going in the right 
direction, the program is, we are doing okay there, it is just 
a matter of we have to keep what we have.
    Mr. Nolan. That has played a critical role, I presume, in 
the ability of barley producers to stay in the business and 
maintain a positive cash-flow?
    Mr. Friederichs. Yes.
    Mr. Nolan. All right.
    Well, thank you, Mr. Chairman. I am going to yield the 
balance of my time to my colleagues here.
    The Chairman. All right, thank you very much.
    I would recognize Mr. Gibbs, from Ohio, for 5 minutes.
    Mr. Gibbs. Thank you, Mr. Chairman. Thanks for holding this 
hearing.
    Just to start off with these low prices, this will be to 
the whole panel, I guess. Credit availability, how do you see 
that you have a couple of years of losses for a producer out 
there and how does that tie in with the title I programs, and 
how does that all interact? Do you see what is happening with 
the credit here in the next year or 2 for producers out there, 
its availability?
    Mr. Schemm. Thank you, Congressman. As I referenced in my 
oral testimony, I just talked with my banker yesterday and some 
of the points that we were discussing brings me to a lot of 
concern as we do go forward. He has said that he is seeing a 
significant amount of producers having to restructure our 
short-term debt or lines of credit for our production, and roll 
them over into long-term debt or land debt. And obviously, this 
brings a lot of concern to us that more highly leverages our 
operations.
    I have seen many operations in my area bringing back 
younger operators, and they have been trying to incorporate 
this next generation. When we look at the average age of 
American farmers being 58, being very critical to the role of 
American ag and yet they were here through the good times, and 
now as they struggle to go through these financial tough times, 
we have a lot of concern what is going to happen to our small 
communities out there in this generational transfer.
    Mr. Gibbs. Now, do you feel like the ARC and PLC programs 
are sufficient enough, or is it, I know coupled with crop 
insurance, I guess one of the questions I had, and Mr. Spurlock 
might have talked a little bit about it in his testimony, is, I 
am a firm believer that crop insurance, we should strengthen it 
whenever we can, not weaken it. For me as a public official, 
policymaker, it is a lot easier to go out and talk to my non-
farm constituents about crop insurance because people 
understand the principle of insurance versus the title I 
programs. And I guess I am just kind of wondering, you all 
talked about coupling them together, obviously, the importance 
of title I and crop insurance, but is there a way we could 
structure crop insurance in such a way that it would be 
beneficial, and not be market distortion, and I guess that 
relates to how sufficient the ARC and PLC programs are, going 
forward, especially when you look at credit availability.
    Mr. Schemm. My banker very much relies upon title I, ARC, 
and PLC when we calculate into it. And there are challenges, as 
I referenced in my oral testimony, in the aspect of, many times 
that payment can be received a year and a half later. But it is 
much easier to quantify that payment. They do realize and they 
appreciate the crop insurance aspect, but again, crop insurance 
only kicks in when there is basically almost a disaster level 
that occurs either at a yield or a price level, and then the 
problem that occurs with that again is the eroding stance as 
you go forward with either price or in a drought situation of 
yield that erodes that crop insurance. Again, this is where 
this kicks in to the title I program to be very vital in my 
operation, and the farmers that I talk to, in being able to 
sustain or to be able to get that bank note with their banker.
    Mr. Gibbs. Mr. Spurlock, for corn growers, what are your 
thoughts on that? Do you see a way that we can improve crop 
insurance to be a better safety net?
    Mr. Spurlock. Yes, sir. I think that any time we work at 
it, and as we go through these years new product development is 
awfully important to us to look at and find that next level of 
crop insurance policies that can improve and help all of our 
producers.
    Mr. Gibbs. Because I have heard from some of my producers, 
I am hearing different things about title I, but I have heard 
some of my producers say let's take that money and put it into 
crop insurance. Would that be feasible or not?
    Mr. Spurlock. No, sir, that would not be something we are 
looking at. We have our risk management action teams are in the 
process of running studies and looking at what is going on. And 
all of this information from all of our states, you go back to 
our grassroots level, and each state has been doing surveys and 
town hall meetings and working together in bringing this all 
out of the 26 organizations, bringing it back into this action 
team, and working and developing a true desire and what we 
think would work for the future, and a lot of what you have 
already seen is there.
    Mr. Gibbs. Okay. I guess the reason I just mentioned that, 
the atmosphere is different now from the last farm bill because 
commodity prices are opposite what they were. But, I was 
amazed, we had a debate with our friends over on the side of 
the Capitol, and some of our Senators said, ``Well, just do 
away with title I.'' I was flabbergasted. And I don't know if 
it is because we had high commodity prices maybe that morning, 
mentioned this time with low commodity prices, but I thought it 
was interesting, but they threw that out last time.
    Mr. Spurlock. The choice of the two programs is what has 
made this one work, and will make it really work well in the 
future.
    Mr. Gibbs. Right. Thank you. I yield back.
    The Chairman. The gentleman yields.
    I now recognize the gentleman from Minnesota, Mr. Walz, for 
5 minutes.
    Mr. Walz. Well, thank you, Mr. Chairman. And thank you all 
for being here. I am grateful for it.
    We are starting early. That is the right thing to do. We 
know how important the farm bill is. All of us have the 
stories. My district is proud to say it is the ninth largest 
agricultural district, spread amongst a lot of commodities. Of 
course, corn and soybean are king, and also a lot of animal 
agriculture. And we found a way to make that work, providing 
feedstock, as well as the biofuel industries that is absolutely 
critical to the vitality of southern Minnesota, so I am 
grateful you are all here.
    Before I ask a question though, I would like to thank you, 
Mr. Moore, for that full-throated endorsement of keeping the 
farm bill together. We cannot separate those who produce food 
from those who consume it. That is a huge mistake, and I can't 
tell you that all of the important things you are talking about 
will be derailed if that ideological piece goes forward. Again, 
I thank you for that.
    Mr. Moore. Well, thank you, Congressman. As I look at the 
farm bill, it is more of a food bill, from the way I look it. 
And what better place to have both the farm bill's, securities, 
safety nets for the people who produce the food, and have it 
also in the same bill that offers the opportunity for people 
who need that additional food and nutrition to make sure their 
families are comfortable and viable. What better place to have 
that than in the same bill, both of them working together.
    Mr. Walz. Absolutely. And the Chairman and I had a little 
discussion the other day on AgriTalk, and he is a strong 
champion of this articulation. And I have said it helps it 
helps us build a coalition to understand where we are both 
coming from. If we have an issue on the Clean Water Act, we 
have friends who are willing to listen to us and understand 
this isn't about us not caring about clean water, it is about 
how we go about producing the food and doing that. If you 
separate that, it makes it harder. Thank you both.
    Mr. Schemm, thank you again too for your comments. 
Beginning farmer and rancher focus has been a passion of mine. 
You are absolutely right, it is not just demographic numbers, 
we have a lot of folks that really want to live on the land, a 
lot of folks who want to raise their children in this 
lifestyle, a lot of small communities that are fabulous places 
to live in southern Minnesota, but if we don't get this right 
and get them on the land, you see the demographic shift if you 
go back and look decade by decade. Mr. Friederichs, you have 
seen it in Foxhome, if you will, as it gets smaller and smaller 
and smaller. I lived in a town of 400 people. That is the city 
for you. And when I went to high school, but you know what, we 
had a grocery store, we had a high school, we had two gas 
stations, we had stores, and all the nostalgic looking back, 
the fact of the matter is the economics have changed and mostly 
because there were no opportunities for young people.
    So my question to you is, why have commodity prices, and I 
will set you up for this one, commodity prices have gone down, 
all of my folks tell me rent sure hasn't, land prices sure 
haven't, and this is becoming a real problem. In my state, one 
of the drivers about this is, and we have to be honest about 
it, is to fund those local schools, the tax base falls heavily 
back on those land owners who, at this point in time, might be 
land wealthy and capital poor. How do you go about that? How do 
we talk about land prices and getting young folks back on the 
land? Have you got any ideas? I know it is a million dollar 
question.
    Mr. Friederichs. Yes, you have that right. Boy, I don't 
know. In our area, the prices are totally different than what 
it is making. The land values are $5,000, $6,000 an acre, and 
if you figure a four percent interest rate on that, you have to 
have 100 bushels, 150 bushels of corn to make it, break it. 
Barley, you need 100 bushels. I don't know what the answer is.
    Mr. Walz. It is a tough one, because if it is not 
generational pass through of the land, it is very difficult. My 
mom still has our farm, and my cousins are able to farm on it 
because my mom rents it to them at a low rate because all she 
wants to do is make back enough to pay for the taxes. If they 
had to get that on the market, they wouldn't be farming right 
now. That is very frustrating.
    Mr. Friederichs. That is very frustrating.
    Mr. Walz. Well, my final point and question to both of you 
is, I said it there, I believe in these win-win situations, 
biofuels has been an absolute American success story. It is 
about innovation, it is taking us off of foreign oil, it is 
making us more secure, it is a national security priority as 
well as an economic priority. Do all of you worry, I have to 
say, there are three names that keep me up at night in my area 
are Icahn, Pruitt, and Tillerson, to be very honest with you, 
have never said a lot. The thing that keeps me balanced in this 
is, just south of me in Iowa, when President Trump gave a full-
throated endorsement of our biofuels industry.
    Can I just, in closing, Mr. Spurlock and Moore, 
specifically, are you hopeful that we can keep this industry 
thriving?
    Mr. Spurlock. Yes, sir. It is a little over \1/3\ of our 
demand driver in the corn industry. As it has grown, and like 
you said, it is a great rural economic development project, it 
has put tremendous jobs into the rural areas, it has offset 540 
million barrels of foreign oil that no longer comes into the 
U.S. We produce a much greener fuel to go into the fueling 
system, and we need all the support and help we can to keep the 
Renewable Fuel Standard going strong and keep it going.
    Mr. Walz. I appreciate it. My time is up. Mr. Moore, you 
will have a chance to do this, say that as often as you can say 
it, and I will too. We need to.
    I yield back.
    The Chairman. I thank the gentleman.
    The gentleman from Texas is recognized for 5 minutes. Mr. 
Arrington.
    Mr. Arrington. Thank you, Mr. Chairman. And thank you 
panelists. I thought that getting cotton back in the farm bill 
as a covered commodity, was the greatest challenge and threat 
to west Texas, until I heard the no barley, no beer comment, 
and I am having to rethink that.
    I want to make note and say a special thanks to Tim Lust 
and to the National Sorghum Producers. And they are a real 
asset to me, and a wealth of information, and they are great 
advocates and they represent the industry very well.
    Speaking of cotton, when we pulled cotton out of the farm 
bill it had a disastrous effect on cotton producers. That is my 
take after being with a bunch of cotton farmers for the last 
year to year and a half. I also understand there were adverse 
impacts, ripple effects, on other producers like peanut farmers 
and soybean farmers. Can anybody comment on the ripple effect, 
and the indirect, negative impact on other commodities?
    Mr. Atkisson. Well, as a sorghum farmer, I can comment a 
little bit on that, that is a direct way that policy affects 
planted acreage. We always need to keep in mind how our policy 
can affect the commodities that are grown in a certain area. 
While planting a certain commodity might not make sense, our 
farmers are seeking to make money, and they need to make money 
to provide for their families. They are going to find the best 
crop that will provide them with the most amount of income to 
plant on their acreages. Especially during a time like this 
where we need to have a safety net for some of those producers, 
and they are going to weigh all their options and they are 
going to find the commodity that is going to provide them with 
the best benefit for their families.
    Mr. Arrington. Other comments? Mr. Moore?
    Mr. Moore. Yes, thank you, Congressman. Yes, we recognize 
that all sectors of agriculture need to be viable. We don't 
want to sacrifice any sector, or any commodity. ASA is very 
supportive of making cottonseed oil a program crop. We 
recognize that if there is a disincentive to grow a crop, 
especially in the southern U.S. where they can grow multiple 
crops, Illinois is predominantly soybeans and corn, but when 
you disincentivize one particular crop from being grown, there 
are going to be other crops grown on those acres. And so we 
need to have all of agriculture to be successful so we can 
raise the boat as the tide rises.
    Mr. Arrington. Thank you, guys.
    With respect to risk management for market risk, it seems 
to me that we address one part of that equation by trying to 
set a good and responsible reference price, and I am sure that 
is a difficult thing to do with market fluctuations, but it 
seems to me that the other part of the equation is the 
production cost. And my question to you is, how would one 
include production cost as part of the total equation in 
providing support and market risk coverage? Anybody on the 
panel. And is that even a good idea?
    Mr. Schemm. Thank you, Congressman. That is one thing we 
have been exploring as a wheat group. We are faced with the 
challenge of six different classes of wheat grown over a very 
wide variety of regions, and conditions within wheat. And so 
the cost of production, obviously, varies much within our crop, 
and the challenges of that. We have looked at the reference 
price now and the impact that it has, what we have seen 
specifically for wheat, and there are other commodities we can 
associate this with too, is that it is not an effectively 
functioning reference price. And that is why we are currently 
exploring where we can tie in that cost of production to that 
reference price, but achieve something that is fiscally 
responsible and accurate, and reflects the regions and variety 
of conditions that wheat is grown in.
    Mr. Arrington. Other comments?
    Mr. Spurlock. A lot of your work comes from the FAPRI, as 
Dr. Joe Outlaw from Texas A&M, they have the set of farms that 
go across the nation. They have them in the cotton industry, 
they are in the corn and soybean, they are livestock and 
everything. And Dr. Outlaw sent us a quick summary a few days 
ago about the production costs. And there is such a difference 
in production costs across the nation. What happens in the 
Midwest on corn matches closely to the expenses of irrigated 
corn in the Texas Panhandle, but then as you go across there 
are different ones. That happens in every commodity. And the 
production costs, it is more expensive to farm in some areas 
than others, and how do we determine that is a hard question.
    Mr. Arrington. I yield back.
    The Chairman. The gentleman yields.
    The gentlelady from Illinois, Mrs. Bustos, is recognized 
for 5 minutes.
    Mrs. Bustos. Thank you, Mr. Chairman. And because Mr. 
Walz's time ran out on the biofuels question, I would actually 
like to redirect that to Mr. Moore. I would like to hear about 
it from the soybean perspective.
    Mr. Moore. Thank you, Congresswoman. The feedstocks for 
ethanol and soy biodiesel are a bit different, and so we want 
to make sure that we use up the surplus soybean oil that is in 
the marketplace right now, and not only is that a benefit to 
the price, but it also helps our livestock partners in being 
able to have soybean meal at a relatively stable price.
    One of the things we don't really talk about, and I haven't 
heard it here yet today, was the environmental benefits from 
both using ethanol and soy biodiesel. It is extremely 
beneficial to our environment as we go pulling a semi away from 
a stop sign, you don't see the black smoke anymore because they 
are using biodiesel B2 or B20, in our area is what we use is 
B20. There are a lot of environmental benefits that we really 
don't recognize anymore, it is more economic, but economics is 
a great thing, but the environmental benefits of using ethanol 
and biofuels is another reason to make sure that RFS is a 
viable standard.
    Mrs. Bustos. Okay, thank you, Mr. Moore.
    The next question I have will be for Mr. Spurlock and Mr. 
Moore. The 2014 Farm Bill has relinked conservation compliance 
provisions to crop insurance premium subsidies eligibility. 
Have the two of your organizations studied how compliance 
requirements have affected your growers? And, Mr. Spurlock, we 
can maybe start with you.
    Mr. Spurlock. I am trying to think how to answer 
completely. When it came in and we first did the compliance 
into the Federal crop, people wondered how bad it would affect 
it and what it would do, but I don't think we have really seen 
a major problem with that. Since agriculture and owners of the 
land, as we are generational, we are the first 
conservationists. We go in, we take care of our land, our soil 
health, we want the water to be as healthy as possible. And so 
agriculture as a whole is the first environmentalist, we take 
care of it well, and I don't think that it did create any 
hardships for any of our producers.
    Mrs. Bustos. Thank you.
    Mr. Moore. ASA has not done any studies to my knowledge 
about your question, but two things; it is a great example of 
how things work in D.C. where you have to build coalitions to 
get a bill passed. Agriculture was successful in the last bill 
working with conservation groups to get them onboard, and so we 
could get something to pass.
    The other thing that you want to talk about is, in the 
soybean industry we talk a lot about being sustainable and 
using sustainable practices. And so I was not opposed to having 
conservation tied to Federal crop insurance because as we go 
talk to our customers overseas, we use that aspect of 
sustainability and that eight to eleven percent of the farms 
across the United States are spot-checked very year to make 
sure we are following our conservation plans. And so that is 
one of the talking points we use when we go talk to our 
customers overseas about how sustainable soybean production is 
in the United States.
    Mrs. Bustos. Okay. And just one last question, and I am 
going to direct this one to Mr. Moore as well. It is kind of 
the hometown advantage of having you up there. And by the way, 
Mr. Chairman, I do think that when you can talk about beer and 
baseball and pizza all in a hearing, that is a sign of success. 
Mr. Moore, in your testimony you suggested changes for 
selecting yields under the ARC-County program. I understand 
that the American Soybean Association believes that RMA data 
should be used as the default county yield data; however, in 
your opinion, is county-level data always the most appropriate, 
and do you see value in a regional or state-level breakdown?
    Mr. Moore. In my experience, and the discussions that we 
have had in our organization, the closer you can get to my farm 
the better off we are when we do those kind of ARC-County or 
PLC calculations. I understand that that has to be a different 
price tag to it than a state level or regional level, but my 
personal opinion, the closer we can get to my farm and the 
information that I have, that I calculate every year and submit 
to the USDA office, is more accurate and more beneficial to 
each individual farmer.
    Mrs. Bustos. All right, with that, with the 5 seconds left, 
I yield back.
    The Chairman. Thank you.
    I would now like to introduce or recognize, rather, the 
distinguished Chairman emeritus. Before I do, I have to 
translate the Latin. Emeritus means old, and distinguished 
means gray-haired, which he got because of the 2014 Farm Bill. 
That is a compliment. You earned all of that. I recognize the 
distinguished Chairman emeritus for 5 minutes.
    Mr. Lucas. I would say to the Subcommittee Chairman, thank 
you very much, and I very much respect that. And by the time 
you have lived through this process, you might look like me 
too. That is not a threat, that is an observation.
    With that, I would like to turn to Mr. Spurlock. One of the 
proclaimed benefits of ARC that we heard during the 
consideration of the 2014 Farm Bill was that it was a more 
market-oriented approach to farm policy, and that the guarantee 
follows the 5 year average prices. Does that same logic apply 
now that we have entered this new paradigm on cash prices?
    And that is an affectionate question, sir. In a positive 
way.
    Mr. Spurlock. Yes, sir. As we have moved into a new 
paradigm, as you have said, of the lower prices, the formula 
has worked well coming down, but then the Olympic average will 
begin to make the payments less as it goes on. And so as we 
look at redoing it, there is something, ARC has validity to go 
into the future. It may need a little bit of formula changing 
to make it work, but at this point is where that choice will 
come in, and as we start the new farm bill, if given the choice 
again to pick one or the other, we will be able to look at the 
formulas and look at from our land-grant institutions, which 
model works best and then we will know whether it is the PLC or 
the ARC for the future.
    Mr. Lucas. I appreciate those comments about the virtues of 
choice. That was quite a discussion 5 years ago as we launched 
into this process; should there be choice or should we all be 
tied in together.
    Corn, of course, is in a unique position, as you yourself 
stated. Did you say 30 percent of the crop goes in to producing 
renewable fuel? Did I understand that, did I misunderstand 
that?
    Mr. Spurlock. Yes, sir, about \1/3\ of our crop, 4.2 
billion bushels.
    Mr. Lucas. About \1/3\ of the crop.
    With the exception of our soybean friends, really no one 
else has quite that set of circumstances, and I very much 
appreciate that.
    That said, the biggest challenge, and I do not speak out of 
turn for the full Committee Chairman or the full Committee 
Ranking Member, part of the big challenge that we will face in 
this coming year is when the revenue numbers, the new budget 
process, what is available to us when we have a number to work 
with, that will essentially determine, again, as it did last 
time, what kind of a farm bill we have. And I would hope that 
what you have just stated, and listening to your colleagues on 
the panel, that the framework is there, it is a matter of how 
do we handle the adjustments within the framework, and that all 
comes down to the money equation.
    Just for a moment, I have to turn to my wheat friend over 
here, Mr. Schemm. I have heard many of my producers express 
concern about the effects that the quality losses can have on 
their production history from crop insurance. Could you visit 
for a moment about what kind of changes you think would help 
prevent those from affecting their yield history?
    Mr. Schemm. Thank you. The challenge, especially it was 
espoused this year in the PNW region of the country with our 
wheat producers when they had what they called falling numbers 
occur to them. And many of them became very concerned on their 
crop insurance side when they went to deliver and sell those 
bushels at their elevator, that even though they did not make 
any claim on that quality loss there, that their actual yield 
or APH on their operations was reduced as a reflection of that 
quality loss. And we have a very large concern that a dynamic, 
even though their yields were higher, got pulled down and it 
erodes that risk management tool there. What we would like to 
see developed is a quality loss tool within crop insurance so 
that it will not affect their yield, but instead can affect the 
quality loss side of it.
    There are even impacts we have had, I would suggest, of 
quality that occurred within the Hard Red Winter wheat region 
as well as this year with a very large crop, but quality that 
was not what the market wanted, but the market does not have a 
good quality factor into it, and so as a result at local 
elevators, the actual cash price widened to a significant 
amount, versus what the futures price was. And once again 
there, that eroded their crop insurance side of it because they 
were not able to receive an indemnity that would be recipient 
of what a cash price they were having because the crop 
insurance was based upon a futures price.
    So we are continuing to work and look at ways that we can 
address these quality loss things, and would like to work 
further with the Committee too.
    Mr. Lucas. I appreciate the gentleman's observations.
    My time has expired. I yield back to the young-looking 
Subcommittee Chairman.
    The Chairman. I thank the gentleman.
    I recognize the gentleman from Georgia, Mr. Scott, for 5 
minutes.
    Mr. David Scott of Georgia. Thank you, Mr. Chairman.
    Mr. Spurlock, in the last year, 2015, when there was an 
assessment of the prices in production of corn, it was stated 
that it cost farmers $675 per acre to produce the corn, yet 
they could only get $611 back in revenue. Now, according to my 
calculations, that is a loss of $64 for every acre that is 
planted. They don't even break even. They lose $64. How can we 
continue to do this, particularly my own state, we planted corn 
on 344,000 acres and yielded back to us $210 million. But if 
you deduct that $64 for each acre, it appears to be a losing 
position. What is your recommendation as to what we must do to 
fix that? And this is particularly true with the climate we are 
in. For example, President Trump's budget proposal says that we 
should cut agriculture by 21 percent. Now, that budget comes 
out and it normally doesn't go anywhere, but once your name is 
called that somebody is out to get you, you really need to take 
heed and begin to plan for that. And I want to know what we 
need to do to deal with this deficit between planting the corn, 
costing us $675, and then harvesting that where we lose $64 per 
acre for producing it.
    Mr. Spurlock. As we come through the last year, a lot of 
the talks that I have done and the work I have done I have 
talked about three different things; demand, demand, and 
demand. And our demand that we work with is trade, is our 
exports. As we look at our exports and where they are at, we 
need our new Administration, as they go in and they work to 
rewrite NAFTA and bring it up to a newer level from a 23, 25 
year old program, we need that trade, we need to be out talking 
to Japan, to the Koreas, to the world, to improve these deals 
and move this demand at that level.
    The next demand we have goes back to the same thing. 
Livestock is our major buyer. They are the biggest part of the 
corn in the U.S., goes into our livestock industry. They have 
to have that ability to access the world also with their 
proteins. There is a rising middle-class in the world that 
wants more protein, and so our ability to ship the poultry, the 
pork, beef, our dairy products, and any of that that we export 
is grain that is being fed in the U.S., and so we are there 
working that.
    And then the last you get to is the ethanol industry, our 
biofuels industry, which has been so successful in working 
through the timeframe.
    Mr. David Scott of Georgia. Yes, and you testified on the 
area, the Renewable Fuel Standard of it, and I don't think 
enough emphasis is being given to corn in terms of making sure 
that our corn farmers are making money in a healthy way. And I 
am wondering, as we approach this new farm bill, if we need to 
really set aside here, because it is just used for us, going to 
the grocery store, getting a good ear of corn, I love corn, I 
was brought up on a farm, and I realize the hogs love corn too, 
the horses, everybody loves corn. Even the fuel now is turning 
to corn. We have a real serious dynamic here. Is there anything 
that you would suggest we do in terms of singularly addressing 
the farmer, given this demand, given this weakness of return on 
production, that we can help them with some sort of subsidy, 
something that would make up and give them a comfort level out 
there?
    Mr. Spurlock. I was going to say that is where our safety 
net is at that we are working with, and that your Subcommittee 
and the Agriculture Committee will work with, and we appreciate 
all the work and effort on risk management and the title I 
also.
    Mr. David Scott of Georgia. All right.
    Thank you, Mr. Chairman.
    The Chairman. I thank the gentleman.
    And I recognize the gentleman from Florida, Mr. Dunn, for 5 
minutes.
    Mr. Dunn. Thank you very much, Mr. Chairman. And again, let 
me thank the panel for making the trip up here. I am sure you 
had many other things you could be doing with your time.
    This is, we recognize, a difficult time. You have sustained 
low incomes and increasing debt. I would like to turn our 
attention to the question of the debt problem, if we may.
    Mr. Moore, in your testimony you discussed the increasing 
difficulty of obtaining operating loans, and I guess what I 
would like to know is what are the concerns you have, and what 
are the pressure points in your industry and in your locale for 
obtaining credit on the farm? And, if we have the time, we have 
each of you in your different locales and your industries tell 
me what the problems are underwriting those loans or to get to 
the underwritten loans there. Thank you, Mr. Moore.
    Mr. Moore. Thank you, Congressman. Working a case, I am a 
community banker. I am going to sit on the Board of Directors 
of community bankers. I borrow money and I oversee the part of 
the loan group that looks at our loans.
    Mr. Dunn. And so you are really attuned to----
    Mr. Moore. The working cash is king. And we came off of 
extremely profitable times. I paid more in income tax for 2 
years in a row than I paid in the prior 25 years put together, 
and was happy to do it because we made money. I saw 3 years 
that this was going to be an issue of these low prices as they 
started to decline. Everyone told me that, ``Oh, no, it is not 
the same as it was in the 1980s.'' And I lived through the 
1980s, I survived. And we have more working cash, we don't 
borrow as much money as we used to back then, and land prices 
are way higher. Well, we burned through working cash so fast in 
the last 2 years. That is what bankers are looking for. If you 
burn through your equity that you have, that means you have to 
go refinance, restructure your loan, like Dave was talking 
about. It puts an enormous amount of stress on peoples' 
families, their farming operations, they can't do the things 
they need to do to continue to be successful and profitable and 
sustainable. We are in the middle of this, and we still have 
some time to go before we are out of it, but it is critical 
that farm policy is created that doesn't harm our ability to 
produce food for people.
    Mr. Dunn. Thank you. And right down the line, Mr. Schemm, 
in your industries what do you see?
    Mr. Schemm. I am very much referencing what Mr. Moore said 
as well. In my discussions with my banker I have had, and 
talking with him about our area, he has seen a huge impact 
particularly upon our dryland farms as they are many times 
challenged with more inconsistent production and variables, and 
he is seeing right now they are the ones that are being hit the 
most. And again, restructuring short-term debt into long-term 
debt, the unfortunate side effect, obviously, is that raises 
their debt-to-asset ratio, and as that ratio gets higher and it 
puts stresses on more farms, we are now starting to see, and 
seeing across the country, a softening of land prices. And on 
any operation one of your key asset collaterals that you use to 
borrow money, and can borrow money against, is those land 
values. And as those land values drop, you have less collateral 
to utilize to be able to continue farming operations.
    Mr. Dunn. Mr. Moore made reference to community banks and 
loaning money. Do you borrow from community banks or from a 
Farm Credit institution?
    Mr. Schemm. I borrow from a community bank, and I have a 
lot of concern with some of the challenges that they have to 
meet when they deal with various regulations of trying to make 
sure that their own banks have a good and viable balance sheet.
    Mr. Dunn. Yes. Mr. Friederichs. In your industry, Mr. 
Friederichs? Yes.
    Mr. Friederichs. Well, in my area the farmers, there are a 
lot of different commodities that are growing in my area, so 
the sugar industry has really taken a big hit, and that is 
where a lot of it is, they are hanging in there, but the 
bankers are saying your cash-flow is going away, you are using 
up your reserves, and it is the same all over.
    Mr. Dunn. Okay. Well, I thank you very much. I wanted to 
get a picture of that, and it is interesting to me to know that 
your community banks are able to participate in the farm loans. 
We usually see those go to the Farm Credit System for the most 
part.
    Mr. Chairman, I yield back. Thank you.
    The Chairman. The gentleman yields back.
    The gentlelady from Delaware is recognized for 5 minutes.
    Ms. Blunt Rochester. Thank you, Mr. Chairman. I want to 
first thank the witnesses. I was fortunate to be here for all 
of your testimony and found it really very interesting, 
especially as a new Member to the Agriculture Committee.
    My first question is really for all of the witnesses. What 
I have heard is one of the biggest challenges that farmers face 
right now, and the agriculture economy in general, is market 
volatility. And so if you could talk a little bit about market 
volatility. The 2014 Farm Bill provided new programs to respond 
to this, and I am just curious do you feel that the commodity 
programs and the crop insurance programs adequately smoothed 
volatility, and are there other things that you think the 
Committee should consider? And we can start at this end.
    Mr. Spurlock. Yes, ma'am. As we have gone through these 
programs, the market volatility comes as we have had such a 
tremendous ability to produce these crops, so now we have 
carryovers that are carrying over in all commodities; in the 
corn, the wheat, soybeans I know are the ones that I see the 
most right now. But as we look at these, we have these ARC and 
PLC payments, and working with them, they have done a good job 
of trying to do the best they can. I mean nothing is perfect 
and there is always the ability to improve on these, and we 
would hope that your ability to improve on them would take the 
same template and the same work and make it better for the 
future with prices that we are at right now.
    Ms. Blunt Rochester. Okay, thank you.
    Mr. Moore. I would agree that they are working well, but 
some things, just off the top of my head, we haven't got policy 
on it, but raise the reference price, the marketing loan price 
on all commodities. I take advantage of that low-interest loan 
that the Commodity Credit Corporation offers, and right now it 
is about $5 on soybeans, and that has been about \1/2\ the 
price of the case of soybeans, but the market has come down.
    The Olympic average that is being used to calculate the ARC 
price, as we come down in prices, you are taking out the high 
and taking out the low, but everything is going to be low now 
and so you are not going to be using that. And if you could end 
up with a 5 year instead of a 3 year average, that might be 
beneficial. And moving that payment up to the current year, 
current tax year, for example. Waiting for a year and a half 
after receiving a payment in 2018 for the 2017 crop year is 
difficult. It doesn't work with cash-flows.
    Ms. Blunt Rochester. Thank you.
    Mr. Schemm. Mr. Moore and I share many of the same 
concerns. The challenges that we have with wheat is that some 
of our producers tend to be a little bit more yield-concerned 
because of variability yield, and some of our producers tend to 
have a little bit more consistent yield because of the areas 
that they grow in, maybe under irrigation, things like that, so 
they will tend to be a little bit more price-sensitive on it. 
And so the ability for them to choose either the ARC or PLC 
programs has been very viable for them to be able to choose 
that, and helps to complete the whole aspect of the farm bill. 
As we have looked at those, part of the challenges on the price 
side, as you have referenced, when we talk about volatility is 
making sure, as Mr. Moore said, is that reference price is an 
accurate reference price, that it does not get set too low, and 
that is what we feel has happened in wheat with the $5.50 
reference price, it has been set so low that it will not 
trigger and adequately help a producer deal with the challenges 
of the cost of production.
    Ms. Blunt Rochester. Okay, thanks.
    Mr. Friederichs. As of right now, the barley industry is 
doing fine as far as triggering the PLC and the ARC, but in the 
future I believe that it is going to start to kick in and 
hopefully it works right.
    Ms. Blunt Rochester. Okay, thanks. Okay.
    Mr. Atkisson. And I will echo what some of my colleagues 
down the table said. Within sorghum, we had a higher percentage 
of producers went with the PLC program. PLC did what it was 
designed to do. When we had a dip in the market PLC was there 
as a safety net for those low prices, as crop insurance 
provided the year-to-year benefit of providing those producers 
with yield loss coverages and things like that. With the two 
tools, we have crop insurance, and then within the commodity 
programs those choices have provided us with the tools we need, 
but going through these times of the depressed economy we feel 
like we should step further into title I.
    Ms. Blunt Rochester. Thank you.
    I would yield back my time if I had some.
    The Chairman. I thank the gentlelady.
    And I would now recognize the distinguished Chairman of the 
full Committee from Texas, Mr. Conaway.

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

    Mr. Conaway. Well, I thank the Chairman. I appreciate the 
discretion you have shown insulting the former Chairman and not 
the current Chairman.
    Before I get to my questions, Mr. Moore, in your written 
testimony you mentioned that your team was in favor of perhaps 
moving cottonseed into the other oilseed program, as long as we 
didn't take the money away from you to do that. I certainly 
appreciate that. But at the end, you made a comment that as 
long as it was WTO-compliant. Now, was that gratuitous kind of 
comment just thrown in, or are you legitimately concerned that 
title I programs are not WTO-compliant, what was that for? Why 
did you stick that in there?
    Mr. Moore. We want to make sure everything we do in 
agriculture here is WTO-compliant.
    Mr. Conaway. I understand that, but are you legitimately 
concerned that our title I programs are not WTO-compliant as 
they currently stand, as a team? That would be helpful to know 
if that is the case, because if it is, you have me really more 
concerned than I was otherwise. Because I believe they are, and 
I am not sure why that was tossed in there.
    Mr. Moore. Personally, I don't believe that they are in 
risk of being deemed not WTO-compliant.
    Mr. Conaway. Okay, I got you.
    Well, first off, thank you for all your policy teams going 
at it right now. Get that stuff to us sooner rather than later. 
And next spring or whenever we start putting pencil to paper, 
the longer you wait to give us your new good ideas, you create 
barriers that might have not otherwise have been there had you 
got those in early. Encourage your folks to come to their 
conclusions and decisions as early as you can, because it would 
make our collective efforts at getting those factored in, in as 
fulsome a way as you can to make that happen.
    Mr. Moore, you also estimated that you think the ARC-County 
program will be less ascribed to, going forward, and you folks 
may move to PLC, and that you suggest we take another look at 
ARC-County by expanding that. Does it make more sense to do 
that, or just stick with the PLC program that people are moving 
to?
    Mr. Moore. We won't know for sure. I don't think we would 
be able to answer that for sure until we get the numbers in 
front of us, but farmers prefer a choice, they don't want ten 
choices but a couple of choices are good, and making sure that 
both of those choices are available is important.
    Mr. Conaway. Well, I intend to keep the choices available, 
I am just wondering if you would expand the coverage on the 
ARC-County payment system versus doing something better under 
PLC.
    Mr. Moore. My opinion of enhancing the ARC-County would be 
beneficial, more revenue base for the farmers that we represent 
instead of just price loss.
    Mr. Conaway. I got you. One of the struggles we have is who 
to help, who to try to give risk management tools to folks who 
have been in business throughout that run-up to congratulations 
on the 2 years you paid more taxes than you had the former 25 
years. That is a good thing, quite frankly. It is going to make 
it hard for you to run for office somewhere, so you build up 
equity during those years, and then in the hard years you are 
running through that, you are burning through cash equities, 
you mentioned earlier. Is the structure of our program such 
that we should give more attention to the folks who have not 
had a chance to build up equity, because they have burned 
through whatever they have as well, you have burned through 
equity. Are we structured right to go at, or ignore that issue 
as to how long people have been in business in terms of our 
programs?
    Mr. Moore. Anything you can do to encourage young people to 
enter into agriculture, I have a son who started farming 3 
years ago so he doesn't have any equity.
    Mr. Conaway. Right.
    Mr. Moore. And so for him to take over our farming 
operation he couldn't do it if he had to borrow all of the 
money because he has no equity built up. And so his risk is 
much greater than my risk.
    Mr. Conaway. Right, so should we structure, and this is for 
everybody, all the others, in the entire minute I have left, 
should we structure the programs towards those folks or try to 
be neutral in that regard and just have risk management tools? 
Anybody.
    Mr. Atkisson. Mr. Chairman, I will handle that one, I am 
\1/2\ of the average age of the average farmer in the United 
States. When I was younger I took advantage of some of those 
programs within the FSA that were targeted towards young and 
beginning producers, and those programs have greatly benefitted 
our small communities within western Kansas. Going forward, 
farmers are always about being fair to each other, and the fact 
that we need to support our young producers, but like Mr. Moore 
said, our young producers that are coming back are going to be 
at much more risk than our older, more established producers.
    Mr. Conaway. Yes, Mr. Spurlock.
    Mr. Spurlock. I think that as we look at it, we have to 
remember that our young producers are coming back behind an 
older set of farmers, and as long as we protect all farmers at 
the same time, we keep the older generation in agriculture at 
this time, we have to have these programs work for everybody 
evenly, and when those families are healthy and in good shape 
they can bring back their next generations and bring them in, 
and the two will work together.
    Mr. Conaway. I got you. Thank you, Mr. Spurlock.
    Again, thank you for your early work on policy. The sooner 
you can get it to our team and we can start folding it into the 
system, the better it is all going to work for everybody.
    I yield back. Thank you.
    The Chairman. Thank you, Mr. Chairman.
    I recognize the gentlelady from the Virgin Islands, Ms. 
Plaskett, for 5 minutes.
    Ms. Plaskett. Thank you, Mr. Chairman.
    Mr. Conaway, that was very interesting, and it led me to a 
question that I was wondering about. The balancing that has to 
be done with the older farmers, the established farmers, and 
then these new farmers that are coming up. In the Virgin 
Islands, we had a lot of young people who come from economic 
and finance backgrounds that are interested in farming now, and 
are trying to assist the older farmers with the technical and 
the compliance expertise so they can go to the next level.
    Would it be possible, or should we have programs that 
assist in that respect where the risk of the younger farmer, 
the greater risk that he has, if he is partnering with an older 
farming establishment, might be able to assist them in growing 
that business? Have you seen any? Do we have programs like 
that?
    Mr. Spurlock. At National Corn, we are working within a 
couple of our different action teams trying to develop and put 
together what needs to be done for the younger farmers, looking 
at new programs and analyzing the ones that are there and 
seeing if there is a better way to do it, that we can bring 
more of these back into agriculture and keep them----
    Ms. Plaskett. I would love to hear about those or assist 
you in any way possible in that. That is really important for 
us to have the next generation of farmers to come onboard, and 
to think that it is a very vibrant possibility for them. And 
not strictly those who have grown up on a farm, this is 
something that can take us to the next level of innovation in 
farming in the United States.
    Mr. Spurlock. Yes, ma'am. In the last two meetings we have 
had, we have a gentleman from Minnesota that is wanting to turn 
his farm over, and he has stood up and we have talked, he gave 
a plea trying to find someone, because his family is not in 
agriculture and not coming back, so he is asking and through 
social network and through the ag families, looking to find 
those next young farmers to go help him continue his farm on.
    Ms. Plaskett. Well, if he is a Minnesota farmer, he is 
probably a good Lutheran, and that is what the Virgin Islands 
is full of, we are from that Danish background. We may have one 
or two----
    Mr. Spurlock. He may need to look in the Virgin Islands 
then. Yes, ma'am.
    Ms. Plaskett. Mr. Moore, one of the things that you talked 
about in your testimony is the need in advocating for keeping 
the nutrition program as part of the farm bill and not 
splitting the two. Could you go into more detail about that?
    Mr. Moore. Sure. It is imperative that we keep that in the 
farm bill. It not only builds a coalition because there are a 
few Members in Congress that have agriculture in their 
district, but everybody eats. I live in a community of 1,000 
people, and my family has been involved in a local food pantry, 
and we live in rural Illinois with 17,000 people that live in 
my county, 1,000 in my hometown. The need out there for 
nutrition assistance was staggering to me, as we found out how 
many people needed to take advantage of that in the middle of 
rural America, where we grow cattle, hogs, soybean, corn. The 
need is out there. Any time we can provide great service to 
people who need that food, whether I am a farmer or whether you 
are in the anti-hunger groups, it is critically important. That 
is part of what sustainability is, is making our communities a 
better place to live, and that is what we are doing in 
Illinois.
    Ms. Plaskett. Thank you.
    And then just quickly, I don't know if one or two of you 
may be able to answer this. President Trump has threatened to 
impose the 20 percent tariffs on all imports from Mexico, which 
may have, in effect, a retaliatory response by Mexico. How 
might that affect some of the commodities in your own trade 
within your organizations? Have you discussed this or thought 
about this?
    Mr. Schemm. Within the wheat industry we have a huge 
concern over this. With over 50 percent of our wheat that is 
exported out of this country, this absolutely factors into a 
huge component of the price that our farmers are able to 
receive for their product.
    Ms. Plaskett. Yes.
    Mr. Schemm. And without that trade component being in 
there, we obviously cannot eat all the wheat that we produce in 
this country, especially when we get up into the PNW, Pacific 
Northwest, part of our country where there are areas where they 
export 80 to 85 percent of it. And so again, trade is a vital 
component there and we have a lot of concern, and we definitely 
want to see new trade agreements, or trade agreements that can 
be beneficial to ag, because ag in general benefits from the 
export market.
    Ms. Plaskett. Wow. Okay, thank you.
    And I yield back. Thank you, Mr. Chairman.
    The Chairman. I thank the gentlelady.
    I now recognize the gentleman from Georgia for 5 minutes.
    Mr. Allen. Thank you, Mr. Chairman. And thank you all for a 
very interesting conversation about the state of our 
agriculture industry. It is amazing that the more productive 
you get, the less money you make, I tell you, but that seems to 
be the case. And obviously, the taxpayers out there have 
spoken, they are interested in efficiency. Frankly, a lot of 
people, of course I represent them, agriculture is the number 
one industry in my district, so I understand it, I understand 
the importance as far as national security of our farm program, 
and why we need to make sure that not only that we keep our 
existing farmers in business, but to add more folks. As the 
demand for food grows in this world, we have to be prepared to 
meet that need. And as, Mr. Moore, you said, not everybody 
farms but everybody does eat. And so it is critically 
important.
    Talk about trade, I have looked at this situation where, 
frankly, those countries that ship goods in here don't pay a 
tax, and when we ship goods into the other countries our 
producers have to pay a tax. Have you all come up with any 
solutions to that, because we have manufacturers, we have money 
moving offshore, we have manufacturers moving offshore, what 
can we do from an ag standpoint to deal with this? Mr. Schemm, 
Mr. Moore, you have any suggestions?
    Mr. Moore. Well, the American Soybean Association was very 
supportive of the TPP, and the benefits to agriculture in 
reducing those tariffs, making it fair trade and making it 
equitable, we continue to hope that as the Administration goes 
towards making bilateral agreements, they will use the 
agricultural benefits and the language in the TPP as a template 
as they go forward speaking with bilateral, for example, Japan 
for TPP and on NAFTA they are the same thing. We want to make 
sure as they modernize the NAFTA agreement that those benefits 
that agriculture has had over the last 20+ years are still in 
place. And we understand the need that all three countries need 
to modernize that.
    Mr. Allen. Okay. Mr. Schemm?
    Mr. Schemm. We were very happy to see the U.S. pursue 
negotiations with China over their violations of trade there 
that has occurred there. And so it is a key component with 
trade agreements that we do have enforcement of those trade 
agreements. According to the study that the wheat organizations 
have done, it cost the U.S. wheat growers almost $650 million 
because of China's lack of fulfilling their commitment to 
purchase wheat, and the subsidies that they give to their 
producers. This is something that, again, has huge impacts, we 
have calculated anywhere from 30 to 40 per bushel to our 
American wheat farmer, and so it is critical that those 
agreements get enforced. And as I referenced earlier though, it 
is also very critical that we have an agreement in the first 
place.
    Mr. Allen. And speaking to that, we grow a lot of cotton in 
my district. In fact, Mr. Chairman, we grow the best cotton in 
the United States in my district.
    Mr. Conaway. Your objective criteria.
    Mr. Allen. But, one of the things that if you look where we 
buy all of our goods, we buy from Asia, yet they pay us market 
base, which is 60 a pound, and they pay their own farmers 
$1.40 a pound for inferior cotton. This trade thing, and what 
the President is up to here, it may be good. I think that we 
need to talk to our neighbors across the world about what is 
fair. And that is what I am interested in because, again, the 
American taxpayers, they are good folks and we have to make 
sure our farm industry is healthy, but at the same time, we are 
getting taken advantage of by the rest of the world. And I 
realize that the WTO is involved, and we are a developed 
nation, and some of them are underdeveloped, and all that sort 
of thing, but we have to figure out a way to make this work. 
With your help, we would appreciate that and get something here 
in this next farm bill that will help us with that.
    I yield back, my time is up. Thank you.
    The Chairman. I thank the gentleman.
    I now recognize the gentleman from Florida, Mr. Lawson, for 
5 minutes.
    Mr. Lawson. Thank you very much, Mr. Chairman. And it is an 
honor to be here with you gentlemen today. And probably before 
I got here, there was a considerable amount of discussion about 
different areas of insurance, commodity insurance and so forth, 
that is very important. What I have been trying to get my hands 
around, and see I have pretty big hands, from being an athlete, 
but there has been a great deal of discussion about immigrants, 
and I know there is a big difference from being a farmer and 
working on a farm. My concern, which has happened in America 
and it has been really publicized a great deal during the last 
campaign is, with all the immigration reform, I am told by most 
farmers that a lot of time they would not be able to get their 
crops to market without immigrants' labor because Americans 
just don't want to do it. And so as we work here to come to 
some commonsense about immigration reform, I would just like 
you all to respond how important is this issue to being able to 
get your products to market?
    Mr. Spurlock. Sir, it is a very important issue in 
agriculture. As you look at the vegetable industry and the 
amount of hand labor it takes to do that, and when you have to 
advertise in papers to try to get local people, and nobody 
shows up to work, then you have to find the labor to do that. 
In the meat packing industry it is a large percentage of 
migrant workers that are working in the meat industry. The 
dairy industry is the same. And on our crop farms across the 
nation, these things all come to pass.
    The programs that we have right now, if you use H-2A and 
you work hard to get those gentlemen in or those ladies, the 
people, the workers, they can only be here for so many months 
and then they move on. Well, the meat packing plants, the 
dairies, they go year-round. We have a major problem in our 
work labor force, the program tends to be broke, and if there 
is a way we can find to fix this to be able to use this labor 
and use it efficiently and consistently, it would be of great 
interest to agriculture.
    Mr. Lawson. Yes, go ahead.
    Mr. Schemm. I was just going to say that the ag industry 
stands to be one of the hardest-hit industries in this country 
when it comes to immigration and the ability, as you 
referenced, getting those crops out. And it affects all of us 
across the industry, whether it is fresh produce or even in my 
situation with wheat, and we see every year a mammoth migration 
of custom harvesters moving across the Great Plains. And even 
this year I was able to have a young man from Argentina on my 
operation, just learning the different farming techniques out 
in the world. And I can only believe that that cultural 
exchange will be able to benefit all of us. And so it is 
something that our producers have expressed a lot of concern as 
they have dealt with the challenges of trying to be able to 
deal with getting their crop to market.
    Mr. Lawson. Right. I have a lot of tomato growers up in 
Gadsden County, and I know the type of labor, because I have 
been out there in the field, that they are using, and some of 
the people are afraid that they are going to get deported or 
something of this nature, but I notice that Gadsden County is a 
county where they have probably the largest population of 
African Americans, but they are not able to get those 
individuals to go out in the fields to harvest the crops as 
they come up. Like we get off maybe two tomato crops before it 
really gets cold, two in north Florida and then maybe one 
coming off in north Georgia. And so my concern is, when I go 
back to address those individuals, I want to do everything that 
I can to help those farmers so that they can keep those workers 
there to get their crops to market.
    Mr. Chairman, what influence that we can have on this next 
farm bill to deal with that kind of situation is extremely 
important to me, and it is important to the farmers. And I will 
say that I have never seen anything like it, when I go out into 
the fields to take a look around and they are really working, 
and really working hard, and I don't think they are causing all 
these problems that people have been talking about.
    I yield back.
    The Chairman. I thank the gentleman.
    I now recognize the gentleman from Nebraska for 5 minutes.
    Mr. Bacon. Thank you, Mr. Chairman. It is an honor to be 
here. Thank you for representing your various markets there and 
growers.
    I wanted to ask you: with the current drop in prices, 45, 
50 percent, will the ARC and the PLC in their current forms be 
a sufficient safety net for you in the commodities that you are 
working?
    Mr. Spurlock. Yes, sir. As we go into this farm bill work 
that you have in front of you, that we think that small tweaks 
in these two programs will be able to make them viable for the 
next 5 years.
    Mr. Bacon. Okay. Some minor tweaks is what you are saying.
    Mr. Spurlock. Yes, sir.
    Mr. Bacon. Thank you. Go ahead, Mr. Moore.
    Mr. Moore. Yes, I would agree, but I want to make sure that 
both the ARC program and the PLC program are offered as options 
for farmers to take. The minor tweaks, dropping the Olympic 
average or using some other reference price changes would be 
helpful.
    Mr. Bacon. Okay, thank you. Mr. Schemm.
    Mr. Schemm. Again, agreeing with my colleagues, choice is a 
critical component. The key things from our perspective is, 
while it does lay a good foundation that, within the ARC, is 
going to be as simple as using more accurate data within PLC, 
it is a reference price for wheat that we just do not feel 
adequately helps protect that producer. Again, tweaks, but key 
critical tweaks.
    Mr. Bacon. Thank you. Mr. Friederichs.
    Mr. Friederichs. I would have to agree with the three 
gentlemen on my right there. I believe it is probably going to 
be sufficient.
    Mr. Bacon. Okay.
    Mr. Friederichs. I guess time will tell.
    Mr. Bacon. Mr. Atkisson.
    Mr. Atkisson. As my colleagues down the table have already 
iterated the programs are working, especially within sorghum 
within the PLC program design, it has done exactly what it was 
designed to do. While we have had a drop-off in the ag economy 
and prices have dropped down, it has provided us with the 
safety net that we have needed. No program is perfect. We think 
there is always room to tweak a program and to make it more 
viable for farmers, but so far ARC and PLC have done exactly 
what they were designed to do.
    Mr. Bacon. I am hearing even with the 45 percent to 50 
percent drop in prices, that the 2014 Farm Bill has worked for 
you. Would you agree? Has it been an effective farm bill 
through this hard time?
    Mr. Moore. No. I don't think it has, at least on the 
fellows that I deal with in Illinois and the farmers that I 
deal with. There is always room for improvement in everything 
that gets done. I think there needs to be the tweaks to make it 
more effective and make it more predictable as we go through 
trying to secure operating notes. It is hard to know today, 
when I go to my banker, what I am going to get in October of 
2018 for a crop I am growing. I won't know what I am going to 
get for sure from the 2016 crop until October of 2017, and so 
since we don't know, it can't be included in our cash-flow 
calculations.
    Mr. Bacon. Okay, thank you for that. Does anybody want to 
expand upon that, or is there agreement?
    Mr. Schemm. I would concur with Mr. Moore that, no, they 
haven't, but they have laid the foundation again. And with 
those tweaks into those programs, they can do the job of 
adequately handling that price drop, but we have to make sure 
we make those changes into those programs.
    Mr. Bacon. One last question. During the 2014 Farm Bill, 
some had intended for there to be a $50,000 payment limit on 
ARC and PLC payments. How would a $50,000 payment limit be 
impacting your operation today in this period of multiple years 
of low prices if that had been proposed successfully?
    Mr. Spurlock. That would be something we would definitely 
have to look at and try to evaluate how it affects most people. 
Any of the larger producers that are having the same problems 
possibly would need larger limits than that. At the level of 
what we are right now, they tend to be working. Most producers 
don't even advance and get to those limits, but it is something 
really to watch and evaluate.
    Mr. Bacon. Anyone else?
    Mr. Atkisson. Yes. Growers in the western Sorghum Belt 
where I am located, we are going into a time where we are 
really needing a safety net. Our PLC program is going to 
fulfill that, however, when you look at those western growers 
and the amount of acres that they have, and the amount of 
leverage, those that have leverage against them, $50,000 is not 
going to be much when you consider what they have at risk on a 
day-to-day basis.
    Mr. Bacon. Anyone else? I want to thank you for your, okay, 
go ahead. Looks like Mr. Schemm has something.
    Mr. Schemm. I just wanted to briefly mention that part of 
the challenges with that limit is that both LDPs and market 
consistent loans would also fall underneath that limit, and 
that is where our producers have really fallen back and used 
currently. We would have to evaluate it, but we do have 
concerns.
    Mr. Bacon. I greatly appreciate your expertise.
    Thank you, Mr. Chairman.
    The Chairman. The gentleman's time has expired.
    Just following up on Mr. Bacon's line of questioning there 
real quick, I am ready to close, but kind of the theme 
throughout the hearing has been if we can make some tweaks here 
and there to PLC, but then he asked the question is the farm 
bill working and then we get a hard no. I am trying to figure 
out how we reconcile the tweaks with a hard no. Are we going to 
tweak it a little bit or are we in agreement that this is an 
abject failure?
    Mr. Spurlock. In the corn industry the programs have worked 
well as it was designed at the time it was, and then 
unexpectedly the markets did take the tumble.
    The Chairman. Okay.
    Mr. Spurlock. The ARC program has worked well for the corn 
industry.
    The Chairman. Yes.
    Mr. Spurlock. Flexibility going both ways is something we 
might have an interest in looking at as we go into the future.
    The Chairman. Great. That is what we should be about, is 
being flexible on this, because we are not going to achieve 
perfection. And I don't think anybody would agree, in this room 
or any other, that we have achieved perfection with the 2014 
Farm Bill, far from it, but it is a heavy lift. The general 
consensus being we can make some modifications to these 
programs, we all agree on that.
    Mr. Schemm. I would just liken a quick analogy to when I go 
drill wheat into residue, and if I have the wrong down pressure 
on that drill it turns to what I call a giant rake and it plugs 
up all the field. But if I adjust my down pressure just a 
little bit, then it will work.
    The Chairman. Yes.
    Mr. Schemm. What the current market conditions here showed 
was that with the current conditions and the down pressure I 
had, I turned into a big rake.
    The Chairman. Yes.
    Mr. Schemm. It did not work. But with a tweak of the down 
pressure I can make it work.
    The Chairman. I would agree with that.
    I appreciate you all being here today. Before I close, let 
me make one quick announcement. The ag tax reform hearing was 
rescheduled for next week. One of our witnesses will focus on 
how the Tax Code can hinder the transfer of farms from one 
generation to the next, which has been something we have 
discussed here today. And for all my colleagues interested in 
that topic, I would encourage you to attend that hearing next 
week as well.
    Once again, gentlemen, I appreciate your time today and 
your testimony.
    Under the Rules of the Committee, the record of today's 
hearing will remain open for 10 calendar days to receive 
additional material and supplementary written responses from 
the witnesses to any question posed by a Member.
    This hearing of the Subcommittee on General Farm 
Commodities and Risk Management is adjourned.
    [Whereupon, at 11:55 a.m., the Subcommittee was adjourned.]


 
                           THE NEXT FARM BILL

                          (THE FUTURE OF SNAP)

                              ----------                              


                        TUESDAY, MARCH 28, 2017

                  House of Representatives,
                                 Subcommittee on Nutrition,
                                  Committee on Agriculture,
                                                   Washington, D.C.
    The Subcommittee met, pursuant to call, at 2:03 p.m., in 
Room 1300 of the Longworth House Office Building, Hon. Glenn 
Thompson [Chairman of the Subcommittee] presiding.
    Members present: Representatives Thompson, Crawford, Davis, 
Yoho, Comer, Marshall, Faso, Arrington, Conaway (ex officio), 
McGovern, Adams, Evans, Fudge, Lujan Grisham, Lawson, Panetta, 
Soto, Maloney, Costa, O'Halleran, and Peterson (ex officio).
    Staff present: Caleb Crosswhite, Callie McAdams, Haley 
Graves, Jennifer Tiller, Mary Rose Conroy, Stephanie Addison, 
Kellie Adesina, Lisa Shelton, Liz Friedlander, Troy Phillips, 
and Carly Reedholm.

 OPENING STATEMENT OF HON. GLENN THOMPSON, A REPRESENTATIVE IN 
                   CONGRESS FROM PENNSYLVANIA

    The Chairman. This hearing of the Subcommittee on Nutrition 
entitled, The Next Farm Bill: The Future of SNAP, will come to 
order. I want to welcome everyone to today's hearing.
    Good afternoon. Today's Nutrition Subcommittee hearing on 
the future of SNAP continues the Committee's series to review 
current policy and to set the stage for the next farm bill. 
Thank you to everyone for taking the time to be here, 
particularly our five witnesses.
    The Committee on Agriculture completed a comprehensive 
review of SNAP during the 114th Congress known as the Past, 
Present, and Future of SNAP, and the purpose of the review was 
to provide a better understanding of SNAP, the population it 
serves, how the program administers food benefits and other 
services to assist that population, and to examine ways the 
program can be improved. While the series highlighted specific 
ways that vulnerable populations are well-served, it also 
exposed several areas for improvement. While prior witnesses 
have touched on the future of SNAP in the context of specific 
hearing topics, this hearing's purpose will be to solely 
discuss the future.
    SNAP, formerly called the Food Stamp Program, is designed 
primarily to increase the food purchasing power of eligible 
low-income households to help them buy a nutritionally-
adequate, low-cost diet. Benefits vary by household size, 
income, and expenses, like shelter and medical costs, and 
averaged nearly $126 per person per month in 2016. SNAP is the 
largest program in the domestic hunger safety net, currently 
offering nutrition assistance to 42.9 million eligible, low-
income individuals and families, all the while providing 
economic benefits to communities.
    SNAP has seen considerable growth in recent years. The cost 
of the program more than doubled from $37.6 billion in 2008, to 
nearly $80 billion at its peak in 2013. Likewise, participation 
in the program increased from 28.2 million participants in 
2008, to 47.6 million participants in 2013. As the economy has 
recovered from the recession, participation and costs of SNAP 
have slowly started to decrease. In 2016, total costs were 
$70.97 billion, with participation at 44.2 million.
    Now this hearing will provide additional opportunity for 
stakeholders to discuss their priorities for improvements to 
SNAP in the upcoming farm bill, in areas such as ensuring 
adequate nutrition, strengthening the pathway toward self-
sufficiency, bettering outcomes for children and families via 
education, and further advancing program efficiency and 
integrity.
    The panel we will hear from this afternoon will offer 
insight based on their operational and policy experience. These 
well-informed perspectives are critical as we look towards farm 
bill reauthorization, with a focus on acknowledging what works, 
reducing administrative burdens, and discussing areas for 
improvement. Our goal is to ensure that SNAP benefits reach 
those most in need in the most effective and efficient manner 
possible.
    I want to thank all of our witnesses for sharing their time 
and expertise.
    [The prepared statement of Mr. Thompson follows:]

Prepared Statement of Hon. Glenn Thompson, a Representative in Congress 
                           from Pennsylvania
    Good afternoon, and welcome to today's Nutrition Subcommittee 
hearing on the future of SNAP. This hearing continues the Committee's 
series to review current policy and set the stage for the next farm 
bill. Thank you to everyone for taking the time to be here, 
particularly our five witnesses.
    The House Committee on Agriculture completed a comprehensive review 
of SNAP during the 114th Congress. Known as the Past, Present, and 
Future of SNAP, the purpose of the review was to provide a better 
understanding of SNAP, the population it serves, how the program 
administers food benefits and other services to assist that population, 
and to examine ways the program can be improved. While the series 
highlighted specific ways that vulnerable populations are well-served, 
it also exposed several areas for improvement. While prior witnesses 
have touched on the future of SNAP in the context of specific hearing 
topics, this hearing's purpose will be to solely discuss that future.
    SNAP, formerly called the Food Stamp Program, is designed primarily 
to increase the food purchasing power of eligible low-income households 
to help them buy a nutritionally-adequate, low-cost diet. Benefits vary 
by household size, income, and expenses--like shelter and medical 
costs--and averaged nearly $126 per person per month in 2016. SNAP is 
the largest program in the domestic hunger safety net, currently 
offering nutrition assistance to 42.9 million eligible, low-income 
individuals and families, all the while providing economic benefits to 
communities.
    SNAP has seen considerable growth in recent years. The cost of the 
program more than doubled from $37.6 billion in 2008, to nearly $80 
billion at its peak in 2013. Likewise, participation in the program 
increased from 28.2 million participants in 2008, to 47.6 million 
participants in 2013. As the economy has recovered from the recession, 
participation and costs of SNAP have slowly started to decrease. In 
2016, total costs were $70.97 billion, with participation at 44.2 
million.
    This hearing will provide additional opportunity for stakeholders 
to discuss their priorities for improvements to SNAP in the upcoming 
farm bill, in areas such as ensuring adequate nutrition, strengthening 
the pathway toward self-sufficiency, bettering outcomes for children 
and families via education, and further advancing program efficiency 
and integrity.
    The panel we will hear from this afternoon will offer insight based 
on their operational and policy experience. These well-informed 
perspectives are critical as we look toward farm bill reauthorization. 
With a focus on acknowledging what works, reducing administrative 
burdens, and discussing areas for improvement, our goal is to ensure 
that SNAP benefits reach those most in need in the most effective and 
efficient manner possible.
    I want to thank all of our witnesses for sharing their time and 
expertise. I now recognize Mr. McGovern for any opening comments he 
would like to make.

    The Chairman. I now recognize the Ranking Member of the 
Subcommittee, Mr. McGovern, for any opening comments he would 
like to make.

 OPENING STATEMENT OF HON. JAMES P. McGOVERN, A REPRESENTATIVE 
                 IN CONGRESS FROM MASSACHUSETTS

    Mr. McGovern. Thank you, Mr. Chairman. It is always good to 
be with you, and I want to thank our expert witnesses for being 
here today. I look forward to your testimony.
    The title of today's hearing is, The Next Farm Bill: The 
Future of SNAP. If I may, let me offer my colleagues a little 
constructive advice. First, let me say don't even think of 
separating the nutrition title from the farm bill. That would 
be a huge mistake, and if it is done, I guarantee you there 
will be no farm bill. Second, with regard to SNAP, don't screw 
around with the program, period. There is no reason whatsoever, 
based on all of our now 20 hearings, to undermine SNAP through 
structural changes, block grants, further restrictions, more 
onerous requirements, or cuts. Please do not do anything that 
will make hunger worse in our country.
    I have read some news reports that the ABAWD population 
might be in the Committee's crosshairs. That is able-bodied 
adults without dependents. As my colleagues know, the majority 
of people on SNAP who can work, do work. ABAWDs, under current 
law, are told if they don't have a job or are not in a job 
training program within a 3 month period of time, they are 
thrown off of SNAP for 3 years. I quite strongly disagree with 
that approach. And now, I am reading that there are some on the 
Committee who don't even want to give a person 3 months.
    Who are ABAWDs? Some are veterans trying to reintegrate 
back into their communities. Some are homeless. Some have 
undiagnosed mental illnesses. Some live in areas of high 
unemployment where job training programs are few or filled. 
Some live in rural areas without transportation where it is 
difficult to get a job or to get to a job training program. In 
short, this is a very complicated population. But as usual, 
there are some who are more interested in a sound bite rather 
than the reality, and I would just say, ``Enough.'' We should 
at least do a hearing on the ABAWD issue before making the 
lives of millions of Americans more miserable.
    If we are talking about the future of SNAP, we need to 
focus on how to make the program even better. We need to make 
sure that anyone who needs modest food assistance benefits has 
access to them. We need to support and expand innovative 
programs that help increase the purchasing power of SNAP. And 
we need to increase SNAP benefits, which currently average a 
mere $1.40 per person per meal, to provide families who benefit 
from the program with access to more nutritious food that lasts 
them through the entire month.
    Mr. Chairman, I look forward to hearing from our witnesses 
today, and based on their prepared testimony, I would say that 
these witnesses will concur with all the other witnesses that 
we have had before this Committee, both brought forward by the 
Majority and the Minority, who have said that SNAP is a good 
program. It is a successful program. It is a program with a low 
fraud and error rate. It is a program that provides people food 
assistance, and that it is important that we not undermine it 
in any way. And that is how I hope we proceed. And again, I 
thank you and I yield back my time.
    The Chairman. The gentleman yields back.
    The chair would request that other Members submit their 
opening statements for the record so that the witnesses may 
begin their testimony and to ensure that there is ample time 
for questions.
    I am pleased now to welcome our witnesses to the table. 
Thank you so much for taking the time and everything else it 
takes to come here to share your passion, your expertise on 
this incredibly important topic. And our witnesses include Ms. 
Stacy Dean, Vice President for Food Assistance Policy, Center 
on Budget and Policy Priorities in Washington, D.C.; Mr. 
Russell Sykes, Director of Center for Employment and Economic 
Well-Being, American Public Human Services Association, 
Washington, D.C.; Mr. Joe Arthur, Executive Director of Central 
Pennsylvania Food Bank, Harrisburg, Pennsylvania; Mr. Josh 
Protas, Vice President of Public Policy, MAZON--A Jewish 
Response to Hunger, based here in Washington, D.C.; and Ms. 
Jennifer Hatcher, Senior Vice President, Government and Public 
Affairs, Food Marketing Institute based in Arlington, Virginia.
    Ms. Dean, please begin with your 5 minutes of testimony 
when you are ready.

        STATEMENT OF STACY DEAN, VICE PRESIDENT FOR FOOD
         ASSISTANCE POLICY, CENTER ON BUDGET AND POLICY
                  PRIORITIES, WASHINGTON, D.C.

    Ms. Dean. Thank you. Chairman Thompson, Members of the 
Subcommittee and full Committee, thank you very much for the 
invitation to testify today. I am Stacy Dean, Vice President 
for Food Assistance Policy at the Center on Budget and Policy 
Priorities, a nonpartisan policy institute here in D.C. I am 
very pleased to be here with you today to talk about SNAP and 
to share ideas for the next farm bill. I have worked on the 
program for more than 20 years, and this will be my fifth farm 
bill.
    SNAP is the nation's most important anti-hunger program. It 
currently helps about 43 million low-income Americans to afford 
a nutritionally adequate diet at more than 200,000 retail 
outlets. Despite its modest benefits, it has powerful short- 
and long-term impacts, and SNAP's success can largely be 
attributed to its national entitlement structure. It helps 
families and communities weather tough economic times. It 
reduces poverty and food insecurity. It improves health, and it 
supports work. The program has proven to be particularly 
important to families with very young children, having lasting 
effects on their health and development. Maintaining and 
building upon these strengths is the first step towards a 
successful title IV.
    So let me turn now to some ideas for the next farm bill. 
The list I will run through draws from my written statement and 
highlights areas for consideration, and they include benefit 
adequacy, eligibility policy, access to SNAP, program 
integrity, and employment and training.
    First, benefit adequacy. SNAP's maximum benefit per person 
per meal, based on USDA's Thrifty Food Plan, is about $1.90, 
while the average benefit is $1.40. Evidence is mounting that 
the Thrifty Food Plan is insufficient for households to 
purchase a healthy diet. SNAP's core purpose is to meet low-
income households' basic nutritional needs. If its basic 
benefits cannot achieve that goal, then they really must be 
reconsidered.
    Let me move onto eligibility policy. SNAP is generally 
available to low-income households, regardless of their 
demographics. There are some additional restrictions, though, 
which can impede SNAP's ability to help some struggling 
individuals and families meet their food needs. The ABAWD rule 
mentioned by Mr. McGovern is one of them. This group are 
childless adults working less than 20 hours per week. Despite 
their very-low-incomes, this group is only eligible for 3 
months of SNAP out of every 36, unless they can maintain a job 
at 20 hours a week. This harsh time limit is frequently called 
a work requirement, but states are not actually required to 
offer these individuals a work slot before terminating their 
benefits, and most don't. We really encourage the Committee to 
consider easing this tough rule.
    In the area of SNAP access, it is important to highlight 
that SNAP is incredibly successful at reaching eligible people. 
USDA estimates that 83 percent of eligible individuals 
participate, one of its true successes. Yet some groups have 
participation well below this level. For example, only 42 
percent of eligible seniors participate in the program. Many of 
the same low-income seniors also are eligible for and similarly 
miss out on Medicare's Low-Income Drug Subsidy Program, and 
assistance from Medicaid to pay their Medicare premiums. Rather 
than tackle low senior enrollment issues in SNAP alone, I 
propose considering low or no cost ideas that would more 
effectively package these three benefits together to respond to 
the needs of low-income seniors more holistically. The Social 
Security Administration already acts as an application hub for 
these benefits, and that role could be strengthened.
    Shifting to program integrity, my written testimony 
includes several ideas that would enhance program accuracy, 
such as increasing access to current wage records for states. 
And while fraud is a minimal problem in SNAP, it is important 
to keep making improvements in this area. One suggestion is to 
expand a current pilot FNS is running to check for dual 
enrollment across states in the Southeast, to make that pilot 
go nationwide.
    Finally, SNAP's employment and training program is one of 
the most active areas of discussion and innovation within SNAP 
today. It is a significant program serving over one million 
people last year. Many states are considering how to shift 
their programs from punitive process oriented approaches to 
ones focused on longer-term success, which engage participants 
ready to build up their skills and move up the economic ladder. 
A new investment in employment and training, perhaps through a 
competitive grant program, could allow states to expand 
programs that support individuals who face difficulty finding 
employment, or offer career and technical training that is 
informed by the local business community.
    So in conclusion, over the many years that I have worked on 
SNAP, Congress has truly endeavored to balance the need to 
maintain SNAP's successful structure and design with changes to 
the program that respond to the needs of under-served groups, 
such as working families and seniors, and to test and implement 
new ideas to improve the program's efficiency, without 
compromising its effectiveness. And as you consider ideas for 
the new farm bill, I urge you to keep those goals your 
priority. I look forward to the discussion today. Thank you.
    [The prepared statement of Ms. Dean follows:]

 Prepared Statement of Stacy Dean, Vice President for Food Assistance 
    Policy, Center on Budget and Policy Priorities, Washington, D.C.
    Thank you for the opportunity to testify today. I am Stacy Dean, 
Vice President for Food Assistance Policy at the Center on Budget and 
Policy Priorities, an independent, nonprofit, nonpartisan policy 
institute located here in Washington. The Center conducts research and 
analysis on a range of Federal and state policy issues affecting low- 
and moderate-income families. The Center's food assistance work focuses 
on improving the effectiveness of the major Federal nutrition programs, 
including the Supplemental Nutrition Assistance Program (SNAP). I have 
worked on SNAP policy and operations for more than 20 years. Much of my 
work is providing technical assistance to state officials and other 
stakeholders and researchers who wish to explore options and policy to 
improve SNAP's program operations to more efficiently serve eligible 
households. The Center on Budget and Policy Priorities receives no 
government funding.
    My testimony today is divided into two sections: (1) SNAP's 
critical role in our country as a Federal nutrition program; and (2) 
ideas for consideration to strengthen SNAP for the future.
SNAP's Critical Role
    I've testified several times recently about the critical role SNAP 
plays in our country. I'm going to quickly summarize here the most 
important points about SNAP's successful features and results, in part 
because these themes were so successfully drawn out in the series of 
hearings before this Committee on SNAP over the past 2 years and 
highlighted in the comprehensive report the Committee issued late last 
year.
    SNAP is a highly effective anti-hunger program. Much of its success 
is due to its entitlement structure and its national benefit structure, 
which focus its benefits to the households with the lowest incomes 
available to purchase groceries and assists poor families to obtain 
adequate nutrition, regardless of where they live. As of last December, 
SNAP was helping 43 million low-income Americans to afford a 
nutritionally adequate diet by providing them with benefits on a debit 
card that can be used only to purchase food. On average, SNAP 
recipients receive about $1.40 per person per meal in food benefits.

   SNAP has largely eliminated severe hunger and malnutrition 
        in the United States. A team of Field Foundation-sponsored 
        doctors examined hunger and malnutrition among poor children in 
        the South, Appalachia, and other very poor areas in 1967 
        (before the Food Stamp Program, as SNAP was then named, was 
        widespread in these areas) and again in the late 1970s--after 
        the program had been instituted nationwide. These physicians 
        found marked reductions over this period in serious nutrition-
        related problems among children and gave primary credit to the 
        Food Stamp Program.\1\ Findings such as this led Senator Robert 
        Dole to describe the Food Stamp Program as the most important 
        advance in U.S. social programs since Social Security.
---------------------------------------------------------------------------
    \1\Nick Kotz, Hunger in America: The Federal Response (New York: 
Field Foundation, 1979).

   SNAP is targeted at need and reduces poverty. SNAP reaches 
        more than 80 percent of eligible households, USDA estimates.\2\ 
        It delivers the largest benefits to those least able to afford 
        an adequate diet; roughly 92 percent of benefits go to 
        households with monthly incomes below the poverty line, and 57 
        percent go to households below \1/2\ of the poverty line, or 
        below $840 a month for a family of three in 2017.
---------------------------------------------------------------------------
    \2\Kelsey Farson Gray and Karen Cunnyngham, ``Trends in 
Supplemental Nutrition Assistance Program Participation Rates: Fiscal 
Years 2010 to 2014,'' USDA, June 2016.

      These features help account for SNAP's large anti-poverty impact. 
        SNAP kept 8.4 million people out of poverty in 2014, including 
        3.8 million children, and made millions of others less poor, 
        according to Census data using the Supplemental Poverty Measure 
        (which counts SNAP and other non-cash benefits as income). SNAP 
        also lifted 2.1 million children above \1/2\ of the poverty 
        line.\3\
---------------------------------------------------------------------------
    \3\CBPP analysis of 2014 Census Bureau data from the March Current 
Population Survey, SPM public use file; corrections for under-reporting 
from HHS/Urban Institute TRIM model. This is an update from a previous 
analysis published in a paper by Arloc Sherman and Danilo Trisi, 
``Safety Net More Effective Against Poverty Than Previously Thought,'' 
CBPP, May 6, 2015, http://www.cbpp.org/research/poverty-and-inequality/
safety-net-more-effective-against-poverty-than-previously-thought.

   SNAP helps low-income households put food on the table. SNAP 
        benefits reduce food insecurity (which occurs when households 
        lack consistent access to nutritious food because of limited 
        resources) among high-risk children by 20 percent and reduces 
        fair or poor health (as reported by their parents) by 35 
        percent, one study found.\4\ Another recent study found that 
        participating in SNAP reduced households' food insecurity by 
        about five to ten percentage points and reduced ``very-low-food 
        security,'' which occurs when one or more household members 
        have to skip meals or otherwise eat less because they lack 
        money, by about five to six percentage points.\5\
---------------------------------------------------------------------------
    \4\Brent Kreider, et al., ``Identifying the Effects of SNAP (Food 
Stamps) on Child Health Outcomes When Participation Is Endogenous and 
Misreported,'' Journal of the American Statistical Association, 
107(499), 2012: 958-975, http://batten.virginia.edu/sites/default/
files/research/attachments/JASA_KPGJ_online(1).pdf.
    \5\James Mabli, et al., ``Measuring the Effect of Supplemental 
Nutrition Assistance Program (SNAP) Participation on Food Security,'' 
prepared by Mathematica Policy Research for the U.S. Department of 
Agriculture, Food and Nutrition Service, August 2013, https://
www.fns.usda.gov/sites/default/files/Measuring2013.pdf.

   SNAP improves long-term health and educational outcomes. 
        Recent research comparing the long-term outcomes of individuals 
        in different areas of the country when SNAP gradually expanded 
        nationwide in the 1960s and early 1970s found that 
        disadvantaged children who had access to food stamps in early 
        childhood and whose mothers had access during their pregnancy 
        had better health and educational outcomes as adults than 
        children who didn't have access to food stamps. Among other 
        things, children with access to food stamps were less likely in 
        adulthood to have stunted growth, be diagnosed with heart 
        disease, or be obese. They also were more likely to graduate 
        from high school.\6\
---------------------------------------------------------------------------
    \6\Hilary Hoynes, Diane Whitmore Schanzenbach, and Douglas Almond, 
``Long-Run Impacts of Childhood Access to the Safety Net,'' American 
Economic Review, 106(4): 2016, 903-934.

   SNAP is highly responsive to the economy. SNAP is the most 
        responsive means-tested program to changes in poverty and 
        unemployment during economic downturns. It expands to meet need 
        and then shrinks when need recedes, most recently during and 
        after the Great Recession of 2007-09. This automatic response 
        not only eases hardship for people directly hit by a downturn 
        but also boosts economic activity in communities across the 
        country, thereby acting as an ``automatic stabilizer'' for the 
---------------------------------------------------------------------------
        weak economy.

   SNAP supports work. SNAP is designed to both supplement the 
        wages of low-income workers and support workers during 
        temporary periods of unemployment. Most SNAP recipients who can 
        work do. The number and share of households that have earnings 
        while receiving SNAP has been on the rise. Among SNAP 
        households with at least one working-age, non-disabled adult, 
        more than \1/2\ work while receiving SNAP--and more than 80 
        percent work in the year prior to or the year after receiving 
        SNAP. The SNAP benefit formula is structured so that 
        participants have a strong incentive to work longer hours or to 
        search for better-paying jobs. SNAP benefits gradually decline 
        as earnings rise, reducing the ``benefit cliff'' effect in 
        SNAP. And, as I discuss in more detail below, SNAP provides a 
        state option to all but eliminate any benefit cliff effects in 
        SNAP.

   SNAP is efficient and effective. USDA and states take 
        seriously their roles as stewards of public funds and emphasize 
        program integrity throughout program operations. The 
        authorizing committees have mandated in SNAP some of the most 
        rigorous integrity standards and systems of any Federal 
        programs. States and USDA have achieved the highest program 
        integrity levels for SNAP in recent years in terms of both the 
        payment error rate and the percentage of SNAP benefits that are 
        illegally exchanged for cash. States and USDA devote 
        significant resources and take advantage of the most modern 
        tools to pursue allegations of fraud and root it out when 
        found.

   SNAP's national benefit structure is key to these successes. 
        States have a high degree of flexibility in how they operate 
        the program, but SNAP's benefit levels and eligibility rules 
        are largely uniform across the states. The national benefit 
        structure was established under President Nixon after an 
        initial effort to operate the program without such standards 
        resulted in enormous disparities across states, with some 
        states setting income limits as low as \1/2\ the poverty line.

      The national benefit structure ensures that poor families can 
        obtain adequate nutrition, regardless of where they live. It 
        also substantially reduces differences across the states in 
        their overall financial support for poor children--a fact of 
        special importance to southern states and rural areas, which 
        have lower cash assistance benefits, higher poverty, and lower 
        fiscal capacity.

    I also believe that the Federal and state agencies that oversee 
SNAP are committed to the program, its participants, and strive for 
continuous improvement. In part, the 5 year farm bill cycle helps to 
foster an atmosphere of continual self-evaluation, a healthy sense of 
external scrutiny, coupled with the opportunity to pursue improvements 
when needed. While the core design of SNAP is largely unchanged since 
its origin, USDA and states have worked to strengthen and modernize the 
program to reflect new opportunities as well as respond to emerging 
challenges. This farm bill will be no different and we look forward to 
the opportunity to work with the Committee on continuing to improve 
SNAP and to build upon its core strengths.
Farm Bill Ideas for Consideration
    The focus of today's hearing is on ways to build on the strengths 
of SNAP. Over the past 2 years, the Committee has undertaken a serious 
effort to learn about SNAP, including the people it serves, how the 
program operates at the state level, and opportunities for improving 
its effectiveness. This learning is reflected in the Committee's 
report, which details the program's strengths, including the ways in 
which SNAP's basic structure contributes to its effectiveness. Given 
the findings of the report, it is appropriate for the Committee to 
consider future policy improvements recognizing that the program is 
working well and meeting its key goals.
    The remainder of my testimony will focus on a set of policy 
improvements that could strengthen the program without undermining the 
key programmatic elements that make it effective today. These policy 
ideas are informed by the Committee's hearings, academic research on 
the program, and our work with state officials, client advocate, and 
service provider groups, as well as our own research. The following is 
not a comprehensive or final list of the Center's suggestions for the 
2018 Farm Bill. Instead, it is meant provide an overview of some of the 
key areas we recommend that you consider.
Improving SNAP's Basic Benefit
    SNAP's maximum benefit per person per meal is about $1.90 and the 
average benefit is about $1.40, reflecting that most households are 
expected to contribute a share of their own income to purchase food. 
SNAP expects families receiving benefits to spend 30 percent of their 
net income on food. Families with no net income receive the maximum 
benefit, which is tied to the cost of the Department of Agriculture's 
Thrifty Food Plan (a diet plan intended to provide adequate nutrition 
at a minimal cost). For all other households, the monthly SNAP benefit 
equals the maximum benefit for that household size minus the 
household's expected contribution.
    Given the modest maximum and average benefit, SNAP delivers strong 
outcomes. In recent years, however, there has been increasing concern 
and growing evidence that SNAP's basic benefit level is out of date and 
not sufficient to ensure that participating households can afford a 
healthy diet. This evidence includes research by leading academics:

   James P. Ziliak, a professor of economics at the University 
        of Kentucky, makes the case that SNAP benefit levels are 
        ``based on increasingly outdated assumptions, including 
        unreasonable expectations about households' availability of 
        time to prepare food, and need to be modernized . . .'' The 
        current Thrifty Food Plan assumes that households can spend 
        close to 2 hours per day preparing food, while households 
        typically spend 30 minutes to an hour a day preparing food.\7\ 
        In addition to this assumption, the current Thrifty Food Plan, 
        in an effort to develop a very low cost plan, assumes that 
        households will consume a diet that is far outside the norm for 
        what Americans eat, including far more of certain types of 
        food--such as dry beans and fluid milk--and far less of other 
        foods, including items commonly consumed like cheese and 
        chicken.
---------------------------------------------------------------------------
    \7\James Ziliak, ``Modernizing SNAP Benefits,'' Hamilton Project, 
Brookings Institution, May 2016, http://www.hamiltonproject.org/assets/
files/ziliak_modernizing_snap_benefits.pdf.

   Studies also show that households experience a range of 
        adverse outcomes due to running out of food at the end of the 
        SNAP benefit month. For example, one study found that the rate 
        of hospital admissions for low blood sugar (which can occur 
        when diabetics reduce their food intake) among low-income 
        individuals in California was 27 percent higher in the last 
        week of the month compared to the first, an increase not found 
        among higher-income individuals--suggesting that exhausting 
        food budgets contributes to these hospitalizations. (California 
        distributes SNAP in the first days of the month.)\8\ Studies 
        have also found that participants consume fewer calories and 
        that diet quality decreases towards the end of the month as 
        households exhaust their benefits.\9\
---------------------------------------------------------------------------
    \8\Hilary Seligman, et al., ``Exhaustion of Food Budgets at Month's 
End and Hospital Admissions for Hypoglycemia,'' Health Affairs, January 
2014, 33(1): 116-123, https://www.ncbi.nlm.nih.gov/pmc/articles/
PMC4215698/.
    \9\Jessica Todd, ``Revisiting the Supplemental Nutrition Assistance 
Program cycle of food intake: Investigating heterogeneity, diet 
quality, and a large boost in benefit amounts,'' Applied Economic 
Perspectives and Policy, 2014; Michael Kuhn, ``Causes and Consequences 
of the Calorie Crunch,'', UKCPR Discussion Paper 2016-11, http://
uknowledge.uky.edu/cgi/
viewcontent.cgi?article=1109&context=ukcpr_papers; Jesse Shapiro, ``Is 
there a Daily Discount Rate? Evidence from the Food Stamp Nutrition 
Cycle,'' Journal of Public Economics, Volume 89, Issues 2-3, February 
2005.

   Economics professors Patricia M. Anderson and Kristin F. 
        Butcher\10\ in a paper we recently commissioned, found that 
        boosting SNAP benefits would raise not only the amount that 
        low-income households spend on groceries but also the 
        nutritional quality of the food purchased. The authors 
        estimated the impact of an increase in SNAP benefits of $30 per 
        person per month--or the equivalent of just under $7 per person 
        per week. (This amounts to a roughly 20 percent increase in the 
        Thrifty Food Plan.) Based on food spending patterns of 
        households with somewhat more resources, the researchers found 
        that a $30 increase would result in about $19 per person per 
        month more in food spending. (This is less than the SNAP 
        benefit increase, even though SNAP can be spent only on food, 
        because the added benefits would free up household income for 
        other necessities such as utility bills or non-food groceries 
        that SNAP doesn't cover.) That increase in food spending, in 
        turn, would raise consumption of more nutritious foods, 
        notably, vegetables and certain healthy sources of protein 
        (such as poultry and fish, and less fast food. The increased 
        food spending would also reduce food insecurity among SNAP 
        recipients.
---------------------------------------------------------------------------
    \10\Patricia Anderson and Kristin Butcher, ``The Relationships 
Among SNAP Benefits, Grocery Spending, Diet Quality, and the Adequacy 
of Low-Income Families' Resource'' Center on Budget and Policy 
Priorities, June 14, 2016, http://www.cbpp.org/research/food-
assistance/the-relationships-among-snap-benefits-grocery-spending-diet-
quality-and-the.

    Such a significant increase may not be feasible in the 2018 Farm 
Bill. Yet, evidence is mounting that SNAP's benefit is insufficient for 
all families to meet their basic food needs with a healthy diet. This 
topic merits further discussion and consideration. SNAP's core purpose 
is to meet low-income households basic nutritional needs. If its 
benefit levels compromise the program's ability to achieve that goal, 
then they must be reconsidered.
The Benefit Cliff
    Some policymakers and service providers have raised concerns that 
programs that provide assistance for low-income families may discourage 
work if participants are worried that they will face a ``cliff'' where 
they lose their benefits all together if they take a job or increase 
their earnings above the program's income limit. SNAP currently 
contains three features that result in a fairly minimal benefit cliff 
for households with income right at the upper end of SNAP's income 
eligibility limit.
    First, SNAP's benefit formula, which targets benefits based on a 
household's income and expenses, phases out benefits slowly with 
increased earnings and includes a 20 percent deduction for earned 
income to reflect the cost of work-related expenses and to function as 
a work incentive. As a result, for most households with each additional 
dollar of earnings the household's SNAP benefits will decline by only 
24 to 36. Most SNAP households, as a result, will see an increase in 
their total income when their earnings go up modestly.
    The program does, however, have a Federal gross income limit at 130 
percent of the Federal poverty line, a rule that creates a small but 
meaningful benefit cliff or benefit loss for some households who might 
increase their earnings above that level. For example, a typical 
household of three with income at 120 percent of the poverty line would 
lose about $200 a month in SNAP benefits if it took a new job or got a 
raise that lifted its monthly income above the gross income limit 
(which at 130 percent of poverty is about $2,200 a month for a family 
of three). This loss of SNAP would cancel out the higher earnings and 
the household would be no better off, and in some cases could be worse 
off.
    Fortunately, states currently have an option to lift the gross 
income limit through ``broad-based categorical eligibility''. More than 
30 states have taken advantage of the option thereby allowing benefits 
to phase out gradually for all working households. Consider the 
previous example in a state that used the categorical eligibility 
option to adopt a higher gross income limit. The household's SNAP 
benefit would drop by only about $60 to $90 a month, so the household 
would still be better off with the higher paying job. This state option 
to raise the gross income limit through broad-based categorical 
eligibility is the second protection in SNAP against a benefit cliff. 
Maintaining this option will allow more states to smooth SNAP's phase 
out and eliminate the relatively modest benefit cliff.
    The third protection against a benefit cliff is its structural 
guarantee to make food assistance available to every household that 
qualifies under program rules and applies for help. SNAP households 
that leave the program because they find a job or get a raise and no 
longer qualify can count on SNAP being available if they need help 
again later. Without this guarantee a household that loses its job 
might have to wait until funding became available to resume benefits--
as occurs now with child care and other benefits that are constrained 
by funding limitations from serving all who are eligible. The fact that 
SNAP is an entitlement lowers the perceived risks of working, making it 
easier for low-income families to take a chance on a new job or 
promotion.
    We plan to do some more detailed analysis on SNAP's income phase 
out and resulting benefit cliff and will publish those findings shortly 
in order to help inform the Committee's review of this issue.
Assessing SNAP's Response to Individuals with Disabilities
    SNAP provides needed food assistance to millions of people with 
disabilities. Over one in four SNAP participants, equivalent to over 11 
million individuals in 2015, has a functional or work limitation or 
receives Federal Government disability benefits, according to CBPP 
analysis of data from the 2015 National Health Interview Survey. The 
program makes an important difference in the lives of these 
individuals. Yet, people with disabilities are more likely to live in 
poverty, endure material hardships, and experience food insecurity. 
Lower family income, higher disability-related expenses, and the 
challenges of providing needed assistance and care to disabled family 
members undermine the economic well-being of people with disabilities 
and their families. People with disabilities are at least twice as 
likely to live in poverty and struggle to put enough food on the table 
as people without disabilities. Disabling or chronic health conditions 
may be made worse by insufficient food or a low-quality diet.
    The Center has a forthcoming analysis on the role SNAP plays for 
low-income individuals with disabilities and how we might improve the 
program to better address their needs. At a minimum, this issue merits 
further study by the Committee and USDA to determine whether Federal 
nutrition programs could be improved or implemented better to meet the 
needs of individuals with disabilities.
Maintaining and Improving Access to SNAP
    SNAP is very successful in reaching eligible people. USDA estimates 
that some 83 percent of eligible individuals participate in the 
program. Working to ensure that eligible households continue to access 
the program remains a top priority. Despite this strong participation 
rate, there are groups who participate at lower rates. Low-income 
seniors are an example. And, we are concerned that vulnerable SNAP 
participants, such as pregnant women, infants, and toddlers may be 
missing out on important supplemental supports through WIC. We believe 
there are effective low- and no-cost efforts to make better connections 
between eligible people and Federal nutrition benefits.

   Increasing eligible senior enrollment in nutrition and 
        health benefits. Many low-income seniors who are eligible for 
        SNAP are also eligible for Medicare Savings Programs (MSPs), 
        which defray Medicare premiums and/or cost-sharing charges for 
        poor and some near-poor seniors not enrolled in the full 
        Medicaid program. Similarly, many SNAP-eligible seniors are 
        also eligible for the Low-Income Subsidy (LIS) for the Medicare 
        Part D prescription drug benefit. But participation rates in 
        these programs among eligible low-income seniors are very low--
        generally in the range of only 35 to 50 percent. Connecting 
        eligible poor seniors to the available Federal health and 
        nutrition benefits for which they are already eligible would 
        make a major dent in hardship for low-income seniors.

      In addition to lack of knowledge among low-income seniors about 
        their potential eligibility for both nutrition and health 
        benefits, senior participation also is inhibited by 
        unnecessarily duplicative and uncoordinated application 
        procedures. These procedures also push up administrative costs. 
        While these programs have similar eligibility rules, seniors 
        typically must apply for them via three duplicative processes--
        through the Social Security Administration (SSA) for LIS, at 
        their state Medicaid agency for the MSPs, and at their state 
        SNAP agency for SNAP (although the last two can be combined, 
        and if a senior applies first for MSP, he or she should be 
        deemed automatically eligible for the LIS).
      Eligible seniors who don't enroll forgo significant financial 
        assistance that could make a large positive effect in helping 
        them make their ends meet.\11\ Tackling low participation rates 
        across programs would be more effective in helping low-income 
        seniors make ends meet than working to improve SNAP 
        participation rates alone.
---------------------------------------------------------------------------
    \11\For example, the MSPs pick up annual Medicare Part B premiums 
of about $1,258 in 2016, as well as help with the Part B deductible of 
$166 and other co-insurance charges for those with incomes below the 
Federal poverty line. SSA estimates that the Low Income Drug Subsidy, 
which pays for Medicare Part D premiums, deductibles, and co-payments, 
has an annual value of about $4,000 for those who are enrolled. USDA 
estimates that elderly individuals who are eligible for SNAP but not 
enrolled would qualify for more than $90 a month, or about $1,100 a 
year.
---------------------------------------------------------------------------
      While some of these issues are outside of the purview of the 
        Agriculture Committee, the farm bill represents an opportunity 
        to engage on improving services for low-income seniors. One 
        suggestion would be to support innovative pilots that test 
        using Social Security field offices in high-poverty 
        neighborhoods to enroll low-income seniors and people with 
        disabilities in a broad set of benefits. Interested local sites 
        could test models in which a single process could facilitate 
        enrollment in Social Security, LIS, MSP, and SNAP for 
        struggling elderly and individuals with disabilities.

   Ensuring SNAP's infants and toddlers are connected to WIC. 
        Nutrition assistance programs play an especially important role 
        for young children, whose brains are rapidly developing. 
        Unfortunately, young children are likelier to live in poor and 
        food-insecure families than older children and are particularly 
        vulnerable to the negative health effects associated with a 
        lack of proper nutrition. Low-income pregnant and post-partum 
        women, infants and children up to age 5 who participate in SNAP 
        are also income eligible for the Special Supplemental Nutrition 
        Program for Women, Infants, and Children (WIC). WIC provides 
        nutritious foods, nutrition education, breastfeeding support, 
        and referrals to health care and social services to its 
        participants. SNAP and WIC's nutritional support lessens the 
        impact of hardship in early childhood and improves health and 
        economic stability into adulthood.

      SNAP does an excellent job of reaching eligible children, but it 
        is unclear how many of SNAP's young children are connected to 
        WIC. Our analysis of administrative and Census data suggests 
        that many toddlers and preschoolers enrolled in SNAP are 
        missing out on WIC, despite being eligible and despite the 
        supplemental assistance WIC could provide and the positive 
        long-term health outcomes of the WIC program. Given these 
        programs' proven benefits on the long-term health and economic 
        outcomes of young children, more can be done at the state level 
        to ensure successful cross enrollment in these two 
        complementary nutrition programs. USDA could promote this 
        connection, set an expectation that states connect eligible 
        SNAP participants to WIC and measure states' success with 
        respect to connecting infants and toddlers to these two 
        effective interventions. Setting an expectation that states 
        will assist low-income infants and toddlers with available 
        Federal nutrition assistance and then measuring states against 
        that expectation will elevate this issue and likely drive 
        improved outcomes. An effort like this would not require new 
        spending and would improve the delivery of Federal nutrition 
        programs to SNAP's infants and toddlers.
Eligibility
    In general, SNAP is available to all households that meet the 
Federal income and asset rules. The amount that households receive is 
calibrated to their individual financial circumstances and their 
ability to purchase a basic diet. There are several groups, however, 
whose participation is further restricted based on their demographic or 
other circumstances. An example of one of those restrictions worthy of 
reconsideration is on individuals subject to the SNAP's 3 month time 
limit.
    One SNAP's harshest rules limits unemployed individuals aged 18 to 
50 not living with children to 3 months of benefits in any 36 month 
period when they aren't employed or in a work or training program for 
at least 20 hours a week.\12\ Under the rule, implemented as part of 
the 1996 welfare law, states are not obligated to offer all individuals 
a work or training program slot, and most do not. SNAP recipients' 
benefits are cut off after 3 months irrespective of whether they are 
searching diligently for a job or willing to participate in a 
qualifying work or job training program. As a result, this rule is a 
time limit on benefits and not a work requirement, as it is sometimes 
described.
---------------------------------------------------------------------------
    \12\For a more comprehensive discussion of the time limit rule, 
see: Ed Bolen, et al., ``More Than 500,000 Adults Will Lose SNAP 
Benefits in 2016 as Waivers Expire,'' Center on Budget and Policy 
Priorities, updated March 18, 2016, http://www.cbpp.org/research/food-
assistance/more-than-500000-adults-will-lose-snap-benefits-in-2016-as-
waivers-expire.
---------------------------------------------------------------------------
Unemployment Rates Are Higher for Workers with Less Education
Monthly Unemployment Rate


          Source: U.S. Bureau of Labor Statistics, Current Population 
        Survey.

    Many of the individuals subject to the time limit struggle to find 
employment even in normal economic times. Those subject to this rule 
are extremely poor, tend to have limited education, and sometimes face 
barriers to work such as a criminal justice history or racial 
discrimination. They also tend to have less education which is 
associated with higher unemployment rates. About a quarter have less 
than a high school education, and \1/2\ have only a high school diploma 
or GED.\13\ SNAP participants subject to the 3 month cutoff are more 
likely than other SNAP participants to lack basic job skills like 
reading, writing, and basic mathematics, according to the Government 
Accountability Office (GAO).\14\
---------------------------------------------------------------------------
    \13\Steven Carlson, Dorothy Rosenbaum, and Brynne Keith-Jennings, 
``Who Are the Low-Income Childless Adults Facing the Loss of SNAP in 
2016?'' Center on Budget and Policy Priorities, February 8, 2016, 
http://www.cbpp.org/research/food-assistance/who-are-the-low-income-
childless-adults-facing-the-loss-of-snap-in-2016.
    \14\``Food Stamp Employment and Training Program,'' United States 
General Accounting Office (GAO-3-388), March 2003, p. 17.
---------------------------------------------------------------------------
     Unemployment rates for lower-skilled workers tend to be high. The 
unemployment rate for people lacking a high school diploma or GED--who 
make up about a quarter of all non-disabled childless adults on SNAP--
stood at 7.5 percent in 2016, while the overall unemployment rate was 
4.9 percent.\15\ (See Figure 1.) Unemployment rates for workers in many 
lower-skilled occupations, such as those in the service industries, are 
also substantially higher than the overall unemployment rate. In 
December of 2015, unemployment in the food services industry was 6.9 
percent, above the national overall average of 4.9 percent.\16\
---------------------------------------------------------------------------
    \15\Bureau of Labor Statistics.
    \16\Industries at a Glance: Food Services and Drinking Places, 
Bureau of Labor Statistics, https://www.bls.gov/iag/tgs/iag722.htm.
---------------------------------------------------------------------------
    While there have been few in-depth studies of those who are subject 
to the time limit, some evidence suggests that a sizable portion have a 
criminal history, which has a significant impact on job prospects. A 
detailed study of childless adults who were referred to community-based 
workfare in Franklin County (Columbus), Ohio found that about \1/3\ had 
a felony conviction.\17\ People with criminal records find it harder to 
be hired due to discrimination as well as low levels of education and 
poor work histories.\18\ In addition to the stigma of incarceration, a 
number of states prohibit people with criminal histories from working 
in certain occupations. As a result, people with criminal backgrounds 
work less and have reduced earnings.
---------------------------------------------------------------------------
    \17\Ohio Association of Food Banks, ``Franklin County Comprehensive 
Report on Able-Bodies Adults Without Dependents, 2014-2015,'' October 
14, 2015, http://admin.ohiofoodbanks.org/uploads/news/
ABAWD_Report_2014-2015-v3.pdf.
    \18\Maurice Emsellem and Jason Ziedenberg, ``Strategies for Full 
Employment Through Reform of the Criminal Justice System,'' Center on 
Budget and Policy Priorities, March 30, 2015, http://www.cbpp.org/
research/full-employment/strategies-for-full-employment-through-reform-
of-the-criminal-justice.
---------------------------------------------------------------------------
    In addition to being harsh policy that punishes individuals who are 
willing to work, the rule is one of the most administratively complex 
and error-prone aspects of SNAP law. Many states also believe the rule 
undermines their efforts to design meaningful work requirements as the 
time limit imposes unrealistic dictates on the types of qualifying job 
training. For all of these reasons, many states and anti-hunger 
advocates have long sought the rule's repeal.
    The Senate versions of the 2002 and the 2008 Farm Bills included 
provisions that would have softened the limit by extending benefits to 
6 months out of every 12 for these unemployed adults to better reflect 
the length of time they would typically avail themselves of the program 
in the absence of a time limit. And, that rule would be simpler for 
states to administer. Rep. Adams through H.R. 1276, the Closing the 
Meal Gap Act of 2017, would convert the time limit to an actual work 
requirement by reframing the rule to say that that states cannot 
enforce the time limit unless they offer individuals subject to the 
rule a work slot or job training program that would meet the law's 
strict standard. Both of these approaches would be meaningful 
improvements to the current situation which results in cutting off food 
assistance to individuals who are willing to work but unable to find 20 
hours per week of employment.
Program Integrity and Oversight
    The farm bill is an important opportunity to equip USDA and states 
with new tools to improve SNAP's program integrity (which encompasses 
fraud and common error--the larger of the two issues). As new 
technology becomes available and as awareness improves of how problems 
arise, there are opportunities to improve SNAP accuracy and prevent 
fraud. And, with respect to fraud, while a relatively small problem, 
it's an ever-changing concern. Criminals are adaptable, and the 
government's response to them must also remain nimble and responsive to 
emerging patterns of fraud.
    Often, our biggest obstacle to helping states implement new 
measures that would increase the accuracy of benefit issuance is cost. 
Modernized eligibility systems, access to useful third-party data, and 
the appropriate level of staff to process cases with a high degree of 
accuracy can be costly for states. While the Federal Government shares 
in the costs of administering the program, state budgets are the 
limiting factor to ensuring the best systems and technology are 
deployed throughout the program. Many states downsized their program 
operations during the recent recession and have not yet rebuilt the 
capacity necessary to take full advantage of new options and 
technology.
    We offer the following suggestions as areas that Congress might 
want to consider to enhance SNAP's program integrity.

   A joint Federal-state effort to analyze client and retailer 
        data for predictors of fraud and to share effective methods of 
        identifying cases or stores that contain fraud or that are 
        guilty of trafficking after a more in-depth investigation. 
        Congress may wish to review whether USDA needs more resources 
        or authority to remove offending stores from the program more 
        quickly. In a hearing I participated in before the House 
        Oversight Committee last year, one witness raised concerns that 
        retailers that could be disqualified through a SNAP 
        administrative process were not always removed from the program 
        in a timely manner in order for law enforcement to build a more 
        powerful criminal case against the store.

   Taking the National Accuracy Clearinghouse nationwide. 
        Through an FNS pilot, several southeastern states and Lexis/
        Nexis are working to run checks across states for dual 
        enrollment in SNAP. This pilot project appears to have been 
        quite successful at identifying a small, but unacceptable, 
        number of individuals enrolled in two states. We encourage you 
        to discuss with FNS whether the farm bill could assist with 
        rolling out the effort nationwide. Our only caveat would be 
        that we want to be sure that states are required to disenroll 
        clients when they report a move to another state. Our 
        understanding is that some states are slow to take such action 
        because they want evidence that the client is moving (which can 
        be difficult to provide). Not being able to disenroll when 
        moving can result in an unintended dual enrollment or a 
        household being prevented from being able to enroll in SNAP in 
        their new state because the originating state has not yet 
        closed the household's case.

   Some states pay (with the support of Federal matching funds) 
        a private company, Equifax, for access to employment and wage 
        records for some SNAP households. Employers with large numbers 
        of low-wage workers often prefer to have a third party handle 
        inquiries regarding their employees' wages and hours. State 
        SNAP agencies report that when their case workers are able to 
        easily access such current income information for applicants 
        and participants, they have higher accuracy and less paperwork 
        burden on both participants and employers. The Committee may 
        wish to explore whether access to these private third-party 
        data sources is something the program can and should provide to 
        all states from the Federal level. A single procurement might 
        be a cost effective approach. The Federal Government, for 
        example, now provides such data to state Medicaid programs 
        through the Federal data hub. Unfortunately that data is too 
        old to be very useful to SNAP, which does a more current 
        assessment of household circumstances. But the service HHS 
        provides to states is worthy of replication in SNAP.
Employment and Training
    SNAP's existing employment and training (E&T) program allows 
states, within certain parameters, to design work and job training 
programs that help SNAP participants gain the skills, training or 
experience needed to gain regular employment. States can determine 
which populations and geographic locations to target for services and 
what types of employment services to offer. A number of states have 
been actively revising, expanding, and improving their E&T programs 
over the past few years.
    As part of the 2013 Farm Bill, Congress authorized ten pilot 
projects to test, with a rigorous evaluation, whether SNAP E&T could 
more effectively connect unemployed and underemployed recipients to 
work. The selected pilots, announced in March 2015, include a mix of 
mandatory and voluntary E&T programs. Several of the pilots target 
individuals who face significant barriers to employment, including 
homeless adults, the long-term unemployed, individuals in the 
correctional system, and individuals with substance addiction. Many of 
the pilots involve multiple partners that help connect SNAP 
participants to resources and services that are available in the 
community and can help them prepare for, find, or retain employment. 
This includes partners that provide training, help recipients secure 
child care assistance and other supportive services, and assist job 
seekers identify job opportunities.
    These pilots are intended to help both states and the Federal 
Government understand how SNAP E&T can most effectively help SNAP 
recipients connect to needed job-related services and which of those 
services the E&T program needs to provide itself to produce the best 
employment outcomes possible. In addition, the farm bill requires USDA 
to work with states to establish performance standards by which to 
assess E&T programs. Both of these initiatives are underway and are 
built upon USDA's fairly robust effort over the past several years to 
support state efforts to improve their employment and training 
services, primarily by ensuring that their programs are preparing SNAP 
recipients for in-demand jobs, such as technical training and 
education-based programs. As a result of these policy initiatives, E&T 
is one of the most active areas of discussion, collaboration, and 
innovation within SNAP today.
    We encourage the Committee to consider making new investments in 
E&T to expand job training opportunities for SNAP participants, perhaps 
through a competitive grant program. Such grants could be targeted to 
states with a proven track record producing positive employment 
outcomes in their E&T programs. Grants could support a wide range of 
programs including those targeted at removing barriers for individuals 
who face a difficult time finding employment such as ex-offenders or 
the homeless, providing case management services (a common theme in 
many of the pilots), or offering career and technical training informed 
by the local business community. The Committee may also wish to 
consider proposals that would assist states that currently focus their 
E&T program primarily on job search and workfare--programs that have 
not been shown to be effective in improving employment outcomes for 
opportunity of participants--with the kinds of supports such as peer 
coaching and a learning collaborative that could help them to build 
more effective job training programs.
Assessing EBT
    SNAP Electronic Benefits Transfer (EBT) is the electronic system 
that allows a recipient to authorize transfer of their government 
benefits from a Federal account to a retailer account to pay for the 
groceries they buy. EBT is used in all 50 states, the District of 
Columbia, Puerto Rico, the Virgin Islands, and Guam. EBT has been fully 
implemented since June of 2004. As the system has been in place for 
more than 10 years, this farm bill offers the opportunity to review how 
well the system is serving the program, whether it's leveraging payment 
technology innovations, whether the reliability of the system matches 
commercial systems, and whether the costs of the EBT system are 
competitive with other similar technologies now available. One area of 
potential concern is the small number of vendors for SNAP EBT services 
and whether there is sufficient competition in the market for price and 
service. Today, only two vendors virtually hold all EBT contracts with 
states.
Issues External to SNAP for Consideration
    Much of my testimony has been about how to improve or strengthen 
SNAP from within the program. It's also useful to consider external 
factors that will set the context for what SNAP must respond to in the 
coming years.
The Labor Market
    While reshaping SNAP's employment and training program to be one 
that helps workers climb the economic ladder is a priority, no job 
training program can change the landscape of the low-wage labor market. 
As I mentioned earlier, the majority of working-age SNAP participants 
who can work, do work, but often the jobs they are working in, or are 
in-between, pay low wages, have variable, unpredictable schedules, 
don't provide full-time hours to workers who want them, and don't 
provide paid sick leave or other benefits. These workers often lack 
access to child care and other crucial job supports, and as a result of 
these conditions, these jobs tend to have high turnover. (For example, 
workers in jobs with paid sick leave are more likely to be able to stay 
employed in their current job than workers without, who may lose a job 
if they or a family member falls ill and they are unable to take the 
time off.)\19\
---------------------------------------------------------------------------
    \19\Heather Hill. ``Paid Sick Leave and Job Stability,'' Work and 
Occupations, Vol. 40 Issue 2, April 2013, https://www.ncbi.nlm.nih.gov/
pmc/articles/PMC3825168/.
---------------------------------------------------------------------------
    SNAP participants who work are most likely to have service, sales, 
or office occupations, in occupations such as cooks, home health aides, 
janitors and maids, and personal care aides. They are most likely to 
work in the education and health industries (such as in schools, 
hospitals, home health services, and nursing homes), in retail trade 
(particularly in grocery stores and discount stores), and in leisure 
and hospitality (such as in restaurants and hotels).\20\ These jobs 
tend to pay low wages and offer part-time and variable hours.
---------------------------------------------------------------------------
    \20\Unpublished CBPP analysis of March 2016 Current Population 
Survey and 2015 American Community Survey data.
---------------------------------------------------------------------------
    As a result, SNAP will continue to be an important support for low-
wage workers and its features that respond and adapt to fluctuating 
earnings are important. It's also important to note that many workers 
will experience periods of unemployment or underemployment due to the 
nature of the labor market and SNAP is a crucial support to them during 
that time.
Repealing the Affordable Care Act
    While changes to the Affordable Care Act are still under 
consideration, it's worth noting that the outcome of that debate will 
have an impact on SNAP. First, research has shown that medical expenses 
can affect food insecurity, as low-income individuals with health 
problems can face tradeoffs between food and medicine. For example, one 
study found that one in three people with chronic conditions were 
unable to afford food, adequate doses of medication, or both.\21\ 
Another found that the probability of food insecurity increases as out-
of-pocket medical expenses increase.\22\ Legislation that reduces 
health coverage or increases out-of-pocket medical expenses for low-
income individuals could have an impact on SNAP. Moreover, when 
individuals go without care they need, their health status may decline, 
making it more difficult to get and keep jobs--and making the job of 
E&T efforts that much more challenging.
---------------------------------------------------------------------------
    \21\Seth A. Berkowitz, Hilary K. Seligman, Niteesh K. Choudhry, 
``Treat or Eat: Food Insecurity, Cost-related Medication Underuse, and 
Unmet Needs,'' American Journal of Medicine, 2014.
    \22\Robert Hielsen, Steven Garasky, and Swarn Chatterjee, ``Food 
Insecurity and Out-of-Pocket Medical Expenditures: Competing Basic 
Needs?'' Family and Consumer Sciences Research Journal, Vol. 39, No. 2, 
December 2010, pp. 137-151.
---------------------------------------------------------------------------
    In addition, SNAP is co-administered with Medicaid in most states. 
When there are significant changes to that program that require states' 
attention, it can divert their focus from SNAP. Until the debate on 
health care concludes, it is premature to predict what the impact to 
SNAP will be and whether the Committee will need to respond. 
Nevertheless with changes as significant as those being contemplated by 
the House, there will surely be ripple effects to SNAP.
Downward Pressure on Non-Defense Discretionary Spending
    Earlier this month, the Administration released its initial Fiscal 
Year 2018 budget proposal. The Administration's budget outline now 
calls for cutting overall non-defense appropriations by another $54 
billion below the full sequestration level. Under that proposal, the 
cumulative inflation-adjusted cut since 2010 would grow to 25 percent. 
For USDA, the Trump budget calls for cutting 2018 discretionary 
appropriations by $4.7 billion or 21 percent below 2017.
    While the initial budget did not provide many details, this lower 
funding level raises concerns for SNAP. First, if FNS's administrative 
budget is cut, that could mean reduced funding for USDA's SNAP 
oversight, research, and program integrity initiatives. Second, the 
budget proposal did single out for elimination several programs outside 
USDA that also support SNAP households. The Low-Income Energy 
Assistance Program (LIHEAP) provides low-income households with energy 
assistance and is slated for elimination under the Administration's 
budget proposal. Many LIHEAP recipients also receive SNAP. If low-
income families and seniors lose LIHEAP, it will make it more difficult 
for them to cover their basic utilities, raising concerns about the 
traditional trade-off in a struggling family's budget between ``heating 
and eating.'' Similarly, cuts to rental assistance and other core forms 
of support to very low-income households will further strain their 
budgets and make it harder for them to afford life's basics, including 
food.
    Other proposed reductions, such as in the area of job training 
programs, also can have an impact on SNAP. First, many SNAP state 
agencies rely upon the job training and other services offered through 
the Workforce Investment Opportunity Act (WIOA) for at least some of 
their E&T training programs. Cuts to those programs will mean fewer 
work slots for E&T participants. And in many cases, the community-based 
organizations that provide SNAP job training are also working with 
Department of Labor funding. Cutting a core source of their funding may 
make their business less viable, reducing the overall pool of providers 
in a community that can provide job training. When the Administration's 
more detailed budget is released in May, there may be many more 
proposed cuts that would impact SNAP participants or the program.
    Chairman Conaway rightly described the Administration budget as a 
``proposal,'' not policy. As the FY18 appropriations process moves 
forward however, current law funding for non-defense discretionary 
(NDD) programs continues to decrease relative to the FY10 level. Even 
if Congress does not adopt the additional cuts to NDD as proposed by 
the Administration, we can anticipate cuts to programs that will impact 
SNAP participants and the program.
Conclusion
    SNAP is an efficient and effective program. It alleviates hunger 
and poverty and has positive impacts on the long-term outcomes of those 
who receive its benefits. And, SNAP has exacting standards with respect 
to eligibility determinations.
    Over the many years that I have worked on this program, Congress 
and USDA have endeavored to balance the need to maintain SNAP's 
successful structure and design with making changes to the program that 
respond to the needs of under-served groups such as working families 
and seniors, and test or implement new ideas to improve the program's 
efficiency without compromising its effectiveness. As we look to the 
next farm bill, we look forward to working with you on changes that 
will improve the effectiveness of SNAP, rather than weaken or 
compromise its ability to meet the basic nutrition needs of struggling 
Americans. As you consider policy proposals, I urge you to keep that 
goal as your priority.

    The Chairman. Thank you, Ms. Dean.
    Mr. Sykes, go ahead and proceed with your 5 minutes of 
testimony when you are ready.

        STATEMENT OF RUSSELL SYKES, DIRECTOR, CENTER FOR
   EMPLOYMENT AND ECONOMIC WELL-BEING, AMERICAN PUBLIC HUMAN 
             SERVICES ASSOCIATION, WASHINGTON, D.C.

    Mr. Sykes. Thank you, Chairman Thompson and others, and a 
particular thank you to my Congressman, John Faso, who I have 
known and worked with for years.
    My name is Rus Sykes. I am the Director, as I said. I work 
at the American Public Human Services Association. We represent 
the appointed CEOs of human services agencies nationwide, many 
local organizations as well, and one of our affiliate 
organizations is the American Association of SNAP Directors. We 
like to think as the practitioners who run the program at the 
ground level, that we have a sort of unique credibility to 
speak about the pros and cons of the program.
    I want to make it very clear that the overarching point is 
that while there is always room for reform, modernization, and 
improvement, SNAP is perhaps the most pivotal and economically 
responsive program, federally, during times of economic 
hardship to ensure that families and children have healthy 
lives and economic and social well-being. It both reduces very-
low-food security very clearly and does it well, and it keeps 
almost five million people, including over two million 
children, out of poverty, based on 2013 data. It drives 
benefits disproportionately at hard economic times into 
distressed communities where unemployment is high, and other 
issues exist. I want to say that whatever you do in 
reauthorization, that essential responsiveness of the program 
needs to be preserved.
    I want to focus on specific points of work simplification 
flexibility for states, the importance of system integration 
and shared data, measuring program success in broader terms, 
discussing honestly the issue that has come before you in the 
past about purchase restrictions and whether they should or 
should not occur, and finally, resources and the notion of an 
income cliff that happens to some that are on the program.
    Let me start with talking about work. We are strong 
proponents of work, but we are strong proponents of work 
programs that actually try to find people jobs, try to help 
them stay in those jobs, and provide the short-term training 
needed based on what actually is available in local 
communities. We think that employers need to play a significant 
role in developing that kind of curricula as do community 
colleges, and it needs to be short-term. And we believe that 
work, obviously, is the economic pathway out of poverty.
    Turning to ABAWDs, as Ms. Dean mentioned, I just want to 
simply say we are strongly in favor of work rules for able-
bodied adults, but, as Ranking Member McGovern pointed out, it 
is a very complicated population, and when we come right down 
to enforcing those rules, we have to make sure that we provide 
real opportunity and don't use the enforcement of those rules 
simply as a sanction policy, or we lose some of the people that 
we very most need to be helping.
    On simplification, I have seen this program over my 42 
years working on it, I am dating myself, go from something that 
was fairly simple in many ways to a very complex program from 
the eligibility and verification standpoint. And so we really 
would like to see the program focus more on outcomes and 
simplify it a bit for states, and we also believe in state 
flexibility. I know in your previous hearings that you 
discussed how many waivers and options states do have at their 
wherewithal already, but there is more that can be done on that 
front, and we strongly urge that we think of those areas, 
because states are closest to the ground. They understand their 
clients. They understand their labor markets, and they 
understand how important the program is in economic hard times.
    System integration with Medicaid and multiple other 
programs is absolutely critical. Tiny steps have been taken in 
that direction with the Federal data hub and other areas, but 
much more needs to be done. And shared data is really critical. 
We need to do more in regard to building common databases so 
people aren't reenrolling in every different program repeatedly 
without having some sort of common identifier to help them be 
in programs.
    We have several new pilots that we would like to think that 
you should explore. One, as Ms. Dean also mentioned, is whether 
benefits are adequate. We really don't know, although there is 
increasing evidence that they may not be. But what I would 
suggest is that we ought to run a geographically diverse pilot 
that tests the Thrifty Food Plan versus the Low Cost Food Plan, 
and rigorously evaluate it to see whether it makes a difference 
in very-low food security or not. Similarly, we ought to do the 
same thing with the earned income disregard. When we talk about 
needing to get those who do not work to work, we have many 
people on the program who are already working, and it is a 
critical income support for them, and they are able to deduct 
20 percent of their earnings. We would like to see that raised 
to 30 percent. We would like to see broader measurements of the 
program than simply quality control and error rates. Those are 
incredibly important from an integrity point of view, but there 
are other things about poverty, very-low-food security 
reduction, access of job placement.
    On purchase restrictions I would close with this. We also 
don't know, although we can see the public health division with 
the anti-hunger community division around whether sugar-
sweetened beverages in particular lead to difficult health 
outcomes in areas of obesity and diabetes. Again, a pilot 
program that would look to test whether that kind of a 
prohibition would result in simple substitution patterns of 
someone's own money, or whether it really would reduce the 
incidents of those kinds of diseases would be something very 
important.
    I look forward to a continuing dialogue with you. All of 
these comments have been amplified in my written remarks, and I 
look forward to talking further and look forward to the 
discussion today. Thank you.
    [The prepared statement of Mr. Sykes follows:]

 Prepared Statement of Russell Sykes, Director, Center for Employment 
  and Economic Well-Being, American Public Human Services Association,
                            Washington, D.C.
    Mr. Chairman and Members of the Subcommittee, thank you for this 
opportunity today to discuss the evolution of the Supplemental 
Nutrition Assistance Program (SNAP), formerly known and the Food Stamp 
Program (FSP). I am Russell Sykes, director of the American Public 
Human Services Association's (APHSA) Center for Employment and Economic 
Well-Being (CEEWB), and, my comments today are shared through the lens 
of our state and local public human services agency members across the 
nation.
    Our member agencies are responsible for directly implementing and 
managing SNAP and a broad array of other connected human services aimed 
at improving population health and well-being. APHSA also represents 
human services administrators across the nation, including those who 
direct each state's SNAP program and who are organized within APHSA as 
the American Association of SNAP Directors (AASD). SNAP sits at the 
cornerstone of an array of core services that assure all families have 
access to food, housing and other supports essential to our basic 
health and well-being. Building on its strong foundation and history, 
the time is ripe for SNAP's next evolution--in coordination with other 
key health and human services--to assure its efficiency and accelerate 
its role in advancing the nation's overall population health and well-
being.
    Over the last 40 years I have worked in social services, including 
the FSP/SNAP, at every level of government and in many capacities, 
outside of government. I have been a direct service provider; a 
researcher; a Deputy Commissioner in New York State, where I 
administered SNAP; a Congressionally appointed member of the National 
Commission on Hunger; and a consultant on a variety of human services 
issues to major research and policy organizations. It is hardly a 
stretch to say that I have been in or around the program since its 
inception. Over that time, I have seen the FSP/SNAP grow from a small 
and straightforward elective program to one that is responsive to 
market conditions and the principal means by which the Federal 
Government reduces food insecurity. It has improved the material well-
being of many people and is a crucial support. But it is also ripe for 
change in some areas due to its complexity, lack of flexibility for 
states to innovate and the need to modernize and coordinate both 
systems and data sharing with multiple other health and human service 
programs.
    SNAP is our nation's principal nutrition assistance program for 
low-income Americans and is one of the largest means-tested programs in 
both reach and cost. In 2015, SNAP provided 45 million people 
(approximately 14 percent of Americans) with benefits in the average 
month, and benefits averaged about $125 per person per month for a 
total annual Federal cost of about $70 billion. SNAP also is a highly 
effective work support and anti-poverty program that helped nearly five 
million individuals including over two million children avoid poverty 
in 2013 according to the Census Bureau's Supplemental Poverty Measure.
    To be eligible, households must have monthly gross incomes below 
130 percent of the Federal poverty level (in 2016, $2,117 per month for 
a household of three) and net incomes below 100 percent of the Federal 
poverty level. SNAP is designed to supplement a household's spending on 
food but not pay for a household's food costs in their entirety. As 
households earn more, they are expected to contribute more of their own 
income toward food purchases.
    SNAP benefits flow disproportionately to those struggling the 
most--a surprisingly diverse population. In 2014, 58 percent of SNAP 
benefits flowed to the 43 percent of SNAP households with gross incomes 
of 50 percent or less of the Federal poverty guidelines. In that same 
year, 22 percent of households receiving SNAP reported no gross income; 
41 percent reported no net income; and only 31 percent had earnings. 
Furthermore, ten percent of recipients were elderly; 44 percent were 
children; and the rest were non-elderly adults.
How Did We Get Here: A Brief Evolutionary History
    SNAP has evolved and grown into its current form over roughly the 
past 50 years. Food assistance was initially a farm subsidy program and 
an anti-hunger effort. In the late 1930s, farmers were producing 
surpluses they could not sell. Many cities were plagued by high 
unemployment, and some people could not afford food. In response, the 
Department of Agriculture developed a program to solve both issues. It 
allowed households to purchase with their own funds food coupons or 
stamps of different colors and valuations for store or commodity food 
purchases.
    Under President Lyndon B. Johnson, the FSP became permanent. The 
Food Stamp Act of 1964 maintained the general structure of purchasing 
food coupons worth more than the dollars paid for them by outlaying 30 
percent of their own money. Over the next decade, program rules were 
standardized nationally. Participation grew from 500,000 to 15 million 
individuals between 1965 and 1974.
    The program changed significantly in the late 1970s, with the 
elimination of the purchase requirement (EPR). The change was driven by 
the concern that households had difficulty finding the up-front cash to 
buy their food-stamp allotment. After EPR was implemented in 1979, the 
30 percent household food contribution became a paper expectation 
rather than an up-front cash outlay. Participation increased by 1.5 
million in the month following the bill's passage.
    Calls to destigmatize the program gained momentum in the mid-1980s. 
This led to the EBT card, originally piloted in one county, which made 
food stamps far less distinguishable from other forms of payment. In 
the late 1980s, Congress officially allowed all states to use EBT and 
passed other changes that expanded program access. The 1990s saw a 
strong movement for welfare reform, and the Personal Responsibility and 
Work Opportunities Reconciliation Act of 1996 (PRWORA) brought about 
major changes to the FSP. Changes included eliminating eligibility for 
most legal immigrants, imposing work registration requirements for work 
eligible adults, but with little teeth as participation was voluntary, 
and even stronger work requirements on able-bodied adults without 
dependents (ABAWDs) that time limited eligibility to 3 in any 36 months 
for those who did not become employed or participate in an allowable 
work activity for 20 hours weekly.
    The focus on tighter eligibility and work requirements began to 
wane over the next decade. The 2002 Farm Bill restored eligibility to 
many qualified aliens; adjusted the standard deduction by family size 
and indexed it to inflation; simplified reporting for states; and 
lengthened certification periods. Participation increased substantially 
to 26 million people in July 2006. The 2008 Farm Bill maintained 
emphasis on outreach and access. The legislation further simplified 
income reporting, allowed states to submit waiver requests to replace 
face-to-face interviews with telephone interviews and signatures, and 
extended transitional benefits to those leaving state cash assistance 
programs. To further destigmatize assistance receipt, the Federal 
program changed its name from the Food Stamp Program to the 
Supplemental Nutrition Assistance Program (SNAP).
    The Great Recession and modifications to the program in response to 
it further expanded participation. Under the American Recovery and 
Reinvestment Act, SNAP benefit amounts were increased by 13.6 percent, 
which was later rolled back because it exceeded actual food price 
inflation. During the recession, participation rose rapidly: by 2013, 
47.6 million people received SNAP benefits worth more than $76 billion. 
This increase in participation (and therefore costs) is exactly how the 
program was designed in order to be economically responsive to such 
economic downturns. The rapid expansion during the recession shows how 
SNAP is perhaps the most pivotal Federal program that secures the 
economic well-being of individuals, families and children facing 
unexpected circumstances due to job loss and general economic hardship.
    With the economy improving, the 2014 Farm Bill shifted focus back 
to reducing costs and increasing work. The final bill reduced spending 
by an estimated $8 billion over 10 years. The debate over the bill 
raised concerns about nonworking able-bodied SNAP beneficiaries. The 
final bill included $200 million to fund pilot projects in ten states 
to test the effectiveness of various education, training and job 
placement programs for SNAP recipients. As of 2016, recipients and 
costs declined to 44.2 million recipients at a cost of $66.6 billion 
and are expected to remain on a decline as the economy improves. 
Concerns remain that the caseload decline has not reflected, as much as 
it perhaps should, a lower unemployment rate. That slower decline also 
continues to reflect a sluggish economic recovery for many and a low 
workforce participation rate among adults.
Where Should We Go From Here: SNAP Reauthorization and the Next Farm 
        Bill
    While SNAP must retain its current strengths and economic 
responsiveness, it can and should be modernized to assure its 
efficiency and impact. The next reauthorization of the farm bill 
presents the opportunity to take stock of the program at a foundational 
level. Significant improvements can be considered in the following 
areas:

   Well-structured and constructive outcome-based work rules,

   Simplification of overall program eligibility and 
        verification rules,

   Increased state flexibility and a requirement that USDA-FNS 
        respond promptly to state waiver and demonstration requests,

   System modernization and cross-program data sharing,

   Innovative pilot approaches that are carefully evaluated for 
        success and replication,

   Broader performance measures than simply payment accuracy, 
        and

   An honest discussion about potential restrictions on certain 
        food purchases.

    Those are among the areas my oral remarks will address today.
Specific Recommendations for SNAP Modernization
   Test Innovation and Use What Works

     Allow states greater flexibility to initiate 
            innovative approaches and impose a time limit on USDA/FNS 
            as to when they must approve or reject state waiver and 
            demonstration requests.

     Several pilot programs should be enacted and 
            rigorously evaluated for potential future replication based 
            on effectiveness and affordability. We recommend pilots 
            testing an alternative benefit adequacy calculation to the 
            Thrifty Food Plan; expansion of the current Earnings 
            Disregard from 20 to 30 percent as more working families 
            receive benefits because of low wages; and prohibiting SNAP 
            dollars from being used to purchase a defined category of 
            unhealthy sugar-sweetened beverages (SSB's) to study if 
            such a policy actually leads to a decrease in SSB 
            consumption and better health or if households simply 
            substitute their own funds and maintain purchasing habits.

     Expand the Summer EBT program option that increases 
            SNAP benefits for households with children during the non-
            school year calendar in areas where operating an actual 
            Summer Food Program site is impractical due to geographic 
            distances, lack of sponsors or other obstacles.

     Whenever pilots or demonstrations succeed and are 
            clearly replicable nationwide, permanently incorporate 
            their components into the program rather than requiring 
            constant waiver renewals.

   Simplification

     Simplify eligibility determination through longer 
            certification periods for stable income non-error prone 
            households, making Combined Application Procedures (CAP) a 
            regular component of the program, and eliminating the cost 
            neutrality provision so that SSI recipients can 
            automatically receive SNAP benefits.

     Allow states, at their own option, to develop 
            agreements with federally recognized Tribal governments to 
            allow those entities to complete eligibility determinations 
            for SNAP where the Tribe is also running a Tribal TANF 
            program. In these cases, states would maintain oversight, 
            quality control and training functions.

     Allow states to utilize temporary staff to determine 
            eligibility as long as they are under the direct 
            supervision of the state. States are experiencing increases 
            in workloads, but unable to add permanent FTE's to meet the 
            demands of these increases because of eroding Federal 
            administrative share of program costs.

   Administrative Modernization and Data Sharing

     Modernize systems in SNAP as well as system interfaces 
            with other programs, more broadly share available data 
            across programs to foster better program alignment and 
            efficiency and increase the emphasis and funding for 
            research regarding what works best in SNAP.

     Return state administrative costs for SNAP, which have 
            eroded over the years, to their original 50/50 percent 
            split.

   Support Work and Economic Capacity-Building as Key Ways to 
        Increase Family Well-Being

     Thoughtfully expand the focus on work for work 
            eligible SNAP households, emphasizing real employment 
            outcomes rather than process outcomes and focus employment 
            and training programs to prepare clients for actual 
            available jobs in local communities. Expand available E&T 
            100 percent funds and broaden the allowable uses of E&T 50/
            50 match funds to encourage additional state innovation and 
            better coordination with other programs under the Workforce 
            Innovation and Opportunity Act (WIOA).

     Change the current 3 in 36 month ABAWD Time Limit work 
            rule to 6 or 9 in 36 months and coincide it with the 
            individual's certification period. Strictly enforce client 
            compliance but do not impose the time limit when no job or 
            available work slot that meets ABAWD requirements can be 
            provided to the individual.

     Add transitional benefits of 1 to 3 months when wages 
            result in a full loss of benefits to avoid the cliff effect 
            of rapidly losing all SNAP benefits and assist families to 
            stabilize economically.

     Current levels of allowable resources are too low and 
            have resulted in the use of Broad-Based Categorical 
            Eligibility (Cat-El) by 42 states as a work around with the 
            vast majority using it to eliminate any resource limit. 
            Raising the resource limit for all SNAP recipients to at 
            least $10K would make better sense and allow for families 
            and individuals to accrue modest savings without 
            compromising program integrity.

   Accountability and Program Integrity--Program integrity and 
        fraud prevention in SNAP are critical. For years, the SNAP 
        error rate was among the lowest of any major program with an 
        extraordinary payment accuracy rate of over 96 percent. 
        Concerns surfaced in 2014 about whether case reviews at the 
        state level were somehow biased, often by the use of outside 
        second party contract reviewers. Since then USDA-FNS and states 
        have been working diligently and cooperatively to traverse and 
        correct any instance or implication of incorrect case accuracy 
        review. A national error rate review is currently awaiting 
        release based on a broad sample of cases nationwide and payment 
        accuracy is expected to remain very high. Additionally, all 
        bias, to the degree it exists, will be removed from the review 
        process going forward. This joint national and state effort has 
        revealed a number of changes that need to be made to ensure 
        consistency and the highest level of program integrity going 
        forward. Necessary reforms include:

     Aligning QC rules consistently across FNS regions, 
            restoring the previous $50 case error threshold, which is 
            now at a very low level $25, simplification of QC sampling 
            requirements and allowing states to substitute phone or 
            online interviews for currently required QC face to face 
            interviews. It also shows that SNAP success should be 
            measured on multiple factors beyond just payment accuracy 
            and timeliness of benefits. High performance bonuses to 
            states should be awarded to states that demonstrate 
            continuous improvement in multiple program areas.
Conclusion
    SNAP benefits provide crucial supports for eligible low-income 
families and individuals to assist them in purchasing food, support 
work for those with low earnings, and respond quickly to economic 
downturns. SNAP also helps communities during economic downturns by 
bringing additional Federal dollars into the local economy, freeing 
dollars to be spent elsewhere. SNAP caseloads and spending also 
fluctuate with economic conditions. This ebb and flow of participants 
and costs based on economic circumstances is the key to SNAP's 
effectiveness.
    SNAP is effective in achieving its primary goal: reducing food 
insecurity. The best measure is very-low-food security (VLFS), which 
the USDA defines as a household in which ``eating patterns of one or 
more household members were disrupted and their food intake reduced, at 
least some time during the year, because they couldn't afford enough 
food.'' The best evidence points to SNAP substantially reducing VLFS 
and improving the general health and well-being of the overall 
population. Evidence also suggests that food assistance has 
particularly beneficial long-term impacts, especially for children.
    SNAP is also a highly effective work support program and reduces 
poverty. Calculations using the government's Supplemental Poverty 
Measure, which counts SNAP as a financial resource, indicates that SNAP 
kept 4.8 million people out of poverty in 2013, including 2.1 million 
children. SNAP appears to be particularly effective for the most 
vulnerable, lifting 1.3 million children out of deep poverty (50 
percent or less of the poverty threshold) in 2013.
    I appreciate the opportunity today as Director of our Center for 
Employment and Economic Well-Being (CEEWB) to share the viewpoint of 
APHSA's state and local members and our affiliate organization the 
American Association of SNAP Director (AASD) who oversee SNAP daily. It 
is fair to say that our members can lay claim to the most detailed 
understanding of SNAP's important value as both a nutritional and anti-
poverty program as well as the need for future program reforms that can 
further improve performance, address the need to help work-eligible 
recipients find employment through meaningful interventions, provide 
crucial bridge supports in economic hard times, and generally enhance 
client services, cost effectiveness program integrity and the economic 
well-being of individuals, families and children.
    I am happy to answer your questions today and both APHSA's CEO, 
Tracy Wareing Evans, and I are more than pleased to continue our work 
with you as you grapple with reauthorizing, modernizing and improving 
SNAP for the future. Please look to us as an ongoing resource for this 
important effort.

    The Chairman. Thank you, Mr. Sykes.
    Now I yield to my colleague from Pennsylvania for the 
purpose of introducing our witness from Pennsylvania.
    Mr. Evans. Thank you, Mr. Chairman.
    Mr. Chairman, Ranking Member, and Members of the Committee, 
Joe Arthur is someone who I know extremely well. In my days in 
the legislature, I was a part of something called the Hunger 
Task Force, and working with Joe and others, we did something 
called the Hunger Garden. But I want to make it very clear that 
the Hunger Garden will not replace the aspect that you do need 
SNAP, too, so you need both.
    Joe was appointed Executive Director of the Central Food 
Bank in July of 2011, after serving as the Associate Director. 
Joe has served as a volunteer board member with the food bank. 
As the food bank principle ambassador, Joe presented regularly 
on issues of hunger in Pennsylvania to community groups, 
legislative gatherings, government partners, prospective donor 
organizations, and other forums. Joe is a leader in the anti-
hunger work through his engagement as board member for the 
association Feeding Pennsylvania, Hunger Free Pennsylvania, 
Hunger Free Lancaster County as a national conference 
representative and food bank national affiliation. Joe will 
tell you that is where I learned the difference between soil 
and dirt, making that distinction.
    Prior to joining the food bank in 2008, Joe worked 23 years 
in financing and accounting, primarily with Pennsylvania 
Community Bank. Joe holds a B.S. in accounting from Penn State 
and is a member of the Pennsylvania Institution of Certified 
Accountants.
    Joe, I thank you for your leadership.
    Thank you, Mr. Chairman.
    The Chairman. I thank the gentleman. I am now pleased to 
recognize Mr. Arthur for 5 minutes of testimony.

         STATEMENT OF JOSEPH ``JOE'' ARTHUR, EXECUTIVE
           DIRECTOR, CENTRAL PENNSYLVANIA FOOD BANK,
                         HARRISBURG, PA

    Mr. Arthur. Mr. Chairman, Ranking Member McGovern, and 
distinguished Members of the House Agriculture Subcommittee on 
Nutrition, and of course my friend from Philadelphia, 
Representative Evans, thank you for inviting me to testify on 
the importance of the Supplemental Nutrition Assistance 
Program, and the program's direction in the next farm bill.
    You have heard my introduction. The part you didn't hear is 
that we distributed about 48 million pounds of food and grocery 
products in our 27 county service territory last year. We 
worked with over 900 community organizations that are our 
member agencies in that work. And these agencies directly feed 
thousands of hungry families throughout central Pennsylvania.
    The 27 counties within our service territory in central 
Pennsylvania represent the most rural of the Commonwealth. 
While we have more than 1.8 million people in our state who 
struggle with hunger, we are blessed with more than 57,000 
family farms, 30,000 of which are in our service territory. In 
a region as agriculturally rich as central Pennsylvania, there 
is no reason that anybody should go to bed hungry. We are proud 
of our partnerships with agriculture.
    With respect to Pennsylvania's extensive dairy industry, we 
are proud to share that our food bank operates the third 
largest charitable milk program in the nation, distributing 
over 1,600 quarts of fresh, refrigerated milk every business 
day, and that we built this program in less than 3 years with 
the help of our Pennsylvania Department of Agriculture, various 
dairy industry experts, and promotional firms, and of course 
dairy farmers and processors.
    We are much more than a provider of food assistance, as 
Chairman Thompson can attest from his many personal visits over 
the years. We operate out of two healthy food hubs, separated 
by driving 2 hours along the beautiful Susquehanna River. We 
have equipped those with state of the art warehousing and cold 
chain infrastructure, efficient loading docks to handle our 16 
refrigerated trucks, and commercial quality demonstration 
kitchens to teach healthy eating, cooking, and healthy shopping 
habits.
    While our food bank works tirelessly to provide emergency 
food assistance to families at risk of hunger, the problem is 
too big to fix without our taxpayer-funded safety net programs 
such as SNAP.
    While we do make a big difference for people in our 
community, national programs reach far more people, and if that 
system should be eliminated or seriously cut, we would not be 
able to backfill the increased demand that would occur from 
those actions. SNAP is the backbone of the national nutrition 
safety net, the first line of defense against hunger, and helps 
nearly 1.8 million people in Pennsylvania, or about 14.2 
percent. It helps them buy groceries every month, and lifts 
about 13 percent of those households out of poverty.
    As the House Agriculture Committee works on a new farm 
bill, we urge you to consider five key points. SNAP supports 
agriculture, local economies, jobs, and retailers. On the 
agriculture front, Pennsylvania's leading economic enterprise, 
agriculture, benefits strongly from the SNAP program. For 
example, the largest farm commodity in Pennsylvania is dairy. 
About nine percent of spending by SNAP households is actually 
on dairy.
    Local economies. Economic research indicates that every 
SNAP dollar redeemed expands the economy by roughly about 
$1.70, leading to billions in local economic activity. 
Billions, with a b. In fact, roughly $2.6 billion in SNAP 
dollars issued in Pennsylvania in Fiscal Year 2015 generated 
about $4.6 billion of economic activity. The economic benefits 
spread through the entire food supply chain, benefitting 
grocers, retailers, manufacturers, producers, and farmers, and 
supporting millions of jobs.
    Second, SNAP is timely and it responds to changes in need. 
One of the strongest features of SNAP is its ability to respond 
quickly. We have seen it grow since the recession, and now we 
have also seen it in recent periods actually reducing. And in 
fact, it contributed more than $30 billion in savings over the 
course of the last farm bill, and contributed to more than $90 
billion savings overall. It is a program that works, and it 
works on the downside too.
    Third, SNAP is temporary and encourages work, and we have 
heard a great deal about that already.
    Fourth, SNAP provides states flexibility and Federal 
accountability; and fifth, SNAP is efficient and accurate.
    As the Subcommittee works on a new farm bill, we look 
forward to working with you to demonstrate how strong support 
for nutrition programs and agriculture programs can strengthen 
communities, such as the one that we serve in central 
Pennsylvania. Thank you very much for this opportunity to 
testify.
    [The prepared statement of Mr. Arthur follows:]

   Prepared Statement of Joseph ``Joe'' Arthur, Executive Director, 
             Central Pennsylvania Food Bank, Harrisburg, PA
    Mr. Chairman, Ranking Member McGovern, and distinguished Members of 
the House Agriculture Subcommittee on Nutrition, thank you for inviting 
me to testify on the importance of the Supplemental Nutrition 
Assistance Program and the program's direction in the next farm bill.
    I am the Executive Director of the Central Pennsylvania Food Bank, 
the largest nonprofit food distribution organization in Pennsylvania. 
We are a member of Feeding America's food bank network that covers 
every county in the United States. We live our mission of fighting 
hunger, improving lives, and strengthening communities every day. We 
truly believe no one should be hungry and are committed to working hard 
every day to make that belief a reality. We are also a fine example of 
public/private partnerships to benefit society, with generally 80 
percent of our food and financial resources sourced through private 
donations.
Hunger in Pennsylvania and the United States
    The Central Pennsylvania Food Bank distributes more than 48 million 
pounds of food and grocery products, equivalent to more than 40 million 
meals, every year to more than 900 soup kitchens, shelters, and food 
pantries in 27 central Pennsylvania counties. These agencies directly 
feed thousands of hungry families throughout central Pennsylvania. We 
could not do this without the generosity of food donors and financial 
supporters from all sectors, including food companies, retailers, 
farmers, corporate funders and individuals.
    The 27 counties within our service territory represent the most 
rural of the commonwealth. While we have more than 1.8 million people 
in our state who struggle with hunger, we are blessed with more than 
57,000 family farms--30,000 of which are in our service territory. In a 
region as agriculturally rich as central Pennsylvania, there is no 
reason that anyone should go to bed hungry. Farmers in our state and 
across the country produce the safest, most affordable, most abundant 
supply of food in the world. And we do our part every day at the 
Central Pennsylvania Food Bank to ensure that we are sourcing and 
distributing nutritious fruits and vegetables, protein and calcium that 
are essential to food-insecure individuals. In doing so, we're not only 
working to meet the supplemental nutrition needs of low-income people, 
we are supporting Pennsylvania agriculture and food businesses across 
the economic spectrum, and their employees.
    The need is real, and the need is significant across the country. 
According to research conducted by Feeding America, there is a 
significant meal gap, or difference between the food low-income people 
need and the resources they have to buy that food. Map the Meal Gap 
2016\1\ shows that there are over eight billion meals missing from the 
tables of low-income Americans per year. Thousands of Pennsylvanians 
continue to struggle to get back on their feet and for many, work does 
not provide protection from poverty and food insecurity. While many 
people think that poverty impacts only a small number of people who 
remain impoverished for many years, the reality is something different 
. . . a majority of Americans experience food insecurity over the 
course of their working lives, often due to unforeseen circumstances 
such as job loss, inadequate hours, divorce or health issues.\2\
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    \1\Map the Meal Gap looks at food insecurity by county across 
America and the amount of meals missing from food-insecure American 
households.
    \2\Rank, Mark Robert, Hirschl, Thomas A. and Foster, Kirk A. 
Chasing the American Dream: Understanding What Shapes our Fortunes. 
Oxford University Press, 2016.
---------------------------------------------------------------------------
    Feeding America's quadrennial study of the people utilizing 
charitable food assistance, Hunger in America 2014, reveals that about 
\2/3\ of the people our food banks and their local agencies serve are 
making impossible trade-offs between paying for food and other 
necessities like rent, transportation, health care and utilities.
    One example of this is Jonah, who recently called into our food 
bank's Food Stamp Helpline. Jonah is a 40 year old, veteran, husband 
and father of two teenage children who was always able to provide 
shelter, food and other essential needs for his family. After being 
honorably discharged from the military, Jonah started working full-time 
for an Army Depot. Between his paycheck and veteran benefits, Jonah 
made ends meet without assistance. Unfortunately, last year Jonah was 
in an auto accident and had a brain injury which caused memory loss and 
balance issues, led to an emergency spinal cord surgery, and affected 
his ability to work. His last paycheck was in December and ever since, 
his savings and checking accounts have been depleted. Although he still 
receives his veteran benefit, this is not enough to cover his mortgage 
let alone buy groceries. In February, Jonah and his family were 
approved for nearly $400 a month in SNAP benefits. Not only has SNAP 
provided Jonah's family the ability to purchase healthy nutritious 
foods, but it supplements the limited food that he receives from his 
local food pantry. In addition, because his family is eligible for SNAP 
benefits his two children are eligible to receive free school meals, 
lessening the family's grocery bill. Without the SNAP benefits, Jonah 
and his family would have to make the choice of paying his mortgage or 
paying for groceries. Fortunately, he is now able to provide a warm and 
loving home as well as a healthy nutritious diet for his family because 
of the SNAP program.
Our Nation's Nutrition Assistance Safety Net
    While the Central Pennsylvania Food Bank works tirelessly to 
provide emergency food assistance to families at risk of hunger, the 
problem is too big to fix without our taxpayer-funded safety net 
programs such as SNAP. While we do make a difference for people in our 
community, national programs reach far more people--and we simply could 
not backfill the increased demand on the charitable food system that 
would result if any of these safety net programs were eliminated or 
cut. We are already stretched to meet sustained high need. As stated as 
a finding in the House Agriculture Committee's comprehensive review of 
the SNAP program, the need for nutrition assistance cannot be addressed 
by just one program or group--it requires collaboration between 
governments, nonprofits, communities and individuals.
    The people that we serve rely on these Federal programs to help 
meet their families' needs, and these programs are an integral piece of 
the safety net--working together and complementing one another. SNAP is 
the backbone of the national nutrition safety net, the first line of 
defense against hunger. SNAP helps nearly 1.8 million people (14.2 
percent of Pennsylvanians) buy groceries every month and lifts 13.1 
percent of those households out of poverty.
    The Central Pennsylvania Food Bank operates a Food Stamps Helpline 
that helps individuals find out if they qualify to receive additional 
food assistance. Within our service territory, only 55 percent of those 
individuals that are income eligible for the program are receiving 
benefits, meaning over 200,000 potential SNAP-eligible central 
Pennsylvanians are not in the program. Our goal is to inform the public 
about this Federal nutrition program and to provide screening and 
enrollment assistance to those who may need and are eligible to receive 
benefits. As an example of our innovative efforts in central 
Pennsylvania to appeal to more Snap-eligible people, we have presented 
in Appendix A, a graphical image for a SNAP outreach campaign using the 
theme ``Feed the Body, Fuel the Soul, Free the Mind''. I am proud to 
share with you that this extraordinary campaign theme and related 
graphics were developed, free of charge, by several students of the 
Pennsylvania College of Arts and Design in Lancaster, Pennsylvania, in 
a recent project for Hunger Free Lancaster County. All activities for 
this campaign will be funded entirely by private donations.
    One woman that our food bank educated, screened and helped to 
enroll in SNAP, is a familiar story to more and more senior citizens 
who are grandparents. Helen was retired and living on a fixed income in 
low cost senior housing, able to pay for her own groceries, utilities, 
and healthcare. In the spring of 2015, like many grandparents of late, 
Helen found herself raising three young children due to their father 
being involved with drugs and a mother who is in prison. Because Helen 
lived in senior-specific housing, she was asked to leave when she 
started to care for the children. She took her savings and bought a 
house, which has increased her cost of living. When school let out for 
the summer Helen started seeing her Social Security check dwindle down 
faster and began dipping into her savings to purchase more groceries to 
take place of the meals the children were receiving during the school 
year. Although she was receiving food from a food pantry it still 
wasn't enough to last until her next visit. In August, Helen didn't 
know where else to turn and finally decided to apply for SNAP and was 
eligible for more than $400 a month. Now that she can provide enough 
food through her SNAP benefits, Helen can provide other necessities to 
these children, such as clothing and shoes.
    The impact of SNAP is vast. SNAP serves some of the most vulnerable 
people in our country and directly supports farmers, the local economy, 
retailers, processors, and many others. Without SNAP, many people would 
maintain higher levels of food insecurity and farmers would have fewer 
outlets for their products.
    While we are here today to speak about SNAP in the context of the 
farm bill, I think it is worth mentioning the looming appropriations 
process that will be underway soon.
Appropriations Process and the Farm Bill
    I commend Chairman Conaway and Ranking Member Peterson in their 
recent communication to the House Budget Committee, requesting that the 
Committee consider the current economic conditions within rural 
communities and the significant contributions toward deficit reduction 
already made by the Agriculture Committee. We wholeheartedly agree that 
the Fiscal Year 2018 budget resolution must respect the cost savings\3\ 
and commitments made under the 2014 Farm Bill, and that the budget 
process must provide flexibility necessary to develop solid agriculture 
and food policy in the new farm bill before the current law expires. 
Regarding the nutrition title of the farm bill, Chairman Conaway 
acknowledged that ``CBO is projecting that the Nutrition Title is 
achieving savings relative to the previous farm bill and significantly 
more than anticipated during the last farm bill debate.''
---------------------------------------------------------------------------
    \3\The Agriculture Committee saved $23 billion over 10 years in the 
context of the 2014 Farm Bill; however, CBO's January 2017 baseline 
estimates show that the current farm bill will save $104 billion, more 
than four times what had previously been pledged.
---------------------------------------------------------------------------
    I also thank the Chairman for conducting a top-to-bottom review of 
SNAP and publishing its findings last year. As stated in the Chairman's 
letter, ``However widely the views of Members of the Committee vary on 
the subject of SNAP, we all share a common conviction in the dignity of 
every person and the importance of creating economic opportunity so 
each and every person is able to live the American dream. On this, we 
are all agreed.''
SNAP Policy Considerations
    As the House Agriculture Committee works on a new farm bill, we 
urge you to consider five key points:

  1.  SNAP supports agriculture, local economies, jobs, and retailers.

        Agriculture: Pennsylvania's leading economic enterprise, 
            agriculture, benefits strongly from the SNAP program. For 
            example, the largest farm commodity in Pennsylvania is 
            dairy. About nine percent of spending by SNAP households is 
            on dairy, providing Pennsylvania farmers with an important 
            source of revenue, and an important outlet for their milk. 
            This becomes even more important given the current 
            conditions within the dairy industry--that of tight 
            margins, a milk surplus, low demand on the market, and 
            disruption to foreign markets.

        Local economies: Economic research estimates that every SNAP 
            dollar redeemed expands the economy by roughly $1.70,\4\ 
            leading to billions in local economic activity. In fact, 
            roughly $2.6 billion in SNAP dollars issued in Pennsylvania 
            in Fiscal Year 2015 generated $4.6 billion in economic 
            activity.\5\ The economic benefits spread throughout the 
            entire food supply chain, benefiting grocers, retailers, 
            manufacturers, producers and farmers, while supporting the 
            millions of jobs they provide.
---------------------------------------------------------------------------
    \4\Zandi, Mark M, Assessing the Macro Economic Impact of Fiscal 
Stimulus 2008, pp. 3-4, Moody's, Jan 2008, https://www.economy.com/
mark-zandi/documents/Stimulus-Impact-2008.pdf.
    \5\USDA, Supplemental Nutrition Assistance Program State Activity 
Report Fiscal Year 2015, pp. 5, published October 2016, https://
www.fns.usda.gov/sites/default/files/snap/2015-State-Activity-
Report.pdf.

        Jobs: A 2010 study by the USDA found that for every $1 billion 
            of added SNAP funding, between 8,900 and 17,000 jobs were 
            created.\6\ Per a study of SNAP's economic effects at the 
            state level, in Pennsylvania a ten percent cut in SNAP 
            funds would result in the destruction of 3,611 jobs.\7\
---------------------------------------------------------------------------
    \6\Hanson, Kenneth, The Food Assistance National Input-Output 
Multiplier (FANIOM) Model and the Stimulus Effects of SNAP, USDA, 
Economic Research Service, October 2010, https://www.ers.usda.gov/
webdocs/publications/err103/8003_err103_reportsummary_1_.pdf.
    \7\Thompson, Jeffrey and Garrett-Peltier, Heidi, The Economic 
Consequences of Cutting the Supplemental Nutrition Assistance Program, 
Published March 2012, The Center for American Progress, https://
www.americanprogress.org/issues/poverty/reports/2012/03/19/11314/the-
economic-consequences-ofcutting-the-supplemental-nutrition-assistance-
program/.

        Retailers: SNAP spending accounts for more than ten percent of 
            all spending on food purchased to be eaten at home.\8\ The 
            resources provided by SNAP are critical to beneficiaries, 
            who spend them almost immediately--97 percent of SNAP 
            benefits are spent in the month they are issued.\9\ In 1 
            month in 2016, SNAP funded around $218 million of sales in 
            Pennsylvania.\10\
---------------------------------------------------------------------------
    \8\Wilde, Park E., The New Normal: The Supplemental Nutrition 
Assistance Program (SNAP), May 2012, mer. J. Agr. Econ. 95(2): 325-331.
    \9\Center on Budget and Policy Priorities, Policy Basics: 
Introduction to the Supplemental Nutrition Assistance Program (SNAP), 
March 2016, http://www.cbpp.org/research/policy-basics-introduction-to-
the-supplementalnutrition-assistance-program-snap.
    \10\USDA, Data from SNAP Nutrition Tables: October 2016, last 
accessed December 2016, https://www.fns.usda.gov/pd/supplemental-
nutrition-assistance-program-snap.

  2.  SNAP is timely and responds to changes in need. One of the 
            strongest features of SNAP is its ability to respond 
            quickly to changes in need. This is the case both during 
            natural and economic disasters. During the recent 
            recession, SNAP participation grew alongside rising 
            unemployment and is falling as the economy slowly recovers. 
            CBO's January 2017 budget projections show SNAP savings of 
            more than $30 billion over the course of the farm bill 
            compared to estimates from just 1 year ago and project SNAP 
            contributing to more than $90 billion in savings overall, 
            which is far more than expected as the program contracts by 
            design. Participation continues to decline and as of 
            December 2016, the most recent data available, more than 
            4.8 million (or ten percent) lower than at its post-
            recession peak in December 2012 and the lowest level since 
---------------------------------------------------------------------------
            September 2010.

  3.  SNAP is temporary and encourages work. SNAP supports households 
            as they get back on their feet, providing them with needed 
            nutrition and encouraging work.

        New participants spend an average of only 12 months on SNAP and 
            most leave the program within 2 years. SNAP is structured 
            to provide a strong work incentive and was designed to 
            essentially not have a ``benefit cliff.'' In fact, for 
            every additional dollar a SNAP participant earns, their 
            benefits decline by about 30 not a full dollar. So, 
            participants have a strong incentive to find a job, work 
            longer hours, or seek better-paying employment.

        More than \1/2\ of SNAP households with at least one working-
            age, non-disabled adult work while on SNAP; more than 80 
            percent work in the year before or after receiving SNAP. 
            For many of these families, SNAP is an important support 
            while they are between jobs and looking for work.

  4.  SNAP provides states flexibility and Federal accountability. 
            SNAP's structure couples local decision-making with Federal 
            oversight to deliver a program that is both flexible for 
            state administrators and accountable to the Federal 
            taxpayer. States have a robust framework of state options 
            when administering SNAP, enabling them to adapt the program 
            to best meet the needs of their state.

        At the same time, Federal oversight ensures that SNAP is 
            accountable both to taxpayers and to participants. 
            Consistent eligibility parameters and benefit levels across 
            states ensure that eligible families are guaranteed food 
            assistance when they fall on hard times, regardless of 
            where they live.

  5.  SNAP is efficient and accurate. Nearly 93 percent of Federal SNAP 
            spending goes for benefits to purchase food. The remainder 
            goes toward administrative costs including monitoring of 
            retailers that accept SNAP and anti-fraud activities, and 
            important services like employment and training that help 
            participants improve their employability and move toward 
            work or improve their prospects.

        SNAP payments are accurate and the program has historically low 
            error rates. SNAP has one of the most rigorous payment 
            error measurement systems of any public benefit program. It 
            also has one of the best records of accuracy in providing 
            benefits only to eligible households. The most recently 
            available data show that more than 99 percent of SNAP 
            benefits are issued to eligible households.

    As the Subcommittee works on a new farm bill, we look forward to 
working with you to demonstrate how strong support for nutrition 
programs and agriculture programs can strengthen communities such as 
the one we serve in central Pennsylvania. These programs work well, but 
with any policy or program, can always be improved to ensure that more 
families and children have access to the nutrition they need.
    Working together, we believe that we can achieve a farm bill that 
helps strengthen our agriculture economy, provides support to rural 
communities, and reduces hunger through partnership and collaboration.
    On behalf of the Central Pennsylvania Food Bank, thank you for this 
opportunity to present testimony.
                               Appendix A



    The Chairman. Mr. Arthur, thank you so much for your 
testimony.
    Mr. Protas, please go ahead with your 5 minutes of 
testimony whenever you are ready.

  STATEMENT OF JOSH PROTAS, VICE PRESIDENT OF PUBLIC POLICY, 
              MAZON--A JEWISH RESPONSE TO HUNGER,
                        WASHINGTON, D.C.

    Mr. Protas. Thank you, Chairman Thompson, Ranking Member 
McGovern, distinguished Members of the Subcommittee on 
Nutrition, and the Committee of Agriculture, thanks so much for 
the opportunity to testify here today. I am pleased to be able 
to share perspectives from MAZON--A Jewish Response to Hunger, 
a national organization committed to ending hunger among people 
of all faiths and backgrounds in the U.S. and Israel.
    In Jewish tradition, and across all faith traditions, there 
is a fundamental value of taking care of the most vulnerable 
among us. In Leviticus, we are commanded to leave the corners 
of our fields and the gleanings of our harvests and vineyards 
for the poor and the stranger. This commandment is a clear 
expression of our collective responsibility to each other. Its 
wisdom respects the dignity of those who are poor, and gives 
them a role in taking care of their needs by harvesting the 
corners of the fields themselves. We are not to judge those who 
are poor, nor should we assume to know the circumstances of 
their lives.
    In our country today, we are blessed to have a national 
program that manifests this value and works effectively to 
provide assistance to those who endure hardship. This program 
respects the dignity of those who experience hunger and 
poverty, responds when the needs increase, supports work, 
promotes long-term health and well-being, contributes to our 
economy, and provides vital assistance to the most vulnerable 
in our society. Of course, this program is SNAP.
    SNAP is not the only assistance that is available, but it 
is the most essential. The problem of food insecurity is 
profound and complex, with responses coming both from 
government programs and from charitable and faith-based 
community organizations. While some argue that charities should 
do more to address food insecurity, the massive scale of this 
problem and the realities of the charitable sector demonstrate 
just how unreasonable this is. Many of these agencies are small 
operations, run out of basements or closets in a local house of 
worship, only a few days each week and for a few hours each 
day. Only the Federal Government has the capacity to solve an 
issue of hunger's magnitude, and SNAP plays a pivotal role, 
providing needed assistance to tens of millions of Americans 
who struggle.
    Can SNAP be improved? Of course. But cutting the funding 
and reach of the program is not an improvement, and 
transforming SNAP into a block grant program threatens its 
impact and its responsiveness.
    Nothing speaks louder to the truth of SNAP than the voices 
of those affected by hunger. MAZON commissioned photo 
journalist Barbara Grover to collect stories from people who 
have experienced this painful reality. One consistent refrain 
heard is that SNAP benefits routinely don't last until the end 
of the month, forcing families to take desperate measures to 
make ends meet. Another is how SNAP recipients often purchase 
cheap and unhealthy foods to fill them up.
    To address this, MAZON recommends that Congress change the 
SNAP benefit calculation to the USDA Low Cost Food Plan, in 
order to provide a more appropriate level of assistance and 
empower food-insecure families to better meet their nutritional 
needs.
    On the ABAWDs, too many able-bodied adults without 
dependents have recently found themselves cut off from SNAP 
benefits after the re-imposition of the 3 month time limit. Who 
are these ABAWDs? They are 60,000 veterans. They are single 
parents of children over the age of 18. They are homeless 
individuals and ex-offenders who struggle to find employment. 
They are residents of areas where economic recovery has failed 
to materialize. They are 19 year olds who have just aged out of 
foster care and have no family on whom to rely. Re-imposing 
time limits seems cruel and misplaced when too little is being 
done to ensure that these people have access to good paying job 
opportunities and available job training slots. We recommend 
that innovative and effective employment and training programs 
be robustly funded, made more widely accessible, and set up 
with reasonable parameters, including individualized case 
management. It is critical that these are voluntary programs 
that build people up, rather than mandatory sanction-based 
programs that penalize individuals.
    More needs to be done to connect under-served populations 
with assistance. High rates of food insecurity among seniors, 
veterans, Native Americans, college students, and LGBT 
individuals are concerning, and more must be done to increase 
SNAP participation for these groups. We recommend additional 
outreach and education efforts to make individuals in these and 
other under-served populations aware of the assistance 
available to them through SNAP, and remove the barriers that 
prevent them from accessing it.
    MAZON's work reveals that stigma associated with SNAP is a 
significant barrier to participation. The perpetuation of myths 
and negative stereotypes of SNAP participants in the media and 
by public officials is damaging to the program, hurts efforts 
to expand access to people who are struggling, and makes it 
more difficult to achieve the larger goal of ending hunger.
    In conclusion, I would simply and vehemently state that 
SNAP works. While there are certainly opportunities to make 
program improvements, including increasing benefit levels and 
expanding program access, the fundamental structure of SNAP as 
an entitlement program is solid and should not be undermined. 
Instead, robust and targeted investments to strengthen program 
features should be considered.
    Along with my written testimony, I have shared just a few 
stories of people impacted by SNAP featured in MAZON's 
traveling multimedia exhibition, This Is Hunger. I encourage 
you to read these personal reflections, and keep in mind the 
real people this program helps. Thank you.
    [The prepared statement of Mr. Protas follows:]

  Prepared Statement of Josh Protas, Vice President of Public Policy, 
          MAZON--A Jewish Response to Hunger, Washington, D.C.
    Distinguished Members of the Subcommittee on Nutrition and 
Committee on Agriculture, thank you for the opportunity to testify 
before you today.
    I'm pleased to be able to share the perspectives about the SNAP 
program on behalf of MAZON--A Jewish Response to Hunger, a national 
nonprofit organization working to end hunger among people of all faiths 
and backgrounds in the U.S. and Israel.
    In Jewish tradition--and across all faith traditions--there is a 
fundamental value of taking care of the most vulnerable among us. In 
Leviticus, we are commanded to leave the corners of our fields and the 
gleanings of our harvest and vineyards for the poor and the stranger. 
This commandment is a clear expression of our collective responsibility 
for each other. Its wisdom respects the dignity of those who are poor 
and gives them a role in taking care of their needs by harvesting the 
corners of the fields themselves. We are not to judge those who are 
poor, nor should we assume to know the circumstances of their lives.
    In our country today, we are blessed to have a national program 
that manifests these traditional values and works effectively to 
provide assistance to the millions of people who struggle with food 
insecurity. This program respects the dignity of those who experience 
hunger and poverty, responds when the needs increase, supports work, 
promotes long-term health and well-being, contributes to our economy, 
and provides vital assistance to the most vulnerable in our society. Of 
course, this program is the Supplemental Nutrition Assistance Program--
SNAP.
    SNAP is not the only assistance that is available, but it is the 
most essential. The problem of food insecurity is profound and complex, 
with responses coming from both government programs and from charitable 
and faith community organizations.
    The charitable sector provides important short-term assistance 
through an array of food pantries, food banks, and houses of worship, 
but this assistance is inherently insufficient to address the systemic 
problem of hunger or feed the significant and persistent number of 
people who need help. While there are those who argue that charity 
alone can address food insecurity, the massive scale of this problem 
and the realities of the charitable sector demonstrate just how 
impossible that is. Many of these agencies are small operations open 
only a few days a week and for a few hours each day. They are often run 
by volunteers out of basements or closets at their local houses of 
worship, and they primarily distribute food that has been donated from 
within their communities.
    Charities cannot sufficiently fill the gaps created by the erosion 
of government programs. The budget of the largest food charity is a 
mere fraction of the Federal response to food insecurity. Only the 
Federal Government has the capacity to solve an issue of hunger's 
magnitude. It is essential that SNAP and other government nutrition 
safety net programs are operated with the utmost effectiveness, 
efficiency, and accountability, and the USDA works diligently to ensure 
this is the case.
    SNAP is a highly effective anti-poverty program that assists tens 
of millions of Americans who struggle with food insecurity. The program 
responded to the increased needs during the Great Recession as it was 
designed to do, and program participation is dropping now as employment 
rates and economic conditions have improved.
    Can SNAP be improved? Of course. But dismantling the structure of 
the program is not an improvement, and transforming SNAP into a block 
grant program threatens its impact and responsiveness.
    Studies have shown us a great deal about the success of SNAP and 
where its limitations have kept it from living up to its promise. But 
nothing speaks louder to the truth of SNAP than the voices of those 
affected by hunger. MAZON commissioned photojournalist Barbara Grover 
to collect stories across the country from people who have experienced 
the painful reality of food insecurity. These stories are featured in 
This Is Hunger, a multimedia exhibition that is currently traveling to 
communities on the East Coast. One consistent refrain from people 
interviewed is that their SNAP benefits routinely didn't last until the 
end of the month, forcing their families to take desperate measures to 
make ends meet. Another is how people confronted with a meager budget 
for food often resort to purchasing cheap and unhealthy products to 
fill them up, giving up fresh and more nutritious choices.
    We recommend that Congress change the SNAP benefit calculation to 
correlate with the USDA Low Cost Food Plan in order to provide a more 
appropriate level of assistance and empower food-insecure families to 
better meet their nutritional needs.
    Too many able-bodied adults without dependents (ABAWDs) have 
recently found themselves cut off from SNAP benefits after the re-
imposition of the 3 month time limit. Who are these ABAWDs? They are 
60,000 veterans. They are single parents of children over the age of 
18. They are homeless individuals and ex-offenders who struggle to find 
employment. They are residents of states where the economic recovery 
has failed to materialize. They are 19 year olds who have just aged out 
of foster care and have no family on whom to rely. Re-imposing time 
limits seems cruel and misplaced when too little is being done to 
ensure that these SNAP recipients have access to good paying job 
opportunities and available job training slots. SNAP Employment and 
Training programs can offer innovative and effective means to 
transition people back to work, as the new E&T pilot programs called 
for in the last farm bill are demonstrating.
    We recommend that such employment and training initiatives be 
robustly funded, made more widely accessible, and set up with 
reasonable parameters, including individualized case management. It is 
critical that these are voluntary programs that build people up rather 
than mandatory sanction-based programs that penalize individuals.
    As a country, we must do more to encourage workforce participation 
and pathways out of poverty, which must include support for affordable 
and accessible childcare, expansion of tax credits, and living wages.
    We also recommend more support for innovative strategies to promote 
healthier eating among SNAP recipients, including building on the 
success of programs such as the Food Insecurity Nutrition Incentive 
grant program and the Senior Farmers Market Nutrition Program, which 
contribute to notable increases in the consumption of fresh fruits and 
vegetables.
    More needs to be done to connect under-served populations with 
helpful assistance from SNAP. High rates of food insecurity among 
seniors, veterans, Native Americans, college students, and LGBT 
individuals are concerning and more must be done to increase SNAP 
participation for these groups.
    We recommend additional outreach and education efforts to make 
individuals in these and other under-served populations aware of the 
assistance available to them through SNAP and remove the barriers that 
prevent them from accessing it. MAZON's work reveals that stigma 
associated with SNAP is among the biggest barriers to participation. We 
regularly encounter misinformation about the program that makes older 
Americans reluctant to participate. Similarly, MAZON's efforts to 
remove barriers to access SNAP for food-insecure military families 
reveals significant negative associations with the program that 
exacerbate shame and stigma, making it more difficult for those who are 
struggling to seek out help. On this topic, I would like to express 
MAZON's sincere appreciation to Chairman Thompson and Ranking Member 
McGovern for their co-sponsorship of the Military Hunger Prevention 
Act, which was recently introduced by Representative Susan Davis and 
would remove an unintentional barrier to SNAP access for currently 
serving military families in need.
    Too much rhetoric has been focused on criticizing the SNAP program 
and impugning the character of SNAP recipients. The perpetuation of 
myths and negative stereotypes of SNAP participants in the media and by 
public officials is damaging to the program, hurts efforts to expand 
access to people who are struggling, and makes it more difficult to 
achieving the larger goal of ending hunger. The energies of the House 
Committee on Agriculture would be better spent supporting and 
cooperating with USDA to further reduce error rates and ensure that 
SNAP is reaching and serving a greater proportion of those who need 
assistance.
    In conclusion, I would simply and vehemently state that SNAP works. 
While there are certainly opportunities to make particular program 
improvements, including increasing benefit levels and expanding program 
access, the fundamental structure of SNAP as an entitlement program is 
solid and should not be undermined. Instead, robust and targeted 
investments to strengthen program features should be considered.
    Along with my written testimony, I have shared just a few stories 
of people impacted by SNAP who are featured in MAZON's traveling 
multimedia exhibition This Is Hunger. I encourage you to read these 
personal reflections and keep in mind the real people this program 
helps. Thank you.
                               Attachment
Dylan from Commerce, Georgia


    It was the best time, when my mom had a job. I actually enjoyed 
life. I used to get to do whatever. Now, I get up in the morning and 
put on my shoes like anybody else, but when I get to school, I think 
about losing our house.
    My mom got laid off 4 years ago from her job at the school 
district. It really gets to me, it really does, that they let her go. 
She'd been there 20 years and is more qualified than a lot of teachers, 
but it seems that getting full time work around here is all political 
now. The only work my mom can get these days is substitute teaching. 
It's part time and not enough to pay for the basics. The fact that my 
84 year old grandpa is keeping us from losing our house, pretty much 
gets to me. Before I go to bed at night, I actually pray that we won't.
    I have a lot of weight on my shoulders for a 14 year old. I can't 
stand our situation. I've had to sacrifice a lot since my mom lost her 
job. I'm actually wearing my mom's pants right now because we can't 
afford to buy me clothes. I can't take the college classes I qualified 
for because we can't afford them. My mom doesn't know it, but I quit 
baseball so she wouldn't have to spend money on my uniform. It's not a 
good feeling when you're sitting in the house eating chips and potted 
meat as your friends are off playing ball and going to steakhouses when 
they win. It's not a good feeling at all.
    Our food stamps have gone from $300 to $200 a month for my mom and 
me. We're not able to afford healthy foods that some people can. It's 
usually chips, bologna sandwiches and all that. We've had to open up 
canned foods from the pantry that's probably older than me. Eating like 
this and knowing that your friends are eating regular food makes me 
feel like I'm not normal. We run out of food some months and I go to 
bed hungry. I've gone days without sleep because of hunger. The next 
day, I'll go through class pinching myself, doing stuff to stay awake.
    Being hungry affects your appearance, how you act. When I'm hungry, 
I'm not in the mood for anything. I'm depressed. Then, my mom picks me 
up and I continue to work as hard as I can in school. I've wanted to 
become a surgeon since the fourth grade. I keep reminding myself that 
if I work hard in life, I can get to where I'm fine. Then I can buy my 
mom a new house.
    It's not fair that we have to go through this. It's not fair for 
anybody to have to go through this. You shouldn't have to worry about 
where your next meal is gonna come from--especially people with kids.
Mollie from New Orleans, Louisiana


    I used to have big money, the good income. I'd take friends out to 
dinner and travel--to London and Scotland. If I saw a collectible 
online I wanted, I'd buy it. I could not have perceived in a million 
years that I would ever be unemployed and kicked out of my apartment. 
Then, the recession hit and by 2012, my successful New England tour 
company was making \1/5\ the income it did the year before. I'm a 
single woman so I decided to cut my losses, sell the business, and move 
back to New Orleans. That's the place that feels like home to me.
    I did everything to find work and applied for countless jobs. But I 
was either over-qualified or rejected because of my age. After 9 
months, my savings ran out. I became late in my rent and couldn't pay 
my utilities. I had to sell everything I owned--my car, art, CDs, 
antiques--to have cash to live on. I was evicted from my apartment with 
nowhere to go. I figured I could live on the streets, but not my dog. I 
gave him to an Akita rescue organization, but that broke my heart since 
he was the only thing left from my past. Four days later I followed him 
to Thibidoux, Louisiana--a place I'd never heard of before.
    Not long after I got here, I saw a long line of people in front of 
a building. I was curious what they were doing, what was in the boxes 
they were getting. That's how I found out about the food pantry. Before 
that, I had never heard of food pantries. Since then, I've been going 
to Good Samaritan Food Bank whenever I can. Although you don't get to 
pick and choose what you want, it's good because they include things 
you can't buy with food stamps--like toiletries and paper products.
    These days, I'm eating pretty low level, just canned goods like 
Vienna sausage, spinach, peaches, because $200 in food stamps is just 
not enough for one adult. I drink a lot of water to help prevent 
hunger. I can't afford fresh food. I only eat lunch and dinner and have 
only coffee for breakfast. When my food stamps run out, it's kinda 
scary not knowing if I'm gonna have any money to eat tomorrow. Every 
time I go to the grocery store I look my receipt and say, ``O.K., how 
much do I have until the sixth of next month when I get my food stamps 
again?'' I'm worrying all the time, trying to save myself here. I'm 
thinking: I've got so much to give, a lot of experience. I ask myself, 
``What can I do next? What haven't I tried?'' So I pray, take a nap, 
re-strategize, and pick myself up.
    I've had moments of being embarrassed and on the verge of tears 
because I don't understand why I can't control any of this. But when I 
eat, I feel refreshed, and that maybe things will get better. They have 
a bit. I'm working part time at a retail big box store. I make $8, 
which comes to $800 a month. I'm living in a run-down trailer, but at 
least it's with my dog. I'm hoping to get full time work, so I can 
afford to move us to a better place. I don't know if I'll ever make the 
money that I did up north, but I hope I can move back to New Orleans 
someday. New Orleans has always been a happy place to me.
Belinda from Thibidoux, Louisiana


    One afternoon, my brother was backing out his car and didn't see my 
daughter. He ran over her. They told me that she was gonna die within 
the first 45 minutes of the accident. That was in 2004. But here we are 
in 2013, and she's still alive.
    My normal child was left in a wheel chair with traumatic brain 
injury and a trachestomy. Six months later, my mom got diagnosed with 
cancer. Then Katrina hit and I lost my mobile home and some family 
members. Then my parents died, one after another. My life has changed 
dramatically over the past decade. To get through it, I just keep my 
priorities are straight--to make sure my kids have the best education, 
clothes on their backs and food on the table.
    Before this, I made really good pay in nursing. I was able to take 
care of my three daughters and help out my parents. But the first year 
after the accident, we never knew what was going to happen and I had to 
resign from my job to be by my daughter's bedside. When I tried to go 
back to work, the recession had hit Louisiana and all they'd give me 
was work on an as-needed basis. The thing that's so confusing is that 
everyday I apply for these jobs in the newspaper, and I don't get any 
calls back.
    I'm a single mom and my only steady income since the accident is a 
little less than $2,000 a month in government assistance. My mortgage 
alone is $1,000 a month and paying that is my first priority because 
I'm not gonna have my kids on the street. I need car insurance to get 
my daughter to all her doctors appointments. She can't miss 'em. And I 
have to pay the lights and water. All that's left for groceries is 
between $150 and $300 a month. That's not enough to feed growing 
children. When I make a little extra cash house cleaning or doing 
private nursing, I go straight to the grocery store to buy food.
    I applied for food stamps but was told my income was too much. If I 
got food stamps, that would change our lives a lot. I would buy stuff 
with vitamins in it, like fresh fruit and vegetables, instead of the 
canned vegetables like spinach, corn, and baked beans that I can 
afford. I am a parent that wants my kids to eat healthy food--stuff 
that's gonna promote their growth and won't make them sick--but I'm 
havin' to fry everything because that fills my kids up and stretches 
the quantity versus giving them quality food. It makes me feel bad that 
I have to say ``no'' to them, but I have to get them to understand that 
we don't have enough food to share when their friends come over. That's 
hard because I was raised to share everything we have.
    I've made sacrifices to make sure that my kids don't starve. I'll 
go without eating to make sure they can. I done sold radios, my TV, 
even furniture to buy food. There are times when my kids wake up durin' 
the night and they're hungry. I try to figure out if there's somethin' 
in the house to give them, like the snacks that I get at the food 
pantry, so they can go back to sleep. The food pantry is a blessing. 
I'm just grateful that I can rely it, but I feel degraded to go there 
because I don't wanna be dependent on nobody for nothing. But the 
upside is I know my kids are gonna have food to eat if I go there.
    I'd do whatever I had to do to make sure that my kids have. I try 
to make the best out of every day. After all, one minute you can be up 
and another minute you can be down.
Ashley from San Diego, California


    My husband's an E4 Petty Officer on a warship. When he joined the 
Navy, I didn't think it was going to be all sunsets and roses, but I 
didn't expect that we'd have to eat ramen 7 nights a week because 
that's what we could afford. We thought being in the military might be 
a way out of living from paycheck to paycheck, but you know, a full-
time clerk at [T]aco [B]ell makes more than my husband. It's 
frustrating that he risks his life to keep us safe from terrorism, and 
misses holidays and birthdays, and doesn't get paid enough to feed the 
family the way he'd like with healthy, fresh food.
    When we found out my husband was being transferred to San Diego we 
thought for sure he'd get a cost of living allowance on top of his 
paycheck. They're given in Hawaii and other expensive places, so we 
thought we'd definitely get it here. But there is no COLA for San Diego 
so that makes living here really hard. We're not alone.
    I'm shocked that so many military families are standing in line at 
the food pantry because they really need help. Many of us struggle for 
months before finding out that there are services for us, and then it's 
pretty much word of mouth. I don't know a whole lot about FSSA, but I 
looked into food stamps and it seemed like we made $100 a month too 
much. Food stamps considers our housing allowance as income, even 
though we don't see a penny of it, but my daughter qualifies for free 
breakfast and lunch at school because our income is so low. I 
understand how base pay, hazard pay, and family separation pay should 
be considered income, but not the BAH. If that were changed, it would 
help families like us tremendously because then we'd qualify for food 
stamps and I could feed my family healthier food instead from a box.
    My husband's base pay is so low that we are barely getting by. We 
have to juggle our finances. We've given up cable and going to the 
movies. The first place I cut is food because the consequences are too 
great if I don't pay the car insurance or have gas money so my husband 
can get to work. I try to put away $50 a month for emergencies. I go to 
the food pantry because every bit helps. Some people would say it's 
wrong to use the food pantry if I can save something, but if I was 
forced to choose, I'd rather put that little bit into savings, as 
opposed to using it to buy a small bag of extra groceries, so we'd have 
money if we need to visit a sick parent or something.
    I was so embarrassed at first to go the food pantry because I grew 
up with everything I needed. But I'd rather be embarrassed and be able 
to feed my family at least one extra meal a week and buy a bit of fresh 
food. It's nice to be able to have my daughter say, ``I'd like a 
snack'' and be able to give her an apple instead of chips, because when 
she eats healthy, she isn't lethargic. It makes me so sad that my 
daughter is 6 and I have to tell her ``no'' sometimes. But on the other 
hand, I would rather grow up understanding that things costs money.
    I looked for a job, but it wasn't worth it. We'd be negative $400 
or $500 a month after paying for daycare and what would I do when my 
husband is deployed? My daughter needs one parent around if she gets 
sick or needs help with school. Like all military kids, she already 
gives up a lot.
Cheryl from Tuba City, Arizona


    Even though we never married, I never thought my boyfriend and I 
would separate. We had it made--we had five kids, a nice apartment in 
Flagstaff, our own washer/dryer, we ate out all the time. But at the 
height of the recession, the place he worked at went out of business. 
He tried to go out on his own, but he struggled. One day, he just 
didn't come home after work. I was pregnant then with our youngest, and 
to this day she hasn't met her father yet.
    After that, I moved my family to the Navajo reservation where I 
grew up. I got the piece of land that was my tribal right and put a 
small RV on it. Right now, my only means of supporting my family is a 
bit of child support, food stamps and WIC, which give me milk, cheese, 
bread and cereal for my youngest kids.
    I really want to work, but the jobs I could get won't pay enough 
for me to afford daycare for the two who aren't in school yet. I can't 
afford to hook up the water or electricity, so we're living without 
power. I can't afford to feed the kids like I want--like they ate 
before. I never know when or how much child support is coming in, so I 
have to put aside a little money each month for times when a kid gets 
sick and I'll need to buy cough syrup or something. It's hard to live 
like this, but we do it. We're a tight family.
    We live mostly on ramen, potatoes and Hamburger Helper and whatever 
we get in the boxes from the food pantry. I am pretty good at budgeting 
and making things stretch, but food is very expensive on the 
reservation and my food stamps last for only 2 weeks. When my food 
stamps come in, it's like Christmas for the kids because they get the 
foods they've been waiting for--the things they've written down on a 
list for me, like strawberries and apples. Sometimes the kids say, 
``mom I'm hungry,'' and ``my friends eat better than we do,'' but I 
tell them this is what we have. I think they understand what's going on 
because when they see the food running low, they hide some of what 
they're given in school and bring it home to eat later. It makes me 
feel so sad inside that I can't give my kids all that they want, but I 
don't let them see it. I try to make it up to them by getting them a 
pizza once in a while.
    I never thought I'd live in an RV, or have to chop wood for heat, 
or shower outdoors with buckets. I thought I'd always be able to 
provide for my kids. At least we're not bouncing around like some 
families. At least we have a place we can call home.
Charles from Haman, Louisiana


    My whole family was truck drivers, so it was in the blood for me to 
be a truck driver. I hauled government jeeps and guns all over the 
country. I just loved my job--going to different states and Canada. I 
had a stroke 9 years ago, at 62, and it shut all that down. I wasn't 
about ready to retire, but the stroke kept me from working. I'm 
wheelchair-bound now.
    I never imagined I'd get to this age and this would be my life. 
Living on low-income you learn how to stretch your money. It was hard 
at first because before the stroke, things were good. My family used to 
go out to eat, to ball games and just had fun--invite people over for a 
fish fry. But now, life's a struggle. My only income is $1,200 a month 
from Disability. I live in low-income senior housing and get Medicare, 
but after the monthly bills, I can't cover everything else I need.
    I can only really afford to go to one doctor appointment a month, 
but that just ain't enough. I try to have more money to spend on the 
doctor by putting more blankets on the bed at night instead of using 
the heat, but I still don't save enough for all the appointments I need 
to treat my diabetes and a heart condition. It makes me feel terrible 
that I can't afford to take care of my health. After my medical, I'm 
only left with about $160, plus $17 in food stamps, to spend a month on 
food. I used to eat grits, eggs, steaks and stuff like that, but since 
the stroke, I don't buy what I want to eat, but what I can afford to 
eat--mostly beans and lunchmeat, or something to make a sandwich with. 
I'm supposed to be on a special diabetes diet, but I just can't afford 
to buy that food. There are times towards the end of the month when all 
I can afford to eat for days at a time is bread and milk. I don't like 
it, but milk and bread kills the hunger a bit. When you're hungry and 
your stomach's growling, I tell yah, it really don't feel good. Getting 
the commodities once a month from the food pantry helps, but if I could 
get $40 or $50 in food stamps, I could feed myself.
    Where I live, we are low-income people and we don't have money to 
buy everything we need, so we share. Sometimes the girls over in the 
other quarter cook turkey neck bone, or something like that, and they 
bring it over here. I've realized that's how we're surviving, by 
sharing.
    My wife is dead and kids are adults now. They're struggling too. 
What really hurts me is when my daughter calls and asks for $25-$30 to 
get her hair cut and I says ``baby if I had it, I'd give it to you.'' 
She's in college and I don't' have nothing to give her right now and 
that's the hardest thing for me.

          To read more stories of people who struggle with food 
        insecurity, visit thisishunger.org/stories.
        
        

    The Chairman. Thank you, Mr. Protas.
    Ms. Hatcher, go ahead and proceed with your 5 minutes of 
testimony when you are ready. Thank you.

STATEMENT OF JENNIFER HATCHER, CHIEF PUBLIC POLICY OFFICER AND 
  SENIOR VICE PRESIDENT, GOVERNMENT AND PUBLIC AFFAIRS, FOOD 
                      MARKETING INSTITUTE,
                         ARLINGTON, VA

    Ms. Hatcher. Thank you for the opportunity to testify, and 
for the work that each of you has already done to understand 
SNAP and its importance.
    First, the supermarket retailers, wholesalers, and 
suppliers that FMI represents are fortunate to work with some 
of the world's best farmers and ranchers to ensure that the 
products we have on the shelf are safe, top quality, available 
year round, and at the most affordable price possible.
    From the food retail perspective, SNAP has evolved in a 
positive way over the past several years. It has become more 
efficient, more flexible to address unique needs and less prone 
to fraud or error. We now have a national electronic program 
with nationally approved products that is consistent from state 
to state. We have seen tremendous operational efficiencies, 
particularly around fresh products due to the expansion of the 
dates SNAP benefits are distributed by state agencies to 
customers. The administrative and licensing function is working 
extremely well. SNAP has very adeptly addressed significant 
fluctuation and the number of eligible beneficiaries.
    A couple of suggestions moving forward. First, there is 
enormous opportunity for USDA to continue to allow for 
innovation and flexibility in how we serve the customer, 
engaging the SNAP customer in a digital format. Second, we 
continue our focus on the efficiency of the transmission part 
of the transaction. Third, there should be no mandatory fees 
charged to merchants. Fourth, we need to encourage new entrants 
to the EBT contractor space to bring greater efficiency and 
innovation. Finally, the USDA online pilot needs to include 
more grocers, more locations as soon as possible to have a 
greater impact on technology design.
    There has been a great deal of thoughtful discussion 
regarding what SNAP participants are buying and how those 
products contribute to health. FMI's President and CEO, Leslie 
Sarasin, recently testified before the Committee about how SNAP 
restrictions would affect the grocery industry and our 
customers. Additionally, last May, Kathy Hanna with the Kroger 
Company testified about a partnership Kroger had entered with 
AARP, who received a Food Insecurity Nutrition Incentive, or 
FINI grant, from USDA. Another example of a successful and 
growing FINI partnership is the Double Up Food Bucks Program, 
operating in 17 Family Fare/(SpartanNash) stores in Michigan 
and 51 Price Chopper stores in Kansas City, Missouri.
    An amazing 95 percent of FMI's supermarket members report 
employing dieticians at the corporate, regional, and store 
level. Additionally, a growing number of FMI members are 
employing in-store chefs.
    Some have suggested that beyond the incentives, we should 
look at penalties and restrictions. Thoughts coming from folks 
on what these penalties or restrictions might look like are all 
over the map. Some have proposed that penalties should only 
apply to certain states or counties. Others have suggested that 
penalties should only apply to certain people. The efficiencies 
and simplicity of the administrative function of SNAP have 
happened because of the consistency of a national program. If 
we put a pilot or a block grant in place in one store or a 
series of stores or in one county, it will require significant 
IT spending. If a penalty were put in place in one county or 
stores or state, the customer would simply avoid shopping in 
the location with the restrictions in place, penalizing not 
only the customer, but also the store owners. Many have said 
that they don't want the penalty to apply to seniors or 
veterans or the disabled, or those with young children. Recent 
USDA figures indicate that 82 percent of SNAP benefit dollars 
are currently utilized by those customers. If this concept was 
developed into policy, would some kind of indicator be put on 
the SNAP cards of those individuals for whom penalties would 
apply? Would store clerks be charged with enforcement of that 
process? Would a team of people at USDA be hired to develop and 
update an electronic product list of those items that would 
trigger a penalty or restriction, and send it electronically to 
the 260,000 SNAP authorized retailers on a monthly basis? As 
you can see, an idea that seems relatively simple in theory 
could have enormous impact, expense, and complexity without a 
clear benefit.
    I would be pleased to try to answer any questions you may 
have.
    [The prepared statement of Ms. Hatcher follows:]

Prepared Statement of Jennifer Hatcher, Chief Public Policy Officer and 
 Senior Vice President, Government and Public Affairs, Food Marketing 
                        Institute, Arlington, VA
    Chairman Thompson, Ranking Member McGovern, and Members of the 
Committee,

    My name is Jennifer Hatcher, and I serve as Chief Public Policy 
Officer and Senior Vice President of Food Marketing Institute,\1\ a 
trade association that represents food retailers and wholesalers, as 
well as their suppliers of products and services. FMI members are 
located in every Congressional district across the country. FMI's tag 
line when referring to its member companies is ``Feeding Families and 
Enriching Lives,'' a responsibility we take very seriously.
---------------------------------------------------------------------------
    \1\Food Marketing Institute proudly advocates on behalf of the food 
retail industry. FMI's U.S. members operate nearly 40,000 retail food 
stores and 25,000 pharmacies, representing a combined annual sales 
volume of almost $770 billion. Through programs in public affairs, food 
safety, research, education and industry relations, FMI offers 
resources and provides valuable benefits to more than 1,225 food retail 
and wholesale member companies in the United States and around the 
world. FMI membership covers the spectrum of diverse venues where food 
is sold, including single owner grocery stores, large multi-store 
supermarket chains and mixed retail stores. For more information, visit 
www.fmi.org and for information regarding the FMI foundation, visit 
www.fmifoundation.org.
---------------------------------------------------------------------------
    As this Committee considers policies regarding ``the Next Farm 
Bill: The Future of SNAP,'' FMI very much appreciates the opportunity 
to testify and the work each of you have already done to understand 
SNAP and its importance.
    First, supermarkets are fortunate to work with some of the world's 
best farmers and ranchers in the world as supply chain partners to 
ensure that the products we have on the shelf are safe, top quality, 
available year round when customers want them, and at the most 
affordable price possible.
    We applaud the detailed review of agriculture policy and SNAP by 
this Committee and would like to share some of the progress we have 
identified with regard to SNAP, some of the changes we have seen in our 
customers and stores over the past 6 years and then will look at the 
future of SNAP and our partnership with USDA and the Congress.
    From the food retail perspective, the Supplemental Nutrition 
Assistance Program (SNAP) has evolved in a positive way over the past 
several years. It has become more efficient, more flexible to address 
unique needs and less prone to fraud or error.
    We now have a national program with nationally-approved products 
that is consistent from state to state. The evolution to 100% 
interoperable electronic transactions, thanks in large part to the 
foresight of this Subcommittee in 2001, has made the program much 
easier for operations and compliance and much simpler for customers. It 
allows states to share and compare data and retailers to look for 
inconsistencies and fraud.
    We have seen tremendous operational efficiencies particularly 
around fresh product, on-shelf availabilities and fewer out of stocks 
due to the expansion of the dates SNAP benefits are distributed by 
state agencies to customers. Only seven states continue to issue 
benefits on 1 day in the month, a number we continue to work to reduce 
(benefits issuance chart attached).
    The administrative and licensing function is working extremely 
well. There is a very competent and responsive team at USDA charged 
with this responsibility.

   SNAP has very adeptly addressed significant fluctuation in 
        the number of eligible beneficiaries via both regular issuance 
        changes due to economic downturns and improvements and Disaster 
        SNAP (D-SNAP) special issuance for major disasters. Following 
        the major economic downtown, in December 2012, there were 
        47,792,056 people on the program vs. the most recent figures in 
        December 2016: 42,968,525 people (which represents the lowest 
        monthly level since September 2010).

    Through this recent positive evolution of program elements, we have 
also seen significant changes in our customers' tastes and desires and 
approaches to shopping.

   Households have moved to shared responsibility for shopping 
        (almost \1/4\ of shoppers have a 50/50 split in the shopping.)

   Shoppers are visiting a broad array of stores for their 
        shopping.
Shoppers Continue To Shop Multiple Channels
          Shoppers today are visiting a broad array of stores to get 
        their shopping done. The last 10 years have seen a slow but 
        steady shift of shoppers away from traditional supermarkets as 
        primary store to other channels, such as supercenters, club 
        stores and limited assortment retailers. Notably, in the past 3 
        years, a significant number of shoppers are no longer claiming 
        any one store as their primary store for groceries (see Chart 
        1.1).
Chart 1.1: Channel of Primary Store


          Source: FMI U.S. Grocery Shopper Trends, 2016. Q; ``Which 
        store or service do you consider your primary source of 
        grocery-type items? In other words, where do you spend the most 
        money on grocery-type items for use in your home?'' 2016: n = 
        2,061. *``No primary store'' not measured prior to 2011. Other 
        channels (Convenience, Dollar, Drug, Ethnic, Military and On 
        line-only) account for approximately 2% of all primary store 
        channels selected in 2016. Other channels account for 1% of all 
        primary store channels selected in 2015. (See Appendix: Table 
        A.9).

   Online is growing. We anticipate it starting to grow more 
        aggressively--perhaps reaching 20% by 2025.\2\
---------------------------------------------------------------------------
    \2\``The Digitally Engaged Food Shopper.'' The Nielsen Company and 
Food Marketing Institute, January 2017.
---------------------------------------------------------------------------
Chart 1.5: Past 30 Day Usage of Online Grocery, Trended By Generation


          Source: FMI U.S. Grocery Shopper Trends, 2016. Q: ``Please 
        indicate the sources where you've purchased grocery-type items, 
        either in person or online in the past 30 days. (Online 
        channel.)'' 2016: n = 2,061. 2015: n = 2,265. (See Appendix: 
        Table A.8).

   Shoppers are using digital tools to be better informed about 
        food, shopping and cooking.

     Table 1.3: Shopper Activities Used Occasionally/Frequently Via
                        Smartphone, By Generation
------------------------------------------------------------------------
 Shopper Online
   Activities:
  Occasionally/     Total    Millennial    Gen-X     Boomer     Mature
   Frequently
------------------------------------------------------------------------
Use digital            49%          59%       45%        44%         18%
 coupons
Look up recipes        47%          66%       47%        24%          8%
Check weekly           46%          55%       41%        41%         25%
 sales specials
 at your primary
 store
Read reviews of        32%          41%       31%        22%         17%
 products and
 brands
Scan QR codes or       23%          29%       22%        15%         10%
 traditional
 barcodes of
 grocery type
 items to
 compare pricing
 across stores
 (for example,
 with Amazon)
Use the in-store       21%          29%       19%        15%          7%
 item locator
Scan QR codes or       20%          23%       19%        18%         13%
 traditional
 barcodes of
 grocery-type
 items to learn
 more about
 their
 nutritional
 value
------------------------------------------------------------------------
Source: FMI U.S. Grocery Shopper Trends, 2016. Q: ``While at the grocery
  store, how often do you use each of the following with your
  smartphone? (Top-2 Box)'' (Among shoppers with smartphones) n = 731.
  (See Appendix: Table A-36).

   With the continued threat to center store, stores have to 
        rethink their focus and space allocations--some are getting 
        laser focused on fresh categories--ready to eats, private 
        brands--and some on pharmacy and expanded health and wellness 
        program offerings.

   With nearly nine in ten shoppers having confidence in the 
        safety of food at the grocery store, stores are able to focus 
        more of their wellness attention to labels, analyzing 
        nutritional claims and other wellness distinctions.
Figure 3.1: Health & Wellness Conti[n]uum: From Food Safety to 
        Community Wellness
        
        
          Source: FMI U.S. Shopper Trends, 2016. Q: ``How confident are 
        you that the food in your grocery store is safe?'' (See 
        Appendix: Table A.59). Q: ``What healthy aims do you look for 
        on the package when purchasing a product? (Select all that 
        apply)'' (See Appendix: Tables A.48-49). Q: 6 ``How concerned 
        are you about the nutritional content of the foods you eat?'' 
        (See Appendix: Table A.45). *The Hartman Group. 
        ``Transparency,'' 2015.

    The factors consumers consider when choosing a store or a product 
are getting morecomplex. Where once there were three key factors--cost, 
taste, convenience--now more than\1/2\ of shoppers are also considering 
additional considerations, including health andwellness, food safety, 
and corporate social responsibility.
Future
    First, there is enormous opportunity for USDA to continue to allow 
for innovation and flexibility in how we serve the customer, engaging 
the SNAP customer in a digital format with more product information, 
menu planning, and better budgeting.
    We need to continue our focus on the efficiency of the transmission 
part of the transaction. We need more and better up time on EBT 
systems; they are currently not performing at the same level of 
efficiency as debit and credit card systems. Any system outage results 
in hours and hours of back-end work matching failed transactions to 
make sure customers are not double charged when a system returns to 
functionality.
    In spite of the lower performance in some cases, there have been 
efforts by some processors to charge retailers fees on transactions--a 
tactic that has been strictly prohibited for decades and needs to be 
clarified in this farm bill. There should be no mandatory fees charged 
to merchants.
    One area where retailers see a growing challenge is the actual 
transmission of the transaction through the state contracted 
processors. Currently, states contract with payments processors to 
handle SNAP and eWIC transactions. Unfortunately, there are very few 
processors in this space, in fact, until recently only two. This lack 
of competition has made the systems less reliable, and we have seen a 
growing frequency of down-times where our members cannot process SNAP 
transactions and customers cannot buy groceries. This is incredibly 
disruptive at store level with abandoned baskets and slowing down of 
checkout lines, all coming at a great cost to our members and a great 
inconvenience to customers. Even more concerning, the state-contracted 
processors are now beginning to propose that merchants and their 
acquirers pay a fee to process SNAP transactions. This tactic has been 
strictly prohibited for decades by the law written by this Committee. 
FMI and our retail members will be seeking further legislative 
clarification in the next farm bill that there should be no fees 
charged to grocers for accepting SNAP.
    We also need new entrants to the state SNAP EBT contractor pool as 
competition inevitably leads to greater efficiency and innovation. As 
mentioned earlier, until recently there were only two processors in the 
market. Recently we learned of a new entrant, Solutran, currently 
contracting to process both SNAP and eWIC, and we are excited to work 
with them in some of these new areas. While three is better than two, 
we look forward to working with the Committee on finding additional 
ways to attract new entrants into the market.
    The demographics of shoppers and how they shop is changing 
dramatically. In January, USDA announced seven retailers and seven 
states selected to participate in a 2 year pilot currently slated to 
begin in August. While FMI has not had any additional communication 
since the announcement about the project, we understand that it is not 
moving very fast and seems to be limited to very few transactions. 
Based on industry research, more grocery customers are shopping online. 
If we wait 2 years for a small scale pilot and then evaluate data 
before determining scalability and criteria, there will not be any 
significant focus on new technology implementation for 3 years or more, 
which is likely to be very late in the technology evolution to be able 
to impact design. One thing we continue to learn is that integrating 
functionality early in technology design and utilization is far simpler 
and less expensive than after-the-fact retrofitting. FMI hopes that 
USDA will move more quickly on a second round in the pilot to allow for 
more grocer participation across the country.
    Responding to consumer interest in having more information about 
products, the retail grocery industry recently launched the SmartLabel 
initiative under the leadership of FMI and GMA. Currently covering over 
5,000 products and expecting 30,000 products by the end of 2017, 
SmartLabel is a digital platform that organizes required and voluntary 
product information and makes it accessible to customers from an app, 
QR code or website. Through SmartLabel and Facts Up Front, which 
launched in 2011, the retail grocery industry is working to help 
consumers make more informed choices about food and their health.
    FMI members have a strong commitment to reducing food waste in our 
supply chain and addressing consumer confusion that can lead to waste 
in the home for SNAP customers and for all customers. Since 2011, we 
have worked with the Grocery Manufacturers Association (GMA) and 
National Restaurant Association (NRA) as part of the Food Waste 
Reduction Alliance (FWRA), which has established itself as one of the 
leading industry-led coalitions fighting food waste in the United 
States. FWRA provides a forum for sharing innovative best practices and 
improving the measurement of food waste in our supply chains, and has 
emerged as a ``go to'' resource for NGOs, academics and policy makers.
    FMI has also worked with our partners at the Grocery Manufacturers 
Association to reduce food waste by addressing consumer confusion 
around date labels. In February, FMI and GMA announced a voluntary, 
industry-led effort to begin reducing the dozen or more different terms 
currently found on food packages to two consistent phrases--``BEST if 
used by'' for packages where quality is the primary concern and ``USE 
by'' for perishable or short shelf-life products. Efforts are already 
underway to implement this new phrasing.
    I would also be remiss if I did not mention one of our proudest 
resources--the Food Keeper (available as an app or online at http://
www.fmi.org/industry-topics/consumer-affairs/foodkeeper-food-storage-
database)--which was developed as part of an innovative collaboration 
between FMI, USDA, and Cornell University. The Food Keeper allows 
consumers to look up individual product categories and receive guidance 
on storage and preparation of the product to maximize freshness, 
quality and shelf life.
    The health and eating habits of SNAP participants is another area I 
would like to address. There has been a great deal of thoughtful 
discussion in the Committee on what SNAP participants are buying and 
consuming. FMI's President and CEO, Leslie Sarasin, recently testified 
before the Committee about how SNAP restrictions would affect the 
grocery industry and our customers. Additionally, last May, Kathy Hanna 
with the Kroger Company testified about a partnership Kroger had 
entered with AARP who received a Food Insecurity Nutrition Incentive 
(FINI) Grant from USDA. The partnership allows Kroger to incentivize 
SNAP customers to purchase more fresh fruits and vegetables in their 
stores. We recently received an update that the program is growing 
strong with weekly coupon redemptions around $2,700. Currently the 
program is active in seventeen of their stores around the Memphis, TN 
area and will expand to another eight in the coming months.
    Partnerships like these and even individual actions by grocers are 
the creative incentives that are a win-win for local farmers, 
supermarket and customers. Another example of a successful and growing 
FINI partnership is the Double Up Food Bucks program operating in 17 
Family Fare/(SpartanNash) stores in Michigan and 51 Price Chopper 
stores in Kansas City, MO. (article attached).
    There is a growing market for grocers to help all of their 
customers make the right food choices for their families based on both 
budget and nutrition. An amazing 95% of FMI's members report employing 
dietitians at the corporate, regional and store level. Just recently 
local grocer Giant Food Stores announced an expansion of its in-store 
nutritionists program by adding three more to their staff.
    Grocers like Giant employ in-store dietitians and nutritionists to 
perform one-on-one consultations for customers with specific dietary 
needs, store tours and community classes to help educate customers on 
how to make the right selections for their families and prepare the 
foods they buy. Additionally, a growing number of FMI's members are 
employing in-store chefs who host cooking demonstrations, help with 
menu building and provide recipes. These services are provided to all 
customers regardless of how they pay.
    Some have suggested that beyond the incentives, we should look at 
penalties and restrictions. Thoughts coming from folks on what these 
penalties or restrictions might look like are all over the map. Some 
have proposed that penalties should only apply to certain states or 
counties. Others have suggested that penalties should only apply to 
certain people. I want to reiterate that the efficiencies and 
simplicity of the administrative function of SNAP that have achieved 
easier operation and compliance and a simpler customer experience have 
happened because of the consistency of a national program. If we put a 
pilot or a block grant in place in one store or a series of stores or 
one county, it will require significant IT spending. The impact on the 
card is also unknown. If a penalty were put in place in one county or 
stores or state, the customer could simply avoid shopping in the 
location with the penalties or restrictions in place--penalizing not 
only the customer, but also the store owner. Another point that some 
who have suggested a penalty or restriction for purchasing unhealthy 
foods is that we don't want the penalty to apply to seniors or veterans 
or the disabled or those with young children. Recent USDA figures 
indicate that 82% of benefit dollars are currently utilized by those 
categories of people. If this concept was developed into policy, would 
some kind of indicator be put on the SNAP cards of those individuals 
for whom penalties would apply? Would store clerks be charged with 
enforcement? Would a team of people at USDA be hired to develop and 
update an electronic product list of those items that would trigger a 
penalty or restriction and send it to the 260,000 SNAP authorized 
retailers on a monthly basis? As you can see, an idea that seems 
relatively simple in theory, would have enormous impact, expense and 
complexity without a clear benefit.
    At FMI, we take the responsibility of providing our customers safe 
and affordable food and nutrition very seriously. As discussions 
regarding the future of food and agriculture policy continue, we very 
much appreciate the opportunity to provide our insight as we learn from 
our members and our customers.

          State-by-State Monthly SNAP Benefit Issuance Schedule
  (Current as of February 13, 2017; Food Marketing Institute Research)
------------------------------------------------------------------------
             State                 Day(s) of SNAP Benefit Distribution
------------------------------------------------------------------------
Alabama                         In August 2013, the state expanded their
                                 distribution dates, moving from the 4th
                                 to the 18th of the month to the 4th
                                 through the 23rd of the month. To
                                 assist in the transition, recipients
                                 received \1/2\ of their benefit on
                                 their original date and \1/2\ on their
                                 new date in the month.
Alaska**                        The main SNAP issuance is all on the
                                 first day of the month. Smaller
                                 supplemental issuances for new
                                 applicants and late recertifications
                                 occur daily throughout the month.
Arizona                         SNAP benefits are distributed over the
                                 first 13 days of the month by the first
                                 letter of the recipients' last name.
                                 For example: last names that begin with
                                 A or B are distributed on the first day
                                 of the month; 2nd day of the month: C
                                 and D; etc.
Arkansas                        Arkansans receive their benefits on
                                 these 8 days: 4th, 5th, 8th, 9th, 10th,
                                 11th, 12th or 13th of each month, based
                                 on the last number of their [S]ocial
                                 [S]ecurity [N]umber.
California                      California is different in that each
                                 county distributes SNAP to those who
                                 qualify. The payments go out to all
                                 those who qualify between the 1-10 of
                                 the month. Others (i.e., new
                                 applicants) get paid throughout the
                                 month depending on when they were
                                 accepted.
Colorado                        Food Stamp benefits are distributed on
                                 the first 10 days of the month by the
                                 recipient's last digit of their
                                 [S]ocial [S]ecurity [N]umber.
Connecticut                     SNAP benefits and cash are distributed
                                 on the first 3 days of the month, by
                                 the first letter of the recipient's
                                 last name. (A-F are available on the
                                 first; G-N on the second and O-Z are
                                 distributed on the third day of the
                                 month.)
Delaware                        Benefits are made available over 23
                                 days, beginning with the 2nd day of
                                 every month, based on the first letter
                                 of the client's last name.
District of Columbia            Benefits are made available from the 1st
                                 to the 10th of every month, based on
                                 the first letter of the client's last
                                 name.
Florida                         All SNAP recipients moved from a 15 day
                                 distribution to a 28 day distribution
                                 in April 2016. In March 2016, to assist
                                 in the new transition, benefits were
                                 ``split.'' Recipients received the
                                 first \1/2\ of their benefits on their
                                 ``old'' date and received the second \1/
                                 2\ of their monthly benefits on what
                                 was their ``new'' date going forward.
                                 The ACCESS Florida system assigns
                                 benefit availability dates based on the
                                 case number recipients received when
                                 they became eligible for the SNAP
                                 program.
Georgia                         In September 2012, SNAP benefits in
                                 Georgia expanded from the 5th to the
                                 14th, and then finally to the current
                                 5th to 23rd of each month, distributed
                                 every other day.
Hawaii                          Benefits are made available on the 3rd
                                 and the 5th of every month, based on
                                 the first letter of the client's last
                                 name.
Idaho                           Benefits were previously made available
                                 on the first day of every month. (Prior
                                 to August 2009, benefits were
                                 distributed on 5 consecutive days at
                                 the beginning of each month, but this
                                 was later moved to 1 day.) In 2014,
                                 H.B. 565 was enacted. The bill requires
                                 the state Department of Health and
                                 Welfare to issue SNAP benefits over the
                                 course of 10 consecutive days within a
                                 month. Bonus money received from USDA
                                 paid for the cost of the change.
                                Currently, and since July 1, 2016,
                                 benefits are distributed over the first
                                 10 days of each month based on the last
                                 number of the birth year of the
                                 recipient; for example, a birthday of 8/
                                 25/64 would receive benefits on the 4th
                                 day of each month.
Illinois                        SNAP benefits are made available on
                                 these 12 days of the month: 1st, 3rd,
                                 4th, 7th, 8th, 10th, 11th, 14th, 17th,
                                 19th, 21st, and 23rd of every month,
                                 based on a combination of the type of
                                 case and the case name.
Indiana                         On January 1, 2014, the state
                                 implemented an expanded schedule for
                                 the distribution of benefits during the
                                 fifth through the twenty-third day of
                                 each month, to be issued every-other-
                                 day, based on the first letter of the
                                 recipient's last name. For example: A
                                 or B = benefits available on the 5th;
                                 first Letter of the Last Name is: C or
                                 D = benefits available on the 7th.
                                 Previously, benefits were made
                                 available on the first 10 calendar days
                                 each month. (TANF is issued on the
                                 first of the month.)
Iowa                            Benefits are made available over the
                                 first 10 calendar days of every month,
                                 based on the first letter of the
                                 client's last name.
Kansas                          Benefits are made available over the
                                 first 10 calendar days of every month,
                                 based on the first letter of the
                                 client's last name.
Kentucky                        Benefits are made available over the
                                 first 19 calendar days of every month,
                                 based on the last digit of the client's
                                 case number. This was recently expanded
                                 from the previous 10 day distribution.
Louisiana                       Benefits are made available between the
                                 1st and the 14th of every month, based
                                 on the last digit of the client's SSN.
                                 (Elderly and disabled benefits are made
                                 available between the 1st and the 4th
                                 of every month.)
Maine                           Benefits are available the 10th to the
                                 14th of every month based on the last
                                 digit of the recipient's birthday.
Maryland                        In January 2016, the distribution
                                 schedule was changed. Benefits are now
                                 distributed from the 4th to the 23rd of
                                 every month, based on the first three
                                 letters of the client's last name.
                                 Previously, benefits were distributed
                                 from the 6th through the 15th of the
                                 month. This was accomplished through a
                                 5 month phase-in.
Massachusetts                   Distribution is based on the last digit
                                 of each recipient's [S]ocial [S]ecurity
                                 [N]umber and distributed over the first
                                 14 days of the month.
Michigan                        In January 2011, SNAP moved from a 7 day
                                 distribution to the current
                                 distribution, which is from the 3rd to
                                 the 21st, distributed every-other-day,
                                 based on the last digit of the head of
                                 household's recipient identification
                                 number. For example, clients' numbers
                                 ending with 0 will receive food
                                 benefits on the 3rd of the month;
                                 numbers ending with 1, food benefits
                                 will be available on the 5th of the
                                 month.
Minnesota                       Benefits are staggered over 10 calendar
                                 days, beginning on the 4th through the
                                 13th of every month, without regard to
                                 weekends or holidays, based on the last
                                 digit of the client's case number.
Mississippi                     Effective February 2017, benefits are
                                 made available from the 4th to the 21st
                                 of every month, based on the last two
                                 digits of the client's case number.
                                 Benefits were previously distributed
                                 from the 5th to the 19th (15 days) of
                                 every month.
Missouri                        Benefits are made available over the
                                 first 22 days of every month, based on
                                 the client's birth month and last name.
Montana                         Benefits are distributed over 5 days by
                                 the last number of the recipient's case
                                 number, from the 2nd to the 6th of
                                 every month.
Nebraska                        Nebraska distributes benefits during the
                                 first 5 calendar days of the month. The
                                 day of distribution is based on the
                                 last digit of the [S]ocial [S]ecurity
                                 [N]umber.
Nevada**                        In Nevada, food stamp benefits are
                                 issued on the first day of each month.
New Hampshire**                 New Hampshire benefits are available on
                                 the 5th of every month.
New Jersey                      The monthly SNAP allotment is available
                                 over the first 5 days of the month. The
                                 day is based on the number in the 7th
                                 position of their case number. Some of
                                 the cases still receive their benefits
                                 based on the assignment at the time the
                                 county was converted to EBT. In Warren
                                 County, all benefits are made available
                                 on the 1st of the month.
New Mexico                      Benefits are made available over 20 days
                                 every month, based on the last two
                                 digits of the SSN.
New York                        The process is twofold as follows: in
                                 New York City, recipients receive their
                                 SNAP benefits within the first 13
                                 business days of the month, according
                                 to the last digit of their case number,
                                 not including Sundays or holidays. The
                                 actual dates change from 1 month to the
                                 next, so NYC publishes a 6 month
                                 schedule showing the exact availability
                                 dates. For the remainder of New York
                                 State, recipients receive their
                                 benefits within the first 9 days of the
                                 month, also according to the last digit
                                 of their case number, including Sundays
                                 and holidays.
North Carolina                  Effective July 2011, the state expanded
                                 its 10 day distribution schedule.
                                 Benefits are now distributed from the
                                 3rd to the 21st of every month, based
                                 on the last digit of the primary
                                 cardholder's Social Security Number.
North Dakota**                  Benefits are made available on the first
                                 day of every month.
Ohio                            In April 2014, Ohio expanded its SNAP
                                 distribution from the first 10 days of
                                 the month to the first 20 days of the
                                 month, staggered every 2 days. This
                                 only affected SNAP recipients who moved
                                 from one county to another; recipients
                                 who experienced a 1 day or more break
                                 in eligibility; and, all new
                                 recipients. Recipients who were on SNAP
                                 before April 2014 did not see a change.
Oklahoma                        Benefits are made available from the 1st
                                 to the 10th of every month, based on
                                 the last digit of the client's SNAP
                                 case number.
Oregon                          SNAP is distributed on the first 9 days
                                 of the month as such: [S]ocial
                                 [S]ecurity [N]umbers ending with ``0''
                                 or ``1'' distribute on the 1st day of
                                 the month, numbers ending with a ``2''
                                 are distributed on the 2nd day of the
                                 month and so on.
Pennsylvania                    Benefits are made available over the
                                 first 10 business days of every month
                                 (excluding weekends and holidays) based
                                 on the last digit of the client's case
                                 number.
Rhode Island**                  Benefits are made available on the first
                                 day of every month.
South Carolina                  In 2012, South Carolina expanded from a
                                 9 day to a 19 day issuance. Current
                                 recipients stayed within the 9 day
                                 distribution, but all new recipients
                                 were given a date that expanded into
                                 the 19 days.
South Dakota**                  Benefits are made available on the 10th
                                 day of every month.
Tennessee                       In October 2012, Tennessee expanded
                                 distribution from 10 to 20 days.
Texas                           Benefits are made available over the
                                 first 15 days of the month, based on
                                 the last digit of the client's SNAP
                                 case number.
Utah                            Benefits are made available on the 5th,
                                 11th, or 15th of every month, based on
                                 the first letter of the client's last
                                 name: A-G available on the 5th; H-O
                                 available on the 11th; P-Z available on
                                 the 15th.
Vermont**                       Vermont benefits are available on the
                                 first of every month.
Virginia                        On September 1, 2012, benefit
                                 distribution was moved from 1 day a
                                 month to 5 days, and then eventually to
                                 the current 1st to the 9th day of every
                                 month, based on the last digits of the
                                 client's case number.
Washington                      Benefits are staggered over the first 10
                                 days of the month based on the last
                                 digit of the households' assistance
                                 unit number. Weekends and holidays do
                                 not affect the schedule. However,
                                 beginning February 1, 2017, an
                                 expansion of distribution was fully
                                 implemented. Going forward, it will be
                                 the first 20 days of the month.
West Virginia                   Benefits are made available over the
                                 first 9 days of every month, based on
                                 the first letter of the client's last
                                 name.
Wisconsin                       Benefits are made available over the
                                 first 15 days of every month, based on
                                 the eighth digit of the client's SSN.
Wyoming                         SNAP is distributed on the first 4 days
                                 of the month.
------------------------------------------------------------------------
Notes:
**States with asterisks are those that only distribute benefits on 1 day
  a month. There are seven that still do so. Warren County, New Jersey
  distributes only 1 day a month, although the rest of the state
  distributes over 5 days. Also, there are four states that distribute
  SNAP just 2 or 3 days a month.
Additional Distribution Information:
There is no limit on the number of days for stagger. The only condition
  in regulation is that no single household's issuance should exceed 40
  days between issuances.
Currently, benefit recipients may only be issued their benefits one time
  a month, or within 40 days.

                              Attachments


Local Produce Incentive Program Expands
USDA-Backed Double Up Food Bucks Rolls Out to Dozens of Retail 
        Locations
Supermarket News
Mark Hamstra, Mar. 16, 2017


          The Double Up Food Bucks program benefits local farmers while 
        enabling low-income consumers to purchase healthy produce.
          Photos courtesy of SpartanNash.

    An increasing number of food retailers have found that a healthy-
eating incentive program that was originally launched at farmers' 
markets can help drive sales in their stores as well.
    The program, called Double Up Food Bucks, offers low-income 
consumers an incentive to buy local produce and to purchase more fruits 
and vegetables overall. It has been growing quickly in the grocery 
sector, with dozens more stores slated to come online around the 
country this year.
    This spring Double Up will be rolled out to 51 Price Chopper stores 
in the Kansas City, Mo., market, after launching in just a handful of 
Price Chopper locations in 2015.
    ``We're big proponents of the program, because it helps our 
customers, it helps local farmers, and it's good for us, too, so it's a 
win-win program all around,'' said Michael Beal, chief operating 
officer, Ball's Food Stores.


          SpartanNash offers Double Up Food Bucks at 17 Family Fare 
        stores in Michigan.

    Ball's debuted Double Up Food Bucks in four Kansas City-area Price 
Chopper locations in 2015 and has since expanded it to 14 stores. This 
spring, several additional Price Chopper operators in the market are 
planning to launch the program. In addition, a Whole Foods Market in 
Overland Park, Kan., and Rollin' Grocer, a traveling store based out of 
a trailer, also participate in the program in the Kansas City market.
    Double Up Food Bucks was launched by the Ann Arbor, Mich.-based 
Fair Food Network in five farmers' markets in the Detroit area in 2009. 
Consumers who receive Supplemental [Nutrition] Assistance Program 
(SNAP) benefits, formerly known as food stamps, can earn $1 toward the 
future purchase of any produce item for every $1 they spend on local 
produce at participating grocery stores.
    The program received a boost through $100 million in funding that 
was included in the 2014 Farm Bill, some of which was awarded last year 
to local organizations supporting Double Up Food Bucks. The Food 
Insecurity Nutrition Incentive (FINI) grants program was created to 
support healthy food incentive programs like Double Up Food Bucks 
across the country.
    ``It has energized this field, and incentivized more partners to 
bring this program into their communities,'' said Emilie Engelhard, 
communications director at the Fair Food Network, of the FINI program.
    Beal said the Double Up Food Bucks program has driven up sales of 
local produce in double digit percentages at Ball's Price Chopper 
stores and has increased transactions among SNAP customers.
    The local organization driving the program in the Kansas City area, 
called Double Up Heartland, has a goal of expanding the program to 117 
retail locations and 68 farmers' markets in the region by 2019, 
according to Engelhard.
    In addition to Kansas and Missouri, the Double Up Food Bucks 
program has also been rolled out to grocery stores in Michigan, 
Arkansas, New York, Colorado and New Mexico, and just last month was 
introduced in California. The program launched in the San Jose, Calif., 
market in three retail locations--two Arteaga's Food Centers and one 
location of Food Bowl 99.
    This summer it is slated to debut at Schnuck Markets in the St 
Louis, Mo., area, according to the Double Up Heartland website.
    ``We really do see grocery as being an important next tier for 
incentive work,'' said Engelhard.


          Retail banner D&W Fresh Market reflects SpartanNash's 
        commitment to fresh.

    SpartanNash, based in Grand Rapids, Mich., in 2014 became the first 
major retailer to offer Double Up Food Bucks in multiple stores when it 
launched in two Family Fare supermarkets in Michigan. The program was 
expanded to five Family Fare locations in 2015, and last year it 
expanded the rollout to 17 Family Fare stores in Michigan.
    In 2016, 80% of points earned toward produce were redeemed, 
SpartanNash said. The company said it was in the process of 
``significantly expanding its program for 2017.''
    ``I love that we can offer the Double Up Food Bucks program at our 
store for the fourth year in a row,'' said Renee Harris, store director 
of the Family Fare Supermarket in Battle Creek, Mich. ``Through the 
program, we can support local products while helping our customers 
stretch their food dollars and encourage healthier eating.''
    SpartanNash said the program exemplifies its commitment to 
corporate responsibility, including environmental sustainability and 
social responsibility.
    Fair Food Network said both Ball's Food Stores and SpartanNash have 
been important to the growth of the program at retail.
    ``The partnership with SpartanNash significantly raised the profile 
of the work within the grocery sector at large,'' said Oran Hesterman, 
President and CEO of Fair Food Network. ``SpartanNash understood early 
on the power of this work as a means to better serve its customers and 
the broader community.''
    SpartanNash and Ball's Food Stores both have long had a commitment 
to local produce, and SpartanNash recently expanded its capabilities in 
this area with the acquisition of Caito Foods Service, a distributor of 
fruits, vegetables and prepared foods.
    ``We are excited to join forces with SpartanNash and increase our 
footprint in providing local fresh products,'' Tony Mitchell, VP of 
sales and procurement at Caito Foods, told SN. ``This acquisition will 
serve to enhance our reach to a greater number of regional family farms 
and consumers.''
    He said consumer interest in local product, which is being driven 
in large part by Millennials, continues to gain strength.
    ``We understand that customers have a growing appetite for locally 
grown items, and SpartanNash has an equally strong appetite for 
supporting local farmers,'' said Mitchell.
    Beal of Ball's Food Stores said he continues to see growth in 
demand for local produce as well.
    ``Our consumers are telling us they want fresh, and its almost to 
the point where there's a perception by consumers that it's as 
important as organic,'' he said, noting that many of the local farmers 
who supply Ball's locations do farm organically.
    ``Local farmers want to get their goods to market, and we have been 
doing that with local farmers for 18 or 20 years,'' said Beal. ``This 
is just another benefit of working with local farmers, and we continue 
to help them grow that business.''

          Source URL: http://www.supermarketnews.com/produce-floral/
        local-produce-incentive-program-expands.

    The Chairman. Thank you for your testimony, Ms. Hatcher. 
The chair would like to remind Members that they will be 
recognized for questioning in order of seniority for Members 
who were here at the start of the hearing. After that, Members 
will be recognized in order of arrival. I appreciate Members' 
understanding.
    We are joined in this hearing by the Ranking Member of the 
full Agriculture Committee, so I am pleased to recognize Mr. 
Peterson for 5 minutes of questioning.

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

    Mr. Peterson. Thank you, Mr. Chairman. I won't take 5 
minutes, but I appreciate you holding this hearing. I 
appreciate the witness' testimony.
    This hearing is entitled, The Next Farm Bill: The Future of 
SNAP. Well, I believe that the future of SNAP is in the farm 
bill, and I think that everybody knows by now that I doubt if 
it is not in the farm bill, then we won't even have a farm bill 
in the future.
    I know there are other Members of the Committee and other 
Members of the House and Senate who agree with that assessment, 
but I worry that the House leadership isn't on the same page, 
and I don't want to find us in another situation where 
leadership steps in and mucks this up by adding unrealistic 
work requirements or some other ideological policy that would 
blow up the whole bill, similar to what happened in 2013.
    The Committee's review of SNAP covered a lot of issues. We 
heard about the success of the program. We also heard some ways 
that we may be able to improve performance. I hope that we can 
keep these facts in mind and find some common ground to make 
sure SNAP is as effective as possible, and that we maintain 
this effective program.
    Again, I am not quite sure where SNAP policy is headed, but 
the farm bill is where it needs to stay. I want to thank the 
Chairman for the time, and I yield back the balance of my time.
    The Chairman. The gentleman yields back.
    I will now take the liberty of 5 minutes of questioning.
    First of all, just thank you to all five of our witnesses 
for being here today and the experience you are contributing to 
a great conversation. We don't get the good public policy 
without good information, and you are serving a tremendous role 
here. It is appreciated.
    Mr. Arthur, we have seen many food banks evolve from simply 
distributing food to providing more comprehensive anti-hunger 
programming, and social service outreach to their local 
communities. In your testimony, you speak of both the food 
distribution and SNAP application assistance services that the 
Central Pennsylvania Food Bank provides. How do you work to 
connect families to these and other programs such as SNAP, or 
employment and training that may be able to offer them longer-
term support and a path towards self sufficiency? And can you 
reflect a little bit on how you work collaboratively with 
partners and other local organizations in your community to 
provide case management and other types of supportive services?
    Mr. Arthur. Thank you, Mr. Chairman. I will take that in a 
few parts.
    First of all, we do direct SNAP outreach now as part of our 
overall food assistance services. And just for the 
Subcommittee, in our central Pennsylvania territory, if you add 
up SNAP and the other Federal food assistance programs, WIC, 
The Emergency Food Assistance Program, all of those, they are 
about ten times larger in the amount of food that is 
distributed in our service territory, ten to one. And we 
distributed almost 50 million pounds of food last year, that is 
to give you an idea of the scale here.
    The second part of that, we do SNAP outreach because we 
think it is a very efficient way to serve, and as I noted in my 
written testimony, we are actually on the low end participation 
rates for folks that might be eligible for SNAP in central 
Pennsylvania, lower than the national average, lower than the 
state average. We decided that something needed to be done, 
that we needed to be in that type of work, and we actually 
right now support that on just privately funded dollars, no tax 
dollars. We believe that is a very important way to serve.
    With respect to other services, we are proud that many of 
our partners do very holistic services right in their 
communities and their neighborhoods, community action programs, 
Salvation Army programs, of course, many faith-based 
organizations, and others that actually do, in addition to food 
service, do direct assistance with job searches, training, et 
cetera. We feel that we are a better partner if we can take 
away all of the food assistance costs and work, and then lend 
our shoulder to their work to help people get connected to 
jobs. While we don't directly create a lot of jobs--although I 
have 100 employees, we do help others that do that. We believe 
that is very important.
    Probably the newest work that we do is with healthcare. We 
are working with some of the primary healthcare organizations 
in central Pennsylvania. Names you might know would be like 
Penn State Hershey Medical would be a big one, Geisinger Health 
Systems. We work with them at the intersection of healthy 
eating and good health outcomes, and there are a lot of details 
in the programs that we do, but it is very important that we do 
that work as well. And we also, as Chairman Thompson has seen, 
we actually have teaching kitchens and we do a very robust 
curricula around helping our member agencies and their clients 
learn better habits on the whole food chain. We are very proud 
of that, and last year we did over 1,600 hours of training like 
that.
    I am very proud that we are part of the broad spectrum of 
not only making sure people are fed, but that they can sustain 
their own lives. We are working to end hunger, not just to feed 
people.
    Thank you.
    The Chairman. Thank you.
    Mr. Protas, in your testimony, and I appreciate your 
testimony. You really kind of touched on the diversity of 
individuals that are within that able-bodied adults without 
dependents classification or label. But in time limits and 
subsequent employment and training programs, what do you see is 
the key to engaging individuals? How do you do that so to 
better engage recipients so you ensure that they are able to 
reach their full potential and progress in their pathway out of 
poverty?
    Mr. Protas. Thanks for the question.
    It is important that there are opportunities available to 
these ABAWDs. In many locations where an individual may be 
facing a time limit, there simply aren't enough job 
opportunities or available job training slots, so to have the 
expectation for somebody to participate in a job training 
program that isn't there or to find a job that is not readily 
available or accessible for them in the community where they 
live is an unfair expectation. Investments should be made to 
make sure that we have job training opportunities that are 
readily available that have case management that will 
effectively help that person along that path, and help that 
person get back to work.
    We heard in previous hearings testimony from other 
witnesses about the importance of that individualized case 
management, and that is just a critical component that more 
investment is needed in.
    The Chairman. Thank you. My time has expired. I am pleased 
to recognize the Ranking Member for 5 minutes of questioning.
    Mr. McGovern. Well thank you, Mr. Chairman. I want to 
applaud the opening statement of our Ranking Member, Mr. 
Peterson, as you can tell, some of us are just a little anxious 
about where we might be going as we approach the farm bill with 
regards to SNAP. And part of it is because of some statements 
that we have seen in the press about additional requirements 
and potential changes that make us a little bit uneasy, but we 
need to be clear-eyed as we move forward and make sure that 
whatever we are contemplating on doing, that it is actually the 
right thing and it is based on reality and not based on 
perception. Because some of the perception with regard to 
people who are on SNAP is not reflective of real life. There 
are many people on this program who work and they earn so 
little that they still qualify for the benefit. We had 20 
hearings and this is the 20th, and the Majority actually put 
together a report, without any input from the Minority, so I 
would like to ask unanimous consent to insert in the record a 
letter I sent to Chairman Conaway giving my side of the story 
on these 19 hearings.
    The Chairman. Without objection.
    [The information referred to is located on p. 964.]
    Mr. McGovern. And again, the latest target seems to be 
these able-bodied adults without dependents, and again, it is a 
very complicated population.
    Ms. Dean, in your testimony, you expressed concern about 
the loss of benefits for vulnerable ABAWD populations. Can you 
identify for us what some of the challenges might be for people 
who can't meet the work requirements to avoid the current 3 
month time limit, and what do you think about suggestions that 
the waiver should be completely eliminated, or that we should 
reduce the amount of time ABAWDs can spend on SNAP?
    Ms. Dean. I think that is a very ill-advised policy 
approach, to withdraw more food assistance from this 
desperately poor group. I don't think it is going to improve 
their well-being or the well-being of the communities that they 
live in.
    One of the mistakes we make about this group is thinking 
that they are some kind of unified demographic solely by the 
fact of their age, 18 through 49, and they are without children 
and they are not working 20 hours a week. That is how the law 
groups them together, but of course, in life, they are 
different kinds of people. Mr. Protas' testimony pulled out 
some terrific examples of folks who could struggle. An 18 year 
old who just ages out of foster care with no family support 
system and there is no more state support to help this 
individual find work. An ex-offender, someone who has just left 
prison is hopefully getting help for job training, but the 
reality is the job market for ex-offenders is just not the same 
as everyone else. And then also, the group overall tends to be 
working in very low wage, low skill jobs that have a higher 
unemployment rate than the overall unemployment rate, and so 
our expectation that when they lose a job, or again, fall below 
20 hours a week, working 18 hours a week is not enough. If they 
lose a couple of shifts, it may take them more than what is 
left on their 90 day clock to raise those hours again. There 
are a lot of reasons why they struggle.
    Mr. McGovern. And Mr. Protas, I appreciate your comments 
about ABAWDs, and I am concerned about this population, and I 
am concerned about how we characterize them here in Congress. 
Oftentimes they are characterized as people who just don't want 
to work, or they are lazy, or they are trying to take advantage 
of the system, when in my experience, from what I have been 
able to tell, again, that is not an accurate picture. I would 
like to hear your response to how do the characterizations of 
ABAWDs distract from our goal of ending hunger, and how can 
these critical depictions discourage under-served populations 
like veterans from getting the help that they so desperately 
need?
    Mr. Protas. Thank you for the question.
    We regularly encounter instances where misinformation and 
negative associations about SNAP make those who are struggling 
reluctant to seek out help, including, as you said, seniors, 
veterans, and surprisingly, currently serving military 
families. And I want to just express thanks to Chairman 
Thompson and to you, Ranking Member McGovern, for your support 
of the Military Hunger Prevention Act. In our work with 
military families, we know that many of them are very reluctant 
to come for help and to apply for SNAP because of the negative 
associations with the program, and that comes from public 
discussions from things that are out there in the media. And 
when people are struggling and need that help and are reluctant 
to participate in a program and to apply for a program, it 
hurts. It hurts their families, it hurts the kids in those 
families. And so this negative rhetoric has real consequences, 
and it really needs to stop.
    Mr. McGovern. That is all my time. Thank you.
    The Chairman. I thank the gentleman.
    I am now pleased to recognize the gentleman from Arkansas, 
Mr. Crawford, for 5 minutes of questioning.
    Mr. Crawford. Thank you, Mr. Chairman. Thank you all for 
being here today.
    Ms. Hatcher, I want to start with some technology issues. 
Since the program's inception, we know that technology has 
moved at an exponential pace, and some of the changes that have 
taken place have moved us more to an electronic-based type of 
administration of the program. What are some of the challenges 
that you see that retailers have to manage with regard to 
maintaining pace with that technology, and how does that 
affect, ultimately, the beneficiaries?
    Ms. Hatcher. We have certainly benefitted by moving the 
program finally to 100 percent electronic. In the days you were 
talking about, with paper coupons there was a lot more 
opportunity for fraud. What we are looking at now is taking the 
next step and using some of the digital and online resources to 
be able to offer those to SNAP customers as well. I know that 
USDA has put in place a pilot project for seven states and 
seven stores, but I guess what I am saying is that we can go 
beyond that. Many things are moving to online and we need to 
really get in at the ground level at this to make sure that we 
are moving the technology along with SNAP in the right 
direction.
    Mr. Crawford. Do you think the agencies are keeping pace 
with regard to that technology? Are there some barriers between 
the retailer and the administrators, or are we staying in close 
contact or are we having some challenges there?
    Ms. Hatcher. I definitely think we are staying in close 
contact. There are certainly additional opportunities, and we 
want to make sure that we are not doing something that is going 
to move us in the wrong direction.
    One of the things we are trying to do is to encourage more 
EBT contractors to enter the space, because with more 
competition and more contractors, you get more ideas and more 
innovation. We just had one recent addition that folks are 
pretty excited about to add to the folks that are out there. 
That is one of the things that we want to help to do is to get 
that information out to other businesses that might be 
interested in entering this environment to move down with 
additional ideas.
    Mr. Crawford. One of the topics that comes up invariably--
we are talking about food deserts and we are talking about 
nutrition programs and things of that nature, and ironically, 
this was a topic that we had earlier in a hearing today is one 
of the most productive rural or agricultural districts in the 
country, mine, and we have problems with access to healthy 
food.
    In previous hearings, we have talked about possibly grocery 
stores serving as essentially distributors and going out into 
rural areas that are relying on convenience stores almost 
exclusively for their nutrition. Can you talk about what a good 
model might be to help incentivize grocers to sort of act as 
those distributors to small rural communities that don't 
otherwise have access to healthy food? Because healthy food 
choices are also a part of the problem, and when all you have 
is access to prepared foods that aren't maybe necessarily the 
greatest in health benefit?
    Ms. Hatcher. No, I think that is a great point. We are 
starting to see a lot of innovation in that space in a 
community where it may not make sense to build a freestanding 
grocery store in a particular area, we have seen more mobile 
vans utilizing libraries and other community centers, as well 
as, like you mentioned, convenience stores. More delivery 
models where you could deliver some of those products rather 
than having a freestanding store there. There are a lot of 
potential opportunities, going forward, but the vans have 
probably had a lot of promise where you have a store that has a 
van that's going in a particular area or distributing to 
another location.
    Mr. Crawford. I am sure technology enhances that or 
facilitates that to a large degree. Are you aware of any kind 
of tax incentives that can be utilized to incentivize a 
retailer to participate in that space?
    Ms. Hatcher. I am not aware of any tax incentives right now 
on that, but certainly will look into it and see if there is 
anything anybody has tapped into, because that might be a 
really good opportunity.
    Mr. Crawford. Thank you, I appreciate it, and I yield back.
    The Chairman. The gentleman yields back. I am pleased to 
recognize the gentlelady from North Carolina, Ms. Adams, for 5 
minutes of questioning.
    Ms. Adams. Thank you, Mr. Chairman, and Ranking Member 
McGovern, thank you. Thank you to the witnesses for your 
testimony.
    In the 12th District of North Carolina that I represent, 
there are some parts of Charlotte that are enjoying economic 
growth with real estate prices that rival those here in 
Washington, D.C. However, many neighborhoods throughout the 
city have not been able to participate in the new economic 
opportunities that exist just a few miles down the road. Whole 
communities have been left behind by how Charlotte has grown 
over the last several decades. And so as the city works to 
bring more equitable development and opportunities to everyone 
in the city, we need the SNAP program more than ever to help 
families put food on the table from one month to the next.
    Ms. Dean, last year the State of North Carolina decided to 
stop all waivers for SNAP work requirements for able-bodied 
adults. Can you spell out how imposing SNAP work requirements 
on able-bodied adults risks states kicking people off the 
program who are still eligible to participate?
    Ms. Dean. Thank you for that question. Yes, the state 
legislature prohibited the governor from ever seeking a waiver 
again in the future, which struck me as really short-sighted 
with respect to policy, particularly in a state, for example, 
that experiences so many hurricanes as natural disasters, 
wanting the ability to respond to individuals, it seems to me 
you would want that flexibility.
    The North Carolina Budget and Tax Policy Center did a 
terrific analysis of the states' decision to cut off all 
waivers and therefore impose the time limit, and they actually 
looked at some of the rural counties in North Carolina and 
compared the number of available jobs to the number of 
individuals who were going to be cut off, and the number being 
cut off because they weren't working 20 hours a week exceeded 
the number of available jobs collected by the governor. And of 
course, available jobs doesn't mean jobs that these individuals 
are qualified for.
    So it is shifting an enormous burden to the charitable 
sector to step in and help feed these individuals and it 
undermines their ability to work when they spend most of their 
time looking for how to feed themselves. It was a very 
unfortunate decision.
    Ms. Adams. Yes, thank you very much. I served 20 years in 
the North Carolina House, and we haven't made the best 
decisions all the time.
    Ms. Hatcher. Congresswoman Adams, I wanted to call out to 
Congressman Evans' work with one of our members in Philadelphia 
on this issue with ex-offenders and finding positions, jobs for 
them through Uplift Solutions. There are some public-private 
partnerships that can be impactful.
    Ms. Adams. Thank you very much.
    As a follow up, Ms. Dean, we have discussed in previous 
hearings that many states do not offer a standard medical 
expense deduction for seniors and the disabled to document 
their true cost of living when they apply or recertify for SNAP 
benefits. In states that do offer standard medical deductions, 
have you seen more seniors claiming the deduction in order to 
increase their monthly SNAP benefits?
    Ms. Dean. We have, and your bill offers a terrific policy 
idea to make it easier for states to offer the medical expense 
deduction, which basically targets more food assistance to 
seniors and people with disabilities with significant out of 
pocket medical expenses. It is an under-utilized feature of the 
program, and sets up a dynamic between paying for drugs and 
other health needs and food. SNAP has a feature to help seniors 
and people with disabilities, and we want to see more states 
take advantage of it.
    Ms. Adams. Okay, and so you have documented through the 
organization that these benefits have consistently not kept 
pace with rising food costs, so how would switching to the Low 
Cost Food Plan permit SNAP recipients to more adequately put 
food on the table?
    Ms. Dean. Well the Low Cost Food Plan is about 30 percent 
higher than the USDA's estimate of a Thrifty Food Plan, so it 
would provide additional food benefits. Just to be clear, SNAP 
benefits do keep pace with food inflation, but what USDA hasn't 
been able to do is reevaluate the Thrifty Food Plan in light of 
our changing understanding of what makes a healthy diet. Access 
to fresh produce, shifting away from extreme assumptions about 
a SNAP household's getting their protein from milk and dried 
beans as opposed to chicken and cheese. It is just out of sync 
with what we are all buying and what the cost of a basic 
healthy diet is.
    Ms. Adams. Thanks very much. Mr. Chairman, I am out of 
time.
    The Chairman. I thank the gentlelady. I am now pleased to 
recognize the gentleman from Kansas, Mr. Marshall, for 5 
minutes of questioning.
    Mr. Marshall. Thank you so much.
    My first question is for Mr. Sykes. I am always interested 
in efficiency. Whenever I am responsible for other people's 
money, I try to take even better care of it, so talk a little 
bit about efficiency. I read somewhere 93 percent is a number. 
Has that been a pretty good number the past 20 years, or where 
have we been up and down----
    Mr. Sykes. I presume you are talking about payment accuracy 
at this point?
    Mr. Marshall. No, efficiency.
    Mr. Sykes. I am sure that goes to----
    Mr. Marshall. If we give you a dollar, how much of it is 
actually being spent on food by the person?
    Mr. Sykes. Well, virtually all of it is being spent on food 
by the person because, other than small limitations on what can 
be purchased, the interesting thing is we have reached over 83 
percent of eligible households, which is an extraordinarily 
high percentage of eligibles. And even more importantly, about 
90+ percent of all possible benefits are being issued, which 
means that some people that may be left out of the program----
    Mr. Marshall. No, I guess that's a different efficiency. 
The efficiency I am wondering is if we are giving a dollar to 
the SNAP program, how much of that is being spent on food?
    Ms. Dean. Ninety-three percent, you got it right. The rest 
is on admin and programs like employment and training.
    Mr. Marshall. And what has that been like the past 20 
years? Is that a good number?
    Ms. Dean. Yes, it has eked up just a bit, but that is about 
the level. It has been around 93, 95 percent for a while.
    Mr. Marshall. Okay. My next question is for Ms. Dean. Ms. 
Dean, I am an obstetrician. WIC has been a very, very 
successful program for my patients, pregnant moms and 
breastfeeding moms, and the great thing about WIC, when my 
patients touch those people, the whole family touches them, and 
they are in the same building where maybe they get flu shots 
and other public healthcare needs. Explain to me how WIC works 
with SNAP and opportunities for working with each other.
    Ms. Dean. I love the WIC program too. It is an incredible 
evidence-based program that hits infants and toddlers right at 
the moment that they most need it.
    WIC is a prescription benefit, though, that provides 
supplemental foods and assumes that the household is also 
getting SNAP or has enough income to be able to buy a basic 
diet. Whereas SNAP is available to purchase any or all foods, 
WIC is prescriptive and limited, that is a big difference.
    I do think, and I really hope that the Committee takes a 
look at ensuring that all SNAP households with a pregnant or 
post-partum mom, infants and toddlers also take advantage of 
WIC. That is pretty true for infants, but it is not true of 
toddlers through the age of 4, and I think that would be an 
enormous and important benefit boost at that critical stage of 
life. And even just measuring and ranking states could improve 
performance there.
    Mr. Marshall. Okay, I yield back.
    The Chairman. The gentleman yields back. At 3:02, votes 
have been called on the House floor. I apologize. The Committee 
will stand in recess until they have been concluded. I 
encourage all Members to return promptly so that we can 
reconvene at that time after the conclusion of votes.
    [Recess.]
    The Chairman. This Committee on Agriculture Nutrition 
Subcommittee will reconvene. My apologies for the recess. Votes 
have a way of getting in the way of things around here.
    I am pleased to recognize my good friend and colleague from 
Pennsylvania, Mr. Evans, for 5 minutes of questioning.
    Mr. Evans. Thank you, Mr. Chairman.
    Ms. Dean, can you speak to the data that does not support 
the view that the social safety net is discouraging labor for 
SNAP?
    Ms. Dean. I am sorry?
    Mr. Evans. The question is can you speak to the data that 
does not support the view that the social safety net is 
discouraging labor for SNAP? In other words, you----
    Ms. Dean. You mean that participation in public benefits 
isn't discouraging labor force participation?
    Mr. Evans. Right.
    Ms. Dean. Yes, there have been a number of studies that 
looked at whether participation in benefits such as Medicaid, 
SNAP, other programs discourages engagement in labor force 
participation.
    Mr. Evans. Right.
    Ms. Dean. And by and large, there is really no evidence to 
suggest that it does dampen people's interest in working. There 
is an enormous amount of labor force participation amongst 
people in poverty. That is, in fact, how they get by. There is 
effectively no cash assistance available. Work is the way for 
everyone in this country, including people in poverty.
    Mr. Evans. Mr. Arthur, I heard you in your testimony talk 
about food banks and SNAP in terms of really addressing food 
insecurity, which is ultimately an objective that we are 
working towards. Maybe if you had your crystal ball, where do 
you think we are relative to addressing food insecurity, even 
with that strategy of food banks and the policy around SNAP. 
Can you speak to that a little bit?
    Mr. Arthur. I would say right now I am very optimistic if 
we can prevent damage to the programs. In our work in central 
Pennsylvania, we actually set a bold goal of actually closing 
the meal gap by 2025, and we are well along in that work, 
meaning make sure that everyone in need has three healthy meals 
a day, and our numbers tell us we are getting close to 70 
percent of closing that gap. But that gap implies that the 
nutrition programs are going to remain in place, and we are 
taking care of the folks who either are still slipping through 
or need a little extra help. That dynamic, that equation can 
change radically if there is any harm done to SNAP or other 
nutrition programs.
    The work that we do with our partners, it is very 
collaborative, and across the board there is significant work 
being done to not only feed people, but to help them be more 
sustainable, help themselves be more sustainable. Do no harm 
would be our strong recommendation to this Committee for SNAP. 
Do no harm.
    I would also, Representative Evans, like to take a moment. 
I need to thank some folks really quick. We are 80 percent 
privately funded, as I put in our written testimony. That 80 
percent comes from over 300 food donors, commercial entities, 
farms, et cetera, that produce that 50 million pounds that I 
mentioned in my testimony. And we have over 25,000 monetary 
donors that make up the 80 percent of our funding that is from 
private donation. We are part of that public-private 
partnership that works together to make sure the safety net is 
sealed, that we are reaching everybody. And I have several 
folks at this table that are donors or represent donors.
    I, actually, am optimistic if we can hold the line in SNAP 
and maybe make some improvements that we can continue to close 
the meal gap and keep working on actually ending hunger, which 
as we all know, is related to jobs.
    Mr. Evans. Last question to Ms. Hatcher. Can you talk a 
little bit about your retail partnership, because obviously 
SNAP has an economic impact on retailers. Can you talk a little 
bit about that?
    Ms. Hatcher. Thank you, Congressman Evans.
    Absolutely SNAP has an economic impact. What we see too now 
is that our customers are our customers, and more than 50 
percent of our customers are using multiple tender, so multiple 
forms of payment in one transaction at the store. A person that 
is using SNAP benefits is also using cash or a debit card or 
another form of payment, so it truly is a supplement, which is 
why it is so important that this electronic system stay in 
place and that we maintain the efficiency that we have in the 
program right now.
    Mr. Evans. Thank you, Mr. Chairman. I yield back the 
balance of my time.
    The Chairman. The gentleman yields back. I am now pleased 
to recognize the gentleman from New York, Mr. Faso, for 5 
minutes.
    Mr. Faso. Thank you, Mr. Chairman. I appreciate the 
witnesses coming here today, and particularly I want to 
recognize my friend, Rus Sykes, who has been working in this 
field for many years, and he and I have collaborated on a 
number of things.
    One of the things that I raised with Mr. Sykes and Ms. Dean 
before we had the vote was there has been some discussion in 
the Committee today about the work requirements. And I was 
wondering if you could just provide us with some data as to how 
this is working. You mentioned there are some 30+ states that 
are imposing work requirements now. Is that through waivers 
where they get that permission, or is that just the statutory 
authorization?
    Ms. Dean. Every state has a SNAP employment and training 
program, and they have a lot of flexibility on whether they 
compel participation in the program and sanction food 
assistance for individuals who refuse to participate or fail to 
participate. Other states take a different approach, which 
would be perhaps a more workforce oriented. They offer skills 
based training or programs that could help remove barriers.
    Mr. Costa represents where there is an incredible program 
in Fresno that he can speak to you in great detail that does 
barrier removal for individuals with child care issues, felony 
convictions, all of those. There is a lot of diversity in 
approaches. What Rus and I were talking about with you is we 
would like to see states have the ability to ramp this up and 
work with what is effective, and there are some terrific demos 
in place that were authorized by the last farm bill that are 
going to teach us a lot about what will work.
    Mr. Sykes. Yes, I agree with everything Stacy said. One of 
the things, we do gold standard research in the pilot programs 
that we implemented in the last farm bill. We are not going to 
really have any final data on them for about 2 or 3 more years 
that are being studied by MDRC and Mathematica. But I am sure 
there are replicable findings in them already, and they are a 
mixture of voluntary and mandatory programs. They involve, a 
number of them, employers which is really key, because in this 
modern era, if the employers aren't involved, then they want 
people with the soft skills to come to work, but if they are 
not involved in developing the actual job curricula that has to 
do with what they need as far as an employer, I don't think 
they will succeed as much.
    In fairness, USDA has begun to take the work programs far 
more seriously. They had a very small staff devoted to it for 
years. Now they have a person responsible for work programs in 
every region and a core staff here nationally. I expect to see 
much more thoughtful application of these programs in the 
future, and hopefully more success that is measureable as far 
as getting people off the rolls, not because we sanction them 
for failing, as we should, but because we help them get jobs 
that make them no longer eligible and more sufficient.
    Mr. Faso. Well thank you, and I am wondering if there are 
any particular states or localities that have programs, you 
mentioned Fresno, where they seem to be doing a particularly 
good job of coordinating work and getting people actually into 
employment?
    Mr. Sykes. Yes, one of the ones that is constantly touted, 
and rightfully so, is the State of Washington. In fact, our 
APHSA board chair does much of the work operating that program 
in the State of Washington. They have a huge employer pipeline 
network. They are really focusing on SNAP E&T and they are also 
trying to intertwine that work with their WIOA programs and 
with the TANF program, and I know Stacy, you have made examples 
of others as well.
    Ms. Dean. Yes, I will throw in Iowa and Connecticut as 
examples of states that work with the community college system 
to promote technical and skills based training.
    Mr. Faso. Good. And Mr. Sykes, tell me a little parochially 
here about New York.
    Mr. Sykes. Well, I mean, New York has been the largest user 
of SNAP E&T funds for many years. SNAP E&T funds come in two 
forms. There is 100 percent share Federal money, which is 
capped at $90 million or thereabouts, and then there is a more 
open-ended stream of 50/50 match money where the state can put 
up its own money and draw down Federal money. And New York has 
done a fairly good job, I would say. One of the ones that looks 
very well when you think about how seriously they take the 
enterprise, and you know, my ex-colleague and very good friend 
who is the Executive Deputy at OTDA now, Barbara Gwinn, is 
someone you should really speak to about that.
    One of the things we think is we would like to see the 
resources expanded a bit for employment and training, 
particularly on the 100 percent side and I think that would 
help more states take it more seriously. USDA needs to be a 
little more relaxed about what would count as 50/50 match 
requirements. It is often very rigid as to what you can use as 
state match and what kind of services you can offer through the 
program.
    Mr. Faso. Thank you very much. Mr. Chairman, I yield back.
    The Chairman. The gentleman yields back. I am pleased to 
recognize the gentleman from California, Mr. Panetta, for 5 
minutes of questioning.
    Mr. Panetta. Thank you, Mr. Chairman. Ladies and gentlemen, 
thank you very much for being here. Your preparation, your 
participation, and your time, I appreciate that.
    Let's talk about fresh fruits and vegetables, something I 
like to bring up quite often based on where I hail from, the 
Salinas Valley, otherwise known as my colleagues are going to 
get sick of me saying, the salad bowl of the world.
    It was mentioned earlier by my colleague from Arkansas, Mr. 
Crawford, talking about the challenges of getting people on 
SNAP to consume more fruits and vegetables. And one of the 
responses was a mobile van in rural areas. Any other ideas that 
you can come up with to help ensure that people in rural areas 
on the SNAP program can have more opportunities to consume 
these items? I mean, we have a number of field workers who are 
out there picking fruits and vegetables every day, hours upon 
hours a day, yet they go home and they don't eat fruits and 
vegetables, and that is an issue. And so I just wondered if 
there are any other ideas that you had?
    Ms. Dean. Let me just jump in on that quickly. First, I 
would like to say, my first job was working for your father at 
OMB, it was a great pleasure, so shout out for him.
    Mr. Panetta. Thank you.
    Ms. Dean. The main issue is whether the individuals have 
the resources to purchase fresh fruits and vegetables, which it 
may not be that they are expensive in the salad bowl of the 
country, but in other parts of the country, they can be quite 
expensive and out of reach. And that is why some of us today 
talked about improving the adequacy of the benefits so that 
those are more affordable for folks.
    It is a separate issue about whether retailers have the 
stock available, and it is a serious concern as to whether, 
even with the resources, are they there for participants. But 
most participants do shop at major grocery stores or 
superstores, and would have access to them.
    Mr. Sykes. We also have seen expansion of some Healthy 
Incentives Pilot Programs that help people purchase fruits and 
vegetables, and increasingly, farmers' markets, more and more 
the EBT programs--the portable ones have penetrated that venue, 
particularly in rural areas, at least that makes things a bit 
more accessible.
    Mr. Panetta. Great, great.
    Ms. Hatcher. Congressman, just a couple of thoughts on the 
supermarket side. Certainly there is the access piece, 
availability of dollars to purchase. Some of the things that 
are ongoing right now in terms of teaching folks, exposing them 
to new fruits and vegetables, teaching them how to cook them. 
We are seeing a lot more with dieticians in store. We now have 
95 percent of our stores with dieticians. We are seeing a lot 
more cooking demos and chefs in store, and you are really going 
to start to see behavior, folks becoming more comfortable with 
those different items.
    And then you are talking about the other point, which is 
the delivery point in rural areas of how do we get those items 
directly to the customer, and we are seeing a lot more in 
addition to the vans, the folks who are doing more online 
shopping now too. We are seeing a lot of different 
possibilities to make sure that, rather than if a community 
can't support a full scale supermarket, is there an area, a 
library, a community center, or a church where they can drop 
off that fresh produce on a regular basis at a specific time. 
The mobile vans, like I mentioned, that we are seeing, there 
are a lot of possibilities, going forward. But there are 
certain segments; first, we need to teach folks, to make them 
available, make it affordable, but also then teach them how to 
cook these items and how to make them delicious.
    Mr. Panetta. Understood.
    Mr. Protas. Just a quick note about the incentive programs. 
We have seen really positive evidence about changes in behavior 
from the FINI grants, the Senior Farmers' Market Nutrition 
Program. There are some exciting pilots for Veteran Farmers 
Market Nutrition Programs. Maybe there is a possibility of a 
pilot program that would serve rural needs. We need you to look 
more at the opportunities around those investments.
    Mr. Arthur. Representative, you mentioned the rural areas, 
and we serve rural areas, but I look over to the great work 
that has been done in the Philadelphia area which provides a 
great example to rural areas. We are learning from The Food 
Trust. We are learning from Philabundance, which is a food 
bank, and they are fair and square market. And we are also 
learning from Brown's ShopRites over in the Philadelphia 
market. Some of that work translates into rural areas, and 
particularly around smaller stores, smaller format stores. Many 
corner store markets in Philadelphia now have fresh fruits and 
vegetables because of the great work by The Food Trust and the 
Fresh Food Financing Initiative.
    Mr. Panetta. Outstanding. Thank you. I yield back my time.
    The Chairman. I thank the gentleman. The gentleman from 
California, Mr. Costa, is not a Member of the Subcommittee, but 
has joined us today. I have consulted with the Ranking Member, 
and we are pleased to welcome him to join in the questioning of 
witnesses. Mr. Costa, you are recognized for 5 minutes of 
questioning.
    Mr. Costa. Thank you very much, Mr. Chairman and Members of 
the Subcommittee. This is an important issue. We have had many 
hearings on it, of course. But the nutrition programs are a key 
component of the farm bill, as we all know, and obviously, a 
lot of discussion not only today, but in previous hearings has 
been around the notion of how we make it more effective. 
Obviously when we looked at the trim lines between 2008 that 
were stated and present, and the amount of beneficiaries 
obviously had a lot to do with the way the Great Recession 
impacted so many communities throughout our country. And 
obviously there was a great deal of need.
    But we also, of course, want to provide opportunities for 
people to gain their independence, and there has been a lot 
that has been discussed about able-bodied adults without 
dependents and there has been a lot of discussion on how the 
safety net works during economically tough times.
    I would like to focus my comments and maybe Stacy Dean, you 
are the person to talk to, because the notion of training 
programs and getting people back to an opportunity to gain full 
employment and be able to be on their own two feet is discussed 
a lot about here. But these training programs that have taken 
place around the country have varying degrees of success, and 
they cost money. We need to be aware of that, and if this farm 
bill were willing to expand those training programs, we have to 
be willing to put our money where our mouth is to make them 
effective.
    The Bridge Academy is one of those programs, and I have 
been working with Pete Weber and a lot of other folks, and we 
have a very significant success rate in terms of those that 
have been able to benefit from it.
    Ms. Dean, you have gotten a chance to come out there it was 
selected as one of the ten pilot programs, the pathway to self 
reliance all told for more than 80 percent of those enrolled 
have gained employment. More than 80 percent of them have 
retained their employment after a year, and about 30 percent 
have achieved full self reliance within 18 months. And this is 
has affected a combination of 1,200 families and 2,300 families 
between 2016 and 2018. This deals with a whole lot of efforts 
that include financial literacy, English classes, and digital 
training.
    How do we best expand upon this, Ms. Dean, since you had a 
chance to get out there? The ABC approach, which is first, to 
get a job; second, to get a better job; and then third, to get 
a career?
    Ms. Dean. Thank you, Mr. Costa. You stepped out the three 
or four times I mentioned and highlighted the Bridge Academy, 
because it is a terrific program.
    Mr. Costa. But I came back.
    Ms. Dean. You did, and as expected, you asked about this 
terrific example.
    So the number one way to do this, of course, we can't, 
which is to replicate the Pete Weber's of the world to other 
parts of the country, but some of the things that they do are 
important and are potentials for other places.
    First is they recruit incredibly carefully the clients that 
they are going to work with. They can talk to 100 to 200 people 
before they identify a family that is the right fit for them 
who will match what they are offering, as opposed to trying to 
push a round peg into a square hole. They spend 18 months with 
these families. They work holistically with the whole family. 
If mom is afraid to go to work because she doesn't think her 
child is going to school and needs help, they try to address, 
for example, both issues. They also will not place someone in a 
job that doesn't have career advancement possibilities. They 
have incredibly strict parameters around who they will work 
with, and they have an unbelievable network in the community so 
they can leverage services.
    The two biggest issues that they say that their 
participants face are transportation and childcare. Without 
those, they have difficulty getting to work reliably and so 
that is why Bridges tries to tackle those pieces.
    SNAP's Employment and Training Program is actually 
incredibly flexible in that it allows states, in fact, requires 
states to provide transportation and childcare for households--
--
    Mr. Costa. We should continue that and try to expand upon 
it.
    Ms. Dean. Absolutely. Absolutely, and also the flexibility 
in the types of services, and not just to target the head of 
household, but to be allowed to provide case management and 
meet broader family needs that may be impeding the ability to 
get back to employment.
    Mr. Costa. Well I thank you. I thank you, Mr. Chairman, and 
the Members of the Subcommittee for allowing me to participate 
with you this afternoon, and I can tell you, having visited and 
been a part of this effort for several years now, 4 years, it 
works. And if you have the kind of resources and people who 
want to make a difference, you can, in fact, make this 
successful. We ought to build upon this as we are looking at 
this year's farm bill so that we can have these kind of 
successes around the country.
    Thank you.
    The Chairman. The gentleman's time has expired. I am 
pleased to recognize Mr. Soto from Florida for 5 minutes of 
questioning.
    Mr. Soto. Thank you, Mr. Chairman.
    My first question circles around whether SNAP benefits are 
currently adequate or not. We see it is an average of $1.40 per 
meal with a maximum of $1.90, so it would be great to hear from 
all of you of whether you believe that is adequate to provide 
healthy meals, and if not, what should it be?
    Mr. Sykes. Well let me say first that the Thrifty Food Plan 
is quite old, and was based on a study of food price costs over 
40 years ago. One could say perhaps at the time it was 
adequate, but it also took into account the fact that the kinds 
of things you could purchase took long preparation hours and 
extremely long times, beans and many other things that would be 
healthy, and that is not really possible, quite often, today.
    The Low Cost Food Plan, which is the next step up, which 
has some more logic to it, but would be to move to it 
completely would be an extraordinarily expensive issue. One of 
the things that we have talked about is we really ought to 
learn exactly what having a different basis for benefits would 
do as far as lowering food insecurity even further, and so we 
are recommending that we do a fairly lengthy broad-based pilot 
that would substitute the Low Cost Food Plan for the Thrifty 
Food Plan, study it, study what it does for health issues, low-
food security, and then if it is, begin to think about how to 
replicate it on a broader scale.
    Mr. Protas. I would just say the adequacy of the Thrifty 
Food Plan is an important topic. In my written testimony, I 
shared some stories from people who deal with food insecurity 
and hunger, and I mentioned in my opening statement that it is 
something that we hear routinely that people lament that their 
SNAP benefits don't last until the end of the month and they 
have to make very desperate choices. I am looking at Dylan's 
story, which was part of the written testimony, who is a 14 
year old who talks about going to bed hungry on a number of 
occasions, and his mom sacrificing food in order to feed him. 
That says it is not only the SNAP benefits, but the other 
available resources for that household don't go far enough, so 
there is clearly an issue and something that needs to be looked 
at seriously.
    Ms. Hatcher. Congressman, we certainly see it in shopping 
patterns in terms of what SNAP customers buy at the beginning 
of the month versus the middle of the month and towards the end 
of the month. They are definitely at the end of the month 
trying to find low-cost, high calorie items. We definitely see 
it on that end.
    Mr. Arthur. If I might respond also, the comment on the end 
of the month brings us into perspective. In physical food 
assistance, we are working with our member agencies, our 
pantries to adopt more of a choice model and to have that align 
with the MyPlate, the USDA MyPlate, and we believe that the 
benefits for SNAP should align with that as well, and that is a 
healthy diet format. Since so much work has gone into that, why 
not align the benefit to actually achieve that type of healthy 
eating? Our perspective is that you need a little more money to 
eat healthy.
    Mr. Sykes. Just to add one other thing. I mean, 
realistically or not, the Thrifty Food Plan allotment, whatever 
it winds up to be for the particular household side after you 
do the equations of eligibility, is not the only money that is 
being meant to be spent. I mean, households are meant to be 
spending 30 percent of their own income after certain 
deductions. That is not to say that we shouldn't look at the 
Low Cost Food Plan, we definitely should and test it, for all 
the reasons I said earlier.
    Mr. Soto. Would anybody be willing to take a stab at what 
it should be?
    Mr. Sykes. More.
    Mr. Soto. We hear that a lot around here. I yield back, Mr. 
Chairman.
    Mr. Arrington [presiding.] Thank you, Mr. Soto. I would now 
yield 5 minutes to Mr. Lawson from Florida.
    Mr. Lawson. Thank you very much, Mr. Chairman. I want to 
thank you all for waiting on us here.
    Each of you know that states are granted the flexibility in 
administering SNAP and ensuring that vulnerable individuals are 
receiving basic food assistance. In the State of Florida, for 
instance, our Governor has elected not to allow waivers for the 
work required for ABAWDs. But this decision by the Governor 
prevents mayors and local elected officials from asking for an 
exemption in the areas that have high unemployment or have 
insufficient employment opportunity. Not only does Florida not 
allow localized and informed geographic decisions by elected 
officials, but it has brought to my attention that the 
advocates in Florida across this country are having real 
difficulty in getting data on the characteristics of who ABAWDs 
are. A permanent group in Tallahassee, for instance, has been 
paying the state thousands of dollars to get demographics about 
ABAWDs. Sometimes there are not a lot of organizations that can 
afford to do that. We don't know whether these individuals are 
veterans, if they are struggling with mental health issues, 
some form of disability. If they are waiting on disability 
decisions, if they are illiterate or don't have access to 
adequate employment. This is a real issue.
    With that in mind, my question is leading up to the farm 
bill. How can we expect to have an informed decision on the 
changes that would affect ABAWDs without any sense of what 
issues ABAWDs are facing and who these individuals are? To come 
to a conclusion, how could this Committee benefit from, let's 
say, a requirement in the upcoming farm bill that ensures 
states collect and share adequate data on ABAWDs to help us 
make informed decisions? And I know I don't have much time, but 
anyone who wishes to answer that, please go ahead.
    Ms. Dean. Thank you, Congressman. I will take a quick crack 
at that. You are right that it is a very complex demographic. 
We don't know a lot about them, you are right. Some are 
veterans, some are homeless, some are individuals waiting for a 
disability determination. Under the law, someone who has some 
kind of impairment ought to be exempt from the rule, but many 
states send a very complicated legalese letter to the 
individual and put the entire burden of them to self-identify 
as being exempt under a rule that most of us here would have 
difficulty understanding if it was the first time we were 
learning about it.
    A better understanding of who this whole group is and its 
impacts would be hugely beneficial to the Committee, but in the 
end, these are very, very poor folks who just simply can't 
afford to feed themselves, and SNAP has a rule that gets in the 
way of offering food assistance to these individuals. Their 
poverty and their food insecurity is one of the most important 
things to know about them so that we can think about how SNAP 
can address their needs.
    Mr. Sykes. Just to add one more issue to that, a reason we 
really need to have good employment programs for people, some 
of the ABAWDs happen to be noncustodial parents as well of 
children who may have a mother on TANF or other things of that 
nature, and so rather than viewing the ABAWD requirement, the 3 
and 36 month time limit rule as trying to get them off the 
rolls, these are the very people we really need to engage in 
honest work programs and get them income so they can be 
participating not only in the workforce, but participating in 
paying support for their children to the degree that they are 
not custodial parents.
    So one thing we have suggested about the ABAWDs is the 3 
month limit is awfully quick, and it is really hard for states 
to find adequate slots that meet the rules of ABAWDs. We have 
suggested--one thing that we have done is if you are going to 
maintain a time limit at all, that it should be expanded to 6 
or 9 months, and it should be aligned with the individual's 
certification period, so states have more ability to work with 
someone on their individual needs for employment.
    Mr. Arrington. Thank you, Mr. Lawson. The gentleman from 
Arizona, Mr. O'Halleran, is not a Member of the Subcommittee 
but has joined us today. I have consulted with the Ranking 
Member and we are pleased to welcome him to join in the 
questioning of the witnesses, so I will yield 5 minutes.
    Mr. O'Halleran. Thank you, Mr. Chairman and Members of the 
Committee, for this opportunity.
    I would like to talk a little bit about my district first. 
I represent 12 Native American Tribes in Arizona. The district 
is larger than Pennsylvania. The Navajo Nation alone is larger 
than West Virginia. The Native American communities suffer from 
a much higher rate of food insecurity than the general 
population. On the Navajo Nation, the rate of food insecurity 
is five times the national average. I would like you to keep in 
mind the fact that we have a tremendous amount of elderly, 
cultural issues, tremendous amount of veterans based on per 
capita, a much higher rate of veterans per family than anywhere 
else in the United States. And because of the work requirement, 
in an area that has very little economic development potential 
even, high unemployment, 50 percent, 80+ percent in some of 
these areas. I just would like to know what opportunities do 
you see, and I would like to direct this to Mr. Protas. What 
opportunities do you see in the farm bill to better address the 
nutritional needs of Native Americans seeking work?
    Mr. Protas. Thank you for the question, Congressman, and I 
know the district well. I grew up in Phoenix and spent a very 
enjoyable summer in Camp Verde working for the Park Service. I 
also know that the food insecurity rates in Indian Country are 
staggering, and particularly on the Navajo Nation where it is 
upwards of 75 percent of the population.
    You have a very complicated situation where you have high 
food insecurity and high unemployment, also in an area that is 
an agricultural producing area, so you have food insecurity in 
food deserts and people who can't access that food. And so this 
is an issue that impacts a lot of folks in Indian Country where 
there are not the proper levels of economic investment and 
business development for Native producers to really bring those 
products to market, and also to contribute to the local food 
economies.
    Sadly in the recent news that we saw about the Trump 
budget, there were proposals to cut funding for programs that 
serve rural areas, including in Indian Country. Cuts and 
elimination of programs, including rural development agencies, 
rural business--cooperative grant programs, Rural Utilities 
Services, and rental assistance grants.
    So first off, those kind of proposals would have a 
disastrous impact on rural communities in Indian Country. 
Instead, what could be done is to have USDA look at targeted 
investments in the agricultural systems to really lift up 
Tribal producers and to make sure that that food is accessible 
in Tribal contacts to be able to provide within the FDPIR food 
package, and also to create jobs, because as you mentioned, the 
unemployment rates are staggering in areas like the Navajo 
Nation. Targeted investments are important to be able to 
increase that employment to make people no longer dependent on 
food assistance, and also to make that food available in Indian 
Country.
    Mr. O'Halleran. Thank you.
    We have 4,000 miles just in the Navajo Reservation of dirt 
roadways. It takes some students 4 hours round trip to get to 
school. Obviously, and others that are unemployed can't afford 
much gasoline, and yet I had heard you talk about superstores 
and not being able to have enough money towards the end of the 
month, and anybody can comment on this, but what does the rest 
of the panel see as the potential to help these people out, 
both in Indian Country and rural Arizona and rural America? 
Because obviously what was just said highlights the fact that 
it is an area that does not necessarily fit the urban 
environment/suburban environment process where there is 
poverty, but poverty located near resources. Please.
    Ms. Dean. I think you highlight the challenges of rural 
poverty quite well, and I do hope that part of the farm bill is 
thinking about rural development, economic investment in rural 
areas, as well as creating new opportunities for individuals 
who live there.
    One of the things we see looking at unemployment rates in 
rural areas is they might be relatively low, but they, in fact, 
in no way reflect the fact that jobs have just left the area. 
The unemployment rate measures folks who are actively seeking 
work, but if you live in a community where jobs left long ago, 
you have just dropped out of the labor market. It doesn't mean 
work is there, and it often goes unrecognized the difficulty of 
rural America.
    Mr. O'Halleran. Thank you, Mr. Chairman.
    Mr. Arrington. The gentleman's time has expired. I now 
yield to the gentlelady, and my neighbor in New Mexico, Ms. 
Lujan Grisham, for 5 minutes.
    Ms. Lujan Grisham. Thank you, Mr. Chairman, and I really 
appreciate the comments that my colleague from Arizona has made 
about the rural and frontier nature of our states, and 
particularly highlighting what it looks like in Indian Country. 
I might just add that there are still places in the Navajo 
Nation where there is no running water or electricity. The 
challenges are incredible, and these safety net programs are 
incredibly valuable and important. And in this Committee, we 
spend a lot of time, not today, but a lot of time talking about 
fraud, we are talking about work requirements, and really 
looking at constraining the program when, in my opinion, if we 
were to look carefully, we are going to find that we really 
have the opposite, that people cannot make it on these 
benefits; that we are penalizing those poorest and most at risk 
in our country.
    In my district and in my state, unfortunately since my time 
on the Agriculture Committee, we have been one of the hungriest 
states in the nation with some of the hungriest children in the 
nation. And I am going to focus somewhere else, even though we 
also have the highest unemployment and in the areas that you 
talked about in rural areas where there really aren't new jobs 
and people leave the job market, and there is a sense that 
because they had a job there must be another one is also not 
accurate.
    But I have another issue that I am really interested in 
about how we work with USDA and through the farm bill to ensure 
that states are held accountable to make sure that the benefits 
that we do have available make their way to recipients. Because 
there is a perverse incentive to do the opposite, and you may 
or may not know that New Mexico is under Federal investigation 
by USDA, which was no easy trick. After 7 years of having 
consent decrees and finally a Federal judge last year saying we 
need a special master and we need to pay attention, because, in 
fact, we now know that the Human Services Department in the 
State of New Mexico falsifies SNAP records; this is what they 
do. They add assets so that they don't meet the expedited 
requirement, because they don't want to get dinged when there 
are insufficient state employees or insufficient attention to 
meet those basic rules. There is a perverse incentive actually 
to not provide SNAP benefits. And if you can imagine, homeless 
veterans, families with children, that they aren't getting any 
SNAP benefits because the state precludes them falsely from 
having access, more than 300 in just the recent review in just 
one community. And it took me well over 2 years to get USDA to 
even agree to do the investigation, even though they were quite 
clear, and I am quoting them when they said, ``We have one of 
the most fouled up SNAP programs in the country.''
    What can we do, both in terms of the farm bill, and in USDA 
accountability that the assumption is the beneficiaries are 
somehow the problem out there. Certainly, I have no tolerance 
for a potential beneficiary who is doing it wrong or is trying 
to cheat, but in fact, you can have whole Administrations that 
are preventing these very necessary benefits from getting to 
the very families who need them and deserve them. What do you 
think?
    Ms. Dean. First, I really want to thank you for how dogged 
you have been in pursuing the appropriate administration of 
SNAP in your state. Your constituents owe you a great debt.
    For most states, timeliness is a core to the ethos of the 
program. Benefits must go out to emergency applications within 
7 days or 30 for a regular application. And in fact, in recent 
years most states have pushed to do same day service, at least 
for some share of their households. I would say what you are 
raising as a concern, well, there is a much broader concern, 
but narrowly that the timeliness metric, that we don't have 
integrity there, that we can't count on it, and when we see it 
falter, the agency isn't swift to swoop in and do something. 
Which is not necessarily the case with respect to payment 
accuracy.
    The Committee could take steps to make the timeliness 
measure more consistent and more scientific, and to bring to 
bear the same weight of the agency on that that they do with 
payment accuracy. In general, it really is an important thing 
to states, but there are times when they are just so far out of 
compliance that it becomes the norm that benefits can take 40, 
60, 90 days to be issued to needy people, and that is 
completely unacceptable. It should not ever be tolerated.
    Ms. Lujan Grisham. Right, and maybe with my time almost 
running out, Mr. Chairman, the thing to think about would be 
that we have states tell you that they are going to be behind 
and they are worried about their constituents, that there could 
be staff assigned from USDA, and that is something that we 
could put in the farm bill. You do a carrot, and then if it is 
purposeful, I am happy with a really big stick.
    Thank you very much.
    Mr. Arrington. Thank you, Ms. Lujan Grisham. I will yield 5 
minutes to myself. I don't know that I will need all 5 minutes.
    I am sorry for coming in and out, so if I have repeated a 
question or a conversation, especially being so gracious with 
your time, I apologize in advance.
    I did hear, Mr. Protas, your opening remarks where you 
quoted Leviticus, I believe, and that is a great reflection on 
the character of God and the compassion of God's heart, and how 
we ought to reflect that compassion in our lives, but the 
scripture tells us in 2 Thessalonians Chapter 3:10, it says 
``For even when we were with you, we gave you this rule. If a 
man will not work, he shall not eat.'' And then he goes on to 
say ``We hear that some among you are idle.'' I think that 
every American, Republican or Democrat, wants to help the 
neediest among us, and it is a reasonable expectation that we 
have work requirements. I think that gives more credibility, 
quite frankly, to SNAP.
    And so my question to you, and again, if I have missed the 
conversation, I apologize, but tell me what is a reasonable and 
responsible work requirement as part of the SNAP program? I 
will tell you that when I travel the 29 counties in west Texas 
in my district, this comes up often, and I need to be able to 
explain to them what my colleagues and my stakeholder friends 
think about a work requirement, and what is reasonable and 
responsible. I will ask anybody to comment on that.
    Mr. Sykes. Well I agree that work requirements are 
important. I view them very similarly to a social contract. 
People who are able-bodied and able to work, whether they be 
with or without dependents, we ought to do everything we can to 
help them reach a higher level of self-sufficiency, because we 
do an excellent job in this country, even with people when they 
have low wages of supplementing those wages.
    But having said that, I mean, the work rules for ABAWDs and 
the work rules in general, the ABAWD work rule, quite candidly, 
is more so a time limit than it is a work rule, and it doesn't 
take into account the fact that it often takes longer to work 
with people who don't have labor force participation. What I 
would say is that, if a state or a locality has done everything 
in their power to work with the client and to try to help them 
find a suitable employment training program that meets the 
ABAWD standard, for instance, but unable to do that, then it is 
wrong to penalize the client in my mind. If the client 
willfully decides that they are just not interested, I don't 
disagree with you that, quite candidly, they have set their own 
situation in motion. But, what doesn't happen too often is 
these programs aren't real. They aren't really focused on 
getting people jobs. They aren't focused on outcomes. They are 
often focused on seat time, and it is quite easy to just 
ultimately say to the recipient, well, you didn't meet the work 
rule, but we didn't do anything to help you meet it.
    Mr. Arrington. Does anybody on the panel believe we ought 
to enhance the work requirement? That we ought to have a 
stricter work requirement for able-bodied adults?
    Ms. Dean. No, I do not.
    Mr. Arrington. Nobody on the panel?
    Ms. Dean. I just want to make sure we are very clear, 
because there is a distinction here. There is the 3 month time 
limit on childless, unemployed adults. States separately have 
very sweeping authority to impose work requirements on many 
other adults in the program, and many, many do. It is not as if 
nothing is going on, and I often fear that there is an enormous 
misunderstanding about that, the level of intensity of the work 
programs.
    Mr. Arrington. Can I----
    Mr. Arthur. Mr. Chairman, if I might just take a broader 
shot at that.
    There is----
    Mr. Arrington. Please make it short, because I have a 
little time and I want to get one more question in.
    Mr. Arthur. I just wanted to state that there is an 
implicit assumption in a lot of this discussion that poor 
people and taxpayers are diametrically opposed, that taxpayers 
are funding these poor folks. In our society, the level of 
taxes at the Federal, state, and local level, income excess tax 
fees, the poor are heavy taxpayers. They are just heavy 
taxpayers, and we need to keep that in mind as we have these 
discussions that poor folks pay a lot of taxes.
    Mr. Arrington. I have just a few seconds here.
    I struggle with the issue of what kind of foods somebody 
ought to be able to purchase with tax funded SNAP funds, and 
would you guys allow me to go over time just for a few seconds 
here just to finish this question?
    So I really do. I honestly have tension here. I don't want 
the purchase of foods that may, in fact, cause in the long-term 
taxpayers to pay out on the back-end for healthcare issues. But 
I don't want the Federal Government to be involved in defining 
what is healthy food, and I certainly don't want a nanny state. 
You could probably predict from my line of questioning. How 
does one incentivize in the SNAP program good choices, healthy 
choices, as opposed to the Federal Government giving some top 
down edict on what is and what isn't healthy?
    Ms. Hatcher. Maybe I should start with that one. We are 
seeing a lot of new incentives in terms of healthy foods. One 
of those is happening at store level. We now have 95 percent of 
our stores with dieticians in the store, either in the actual 
store location or corporate. We are seeing changes in 
behaviors, starting to teach customers how to cook some of 
these healthy foods, how to identify things that they may not 
have tried before and how to cook them. I know that we heard 
from a couple others on the panel talking about these projects 
that are going on to do that, and in addition to that, we have 
seen some of these FINI grants with the Double Up Bucks 
Program, the AARP Program that I think was in Congresswoman 
Lujan Grisham's district, to see behaviors when you do show 
folks how to use these products and how to get them more 
affordably to really start to drive behavior. We are really 
going to see a lot of new possibilities going on in that space.
    Mr. Arrington. Thank you.
    Before we adjourn, and thanks for indulging me in a few 
more seconds there. Before we adjourn, I invite the Ranking 
Member to make any closing remarks.
    Mr. McGovern. Well thank you. Thank you. I appreciate it, 
and I am sorry. We had another hearing that I went to, but we 
got it done in time for me to come for my closing remarks.
    I want to thank all of your for your testimony, and I 
appreciate your answer on ways to incentivize people to make 
healthier choices. There are programs that are up and running 
now. We have a Healthy Incentives Pilot in Massachusetts that 
is doing very well. You talked about the FINI grants and there 
are all kinds of programs that are working. The challenge is to 
make sure the resources are there so that they can be 
widespread. And it is hard for people to make the kinds of 
choices that a dietician would deem as nutritious when you are 
basically talking about on average $1.40 per person per meal. 
It is an inadequate benefit, from my vantage point.
    But I do want to just say that I think that everybody here, 
unless I missed it when I was gone, pointed out that the ABAWD 
population is a vulnerable population. It is fair to say that 
the system isn't working for them the way it should. It is a 
complicated population. It doesn't fit into a nice, neat 
stereotype. And I would just, again, I end as I began, to 
caution this Committee and this Congress from doing anything 
that would make it more difficult for this population. We are 
talking about making sure people have enough to eat, and I 
worry that, based on some of the reports that I have read in 
the press, that we may be going down a road that might cause 
more harm than good.
    So thank you very much for your testimony, and Mr. 
Chairman, thank you very much for yielding me the time to 
close.
    Mr. Arrington. You bet, absolutely.
    Well thank you. I want to reiterate the Ranking Member's 
sentiments for your time, and sorry you had to wait longer 
because of votes, but I appreciate your thoughtful remarks in 
response to our questions.
    Under the Rules of the Committee, the record of today's 
hearing will remain open for 10 calendar days to receive 
additional material and supplementary written responses from 
the witnesses to any question posed by a Member. This hearing 
of the Subcommittee on Nutrition is adjourned.
    [Whereupon, at 4:41 p.m., the Subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]
   Submitted Letter by Hon. K. Michael Conaway, a Representative in 
                          Congress from Texas
March 15, 2017

    Dear Colleague:

    The Supplemental Nutrition Assistance Program (SNAP) is the most 
important nutrition assistance program in the United States, with 
approximately $70 billion in benefits currently serving just shy of 43 
million individuals. As with many means-tested benefit programs, there 
is a detailed framework of Federal law and regulation governing SNAP. 
However, the program is ultimately administered by states that have a 
number of options for implementing certain policies as well as access 
to waivers of Federal law and regulations in specific cases. SNAP 
benefits are fully funded by the Federal Government, with 
administrative expenses divided equally between the Federal and state 
governments.
    The House Committee on Agriculture, by way of a hearing series 
entitled, Past, Present, and Future of SNAP, heard from 60 witnesses 
over the course of 16 hearings in the 114th Congress. These hearings 
afforded the Committee the opportunity to learn more about recipient 
characteristics, program administration and function, and the 
innovative initiatives of Federal, state, local, and private entities.
    Compiled by my staff, the enclosed report outlines the program 
history and structure of SNAP and includes 15 key findings across four 
broad themes. The report identifies a number of ways the program is 
working successfully and a number of areas in need of improvement. That 
said, nothing in the enclosed report suggests gutting SNAP or 
abolishing a program that serves so many.
    In the 115th Congress, we have initiated the work of reauthorizing 
the farm bill, including SNAP. While there will be a time for formal 
input on the farm bill, I welcome your feedback on the report along 
with your suggestions for moving forward. Please feel free to send your 
thoughts to Jennifer Tiller, Professional Staff, at Redacted.
            Sincerely,
            
            
Hon. K. Michael Conaway,
Chairman,
House Committee on Agriculture.
                               attachment
                        committee on agriculture
                      k. michael conaway, chairman


Past, Present, and Future of SNAP
Hearing Series Findings: 114th Congress
          ``We can all agree that no one ought to go hungry in America, 
        and SNAP is essential in protecting the most vulnerable 
        citizens during tough times. For many it is a vital lifeline to 
        keeping food on the table.''
                                        Chairman K. Michael Conaway.\1\
---------------------------------------------------------------------------
    \1\K. Michael Conaway, Chairman of the House Committee on 
Agriculture. Hearing of the House of Representatives, Committee on 
Agriculture. Past, Present, and Future of SNAP. February 25, 2015. 
Washington, D.C.
---------------------------------------------------------------------------
Executive Summary
    The House Committee on Agriculture completed a comprehensive review 
of the Supplemental Nutrition Assistance Program (SNAP) during the 
114th Congress. Known as the Past, Present, and Future of SNAP, the 
purpose of the review was to provide a better understanding of SNAP and 
the population it serves, to review how SNAP utilizes cash and noncash 
benefits to serve that population, and to examine ways the program can 
be improved. While the series highlighted specific ways that vulnerable 
populations are well-served, it also demonstrated several areas for 
improvement. The series also highlighted that there is sincere interest 
on both sides of the aisle in ensuring that SNAP is meeting the needs 
of those it is intended to serve. Several key findings emerged from the 
testimony of 60 witnesses across 16 hearings:
Findings Theme 1: Serving SNAP Recipients through Innovation and 
        Flexibility in Program Delivery
    1a. SNAP serves a wide-ranging demographic, and the program must 
adapt to meet the needs of each recipient.
    1b. States can take advantage of available state options and 
waivers, as well as new and developing technologies.
    1c. Broad-Based Categorical Eligibility (BBCE) is the most 
significant state option in SNAP recipient eligibility determinations.
    1d. The need for nutrition assistance cannot be addressed by just 
one program or just one group--it requires more collaboration between 
governments, charities, businesses, health systems, communities, 
individuals, and many others.
    1e. The diversity of programs serving low-income households has 
simultaneously generated overlaps and gaps in recipient services.
Findings Theme 2: Climbing the Economic Ladder through Work
    2a. Unemployment and underemployment are leading causes of poverty, 
and promoting pathways to employment is the best way to help 
individuals climb the economic ladder out of poverty and into self-
sufficiency.
    2b. Combined with other welfare programs, SNAP recipients may face 
a ``welfare cliff'' when they are just above the income eligibility 
level, which can create disincentives to finding work or increasing 
earnings.
    2c. Better enforcement of work requirements is needed in some 
states, and enforcement needs to be coupled with more effective SNAP 
employment and training (E&T) programs.
Findings Theme 3: Maintaining Program Integrity
    3a. SNAP needs clear program goals and must be evaluated according 
to metrics aligned with those goals to generate program improvement.
    3b. SNAP fraud rates can be improved through innovative state and 
Federal strategies and technologies.
    3c. SNAP error rates are only as good as the program parameters on 
which they are based.
    3d. State flexibility in administering SNAP should not jeopardize 
program integrity.
    3e. Data availability--with robust privacy protections--is a key 
concern in ensuring SNAP is functioning as intended.
Findings Theme 4: Improving Food Access and Promoting Healthy Food
    4a. Americans in both urban and rural communities cannot improve 
their diets without adequate access to healthy food.
    4[b]. Nutrition education--working in tandem with targeted 
incentives--can help SNAP recipients develop healthy lifestyles and 
healthy eating habits.
From the Chair
December 7, 2016

    Through our Past, Present, and Future of SNAP hearing series, the 
House Committee on Agriculture heard from 60 witnesses in 16 hearings 
over the course of the past 2 years on the Supplemental Nutrition 
Assistance Program (SNAP), the most important nutrition assistance 
program in the United States. With around $70 billion in benefits going 
to more than 43 million SNAP recipients each year, even small program 
improvements can result in better nutrition for hungry families and in 
taxpayer resources being used more effectively. This report documents 
the findings of the hearing series, which reviewed characteristics of 
SNAP recipients, the functioning of the program, and innovations in 
serving those in need of nutrition assistance.
    While it may have generated ``hearing fatigue,'' the review of SNAP 
was an essential part of our work as we prepare to reauthorize SNAP in 
the 115th Congress. SNAP is a complex program implemented uniquely by 
each state. It serves diverse populations with a wide range of needs, 
many of which are not visible without taking a deeper dive into the 
program to see how it works.
    We know that we live in a country with the safest, most affordable, 
and most abundant food supply in the world. While Americans on average 
spend less of their disposable income on food than any other country in 
the world, those on the lower end of the income ladder in the United 
States spend more than 34 percent of their disposable income on food--
if they have any disposable income at all. It is our responsibility to 
help our most vulnerable citizens, whether they are children, the 
elderly, the disabled, veterans, or those who are down on their luck 
due to no fault of their own. SNAP serves that purpose, partnering with 
many other organizations to put food on the plates of those who would 
otherwise be hungry. It is the Committee's role to ensure we are 
successful in accomplishing that purpose.
    You will find nothing in this report that suggests gutting SNAP or 
getting rid of a program that does so much to serve so many. What you 
will find are a number of ways the program is working successfully and 
a number of areas in need of improvement. You will find areas for 
innovation, for adjustment, for education and training, and for 
rethinking the best ways to serve those in need.
    There is common ground to be found on SNAP, both in understanding 
the needs of the population SNAP serves, and in working collaboratively 
to improve SNAP. That common ground must be found not only within 
Congress, but across government agencies, nonprofits, the private 
sector, universities, communities, recipients, and a host of other 
partners involved in meeting the needs of our nation's most vulnerable 
citizens.
    SNAP serves a critical mission: to feed those who need it and to 
empower those who are able to move from SNAP to self-reliance. This 
report focuses on how SNAP currently achieves this mission, and 
highlights the suggestions of our many witnesses on how SNAP can more 
effectively fulfill its mission.

 
 
 
Hon. K. Michael Conaway,             Hon. Jackie Walorski,
Chairman,                            Chairwoman, Subcommittee on
House Committee on Agriculture;       Nutrition,
                                     House Committee on Agriculture.
 

Table of Contents
    Overview of Hearing Series
    History of SNAP
    Findings Theme 1: Serving SNAP Recipients through Innovation and 
Flexibility in Program Delivery

          Finding 1a
          Finding 1b
          Finding 1c
          Finding 1d
          Finding 1e

    Findings Theme 2: Climbing the Economic Ladder through Work

          Finding 2a
          Finding 2b
          Finding 2c

    Findings Theme 3: Maintaining Program Integrity

          Finding 3a
          Finding 3b
          Finding 3c
          Finding 3d
          Finding 3e

    Findings Theme 4: Improving Food Access and Promoting Healthy Food

          Finding 4a
          Finding 4b

    Appendix A: Hearings and Witnesses
    Appendix B: Description of Federal Nutrition Programs
    Appendix C: Glossary
Overview of Hearing Series
    Over the course of the 114th Congress, the House Committee on 
Agriculture undertook a top-to-bottom review of SNAP. The Committee 
conducted 16 educational hearings from February 2015 to November 2016 
during its hearing series entitled the Past, Present, and Future of 
SNAP. These hearings took a closer look at how SNAP works and examined 
the challenges faced by recipients. A wide array of witnesses, 
including hunger advocates, researchers, USDA officials, and SNAP 
recipients testified before the Committee. See Appendix A for a 
complete listing of hearings and witnesses.
    SNAP is the largest program under the jurisdiction of the 
Committee, accounting for 79 percent of total farm bill spending.\2\ 
CBO currently projects that SNAP will cost an average of $69.75 billion 
per year over the next 10 years, making it the largest Federal food 
program serving low-income families in the United States.\3\
---------------------------------------------------------------------------
    \2\Congressional Budget Office. Estimated Budgetary Effects of H.R. 
2642, the Agricultural Act of 2014. https://www.cbo.gov/sites/default/
files/113th-congress-2013-2014/costestimate/hr2642lucasltr00.pdf.
    \3\Congressional Budget Office. Baseline Projections for Selected 
Programs. August 2016. https://www.cbo.gov/about/products/baseline-
projections-selected-programs.
---------------------------------------------------------------------------
    Program participation nearly doubled (up 81 percent from FY 2007 to 
FY 2013) as a result of the recent recession. In an average month in FY 
2007, 26.3 million people (or about nine percent of the U.S. 
population) were enrolled in SNAP. That increased to 47.6 million 
people (or about 15 percent of the U.S. population) in FY 2013, owing 
to the fact that the economy was slow to recover and many families 
remained reliant on SNAP. Even now, with a 4.6 percent unemployment 
rate (compared to a 9.6 percent unemployment rate for 2010), there were 
still 43.4 million SNAP participants as of July 2016.4-5 
Because of the magnitude of the program, the House Committee on 
Agriculture devoted significant time and effort to educating Members on 
how SNAP works, who it serves, and what can be done to make it more 
effective.
---------------------------------------------------------------------------
    \4\U.S. Department of Labor, Bureau of Labor Statistics. November 
2016. http://data.bls.gov/timeseries/LNS14000000.
    \5\USDA Food and Nutrition Service (FNS). Supplemental Nutrition 
Assistance Program (SNAP) Summary--Latest Available Month: July 2016. 
http://www.fns.usda.gov/pd/supplemental-nutrition-assistance-program-
snap.
---------------------------------------------------------------------------
    Several critical themes emerged as witnesses presented their 
testimony based on research, work in the community, or personal 
experience with SNAP. This report summarizes the key findings from the 
hearing series. The report also presents additional background 
information as needed to facilitate an understanding of the issues that 
were discussed in the hearings.
History of SNAP
    While the United States has a long history of providing nutrition 
assistance to its citizens, the Supplemental Nutrition Assistance 
Program (SNAP), as we know it, traces its roots to the 1960s. In 1963, 
President Kennedy proposed permanently authorizing a small pilot 
project--which had been introduced in 1961--called the Food Stamp 
Program (FSP). The authorizing legislation, the Food Stamp Act of 1964, 
began with a lofty goal of utilizing ``the nation's abundance of food . 
. . to safeguard the health and well-being of the nation's population 
and raise levels of nutrition among low-income households.''\6\
---------------------------------------------------------------------------
    \6\P.L. 88-525.
---------------------------------------------------------------------------
    In response to growing hunger across the United States, Congress 
amended the Food Stamp Act in 1971 to establish national-level 
eligibility and benefit standards. The program also included a purchase 
requirement for food stamps. That is, recipients paid for the stamps 
(limited to no more than 30 percent of their income with the 1971 
amendments), and then received a ``bonus'' payment to cover the 
difference between the amount paid and the amount needed to attain a 
low-cost, nutritionally adequate diet.\7\
---------------------------------------------------------------------------
    \7\USDA FNS. From Food Stamps to the Supplemental Nutrition 
Assistance Program: Legislative Timeline. http://www.fns.usda.gov/
sites/default/files/timeline.pdf.
---------------------------------------------------------------------------
    The Food Stamp Act of 1977 eliminated the purchase requirement and 
replaced it with the ``net income rule'' whereby recipients were 
expected to spend 30 percent of their net income on food and use the 
stamps as a supplement. The Act also established statutory income 
eligibility based on the Federal poverty level, established ten 
categories of excluded income, and established the principle that 
stores must sell a substantial amount of staple foods to be authorized 
to accept food stamps.
    Electronic Benefit Transfer (EBT) technology was established as an 
issuance alternative to the paper stamps in the 1990 Mickey Leland 
Memorial Domestic Hunger Relief Act. EBT cards allow a recipient to 
authorize the transfer of their government benefits from a Federal 
account to a retailer account to pay for products received. 
Demonstration projects were conducted by state implementation agencies 
until the welfare reforms of 1996--officially known as the Personal 
Responsibility and Work Opportunity Reconciliation Act (PRWORA)--
mandated states implement EBT systems as the source of benefit issuance 
by October 2002.\8\ The EBT card works in the same way as a debit card, 
with recipients using a PIN number at the point of sale. Some states 
use the EBT card for multiple Federal welfare programs, including the 
Special Supplemental Nutrition Program for Women, Infants, and Children 
(WIC) and the Temporary Assistance for Needy Families (TANF) program. 
See Appendix B and Appendix C for a description of Federal welfare and 
nutrition programs, including both WIC and TANF.
---------------------------------------------------------------------------
    \8\USDA FNS. A Short History of SNAP. http://www.fns.usda.gov/snap/
short-history-snap.

------------------------------------------------------------------------
 
-------------------------------------------------------------------------
1996 Welfare Reform\9\
\9\Vee Burke, Congressional Research Service. The 1996 Welfare Reform
 Law. July 1, 2003. http://royce.house.gov/uploadedfiles/
 the%201996%20welfare%20reform%20law.pdf.
    The Personal Responsibility and Work Opportunity Reconciliation Act
 was signed into law on August 22, 1996. The changes in this Act
 reshaped cash and food welfare programs and helped reduce Federal
 welfare spending. The biggest reform from 1996 was replacing the Aid to
 Families with Dependent Children (AFDC) with fixed annual grants to
 states for TANF. The impact of welfare reform on each state General
 Assistance (GA) program differed based on a number of factors,
 including whether populations that were no longer eligible for Federal
 assistance as a result of the Act would have become eligible for a
 state GA program and whether a state chose to provide benefits to those
 groups no longer eligible for Federal assistance. The 1996 Welfare
 Reform also impacted food stamps by:
 
     Giving states more control over food stamp operations and
     coordination with family cash aid;
 
     Adding work rules and time limits for adults without
     dependents and expanding existing work requirements;
 
     Cutting future benefits; and
 
     Placing greater limits on eligibility and expanding
     penalties for violating rules.
------------------------------------------------------------------------

    The Food Security and Rural Investment Act of 2002 (2002 Farm Bill) 
also made significant changes to SNAP. The Quality Control system was 
reformed, improving payment accuracy by 34 percent between FY 2000 and 
FY 2004. Optional policy changes for states were also included, such as 
aligning the definition of income and/or resources to that used in TANF 
or Medicaid, adopting a simplified reporting system, and providing 
transitional benefits for recipients leaving TANF.\10\
---------------------------------------------------------------------------
    \10\USDA FNS. A Short History of SNAP. http://www.fns.usda.gov/
snap/short-history-snap.
---------------------------------------------------------------------------
    The Food, Conservation, and Energy Act of 2008 (2008 Farm Bill) 
formally changed the name of FSP to SNAP. It made substantive spending 
and programmatic changes, authorizing an increase of more than $10 
billion in spending on Federal nutrition programs over the following 10 
years. Household benefits were increased and eligibility was expanded 
via adjustments to asset tests.
    SNAP is now a catchall for individuals and families who receive no 
or lower benefits from other welfare programs, largely because the 
eligibility criteria in SNAP are relatively more relaxed. As a result, 
the net effect has been to increase SNAP enrollment. For example, in 
the welfare reforms of 1996, the cash welfare program Aid to Families 
with Dependent Children (AFDC) was converted into a block grant known 
as TANF, which has rather rigorous work and activity requirements and 
includes a time limit. Another program available to those who are laid 
off from work is Unemployment Insurance (UI). These benefits require 
individuals to have a work history and to be fired through no fault of 
their own to be eligible for assistance. UI benefits are also time-
limited, typically lasting 6 months. A third program, Federal 
disability benefits, requires individuals to prove they are unable to 
work. For many families who have not collected SNAP in the past, SNAP 
is now a default option for filling in the gaps.
    SNAP grew considerably in response to the Great Recession, touched 
off by the financial crisis from 2007 to 2009. As the U.S. economy 
suffered and unemployment rose to nearly ten percent, enrollment in the 
program increased from 28.2 million participants in FY 2008 to 47.6 
million in FY 2013, as shown in the following chart.\11\ Enrollment in 
SNAP often lags the economy, as it takes time for changes to work 
through from businesses to individuals, ultimately resulting in the 
need for food assistance.
---------------------------------------------------------------------------
    \11\U.S. Department of Labor, Bureau of Labor Statistics. Labor 
Force Statistics from the Current Population Survey. Series ID 
LNU04000000. http://data.bls.gov/timeseries/
LNU04000000?years_option=all_years&periods_option=specific_periods&perio
ds=Annual+Data.
---------------------------------------------------------------------------
SNAP Program Participation and Average Benefits


          Source: USDA FNS. SNAP Program Participation and Costs. Data 
        as of October 7, 2016.

    Accordingly, the cost of the program more than doubled from $37.6 
billion in FY 2008 to nearly $80 billion at its peak in FY 2013. 
Although the latest unemployment estimates have largely returned to 
pre-recession levels, SNAP participation levels have been slow to 
respond. CBO estimates that SNAP participation will remain above 33 
million people (and well above pre-recession levels) through FY 2026, 
assuming a continued unemployment rate of 5.0 percent.\12\ USDA data 
shows that spending on SNAP remains three times what it was prior to 
the recession ($23.09 billion pre-recession average compared to $73.99 
billion post-recession in FY 2015). However, SNAP spending is now 
projected to be significantly lower than it was estimated at passage of 
the 2014 Farm Bill.
---------------------------------------------------------------------------
    \12\Congressional Budget Office. Baseline Projections for Selected 
Programs. March 2016. https://www.cbo.gov/about/products/baseline-
projections-selected-programs#20.
---------------------------------------------------------------------------
SNAP Spending Pre- and Post-Recession


          Source: USDA FNS. SNAP Program Participation and Costs. Data 
        as of October 7, 2016.
Program Structure
    Similar to many of the other means-tested benefit programs, there 
is a detailed framework of Federal law and regulation governing SNAP. 
However, the program is ultimately administered by states that have a 
number of options--for example, asset testing and transitional 
benefits--for implementing certain policies as well as access to 
waivers of Federal law and regulations in specific cases.\13\
---------------------------------------------------------------------------
    \13\FNS allows states to submit waivers that may be approved under 
certain criteria. These waivers all relate to regulations FNS requires 
of states. http://www.fns.usda.gov/snap/waivers-rules.
---------------------------------------------------------------------------
    SNAP benefits are fully funded by the Federal Government, although 
state policy options may play a role in increasing or decreasing the 
size of the caseload. Administrative expenses, such as those used for 
determining initial and ongoing eligibility, are divided equally 
between the Federal and state governments.
    While SNAP is an entitlement program--meaning that those who 
qualify for assistance are entitled to the assistance--it is unique in 
that it is funded through the annual appropriations process. In order 
to prevent the program from running out of funds for benefits, there is 
also a $3 billion contingency fund that is also appropriated annually, 
with 2 years of availability. This means that in any year, there are up 
to $6 billion in contingency funds available. Congress would need to 
appropriate additional funds if both the currently appropriated funds 
and contingency funds were exhausted.
SNAP Eligibility
    SNAP eligibility is tied to the Federal poverty level, a measure of 
income issued by the Department of Health and Human Services to 
determine eligibility for a number of welfare benefits. To qualify for 
SNAP, applicants must meet the eligibility and income requirements 
mandated by Congress, both of which are discussed at length in this 
report. While eligibility requirements are nuanced and vary widely 
based on state options, SNAP recipients are generally subjected to 
income requirements mandated by Congress.
    The basic SNAP beneficiary unit is the household. A household can 
be either a person living alone or a group of individuals living 
together. Most households must meet both the gross and net monthly 
income tests provided in the following table to receive SNAP benefits, 
but households with an elderly person or an individual who is receiving 
certain disability benefits only have to meet the net income test. If 
eligible for SNAP, an applicant household also undergoes a calculation 
of its monthly benefit amount (or allotment). This calculation utilizes 
the household's net income as well as the maximum allotment, a figure 
that equals the current value of the ``Thrifty Food Plan'' (TFP).\14\ 
Developed in the 1930s and now updated monthly, the TFP is USDA's 
national standard estimate of the minimum cost of eating at home and is 
broken out by gender and age.
---------------------------------------------------------------------------
    \14\Randy Aussenberg, Congressional Research Service. Supplemental 
Nutrition Assistance Program (SNAP): A Primer on Eligibility and 
Benefits. February 2, 2016. http://www.nationalaglawcenter.org/wp-
content/uploads/assets/crs/R42505.pdf.
---------------------------------------------------------------------------
    Households that have income over the amounts listed in the 
following table cannot receive benefits. For example, a household of 
four would be ineligible for SNAP if their gross monthly income exceeds 
$2,633 (or if their net monthly income exceeds $2,025). These 
thresholds are critical because they determine program eligibility for 
many Americans.

          Maximum Income by Household Size for SNAP Eligibility
------------------------------------------------------------------------
                                                   Gross
                                                  Monthly    Net Monthly
                                                Income (130  Income (100
                                                 percent of   percent of
                                                the Federal  the Federal
                                                  poverty      poverty
                                                   level)       level)
------------------------------------------------------------------------
1                                                    $1,287         $990
2                                                    $1,736       $1,335
3                                                    $2,184       $1,680
4                                                    $2,633       $2,025
5                                                    $3,081       $2,370
6                                                    $3,530       $2,715
7                                                    $3,980       $3,061
8                                                    $4,430       $3,408
*                                                     +$451        +$347
------------------------------------------------------------------------
*Each additional member.
Note: Gross income is a household's total, non-excluded income before
  any deductions have been made. Net income is gross income less
  allowable deductions.
Source: USDA FNS. SNAP Eligibility. http://www.fns.usda.gov/snap/
  eligibility.

    To put these thresholds in context, in FY 2015, approximately 82 
percent of SNAP households lived below the Federal poverty level. 
Forty-two percent of SNAP households had incomes less than or equal to 
\1/2\ of the Federal poverty level, and they accounted for 57 percent 
of all benefits.\15\ Regardless of income, all eligible one- and two-
person households are guaranteed a minimum benefit equal to eight 
percent of the maximum benefit for a one-person household. For FY 2017, 
the minimum benefit for one- and two-person households in the 
contiguous U.S. is $16.\16\
---------------------------------------------------------------------------
    \15\USDA FNS. Characteristics of Supplemental Nutrition Assistance 
Program Households: Fiscal Year 2015. Report No. SNAP-16-CHAR. November 
2016. http://www.fns.usda.gov/snap/characteristics-supplemental-
nutrition-assistance-households-fiscal-year-2015.
    \16\USDA FNS. SNAP Fiscal Year Cost-of-Living Adjustments. Memo 
dated August 10, 2016. http://www.fns.usda.gov/sites/default/files/
snap/SNAP-Fiscal-Year-2017-Cost-of-Living-Adjustments.pdf.
---------------------------------------------------------------------------
    For FY 2017, the maximum monthly benefit in the 48 contiguous 
states and DC is $194 for a one-person household, $357 for a two-person 
household, and $649 for a four-person household.\17\ In determining a 
household's benefit, the net monthly income of the household is 
multiplied by 30 percent (because SNAP households are expected to spend 
30 percent of their income on food), and the result is subtracted from 
the maximum benefit to determine the household's benefit.
---------------------------------------------------------------------------
    \17\USDA FNS. Supplemental Nutrition Assistance Program (SNAP): How 
Much Could I Receive? http://www.fns.usda.gov/snap/how-much-could-i-
receive.
---------------------------------------------------------------------------
Findings Theme 1: Serving SNAP Recipients through Innovation and 
        Flexibility in Program Delivery
    SNAP serves a diverse group of low-income individuals, primarily by 
providing benefits for the purchase of food. SNAP is intended to assist 
low-income individuals in strengthening their food purchasing power 
while they work to lift themselves out of poverty. This point was 
clearly illustrated by Robert Greenstein of the Center on Budget and 
Policy Priorities: ``a family whose rent and utility costs consume \2/
3\ of its income will have less money to buy food than a family that 
has the same income but receives a rental voucher to cover a portion of 
its rental costs.''\18\ Most SNAP recipients face more challenges than 
food insecurity. They also face housing, utility, transportation, and 
childcare costs, to name a few. As noted earlier, this program has 
become a catchall for low-income individuals who either do not qualify 
for a more targeted program like WIC or who need to supplement their 
income (and other forms of public assistance) to purchase food. 
Challenges facing recipients may also differ depending on whether the 
recipient is a single parent, part of a two-parent household, an older 
American, a veteran, currently serving in the military, disabled, or is 
in an urban or rural environment. Jim Weill with the Food Research and 
Action Center (FRAC) pointed out the often surprising fact that ``rural 
food insecurity rates are higher than metro area rates; and food 
insecurity rates are roughly the same in every region of the country, 
albeit they are highest in the South.''\19\ To best serve this diverse 
population, one must understand the demographics and the specific 
challenges they face.
---------------------------------------------------------------------------
    \18\Robert Greenstein, President, Center on Budget and Policy 
Priorities. Hearing of the House of Representatives, Committee on 
Agriculture. Past, Present, and Future of SNAP. February 25, 2015. 
Washington, D.C.
    \19\Jim Weill, President, Food Research and Action Center. Hearing 
of the U.S. House of Representatives, Subcommittee on Nutrition, 
Committee on Agriculture. Past, Present, and Future of SNAP: Developing 
and Using Evidence-Based Solutions. July 15, 2015. Washington, D.C.

          ``rural food insecurity rates are higher than metro area 
        rates; and food insecurity rates are roughly the same in every 
        region of the country, albeit they are highest in the South.''
                            Jim Weill, Food Research and Action Center.

    In FY 2015, about 45.8 million people living in 22.5 million U.S. 
households participated in SNAP in an average month. Of those 
households:\20\
---------------------------------------------------------------------------
    \20\Id., n. 15.

---------------------------------------------------------------------------
   32 percent had earned income;

   22 percent had zero gross income; and

   40 percent had zero net income.

    Seventy-five percent of households included a child, an elderly 
individual, or an individual with a disability, and these households 
received 82 percent of all SNAP benefits. A majority of SNAP households 
with children were single-adult households. In total, almost \2/3\ of 
participants are children, elderly, or disabled: 44 percent of 
participants were under age 18, 11 percent were age 60 or older, and 
ten percent were disabled nonelderly adults.\21\
---------------------------------------------------------------------------
    \21\Id., n. 15.
---------------------------------------------------------------------------
SNAP Household Participation and Characteristics: Decreasing Share of 
        Households with Children, and Increasing Share of Households 
        with No Gross or Net Income\22\
---------------------------------------------------------------------------
    \22\Id., n. 15.
    
    
          Source: USDA FNS. Characteristics of Supplemental Nutrition 
        Assistance Program Households: Fiscal Year 2015. Report No. 
        SNAP-16-CHAR. November 2016. http://www.fns.usda.gov/snap/
        characteristics-supplemental-nutrition-assistance-households-
---------------------------------------------------------------------------
        fiscal-year-2015.

    A more comprehensive listing of the characteristics of SNAP 
recipients for FY 2015 is provided in the following table and provides 
important context for the discussion of recipients in the next section.

                               SNAP Households, Participants, and Benefits Summary
----------------------------------------------------------------------------------------------------------------
                                                        Participants
                                 SNAP                   in Households                 Approximated
                              Households  Percent (%)  with Household  Percent (%)   Annual Dollars  Percent (%)
                                (000)                  Characteristic                (000) Based on
                                                            (000)                    SNAP QC Sample
----------------------------------------------------------------------------------------------------------------
                                                      Total
----------------------------------------------------------------------------------------------------------------
Total                             22,293       100.0%         45,184        100.0%       68,012,160       100.0%
Children                         [9,510]        42.7%         30,774         68.1%           44,824        65.9%
Seniors                            4,361        19.6%          5,503         12.2%        6,703,452         9.9%
Non-Elderly Individuals            4,498        20.2%          8,349         18.5%       10,409,256        15.3%
 with Disabilities
Adults Age 18 to 49 without        4,265        19.1%          5,098         11.3%       10,027,836        14.7%
 Disabilities in Childless
 Households (ABAWDs)
----------------------------------------------------------------------------------------------------------------
                                                    Locality
----------------------------------------------------------------------------------------------------------------
Metropolitan                      18,325        82.2%         36,952         81.8%       56,300,844        82.8%
Micropolitan                       2,177         9.8%          4,520         10.0%        6,455,412        89.5%
Rural                              1,451         6.5%          3,087          6.8%        4,387,500         6.5%
----------------------------------------------------------------------------------------------------------------
                                             Countable Income Source
----------------------------------------------------------------------------------------------------------------
No Gross Income                    4,943        22.2%          7,574         16.8%       16,454,208        24.2%
No Net Income                      8,837        39.6%         15,011         33.2%       32,155,152        47.3%
No Earned Income                  15,212        68.2%         25,241         55.9%       42,283,800        62.2%
TANF Income                        1,293         5.8%          3,850          8.5%        6,276,360         9.2%
SSI                                4,559        20.5%          7,912         17.5%       10,557,420        15.5%
Social Security Income             5,451        24.5%          8,026         17.8%        8,827,512        13.0%
----------------------------------------------------------------------------------------------------------------
                                                  SNAP Benefit
----------------------------------------------------------------------------------------------------------------
Minimum Benefit                    1,610         7.2%          1,931          4.3%          309,372         0.5%
Maximum Benefit                    9,160        41.1%         15,333         33.9%       32,906,256        48.4%
----------------------------------------------------------------------------------------------------------------
Note: the values in this table are calculated based on the SNAP QC sample and may vary from the programmatic
  totals also published by USDA.
Source: USDA FNS. Characteristics of Supplemental Nutrition Assistance Program Households: Fiscal Year 2015.
  Report No. SNAP-16-CHAR. November 2016.

Finding 1a: SNAP Serves a Wide-Ranging Demographic, and the Program 
        Must Adapt To Meet the Needs of Each Recipient
    SNAP serves a wide variety of individuals, both young and old. It 
serves veterans. It serves the disabled. It serves individuals, 
couples, and large families alike. The needs of these populations are 
wide-ranging and require various programmatic adaptations to meet those 
needs. This section provides an overview of SNAP participant 
characteristics that were highlighted throughout the hearing series.
Seniors
    Seniors have the lowest rates of SNAP participation among eligible 
households of any demographic. While the low participation rate has a 
variety of causes, a prominent explanation is the stigma associated 
with SNAP and welfare in general. Many factors contribute to a lack of 
access to food among seniors, including a lack of a substantial income, 
the gap between Medicaid and the cost of living, limited income with 
specialized diets, and mental and physical illnesses.\23\ The issues 
facing these populations must be viewed holistically, with SNAP as one 
piece of a larger solution to solving hunger for seniors.
---------------------------------------------------------------------------
    \23\Lynda Ender, AGE Director, The Senior Source. Hearing of the 
House of Representatives, Committee on Agriculture. Past, Present, and 
Future of SNAP: The World of Nutrition and the Role of the Charitable 
Sector. April 15, 2015. Washington, D.C.
---------------------------------------------------------------------------
    At the Committee's hearing on Special Populations, Eric 
Schneidewind with AARP detailed the unique impact age can have on food 
insecurity:

          ``Elderly households, which are defined as those with an 
        individual over age 60, represented 19 percent of all SNAP 
        recipients in FY 2014. Out of this cohort, 85 percent received 
        either Supplemental Security Income (SSI) or Social Security, 
        and 82 percent of elderly households receiving SNAP consisted 
        of an elderly individual living alone. On average, elderly SNAP 
        households received an average benefit of $129 per month. 
        According to research by the AARP Foundation--a charitable 
        affiliate of AARP--over 17 percent of adults over the age of 40 
        are food-insecure. Among age cohorts over age 50, food 
        insecurity was worse for the 50-59 age group, with over ten 
        percent experiencing either low or very low food security. 
        Among the 60-69 age cohort, over nine percent experienced 
        similar levels of food insecurity, and over six percent among 
        the 70+ population. This emphasizes the fact that the younger 
        segment of older Americans are often at deeper risk for food 
        insecurity than their older counterparts, primarily because 
        they have yet to receive Social Security benefits and--even if 
        they have specialized needs or limitations--might not qualify 
        for other nutrition assistance programs geared toward older 
        Americans.''\24\
---------------------------------------------------------------------------
    \24\Eric Schneidewind, President-Elect of AARP. Hearing of the 
House of Representatives, Subcommittee on Nutrition, Committee on 
Agriculture. Past, Present, and Future of SNAP: Addressing Special 
Populations. January 12, 2016. Washington, D.C.

    Beyond the affordability of food and complexities of 
transportation, seniors often have specific dietary needs, and 
specialized diets can be difficult to afford on a limited income. 
Metabolic illnesses, such as diabetes, require special consideration. 
Vinsen Faris with Meals on Wheels pointed out that for seniors ``. . . 
even a slight reduction in nutritional intake can exacerbate existing 
health conditions.''\25\ A person with diabetes may be unable to eat 
foods with added sugars or even foods, such as grains, that turn into 
fructose when digested. While many food banks and pantries are trying 
to provide a larger range of healthy foods for families with dietary 
restrictions, the increasing number of seniors with dietary 
restrictions still poses a significant challenge.
---------------------------------------------------------------------------
    \25\Vinsen Faris, Executive Director, Meals on Wheels of Johnson 
and Ellis Counties in North Central Texas. Hearing of the House of 
Representatives, Subcommittee on Nutrition, Committee on Agriculture. 
Past, Present, and Future of SNAP: Addressing Special Populations. 
January 12, 2016. Washington, D.C.
---------------------------------------------------------------------------
    A number of SNAP options and other programs are designed to address 
these challenges. Elderly and disabled SNAP recipients are able to 
assign their EBT card to another individual so that person can purchase 
food. Congregate (community meal) food sites--similar in concept to 
group sites for providing summer meals for children--allow seniors to 
gather for a prepared meal. There is also a special Senior Farmers' 
Market program to promote the purchase of fresh fruits and vegetables. 
Finally, the Commodity Supplemental Food Program (CSFP) works to 
improve the health of low-income elderly persons at least 60 years of 
age by supplementing their diets with nutritious, USDA-surplus foods 
provided in boxes delivered to their homes through local food banks.
Children
    SNAP serves 9.5 million households with children, which account for 
43 percent of all SNAP households.\26\ While single-parent households 
are more susceptible to food insecurity, especially those with single 
mothers, two-parent families also struggle with food insecurity. Among 
married couple families with children, the rate of hunger among 
individuals is 3.5 percent (3.9 million individuals); whereas for 
households headed by a single mother, the rate is 13.2 percent (4.7 
million individuals); and for households headed by a single father, the 
rate is 7.2 percent (0.8 million individuals).\27\
---------------------------------------------------------------------------
    \26\Id., n. 15.
    \27\Coleman-Jensen A., Rabbitt M.P., Gregory C., Singh A. 
Statistical supplement to household food security in the United States 
in 2014. Washington, D.C.: U.S. Department of Agriculture, Economic 
Research Service. September 2015. https://www.ers.usda.gov/webdocs/
publications/err194/53740_err194.pdf.
---------------------------------------------------------------------------
    The Committee hearing Breaking the Cycle focused on how to best 
give children who grew up in low-income households a chance to climb 
the economic ladder. Dr. Caroline Ratcliffe with the Urban Institute 
pointed out that ``roughly 29 million of today's children are expected 
to live below the poverty line before age 18.''\28\
---------------------------------------------------------------------------
    \28\Dr. Caroline Ratcliffe, Senior Fellow and Economist, Urban 
Institute. Hearing of the House of Representatives, Subcommittee on 
Nutrition, Committee on Agriculture. Past, Present, and Future of SNAP: 
Breaking the Cycle. October 27, 2015. Washington, D.C.
---------------------------------------------------------------------------
    Educational attainment (including technical school or local 
community college) is a key component of breaking the cycle; in fact, a 
parent's education level can influence whether or not a child grows up 
in poverty. Gaining skills to be in a long-term stable job can bring 
about higher wages and more opportunity for economic mobility. 
Education is becoming increasingly important as Dr. Elisabeth Babcock 
of the Crittenton Women's Union noted: ``Seventy-five percent of the 
jobs in the economy as of 2020 are predicted to require education 
beyond high school, and all of the jobs that pay family sustaining 
wages require this.''\29\
---------------------------------------------------------------------------
    \29\Dr. Elisabeth Babcock, President and CEO, Crittenton Women's 
Union. Hearing of the House of Representatives, Committee on 
Agriculture. Past, Present, and Future of SNAP: The Means to Climbing 
the Economic Ladder. June 10, 2015. Washington, D.C.
---------------------------------------------------------------------------
    Poverty has negative consequences on a child's cognitive and 
physical development. Poverty has a trickle-down effect that can impact 
the emotional well-being of children, in both the long- and short-term. 
Dr. Eduardo Ochoa, Jr. from Children's HealthWatch outlined the 
negative impacts poverty and food insecurity can have on the 
development of children:\30\
---------------------------------------------------------------------------
    \30\Dr. Eduardo Ochoa, Jr. Children's HealthWatch. Hearing of the 
House of Representatives, Subcommittee on Nutrition, Committee on 
Agriculture. Past, Present, and Future of SNAP: Breaking the Cycle. 
October 27, 2015. Washington, D.C.

   Household food insecurity increases the risk of 
        developmental delays by approximately 70 percent in early 
---------------------------------------------------------------------------
        childhood;

   Mental health problems such as depression and anxiety 
        disorders in mothers and behavioral problems in preschool age 
        children are more common when mothers are food-insecure;

   Food insecurity is linked to developmental consequences for 
        both girls and boys during kindergarten through third grade; 
        and

   Food-insecure children are more than twice as likely to be 
        in fair-to-poor health than are food-secure children.

    Nutrition programs that are especially targeted to children provide 
much-needed nutrition assistance in key periods of a child's 
developmental growth, promoting their health and well-being, and 
impacting their ability to learn, grow, and develop to their full 
potential.\31\ Ruth Riley, a former WNBA player shared her own 
experience with SNAP: ``I often joke that growing up I was tall, lanky 
and uncoordinated. Looking back, I can't imagine what my path would 
have been if I'd been tall, lanky, uncoordinated . . . and 
hungry.''\32\
---------------------------------------------------------------------------
    \31\National Commission on Hunger. Freedom from Hunger: An 
Achievable Goal for the United States of America. 2015.
    \32\Ruth Riley. WNBA Athlete. Hearing of the House of 
Representatives, Subcommittee on Nutrition, Committee on Agriculture. 
Past, Present, and Future of SNAP: Breaking the Cycle. October 27, 
2015. Washington, D.C.

          ``I often joke that growing up I was tall, lanky and 
        uncoordinated. Looking back, I can't imagine what my path would 
        have been if I'd been tall, lanky, uncoordinated . . . and 
        hungry.''
                                        Ruth Riley, former WNBA player.

    Several programs outside of SNAP also serve children's nutrition 
needs. WIC provides Federal grants to states so beneficiaries--low-
income pregnant or postpartum women and infants and children under 5 
who are at nutritional risk--can purchase specific healthy foods. The 
School Breakfast Program (SBP) and National School Lunch Program (NSLP) 
provide children with meals at free or reduced prices, depending on 
income eligibility. A child that lives in a household that receives 
SNAP automatically qualifies for school meals. Because nutrition is so 
important to a child's development, when the SNAP benefit allotment is 
calculated for a household, there is no reduction in the SNAP benefit 
amount due to the child receiving meals at school.
    Many of the factors associated with a child's future success go 
beyond what any single government program can or should achieve. SNAP 
is not the only means of breaking the cycle of poverty, but it can play 
a key role in increasing the food security of children.
Veterans
    Veterans make incredible sacrifices on behalf of our country; 
therefore, it is imperative they have the resources they need to be 
successful in civilian life. Of the 22 million veterans in the United 
States, about 1.7 million are in households currently participating in 
SNAP (which is approximately eight percent of all veterans in the 
United States). Veterans vary in age, functional capacity, and 
financial need. Approximately 46 percent of our veterans are seniors, 
including those that served in World War II, Korea, or Vietnam.\33\ 
While younger veterans may align more closely with the able-bodied 
populations, they may also have widely-varying levels of disabilities 
or limitations.
---------------------------------------------------------------------------
    \33\U.S. Department of Veterans Affairs. National Center for 
Veterans Analysis and Statistics. FY 2016 Q1. VA Benefits & Health Care 
Utilization. http://www.va.gov/vetdata/docs/pocketcards/fy2016q1.pdf.
---------------------------------------------------------------------------
    Some veterans are able to reenter the workforce immediately after 
returning home, while others may need assistance adjusting to civilian 
life and training to reenter the workforce. Some have mental 
impairments, such as post-traumatic stress disorder (PTSD), that need 
to be treated and cared for in order for them to live a healthy life.
    Some veterans are unable to reenter the workforce at all. In most 
cases, veteran advocacy groups are focused on obtaining earned Veterans 
Affairs benefits which can take months, but they do not immediately 
connect veterans to SNAP which can be available immediately. Again, 
SNAP cannot solve all of the challenges a veteran faces, but it is an 
important component of serving eligible veterans once they return home.
Active-Duty Military
    As Abby Leibman of MAZON--A Jewish Response to Hunger points out: 
``For currently serving members of the military, food insecurity is 
triggered by a number of different circumstances, including low pay 
among lower ranking enlistees, high unemployment among military 
spouses, larger household sizes, challenges around activation and 
deployment, and unexpected financial emergencies.''\34\
---------------------------------------------------------------------------
    \34\Abby Leibman, President and CEO, MAZON--A Jewish Response to 
Hunger. Hearing of the House of Representatives, Subcommittee on 
Nutrition, Committee on Agriculture. Past, Present, and Future of SNAP: 
Addressing Special Populations. January 12, 2016. Washington, D.C.
---------------------------------------------------------------------------
    Historically, active-duty military members had the option to 
participate in the Family Subsistence Supplemental Allowance (FSSA), 
administered by the Department of Defense, rather than utilizing SNAP. 
This program assisted military members that were in the lowest pay 
bracket and had multiple children. FSSA benefits could be used at the 
same places as SNAP, including military commissaries. In addition to 
financial requirements, military personnel were required to request 
access to FSSA up through their chain of command. The program was 
officially disbanded on September 30, 2016, for individuals serving 
within the United States or U.S. territories. It was determined the 
benefit was duplicative, underutilized, hard to qualify for, and less 
valuable than SNAP, with as few as 100 military families utilizing 
FSSA. In contrast, in 2014, USDA projected that there were as many as 
22,000 military families receiving SNAP in the United States.
    A significant barrier facing some military families is how they 
receive their housing allotment. If families live in military housing, 
it is treated as an in-kind benefit and is not counted toward their 
SNAP eligibility calculation, lowering their income and increasing 
their SNAP benefit amount (SNAP eligibility is discussed in detail 
later in this report). However, if the family receives the Basic 
Allowance for Housing to reside off base, then the housing allowance is 
counted as income for the family when computing eligibility, increasing 
the family's income and decreasing the SNAP benefit. This simple 
distinction can be the determining factor for whether military families 
qualify for SNAP.
Finding 1b: States Can Take Advantage of Available State Options and 
        Waivers, As Well As New and Developing Technologies
    As Chairman Conaway pointed out in his opening statement at the 
March 2, 2016, hearing: ``State flexibility can be an important tool in 
helping a family move out of poverty, however, the American taxpayer 
needs confidence that government programs are being targeted to those 
most in need.''\35\
---------------------------------------------------------------------------
    \35\K. Michael Conaway, Chairman of the House Committee on 
Agriculture. Hearing of the House of Representatives, Committee on 
Agriculture. Past, Present, and Future of SNAP: Examining State 
Options. March 2, 2016. Washington, D.C.
---------------------------------------------------------------------------
    SNAP implementing agencies have various policy options made 
available through statute, regulations, and waivers. By using the 
flexibility available to them, states have the ability to adapt their 
programs to meet specific needs within their local communities. These 
can improve access to the program and improve efficiency of program 
administration.
    States have the ability to expand SNAP categorical eligibility 
beyond recipients who receive cash benefits from another specified 
program (e.g., TANF, SSI, or GA). Known as Broad-Based Categorical 
Eligibility (BBCE), households that receive noncash benefits funded by 
TANF or Maintenance of Effort (MOE) funds are deemed eligible for SNAP, 
thus indirectly aligning a state's SNAP asset and income limits with 
the TANF noncash benefit program. Other state options include the 
ability to centralize or decentralize administration of SNAP; to make 
adjustments to how often recipients have to report changes in income; 
to determine how soon the state must take action on changes in income; 
to determine adjustments to allowances for utilities and homeless 
housing; to determine how vehicles are treated as assets; to determine 
how various types of income are treated; to decide how drug felons are 
treated; to determine whether transitional benefits are offered; to 
offer online applications; and to make use of various technology 
options. Additional details are provided in the table that follows.\36\
---------------------------------------------------------------------------
    \36\USDA FNS SNAP. State Options Report. April 15, 2016. http://
www.fns.usda.gov/snap/state-options-report.
---------------------------------------------------------------------------
    Many witnesses pointed to the importance of state options in 
allowing SNAP to target those in need. Examples of requests for 
additional flexibility include allowing states to ask for additional 
information in filing an online application and for flexibility in 
determining when interviews for initial certification or 
recertification are conducted.\37\
---------------------------------------------------------------------------
    \37\Stephanie Muth, Deputy Executive Commissioner for the Office of 
Social Services, Texas Health and Human Services Commission. Hearing of 
the House of Representatives, Committee on Agriculture. Past, Present, 
and Future of SNAP: Examining State Options. March 2, 2016. Washington, 
D.C.
---------------------------------------------------------------------------
    Waivers are awarded to states at the discretion of USDA's Food and 
Nutrition Service (FNS), whereas state options are used at the 
discretion of states. Many waivers that are widely used eventually 
become state options. As Stacy Dean of the Center on Budget and Policy 
Priorities pointed out, the use of waivers from USDA allows states to 
test new ideas: ``USDA can waive certain SNAP requirements to test 
whether a change would be in the program's interest.''\38\ Jon Baron of 
the Laura and John Arnold Foundation also pointed out a need for 
testing ideas at the state level, and then using that information to 
inform FNS and SNAP agencies in other states. However, he cautioned 
that ``to build a body of proven effective strategies within SNAP, as 
in welfare, will require a much larger effort, specifically strategic 
trial and error.''\39\ There is a need for balance between state 
options, waivers, and program efficiency and integrity. FNS plays an 
important role in providing guidance and oversight to states, as well 
as in centralizing key program functions.
---------------------------------------------------------------------------
    \38\Stacy Dean, Vice President for Food Assistance Policy, Center 
for Budget and Policy Priorities. Hearing of the House of 
Representatives, Committee on Agriculture. Past, Present, and Future of 
SNAP: Examining State Options. March 2, 2016. Washington, D.C.
    \39\Jon Baron, Vice-President for Evidence-Based Policy, Laura and 
John Arnold Foundation. Hearing of the House of Representatives, 
Subcommittee on Nutrition, Committee on Agriculture. Past, Present, and 
Future of SNAP: Developing and Using Evidence-Based Solutions. July 15, 
2015. Washington, D.C.

          ``to build a body of proven effective strategies within SNAP, 
        as in welfare, will require a much larger effort, specifically 
        strategic trial and error.''
                            Jon Baron, Laura and John Arnold Foundation
    States have the option to make a number of determinations on 
program administration, reporting, eligibility, and resources, even 
beyond those included in this report. Select decisions that states must 
make in deciding how to operate SNAP are included in the table below.

                      Select State Options for SNAP
------------------------------------------------------------------------
                                        It Is the State's Option to
      Title of State Option                      Determine:
------------------------------------------------------------------------
Program Administration             Is it a state or county administered
                                    program?
Reporting Requirements             How frequently must SNAP recipients
                                    report changes in household
                                    circumstances?
Simplified Reporting--Action on    Must the state agency act on all
 Changes                            changes reported during the
                                    certification period, or only on
                                    changes that increase household
                                    benefits?
Simplified Reporting--             How often will a state certify
 Certification Length               households based on various
                                    circumstances (e.g., 6, 12, 24 or
                                    months)?
Simplified Income and Resources    Will some types of income and
                                    resources be excluded to align SNAP
                                    policy with TANF or Medicaid policy?
Simplified Self-Employment         Will the state adopt a simplified
 Determination                      method for determining the cost of
                                    doing business for the self-
                                    employed? If so, will the method be
                                    a flat percentage, a figure based on
                                    average costs, or another method?
Simplified Homeless Housing Cost   Will the state use a standard $143
                                    per month for homeless shelter
                                    expenses?
Standard Utility Allowances        Will the standard utility allowance
 (SUAs)                             be mandatory (thus, the state is
                                    opting out of prorating SUA's for
                                    households that share a living space
                                    and is required to use a SUA that
                                    includes specific treatment of
                                    utility costs for public housing
                                    residents)?
Treatment of Vehicles              Will the state's SNAP vehicle policy
                                    be aligned with their TANF policy
                                    (only if it will result in lower
                                    attribution of household assets)?
                                    Will the state opt to exclude all
                                    vehicles or exclude at least one
                                    vehicle? Will the state raise the
                                    exception amount above the standard
                                    exception amount of $4,650 to fair
                                    market value?
Treatment of Income and            For non-citizens who would have been
 Deductions of Ineligible Non-      ineligible for SNAP prior to PRWORA,
 Citizens                           will the state count all, or a pro-
                                    rated share of the individual's
                                    income and deductions when
                                    determining the benefit level of
                                    other household members? For non-
                                    citizens who are ineligible for SNAP
                                    because of PRWORA, will the state
                                    count none, or a pro-rated share of
                                    the individual's income and
                                    deductions when determining the
                                    benefit level of other household
                                    members?
Child Support Expense Income       Will the state treat legally
 Exclusion                          obligated child support payments as
                                    deductions or income exclusions?
Child Support Related              Will the state disqualify individuals
 Disqualifications                  who fail to cooperate with child
                                    support enforcement, who are in
                                    arrears in court-ordered child
                                    support, or both?
Comparable Disqualifications       Will the state disqualify SNAP
                                    applicants or recipients who fail to
                                    perform actions required by other
                                    means-tested public assistance
                                    programs? (Applies to that
                                    individual only, not entire
                                    household)
Drug Felony Disqualifications      Will the state opt out entirely from
                                    the permanent disqualification of
                                    SNAP eligibility of drug felons, or
                                    chose to implement less severe
                                    restrictions, or leave the lifetime
                                    ban in place?
Work Requirements and              For work requirements, will the state
 Disqualification Policy            (1) establish disqualification (DQ)
                                    periods longer than the minimums?
                                    Will the state (2) make the DQ
                                    permanent upon the third occurrence?
                                    Will the state (3) sanction the
                                    entire household if the head of
                                    household fails to comply?
Broad-Based Categorical            Will the state expand categorical
 Eligibility (BBCE)                 eligibility to ``Broad-Based
                                    Categorical Eligibility'' (BBCE),
                                    making eligible households that
                                    receive noncash benefits that are
                                    funded by TANF or Maintenance of
                                    Effort (MOE) funds? (Households must
                                    still provide documentation of
                                    income and expenses for benefits to
                                    be calculated, must meet all other
                                    SNAP rules, and have net incomes low
                                    enough to qualify for benefits).
Transitional Benefits Alternative  For households leaving TANF or state-
 (TBA)                              funded cash assistance programs,
                                    will the state offer up to 5 months
                                    of benefits at a level equal to the
                                    amount the household received prior
                                    to TANF termination (adjusted for
                                    the loss of TANF income)? Will state
                                    agencies exclude households where
                                    all members are ineligible to
                                    receive SNAP benefits because of
                                    means-tested programs, failure to
                                    cooperate with child support
                                    agencies, and/or are delinquent on
                                    court-ordered child support?
Document Imaging                   Will the state create a paperless or
                                    less paper intensive certification
                                    process?
Demonstrations for the Elderly     Will the state implement a more
 and Disabled                       streamlined application and
                                    certification process for the
                                    elderly (ESAP)? Will the state
                                    request a demonstration waiver to
                                    establish a Standard Medical
                                    Deduction (SMD) for elderly or
                                    disabled SNAP household members in
                                    lieu of calculating actual
                                    allowable, out-of-pocket medical
                                    expenses?
------------------------------------------------------------------------
Note: This table reflects state options reflected in the most recent
  USDA FNS State Options Report. April 15, 2016.
Source: USDA FNS SNAP. State Options Report. Options as of October 1,
  2015. Published April 15, 2016. http://www.fns.usda.gov/snap/state-
  options-report.

    Technology plays an important role in implementing these state 
options. For example, the use of computers streamlines the application 
process and makes SNAP more accessible to low-income families. The use 
of technology can also ease administrative burdens and enhance program 
integrity.
Finding 1c: Broad-Based Categorical Eligibility (BBCE) Is the Most 
        Significant State Option in SNAP Recipient Eligibility 
        Determinations
    Given that SNAP is a state-administered program, states have a 
number of options at their disposal for determining the eligibility of 
SNAP participants. One of the most significant state options is the 
type of categorical eligibility states choose to implement: regular, 
narrow, or broad-based. Categorical eligibility provides flexibility 
and administrative ease for states to administer several welfare 
programs simultaneously, in particular by altering or eliminating asset 
tests, gross income tests, and net income tests. States that elect the 
broadest form of categorical eligibility are unable to guarantee that 
they are only serving households with limited assets.
    In general, to become eligible for SNAP, households must meet gross 
income, net income, and asset thresholds. In summary, the income and 
asset requirements for SNAP eligibility are:\40\
---------------------------------------------------------------------------
    \40\Id., n. 14.
---------------------------------------------------------------------------
    Gross Income: gross monthly income (all income as defined by SNAP 
law) for the household must be at or below 130% of the Federal poverty 
level.
    Net Income: net household monthly income (with SNAP-specific 
deductions subtracted) must be at or below 100% of the Federal poverty 
level.
    Assets: household assets are limited to a maximum of $2,250 per 
household (adjusted for inflation) or $3,250 (adjusted for inflation) 
for households that have an elderly or disabled member, with various 
exceptions for assets like homes, vehicles, and retirement savings.

------------------------------------------------------------------------
 
-------------------------------------------------------------------------
SNAP Asset Test Summary\48\
 
    Asset tests in SNAP are intended to limit program eligibility to
 those households who are most in need. This directs program benefits to
 those with the fewest financial resources. Federal rules impose a
 resource test on a household's liquid assets, with the limit dependent
 on whether the household includes an elderly or disabled member,
 effectively applying a less restrictive asset test to those groups.
    SNAP legislation in 1964 left it to the states to set asset
 limits.\41\ This changed in 1971, when the Secretary of Agriculture was
 required to set asset limits with exceptions for elderly
 households.\42\ Since that time, SNAP asset limits have been raised and
 lowered and adjusted for inflation, and additional exceptions were made
 for households with disabled members.43	47 For FY 2017, the maximum
 value of counted assets for most households is capped at $2,250, and
 the maximum value of counted assets for households with an elderly or
 disabled member is capped at $3,250.
\41\P.L. 88-525, 5.
\42\P.L. 91-671, 4
\43\P.L. 95-113 1301.
\44\P.L. 96-249, 108, 138.
\45\P.L. 99-198, 1514.
\46\P.L. 107-171, 4107.
\47\P.L. 110-246, 4104.
 
    Included Assets:
 
     Cash on hand.
 
     Checking and savings accounts.
 
     Savings certificates.
 
     Stocks and bonds.
 
     Nonrecurring lump sum payments and lump sum payments that
     have been disregarded as income.
 
     A portion of the value of vehicles (in some cases).
 
     Recreational property.
 
    Excluded Assets:
 
     Household's primary residence (home and surrounding
     property).
 
     Business assets.
 
     Personal property (household goods and personal effects).
 
     Lump sum earned income tax credit and other non-recurring
     payments.
 
     Burial plots.
 
     Cash value of life insurance policies.
 
     Value of all tax-recognized pension savings/plans and
     education savings.
 
     Certain other resources whose value is not accessible to
     the household.
 
     Certain other resources that would not yield more than
     $1,000 if sold.
 
     Certain other resources that are required to be disregarded
     by other Federal laws.
 
    Of note is the vehicle asset limit, which is exercised as a state
 option. States have the option to align their SNAP vehicle policy with
 their TANF policy when it will result in a lower calculation of assets.
 The standard excluded amount of a vehicle is $4,650; however states may
 raise this amount to fair market value, opt to exclude the full value
 of at least one vehicle, or opt to exclude the value of all
 vehicles.\49\
\48\Id., n. 14.
\49\Id., n. 36.
Editor's note: the footnotes were out of sequence in the document, they
 have set as submitted.
------------------------------------------------------------------------

    Federal law provides two basic pathways for SNAP eligibility: (1) 
by meeting program-specific Federal requirements (including those 
above), or (2) by being deemed automatically, or ``categorically'' 
eligible, based on participation in other low-income assistance 
programs. In general, categorical eligibility eliminates the need for 
making a financial eligibility determination for SNAP if a household 
has already been through a determination for another low-income program 
(even if the eligibility criteria are not the same). However, 
categorically eligible households generally must still meet prescribed 
income requirements to receive SNAP benefits.
    For states electing to use categorical eligibility, there are three 
types:\50\
---------------------------------------------------------------------------
    \50\Gene Falk and Randy Aussenburg. Congressional Research Service. 
The Supplemental Nutrition Assistance Program (SNAP): Categorical 
Eligibility. February 2, 2016. http://www.nationalaglawcenter.org/wp-
content/uploads/assets/crs/R42054.pdf.
---------------------------------------------------------------------------
    Traditional Categorical Eligibility: All members of a household are 
automatically made eligible for SNAP based on the receipt of needs-
tested cash aid from TANF, SSI, or GA. These households have already 
met the income and asset tests for cash aid, and these thresholds are 
generally stricter than those for SNAP.
    Narrow Categorical Eligibility: A less restrictive eligibility 
standard than traditional categorical eligibility, with eligibility 
conveyed through receipt of cash or specific noncash benefits from 
TANF, such as child care and counseling. Relative to traditional 
categorical eligibility, more households are eligible with narrow 
categorical eligibility.
    Broad-Based Categorical Eligibility (BBCE): The least restrictive 
option, where households may become eligible for SNAP because they 
qualify for any noncash TANF or state MOE funded benefit. This broadens 
the eligibility for SNAP because noncash TANF benefits typically are 
available to a broader range of households and at higher income levels.
    By allowing states to align their SNAP eligibility (and asset 
tests) with TANF eligibility (and asset tests), BBCE has eliminated the 
asset test for SNAP in many states. As shown in the following map, as 
of January 2016 there are 42 states that currently use BBCE. Only five 
of the 42 states that utilize BBCE have an asset test that applies to 
most applicants. In the other 37 BBCE states, there is no asset test 
for households that qualify for SNAP under BBCE rules.\51\ In contrast, 
there are six states that use only traditional categorical eligibility. 
Since states that do not administer an asset test generally do not 
collect data on the assets of SNAP households, it is not possible to 
determine the extent to which BBCE has resulted in households with 
assets above the usual SNAP asset limit receiving benefits. Households 
that are not deemed categorically eligible for SNAP may apply for and 
receive SNAP benefits under regular SNAP rules.\52\
---------------------------------------------------------------------------
    \51\USDA FNS. Broad Based Categorical Eligibility. August 2016. 
http://www.fns.usda.gov/sites/default/files/snap/BBCE.pdf.
    \52\Ibid.
    
    
          Source: Gene Falk and Randy Aussenberg. Congressional 
        Research Service. The Supplemental Nutrition Assistance Program 
        (SNAP): Categorical Eligibility. February 2, 2016. http://
        nationalaglawcenter.org/wp-content/uploads/assets/crs/
---------------------------------------------------------------------------
        R42054.pdf.

    Karen Cunnyngham of Mathematica highlighted the impacts of BBCE: 
``We estimate that, in [FY] 2014, eight percent of SNAP households were 
eligible solely through state expanded categorical eligibility 
programs.''\53\ She also reported that within BBCE, approximately three 
percent of households were eligible through higher income limits, and 
five percent of households were eligible through higher asset limits.
---------------------------------------------------------------------------
    \53\Karen Cunnyngham, Senior Researcher, Mathematica Policy 
Research. Hearing of the House of Representatives, Committee on 
Agriculture. Past, Present, and Future of SNAP: Examining State 
Options. March 2, 2016. Washington, D.C.
---------------------------------------------------------------------------
    Compared to the other options available to states, BBCE has the 
most significant impact on determining eligibility. While households 
eligible solely due to categorical eligibility receive lower-than-
average benefits, recipient benefits for the eight percent of 
households made eligible due to BBCE could still account for hundreds 
of millions of dollars in benefits.
    In contrast to BBCE, most other state options deal more with 
program administration than with eligibility. By allowing states to 
grant eligibility to those who receive noncash benefits in other 
specified programs, some state options broaden the pool of recipients 
and eligible applicants and extend benefits beyond the original 
parameters of the program. There are few other state options that do 
this, and none of them do it to the same extent as BBCE.
Finding 1d: The Need for Nutrition Assistance Cannot Be Addressed By 
        Just One Program Or Just One Group--It Requires More 
        Collaboration Between Governments, Charities, Businesses, 
        Health Systems, Communities, Individuals, and Many Others
    Private-sector charitable organizations play a vital role in 
assisting families living in poverty. Whether it is a food bank helping 
families put food on the table or a nonprofit researching the best way 
to engage families so they can successfully transition out of poverty, 
all of these organizations play a role. ``Everyone; the Federal 
Government, state governments, not-for-profits, the private sector, 
researchers, and recipients themselves, have a role to play in lifting 
Americans out of poverty and up the economic ladder,'' stated 
Subcommittee Chairwoman Jackie Walorski during the hearing focused on 
Addressing Special Populations.\54\
---------------------------------------------------------------------------
    \54\Jackie Walorski, Chairwoman of the Subcommittee on Nutrition, 
Hearing of the House of Representatives, Committee on Agriculture. 
Past, Present, and Future of SNAP: Addressing Special Populations. 
January 12, 2016. Washington, D.C.

          ``Everyone; the Federal Government, state governments, not-
        for-profits, the private sector, researchers, and recipients 
        themselves, have a role to play in lifting Americans out of 
        poverty and up the economic ladder.''
        Rep. Jackie Walorski (IN-2), Nutrition Subcommittee Chairwoman.

    Public-private partnerships emphasize the value in understanding 
what is happening within communities, and holistically in the life of 
individuals, in order to best meet their needs. As Dustin Kunz of the 
Texas Hunger Initiative stated in his testimony, ``Complex problems 
require complex, creative, and collaborative solutions. Public 
challenges, such as food insecurity, require a response that exceeds 
the capabilities and resources of any one department, organization, or 
jurisdiction. Collaboration provides a way to stretch those resources 
and accomplish more with less, and the benefits of these partnerships 
include cost savings and enhanced quality and quantity of services, 
while also addressing community needs, enhancing trust, and increasing 
citizen support.''\55\ SNAP should work in tandem with the services 
that are being provided locally. The Federal Government should then 
work to enhance the work on the ground and not impede it. This also 
requires the individual in need to be invested in working toward self-
sufficiency. Unless the individual, local, state, and Federal 
organizations are all working together, efforts to improve the 
circumstances may be in vain. Jonathan Webb with Feed the Children 
affirmed that by stating, ``when we are looking at these solutions, it 
needs to be a broad-based approach to the solution that understands 
that poverty is a component, education is a component, employment is a 
component, and bringing these collaborative folks to the table to take 
their piece of the issue in a way that gives them flexibility to test 
new ideas is the approach that we are suggesting.''\56\
---------------------------------------------------------------------------
    \55\Dustin Kunz, Research Project Manager, Texas Hunger Initiative. 
Hearing of the House of Representatives, Committee on Agriculture. 
Past, Present, and Future of SNAP: The World of Nutrition and the Role 
of the Charitable Sector. April 15, 2015. Washington, D.C.
    \56\Jonathan Webb, Director of Foundations and Community Outreach, 
Feed the Children. Hearing of the House of Representatives, Committee 
on Agriculture. Past, Present, and Future of SNAP: The World of 
Nutrition and the Role of the Charitable Sector. April 15, 2015. 
Washington, D.C.
---------------------------------------------------------------------------
    Establishing best practices and forming models based on evaluation 
metrics leads to stronger case management and informs what works best 
for specific communities. Jeremy Everett of Texas Hunger Initiative 
asserts that ``when public and private partnerships are carefully 
informed by research and evaluation, stronger networks are likely 
formed between clients and local organizations, thus building a 
foundation for increased social capital for low-income families.''\57\ 
For public-private partnerships to work, it is important to understand 
the needs and resources in a community and how those can be leveraged 
to assist low-income individuals to climb the economic ladder.
---------------------------------------------------------------------------
    \57\Jeremy Everett, Director, Texas Hunger Initiative. Hearing of 
the U.S. House of Representatives, Subcommittee on Nutrition, Committee 
on Agriculture. Past, Present, and Future of SNAP: Developing and Using 
Evidence-Based Solutions. July 15, 2015. Washington, D.C.

          ``when public and private partnerships are carefully informed 
        by research and evaluation, stronger networks are likely formed 
        between clients and local organizations, thus building a 
        foundation for increased social capital for low-income 
        families.''
                               Jeremy Everett, Texas Hunger Initiative.

    The charitable sector provides case management as a key component 
in improving the overall well-being of a low-income individual or 
family. Case management allows the holistic needs of the individual to 
be recognized by identifying barriers, providing tools and skills, and 
connecting clients to available resources. This has been applied in the 
SNAP Employment and Training (E&T) program and in the initial 
application process to ensure clients are receiving the government 
benefits they qualify for, as well as services that might be available 
to them in their community. This was highlighted by Jon Anderson of 
Georgia's Division of Family and Child Services, who emphasized the 
importance of coordinating nutrition services with other government 
services through the use of case management.\58\ Although case 
management differs based on the community, organization, and its goals, 
it has proven a critical component of ensuring that SNAP recipients 
have an increased chance of upward mobility. Patrick Raglow with 
Catholic Charities of the Archdiocese of Oklahoma City, emphasized the 
success of case management strategies: ``Case management as employed by 
Catholic Charities and similar agencies, seeks to engage those we serve 
in a relationship to best address the conditions which bring the client 
to us, and not merely transfer resources to cover immediate needs. We 
accompany people on their journey to self-sufficiency, drawing from 
each client's own resources, talents, aspirations, and 
objectives.''\59\
---------------------------------------------------------------------------
    \58\Jon Anderson, Deputy Division Director, Division of Family and 
Children Services. Hearing of the House of Representatives, 
Subcommittee on Nutrition, Committee on Agriculture. Past, Present, and 
Future of SNAP: Improving Innovation and Success in Employment and 
Training Programs. September 13, 2016. Washington, D.C.
    \59\Patrick Raglow, Executive Director, Catholic Charities of the 
Archdiocese of Oklahoma City. Hearing of the House of Representatives, 
Committee on Agriculture. Past, Present, and Future of SNAP: The Means 
to Climbing the Economic Ladder. June 10, 2015. Washington, D.C.
---------------------------------------------------------------------------
    Food banks provide another example of the combined efforts of 
charitable organizations and government programs to alleviate hunger. 
Many food banks receive some level of government funding through The 
Emergency Food Assistance Program (TEFAP) and CSFP. TEFAP provides 
assistance to food banks through mandatory funding in the farm bill, 
bonus purchases made by USDA to provide support to agriculture markets, 
and through storage and distribution funds provided through the 
appropriations process. While Federal commodities and funds are 
important to food banks, the majority of their food is donated by 
retailers, manufacturers, and private donors. In addition to working 
through TEFAP and CSFP, food banks are very involved in many facets of 
SNAP. They can be the grantees of SNAP E&T, SNAP Outreach, and/or SNAP-
Ed (officially, the Nutrition Education and Obesity Prevention Grant 
program funding).
    Many food banks also have staff that provide support in signing up 
low-income individuals for public benefits. While food banks do play a 
crucial role in assisting low-income individuals, it is important to 
note that the United States cannot simply ``food bank'' its way out of 
hunger. Rather, it takes the coordinated effort of all Federal, state, 
and local partners. Leveraging existing resources and promoting 
successful practices on the ground is an important step in reducing 
hunger and poverty in the United States. As Kate Maehr with the Greater 
Chicago Food Depository stated, ``if we can keep the Federal nutrition 
programs strong, then the dollars that we get from private donations 
can actually help us support innovative efforts.''\60\
---------------------------------------------------------------------------
    \60\Kate Maehr, CEO, Greater Chicago Food Depository. Hearing of 
the House of Representatives, Committee on Agriculture. Past, Present, 
and Future of SNAP: The World of Nutrition and the Role of the 
Charitable Sector. April 15, 2015. Washington, D.C.
---------------------------------------------------------------------------
Finding 1e: The Diversity of Programs Serving Low-Income Households 
        Simultaneously Generates Overlaps and Gaps in Recipient 
        Services
    While addressing food insecurity in the United States must involve 
a variety of organizations meeting a diversity of needs of low-income 
individuals, that complexity has led to duplication among welfare 
programs. The resulting confusion is pervasive at all levels--Federal, 
state, and local--in both public and private organizations. Dr. Eugene 
Steuerle with the Urban Institute had this to say about current 
policies that assist those in poverty:

          ``With some exception, 20th century social welfare policy has 
        entailed a liberal-conservative compromise that has never had a 
        primary focus on mobility and opportunity, upon work and the 
        gains that come about when individuals or households unite in 
        marriage and other joint efforts. It has also failed for the 
        most part to integrate programs efficiently and equitably, 
        leading to high combined marginal tax rates, a weakened ability 
        to adjust to individual circumstances, a lack of coordination 
        among programs serving the same people, an inadequate targeting 
        of benefits to those who qualify, and--relative to a focus on 
        human capital and work--a lower growth rate for the economy as 
        a whole.''\61\
---------------------------------------------------------------------------
    \61\Dr. Eugene Steuerle, Senior Fellow, Urban Institute. Joint 
Hearing of the House of Representatives, Subcommittee on Nutrition, 
Committee on Agriculture and the Subcommittee on Human Resources, 
Committee on Ways and Means. Past, Present, and Future of SNAP: The 
Means to Climbing the Economic Ladder. June 10, 2015. Washington, D.C.

    Federal food assistance is provided through a decentralized system 
that involves multiple Federal, state, and local organizations. The 
complex network of 18 food assistance programs (listed in Appendix B) 
emerged in a piecemeal fashion over the past several decades to meet 
various needs. In hearing testimony, the U.S. Government Accountability 
Office (GAO) noted that according to USDA and local providers, the 
multiple food assistance programs help to increase access to food for 
vulnerable or target populations.\62\ However, GAO also testified that 
this patchwork of food assistance programs shows signs of program 
overlap. This can create unnecessary work and lead to inefficient use 
of resources. Further, overlapping eligibility requirements create 
duplicative work for both service providers and applicants. According 
to Dr. Angela Rachidi with the American Enterprise Institute, ``The 
extent to which we can limit the burden on staff and on families by 
better consolidating and coordinating food assistance programs, the 
better these families will be served and the better the government's 
money will be spent.''\63\
---------------------------------------------------------------------------
    \62\Kay Brown, Director, Education, Workforce, and Income Security, 
U.S. Government Accountability Office. Hearing of the House of 
Representatives, Subcommittee on Nutrition, Committee on Agriculture. 
Past, Present, and Future of SNAP: The World of Nutrition, Government 
Duplication, and Unmet Needs. May 20, 2015. Washington, D.C.
    \63\Dr. Angela Rachidi, Research Fellow, American Enterprise 
Institute. Hearing of the House of Representatives, Subcommittee on 
Nutrition, Committee on Agriculture. Past, Present, and Future of SNAP: 
The World of Nutrition, Government Duplication, and Unmet Needs. May 
20, 2015. Washington, D.C.
---------------------------------------------------------------------------
    According to GAO, some food assistance programs provide comparable 
benefits to a similar population, but are managed separately, which 
could be a potentially inefficient use of Federal funds:\64\
---------------------------------------------------------------------------
    \64\Id., n. 62.

   Six programs--NSLP, SBP, Fresh Fruit and Vegetable Program 
        (FFVP), the Summer Food Service Program (SFSP), the Special 
        Milk Program, and the Child and Adult Care Food Program 
        (CACFP)--all provide food to eligible children in settings 
        outside the home, such as at school, day care, or summer day 
---------------------------------------------------------------------------
        camps.

   Two programs--CSFP and the Elderly Nutrition Program--both 
        target older Americans.

   Individuals eligible for groceries through the CSFP are 
        generally eligible for groceries through both TEFAP and SNAP.

   The Federal Emergency Management Agency's Emergency Food and 
        Shelter National Board Program and TEFAP both provide groceries 
        and prepared meals to needy individuals through local 
        government and nonprofit entities.

   SFSP is similar to the Summer Seamless Option of the NSLP.

    This patchwork system did not develop overnight, and the current 
framework is the result of a variety of factors. In fact, some of the 
overlap is rooted in split jurisdiction among the authorizing 
committees in Congress. For example, in the House of Representatives, 
the House Committee on Agriculture has jurisdiction over SNAP; 
Nutrition Assistance Program grants for Puerto Rico, American Samoa, 
and the Commonwealth of the Northern Mariana Islands; Food Distribution 
Program on Indian Reservations (FDPIR); CSFP; TEFAP; Community Food 
Projects; the Senior Farmers' Market Nutrition Program; and authorizes 
the funding for FFVP. The House Committee on Education and the 
Workforce handles WIC; SFSP; NSLP; SBP; WIC Farmers' Market Nutrition 
Program; Special Milk Program; CACFP; and FFVP, generally. TANF, SSI, 
the Children's Health Insurance Program (CHIP), and Medicaid are 
authorized by the Committee on Ways and Means, and the housing programs 
are overseen by the Financial Services Committee.
    Various Federal, state, and local agencies are then responsible for 
administering this patchwork of programs on the ground. Regarding SNAP, 
the operation of the program is at the discretion of each state. For 
instance, in California, SNAP is a county-run program. In Texas, SNAP 
is administered by the state. The same goes for E&T programs within 
states. For example, New Jersey operates its E&T programs out of its 
Workforce Commission while some other states, such as Georgia, run 
their E&T programs out of their Health and Human Services departments. 
Dr. Angela Rachidi of the American Enterprise Institute cited a 
specific example in New York City where SNAP, WIC, school food 
programs, and child and adult care programs are all administered by 
different agencies and the result is that each agency must determine 
eligibility and administer benefits separately. According to Dr. 
Rachidi:

          ``A better system would be to consolidate programs that share 
        the same goals and coordinate programs across one or two 
        governing bodies, with a focus on the person or household. This 
        will save the government money and reduce the burden on 
        participating families. It may also improve service delivery to 
        families by ensuring that they are made aware of all the 
        benefits they are eligible for, as well as limiting the chance 
        for errors, fraud, and abuse. I provided three specific 
        examples where coordination could be beneficial--setting 
        nutrition guidelines, authorizing retailers, and administering 
        nutrition education programs--and reducing inefficiencies in 
        eligibility determination should also be explored.''\65\
---------------------------------------------------------------------------
    \65\Dr. Angela Rachidi, Research Fellow, American Enterprise 
Institute. Hearing of the House of Representatives, Subcommittee on 
Nutrition, Committee on Agriculture. Past, Present, and Future of SNAP: 
The World of Nutrition, Government Duplication, and Unmet Needs. May 
20, 2015. Washington, D.C.

    While the preceding examples concern nutrition programs, silos 
exist throughout the welfare system. Eligibility workers within one 
program may not know the eligibility requirements for another welfare 
program. This uncoordinated system makes it challenging to share 
information on participating households. In the Committee's first Past, 
Present, and Future of SNAP hearing, Douglas Besharov with the 
University of Maryland confirmed this, saying, ``there is a great need 
to modernize the program and to coordinate it with TANF, with 
unemployment insurance, with SSI, with SSDI, and as well, the earned 
income tax credit.''\66\
---------------------------------------------------------------------------
    \66\Douglas Besharov, Professor, University of Maryland School of 
Public Policy. Hearing of the House of Representatives, Committee on 
Agriculture. Past, Present, and Future of SNAP. February 25, 2015. 
Washington, D.C.

          ``there is a great need to modernize the program and to 
        coordinate it with TANF, with unemployment insurance, with SSI, 
        with SSDI, and as well, the earned income tax credit.''
                              Douglas Besharov, University of Maryland.

    A system that works in silos has a higher likelihood of fraud and 
error going undetected. States are beginning to focus more on 
coordination through data sharing across states and throughout the 
various programs.
Findings Theme 2: Climbing the Economic Ladder through Work
    In the early days of the Food Stamp Program, eligibility 
requirements were established on a state-by-state basis. When the 
program expanded nationally, the Federal Government began establishing 
uniform standards of eligibility, which included work requirements. 
There are now two main types of work requirements for SNAP: general 
work requirements and what is known as the ``ABAWD time limit'', which 
is a time limit for receiving SNAP benefits for Able-Bodied Adults 
without Dependents (ABAWDs). While some form of work requirements have 
historically been mandated, it is up to states as to how they are 
carried out. A recurring critique of work requirements is the degree to 
which they are enforced by states. As Dr. Ron Haskins with the 
Brookings Institution stated in his testimony, ``[SNAP] currently has 
modest work requirements, but they do not appear to be rigorously 
enforced.''\67\
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    \67\Dr. Ron Haskins, Senior Fellow, Brookings Institution. Hearing 
of the House of Representatives, Subcommittee on Nutrition, Committee 
on Agriculture. Past, Present, and Future of SNAP: Breaking the Cycle. 
October 27, 2015. Washington, D.C.

          ``[SNAP] currently has modest work requirements, but they do 
        not appear to be rigorously enforced.''
                                Dr. Ron Haskins, Brookings Institution.

    The current general work requirements were created in 1971 by an 
amendment to the Food Stamp Act of 1964 (P.L. 91-671). Additional 
changes in the 2008 Food and Nutrition Act mandated that in all states, 
non-exempt participants must:

   Register for work;

   Accept a suitable job if offered one; and

   Not voluntarily quit a job without good cause or reduce work 
        effort below 30 hours per week.

    Certain participants (who constitute a large share of SNAP 
participants) are exempt from these requirements because they are 
physically or mentally unfit for work; under age 16; over age 59; 
between 16 and 18 and not the head of household and attending school; 
and for various other reasons. It is also important to note that the 
general work requirements are a requirement to register for work, not a 
minimum for hours worked.
    The welfare reforms of 1996 also added the time limit for ABAWDs 
who are not working and not otherwise exempted. Adults aged 18-49 who 
are not physically or mentally unfit for work or caring for a minor 
child are now ineligible for SNAP if they have received 3 months of 
SNAP benefits during the previous 36 months, unless the participant:

   Works at least 20 hours per week;

   Participates in an E&T program for at least 20 hours per 
        week; or

   Participates in a state's ``workfare'' program.

    The welfare reforms of 1996 allowed states to request a temporary 
waiver from USDA--typically for up to 12 months--for the ABAWD time 
limit in all or parts of the state when unemployment is high or there 
are not enough jobs available. After the 2008 economic crisis, a 
majority of states operated under the statewide ABAWD time limit 
waivers. As the economy recovered, fewer states were eligible to extend 
their statewide waivers beyond January 2015. As of October 1, 2016, 
there were 16 states without ABAWD waivers, 26 states approved for 
partial waivers, and 11 states with waivers for the entire state or 
territory.
    All states are also granted an exemption to be administered at the 
state's discretion, allowing them to continue to provide SNAP benefits 
for up to 15 percent of recipients who would otherwise be made 
ineligible by the ABAWD time limit.
Finding 2a: Unemployment and Underemployment Are Leading Causes of 
        Poverty, and Promoting Pathways to Employment Is the Best Way 
        To Help Individuals Climb the Economic Ladder Out of Poverty 
        and Into Self-Sufficiency
    According to the National Commission on Hunger and others, work is 
a crucial factor in helping low-income individuals lift themselves out 
of poverty.68-69 While many families on SNAP work, there are 
a large number of households that do not report earned income, which is 
income that a person receives for doing work (such as salaries, wages, 
tips, etc.). According to the most recent USDA SNAP Characteristics 
Report, 68 percent of total SNAP households reported no earned income. 
When looking at the SNAP households that one might expect to generate 
an earned income (e.g., households that do not contain children, 
disabled, or the elderly), only 20.6 percent of these households 
reported earned income.\70\
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    \68\Id., n. 67.
    \69\National Commission on Hunger. Freedom from Hunger: An 
Achievable Goal for the United States of America. 2015.
    \70\Id., n. 15.
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    It comes as no surprise that employment is highly correlated with 
income. In 2014, according to the U.S. Census Bureau, only 2.7 percent 
of full-time workers lived below the Federal poverty level, compared 
with 32.3 percent of adults who do not work. Even part-time work makes 
a significant difference, with only 17.5 percent of part-time workers 
living below the poverty level.\71\
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    \71\U.S. Census Bureau. Income, Poverty, and Health Insurance 
Coverage in the United States: 2012. http://www.census.gov/prod/
2013pubs/p60-245.pdf.
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    During the hearing The Means to Climbing the Economic Ladder, 
Members heard testimony from organizations that work within local 
communities to provide job training to low-income individuals. 
Recipients come from a range of situations that require various levels 
of job training to prepare for a successful job. Without a strong 
foundation in work skills, individuals may need more assistance in 
gaining and maintaining a job. WeCare, a job training program located 
in New York City, grouped SNAP recipients in four categories: (1) fully 
employable, where no accommodations were needed; (2) employable, with 
accommodations; (3) temporarily unemployable, which is also referred to 
as needing wellness or condition management; or (4) possible Federal 
disability benefits.\72\ ``It is not just about giving people food. It 
is about worker training. It is about getting people in the community 
back on their feet,'' Subcommittee Ranking Member Jim McGovern 
stated.\73\ The ability of the Federal Government to account for these 
special circumstances is limited; therefore, it is crucial that state 
and local partners are invested.
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    \72\Grant Collins, Senior Vice President, Fedcap Rehabilitation 
Services, Inc. Hearing of the House of Representatives, Subcommittee on 
Nutrition, Committee on Agriculture. Past, Present, and Future of SNAP: 
The Means to Climbing the Economic Ladder. June 10, 2015. Washington, 
D.C.
    \73\James P. McGovern, Ranking Member of the Subcommittee on 
Nutrition. Hearing of the House of Representatives, Committee on 
Agriculture. Past, Present, and Future of SNAP: The World of Nutrition 
and the Role of the Charitable Sector. April 15, 2015. Washington, D.C.

          ``It is not just about giving people food. It is about worker 
        training. It is about getting people in the community back on 
        their feet.''
    Rep. Hon. James P. McGovern (MA-2), Nutrition Subcommittee Ranking 
                                                                Member.
Finding 2b: Better Enforcement of Work Requirements Is Needed in Some 
        States, and Enforcement Needs To Be Coupled With More Effective 
        SNAP Employment and Training (E&T) Programs
    The importance of work has always been recognized, but not 
necessarily emphasized, as noted by David Stillman with the Washington 
Department of Social and Health Services. According to Stillman, 
``While [SNAP] has had a requirement to include an [E&T] component 
since 1998, most states' programs have consisted of a referral to a job 
search program.''\74\ SNAP E&T programs assist in providing job 
training and job readiness to SNAP recipients. USDA's FNS gives each 
state funds and a set of requirements to implement their E&T programs. 
States decide which department will run their programs (e.g., Health 
and Human Services, Workforce Commission, etc.) and whether or not they 
work in tandem with other work-support programs in the state (e.g., 
TANF, Workforce Innovation and Opportunity Act Programs). Each state is 
required by law to operate a SNAP E&T program, though they have 
considerable flexibility in the design and scope of their programs. 
States must submit annual state E&T plans identifying, among other 
things, the services the state plans to offer; the categories and types 
of individuals the state intends to exempt from E&T participation; 
characteristics of the population the state agency intends to place in 
E&T and the geographic areas covered and not covered by the E&T plan. 
Services offered must include one or more of the following components:
---------------------------------------------------------------------------
    \74\David Stillman, Assistant Secretary, Economic Services 
Administration, Washington State Department of Social and Health 
Services. Hearing of the House of Representatives, Subcommittee on 
Nutrition, Committee on Agriculture. Past, Present, and Future of SNAP: 
Improving Innovation and Success in Employment and Training Programs. 
September 13, 2016. Washington, D.C.

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   Job search activities;

   Job search training, including skills assessments, job 
        finding clubs, training in employability techniques, and job 
        placement services;

   Workfare programs;

   Programs designed to improve the employability of eligible 
        individuals through actual work experience, training, or both;

   Educational programs to improve basic skills and literacy;

   Programs designed to increase an individual's self-
        sufficiency through self-employment;

   Programs to provide job retention service for up to 90 days 
        following employment; or

   Other employment, educational, or training programs approved 
        by the Secretary of Agriculture or the state.

    States also have the flexibility to determine what type of 
participation to require under the program--either mandatory or 
voluntary participation. States can also choose to work with local 
nonprofits. State E&T programs are generally operated on a county-by-
county basis and offer different services to different SNAP recipients 
based on where they live. In most cases, especially in rural counties, 
recipients get basic assistance in the form of being provided a 
computer for job searches. Seattle Jobs Initiative, an innovator in the 
employment training space, has partnered up with FNS to provide best 
practices to programs across the country to assist in providing better 
services.
    The 2014 Farm Bill enjoyed bipartisan support in focusing on the 
importance of work via SNAP E&T Pilots. The grants to implement these 
pilots were awarded to ten states to focus their efforts on different 
community needs and implementation methods, including focusing on both 
urban and rural settings, comparing voluntary versus mandatory 
participation, and evaluating whether job readiness training versus on-
the-job training better prepares recipients for work. While the pilots 
are a few years away from having tangible metrics, they are still able 
to provide initial best practices in improving recipients' job skills 
and job entry. Pete Weber with the Fresno Bridge Academy cited research 
from the Center on Budget and Policy Priorities on common 
characteristics across effective E&T programs. They found that the most 
effective programs include providing education or remediation to allow 
individuals with low education levels to access industry-specific 
training programs; individualized, hands-on work to build life skills; 
and provision of supportive services (transportation and flexible funds 
to help purchase items to help individuals work or look for work).\75\
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    \75\Pete Weber, Founder, Fresno Bridge Academy. Hearing of the 
House of Representatives, Subcommittee on Nutrition, Committee on 
Agriculture. Past, Present, and Future of SNAP: Improving Innovation 
and Success in Employment and Training Programs. September 13, 2016. 
Washington, D.C.
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    If the Federal Government is going to help enable recipients to 
climb the economic ladder, first there must be a better understanding 
of what is happening at the local level and what can be improved upon. 
As stated earlier in this section, there is concern that general work 
requirements are not adequately enforced. States must engage in greater 
oversight of the enforcement of the general work requirements to ensure 
those who can work do. At the Federal level, the way states enforce the 
work requirements must be taken into account to ensure that this can be 
done with administrative ease.
    Successful E&T programs paired with work requirements promote the 
importance of work and help maintain program integrity. ``There is 
little evidence that harsh provisions are necessary to encourage able-
bodied adults to work. Reasonable requirements, strongly enforced, and 
accompanied by the carrots for work provided by the work support 
system, may well be enough to encourage adults to work,'' stated Dr. 
Ron Haskins with the Brookings Institution. Those that can work should 
work, and they need to be provided with the tools to aid in their 
upward economic mobility. This ``builds the participants' confidence in 
their own natural ability and self-worth.''76-77
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    \76\Id., n. 67.
    \77\Leon Samuels, Executive Director, Strive DC. Hearing of the 
House of Representatives, Committee on Agriculture. Past, Present, and 
Future of SNAP: The Means to Climbing the Economic Ladder. June 10, 
2015. Washington, D.C.
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Finding 2c: Combined With Other Welfare Programs, SNAP Recipients May 
        Face a ``Welfare Cliff'' When They Are Just Above the Income 
        Eligibility Level, Which Can Create Disincentives To Finding 
        Work Or Increasing Earnings
    SNAP does not operate in a vacuum. The recipients of one Federal 
program are often the recipients of multiple Federal programs. During a 
joint hearing on the welfare cliff, then-Chairman of the House Ways and 
Means Committee Paul Ryan pointed out that, ``right now we have a 
safety net that is designed to catch people falling into poverty. What 
we need is a safety net to lift people out of poverty.''\78\ According 
to the most recent SNAP Characteristics Report, 20 percent of SNAP 
recipients receive SSI, 24 percent receive some form of Social Security 
benefits, nine percent receive child support enforcement payments, 
seven percent receive support from TANF, and four percent receive UI. A 
recipient just below the income threshold of certain programs may see a 
significant decrease in the amount of assistance they receive when they 
obtain employment that provides earned income over a certain threshold, 
leading to what is known as the ``welfare cliff.'' This phenomenon is 
highlighted in the figure below.
---------------------------------------------------------------------------
    \78\Paul Ryan, Chairman of the House Committee on Ways and Means. 
Joint Hearing of the House of Representatives, Subcommittee on 
Nutrition, Committee on Agriculture and the Subcommittee on Human 
Resources, Committee on Ways and Means. Past, Present, and Future of 
SNAP: The Means to Climbing the Economic Ladder. June 10, 2015. 
Washington, D.C.

          ``right now we have a safety net that is designed to catch 
        people falling into poverty. What we need is a safety net to 
        lift people out of poverty.''
                 Rep. Paul Ryan (WI-1), former Ways and Means Chairman.
Tax and Transfer Benefits for Universally Available and Additional 
        Programs
        
        
          Note: This scenario applies to single adults with two 
        children.
          Source: Dr. Eugene Steuerle, Senior Fellow, Urban Institute. 
        Joint Hearing of the House of Representatives, Subcommittee on 
        Nutrition, Committee on Agriculture and the Subcommittee on 
        Human Resources, Committee on Ways and Means. Past, Present, 
        and Future of SNAP: The Means to Climbing the Economic Ladder. 
        June 10, 2015. Washington, D.C.

    Individuals may be forced to decide whether to reduce the number of 
hours worked and gain more government benefits, or work and lose said 
benefits but have less monthly income than if the recipient was to 
forgo working. In discussing the welfare cliff, Dr. Casey Mulligan of 
the University of Chicago highlighted two reasons government tax and 
spending rules reduce the reward for work. First, there are income 
contingencies that occur--if a household receives more income from 
work, it receives fewer benefits. Second, there are employment 
contingencies--the more employment a household has, the more its taxes 
and benefit amounts are impacted even if its income is the same.\79\
---------------------------------------------------------------------------
    \79\Dr. Casey Mulligan, Professor, Department of Economics, 
University of Chicago. Joint Hearing of the House of Representatives, 
Subcommittee on Nutrition, Committee on Agriculture and the 
Subcommittee on Human Resources, Committee on Ways and Means. Past, 
Present, and Future of SNAP: The Means to Climbing the Economic Ladder. 
June 10, 2015. Washington, D.C.
---------------------------------------------------------------------------
    Chanel McCorkle, a SNAP recipient, described her experience with 
the welfare cliff: ``After I lost my job I applied for Temporary Cash 
Assistance through the Department of Social Services. Thirty days after 
I applied I was granted cash assistance, and immediately received 
daycare vouchers and an increase in food stamp assistance. The daycare 
vouchers I so desperately needed while I was working were finally 
granted to me after it cost me my job.''\80\
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    \80\Chanel McCorkle, Candidate, America Works of Maryland. Joint 
Hearing of the House of Representatives, Subcommittee on Nutrition, 
Committee on Agriculture and the Subcommittee on Human Resources, 
Committee on Ways and Means. Past, Present, and Future of SNAP: The 
Means to Climbing the Economic Ladder. June 10, 2015. Washington, D.C.
---------------------------------------------------------------------------
    The answer to fully addressing the welfare cliff does not wholly 
rely on SNAP; instead it relies on coordination across committees and 
welfare programs to ensure they reduce poverty and hunger while 
encouraging work that leads to greater economic success. Erik Randolph 
with the Illinois Policy Institute described the welfare cliff by 
providing the following example: ``A single parent in Lake County, 
Illinois, who earns $12 per hour brings home just over $22,000 in net 
pay. However, that same single parent is eligible for an array of 
welfare benefits as follows:

   ``Refundable tax credits from the Earned Income Tax Credit, 
        the Additional Child Tax Credit, and the Illinois Earned Income 
        Tax Credit;

   ``Food assistance, including SNAP, food packages from WIC, 
        and the National School Lunch Program;

   ``Housing assistance from the Housing Choice Voucher 
        Program;

   ``Subsidized child care services; and

   ``Medical assistance for both the parent and her children.''

    Randolph continued, ``When you add up the value of those potential 
benefits, it comes to an astounding $39,534, bringing the total net 
receivables in terms of earned income and benefits to $61,655. In 
comparison, suppose you earn $18 per hour, bringing home about $33,000 
in net pay. That is a gain of about $11,000 in earned income. However, 
your potential welfare benefits will drop drastically to $5,236 from 
$39,534, for a loss of more than $34,000. Why would any sane person 
voluntarily give up $34,000 in benefits to gain only $11,000?''\81\
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    \81\Erik Randolph, Senior Fellow, Illinois Policy Institute. Joint 
Hearing of the House of Representatives, Subcommittee on Nutrition, 
Committee on Agriculture and the Subcommittee on Human Resources, 
Committee on Ways and Means. Past, Present, and Future of SNAP: The 
Means to Climbing the Economic Ladder. June 10, 2015. Washington, D.C.
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Findings Theme 3: Maintaining Program Integrity
    Program integrity within SNAP is critical for both the functioning 
and long-term sustainability of the program. Jessica Shahin of USDA FNS 
emphasized this in her testimony at the Evaluating Error Rates and 
Anti-Fraud Measures to Enhance Program Integrity hearing: ``As vital as 
the program is to so many, and as well as it operates, we can all agree 
that it can do even better, and it is up to all of us, the Federal 
Government, the states, and the local providers to work together to 
improve it by holding ourselves accountable. FNS is committed to 
continually improving the integrity of SNAP. FNS has long recognized 
that SNAP cannot succeed without strong public confidence, so good 
stewardship of tax dollars is one of our most important 
objectives.''\82\
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    \82\Jessica Shahin, USDA FNS, SNAP Associate Administrator. Hearing 
of the House of Representatives, Committee on Agriculture. Past, 
Present, and Future of SNAP: Breaking the Cycle. October 31, 2016. 
Washington, D.C.

          ``FNS has long recognized that SNAP cannot succeed without 
        strong public confidence, so good stewardship of tax dollars is 
        one of our most important objectives.''
                                              Jessica Shahin, USDA FNS.

    At the same hearing, Dave Yost, Auditor of State in Ohio, discussed 
the public perception and impact of food stamp fraud: ``Food stamp 
fraud hardens the hearts of good people and deafens their ears to the 
sound of hunger. Every dollar wasted or fraudulently spent is a dollar 
that could be used for its intended purpose: to feed the poor. For 
those who hunger, and for those who pay the bill, we owe a greater 
effort toward integrity.''\83\
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    \83\Dave Yost, Auditor of State, State of Ohio. Hearing of the 
House of Representatives, Committee on Agriculture. Past, Present, and 
Future of SNAP: Breaking the Cycle. October 31, 2016. Washington, D.C.

          ``Food stamp fraud hardens the hearts of good people and 
        deafens their ears to the sound of hunger. Every dollar wasted 
        or fraudulently spent is a dollar that could be used for its 
        intended purpose: to feed the poor. For those who hunger, and 
        for those who pay the bill, we owe a greater effort toward 
        integrity.''
                                   Dave Yost, Auditor of State in Ohio.

    Both of these witnesses highlighted how critical it is to seek 
constant and continuous improvement in SNAP. They also pointed out how 
important it is to understand any issues or problems that arise with 
payments and to ensure that sufficient steps are taken to address and 
prevent future issues.
    In any discussion of program integrity, it is important that terms 
be carefully defined. In the context of SNAP:

   Improper payments, or ``SNAP errors'', are under or 
        overpayment of benefits due to:

     Unintentional administrative errors in eligibility or 
            benefit determination; and

     Misrepresentation of eligibility;

   Fraud is the intentional misuse of SNAP benefits. It 
        includes:

     Benefits trafficking, which is the exchange of SNAP 
            benefits for cash or noncash goods or services (other than 
            eligible food) by recipients and/or retailers;

     Misrepresentation of eligibility resulting in benefits 
            being improperly awarded to recipients; and

     Misrepresentation of information by businesses or 
            individuals when applying to become a SNAP authorized 
            retailer.

    As made clear by these descriptions, there is overlap between the 
components of fraud and improper payments, and addressing program 
integrity is a challenging and complicated issue. Clarity in what is 
being measured and how those metrics can be used to ensure benefits 
reach intended recipients are critical considerations in the structure 
of the program.
Finding 3a: SNAP Needs Clear Program Goals and Must Be Evaluated 
        According to Metrics Aligned With Those Goals To Generate 
        Program Improvement
    The Food and Nutrition Act of 2008, as amended, lays out 
Congressional intent for SNAP:

          ``It is hereby declared to be the policy of Congress, in 
        order to promote the general welfare, to safeguard the health 
        and well-being of the nation's population by raising levels of 
        nutrition among low-income households. Congress hereby finds 
        that the limited food purchasing power of low-income households 
        contributes to hunger and malnutrition among members of such 
        households. Congress further finds that increased utilization 
        of food in establishing and maintaining adequate national 
        levels of nutrition will promote the distribution in a 
        beneficial manner of the nation's agricultural abundance and 
        will strengthen the nation's agricultural economy, as well as 
        result in more orderly marketing and distribution of foods. To 
        alleviate such hunger and malnutrition, a supplemental 
        nutrition assistance program is herein authorized which will 
        permit low-income households to obtain a more nutritious diet 
        through normal channels of trade by increasing food purchasing 
        power for all eligible households who apply for 
        participation.''\84\
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    \84\Food and Nutrition Act of 2008 as Amended, Declaration of 
Policy, Section 2.

    Throughout the hearing series, witnesses emphasized that SNAP does 
not simply provide nutrition to low-income recipients. It also provides 
nutrition education, better access to fresh fruits and vegetables, 
valuable employment and training opportunities, and coordination with 
other welfare programs. Monitoring the progress on all of these 
objectives is a major challenge, and witnesses documented the need for 
targeted program metrics and evaluations.
    SNAP program performance is currently evaluated in a number of 
ways. Some of those evaluations provide the characteristics of SNAP 
recipient households, including household composition; presence of 
children, elderly, or disabled persons; gross and net income; and other 
characteristics.\85\ Other evaluations provide information on the over 
250,000 retailers who participate in SNAP and on FNS's monitoring and 
evaluation of retailers. USDA publishes a report of compliance activity 
for retailers, reflecting sanctions (including disqualifications) and 
other compliance actions. In FY 2015, USDA flagged over 17,900 stores 
for potential violations and initiated over 3,700 compliance actions on 
authorized firms found in violation of SNAP regulations.\86\
---------------------------------------------------------------------------
    \85\Id., n. 15.
    \86\USDA FNS. SNAP Retailer Management FY 2015 Year End Summary. 
http://www.fns.usda.gov/snap-retailer-data.
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    In another method of program monitoring and evaluation, states and 
FNS have quality control (QC) procedures in place to review household 
eligibility determinations. States review a sample of their SNAP cases, 
and FNS subsequently verifies a sub-sample of those cases. The results 
of this review are used to calculate state error rates, and the state 
error rates are averaged (weighted) to estimate the national error 
rate. Much of the information on SNAP performance is collected at the 
state level because the states are responsible for making SNAP 
eligibility determinations.
    The design and structure of programs can also be critical in 
ensuring they are able to be monitored and evaluated adequately. For 
example, the 2014 Farm Bill funded ten pilot projects designed to 
reduce dependency and increase work, all of which are required to have 
a ``control group'' that does not participate in the program, in order 
to be able to measure whether the pilots achieve their desired 
outcomes.
    One area of SNAP that differs from the program evaluation methods 
of other means-tested programs is that SNAP includes bonuses tied to 
error rates. USDA provides states with financial bonuses and imposes 
sanctions to reduce or maintain low error rates. In general, $24 
million is allocated among states with the best payment accuracy and 
most improved payment accuracy.\87\
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    \87\Kay Brown, Director, Education, Workforce, and Income Security, 
U.S. Government Accountability Office. Hearing of the House of 
Representatives, Committee on Agriculture. Past, Present, and Future of 
SNAP: Evaluating Error Rates and Anti-Fraud Measures to Enhance Program 
Integrity. July 6, 2016. Washington, D.C.

          ``The Federal Government could greatly accelerate evidence 
        building within SNAP by creating strong incentives for states 
        to use their existing funds to rigorously test new employment/
        training strategies.''
                             Jon Baron, Laura & John Arnold Foundation.

    There are differences of opinion regarding state bonuses and the 
basis on which they should be awarded. Some believe these bonuses serve 
as an important incentive to states to focus on particular areas of 
SNAP success. For example, as Jon Baron at the Laura and John Arnold 
Foundation noted, ``The Federal Government could greatly accelerate 
evidence building within SNAP by creating strong incentives for states 
to use their existing funds to rigorously test new employment/training 
strategies.''\88\
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    \88\Jon Baron, Vice-President for Evidence-Based Policy, Laura and 
John Arnold Foundation. Hearing of the House of Representatives, 
Subcommittee on Nutrition, Committee on Agriculture. Past, Present, and 
Future of SNAP: Developing and Using Evidence-Based Solutions. July 15, 
2015. Washington, D.C.
---------------------------------------------------------------------------
    However, there is also concern about whether the reporting and 
evaluation that are done are adequate to measure the intended outcomes 
of the program. This is critical for determining whether SNAP is 
successful or not, and in what ways the program can be improved. As 
pointed out by Dr. James Sullivan of the University of Notre Dame: ``By 
steering resources towards the most effective social programs, evidence 
of what works and what doesn't can significantly improve the lives of 
the poor.''\89\ He further states, ``By guiding funds away from 
ineffective programs, high quality impact evaluations allow us to do 
more good with the limited resources available.''
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    \89\Dr. James Sullivan, Rev. Thomas J. McDonagh, C.S.C., Associate 
Professor of Economics, University of Notre Dame and Director, Wilson 
Sheehan Lab for Economic Opportunities. Hearing of the House of 
Representatives Subcommittee on Nutrition, Committee on Agriculture. 
Past, Present, and Future of SNAP: Developing and Using Evidence-Based 
Solutions. July 15, 2015. Washington, D.C.
---------------------------------------------------------------------------
    Witnesses who testified at the hearings on reporting and evaluation 
suggested that using evidence to guide policy can generate positive 
outcomes. This requires actions such as incentivizing innovation and 
measurement of program effectiveness. Measurement of effectiveness is 
highly dependent on data available, and the decentralized nature of 
SNAP administration has long hampered data collection efforts.
    The importance of adequate reporting metrics is readily apparent in 
efforts to track and prevent churn. Churn occurs when ``SNAP households 
rapidly cycl[e] on and off the program, usually due to lapses through 
the recertification process.''\90\ Churn imposes costs both to 
participants and to agencies administering the program. For agencies, 
churn increases costs by requiring agencies to process additional 
applications from households reentering the program. For participants, 
costs include the loss of benefits that they otherwise would have 
received, the administrative burdens of the reapplication process, and 
other burdens related to coping during the period without benefits.
---------------------------------------------------------------------------
    \90\Gregory Mills, Senior Fellow, Urban Institute. Hearing of the 
House of Representatives, Subcommittee on Nutrition, Committee on 
Agriculture. Past, Present, and Future of SNAP: Recipient 
Characteristics and Dynamics. February 26, 2015. Washington, D.C.
---------------------------------------------------------------------------
    Data and research are conflicting regarding how long SNAP 
participants are on the program. Stephen Tordella of Decision 
Demographics testified on a recent study of SNAP participation dynamics 
his organization conducted. Based on their findings, SNAP spells (or 
continuous time on the program) have gotten longer over the past 
decade: \1/2\ of those who entered the program between 2008 to 2012 
(``new entrants'') exited within 12 months, compared to 10 months 
during the mid-2000s and 8 months in the early 2000s. SNAP spell 
lengths were shorter for individuals in families without children and 
for ABAWDs. Spell lengths were longer for new entrants living in 
poverty, those in single-parent families, nonelderly disabled adults, 
and children.
    Overall, however, most entrants left the program within 2 
years.\91\ Understanding why a recipient is moving on and off the 
program is of benefit to the recipient and could lower administrative 
costs. Adequate reporting and evaluation metrics can get at the root of 
the issues recipients face and allow states to best know what 
individuals are facing.
---------------------------------------------------------------------------
    \91\Stephen Tordella, President, Decision Demographics. Hearing of 
the House of Representatives, Subcommittee on Nutrition, Committee on 
Agriculture. Past, Present, and Future of SNAP: Recipient 
Characteristics and Dynamics. February 26, 2015. Washington, D.C.
---------------------------------------------------------------------------
Finding 3b: SNAP Fraud Rates Can Be Improved Through Innovative State 
        and Federal Strategies and Technologies
    Fraud rates are one of several important indicators of SNAP program 
integrity. Fraud is especially malicious because it is intentional. 
SNAP recipient fraud can occur when applicants make misleading or false 
claims to obtain benefits or when applicants misuse benefits by trading 
them for cash or noncash goods or services (this particular type of 
fraud is known as ``trafficking''). Examples of trafficking include the 
illegal sale of SNAP benefits for cash and sales of SNAP benefits for 
ineligible items. For example, from 2009 to 2011, trafficking of SNAP 
benefits for cash at a discount to food retailers diverted an estimated 
$858 million annually from SNAP benefits, and overall, approximately 
1.3 percent of total SNAP benefits were trafficked via retailers.\92\
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    \92\USDA FNS. Nutrition Assistance Program Report. The Extent of 
Trafficking in the Supplemental Nutrition Assistance Program: 2009-
2011. August 2013. http://www.fns.usda.gov/sites/default/files/
Trafficking2009.pdf.
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    While these numbers are alarming, a September 2012 USDA Office of 
Inspector General (OIG) report found that the exact amount of recipient 
fraud is difficult to estimate accurately and recommended that FNS 
determine the feasibility of creating a uniform methodology to 
calculate recipient fraud in the same way across states. FNS ultimately 
determined that to do so would require legislative authority mandating 
significant state investment of time and resources in addressing fraud 
beyond current requirements.\93\
---------------------------------------------------------------------------
    \93\Id., n. 87.
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    Responsibility for addressing SNAP fraud falls on both FNS and 
states. At the Federal level, FNS is responsible for managing retailer 
fraud. SNAP retailers are approved nationally, and any fraud they 
commit could have implications across state borders. At the state 
level, individual state or local agencies that administer SNAP are 
responsible for detecting, investigating, and prosecuting fraud 
committed by recipients. FNS retains responsibility for providing 
guidance and monitoring state activities.
    Strategies for addressing fraud are wide-ranging and include: 
cross-referencing across state databases to identify duplication, 
monitoring transactions that are for an even dollar amount, conducting 
undercover investigations, and using an electronic audit trail of EBT 
transactions to identify trafficking. GAO's hearing testimony also 
pointed out that many states employ fraud reporting hotlines and 
websites, and that many states do extensive review of school 
enrollment, vehicle registration, vital statistics, and credit reports 
to detect potential fraud. However, the depth of this analysis varied 
considerably and at the time of GAO's report, for example, Florida was 
routinely reviewing EBT transactions data for suspicious patterns, 
while Texas was only reviewing transactions for households that had 
been referred for potential fraud. Some states, but not all, monitored 
postings on social media and e-commerce sites to monitor for 
individuals selling SNAP benefits. States have reported limitations on 
their ability to track fraud due to inadequate staffing levels.\94\
---------------------------------------------------------------------------
    \94\Id., n. 87.
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    At the Federal level, FNS has over 100 analysts who analyze 
retailer data, conduct undercover investigations, and process cases 
against violating retailers. The Federal Government also collects 
delinquent SNAP recipient claims via the Treasury Offset Program; these 
claims could be because of intentional program violations by the 
client, inadvertent household error, or a state agency error.\95\
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    \95\USDA FNS. What is FNS Doing to Fight SNAP Fraud. http://
www.fns.usda.gov/fraud/what-fns-doing-fight-snap-fraud.
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    Reducing or eliminating SNAP fraud is critical to program integrity 
and continuing to provide benefits to eligible individuals and 
households. Although fraud is an ongoing concern, efforts to address it 
are also ongoing.
Finding 3c: SNAP Error Rates Are Only As Good As the Program Parameters 
        On Which They Are Based
    The SNAP error rate is an often-cited parameter of SNAP program 
integrity. USDA's SNAP payment error rate is determined via the SNAP 
Quality Control System, which measures the accuracy of eligibility and 
benefit determinations made by states. The SNAP payment error rate is 
the sum of overpayments and underpayments, but notably excludes errors 
of less than $37 per month.\96\ As of FY 2014, the SNAP national 
payment error rate was 3.66 percent, which reflected a combined rate of 
2.96 percent overpayments and 0.69 percent underpayments.\97\ Using the 
$69.99 billion in total payments in FY 2014, overpayments of 2.96 
percent were equal to just over $2.07 billion. There has been a long-
term downward trend in SNAP error rates calculated as a percent of 
benefits, but it is important to note that these have come as the value 
of benefits from the program have been increasing, and the dollar value 
of overpayment of benefits was on a general uptrend through FY 
2011.\98\ Regardless of the improvements in SNAP error rates, taxpayer 
dollars must be used and protected appropriately, since even low error 
rates represent significant taxpayer cost.
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    \96\Agricultural Act of 2014, Section 4019. Note that the $37/month 
is adjusted annually at the rate of changes in the value of the Thrifty 
Food Plan.
    \97\USDA FNS. Supplemental Nutrition Assistance Program (SNAP): 
Quality Control. http://www.fns.usda.gov/snap/quality-control.
    \98\USDA FNS. SNAP Quality Control Error Rates. http://
www.fns.usda.gov/snap/snap-quality-control-error-rates.
---------------------------------------------------------------------------
    While fraud is clear cut in that it requires malicious intent, SNAP 
administrative errors are considered unintentional. Although they are 
unintentional, error rates vary substantially based on program design. 
Using the policy options provided in SNAP statute, states have the 
option of implementing an option called ``simplified reporting,'' which 
requires households to report changes in income only when their income 
rises above a certain level. Simplified reporting may lower error rates 
because it reduces the frequency of required reports. States that do 
not utilize this option require households to report their earnings 
more frequently. This option is discussed at length later in the 
report.
    In another example of the potential for variation in error rates, 
the use of BBCE in determining eligibility for SNAP means that there 
are fewer steps required in an agency determination of household 
eligibility. By linking SNAP eligibility to receiving noncash services 
provided by TANF, the state effectively removes or increases SNAP asset 
limits, increases the SNAP gross income limit, and removes the SNAP net 
income limit (because they are using the TANF noncash asset and income 
limits instead). According to GAO, ``state flexibilities that 
simplified program policies or procedures may therefore have 
contributed to decreases in the SNAP improper payment rate, though the 
rate was likely affected by additional factors as well, such as changes 
in the number of SNAP applicants and state staffing levels.'' In other 
words, if fewer hurdles are required to determine SNAP eligibility, 
there are fewer opportunities for making errors. Reducing the error 
rate may not necessarily be a good thing if it comes at the expense of 
robust eligibility requirements. Of 33 state options GAO reviewed, 17 
likely reduced the potential for error. In some cases, potential to 
reduce the error rate was also a key factor in a state's decision to 
adopt certain policies.\99\
---------------------------------------------------------------------------
    \99\Id., n. 87.
---------------------------------------------------------------------------
    Another concern with SNAP error rates was highlighted in the USDA 
OIG's review of the QC process to determine whether there are 
sufficient controls in place to ensure the integrity of SNAP error rate 
determinations. After reviewing national, regional, and state level 
procedures, OIG found that states ``weakened the QC process by using 
third-party consultants and error review committees to mitigate 
individual QC-identified errors, rather than improving eligibility 
determinations'' and that error cases were also treated non-uniformly. 
They also found that ``FNS' two-tier QC process is vulnerable to state 
abuse due to conflicting interests between (1) accurately reporting 
true error rates and incurring penalties or (2) mitigating errors and 
receiving a bonus for exceeding standards.'' Further, OIG concluded 
that ``FNS' QC process understated SNAP's error rate.'' OIG recommended 
that FNS consider changing QC from a two-tier process to a one-tier 
process in which FNS or a third party reviews the cases.\100\ These 
concerns are of particular importance because states are also eligible 
to receive high-performance bonuses based on their error rates. This 
can create perverse incentives for states to seek ways to hide errors 
rather than seek actual program improvement.
---------------------------------------------------------------------------
    \100\USDA Office of Inspector General. FNS Quality Control Process 
for SNAP Error Rate. September 2015. Audit Report 27601-0002-41.
---------------------------------------------------------------------------
    In response to OIG's findings, USDA FNS has undertaken an extensive 
review of the QC process, including issuing strong guidance to states 
on the integrity of the SNAP Quality Control system. States were 
provided directives on preventing bias, on misusing error review 
committees and third party systems, and on their responsibilities for 
addressing improper payments.\101\ USDA's review process revealed data 
quality concerns in 42 states for FY 2015. USDA has indicated it will 
not be releasing national error rates for FY 2015. However, in November 
2016, USDA released the error rates for 11 states where QC data can be 
validated. In accordance with Federal policy, ten of those states will 
receive payment accuracy bonus awards.
---------------------------------------------------------------------------
    \101\USDA FNS. Integrity of the SNAP Quality Control System. 
Quality Control Policy Memo: 16-02. Jan. 20, 2016.
---------------------------------------------------------------------------
    The presence of state flexibilities and concerns with the QC system 
show that there are ways that states can significantly lower error 
rates without necessarily improving program integrity. Thus, SNAP error 
rates must be considered in the context of any changes in program 
design and state options for implementing SNAP. Perhaps more 
importantly, additional consideration is needed in whether performance 
bonuses based on SNAP error rates are warranted, given subjective 
program design and implementation.
Finding 3d: State Flexibility in Administering SNAP Should Not 
        Jeopardize Program Integrity
    Some state flexibility within SNAP is critical to better targeting 
benefits to those in need, for streamlining program administration, and 
for coordinating with other programs. However, the discussion of SNAP 
error and fraud, as well as the extensive needs of some SNAP 
beneficiaries, indicates that flexibility and accountability must be in 
balance. As described in extensive detail earlier, states have a long 
list of options they can take at their discretion as well as the 
ability to apply to FNS for waivers from many SNAP program 
requirements. State options can be difficult to track because they are 
implemented at the option of the state and are typically reported to 
FNS primarily via an annual state plan submission.
    Further, after reviewing 33 state options, GAO concluded that the 
majority of state SNAP policy flexibilities likely reduced payment 
errors. Of the 17 that potentially reduced the likelihood of payment 
errors, 11 simplified the SNAP program requirements (generally reducing 
opportunities for participants and caseworkers to make errors) and six 
modified the procedures for receiving and processing information. One 
of the most commonly used options relates to recipient reporting 
frequency.\102\
---------------------------------------------------------------------------
    \102\Id., n. 87.
---------------------------------------------------------------------------
Recipient Reporting Frequency
    SNAP implementing agencies are granted flexibility in determining 
the requirements for recipients to report changes in income (or other 
key household changes). However, flexibility in reporting comes with a 
tradeoff in the timeliness of the information the state agency has on 
recipients.
    A perfect example of this tradeoff can be seen in reporting 
requirements for the elderly or disabled. Households in which all 
members are elderly or disabled have a certification period of up to 24 
months with a 12 month periodic reporting requirement.\103\ This 
reduces the burden on the household and on the state agency for 
handling reporting; however, a year could pass with no update in 
household status, in which time the household composition could change.
---------------------------------------------------------------------------
    \103\Food and Nutrition Act of 2008. Section 3(f).
---------------------------------------------------------------------------
    State agencies have the option of requiring SNAP recipients to 
report household circumstances at various intervals and in various 
ways. State agencies can use different reporting systems for different 
types of households, or different geographical areas, but each 
household is subject to only one reporting system:

   For change reporting, recipients may be required to report 
        changes periodically or within a certain time, typically within 
        10 days, after certain changes in circumstances occur.

   Under periodic reporting, participants report either 
        monthly, quarterly, or using a simplified system with reduced 
        reporting requirements. Under simplified reporting, households 
        are required to report changes in income between certification 
        and scheduled reporting periods when total countable income 
        rises above 130 percent of the poverty level or when work hours 
        for ABAWDs fall below 20 hours per week. State agencies have 
        the option to act on all changes reported during the 
        certification period, or to act only on certain changes that 
        result in an increase in household benefits. States that have 
        chosen to act on all changes must act to verify any changes 
        reported and take appropriate action, even if this change 
        reduces the client's benefit. This option allows states that 
        have combined SNAP/TANF programs to more seamlessly integrate 
        the two. It avoids a situation where the TANF program has acted 
        on a change, but SNAP has not, and it decreases caseworker 
        burden by aligning the programs.

    Households certified for SNAP for longer than 6 months must submit 
a periodic report at least once every 6 months, but no more than once 
every 4 months, during the certification period. Some [state] agencies 
have opted to certify simplified reporting households for 12 months, 
with a periodic report at 6 months. Others have opted to certify these 
households for 6 months.\104\
---------------------------------------------------------------------------
    \104\Id., n. 36.
---------------------------------------------------------------------------
    The net result of the state option for simplified reporting, and 
other state options such as BBCE, is that states can generate 
reductions in their state error rate without necessarily increasing the 
likelihood that the program serves those most in need.
    Beyond reporting requirements and other state flexibilities, there 
is also an important systematic role that FNS plays in SNAP program 
consistency and oversight. Important efficiencies are gained by 
retaining some roles in program administration at the Federal level. 
Because SNAP retailers, transactions, and recipients can all reach 
across state lines, a unified approach to management of these portions 
of SNAP and oversight of implementation are all critical in program 
integrity.
    Unfortunately, there are significant examples of when states fell 
short in their responsibility to protect SNAP program integrity. As was 
mentioned at several of the hearings, a USDA review of New Mexico's 
Human Services Department and its implementation of SNAP found severe 
compliance issues with SNAP administration, primarily with recipient 
certification, improperly slowing the application process, and 
improperly paying benefits.
    A balance must be struck between enhancing program integrity and 
ensuring ``that the administration of benefit programs does not impose 
additional burdens on working families.''\105\ Requiring an individual 
to take off work and stand in a long line to see a caseworker, for 
instance, creates an undue burden on the recipient. Addressing the 
administrative burden of reporting requirements while utilizing data 
sharing among and within states could ease administrative burdens while 
improving program integrity.
---------------------------------------------------------------------------
    \105\Dr. Olivia Golden, Executive Director, Center for Law and 
Social Policy. Joint Hearing of the House of Representatives, 
Subcommittee on Nutrition, Committee on Agriculture and the 
Subcommittee on Human Resources, Committee on Ways and Means. Past, 
Present, and Future of SNAP: The Means to Climbing the Economic Ladder. 
June 10, 2015. Washington, D.C.
---------------------------------------------------------------------------
Finding 3e: Data Availability--With Robust Privacy Protections--Is a 
        Key Concern in Ensuring SNAP Is Functioning As Intended
    Because SNAP is state (and in some cases, county) administered, 
program data and eligibility determinations are managed at the state 
agency level. The Committee's review of SNAP points to room for 
improvement in how data is collected among state and county agencies 
and FNS. Currently, data modeling is used to augment actual data. For 
example, Karen Cunnyngham of Mathematica highlighted the use of this 
approach to ``compare poverty, SNAP eligibility, and SNAP participation 
across states.''\106\
---------------------------------------------------------------------------
    \106\Karen Cunnyngham, Senior Researcher, Mathematica Policy 
Research. Hearing of the House of Representatives, Committee on 
Agriculture, Subcommittee on Nutrition. Past, Present, and Future of 
SNAP: Evaluating Error Rates and Anti-Fraud Measures to Enhance Program 
Integrity. February 26, 2015. Washington, D.C.
---------------------------------------------------------------------------
    At the request of Chairman Conaway, GAO recently reported on 
practices that can enhance the utilization of data by states.\107\ 
States are required by law and regulation to determine eligibility for 
SNAP. Verification of that information, and in particular, verification 
of income information of potential SNAP beneficiaries, is a critical 
challenge for states and is a data-intensive process, as noted by GAO: 
``One financial criterion for SNAP eligibility and benefit amount 
involves household income, which can come from various sources, 
including earned income, such as wages and salaries, and unearned 
income, such as payments from other government programs.''\108\
---------------------------------------------------------------------------
    \107\U.S. Government Accountability Office. Report to the Chairman, 
Committee on Agriculture, House of Representatives. Supplemental 
Nutrition Assistance Program: More Information on Promising Practices 
Could Enhance States' Use of Data Matching for Eligibility. GAO-17-111. 
October 2016.
    \108\Ibid.
---------------------------------------------------------------------------
    Agencies at the state and county level that administer SNAP 
simplify this process with data matching to (1) obtain information on 
households' income, (2) verify information provided on income, and (3) 
identify discrepancies. Data matching can also inform agencies on 
changes in income for interim checks and recertification of recipients.
    A survey of all states shows that they conduct multiple data 
matches for income. In total, 16 types of state data matches were 
reported. Examples of data sources used by states for data matching 
include:\109\
---------------------------------------------------------------------------
    \109\Ibid.

   Old Age, Survivors, and Disability Insurance (OASDI) income 
        information can be obtained from multiple data matches with the 
        Social Security Administration (SSA) and is used by 51 of 53 
---------------------------------------------------------------------------
        state agencies.

   SSI information comes from several direct data matches with 
        SSA and is used by 51 of 53 state agencies.

   The Work Number' is a commercial verification 
        service operated by Equifax Inc. that provides payroll 
        information from participating employers for a fee and is used 
        by 45 of 53 state agencies.

   Public Assistance Reporting Information System (PARIS) 
        Interstate file from the Department of Health and Human 
        Services (HHS) provides information on individuals' benefit 
        receipt in other states, but is used by 40 of 53 state 
        agencies.

    The GAO study showed that the opinion of state officials on the 
usefulness of each data match varied widely. For example, SSI and OASDI 
were overwhelming viewed as useful. In contrast, the National Directory 
of New Hires (NDNH) and the Beneficiary Earnings Exchange Record (BEER) 
were considered not at all or somewhat useful by a majority of states. 
Opinions about usefulness generally were derived from concerns about 
accuracy (and ability to verify accuracy) and timeliness of data that 
is being used to determine program eligibility and benefits.
    States recognize the need for improving their data matching 
processes. Some states are targeting and streamlining their data 
matching activities, including prioritizing which matches need follow-
up. For example, Texas, Virginia, and Washington have enabled 
caseworkers to look up data from multiple data systems with a single 
search.
    SNAP is not the only Federal program that requires data on 
household income, and there is a particular opportunity to leverage 
information and systems used for TANF and Medicaid income verification. 
For example, the Center for Medicaid and Medicare Services (CMS) 
created the Federal data services hub (``the Hub'') that provides a 
single access point to gather information for eligibility 
determinations for Medicaid. That includes access to data from SSA and 
Work Number'. Although this data is also used for SNAP, data 
use agreements currently in place do not allow the use of this 
information for SNAP eligibility determinations. This hindrance is a 
concern for states interviewed by GAO and is an area where additional 
access to data and technology could enhance program functionality and 
efficiency.
    Robert Greenstein of the Center on Budget and Policy Priorities 
testified on the use of data to improve program integrity.\110\ He 
noted that innovation that is used in states such as Utah, Washington, 
and Idaho, enables caseworkers to access data in real time and to 
process reported changes in household income. Other suggestions include 
helping states share tools and innovations across states via 
establishment or procurement of IT solutions, removal of barriers to IT 
adoption, or increased incentives for states to adopt well-regarded 
options. These solutions would not only improve program integrity but 
also reduce the burden on SNAP recipients. As Representative Ashford 
pointed out, ``. . . data collection, and then also being able to rely 
on data to make decisions in a coordinated way, is the most important 
thing we can do.''\111\
---------------------------------------------------------------------------
    \110\Robert Greenstein, President, Center on Budget and Policy 
Priorities. Hearing of the House of Representatives, Committee on 
Agriculture. Past, Present, and Future of the Supplemental Nutrition 
Assistance Program. February 25, 2015. Washington, D.C.
    \111\Brad Ashford, Member of the House Committee on Agriculture. 
Hearing of the House of Representatives, Committee on Agriculture. 
Past, Present, and Future of the Supplemental Nutrition Assistance 
Program. February 25, 2015. Washington, D.C.
---------------------------------------------------------------------------
Findings Theme 4: Improving Food Access and Promoting Healthy Food
    Limited access to supermarkets, grocery stores, and other sources 
of nutritious food may make it more difficult for many Americans to 
consume a healthy diet. This is a particular concern for SNAP, with 
Federal spending intended to provide nutrition to millions of 
Americans. Hearing witnesses indicated that recipients would benefit 
from improved access to healthy food.
    Areas with limited access to fresh food are oftentimes called 
``food deserts.'' According to USDA, to qualify as a low-access 
community, at least 500 people and/or at least 33 percent of the Census 
tract's population must reside more than 1 mile from a supermarket or 
large grocery store; for rural areas the distance is more than 10 
miles. This becomes an issue when the easiest store to get to primarily 
provides packaged and processed food. SNAP recipients may find the 
convenience of a local market is greater than the cost and time it 
takes to travel farther to a supermarket. High-calorie foods with 
minimal nutritional value can often be a staple for families with 
limited resources.
    As Dr. James Ziliak of the University of Kentucky noted, ``Many of 
our low-income families, especially in urban areas, don't have ready 
access to the whole spectrum of foods that make up the Thrifty Food 
Plan that underlies USDA's plan for the SNAP benefit.''\112\ His 
concerns were also echoed by Dr. Kimberlydawn Wisdom of the Henry Ford 
Health System: ``Today, SNAP recipients live in neighborhoods and 
communities where making healthy choices can be challenging, if not 
impossible, due to the lack of safe, well-equipped, and well-maintained 
places to work and play, and the absence of nearby full-service grocery 
stores and other health services. These factors contribute to the 
malnutrition that now coexists with overweight and obesity. 
Comprehensive literature reviews examining neighborhood disparities and 
food access have found that neighborhood residents with better access 
to supermarkets tend to have healthier diets and reduced risk for 
obesity.''\113\
---------------------------------------------------------------------------
    \112\Dr. James P. Ziliak, Founding Director, Center for Poverty 
Research; Professor and Carol Martin Gatton Endowed Chair in 
Microeconomics, Department of Economics, University of Kentucky. Joint 
Hearing of the House of Representatives, Subcommittee on Nutrition, 
Committee on Agriculture and the Subcommittee on Human Resources, 
Committee on Ways and Means. Past, Present, and Future of SNAP: The 
Means to Climbing the Economic Ladder. June 10, 2015. Washington, D.C.
    \113\Dr. Kimberlydawn Wisdom, Senior Vice President, Community 
Health and Equity, Henry Ford Health System. Hearing of the House of 
Representatives, Committee on Agriculture. Past, Present, and Future of 
SNAP: Evaluating Effectiveness and Outcomes in Nutrition Education. 
June 22, 2016. Washington, D.C.
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Finding 4a: Americans in Both Urban and Rural Communities Cannot 
        Improve Their Diets Without Adequate Access to Healthy Food
    A number of approaches have been taken to address the well-
documented concerns of access to healthy food. The Committee heard from 
multiple witnesses about how small and local retailers help provide 
access to food in both urban and rural areas where large-format stores 
are not easily accessible.114-115 For example, Eric 
Schneidewind of AARP noted that the AARP Foundation in Chicago is 
connecting fresh food supplies to food deserts.\116\ Another witness, 
Jimmy Wright, owner of Wright's Market, spoke about the opening of 
Carver Neighborhood Market in South Atlanta, an area that was 
previously considered a food desert. Wright has also started a shuttle 
service for all customers, including SNAP recipients, who are not able 
to reach his store in Opelika, Alabama, due to a lack of 
transportation. He is also now working on an online ordering and home 
delivery option to enable greater access to nutritious food for his 
customers.\117\
---------------------------------------------------------------------------
    \114\Doug Beech, Counsel, Casey's General Store. Hearing of the 
House of Representatives, Committee on Agriculture. Past, Present, and 
Future of SNAP: The Retailer Perspective. March 2, 2016. Washington, 
D.C.
    \115\Carl Martincich, VP of Human Resources, Love's Travel Stops 
and Country Stores. Hearing of the House of Representatives, Committee 
on Agriculture. Past, Present, and Future of SNAP: The Retailer 
Perspective. March 2, 2016. Washington, D.C.
    \116\Eric Schneidewind, President-Elect of AARP. Hearing of the 
House of Representatives, Subcommittee on Nutrition, Committee on 
Agriculture. Past, Present, and Future of SNAP: Addressing Special 
Populations. January 12, 2016. Washington, D.C.
    \117\Jimmy Wright, Owner, Wright's Market. Hearing of the House of 
Representatives, Committee on Agriculture. Past, Present, and Future of 
SNAP: The Retailer Perspective. March 2, 2016. Washington, D.C.
---------------------------------------------------------------------------
    Other programs like those presented by Dr. Shreela Sharma of the 
University of Texas and Brighter Bites, combine food delivery with 
nutrition education. Brighter Bites is a three-part program in low-
income communities for 16 weeks during the school year and 8 weeks 
during the summer that (1) delivers 30 pounds of fresh produce, (2) 
provides nutrition education in school and for parents, and (3) gives 
families an opportunity to try a healthy, tasty recipe.\118\ Brighter 
Bites has achieved promising results, with 98 percent of families 
increasing their fruit and vegetable consumption and cooking more at 
home, having more fruits and vegetables available at home during meals, 
and using nutrition labels to make purchasing decisions.
---------------------------------------------------------------------------
    \118\Dr. Shreela Sharma, Professor of Epidemiology at the 
University of Texas, Co-Founder of Brighter Bites. Hearing of the House 
of Representatives, Committee on Agriculture. Past, Present, and Future 
of SNAP: Evaluating Effectiveness and Outcomes in Nutrition Education. 
June 22, 2016. Washington, D.C.
---------------------------------------------------------------------------
    Allowing SNAP benefits to be utilized for online purchases is a 
prominent way retailers are working to bring nutritious food to both 
urban and rural areas that might not have had easy access before. While 
this is not yet a reality, the 2014 Farm Bill allowed for the 
implementation of five online retailing pilots. Speaking on the 
potential impact of the online pilots, Eric French with Amazon said, 
``this would open up new options for millions of SNAP recipients, while 
providing our existing customers who are SNAP recipients with the 
ability to stretch their SNAP dollars and choose the payment type that 
is best for them.''\119\ Members are watching with interest to see the 
impact these online pilots have on improving food access.
---------------------------------------------------------------------------
    \119\Eric French, Director of Grocery, Amazon. Hearing of the House 
of Representatives, Committee on Agriculture. Past, Present, and Future 
of SNAP: Opportunities for Improving Access to Food. November 16, 2016. 
Washington, D.C.
---------------------------------------------------------------------------
    Technology allows organizations to create innovative ways to 
increase access to nutritious food and to understand what people are 
purchasing. This innovation includes how grocery stores and farmers' 
markets are using point-of-sale equipment to implement an initiative 
called Double Up Food Bucks in their respective models. Double Up Food 
Bucks is a program started by the Fair Food Network which provides an 
incentive for purchasing fruits and vegetables at participating grocery 
stores and farmers' markets. Another example is the creation of an app 
for use at farmers' markets that accepts all forms of tender (SNAP, 
WIC, Debit, Credit, etc.). The app assists in tracking what people 
purchase at the market, measuring ``actual changes in purchasing 
patterns, track[ing] improvements, and figur[ing] out what works to 
increase customers' consumption of the most nutritious foods.''\120\ As 
Gunnar Lovelace of Thrive Market pointed out, ``The proliferation of 
technology, specifically information technology, has increased in ways 
that no one could have predicted. Presently, 75 percent of individuals 
living in poverty have a smartphone. Through their smartphone, they can 
now order goods and services that may have previously been out of reach 
to them, either geographically, or in some cases, financially.''\121\
---------------------------------------------------------------------------
    \120\Pamela Hess, Executive Director, Arcadia Center for 
Sustainable Food and Agriculture. Hearing of the House of 
Representatives, Committee on Agriculture. Past, Present, and Future of 
SNAP: Opportunities for Improving Access to Food. November 16, 2016. 
Washington, D.C.
    \121\Gunnar Lovelace, Executive Director, Thrive Market. Hearing of 
the House of Representatives, Committee on Agriculture. Past, Present, 
and Future of SNAP: Opportunities for Improving Access to Food. 
November 16, 2016. Washington, D.C.
---------------------------------------------------------------------------
    A variety of innovative approaches are appropriate and much-needed 
in improving access to healthy food for SNAP recipients. SNAP has an 
opportunity to adapt to changing consumer demographics and preferences 
while improving program delivery and access.
Finding 4b: Nutrition Education--Working In Tandem With Targeted 
        Incentives--Can Help SNAP Recipients Develop Healthy Lifestyles 
        and Healthy Eating Habits
    Nutrition education is often provided in conjunction with food 
benefits to encourage healthy eating. This is accomplished through 
SNAP-Ed and the Expanded Food and Nutrition Education Program (EFNEP), 
both authorized in the farm bill.
    SNAP-Ed is an approximately $400 million program awarded via 
Federal grants to state agencies. The state agencies can then award 
grants to various organizations in the state, such as food banks, land-
grant universities, or nonprofits. SNAP-Ed targets low-income 
individuals and communities through a variety of public health 
approaches to improve the likelihood that persons eligible for SNAP 
will make healthy choices within a limited budget and choose active 
lifestyles consistent with the current Dietary Guidelines for 
Americans. The Healthy, Hunger-Free Kids Act of 2010 amended SNAP-Ed to 
place greater emphasis on evaluations and measuring program 
effectiveness. It also restructured the allocation formula to provide a 
more even distribution among the states. SNAP-Ed has the flexibility to 
work in schools, grocery stores, parks, or public gyms. SNAP-Ed offers 
many different forms of direct education and takes community input into 
consideration when developing education programs.
    In contrast, EFNEP is an approximately $68 million program operated 
through the Cooperative Extension Service at 1862 and 1890 Land-Grant 
Universities. EFNEP delivers direct education via peer educators in a 
series of interactive, hands-on lessons to improve four core areas: 
diet quality and physical activity; food resource management; food 
safety; and food security. EFNEP tends to be less flexible in how it 
delivers services than SNAP-Ed, but it has the capacity to reach more 
people than SNAP-Ed because it operates in more areas--both urban and 
rural--across the country.
    SNAP-Ed and EFNEP both have the ability to focus efforts on 
ensuring that low-income individuals have access to nutritious food and 
the knowledge of how to prepare food. SNAP-Ed programs tend to focus 
more heavily on younger children, while EFNEP programming focuses more 
on the family. Dr. Jo Britt-Rankin with the University of Missouri 
acknowledged the gap in home economic skills, saying, ``we know that 
many of our young people today are almost two generations from having 
cooking skills.''\122\ Both programs work to address the climbing 
obesity and diabetes rates that correlate with poor eating habits. Even 
so, the number of individuals these programs reach is expansive and is 
continuing to grow as the programs become stronger and as FNS 
implements requirements for evaluation metrics and shares best 
practices. Sue Foerster with the Association of SNAP Nutrition 
Education pointed out that ``the size of our population that we are 
trying to influence is 90 million people that have incomes below 185 
percent of poverty. Of that, about 40 million are already SNAP 
participants, and [you] can see that the scope of our effort is quite 
large.''\123\
---------------------------------------------------------------------------
    \122\Dr. Jo Britt-Rankin, Extension Committee on Organization and 
Policy. Hearing of the House of Representatives, Committee on 
Agriculture. Past, Present, and Future of SNAP: Evaluating 
Effectiveness and Outcomes in Nutrition Education. June 22, 2016. 
Washington, D.C.
    \123\Susan Foerster, Founding Member, Association of SNAP Nutrition 
Education. Hearing of the House of Representatives, Committee on 
Agriculture. Past, Present, and Future of SNAP: Evaluating 
Effectiveness and Outcomes in Nutrition Education. June 22, 2016. 
Washington, D.C.
---------------------------------------------------------------------------
    A number of incentive approaches have also been explored in SNAP, 
either independently or in conjunction with nutrition education. For 
example, the 2014 Farm Bill began the Food Insecurity Nutrition 
Incentive (FINI) grants. FINI grants support projects to increase the 
purchase of fruits and vegetables among low-income consumers 
participating in SNAP by providing incentives at the point of sale. 
Examples of this include using loyalty cards in a grocery store to put 
bonus amounts into SNAP recipients' accounts.\124\ In Memphis and North 
Tennessee, Kroger has also partnered with AARP on its FINI grant to 
incentivize SNAP customers to purchase more fruits and vegetables.\125\ 
Many programs pair an incentive for healthy eating with additional 
education on selecting and preparing healthy food.
---------------------------------------------------------------------------
    \124\Mike Beal, Chief Operating Officer, Balls Food Stores. Hearing 
of the House of Representatives, Committee on Agriculture. Past, 
Present, and Future of SNAP: Opportunities for Improving Access to 
Food. November 16, 2016. Washington, D.C.
    \125\Kathy Hanna, Senior Director Enterprise Payments and Store 
Support, The Kroger Company. Hearing of the House of Representatives, 
Committee on Agriculture. Past, Present, and Future of SNAP: The 
Retailer Perspective. March 2, 2016. Washington, D.C.
---------------------------------------------------------------------------
Food Eligibility
    Discussions about incentivizing healthy purchases are often coupled 
with discussions about restricting the foods eligible for purchase with 
SNAP benefits. Currently, the Food and Nutrition Act of 2008 defines 
eligible food for SNAP as any food or food product for home consumption 
and also includes seeds and plants that produce food for consumption by 
SNAP households. Since the definition of food is a specific part of the 
Act, any change to this definition would require action by Congress.
    In general, SNAP recipients can use SNAP benefits to buy any food 
products except:

   Beer, wine, liquor, cigarettes or tobacco;

   Vitamins and medicines;

   Food that will be eaten in the store; and

   Hot foods.

    SNAP benefits cannot be used to buy nonfood items, such as pet 
foods, soaps, paper products, and household supplies.
    Since passage of the Food Stamp Act in 1964, Members of Congress 
have proposed changes to the list of eligible items on SNAP, including 
proposals that would make SNAP similar to the WIC program. The few 
waivers that have been requested from USDA were denied, and there are 
currently no waivers in place to allow state and/or local governments 
to impose restrictions.
    Some argue that outright restrictions on food eligibility would 
cause a number of challenges, including expanding bureaucracy or 
burdening smaller stores without the technology to identify and track 
products eligible for SNAP benefits. Some also argue that restrictions 
would be ineffective in changing the purchasing patterns of 
participants since SNAP recipients are generally expected to purchase 
30 percent of their monthly food with their own money and that there is 
no guarantee restricting the use of SNAP would affect total food 
purchases, other than substituting one form of payment (cash) for 
another (SNAP benefits).
    In contrast, others contend that SNAP should assist in purchasing 
nutritious food. To enhance program integrity and sustainability, some 
have argued that Federal dollars should focus on improving the health 
of the recipient. They argue that restricting item eligibility--for 
items such as sodas or candy--provides an assurance that recipients are 
purchasing items that improve their overall nutrition. Some argue that 
limiting eligibility of some food items also gives greater assurance to 
the general public that tax dollars are being used to improve the food 
security of SNAP recipients.
    USDA recently assessed the feasibility of collecting data on SNAP 
purchases at the point of sale and has provided a detailed summary of 
the food items that are being purchased. USDA concluded that item-level 
transaction data can currently be collected from 80 percent of all EBT 
redemptions from the retailers that use integrated electronic cash 
register (IECR) systems, but not from stores with less sophisticated 
systems. FNS concluded that it would need additional legal authority to 
require stores to collect and submit transaction level data.\126\
---------------------------------------------------------------------------
    \126\USDA FNS Nutrition Assistance Program Report. Feasibility 
Study of Capturing Supplemental Nutrition Assistance Program (SNAP) 
Purchases at the Point of Sale. November 2016. http://www.fns.usda.gov/
snap/feasibility-study-capturing-supplemental-nutrition-assistance-
program-snap-purchases-point-sale.
---------------------------------------------------------------------------
    USDA also recently analyzed point-of-sale transaction data 
collected for calendar year 2011 from a leading grocery retailer 
``whose stores would be classified as grocery stores, supermarkets, and 
combination food and drug stores.'' USDA found many non-staple items 
(e.g., sweetened beverages and prepared desserts) among the top items 
purchased by SNAP households, as summarized in the following 
table.\127\
---------------------------------------------------------------------------
    \127\USDA FNS Nutrition Assistance Program Report. Foods Typically 
Purchased by Supplemental Nutrition Assistance Program Households. 
November 2016. http://www.fns.usda.gov/snap/foods-typically-purchased-
supplemental-nutrition-assistance-program-snap-households.

             SNAP Household Expenditures by Summary Category
------------------------------------------------------------------------
                                    SNAP Household Expenditures
     Summary Category     ----------------------------------------------
                                   Rank             % of Expenditures
------------------------------------------------------------------------
Meat, Poultry and Seafood              1                    19.19%
Sweetened Beverages                    2                     9.25%
        Vegetables                     3                     7.19%
Frozen Prepared Foods                  4                     6.92%
 Prepared Desserts                     5                     6.90%
High Fat Dairy/Cheese                  6                     6.50%
Bread and Crackers                     7                     5.39%
            Fruits                     8                     4.68%
              Milk                     9                     3.54%
      Salty Snacks                    10                     3.43%
    Prepared Foods                    11                     3.07%
            Cereal                    12                     2.84%
Condiments and Seasoning              13                     2.65%
     Fats and Oils                    14                     2.36%
             Candy                    15                     2.10%
------------------------------------------------------------------------
Source: USDA FNS Nutrition Assistance Program Report. Foods Typically
  Purchased by Supplemental Nutrition Assistance Program Households.
  November 2016. http://www.fns.usda.gov/snap/foods-typically-purchased-
  supplemental-nutrition-assistance-program-snap-households.

    USDA's report will undoubtedly reignite the discussion on food 
eligibility within SNAP and ways in which SNAP can incentivize 
healthier eating. As noted above, incentives partnered with nutrition 
education can lead to healthier eating patterns in low-income 
individuals.
Appendix A: Hearings and Witnesses
Past, Present, and Future of SNAP (http://agriculture.house.gov/
        calendar/eventsingle.aspx?EventID=2430)
Full Committee: February 25, 2015
   Mr. Douglas Besharov, Professor, School of Public Policy, 
        University of Maryland, College Park, MD

   Mr. Robert Greenstein, Founder and President, Center on 
        Budget and Policy Priorities, Washington, D.C.
SNAP Recipient Characteristics and Dynamics (http://
        agriculture.house.gov/calendar/eventsingle.aspx?EventID=2429)
Subcommittee: February 26, 2015
   Ms. Karen Cunnyngham, Senior Researcher, Mathematica Policy 
        Research, Washington, D.C.

   Dr. Gregory Mills, Senior Fellow, Urban Institute, 
        Washington, D.C.

   Mr. Stephen Tordella, President, Decision Demographics, 
        Washington, D.C.

   Dr. James P. Ziliak, Founding Director, Center for Poverty 
        Research, University of Kentucky, Lexington, KY
The World of Nutrition and the Role of the Charitable Sector (http://
        agriculture.house.gov/calendar/eventsingle.aspx?EventID=2418)
Full Committee: April 15, 2015
   Ms. Kate Maehr, CEO, Greater Chicago Food Depository, 
        Chicago, IL

   Ms. Keleigh Green-Patton, South Holland, IL

   Mr. Dustin Kunz, Salesforce Administrator and Research 
        Project Manager, Texas Hunger Initiative, Waco, TX

   Ms. Lynda Taylor Ender, AGE Director, The Senior Source, 
        Dallas, TX

   Mr. Jonathan Webb, Director of Foundations and Community 
        Outreach, Feed the Children, Edmond, OK
The World of Nutrition, Government Duplication and Unmet Needs (http://
        agriculture.house.gov/calendar/eventsingle.aspx?EventID=2413)
Subcommittee: May 20, 2015
   Ms. Kay Brown, Director, Education, Workforce, and Income 
        Security, U.S. Government Accountability Office, Washington, 
        D.C.

   Ms. Angela Rachidi, Research Fellow, American Enterprise 
        Institute, Washington, D.C.

   Mr. Joe Nader, Exec[ut]tive Chef, Levy Restaurants and the 
        Detroit Lions, and volunteer chef for Share Our Strength's 
        Cooking Matters, Detroit, MI

   Ms. Sherri Tussler, Executive Director, Hunger Task Force, 
        Milwaukee, WI
The Means to Climbing the Economic Ladder (http://
        agriculture.house.gov/calendar/eventsingle.aspx?EventID=2410)
Full Committee: June 10, 2015
   Mr. Patrick Raglow, Executive Director, Catholic Charities 
        of the Archdiocese of Oklahoma City, Oklahoma City, OK

   Mr. Leon Samuels, Executive Director, STRIVE DC, Washington, 
        D.C.

   Dr. Elisabeth D. Babcock, President and CEO, Crittenton 
        Women's Union, Boston, MA

   Mr. Grant Collins, Senior Vice President, Fedcap 
        Rehabilitation Services, Inc., New York, NY
How Our Welfare System Can Discourage Work (http://
        agriculture.house.gov/calendar/eventsingle.aspx?EventID=2407)
Joint Nutrition (Agriculture) and Human Resources (Ways and Means) 
        Subcommittees: June 25, 2015
   Dr. Casey Mulligan, Professor, Department of Economics, 
        University of Chicago, Chicago IL

   Dr. Eugene Steuerle, Senior Fellow, Urban Institute, 
        Washington, D.C.

   Dr. Olivia Golden, Executive Director, Center for Law and 
        Social Policy, Washington, D.C.

   Ms. Chanel McCorkle, Candidate, America Works, Baltimore, MD 
        (accompanied by Marsha Netus, Director of Operations)

   Mr. Erik Randolph, Senior Fellow, Illinois Policy Institute, 
        Chicago, IL
Developing and Using Evidence-Based Solutions (http://
        agriculture.house.gov/calendar/eventsingle.aspx?EventID=2402)
Subcommittee: July 15, 2015
   Mr. Jon Baron, Vice President for Evidence-Based Policy, 
        Laura and John Arnold Foundation, Washington, D.C.

   Mr. Jim Weill, President, Food Research and Action Center, 
        Washington, D.C.

   Dr. James Sullivan, the Rev. Thomas J. McDonagh, C.S.C. 
        Associate Professor of Economics, University of Notre Dame and 
        Founder of the Wilson Sheehan Lab for Economic Opportunity, 
        South Bend, IN

   Mr. Jeremy Everett, Director, Texas Hunger Initiative, Waco, 
        TX
Breaking the Cycle (http://agriculture.house.gov/calendar/
        eventsingle.aspx?Event
        ID=2970)
Subcommittee: October 27, 2015
   Dr. Caroline Ratcliffe, Senior Fellow, The Urban Institute, 
        Washington, D.C.

   Ms. Ruth Riley, Former WNBA Athlete and Olympic Gold 
        Medalist, Granger, IN

   Dr. Eduardo Ochoa, Jr., Department of Pediatrics, University 
        of Arkansas for Medical Sciences, on behalf of Children's 
        HealthWatch, Little Rock, AR

   Dr. Ron Haskins, Senior Fellow, Economic Studies, The 
        Brookings Institution, Washington, D.C.
The National Commission on Hunger (http://agriculture.house.gov/
        calendar/eventsingle.aspx?EventID=3014)
Full Committee: November 18, 2015
   Mr. Robert Doar, Co-Chair of the National Commission on 
        Hunger, Morgridge Fellow in Poverty Studies, American 
        Enterprise Institute, Washington, D.C.

   Ms. Mariana Chilton, Co-Chair of the National Commission on 
        Hunger, Associate Professor and Director of the Center for 
        Hunger Free Communities, Drexel University, Philadelphia, PA
Addressing Special Populations (http://agriculture.house.gov/calendar/
        eventsingle.
        aspx?EventID=3074)
Subcommittee: January 12, 2016
   Ms. Abby Leibman, President and CEO, MAZON: A Jewish 
        Response to Hunger, Los Angeles, CA

   Ms. Erika Tebbens, former military spouse, Ballston Spa, NY

   Mr. Vinsen Faris, Executive Director, Meals-on-Wheels of 
        Johnson and Ellis Counties in North Central Texas, Cleburne, TX

   Mr. Eric Schneidewind, President-Elect, AARP, Washington, 
        D.C.
Examining State Options (http://agriculture.house.gov/calendar/
        eventsingle.
        aspx?EventID=3165)
Full Committee: March 2, 2016
   Ms. Stephanie Muth, Deputy Executive Commissioner for the 
        Office of Social Services, Texas Health and Human Services 
        Commission, Austin, TX

   Ms. Stacy Dean, Vice President for Food Assistance Policy, 
        Center for Budget and Policy Priorities, Washington, D.C.

   Ms. Karen Cunnyngham, Senior Researcher, Mathematica Policy 
        Research, Washington, D.C.
The Retailer Perspective (http://agriculture.house.gov/calendar/
        eventsingle.
        aspx?EventID=3334)
Full Committee: May 12, 2016
   Ms. Kathy Hanna, Senior Director Enterprise Payments & Store 
        Support, The Kroger Co., Cincinnati, OH

   Mr. Jimmy Wright, Owner, Wright's Market, Opelika, AL

   Mr. Doug Beech, Counsel, Casey's General Stores, Ankeny, IA

   Mr. Carl Martincich, VP of Human Resources and Risk 
        Management, Love's Travel Stops and Country Stores, Oklahoma 
        City, OK
Evaluating Effectiveness and Outcomes in Nutrition Education (http://
        agriculture.house.gov/calendar/eventsingle.aspx?EventID=3433)
Full Committee: June 22, 2016
   Dr. Kimberlydawn Wisdom, Senior Vice President, Community 
        Health & Equity, Henry Ford Health System, Detroit, MI

   Ms. Susan Foerster, Founding Member, Association of SNAP 
        Nutrition Education Administrators, Carmichael, CA

   Dr. Shreela Sharma, Professor of Epidemiology at the 
        University of Texas, Co-Founder of Brighter Bites, Houston, TX

   Dr. Jo Britt-Rankin, Associate Dean & Extension Professor, 
        Extension Committee on Organization & Policy, Columbia, MO
Evaluating Error Rates and Anti-Fraud Measures to Enhance Program 
        Integrity (http://agriculture.house.gov/calendar/
        eventsingle.aspx?EventID=3463)
Full Committee: July 6, 2016
   Ms. Jessica Shahin, SNAP Associate Administrator, Food and 
        Nutrition Service, USDA, Alexandria, VA

   Ms. Kay Brown, Director, Education, Workforce, & Income 
        Security, U.S. Government Accountability Office, Washington, 
        D.C.

   Mr. Dave Yost, Auditor of State, Columbus, OH
Improving Innovation and Success in Employment and Training Programs 
        (http://agriculture.house.gov/calendar/
        eventsingle.aspx?EventID=3511)
Subcommittee: September 13, 2016
   Mr. David Stillman, Assistant Secretary, Economic Services 
        Administration, Department of Social and Health Services, 
        Olympia, WA

   Mr. Pete Weber, Founder, Fresno Bridge Academy, Fresno, CA 
        (accompanied by Kim McCoy Wade, CalFresh Branch Chief, 
        Department of Social Services, Sacramento, CA)

   Mr. Jon Anderson, Deputy Division Director, Office of Family 
        Independence, Division of Family and Children Services, 
        Atlanta, GA
Opportunities for Improving Access to Food (http://
        agriculture.house.gov/calendar/eventsingle.aspx?EventID=3564)
Full Committee: November 16, 2016
   Mr. Eric French, Director of Grocery, Amazon, Seattle, WA

   Mr. Gunnar Lovelace, Founder and Co-CEO, Thrive Market, 
        Marina del Ray, CA

   Mr. Mike Beal, Chief Operating Officer, Balls Food Stores, 
        Kansas City, KS

   Ms. Pamela Hess, Executive Director, Arcadia Center for 
        Sustainable Food and Agriculture, Alexandria, VA

   Ms. Melinda Newport, Director, WIC/Child Nutrition, 
        Department of Health, Chickasaw Nation, Ada, OK
Appendix B: Description of Federal Nutrition Programs
    Below is a list of federally-funded nutrition assistance programs 
(**) denotes programs within the jurisdiction of the House Committee on 
Agriculture:\128\
---------------------------------------------------------------------------
    \128\Randy Aussenburg, Kirsten Colello. Congressional Research 
Service. Domestic Food Assistance: Summary of Programs. February 17, 
2016. https://www.fas.org/sgp/crs/misc/R42353.pdf.
---------------------------------------------------------------------------
Supplemental Nutrition Assistance Program**
    Provides benefits (through the use of EBT cards) that supplement 
the food purchasing power of low-income recipients. Benefits vary by 
household size, income, and expenses (like shelter and medical costs) 
and averaged $194 per person per month in FY 2017. Administered by USDA 
FNS.
Food Distribution Program on Indian Reservations (FDPIR)**
    Indian Tribal Organizations (ITOs) and some state agencies 
administer a food distribution program on Indian reservations and in 
other Native American communities, with eligibility rules similar to 
SNAP. USDA purchases and ships FDPIR foods to the ITOs and state 
agencies based on orders from a list of available foods. These 
administering agencies store and distribute the food, determine 
applicant eligibility, and provide nutrition education to recipients. 
Administered by USDA FNS.
The Emergency Food Assistance Program (TEFAP)**
    Provides food commodities (and cash support for distribution costs) 
through states to local emergency feeding organizations (e.g., food 
banks/pantries, soup kitchens) serving the low-income population. 
Administered by USDA FNS.
Community Food Projects**
    Competitive grants to nonprofit organizations for programs that 
improve access to locally-produced food for low-income households. 
Eligibility for grants will vary according to request for applications. 
Administered by USDA FNS.
Commodity Supplemental Food Program (CSFP)**
    Provides supplemental monthly food packages to primarily low-income 
elderly persons in projects located in 47 states, the District of 
Columbia, and two Indian Tribal Organizations (ITOs). Administered by 
USDA FNS.
Senior Farmers' Market Nutrition Program (SFMNP)**
    Provides grants to participating states to offer vouchers/coupons 
to low-income seniors that may be used in farmers' markets, roadside 
stands, and other approved venues to purchase fresh produce. It is 
administered by state agencies, such as the Department of Agriculture 
or Department of Aging. The Federal SFMNP benefit level, whether a 
household or individual, may not be less than $20 or no more than $50 
per each farmers' market calendar year. This operates separately from 
SNAP. Administered by USDA FNS.
Fresh Fruit and Vegetable Program (FFVP)
    Provides grants to schools to purchase fresh fruit and vegetable 
snacks to be provided during the school day. The Committee authorizes 
funding for FFVP; the House Committee on Education and the Workforce 
authorizes the program generally. Administered by USDA FNS.
Special Supplemental Nutrition Program for Women, Infants, and Children 
        (WIC)
    Provides supplemental, nutrient-rich foods; nutrition education and 
counseling; and breastfeeding promotion and support to low-income 
pregnant, post-partum, or breastfeeding women, infants, and children. 
WIC benefits are redeemable for a list of nutrient-rich foods specific 
to the participant's eligibility category and medical needs (for 
example, foods specifically recommended for an anemic pregnant woman). 
These foods are specified in USDA FNS regulations, although state 
agencies may further specify. Administered by USDA FNS.
WIC Farmers Market Nutrition Program
    Provides grants to participating states to offer vouchers/coupons/
EBT to WIC participants that may be used in farmers' markets, roadside 
stands, and other approved venues to purchase fresh produce. 
Administered by USDA FNS.
School Breakfast Program (SBP)
    Provides Federal cash assistance for elementary and secondary 
schools that provide breakfast to school children. Federal subsidies 
currently range from about 30 to $2.00 per meal (depending on the type 
of meal/snack and the income of the recipient, with subsidies higher in 
Alaska and Hawaii). Total amount of assistance is based on the number 
of free, reduced-price, and paid lunches served. Administered by USDA 
FNS.
National School Lunch Program (NSLP)
    Provides Federal assistance, in the form of cash and commodities, 
to elementary and secondary schools that provide lunch to school 
children. Federal subsidies currently range from about 30 to $3.00 per 
meal (depending on the type of meal/snack and the income of the 
recipient, with subsidies higher in Alaska and Hawaii). Total amount of 
assistance is based on the number of free, reduced-price, and paid 
lunches served. Administered by USDA FNS.
Summer Food Service Program (SFSP)
    Provides Federal cash assistance and some commodity foods to local 
public and private nonprofit ``service institutions'' running summer 
youth programs, camps, or other recreation sites that serve low-income 
children during their summer break or during lengthy school-year 
breaks. Sites may be schools, camps, community centers, and other 
organizations. Sponsors receive per-meal/snack subsidies as well as 
assistance with operating costs. Administered by USDA FNS.
Special Milk Program
    Provides public or nonprofit schools or child care institutions 
that do not participate in other Federal meal programs with a per \1/2\ 
pint reimbursement for part of the cost of milk served to children/
students. Administered by USDA FNS.
Child and Adult Care Food Program (CACFP)
    Provides cash subsidies to participating child care centers, family 
day care homes, afterschool programs, and non-residential adult-care 
centers for the meals and snacks they serve to children, the elderly, 
and chronically disabled persons. In child care centers and non-
residential adult-care settings, per-meal/snack subsidy payments are 
the same as those for school meals and child care centers. Family day 
care homes are reimbursed according to a tiered system. Federal 
subsidies currently range from about 25 to $2.80 (depending on the 
type of meal/snack and the income of the recipient, with higher 
subsidies in Alaska and Hawaii). Administered by USDA FNS.
Congregate Nutrition Program
    Provides meals to seniors in settings such as senior centers, 
schools, and adult day care centers. Offers social services such as 
nutrition education and screening, nutrition assessment, and counseling 
at meals sites. Provides seniors with opportunities for social 
engagement and volunteerism. Administered by Health and Human Services.
Home Delivered Nutrition Program
    Provides meals to seniors who are homebound. Offers services such 
as nutrition screening and education, nutrition assessment, and 
counseling. Administered by Health and Human Services.
Grants to Native Americans: Supportive and Nutrition Services
    Provides for the delivery of supportive and nutrition services 
comparable to services provided in the Home Delivered Nutrition Program 
(e.g., congregate and home-delivered meals) to older Native Americans. 
Administered by Health and Human Services.
Nutrition Services Incentive Program (NSIP)
    Provides funds to states, territories, and Indian Tribal 
Organizations to purchase food or to cover the costs of food 
commodities provided by USDA for the congregate and home-delivered 
nutrition served during the prior year. Most states choose to receive 
their share of funds in cash, rather than commodities. Administered by 
Health and Human Services.
Appendix C: Glossary
    Aid to Families with Dependent Children (AFDC): established by the 
Social Security Act of 1935 as a grant program to enable states to 
provide cash welfare payments for families with needy children who had 
been deprived of parental support or care because their father or 
mother was absent from the home, incapacitated, deceased, or 
unemployed.
    American Recovery and Reinvestment Act of 2009 (ARRA): legislation 
based largely on proposals made by President Obama, ARRA was intended 
to provide a stimulus to the U.S. economy in the wake of the economic 
downturn. ARRA included Federal tax relief, expansion of unemployment 
benefits and other social welfare provisions and domestic spending in 
education, health care, and infrastructure, including the energy 
sector.
    Beneficiary Earnings Exchange Record (BEER): a batch exchange that 
provides earnings data to states. Since its inception in 1988, the BEER 
system has been reporting wage information from the Social Security 
Administration.
    Children's Health Insurance Program (CHIP): provides health 
coverage to eligible children, through both Medicaid and separate CHIP 
programs. CHIP is administered by states according to Federal 
requirements. The program is funded jointly by states and the Federal 
Government.
    Electronic Benefit Transfer (EBT): an electronic system that allows 
state welfare departments to issue benefits via a magnetically encoded 
payment card used in the United States.
    Expanded Food and Nutrition Education Program (EFNEP): a nutrition 
education program implemented by the Cooperative Extension Service 
since 1969. EFNEP has assisted limited resource families and youth in 
acquiring the knowledge, skills, and changed behaviors necessary for 
nutritionally sound diets.
    Family and Social Services Administration (FSSA): an agency created 
to develop, finance and compassionately administer programs to provide 
healthcare and other social services to the citizens of Indiana in need 
in order to enable them to achieve healthy, self-sufficient and 
productive lives.
    Food and Nutrition Service (FNS): an agency within USDA working to 
end hunger and obesity through the administration of Federal nutrition 
assistance programs including WIC, SNAP, and school meals. In 
partnership with state and tribal governments, FNS programs serve one 
in four Americans during the course of a year.
    General Assistance (GA): a state-run safety net of last resort for 
those who are very poor and do not qualify for other public assistance. 
Thirty states have General Assistance programs, which generally serve 
very poor individuals who do not have minor children, are not disabled 
enough to qualify for the Supplemental Security Income program and are 
not elderly.
    Healthy, Hunger-Free Kids Act of 2010 (HHFK): authorizes funding 
and sets policy for USDA's core child nutrition programs: the National 
School Lunch Program, the School Breakfast Program, the Special 
Supplemental Nutrition Program for Women, Infants and Children, the 
Summer Food Service Program, and the Child and Adult Care Food Program.
    Individualized Family Support Plan (IFSP): a written plan 
identifying the specific concerns and priorities of a family related to 
enhancing their child's development and the resources to provide early 
intervention services to children with disabilities age's birth through 
2 years or special education and related services to children with 
disabilities ages 3 through 5.
    Maintenance of Effort (MOE) funds: generally refers to the funds 
spent by a state to meet a TANF requirement that a state spend at least 
a specified amount of state funds for benefits and services for needy 
households each year. These funds may be spent within or outside of the 
state's TANF cash assistance program.
    Medicaid: a joint Federal and state program that helps with medical 
costs for some people with limited income and resources. Medicaid also 
offers benefits not normally covered by Medicare, like nursing home 
care and personal care services.
    National Directory of New Hires (NDNH): a database established 
pursuant to the Personal Responsibility and Work Opportunity 
Reconciliation Act of 1996. The primary purpose of the NDNH is to 
assist state child support agencies in locating parents and enforcing 
child support orders; however, Congress has authorized specific state 
and Federal agencies to receive information from the NDNH for 
authorized purposes.
    Older Americans Act (OAA): originally enacted in 1965, OAA is 
legislation that supports a range of home and community-based services, 
such as meals-on-wheels and other nutrition programs, in-home services, 
transportation, legal services, elder abuse prevention and caregivers 
support. These programs help seniors stay as independent as possible in 
their homes and communities.
    Old-Age, Survivors and Disability Insurance Program (OASDI): the 
official name for Social Security in the United States. OASDI is a 
comprehensive Federal benefits program that provides benefits to 
retirees, disabled people, and their survivors.
    Public Assistance Reporting Information System (PARIS): a data 
matching service matching recipients of public assistance to check if 
they receive duplicate benefits in two or more states. PARIS matches 
help identify improper payments and minimize fraud and abuse.
    Social Security Administration (SSA): an independent agency of the 
Federal Government that administers Social Security, a social insurance 
program consisting of retirement, disability, and survivors' benefits. 
The U.S. Social Security program is the largest such system in the 
world and is also the biggest expenditure in the Federal budget. One in 
seven Americans receive a Social Security benefit and more than 90 
percent of all American workers are in jobs covered by Social Security.
    Supplemental Security Income (SSI): a Federal income supplement 
program funded by general tax revenues (not Social Security taxes). It 
is designed to help aged, blind, and disabled people, who have little 
or no income, and it provides cash to meet basic needs for food, 
clothing, and shelter.
    Temporary Assistance for Needy Families (TANF): a block grant 
program created in the 1996 welfare reform (to replace AFDC, a program 
that had provided cash welfare benefits to needy households) designed 
to help needy families achieve self-sufficiency. States receive block 
grants to design and operate programs that accomplish one of the 
purposes of the TANF program. The four purposes of the TANF program are 
to:

   Provide assistance to needy families so that children can be 
        cared for in their own homes.

   Reduce the dependency of needy parents by promoting job 
        preparation, work and marriage.

   Prevent and reduce the incidence of out-of-wedlock 
        pregnancies.

   Encourage the formation and maintenance of two-parent 
        families.

    U.S. Department of Agriculture (USDA): a cabinet-level department 
that provides leadership on food, agriculture, natural resources, rural 
development, nutrition, and related issues based on public policy, the 
best available science, and effective management.
    U.S. Department of Health and Human Services (HHS): a cabinet-level 
department of the Federal Government with the goal of protecting the 
health of all Americans and providing essential human services.
    U.S. Government Accountability Office (GAO): an independent, 
nonpartisan agency that works for Congress. Often called the 
``Congressional watchdog,'' GAO investigates how the Federal Government 
spends taxpayer dollars.
    Workforce Innovation and Opportunity Act (WIOA): legislation 
designed to strengthen and improve the nation's public workforce system 
and help get Americans, including youth and those with significant 
barriers to employment, into high-quality jobs and careers and help 
employers hire and retain skilled workers.

          ``We want it to work for the participants. We want it to work 
        for the taxpayer, and that . . . the purpose of this multi-year 
        review . . . to get it right, to try to figure out what the 
        right policies are, how we can make these things work.''
Chairman K. Michael Conaway, The World of Nutrition Aid and the Role of 
                                                     Charitable Sector.

          ``I have also personally experienced the stigma of being from 
        a low-income family. Childhood hunger and food insecurity 
        crosses many demographics and socioeconomic areas. It is urban, 
        suburb[an], and rural. Hunger is the face of many Americans.''
      Joseph Nader, Ford Field, Government Duplication and Unmet Needs.

          ``One thing military families should never have to worry 
        about is having enough food.''
 Erika Tebbens, former military spouse, Addressing Special Populations.

          ``Poverty is incredibly complex, and people are poor for a 
        myriad of reasons, but access to quality health care, access to 
        quality education, access to housing. all have a direct impact 
        on outcomes, in terms of utilization of the SNAP program.''
Jeremy Everett, Texas Hunger Initiative, Developing and Using Evidence-
                                                       Based Solutions.

          ``Investment by Federal nutrition programs in targeted foods 
        of high nutritional quality, and educational support to assist 
        families in using those optimally, is critical to reducing food 
        insecurity, as well as, avoiding obesity, diabetes and other 
        costly chronic diseases that compromise quality of life.''
 Melinda Newport, Chickasaw Nation, Opportunities for Improving Access 
                                                               to Food.

          ``Every day the SNAP program and food banks work in tandem.''
Kate Maehr, Greater Chicago Food Depository, The World of Nutrition and 
                                     the Role of the Charitable Sector.

          ``The day we don't need food banks is the day we end hunger 
        in America.''
Sherrie Tussler, Hunger Task Force, The World of Nutrition, Government 
                                          Duplication, and Unmet Needs.

          ``I prefer to see SNAP . . . not so much [as] a program, but 
        a path-
        way . . . that works in a functional way to . . . lift people 
        out of poverty, to achieve greater opportunity, [and] to 
        provide a means for up[ward] mobility.''
                  Congressman Glenn Thompson, Examining State Options .

          ``Many people call SNAP a safety net, but for me it was like 
        a trampoline--bouncing my family back into work and a brighter 
        future.''
   Keleigh Green-Patton, Former SNAP Recipient, Role of the Charitable 
                                                                Sector.
                                 ______
                                 
    Submitted Letter by Hon. James P. McGovern, a Representative in 
                      Congress from Massachusetts
February 14, 2017

  Hon. K. Michael Conaway,
  Chairman,
  House Committee on Agriculture,
  Washington, D.C.

    Dear Chairman Conaway:

    In the 114th Congress, the House Agriculture Committee held 18 
hearings on the ``Past, Present and Future of SNAP.'' In more than 30 
hours of testimony from over 60 experts from across the country, these 
extensive and instructive hearings resulted in 830 pages of official 
hearing record from which the Committee compiled a 66 page report, 
released in December.
    I applaud your commitment to creating this comprehensive body of 
evidence on SNAP but as the summary report was completed without input 
from the Minority Members, I am writing to emphasize some of the most 
powerful testimony given before the Committee that I believe should 
help guide policy decisions in the upcoming farm bill:

    SNAP Benefits Should Not Be Cut:

    Nearly 50 million Americans, including working families, veterans, 
seniors and the disabled, struggle to put food on the table. SNAP is a 
vital tool to help struggling Americans get back on their feet and 
participation has steadily declined as economic conditions have 
improved because of its entitlement structure.

          ``. . . the notion that charity helps to support the 
        Government programs is an important concept and it is an 
        important partnership, but it is the Government programs that 
        provide the kind of consistent, stable, and baseline support 
        that these families need, and that charity alone could never be 
        responsive enough.''
                               Abby Leibman, [MAZON], January 12, 2016.

          ``. . . I am arguing that food stamps are a crucial part of 
        what I call the work support system, and a lot of people work 
        because they can, not just with their own wages, which are 
        often low, but because they get these other benefits, up to 
        around $30,000 or so, they can make their family better off 
        because of food stamps, Medicaid, childcare, and so forth. So 
        the government programs that help them are essential. That is 
        the main point of my testimony.''
          Dr. Ron Haskins, The Brookings Institution, October 27, 2015.

          ``We recommend that Congress refrain from making any further 
        benefit cuts, and avoid making any structural changes that 
        would weaken SNAP's ability to respond to increased needs due 
        to economic changes. We recommend that you resist expanded work 
        requirements, particularly on workers 50 plus, who typically 
        take longer to find new permanent employment after being 
        unemployed.''
                             Eric Schneidewind, AARP, January 12, 2016.

          ``I talked on a number of occasions to Erskine Bowles, to 
        Alan Simpson, to people involved in Domenici-Rivlin, and to the 
        Senators of both parties of the Gang of Six, and they made a 
        specific determination that deficit reduction should not 
        increase poverty or hardship. And they weren't saying that 
        there were no improvements that could be made in these 
        programs, but they were saying that they did not think reducing 
        benefits in these programs was an appropriate source of deficit 
        reduction.''
Robert Greenstein, Center on Budget Policies and Priorities, February, 
                                                              25, 2015.

    The SNAP Benefit is Inadequate:

    On average, SNAP households receive about $255 a month. The average 
SNAP benefit per person is about $126 per month, which works out to 
just $1.40 per person, per meal.

          ``I know everybody is on different sides of this issue 
        politically, but people can't parent well and raise happy, 
        healthy children who are ready to learn, and you can't work 
        well if you are hungry, if you are wondering where your next 
        meal is coming from, or if you had to spend your lunch money 
        taking a cab because you were late for work that morning. It is 
        super frustrating to me that this fundamental thing that is the 
        sort of basis of all human health is even a debate.''
     Pamela Hess, Arcadia Center for Sustainable Food and Agriculture, 
                                                     November 16, 2016.

          ``Your concern for program duplication should be balanced 
        with the knowledge that the Federal nutrition programs do not 
        meet the need. Funding for these programs is wholly inadequate, 
        and the evidence of this is the billions of dollars that 
        private-sector plows into buoying their shortfalls. Food banks, 
        soup kitchens, homeless shelters, and food pantries feed 
        millions of hungry Americans shorted by these programs. And no 
        matter how reputable, food banks are a scourge on our nation's 
        reputation. We should put them out of business because the 
        grocery store is where food comes from and the most dignified 
        way to get it is to buy it with your wages. The day we no 
        longer need food banks is the day that we end hunger.''
            Sherrie Tussler, Milwaukee Hunger Task Force, May 20, 2015.

          ``But I will tell you that if we can keep the Federal 
        nutrition programs strong, then the dollars that we get from 
        private donations can actually help us support those innovative 
        efforts. But right now so many of us are having to buy 
        additional food to ensure that people have food to eat as food 
        programs such as SNAP goes through cuts.''
                   Kate Maehr, Chicago Food Depository, April 15, 2015.

          ``So the Thrifty Food Plan . . . the basis for which the SNAP 
        benefit--just assumes a very meager diet, and heroic 
        assumptions about how much time families have to cook, shop, 
        and really extreme assumptions about what they are buying, 
        relative to the rest of America. A more realistic food plan, 
        including a low cost food plan, would just make high--more 
        nutritious, healthy diets, put them within reach of families on 
        this program.''
   Stacy Dean, Center on Budget Policies and Priorities, March 2, 2016.

    SNAP Does Not Discourage Work:

    About 30 percent of SNAP households have earnings from wages, 
salaries or self-employment. Of those not working the majority are 
children, elderly, disabled or were caring for children or disabled 
family members in their home.

          ``Somehow we have determined that punishing people with 
        hunger will motivate them towards work. Hunger doesn't 
        motivate. It dulls and it makes people sick.''
                    Sherrie Tussler, Milwaukee Food Bank, May 20, 2015.

          ``The conclusion of a team of leading researchers who 
        examined all of the research in the field is that SNAP does not 
        pose significant work disincentives, and its effect on the 
        amount that people work is small . . . There also was testimony 
        before the Senate Finance Committee a year or . . . so ago from 
        one of the nation's leading conservative economists, Robert 
        Hall, who is at Stanford and at the Hoover Institution, and he 
        said the data do not seem to support the view that the social 
        safety net is discouraging labor for SNAP.''
 Robert Greenstein, Center on Budget Policies and Priorities, February 
                                                              25, 2015.

          ``. . . the research bears out that families that have jobs 
        that have unpredictable work hours, or that are seasonal 
        workers, have major income fluctuations, and those income 
        fluctuations are not necessarily accommodated in the SNAP 
        program, so people may lose their SNAP benefits before they 
        have stabilized their income, and are more likely to report 
        hunger.''
 Mariana Chilton, The National Commission on Hunger, November 18, 2015.

    Eliminating Work Waivers Hampers State Flexibility and Increases 
Hunger:

    Current law mandates that adults between the ages of 18-50, who are 
able to work, are limited to 3 months of SNAP out of every 3 years. 
States can choose to waive this limit and have done so during times of 
high unemployment.

          ``I think it is reasonable to have some adjustment during a 
        recession in Federal work requirements. I am not sure I would 
        suspend them, but I would give people a longer time to find a 
        job, for example, would be a reasonable approach.''
              Ron Haskins, The Brookings Institution, October 27, 2015.

          ``Yes, in California, we are anticipating the end of the 
        waiver in parts of the state in about eighteen months, and we 
        are engaged in a lot of planning on that because we do think 
        the rule would be very harsh--harshly felt by families. And it 
        is very complicated, frankly, to administer and administer 
        accurately. No, we do not have enough jobs and enough job 
        training and enough job slots.''
             Kim McCoy Wade, CalFresh Branch Chief, September 13, 2016.

    Creating Innovative, Evidence-Based Programs and Supporting Good 
Case management is an Investment:

    Case management that helps connect those in need with tailored 
services to move out of poverty can be successful. However, high 
quality, effective case management for those who need it, requires a 
well-funded multi-year commitment to families and individuals.

          ``. . . you can't expect programs to be built on evidence of 
        effectiveness if there is no evidence. The most innovative 
        ideas for social programs frequently come from states or local 
        providers. But state and local agencies and private service 
        providers often lack the resources to put these ideas into 
        practice. Thus, we need funds to encourage providers to 
        experiment with new, promising ways to help those in need, and 
        to build strong evidence for innovative programs.''
           James Sullivan, The University of Notre Dame, July 15, 2015.

          ``Our efforts at the Texas Hunger Initiative demonstrate 
        informed engagement, and are building a foundation for 
        evidence-based solutions. We believe that allocating resources 
        to the Hunger Free Communities line in the farm bill will 
        expand the capacity of informed engagement in public and 
        private partnerships, resulting in greater local coordination, 
        strengthened social networks for low-income Americans. And when 
        public and private partnerships are carefully informed by 
        research and evaluation, stronger networks are likely formed 
        between clients and local organizations, thus building a 
        foundation for increased social capital for low-income 
        families. We believe that this has the potential to reduce the 
        need for long-term Federal assistance.''
                Jeremy Everett, Texas Hunger Initiative, July 15, 2015.

          ``The families that we work with have a 44 percent earned 
        income gain within the first year, and their tax payments go up 
        by 35 percent. We know, from a return on investment analysis, 
        that the investments we are making in these families are cost 
        effective for the public dollar, and decrease subsidies, and 
        increase tax payments. You are right in saying that we have to 
        expect these interventions to prove their worth, and we have to 
        work with families in a way that is going to be able to create 
        that public value for the interventions that we have.''
             Elisabeth Babock, Crittenton Women's Union, June 10, 2015.

          ``So the complexity of the interplay between these issues 
        means that Congress needs to take a good hard look at securing 
        the level of benefits at a rate that provides people with 
        financial stability, and is a realistic safety net that allows 
        them to get security and then move off of benefits. For those 
        for whom gainful employment is no longer an option because they 
        are either disabled or they are too senior to work, then we 
        need to think about systems and how those play into other kinds 
        of supports that allow people to live with dignity as they age, 
        and they can provide themselves and their families with the 
        kind of support that they need.''
                               Abby Leibman, [MAZON], January 12, 2016.

    Programs that Provide an Economic Ladder Require Adequate Funding:

    Block granted programs provide only flat funding and are not 
responsive to economic changes. Since 2000, federally funded block 
grants that pay for critical work supports like housing, job training, 
maternal and child health and childcare have eroded by 37 percent.

          ``Families don't just come with one issue. And when a child 
        is sick, we see that there are a lot of things that are going 
        on. It is not just about food, it is also about housing, it is 
        also about income . . . We have to think about other things 
        like childcare supports . . . because if you have more moms who 
        are working at low-wage jobs, if you don't have the childcare 
        to help that backstop, it is really not going to be very 
        helpful for that mom. So there are a lot of interlocking needs 
        that we need to address.''
   Dr. Eduardo Ochoa, Jr., Arkansas Children's Hospital for Children's 
                                         HealthWatch, October 27, 2015.

          ``So I could not recommend more highly the utilization of 
        resources to address transportation issues. After housing, 
        transportation is really the second highest cost center to a 
        struggling family living in poverty or living on low wages. And 
        it is really critically important that we consider those 
        challenges.''
      David Stillman, Washington State Department of Social and Health 
                                          Services, September 13, 2016.

          ``Particularly, in the rural communities, transportation is 
        really, really critical because the availability of jobs is 
        constrained. As to child care, it is the single funding issue 
        that we struggle with the most. It is a real problem.''
                 Pete Weber, Fresno Bridge Academy, September 13, 2016.

    As this testimony reflects and you have stated, ``SNAP is essential 
in protecting the most vulnerable citizens during tough times. For many 
it is a vital lifeline to keeping food on the table.''
    We look forward to working with you to incorporate these expert 
findings into policy in the 115th Congress.
            Sincerely,
            
            
Hon. James P. McGovern,
Ranking Minority Member,
Subcommittee on Nutrition,
House Committee on Agriculture.


 
                           THE NEXT FARM BILL

                       (COMMODITY POLICY--PART 2)

                              ----------                              


                         TUESDAY, APRIL 4, 2017

                  House of Representatives,
         Subcommittee on General Farm Commodities and Risk 
                                                Management,
                                  Committee on Agriculture,
                                                   Washington, D.C.
    The Subcommittee met, pursuant to call, at 10:00 a.m., in 
Room 1300 of the Longworth House Office Building, Hon. Eric A. 
``Rick'' Crawford [Chairman of the Subcommittee] presiding.
    Members present: Representatives Crawford, Lucas, Austin 
Scott of Georgia, Allen, Bost, Abraham, Bacon, Dunn, Arrington, 
Conaway (ex officio), Nolan, Bustos, Blunt Rochester, David 
Scott of Georgia, Maloney, Plaskett, Lawson, O'Halleran, and 
Peterson (ex officio).
    Staff present: Bart Fischer, Callie McAdams, Matthew S. 
Schertz, Stephanie Addison, Trevor White, Anne Simmons, Matthew 
MacKenzie, Mike Stranz, Faisal Siddiqui, John Konya, and Nicole 
Scott.

    OPENING STATEMENT OF HON. ERIC A. ``RICK'' CRAWFORD, A 
            REPRESENTATIVE IN CONGRESS FROM ARKANSAS

    The Chairman. This hearing of the Subcommittee on General 
Farm Commodities and Risk Management entitled, The Next Farm 
Bill: Commodity Policy--Part 2, will come to order.
    Good morning and welcome to today's hearing. This hearing 
is a continuation of the series we have been holding over the 
past month in preparation for the next farm bill. Over the 
course of the next several months, we will be working to 
improve upon the 2014 Farm Bill and ensure that the needs of 
not only American farmers and ranchers are met, but that 
consumers will continue to benefit from sound and stable farm 
policy.
    Last week we heard from producers of corn, soybeans, wheat, 
barley, and sorghum about what is and is not working in the 
2014 Farm Bill for those crops. This week we will have the 
opportunity to hear of the perspective of the cotton, rice, 
peanut, canola, and sugar industries.
    As Members of this Committee are aware, these hearings come 
at a period of time when the farm bill is being tested, and 
that is exactly the period of time by which they should be 
judged. Commodity prices are in the tank across the board and 
have been for several years. Net farm income has fallen 50 
percent in 4 years, the steepest decline since the Great 
Depression. It is times like these when getting farm policy 
right is critical for farmers and ranchers. As then-Chairman 
Lucas was fond of saying, farm bills are not written for the 
good times. They are written for the bad times, as we are 
experiencing now.
    Last week we heard the message that the farm safety net 
largely was working as intended and the framework should be 
left alone. That said, witnesses pointed out additional tweaks, 
like improving the yields used to calculate ARC guarantees, 
would be needed to provide a functioning safety net.
    While we will hear about what is and is not working, we 
will also have the opportunity to hear from a crop that was 
left out of the commodity title in the last farm bill 
altogether, and that is cotton. We will hear about the effects 
that this lack of policy has had on the cotton industry and the 
ripple effect across other crops and rural communities. While 
Committee leadership at the time warned this could happen, this 
provides yet another real world example of why we need sensible 
farm policies in place for all major commodities.
    I am glad to see that we have such an outstanding set of 
panelists here today. Thank you to each one of you for taking 
the time out of your busy schedules and away from your 
operations to join us. Your commitment to improving farm policy 
for all of your fellow producers does not go unnoticed by the 
Members of this Subcommittee.
    [The prepared statement of Mr. Crawford follows:]

Prepared Statement of Hon. Eric A. ``Rick'' Crawford, a Representative 
                       in Congress from Arkansas
    Good morning and welcome to today's hearing. This hearing is a 
continuation of the series we have been holding over the past month in 
preparation for the next farm bill. Over the course of the next several 
months, we will be working to improve upon the 2014 Farm Bill and 
ensure the needs of not only American farmers and ranchers are being 
met, but that consumers will continue to benefit from sound and stable 
farm policy.
    Last week we heard from producers of corn, soybeans, wheat, barley, 
and sorghum about what is and is not working in the 2014 Farm Bill for 
those crops. This week we will have the opportunity to hear the 
perspective of the cotton, rice, peanut, canola, and sugar industries.
    As Members of this Committee are aware, these hearings come at a 
period of time when the farm bill is being tested, and that is exactly 
the period of time by which they should be judged. Commodity prices are 
in the tank across the board and have been for several years. Net farm 
income has fallen 50% in 4 years, the steepest decline since the Great 
Depression. It is times like these when getting farm policy right is 
critical for farmers and ranchers. As then-Chairman Lucas was fond of 
saying, farm bills are not written for the good times. They are written 
for the bad times like we are experiencing now.
    Last week we heard the message that the farm safety net largely was 
working as intended and the framework should be left alone. That said, 
witnesses pointed out additional tweaks--like improving the yields used 
to calculate ARC guarantees--would be needed to provide a functioning 
safety net.
    While we will hear about what is and is not working, we will also 
have the opportunity to hear from a crop that was left out of the 
commodity title in the last farm bill altogether--and that is cotton. 
We will hear about the effects that this lack of policy has had on the 
cotton industry and the ripple effect across other crops and rural 
communities. While Committee leadership at the time warned this could 
happen, this provides yet another real world example of why we need 
sensible farm policies in place for all major commodities.
    I am glad to see that we have such an outstanding set of panelists 
here today. Thank you to each one of you for taking the time out of 
your busy schedules and away from your operations to join us. Your 
commitment to improving farm policy for all of your fellow producers 
does not go unnoticed by the Members of this Subcommittee.
    With that, I yield to the Ranking Member, Mr. Nolan, for any 
opening comments he would like to make.

    The Chairman. With that, I would like to yield to the 
Ranking Member, my friend Mr. Nolan from Minnesota, for any 
opening comments he would like to make.

OPENING STATEMENT OF HON. RICHARD M. NOLAN, A REPRESENTATIVE IN 
                    CONGRESS FROM MINNESOTA

    Mr. Nolan. Thank you very much, Chairman Crawford, and 
Members of the Subcommittee, for holding this second hearing 
with respect to commodity policy in the next farm bill. And 
thank you to the great panel of witnesses that we have here 
today, and I can't tell you how glad we are that you are here, 
and we are anxious to hear from you.
    There is an old saying in this town that if you don't show 
up to make your case, why one of two things can happen. One is 
nobody knows you exist. Worse yet, they know you exist and 
think you don't care. That is the last thing we want, because 
the other old saying in this town is that if you are not at the 
table, you might be on the menu, and we don't want that as 
well.
    So we are about to hear from all of you, including Mr. Rob 
Rynning from Kennedy, Minnesota. Welcome, Rob. Good to see you 
here, and welcome to the Subcommittee.
    Well, it is abundantly clear from all the numbers and 
studies that we have seen that economic times in America's farm 
country are tough, and they are getting tougher. Commodity 
prices and farm income are down. Debts and cash rents are going 
up, and loans are hard to come by, and 2017 promises to be more 
of the same, and we can't have that.
    It is also clear that we need a farm safety net that works 
for all farmers, regardless of which commodities they produce. 
While we may not grow cotton in Minnesota, we grow a lot of 
corn and a lot of wheat and sunflower seeds and barley, and of 
course, canola, which we are going to hear about, I hope. But 
we know that when one commodity operates under a policy that 
doesn't work, then it affects and is felt in all other crops in 
all of the other regions.
    This hearing serves as an opportunity for us to learn more 
about the unique concerns of each commodity producer for their 
particular crop, and hopefully today's testimony can bring us 
closer to consensus on what our commodity programs ought to 
look like in the next farm bill. Because the fact of the matter 
is that we need to do everything we can to put a stop to these 
boom and bust cycles that threaten our farmers, threaten our 
rural communities, threaten our rural businesses, and the many 
good paying jobs they support all across rural America.
    So with that said, I am looking forward to hearing from 
today's witnesses. Once again, I want to thank Chairman 
Crawford for holding this important hearing. Mr. Chairman, I 
yield back the remainder of my time.
    The Chairman. I thank the gentleman, and I would like to 
recognize our full Committee Chairman, Chairman Conaway, for 
any opening comments he would like to make.

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

    Mr. Conaway. Well thank you, Mr. Chairman. Mr. Nolan has 
the market cornered on old sayings around here.
    The 2018 Farm Bill is going to be on us rapidly. What I 
would ask each of you, of the witnesses and their policy arms 
to get your good ideas in front of the Committee sooner rather 
than later. You probably have until the fourth quarter, so we 
need whatever ideas you have legislatively in the mix soon so 
that we will be able to pull those in.
    With that, I am looking forward to the testimony and 
looking forward to working with each of y'all's groups on 
crafting that 2018 Farm Bill. With that, Mr. Chairman, I yield 
back.
    The Chairman. I thank the Chairman. I would also like to 
recognize the Ranking Member of the full Committee for any 
comments he would like to make at this time.

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

    Mr. Peterson. Well thank you, Mr. Chairman, and thank you 
for having the hearing, and I thank the witnesses for being 
here.
    I would like to welcome Mr. Rynning, who is from my 
district, from Hallock, Kittson County. It is not the end of 
the world, but you can see it from there. He has done a great 
job of not only representing canola, but other crops in our 
area, and he was one of those that was instrumental in getting 
a processing plant up in Hallock for canola.
    We have our challenges as we work towards the next farm 
bill, and I am for one of those, even though we don't grow 
cotton, I am for getting a fix for cotton, and I am also 
interested in some other areas as well in terms of seeing what 
we can do to make sure that the system works going into the 
future.
    So thank you for being here. I am looking forward to your 
testimony, and I yield back.
    The Chairman. Thank you, Mr. Peterson. The chair would 
request that other Members submit their opening statements for 
the record so the witnesses may begin their testimony, and to 
ensure that there is ample time for questions.
    I would like to welcome our witnesses to the table. First, 
Mr. Ronnie Lee, Chairman, National Cotton Council, Bronwood, 
Georgia; Mr. Blake Gerard, Chairman, USA Rice Farmers Board of 
Directors, Cape Girardeau, Missouri; the Honorable Tim McMillan 
on behalf of the Southern Peanut Farmers Federation, Enigma, 
Georgia; Mr. Rob Rynning, President, U.S. Canola Association, 
Kennedy, Minnesota, also on behalf of the National Sunflower 
Association; and Mr. Jack Roney, Director of Economics and 
Policy Analysis, American Sugar Alliance, Arlington, Virginia.
    One thing I would like to point to your attention, 
gentlemen, I believe all of you have been here before, but if 
you will notice the lights in front of you, it is just like a 
traffic light. When it is green, feel free, keep your foot on 
the gas. When it turns yellow, get ready to step on it, and 
when it turns red, slam on the brakes so we can get everybody 
in, in a timely fashion. I appreciate that.
    I would like to first yield to Mr. Austin Scott to 
introduce our first witness.
    Mr. Austin Scott of Georgia. I thank you, Mr. Chairman. I 
want to welcome Mr. Ronnie Lee, Chairman of the National Cotton 
Council, from Bronwood, Georgia. He is a great farmer, but his 
real claim to fame is his brother-in-law is a great turkey call 
maker, and maybe over the Easter break we can go chase some of 
those overgrown chickens. Thank you.
    The Chairman. Thank you, Mr. Scott, and Mr. Lee, you are 
recognized for 5 minutes.

  STATEMENT OF RONNIE LEE, CHAIRMAN, NATIONAL COTTON COUNCIL, 
                          BRONWOOD, GA

    Mr. Lee. Chairman Crawford, Ranking Member Nolan, 
Subcommittee Members, thank you for the opportunity to testify 
on the policy needs of the U.S. cotton industry. My name is 
Ronnie Lee. My family and I raise cotton, corn, peanuts, small 
grains, pecans, and cattle in southwest Georgia, and I own and 
operate a cotton gin and warehouse operation.
    Implementation of the 2014 Farm bill coincided with a time 
of significant changes in the global cotton market. Shortly 
after the bill was enacted, cotton prices went down a steep 
decline, the result of policy changes and challenges, a build 
up of global stock, lower demand, and reduced exports. Slumping 
cotton demand is largely the result of tremendous increases in 
polyester use. Capacity is contributing to artificially low 
polyester prices in key Asian markets such as China.
    This is the global market U.S. cotton must compete against 
since 75 percent of raw fiber production is exported, with 
another 15 or 20 percent exported as cotton textile products. 
Market volatility and mounting economic pressures underscore 
the critical importance of an improved safety net for cotton 
farmers. Cotton is the only crop that does not have a long-term 
price or revenue protection in the farm bill. Current ARC PLC 
policies in the farm bill are designed to help producers to 
stand for long periods of price decline and depressed market 
conditions. While these policies will generally perform well 
for producers like myself, on our other crops, I remain 
completely vulnerable to the instability of the cotton market.
    The current farm bill introduced fundamental changes in the 
cotton policy with the STAX crop insurance policy as a core 
component of the cotton safety net. The move to STAX was done 
in order to resolve a longstanding WTO case brought by Brazil. 
Unfortunately, the changing economic landscape and lower market 
prices reduced the effectiveness of STAX as a means of 
providing support for cotton producers.
    For over a year, the National Cotton Council has been 
working with Congress to get cottonseed designated as a covered 
commodity and eligible for ARC and PLC programs. We strongly 
believe a cottonseed policy is needed now to help provide 
support to our producers as a bridge until a new farm bill is 
enacted. Part of this process will need to convert generic 
base, which is a historic cotton base, back to cottonseed or 
other covered commodities. The establishment of generic base 
was intended as a short-term measure, given the circumstances 
of the 2014 Farm Bill development, not a long-term policy.
    In the next farm bill, for Congress to be able to address 
the shortcomings in the cotton policy and other areas of the 
budget and other areas of need, we strongly oppose any attempt 
to reduce the budget. Given the dramatic decline in farm bill 
spending, coupled with significant downturn in farm income and 
generally weak commodity prices, a greater investment in these 
critical policies for rural America should be in order.
    For U.S. textile mills, after a decade of sharp decline, 
cotton consumption has stabilized since 2008. The stability and 
expected future growth can be attributed to the continued 
benefits of the Economic Adjustment Assistance Program, by 
allowing U.S. mills to make new investments necessary to remain 
competitive. Continued funding of the program supports a 
manufacturing base that supports U.S. jobs. The National Cotton 
Council strongly supports additional investment in MAP and FMD 
trade promotion programs, the highly successful public-private 
partnerships that help leverage the industry funds to open and 
expand export markets.
    For the past 3 years, cotton producers have struggled with 
low prices and high production costs, resulting in financial 
hardship. It is imperative that the next farm bill bring cotton 
back to title I so that producers are able to access the same 
complete set of risk management tools available to other crops.
    We look forward to working with Congress and other 
organizations to pass a farm bill that effectively addresses 
the needs of all producers of all commodities in all regions of 
the country. Thank you. I would be pleased to respond to 
questions.
    [The prepared statement of Mr. Lee follows:]

 Prepared Statement of Ronnie Lee, Chairman, National Cotton Council, 
                              Bronwood, GA
Introduction
    Chairman Crawford, Ranking Member Nolan, and Members of the 
Subcommittee, thank you for the opportunity to provide this testimony 
regarding the current farm bill and the policy needs of the U.S. cotton 
industry in the next farm bill.
    My name is Ronnie Lee, and along with my three sons, we raise 
cotton, corn, peanuts, small grains, hay, pecans, and cattle in 
southwest Georgia. We also own and operate McCleskey Cotton Company, a 
ginning and warehousing operation, along with part ownership in a 
cottonseed crushing and marketing company.
    I serve as Chairman of the National Cotton Council (NCC). NCC is 
the central organization of the United States cotton industry. Its 
members include producers, ginners, merchants, cooperatives, 
warehouses, textile manufacturers and cottonseed processors and 
merchandisers. Farms and businesses directly involved in the 
production, distribution, and processing of cotton employ more than 
125,000 workers and produce direct business revenue of more than $21 
billion. Annual cotton production is valued at more than $5.5 billion 
at the farm gate. Accounting for the ripple effect of cotton through 
the broader economy, direct and indirect employment surpasses 280,000 
workers with economic activity of almost $100 billion.
    In addition to cotton fiber, cottonseed products are used for 
livestock feed, and cottonseed oil is used as an ingredient in food 
products as well as being a premium cooking oil.
Current Industry Conditions
    As you know, the current economic situation for much of production 
agriculture is bleak, including for U.S. cotton farmers. The passage of 
the 2014 Farm Bill coincided with significant changes in the global 
cotton market. Shortly after the bill was approved, cotton prices began 
a significant decline, the result of a build-up of global cotton 
stocks, especially in China, decreased demand, and reduced exports. 
This led, in 2015, to the lowest U.S. cotton acreage in over 30 years. 
While cotton prices and acreage have increased from the lows 
experienced in 2015, producers are still struggling with prices at 
levels not adequate to cover all production costs. According to USDA 
data in 2016, 19 percent of cotton farms are considered either highly 
or extremely highly leveraged.
    To understand the challenges facing cotton farmers, it is important 
to review the dynamics at work in global cotton demand. USDA estimates 
world mill use at 112 million bales for the current 2016 marketing 
year. However, even with very modest growth, world cotton demand 
remains almost 12 million bales below the peak demand observed in 2006. 
Slumping demand is largely the result of the tremendous increase in 
polyester use. During the past decade when cotton mill use fell by 12 
million bales, polyester's production capacity, primarily located in 
China, increased by 145 million bales. Excess production capacity, in 
many cases fueled by government support, is contributing to polyester 
prices in Asian markets of approximately 50 per pound. While consumers 
continue to express their preference for cotton products, the 
tremendous increase in low-priced polyester production has created 
extraordinary hurdles for increasing cotton demand.
    I highlight these issues because of the critical influence of 
international markets and manmade fiber on the financial conditions of 
U.S. cotton farmers. Approximately 75% of U.S. raw cotton production is 
exported, with another 15-20% exported as cotton yarn, fabric of 
another textile product. Policies that directly affect international 
production, consumption and trade have a direct bearing on U.S. market 
prices.
    For 2017, USDA is estimating 12.2 million acres planted to cotton, 
a 21% increase from 2016. This increase reflects several factors, 
including the availability of seeds with new herbicide tolerant traits, 
increased water supplies in some regions, and declines in the expected 
returns of competing crops.
Cotton Policy and the Farm Bill
    While cotton acres across the U.S. are expected to recover, the 
lack of eligibility for the same price and revenue policies as other 
crops remains a major concern. As you know, these title I commodity 
policies in the farm bill are designed to help producers withstand 
prolonged periods of price declines and depressed market conditions. 
While the Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) 
policies have generally performed well for producers like myself of 
other crops, I remain vulnerable to further instability in cotton 
markets.
    Under the current farm bill, cotton producers can purchase the 
Stacked Income Protection Plan (STAX) crop insurance policy. In 
addition, the marketing loan program was modified so that the loan rate 
can adjust lower based on average market prices of the prior 2 years. 
Cotton is the only program crop that does not have any long-term price 
or revenue protection policy in the 2014 Farm Bill.
    Cotton policy in the 2014 Farm Bill was enacted largely in response 
to a World Trade Organization (WTO) trade challenge brought by Brazil 
against certain components of U.S. farm policy and select cotton-
specific policies. In an effort to avoid further political controversy 
and trade retaliation, Congress provided STAX as the core safety net 
for cotton. Unfortunately, STAX has proved inadequate for U.S. cotton 
growers.
    For more than a year now, NCC has been working with Congress and 
the previous Administration to try to get cottonseed designated as a 
covered commodity and eligible for the ARC/PLC programs in the 2014 
Farm Bill. Cottonseed remains an important co-product of cotton 
production, along with the cotton fiber. Support can be provided for 
cottonseed without running afoul of the agreement with Brazil that 
settled the WTO case and without violating U.S. commitments under the 
WTO. We strongly believe we need a cottonseed policy in place to help 
provide support to our producers as a bridge until the new farm bill is 
enacted, hopefully before the expiration of the current bill in 2018.
    While we will continue our short-term efforts related to 
cottonseed, NCC is also beginning internal discussions on the policy 
objectives for cotton in the next farm bill. We know that a meaningful 
safety net for cotton must be included in title I of the farm bill. 
Better protection in times of depressed markets can take on several 
forms, and our industry will continue to pursue the best avenue to 
provide growers adequate protection that is consistent with both our 
international obligations and the needs of our industry.
Farm Bill Budget Resources
    In order for Congress to be able to address the current 
shortcomings in U.S. cotton policy and to shore up other areas of need 
in farm policy, we strongly oppose any attempts to reduce the budget 
for the next farm bill. Further, we urge the Committee to seek any 
opportunities to increase the Federal investment in farm policies that 
ensures the U.S. consumer continues to have the safest, most affordable 
and secure supply of food and fiber in the world. In the January 2017 
Congressional Budget Office baseline projection, the cost of the 
current farm bill is expected to be more than $100 billion less than 
estimated when the bill was enacted in 2014. Given this dramatic 
decline in farm bill spending, coupled with the significant downturn in 
farm income and generally weak commodity prices, a greater investment 
in these critical policies for all of rural America should be in order.
    Last month, NCC joined 16 other organizations on a letter to the 
House and Senate Budget and Appropriations Committees stressing the 
critical need for the Agriculture Committees to have additional budget 
resources in order to craft a new farm bill. The additional resources 
are needed to help address the significant holes in the safety net for 
cotton and other commodities, while maintaining other programs designed 
to respond to the significant downturn in commodity prices and farm 
revenue.
Marketing Loan Program
    In addition, our industry relies heavily on a properly functioning 
marketing loan program that helps ensure orderly marketing and flow of 
cotton to the market. Maintaining the marketing loan policy, with some 
minor adjustments, is also a priority.
Crop Insurance
    A strong crop insurance program is also critical since in 
agriculture, one thing is for certain, crop losses will occur in some 
part of the U.S. each year. Annual losses incurred by farmers clearly 
demonstrate the need for crop insurance protection and the public-
private partnership of program delivery. Farmers, their lenders, input 
suppliers and other stakeholders agree that crop insurance protection 
should remain a viable, affordable tool for managing risk.
    In 2016, 96% of cotton acres were covered by either multi-peril 
``buy-up'' insurance or catastrophic coverage. 88% of these acres were 
covered by multi-peril insurance. The STAX policy was purchased on over 
2.5 million acres covering 26% of total insured acres. Participation in 
STAX has not been as extensive as initially projected, largely because 
of extremely low prices, which render the revenue assurance of STAX 
less beneficial relative to the costs of production.
    For this reason, it is imperative that cotton producers have access 
to the same complement of risk management policies and tools as other 
producers, including commodity policies in title I, along with crop 
insurance.
    Federal crop insurance provides an effective risk management tool 
to farmers and ranchers of all sizes when they are facing losses beyond 
their control, reduces taxpayer risk exposure, makes hedging possible 
to help mitigate market volatility, and provides lenders with greater 
certainty that loans made to producers will be repaid. The public-
private partnership of program delivery works very well, allowing for 
timely and outstanding service to producers when they need it the most 
and providing much-needed jobs across rural America.
    While the overall crop insurance program is working well and should 
be defended, there are a few areas that can be improved. NCC is 
currently working with the Risk Management Agency (RMA) to improve 
quality loss provisions that have proved inadequate for many producers 
in the Southeast region who suffered through extensive rains during the 
2015 and 2016 harvest seasons. RMA has been a good partner in 
identifying and pursuing improvements to this feature of the crop 
insurance product. We remain hopeful that an improved quality loss 
provision will be available for cotton crop insurance policies for the 
2018 crop. Particularly important in the Southwest region is the 
ability to insure Enterprise Units by practice, which is permitted in 
the 2014 Farm Bill. In our view, RMA has not implemented this provision 
in the manner intended by Congress and should be reconsidered by USDA, 
and if necessary further clarified in the next farm bill.
Payment Limits and Program Eligibility
    Our industry is opposed to any further tightening of payment limits 
and eligibility requirements, as we believe these policies are already 
too burdensome and restrictive in light of the size and scale of 
production agriculture necessary to be competitive and viable in 
today's global market. In addition, we believe the current definition 
of `family member' that is used for actively engaged provisions the 
farm bill should be broadened to ensure extended family members are not 
forced out of the family farm simply because they do not fit within the 
current, unnecessarily restrictive definition for `family member'. We 
hope to work with the Committee to address this problematic provision 
in the next farm bill.
Extra Long Staple Cotton Policies
    There are important policy considerations for Extra Long Staple 
(ELS) or Pima cotton as well. The industry is evaluating the potential 
for an increase in the loan rate for the ELS loan program in order to 
better reflect the relative market value of Pima cotton. Since this is 
a non-recourse loan without marketing loan provisions, there should be 
little, if any, additional government cost or exposure. Also, the ELS 
Cotton Competitiveness Program is not currently functioning as intended 
given the recent shift in the countries that are major producers, 
importers and exporters of ELS cotton. For the intended objectives of 
this program to be met, USDA needs to take steps to update the key 
price data being used. If USDA continues to resist this administrative 
adjustment, then we will seek to make the modifications in the next 
farm bill.
Conservation Policies
    Conservation programs continue to be extremely popular across the 
Cotton Belt. Specifically, the Environmental Quality Incentives Program 
and the Conservation Stewardship Program are both heavily accessed. I 
commend the Committee for streamlining conservation programs in the 
2014 Farm Bill. This will make them easier for the Natural Resources 
Conservation Service (NRCS) to administer, but more importantly easier 
for producers like myself to utilize. These programs have become 
integral parts of many producer's operations and achieve the goal of 
improving and protecting the environment while also improving our 
farming operations.
    One area that can be improved is exempting NRCS from requiring 
producers participating in USDA cost-share programs to obtain and keep 
up to date a System for Award Management (SAM) number and a Duns and 
Bradstreet (D-U-N-S) number. The SAM number in particular is burdensome 
because of the yearly renewal requirement. The D-U-N-S number can also 
be complicated if the number is arbitrarily changed without the 
producer's knowledge. Many producers, including some in my area, have 
had payments extensively delayed after they had completed the project 
because of this paperwork requirement. In addition, many producers may 
not realize that while obtaining these numbers is a burdensome, timely 
process, they can obtain these numbers for free, yet inadvertently 
agree to pay companies who contact them directly hundreds of dollars to 
obtain the numbers. The SAM system and D-U-N-S requirement were never 
intended for conservation contracts, and it is our hope that this 
oversight can be corrected in the next farm bill.
Textiles and Economic Adjustment Assistance Program
    After a decade of experiencing a precipitous decline in the amount 
of cotton used by U.S. textile mills, U.S. mill consumption has 
stabilized since 2008 due to ongoing assistance provided in the farm 
bill.
    The recent years of stability and expected future growth can be 
attributed to the continued benefits of the Economic Adjustment 
Assistance Program (EAAP), first authorized in the 2008 Farm Bill. 
Recipients must agree to invest the proceeds in equipment and 
manufacturing plants, including construction of new facilities as well 
as modernization and expansion of existing facilities. EAAP funds have 
allowed investments in new equipment and new technology, thus allowing 
companies to reduce costs, increase efficiency and become more 
competitive. By allowing U.S. textile mills to make the new investments 
necessary to remain competitive, the program supports a manufacturing 
base that supports jobs in the United States.
Trade Promotion Programs
    Given the tremendous reliance by our industry on exports of raw 
cotton fiber and yarn, it is essential that the U.S. agriculture 
industry have a strong, well-funded public-private partnership to help 
leverage private resources to expand export markets and grow demand for 
U.S. agriculture products. A central part of this effort is USDA's 
Market Access Program (MAP) and Foreign Market Development (FMD) 
program. Even though the U.S. continues to be heavily outspent by other 
major agricultural producing and exporting countries, MAP and FMD 
investments have been flat for more than a decade. MAP and FMD have 
resulted in a $2.1 billion increase per year in cash farm income since 
2002. Agricultural exports in 2014 accounted for $340 billion in 
economic output and supported 1.1 million jobs. For this reason, we 
believe it is justified for the new farm bill to invest additional 
funds in these programs.
    The value of U.S. cotton fiber exports exceeds $5 billion annually, 
along with an additional $3 billion in exports of value-added cotton 
textile products. Independent studies found that for each dollar spent 
by organizations like Cotton Council International that partner with 
USDA to expand and promote exports, there is a $35 return on 
investment. In direct monetary and in-kind investments, the U.S. cotton 
industry invests over $2 for every $1 of MAP funds utilized for export 
promotion activities. These programs work, and in response our industry 
stakeholders are investing in their businesses and creating jobs.
Federal Check-off Programs
    The U.S. cotton industry, like many other commodities, has a 
national commodity research and promotion program (check-off program) 
to allow the industry's stakeholders to combine resources for the 
benefit of the industry as a whole. The Cotton Research and Promotion 
Act of 1966 was the first legislation of its kind. It enabled upland 
cotton producers and importers of cotton textile products, after 
passing a referendum, to join together to begin addressing competing 
fibers and re-establishing markets for cotton. Today, every bale of 
cotton produced and the cotton content of imported cotton products is 
assessed and those dollars fund a very successful research and 
promotion program. A recent third-party economic assessment of this 
program indicated returns to producers and the government of over $7.00 
for every $1 contributed over the life of the program. The return on 
investment is even higher for importers. The Cotton Board's members are 
appointed by the Secretary of Agriculture to administer and oversee the 
operation of the program on behalf of all stakeholders. The program 
itself has significant built-in safeguards to protect this investment. 
In addition, the Department of Agriculture oversees almost every aspect 
of the program's operation. These are carefully managed, productive 
programs that generate positive return for U.S. cotton producers and 
importers of cotton products at no cost to taxpayers. These types of 
check-off programs should continue and should not be hamstrung by 
unnecessary legislative or regulatory provisions that do not contribute 
meaningfully to transparency but would weaken their effectiveness.
Conclusion
    In closing, for the past 3 years, U.S. cotton producers have 
struggled with low cotton prices, high production costs and the 
resulting financial hardships. While current cotton futures market 
prices have increased from year-ago levels, many producers continue to 
face economic challenges. The projected increase in cotton acreage is 
largely the result of weaker prices of competing crops and improved 
expectations for water in some regions that were experiencing severe 
drought conditions. Therefore, it is imperative that the next farm bill 
bring cotton back into the title I commodity policy so that cotton is 
able to access the same full complement of risk management tools as 
other crops.
    NCC looks forward to working with the Committee and all commodity 
and farm organizations to develop and pass a new farm bill that 
effectively addresses the needs of all commodities and all producers in 
all regions of the country.
    Thank you for this opportunity, and I would be pleased to respond 
to any questions.

    The Chairman. Thank you, Mr. Lee.
    I am now pleased to welcome Mr. Blake Gerard, Chairman, USA 
Rice Farmers Board of Directors, from Cape Girardeau, Missouri. 
Mr. Gerard, you are recognized for 5 minutes.

         STATEMENT OF BLAKE GERARD, CHAIRMAN, BOARD OF
DIRECTORS, USA RICE FARMERS, CAPE GIARARDEAU, MO; ON BEHALF OF 
                      USA RICE FEDERATION

    Mr. Gerard. Thank you. Chairman Crawford, Ranking Member 
Nolan, and Members of the Subcommittee, thank you for holding 
this important hearing on commodity policies. My name is Blake 
Gerard, and I am a fourth generation family farmer, and grow 
more than 2,000 acres of rice and soybeans in southern Illinois 
in Congressman Bost's district. I am the Chairman of the USA 
Rice Farmers Board of Directors, and the USA Rice Government 
Affairs Committee. I am honored to offer my testimony on behalf 
of the USA Rice Federation.
    Rice is grown on 3 to 4 million acres across eight states. 
The industry as a whole provides jobs and income for more than 
128,000 people, 31,000 of those directly in farming. While a 
small commodity by acreage, we pack a punch, contributing $34 
billion annually to the economy, with the farming sector 
accounting for $5.6 billion alone.
    USDA's most recent forecast for 2017 prices put us at a 10 
year low and a 36 percent decline since the 2014 Farm Bill 
passed. While a variety of factors have influenced this 
downturn, the actions of major exporting countries and their 
governments are the most significant. In recent years, we have 
seen a significant increase in imports of foreign rice, with 
imports coming primarily from countries that are known to 
violate their WTO obligations.
    Operating costs for rice exceed every other crops covered 
by the commodity title, projected by USDA to be nearly $1,000 
per acre in 2018. Because of specialized infrastructure, field 
equipment, and soil types needed for rice, it is difficult to 
economically justify a shift from year to year, so we rice 
farmers are in it for the long haul. We intend to ride out the 
storm, but we cannot do so without the safety net that the PLC 
program provides.
    It is safe to say that one of the reasons the majority of 
rice farming families, and myself, are still in business today 
is the farm bill safety net, specifically PLC. Ninety-nine 
percent of long grain acreage and 94 percent of medium grain 
farms selected PLC. It has provided counter-cyclical assistance 
when needed the most.
    While we feel that PLC was working the way Congress 
intended, we have recommendations which we believe can make it 
more effective for rice farmers. We recommend that you consider 
revisions that would accelerate the delivery. PLC assistance is 
triggered based on the previous marketing year average, which 
is calculated and published by USDA more than 12 months after 
we have harvested our crop. The bills for our input costs don't 
wait 12 months before coming due. When farmers go to the bank 
to renew operating lines of credit, it is nearly impossible to 
predict a year in advance what assistance they may receive. 
This seriously impacts our ability to forecast a cash flow 
sufficient to obtain operating financing.
    California's rice market has fallen at a more rapid rate 
than the rest of the country, but they have not received the 
much needed assistance that PLC could provide. We appreciate 
inclusion of the multiplier for Temperate Japonica rice to take 
into account the higher than average cost of production in 
California. The multiplier currently used to calculate the 
reference price does not reflect the full cost of production, 
and therefore needs to be increased.
    The statute and regulations that define actively engaged in 
farming for the purpose of program eligibility also remain 
problematic for rice farmers. These regulations impose an 
arbitrary cap of three managers per operation, regardless of 
the size or complexity. USDA's final rule did not protect 
entities from maintaining family farm status following the 
death of a lineal family member, such a parent or grandparent, 
which has resulted in the disqualification of true family 
members who have an active role in the operation's survival. We 
request that this Committee revise the statute to provide an 
exemption within those regulations to protect farm families 
against unforeseen linkage breaks in their operating structure.
    Additionally, a $125,000 payment limit seemed like a 
farfetched problem when the prices were high in 2013 and 2014. 
Unfortunately, as market conditions continue to deteriorate, 
growers are receiving larger payments and many are close to or 
at payment limits. It seems wrong to maintain policy that 
provides full assistance to producers when they experience some 
losses, but only partial assistance when they really are hit 
the hardest.
    Mr. Chairman, farmers face more risk than any other 
business. We are dependent on global markets that are often 
distorted, weather, disease, and any number of other factors 
could cause our crops to fail and us to go bankrupt. When 
threats are made to cut funding of policy for the farm safety 
net, the existence of the full-time family farmer is put into 
jeopardy. Without a strong domestic support structure, only a 
small number of truly consolidated operations could survive. I 
am here to ask this Committee's consideration in not only 
maintaining our commodity title programs, but strengthening it 
using our recommendations as you work to reauthorize this 
important legislation in 2018.
    Thank you, and I will be happy to respond to questions.
    [The prepared statement of Mr. Gerard follows:]

 Prepared Statement of Blake Gerard, Chairman, Board of Directors, USA 
  Rice Farmers, Cape Giarardeau, MO; on Behalf of USA Rice Federation
Introduction
    Chairman Crawford, Ranking Member Nolan, and Members of the 
Subcommittee, thank you for holding this important hearing to examine 
the farm safety net. I am honored to have the opportunity to offer 
testimony on behalf of the USA Rice Federation, the global advocate for 
the U.S. rice industry.
    My name is Blake Gerard. I'm a fourth-generation farmer and grow 
more than 2,000 acres of rice and soybeans on my family's operation in 
southern Illinois. I serve as the Chairman of the USA Rice Farmers 
Board of Directors, Chairman of the USA Rice Government Affairs 
Committee, and as an active member of other state and national 
industry-related boards and committees. I am honored to be here today 
representing U.S. rice farmers.
    Rice planting is currently underway on my farm and throughout the 
rice growing regions in the U.S. and nearly completed in the 
southernmost regions of Louisiana and Texas. The U.S. rice industry is 
a multibillion dollar industry that provides jobs and income for not 
only producers and processors of rice, but for all involved in the 
value chain. Much of this economic activity occurs in the rural areas 
of the Sacramento Valley in California, the Gulf Coast region of 
Louisiana and Texas, up and down the Mississippi River Basin starting 
in Illinois, down the Bootheel of Missouri, through the Grand Prairie 
of Arkansas and in the Mississippi Delta region. All combined, these 
areas plant rice on 3 to 4 million acres on an annual basis.
    The U.S. rice industry is unique in its ability to produce all 
types of rice, from long grain, medium grain, and short grain, to 
aromatic and specialty varieties. Last year, rice farmers produced a 
rice crop directly generating $5.6 billion that was reinvested in local 
economies. This production and subsequent sales of rice generated $34 
billion in total value added to the U.S. economy from rice production, 
milling, and selected end users. The industry provides jobs and income 
to more than 128,000 people within the U.S. labor force.
    Today, about 81 percent of all the rice that is consumed in the 
U.S. is produced here at home. And, despite significant trade barriers 
to exports, the U.S. remains the largest non-Asian exporter of rice and 
within the top five largest exporters worldwide. On average, about 50 
percent of the annual rice crop is exported as either rough or milled 
rice. The top U.S. export markets for rice include Mexico, Canada, 
Japan, and throughout Central America and the Middle East. Of the rice 
produced by our fa[r]mers that remains in the domestic market, 53 
percent is bound for direct food use, 16 percent is dedicated to 
processed foods, 15 percent is used to produce beer, 14 percent is for 
pet food, and the balance is used for industrial purposes.
    Beyond the substantial economic and nutritional benefits of rice is 
the environmental dividend from winter-flooded rice fields that provide 
critical habitat for migratory waterfowl and other wetland-dependent 
species. All of the major rice-production areas in the U.S. host 
important waterfowl activity during winter months. Without rice 
farming, wetland habitats in the U.S. would be vastly reduced. A loss 
of this magnitude would have a disastrous effect on waterfowl, shore 
birds, and a host of other wetland-dependent species. In the Delta 
region of Arkansas, Mississippi, Missouri, and Louisiana, at least 70 
wildlife species rely on rice fields for habitat. In California, rice 
fields provide unparalleled habitat for 230 species of wildlife, and 
provide wintering habitat for some seven million ducks and geese that 
winter each year in the Pacific Flyway. So critical is this habitat to 
the flyway that experts estimate we would lose more than one million 
ducks if California rice acres were cut in half. Rice production areas 
in Texas correspond with the bird migration corridor known as the 
Central Flyway, providing important habitat to hundreds of bird species 
that rely on these artificial wetlands during their migratory journey. 
The cost of replacing existing rice habitat with managed natural 
wetlands would be more than $3.5 billion.
State of the Rice Industry
    Recent analysis conducted by Texas A&M's Agricultural and Food 
Policy Center concluded that on average, each rice farmer in the U.S. 
generates more than $1 million of economic activity in his or her local 
economy on an annual basis. While rice farming and the associated 
production and processing industries continue to act as economic 
drivers in rural communities, many of our growers have been struggling 
with rice prices at or below the cost of production for the last 3 
years. As commodity prices continue to sink, the certainty of remaining 
in business for many growers is also sinking. Farmers rely on good 
years to help support them through the bad years. This is especially 
challenging for young and beginning farmers, who have not yet had an 
opportunity to build reserves.
    When the current farm bill was enacted in early 2014, U.S. rice 
prices across all grain lengths averaged $16.30 per hundredweight. The 
USDA's most recent forecast for the 2016/17 prices show an average 
price of $10.50 per hundredweight--a 10 year low for the industry, and 
an overall decrease of 36 percent. Even more extreme, California's 
Temperate Japonica rice was averaging $21.60 per hundredweight for the 
2014/15 marketing year, and is now forecast at $13.60 per 
hundredweight--a 37 percent decline in just 2 years. In addition to the 
low prices we are witnessing, the rice industry has been severely 
impacted by natural disasters. Over the last 4 years, our national 
average yields have taken a significant hit and decreased annually due 
to extreme flooding or drought throughout the rice-growing regions. The 
U.S. rice industry is clearly not in a great place due to factors far 
outside of our control. Weather events will continue to impact our 
yields and other major rice producing countries, many of which do not 
abide by World Trade Organization (WTO) rules, will continue to 
overproduce and artificially depress world market prices for rice. A 
robust safety net is necessary to protect American farmers from not 
only extreme weather events but also multiple year price declines.
Trade and Export Factors Influencing U.S. Markets
    The industry heavily relies on exports. Approximately 50 percent of 
our annual crop is exported to more than 120 countries around the 
globe, accounting for ten percent of global rice trade. These exports 
are critical to rice farmers, millers, and merchants. The volatility of 
the global rice export market makes it difficult to project sales 
beyond several months and the levels of U.S. rice exports have been 
inconsistent over the last decade, adding to the uncertainty in our 
markets. We are also seeing a consistent increase of imported foreign 
rice, growing from five percent to nearly 20 percent over the last 2 
decades, putting domestic growers at even more of a disadvantage. These 
growing imports are mostly originating from our global trade 
competitors that are frequently in violation of their WTO obligations.
    According to a 2015 study on the global competitiveness of the U.S. 
rice industry by the U.S. International Trade Commission (USITC), rice 
is considered the most government-interfered with crop in the world. 
U.S. farmers simply cannot compete with foreign government treasuries, 
like that of India, Thailand, and Vietnam. Producers in these and other 
countries overproduce as a result of the lucrative subsidies they are 
provided that encourage them to plant rice even when the market tells 
them otherwise, distorting the world market price. Thankfully, last 
year the U.S. Trade Representative finally initiated two cases against 
China at the WTO, both involving rice. We appreciate this Committee's 
recognition of these WTO violations and for holding several 
Congressional hearings to bring the issue to the forefront. We are 
confident that the U.S. has a strong case and will win. While these WTO 
cases take some time to run their course, we are already seeing other 
bad actors take note of the case against China. Two weeks ago, India, 
another notorious violator of WTO commitments, requested ``observer 
status'' on the case out of concern that the U.S. will soon challenge 
their illegal subsidies. It is critical that the U.S. Government 
continue to go after the bad actors that put American rice growers at 
an unfair disadvantage and threaten our livelihood.
    The USITC report lays out these problems in great detail. The key 
conclusions are well known to our industry and my fellow producers. It 
outlined the pervasive extent of foreign government involvement in 
global rice markets and the high levels of foreign tariffs that keep 
U.S. rice from competing in those markets. USITC analysts concluded 
that U.S. rice production would be 1.3 million metric tons (mmt) higher 
in the absence of global tariffs. Removing foreign tariffs not only 
leads to higher production in the U.S. but would also increase U.S. 
exports by slightly more than 1.3 mmt or approximately 25 percent. 
Please keep in mind that U.S. import duties on rice are essentially 
zero.
Examples of Export Challenges
    The U.S. rice industry continues to face a number of challenges in 
exporting our safe, nutritious, and cost-effective crop. Several 
examples include:

   No access to the Cuban market.

     With the appropriate statutory changes, the U.S. could 
            regain 30 percent of the Cuban rice business within 2 
            years. That is an estimated 135,000 metric tons of new 
            demand. We anticipate the U.S. share of the market would 
            exceed 50 percent within 5 years, and it could reach 75 
            percent or more within 10 years with full commercial 
            relations. That is equal to somewhere between $40 and $60 
            million worth of new demand from Cuba within those first 2 
            years of lifted sanctions. We are thankful for the efforts 
            of Chairman Crawford along with a number of other Members 
            of the House Committee on Agriculture that sponsored a bill 
            to remove private financing barriers for agricultural 
            commodities with Cuba.

   No access to the Chinese market.

     The USDA and the Chinese Government have been in 
            negotiations for nearly a decade on a phytosanitary 
            agreement. Finally, in the fall of 2015 they finalized the 
            text with industry support. The Chinese Government has 
            refused to finalize the deal and we need your support to 
            urge the Chinese to sign the protocol and allow us access 
            to this important new market.

   Irregular/non-transparent tenders for rice to be shipped to 
        Iraq.

     The U.S. State Department worked with the Iraqi 
            Government to sign a Memorandum of Understanding that 
            supports regular U.S.-specific tenders for rice. While we 
            have seen some positive movement, this large export market 
            remains inconsistent and intergovernmental corruption in 
            Iraq often acts a barrier to selling our rice. Iraq at one 
            time was the largest market for U.S.-grown rice but in 
            recent years has been sourcing much of its rice from 
            Thailand--one of the leading, cheating competitors of the 
            U.S. in terms of rice exports.

   Lack of meaningful, quality access to Japan.

     While the Trans-Pacific Partnership (TPP) trade deal 
            would have provided some new access for U.S.-grown rice to 
            Japan, the real gains were unclear and volume remained 
            below what we felt was fair. The industry sought a higher 
            volume tariff rate quota (TRQ) for U.S.-grown rice going 
            into Japan. We support a bilateral trade deal with Japan 
            that revisits the TRQ level for U.S.-grown rice and 
            provides the additional assurances we need on quality of 
            access.

   Little to no access to the European Union (EU) and the 
        United Kingdom (UK).

     The U.S. rice market was effectively destroyed because 
            of EU biotechnology policies beginning in 2006 and the 
            market never recorded beyond a small quantity shipped 
            largely to the UK under an existing trade concession. EU 
            duties applied on U.S. rice outside the concession are high 
            but unfortunately they provide favorable trade concessions 
            for our global competitors. USA Rice is seeking substantive 
            market access gains in Europe. That is why we support a 
            U.S.-UK bilateral trade deal once the UK has formally 
            exited the EU in 2018 and why we support returning to talks 
            surrounding the Transatlantic Trade and Investment 
            Partnership.
U.S. International Food Aid Programs
    In addition to trade and export challenges, USDA and the U.S. 
Agency for International Development (USAID) international food aid 
programs continue to be a target for cuts and statutory revisions by 
Congress, the Administration, and others. These international food aid 
programs have long been a critical component to our diplomatic success. 
They are supported by farmers, shippers, processors, mills, and 
humanitarian organizations long known for saving lives in the face of 
daunting emergency situations and preventing crisis through effective 
monitoring and response. The programs have an extensive history of 
measurable successes reducing hunger and malnutrition while also 
supporting education, democracy, and agricultural development in 
vulnerable populations throughout the world. This year in particular, 
our food system is projected to face unprecedented demand, especially 
in nations across Sub-Saharan Africa and the Middle East.
    Rice is one of the primary commodities utilized by a number of 
these programs, whether it is by direct aid or through monetization. 
Unfortunately, the Administration's recent budget proposal threatens to 
reduce or even eliminate that already small market for U.S. rice 
farmers through cuts in funding. The U.S. rice industry has invested a 
lot of time and capital into developing fortified rice and rice 
products recently approved for use in food aid that are aimed at 
reducing global hunger and malnutrition, particularly in women and 
children. Despite only serving as a one to five percent share of all 
rice exports. It is important to the industry that we continue to play 
a strong role in providing our nation's agricultural bounty to those in 
need by fully funding the USDA's Food for Progress and McGovern-Dole 
Food for Education programs and USAID's Food for Peace program.
Export Marketing and Development Programs Are Worth the Investment
    Trade and exports are not self-sustaining without regular, 
strategic marketing of our products. The majority of U.S. agricultural 
products are promoted globally through the USDA's Market Access Program 
(MAP) and Foreign Market Development (FMD) program that provide annual 
allocations to commodity organizations through an extensive 
application/request process. These programs are vital to both growth 
and new opportunities for our agricultural exports and have a long 
track record of measurable success throughout their lifespan.
    USA Rice is able to not only effectively utilize our annual 
allocation, but we contribute $7 in private industry funds for every $1 
in Federal funding through MAP and FMD, making them true economic 
drivers. Unfortunately, funding for these programs through the farm 
bill has remained flat for a number of years and the rate of increase 
for our exports are increasing has declined. Without additional funding 
the programs will become less effective and eventually suffer. We would 
like to see a significant increase, potentially doubling funding for 
these programs to help grow agricultural exports amid this turbulent 
trade atmosphere. We believe providing additional resources will help 
to elevate commodity prices, thus offsetting the costs of the commodity 
title.
Increasing Costs for Production
    According to USDA's Economic Research Service, the 2018 crop year 
is forecast to have some of the highest production costs on record--
nearly $1,000 per acre for rice. Our operating costs plus labor exceed 
every other crop covered by the commodity title. To put that into 
perspective, the production costs forecast for 2018, including labor, 
are: $679 per acre for corn; $479 per acre for soybeans; $312 per acre 
for wheat; and $317 per acre for sorghum. Folks may question why rice 
farmers do not typically choose to grow something else, and the answer 
is multiple fold. Weather, water availability, and soil type all play a 
role in whether it is agronomical to grow rice in a region. But, most 
importantly, it is economics. The initial investments for rice farmers 
including equipment, infrastructure for irrigation, conservation 
measures that have been installed, etc., are so specialized that it is 
difficult to economically justify a shift from year to year.
    According to USDA's February Agricultural Prices Report, the Prices 
Received to Prices Paid ratio in January for food grains, including 
rice, was at 62.9 percent, down 15 percent from a year ago. With rising 
input costs and decreasing rice prices, our reserves, if we have them, 
are going to continue to dwindle for the foreseeable future.
Price Loss Coverage and Other Safety Net Policies
    It is safe to say that the reason I am still in business today is 
because of the safety net provided by the 2014 Farm Bill and, 
specifically, Price Loss Coverage (PLC). When prices were as high as 
they were during the last farm bill's development, USA Rice advocated 
for a safety net to protect us during multi-year price declines (i.e., 
PLC) instead of shallow losses. We appreciate this Committee's 
recognition that the farm safety net is not one-size-fits-all and for 
including PLC, which, by and large, is working as intended. It is this 
Committee's foresight and work on our behalf that has helped to 
safeguard much of America's rice industry.
    The 2014 Farm Bill allowed growers to choose between PLC and the 
Agriculture Risk Coverage (ARC) within title I. While a small number of 
rice farmers elected to use ARC, the vast majority enrolled in PLC. In 
total, 99 percent of long grain rice farms and 94 percent of medium 
grain rice farms selected PLC as their safety net of choice.
    Rice is unique in that it has different market prices for southern-
grown long grain and medium grain rice types and California's Temperate 
Japonica-type rice. Since the current farm bill has been in place, a 
small number of insubstantial ARC payments have been made to rice 
farmers in select counties. PLC has been the primary safety net for 
rice farmers. Long grain rice prices settled below the reference price 
after the 2014 and 2015 crop years and growers received the much needed 
assistance. Southern medium grain rice growers only received support 
through PLC for the 2015 crop year.
    USA Rice appreciates this Committee recognizing a higher than 
average cost of production for California's Temperate Japonica rice by 
designating it a separate multiplier for the PLC reference price. 
Unfortunately, the multiplier that was used to calculate the Temperate 
Japonica reference price is not sufficient in capturing the full cost 
of production. California's rice market has fallen at a more rapid rate 
than the rest of the country while under a drought situation, causing 
additional challenges without receiving any assistance under PLC.
    While, overall, we feel that PLC is working the way Congress 
intended, the reference price for Temperate Japonica needs to be 
increased to reflect the higher than average cost of production, 
incorporating the unique needs of the growing region. USA Rice is 
working with the California Rice Commission to develop a more accurate 
accounting of the operating cost for Temperate Japonica using on-farm 
data so that we can provide the most current and accurate 
recommendation to this Committee in advance of the farm bill's 
reauthorization.
    We acknowledge the political and budgetary considerations at play 
in writing the last farm bill, and the subsequent need to shift 
assistance timing for commodity title benefits until the crop year is 
fully completed. If triggered, USDA issues PLC assistance to long and 
medium grain rice growers in the South in November based upon the 
previous crop year's Market Year Average price. For Temperate Japonica 
rice growers in California, PLC assistance is issued in February based 
on the Market Year Average price for 2 crop years prior.
    There are multiple problems created at the farm level as a result 
of this delay. The bills for our input costs ahead of planting season 
do not wait until a year after the crop is harvested before coming due. 
When farmers go to the bank after harvest, it is nearly impossible to 
predict a year and a half in advance what kind of assistance they may 
qualify for--making it impossible to accurately predict cash flow. That 
has a big negative impact on the ability of farmers to access capital 
through financing.
    We request that this Committee look into mechanisms to accelerate 
at least a portion of the PLC assistance which growers are anticipated 
to receive. I believe that the assistance will be more effective if 
producers can start utilizing it sooner during the year. More 
importantly, bankers would be more apt to approve our annual operating 
loans if the PLC assistance is advanced or accelerated.
Actively Engaged in Farming
    Actively Engaged in Farming regulations brought forth a lot of 
confusion and disruption throughout farm country following the 
publication of USDA's proposed and final rule in 2015. The industry 
requested a grace period to allow for growers to meet with their 
attorneys and actively work to restructure the way they managed their 
operations. These regulations were burdensome and costly for the 
affected operations, primarily in the mid-South where rice is most 
produced. There are, unfortunately, no safeguards in the USDA's final 
rule that protect entities from maintaining ``family farm'' status 
following the death or retirement of a lineal family member, such as a 
parent or grandparent. It was not the intent of Congress to force 
family farms out of eligibility as a result of family transitions. As a 
son, a grandson, and a father, I can truly attest to the importance of 
estate planning activities to ensure the continued operation and 
viability of a family's farm. We are requesting that this Committee 
revise the statute to provide an exemption or safeguard to protect 
hardworking farm families against unforeseen linkage breaks in their 
operating structure.
    In addition, the regulations should not include a cap on active 
personal farm managers. Invoking an arbitrary limit of one to three 
farm managers completely ignores the diversity and unique needs of 
farming operations across different crops and regions. Southern family 
farming operations are often larger than three individuals, and are 
most affected by this limit. While a family operation can have as many 
farm managers as required to manage the complexity and scope of the 
operation, it is irrational to then limit the number of eligible farm 
managers in similar operations that involve non-lineal family members, 
friends, or neighbors. The diverse sizes and scopes of farming 
operations across the nation require different types of expertise and 
numbers of individuals to adequately manage such operations. A limit 
ignores economies of scale, the increasing need to achieve efficiencies 
in agricultural production, and the complexity of such operations.
Adjusted Gross Income and Payment Limitations Should Be Eliminated
    USA Rice opposes additional eligibility requirements based on a 
producer's adjusted gross income (AGI). In fact, we firmly believe that 
this AGI limit should not exist at all. Farmers need to build up 
reserves in good times in order to weather bad times. But, an AGI test 
that excludes farmers from the farm bill in a given year due to the AGI 
of the farmer in previous years turns this fact of life on its head.
    Additionally, a $125,000 payment limit seemed like a farfetched 
problem when the 2014 Farm Bill was written and prices were higher. 
Unfortunately, in current market conditions, many growers are at or 
close to the payment limits. If a farmer is limited at $125,000 and his 
losses are $200,000 across his operation, there is a serious problem 
with the effectiveness of the safety net. It seems counterintuitive to 
maintain policy that provides full assistance to producers when they 
experience some losses but only partial assistance to those that are 
hit the hardest and experience deep losses.
Crop Insurance Needs Improvement
    Crop insurance has not been as valuable a risk management tool for 
rice as it has been for other crops and areas. Rice farms are 100 
percent irrigated, and on average, our yields are very consistent. Our 
financial problems occur with higher production costs due to irrigation 
or as the result of a weather event in the fall that disrupts our 
harvest and affects the quality of our crops.
    Revenue Protection policies work well when prices are high and were 
increasingly utilized by rice farmers through 2014, but have faced 
challenges and diminished sales in recent years. Revenue-based 
insurance uses averages from the Rough Rice Futures Contract in the 
fall to set the expected price used to calculate revenue. 
Unfortunately, because rice is a thinly traded commodity in the futures 
market, in 2015 there was not an adequate amount of activity for RMA to 
determine an expected price. Therefore, revenue policies were not 
available for that year and producers were forced to use Yield 
Protection coverage, which did not provide adequate protection.
    Though rice yields do not tend to be as variable as other crops due 
to our irrigation practices, crop insurance rates remain high relative 
to other crops. For example, a 75 percent Revenue Protection policy for 
corn in Floyd County, Iowa on a slightly above average Actual 
Production History would cost the farmer $9 per acre--that is $1.70 out 
of pocket for every $100 in coverage. The same policy on rice in 
Richland Parish, Louisiana would cost $23 per acre--that is $4.87 for 
$100 in coverage. So in this example, the rice insurance is nearly 
three times as high as the corn insurance--and this is reflective of 
the cost across the rice belt. With the price guarantee of $10.30 per 
hundredweight of rice this year, it is easy to see why standard Revenue 
Protection insurance is not as useful of a tool as we had hoped it 
would be for rice farmers.
    The 2014 Farm Bill created a county-wide insurance-based policy 
called Supplemental Coverage Option (SCO) that we had hoped, coupled 
with PLC in the commodity title, would provide a complementary set of 
risk management tools for our growers. However, after the product was 
rated by USDA's Risk Management Agency (RMA), in most counties it was 
economically infeasible to purchase for most producers.
    USA Rice spent several years working with consultants to develop an 
insurance product that would provide coverage for drastic changes in 
margins based on rising input costs. This product was finally approved 
in 2015. However, in the course of its development it was merged with a 
product designed to cover margins in other crops, and the resulting 
changes did not meet the needs of the rice industry. Participation in 
the Margin Protection insurance product have been very low, with the 
number of policies sold in the single digits last year. For all of our 
investment and efforts, the product is simply not functioning as an 
adequate risk management tool. However, this does not mean the concept 
is without merit. Because of our investments in the initial product 
structure and the need to cover our margins as input costs rise in the 
future, we would be very supportive of this Committee looking into ways 
to revise Margin Protection to be more affordable and to better fit the 
needs of rice farmers.
    Finally, we have made attempts to improve crop insurance for rice 
farmers through the promotion of a downed rice policy that indemnifies 
producers for increased harvest costs associated with late-season 
storms that lay the rice down. This policy has been fairly successful 
in certain areas but problems with the overall range of the policy 
persist. As an industry, we plan to continue to work to improve crop 
insurance coverage and options for rice farmers and will continue to 
utilize basic coverage options to, at least partially, insure our crop 
in the event of catastrophic losses due to weather.
Farm Policy Is Necessary for National Security
    Our nation's strong farm safety net would not be what it is without 
all of the pillars that make up farm policy. Agriculture is not a 
partisan issue. We divide ourselves by region and sector but not by 
political beliefs. Fortunately, the commodity title and other titles 
make sure that each of our different sectors and regions have something 
that works. Without the certainty of this legislation, our already 
high-risk career would take on a new level of risk.
    While some of the factors affecting the farm economy are within the 
control of the farmers themselves, most of them are not. Illegal and 
over-subsidizing of rice production by our foreign competitors, phony 
sanitary and phytosanitary barriers, lack of private financing options, 
etc., all play into the need and justifications for strong farm policy 
to protect our basic agricultural infrastructure.
    The average U.S. farmer faces more and different risks than any 
other business we could point to. We are affected by global futures and 
cash markets, weather, pests and disease, and any number of other 
factors that could cause our crop to fail and our farms to go bankrupt. 
We are at the mercy of our bankers who have to be able to justify 
giving us our annual operating loans and determine if the lenders can 
absorb the unique risks associated with farming. The business of 
agriculture is high stakes. Most farmers borrow more money in 1 year 
than the average family borrows in an entire lifetime.
    When threats are made to cut or eliminate funding and policy for 
the farm safety net, the very existence of the full-time family farmer 
is put in jeopardy. Without a strong and predictable safety net, only a 
small number of truly consolidated operations would survive. These 
would not be the competitive family enterprises we know today.
    Please keep in mind that if it were up to us as farmers, we would 
prefer to prosper solely on the great prices our crops bring at the 
market. Unfortunately, commodity markets are not always kind, and 
agricultural markets are distorted by our foreign competitors. The 
simple fact is that right now our crops are not bringing enough at the 
market to pay our loans and buy our supplies for next year without the 
assistance provided by the farm bill.
    I am here to ask for this Committee's consideration in not only 
maintaining our commodity title policies, but strengthening them by 
using our recommendations as you prepare to reauthorize the farm bill.
    I want to again thank you, Chairman Crawford, Ranking Member Nolan, 
and the Members of the Subcommittee for inviting me here today to 
provide insight on behalf of the U.S. rice industry.

    The Chairman. Thank you, sir. I appreciate that.
    I want to yield to the gentleman from Georgia, Mr. Austin 
Scott, to introduce our next witness.
    Mr. Austin Scott of Georgia. Thank you, Mr. Chairman. We 
have Mr. Tim McMillan representing the Southern Peanut Farmers 
Federation from Enigma, Georgia, and if you don't know where 
Enigma, Georgia is, that is in Berrien County, Georgia, and if 
you don't know where that is, we are capable of governing 
ourselves.
    The Chairman. I thank the gentleman, and Mr. Tim McMillan, 
you are recognized for 5 minutes.

STATEMENT OF HON. TIMOTHY E. McMILLAN, CO-FOUNDER AND CO-OWNER, 
SOUTHERN GRACE FARMS, ENIGMA, GA; ON BEHALF OF SOUTHERN PEANUT 
                       FARMERS FEDERATION

    Mr. McMillan. Good morning, Chairman Crawford, Ranking 
Member Nolan, and Members of the Subcommittee. I am Tim 
McMillan, and I am a seventh generation family farmer from 
Berrien County, Georgia. That is on the other end, Congressman 
Peterson, of the world. I am testifying today on behalf of the 
Southern Peanut Farmers Federation, the largest peanut grower 
organization in the United States.
    I want to be clear today that the peanut provisions of the 
2014 Farm Bill have provided a safety net for peanut producers. 
If the Price Loss Program had not been in place, I am afraid 
many farmers in the Southeast would no longer exist because of 
the downturn in the farm economy which has plagued us the past 
3 years.
    The Federation supports maintaining the current PLC program 
in the 2014 Farm Bill, including these key provisions: the 
current reference price for peanuts, a separate payment limit 
as established in the 2002 Farm Bill, and storage and handling 
provisions.
    The 2014 Farm Bill was drafted during a period of high 
prices. When we compare average prices in 2011 through 2012 
through 2016 prices, we see a 39 percent decline in peanut 
prices. The USDA has projected the net farm income from 2013 
through 2017 to decline by 49.6 percent. I see the real impact 
of these numbers in the faces of my neighbors, my customers, 
and I hear it in discussions with lenders and our suppliers.
    The peanut Price Loss Coverage Program has worked, but 
peanuts are not sufficient to carry an entire farming 
operation. Corn and cotton prices have been depressed, and with 
the lack of a cotton PLC program, more pressure has been placed 
on growers to plant peanuts by lenders and others. Peanut 
growers know that a rotation is critical for their cropping 
system. However, during this period of severely depressed farm 
economy, many farmers modified their crop rotations in order to 
survive. As a result, U.S. peanut yield has declined by 
approximately 13 percent.
    Although the increased peanut acreage has impacted yields 
and the cost of production, peanut acreage during the life of 
the 2014 Farm Bill is not out of line. During the life of the 
2014 Farm Bill, average planted acres were only 16 percent more 
than the average acres planted during the years 2002 through 
2013.
    What about the demand for peanuts? Demand has kept pace 
with the supply of peanuts. U.S. per capita peanut consumption 
increased 12 percent from 2012 to 2016. Domestic demand and 
export demand have grown significantly in the last few years. 
The number of peanuts used for peanut butter has grown 64.4 
percent since 2002, and ten percent since 2014.
    When we take a closer look at USDA's Foreign Agricultural 
Services export data, comparing the average exports of peanuts 
and peanut butter during the 2008 Farm Bill relative to the 
2014 Farm Bill, we also see strong growth. Peanut exports 
increased by approximately 71 percent.
    What about the supply of peanuts in the U.S.? In the 
current market, demand exceeds supply. Given this economic 
situation, early contract prices for the 2017 crop have been 
reported in $475 to $550 per ton range. In addition, peanuts 
have not seen significant forfeitures at USDA. Marketplace 
indicators suggest there is not an oversupply of peanuts. 
According to the National Center for Peanut Competitiveness, 
the peanut program in the 2014 Farm Bill has not led to 
excessive peanut acreage.
    What about the impact of generic acres on peanuts? Generic-
based acres are available to any covered commodity in 2014 Farm 
Bill. The Committee wisely established a program allowing 
growers to keep these base acres. Without these base acres, the 
current struggling farm economy would be much worse.
    In conclusion, the Federation supports the peanut 
provisions in the 2014 Farm Bill, and appreciates the 
opportunity to work with you as we move forward with the next 
farm bill. Thank you for allowing me to testify today.
    [The prepared statement of Mr. McMillan follows:]

   Prepared Statement of Hon. Timothy E. McMillan, Co-Founder and Co-
 Owner, Southern Grace Farms, Enigma, GA; on Behalf of Southern Peanut 
                           Farmers Federation
    Good morning, Chairman Crawford, Ranking Member Nolan, and Members 
of the Subcommittee. My name is Tim McMillan and I am a seventh-
generation family farmer from Berrien County, Georgia. Our farm is a 
typical diversified row crop farm with peanuts, cotton, cows, timber 
and some specialty crops. It is an honor for me to be here today before 
this Committee.
    I am testifying today on behalf of the Southern Peanut Farmers 
Federation (Federation), the largest peanut grower organization in the 
United States. The Federation is comprised of the Alabama Peanut 
Producers Association, the Florida Peanut Producers Association, the 
Georgia Peanut Commission and the Mississippi Peanut Growers 
Association.
    I want to thank this Committee for what you have meant to peanut 
farm families and communities across the Peanut Belt for many years. 
You have provided a program that pushed our industry to market our 
products more efficiently in the domestic and export markets. You 
encouraged our industry to move from a supply-management program to a 
market program in the 2002 Farm Bill. Finally, the Price Loss Coverage 
(PLC) program has assured growers that a safety net program was 
available when farm economies struggled.
    I want to be clear today that the peanut provisions of the 2014 
Farm Bill have worked as a safety net for peanut producers. If the PLC 
program had not been in place, I am afraid many farms in the Southeast 
would no longer exist because of the downturn in the farm economy which 
has plagued us the past 3 years. In addition, this bill continues to 
assure consumers a safe, affordable food supply.
    The Federation supports maintaining the current PLC program in the 
2014 Farm Bill including these key provisions:

   Current Reference Price for Peanuts.

   Separate Peanut Payment Limit (as established in the 2002 
        Farm Bill).

   Storage and Handling Provisions.

    The 2014 Farm Bill was drafted during a period of high prices. When 
we compare average prices in 2011-2012 to 2016 prices, we see a 39% 
decline in peanut prices. Corn, soybeans, wheat and cotton all saw 
significant drops in prices when comparing the years that the 2014 Farm 
Bill was developed to 2016 prices.
    The U.S. Department of Agriculture projected 2017 net farm income 
in the U.S. to be $62.3 billion which translates to a 49.6% decline in 
net farm income since 2013. I see the real impact of these numbers in 
the faces of my neighbors and hear it in discussions with lenders and 
our suppliers.
    The peanut Price Loss Coverage (PLC) program has worked but peanuts 
are not sufficient to carry an entire farming operation. Corn and 
cotton prices have been depressed and with the lack of a cotton PLC 
program, more pressure has been placed on growers to plant peanuts by 
lenders and others. For many growers, the only option to survive was to 
plant more peanut acreage.
    Peanut growers know that rotation is critical for their cropping 
systems. However, during this period of a severely depressed farm 
economy, many farmers modified their crop rotations in order to 
survive.

   U.S. peanut yield has declined by approximately 13%.

   Georgia's peanut yield has declined by 14%.

   Southeast average yield has declined by 11%.

    Research has shown that with reduced rotation, not only will peanut 
yields drop but chemical costs increase. The cost of weed control 
continues to rise as resistant pigweed becomes more widespread, and 
some of our fungicides are becoming less effective as pathogens mutate 
and adapt. According to the University of Georgia's National Center for 
Peanut Competitiveness (NCPC), we have seen a downward trend in peanut 
yields since 2012.
    According to the NCPC, these increased costs of production could 
make the current reference price ineffective.
    Although the increased peanut acreage has impacted yields and cost 
of production, peanut acreage during the life of the 2014 Farm Bill is 
not out of line.

   Prior to the 2002 Farm bill, U.S. peanut acreage exceeded 
        1.6 million acres for several years, in the early 1990's, and 
        exceeded 2 million acres in 1991.

   After we changed the peanut program in the 2002 Farm Bill 
        from a supply management program to a market oriented program, 
        U.S. peanut acreage has exceeded 1.6 million acres.

   Planted acreage of 1.6 million acres is not a new phenome.

   Average planted acres during the life of the 2014 Farm Bill 
        is only approximately 16% more than the average acres planted 
        during the years 2002-2013.
What About the Demand for Peanuts?
    It is very important to this discussion to note that demand has 
kept pace with the supply of peanuts. First, I want to address domestic 
demand. According to USDA and U.S. Department of Commerce data, U.S. 
per capita peanut consumption has grown from 6.6 pounds per capita in 
2012 to 7.4 pounds per capita in 2016--a 12% increase.
    The peanut industry took two major steps to encourage demand. 
First, the Peanut Institute was created to fund research on the 
nutrition aspects of peanuts. Second, peanut growers voted to create 
the National Peanut Board (NPB) through a national check-off program 
overseen by USDA. As a result of these efforts, consumers in the U.S. 
and in other countries are increasingly recognizing that:

   Peanuts are heart healthy, fight obesity, reduce the risk of 
        Type 2 diabetes plus have key micronutrients.

   Peanuts by means of Ready to Use Therapeutic Food (RUTF) are 
        also a widely-used tool to fight severe malnutrition in 
        children around the world.

    Domestic demand and export demand have grown significantly in the 
last few years. Utilizing USDA's National Agricultural Statistical 
Service's (NASS) Peanut Stocks and Processing reports and comparing the 
first 6 months of the 2016-17 marketing year to a comparable time 
period for previous marketing years:

   The number of peanuts used for peanut butter has grown 64.4% 
        since 2002 and 10% since 2014.

   Total shelled peanut use has increased approximately 47% 
        since 2002 and 11% since 2014.

    When we take a closer look at USDA's Foreign Agricultural Service's 
(FAS) export data, comparing the average exports of peanuts and peanut 
butter during the 2008 Farm Bill relative to the 2014 Farm Bill, we 
also see strong growth.

   Peanut exports increased by approximately 71%.

   Peanut butter exports have grown by 52%.
What About the Supply of Peanuts in the U.S.?
    Peanut shellers speak openly about the tight supply of peanuts. 
Today's peanut prices do not support the concept that the 2014 Farm 
Bill is causing excessive peanut acreage planting.
    As peanut growers entered the 2016 crop year, USDA had published 
incorrect inventory numbers. Based on the incorrect numbers, the peanut 
industry assumed that supply significantly exceeded demand which had a 
negative effect on peanut prices received by farmers, ranging from a 
$355/ton (loan rate) to approximately $380/ton.

   Based on the reduced prices, the Southeast, the largest 
        region of peanut production in the U.S., reduced peanut 
        planting by approximately 11%.

    Once USDA corrected the mistake during the growing season, contract 
prices for the uncontracted 2016 crop and any unsold 2015 crop in the 
loan increased significantly to the $450/ton range. Recently, any 
uncontracted 2016 crop peanuts have seen contracts increase even more. 
As one major sheller stated in their newsletter ``This will continue to 
support 2016 crop values as the market is forced to ration supply of 
quality tons.'' As of today, demand exceeds supply. Given this economic 
situation, early contract prices for the 2017 crop have been reported 
in the $475-$550/ton.

   Peanut shellers are still offering higher 2017 crop contract 
        prices which encourage peanut acreage.

   Shellers would not be offering these types of contracts 
        unless signals from manufacturers and exporters clearly 
        indicate that they need more peanuts for the marketplace.

   These actions are not being driven by the 2014 Farm Bill but 
        instead by the markets and the rules of supply and demand.

   The shellers' actions indicate that the program has not 
        created an excess supply of peanuts in the marketplace.

    Peanuts have not seen significant forfeitures at USDA. For the 2015 
peanut crop year, the latest data available to the NCPC, approximately 
62 tons were forfeited. This translates into approximately .0021% of 
the total 2015 peanut crop being forfeited. USDA sold those tons at an 
average price of $363.67/ton which was above the loan rate of $355/ton 
translating into a profit for the government and no cost to the 
taxpayer. To date, according to the NCPC, there have been no peanut 
loan forfeitures from the 2016 peanut crop.
    From the evidence we see in the marketplace, there is not an 
oversupply of peanuts. According to the NCPC, ``The peanut program in 
the 2014 Farm Bill has not led to excessive peanut acreage.''
What About the Impact of Generic Acres on Peanuts?
    As you are aware, the cotton industry opted for the STAX program in 
the 2014 Farm Bill while cotton producers maintained their generic base 
acres. These generic base acres are available to any covered commodity 
in the 2014 Farm Bill. This Committee wisely established a program 
allowing growers to keep these base acres. Without these base acres, 
the current struggling farm economy would be much worse.
    The United States Department of Agriculture's (USDA) Farm Service 
Agency (FSA) February 2017 data examined the allocation of generic base 
acres and updated the program payments for covered commodities planted 
on these generic base acres.

   For the 2014 crop year, only approximately 58% of the 
        generic base acres were allocated to a covered commodity.

   Approximately 7.4 million generic base acres were not 
        utilized by cotton farmers for the 2014 crop year.

   Approximately 32% of the generic base acres assigned to 
        soybeans.

   26% of the generic base acres assigned to wheat.

   19% of the generic base acres assigned to corn.

   13% of the generic base acres assigned to grain sorghum.

   Only 7% of the generic base acres assigned to peanuts.

   Less than 53% of the 2014 peanut certified acres had generic 
        acres attributed.

    Were there significant changes in these planting ratios for the 
2015 crop year? The answer is no.

   Approximately 61% of the generic base acres were allocated 
        to a covered commodity.

   Approximately 7 million generic base acres were not utilized 
        by cotton farmers.

   Approximately 90% of the generic base acres were assigned to 
        soybeans, wheat, corn and grain sorghum.

   Only 8.7% of the generic base acres assigned to peanuts.

   Approximately 57% of the 2015 peanut certified acres had 
        generic acres attributed.

    Based on USDA deadlines for the 2016 crop year, it is assumed that 
the 2016 ratios will not differ significantly from the 2015 data. With 
the generic base acres attributed to the covered commodities of the 
2014 Farm Bill, these commodities did receive payments.

   For the 2014 crop, the total payments for the covered 
        commodities on generic acres were almost $149 million.

   For the 2015 crop, the attributed generic base acres 
        generated approximately $444 million in payments for the 
        covered commodities.

   Almost a threefold increase in generic base acres payments 
        to cotton producers from the 2014 crop year to the 2015 crop 
        year.

   Given the depressed commodity prices, the 2016 crop year 
        payments to be received in October 2017 are assumed to be 
        similar to the 2015 crop year payments.

    For the 2014 crop, only 27% of all ARC-PLC peanut payments was 
derived from generic base acres attributed to peanuts. For the 2015 
crop year, approximately 33% of the total payments derived from generic 
base acres attributed to peanuts.
    While these payments were attributed to peanuts, in reality, the 
payments were received by cotton producers who are also peanut 
producers. Thus, any scoring in terms of the cost of the peanut program 
should take into account the generic acre impact. As I stated earlier, 
cotton was not a covered commodity in the ARC-PLC programs. Generic 
acres, as part of the safety net, allowed cotton producers, who also 
grew other commodities like peanuts, corn, soybeans, wheat and rice, to 
participate in some limited manner and stay on the farm. For many 
farmers, generic base actually made it possible to keep planting cotton 
on our farms in order to maintain some level of crop rotation. Without 
this generic acre program, many farmers across the U.S. would have had 
their farm income, the safety net reduced dramatically. This program 
has worked at a time when prices were low.
    The Federation supports the National Cotton Council's request for 
USDA to approve a cottonseed program for cotton producers.
Peanut Growers Support Viable Risk Management Tools
    The Federation supports the risk management provisions of the 2014 
Farm Bill. Congress approved a peanut revenue insurance program in the 
2014 Farm Bill. This was a product of the peanut industry working with 
USDA's Risk Management Agency and crop insurers to develop a tool that 
worked for producers. Growers are participating in this program.
    In conclusion, the Federation supports the peanut provisions in the 
2014 Farm Bill and appreciates the opportunity to work with you as we 
move forward with the next farm bill.
    Thank you for allowing me to testify today.

    The Chairman. Thank you, Mr. McMillan.
    I would like to recognize Mr. Peterson, the full Committee 
Ranking Member, for the introduction of our next witness.
    Mr. Peterson. Well I kind of introduced him before, but Rob 
Rynning is one of my constituents. He does a great job, not 
only as a farmer, but spending a lot of his time representing 
people in our part of the world at meetings like this, and so I 
personally appreciate his involvement and efforts, and I don't 
know how he gets time to farm, but other than that, welcome to 
the Committee.
    Mr. Rynning. My brother wonders the same thing at times.
    The Chairman. Mr. Rynning, you are recognized for 5 
minutes.

      STATEMENT OF ROBERT RYNNING, PRESIDENT, U.S. CANOLA 
   ASSOCIATION, KENNEDY, MN; ON BEHALF OF NATIONAL SUNFLOWER 
                          ASSOCIATION

    Mr. Rynning. Thank you, Mr. Chairman.
    On behalf of the U.S. Canola and National Sunflower 
Associations, I want to thank the Chairman and Ranking Member, 
as well as the Committee for the invitation to appear before 
you today. I am Robert Rynning, President of the U.S. Canola 
Association. My brother, nephew, and I farm in the very 
northwest corner of Minnesota, just a few miles south of the 
Canadian line, growing canola, barley, wheat, and soybeans. 
Because minor oilseed producers grow a number of crops in 
rotation on their farms, I want to note the common areas of 
agreement between USCA and NSA have with groups affiliated with 
the statement attached to my testimony. We also signed a letter 
to the Senate Budget and Appropriations Committee with 15 other 
farm groups, outlining in detail a need for additional 
resources to write the next farm bill.
    The U.S. has planted an average of 1.7 million acres of 
canola and 1.7 million acres of sunflowers over the past 5 
years. The majority of U.S. canola production is in the 
Northern Plains, however, winter canola varieties have been 
successfully introduced into the Southern Great Plains, and 
this region has the potential to become another major U.S. 
production area. Another winter canola production region can 
also be found in the mid-southern states, with much of this 
acreage being double cropped with soybeans. The Pacific 
Northwest also grows both winter and spring canola varieties. 
The U.S. produced a record 3 billion pounds of canola seed last 
year, but we will still need to import 68 percent of our 
expected canola oil consumption and 75 percent of our expected 
canola meal consumption this year.
    The majority of the 2.5 billion pounds of sunflower seed 
the U.S. produces annually are grown from the Dakotas to the 
Panhandle of Texas. There are two types of sunflowers grown. 
Oil sunflowers comprise 80 percent of the production and are 
grown for high quality cooking oil, or sold as bird food. The 
remainder is confection seed, which is used in the snack food 
and bakery markets. Confections receive a premium over oil, 
causing the season average price of all sunflowers to be higher 
than other minor oilseeds. Seventy-five percent of the U.S. 
sunflower oil is consumed domestically, with the remainder 
exported to Canada, Mexico, and Japan. Confections are very 
reliant on exports, since \1/2\ of our confection production is 
exported, mainly to Spain, Mexico, Canada, and the Middle East.
    USCA and NSA support continuing the ARC and PLC programs 
with support payments tied to historical crops bases, and the 
ability to choose between programs by crop. We also encourage 
the use of RMA yields first, rather than NASS yields when 
computing our county yields.
    In the 2014 Farm Bill signup, 97 percent of canola-based 
acres were entered into PLC program. Sunflower-based signup was 
more diverse with 56 percent into PLC and 43 percent into ARC 
county. Prices for both crops have fallen 40 percent from their 
peak, and both have received payments in the 2014 Farm Bill, 
although sunflower payments have been less, due to confection 
seed premiums, which increase all sunflower season price. 
However, for the 2016 crop, confection premiums have declined 
considerably, and payments for PLC and ARC county are expected 
to increase.
    Although annual planted acres appear stable for canola and 
sunflowers, there is real concern that core acreage will not be 
sufficient in the future to sustain infrastructure for those 
alternative crops. Many producers in the Northern Plains who 
plant canola and sunflowers have also begun planting soybeans 
and corn. Per acre cost of seeding canola is $50 more and 
sunflowers $20 more than soybeans this spring, and soybean 
acres will increase this year as farmers strive to reduce the 
overall input costs. Sunflower producers in the prairie pothole 
region also have the added burden of potential blackbird 
depredation that can lose a substantial portion of their crop 
in the fall if large migratory flocks infest their fields.
    Beyond the healthy oil both these crops supply, as well as 
the high quality canola meal used to supplement dairy herd 
ration, canola and sunflowers also provide needed quality 
habitat for honeybees as well as wild pollinators. Honeybees 
support $15 billion of agriculture production in the U.S. 
through pollinator services, but a major decline in honeybee 
health has put these benefits at risk. Bee health decline has 
been linked to several factors, including the lack of suitable 
habitat due to increased agricultural monocultures, and 
declining wild spaces. Canola and sunflowers provide ideal 
habitat and forage for honeybees when they are not being used 
for pollinator services, and are preferred hive sites by 
beekeepers. Canola fields bloom a month or longer under ideal 
weather, providing bees with a good source of nectar and 
pollen. Sunflowers bloom in late summer, providing habitat and 
forage in a time when fewer plants are blossoming. Maintaining 
the acreage of cropland planted annually to these two crops is 
essential to contribute viably to the honeybee industry, and an 
increase of just 2 to 3 million acres across the U.S. would 
have an immediate positive impact on honeybee health. USCA and 
NSA support the creation of pollinator incentive, include 
canola and sunflowers in cropping rotations to provide habitat 
for honeybees and wild pollinators. We are uncertain whether 
this initiative would be in the commodity title or conservation 
title, but are willing to work with the Committee to develop 
such an initiative.
    Thank you, Mr. Chairman, for your time and attention. I 
will be happy to answer any questions the Committee may have.
    [The prepared statement of Mr. Rynning follows:]

     Prepared Statement of Robert Rynning, President, U.S. Canola 
 Association, Kennedy, MN; on Behalf of National Sunflower Association
    On behalf of the U.S. Canola Association and the National Sunflower 
Association, I want to thank the Chairman and Ranking Member, as well 
as the Committee, for this opportunity to represent the views of U.S. 
canola and sunflower growers. I am Robert Rynning, President of the 
U.S. Canola Association. I operate with my brother a fifth generation 
family farm in northwest Minnesota near Kennedy, growing canola, 
barley, wheat, and soybeans.
    Because farmers grow canola and sunflowers in agronomic rotations 
with a number of other crops on their farms, I want to note the common 
areas of agreement USCA and NSA have with the groups affiliated with 
the statement attached to my testimony.* Another area of agreement is 
the need for additional resources to write the next farm bill as 
outlined in the March 15 letter to the Senate Budget and Appropriations 
Committees that USCA and NSA signed along with 15 other farm 
organizations.
---------------------------------------------------------------------------
    *Editor's note: the document referred to is entitled Attachment, 
and follows the prepared statement of Mr. Moore (located on p. 799), 
published in the March 28, 2017, The Next Farm Bill: Commodity Policy--
Part 1, General Farm Commodities and Risk Management Subcommittee 
hearing. For purposes of this publication it is not reprinted here.
---------------------------------------------------------------------------
    Regarding canola and sunflowers specifically, the U.S. has planted 
an average of 3.4 million acres of these alternative rotational crops--
1.7 million each--the last 5 years.
    While the Northern Plains account for the majority of U.S. canola 
production, winter canola varieties have been successfully introduced 
in the Southern Great Plains and this region has the potential to 
become another major U.S. production area. Winter canola production can 
also be found in the mid-southern states, and much of this acreage 
supports double cropping of soybeans or other spring-seeded crops. A 
fourth production area is in the Pacific Northwest, which produces both 
winter and spring canola varieties. In 2016, the U.S. produced a record 
3 billion pounds of canola seed, but for the coming year, the U.S. will 
still need to import 68 percent of our expected canola oil consumption; 
and 75 percent of our expected canola meal consumption.
    The majority of U.S. sunflowers are produced in the region 
stretching from the Dakotas to the panhandle of Texas, producing about 
2.5 billion pounds of sunflower seed annually. Of the two types of 
sunflower seed produced, oil-type sunflowers represent approximately 80 
percent of production, which is crushed for high quality cooking oil or 
sold as bird food. The remainder of production is confection seed and 
is used in the snack food and bakery markets. Confection seed types 
receive a premium over oil-type which causes the season average price 
of all sunflower seed to exceed that of other minor oilseeds. Seventy-
five percent of U.S. sunflower oil is consumed domestically with the 
remainder exported to Canada, Mexico and Japan. Exports are extremely 
important to confection sunflower seed producers as seed and kernel 
exports represent approximately \1/2\ of the U.S. confection sunflower 
industry's production. The main markets for confection seed and kernel 
are Spain, Mexico, Canada and Middle East region.
    USCA and NSA support the continuation of the ARC and PLC programs, 
with support payments tied to historical crop bases and the ability to 
choose between the programs by crop. We also encourage the use of RMA 
yields first rather than NASS yields when computing ARC-CO yields. In 
the 2014 Farm Bill sign-up, 97 percent of canola base acres were 
entered into the PLC program. Sunflower base sign-up was more diverse 
with 56 percent entered into PLC and 43 percent ARC-CO. Prices for both 
canola and sunflowers have fallen 40 percent from their peak and both 
crops have received payments from the 2014 Farm Bill, although 
sunflower payments have been less due to the confection-type's price 
premiums, which increase the all sunflower season average price. 
However, for the 2016 crop, confection premiums declined considerably 
and payments for PLC and ARC-CO are expected to increase.
    Although annual planted acres appear stable for canola and 
sunflowers, there is real concern that core acreage will not continue 
to be planted at levels high enough in the future to sustain the seed 
and processing infrastructure for these alternative crops. Many 
producers in the Northern Plains who plant canola and sunflowers have 
also begun planting soybeans as well as corn. The per acre cost of 
seeding canola is $50 more (and sunflowers $20 more) than soybeans this 
spring, and soybean acres will increase this year as farmers strive to 
reduce overall input costs. Sunflower producers in the prairie pothole 
region also have the added burden of potential black bird depredation, 
and can lose a substantial portion of their crop in the fall if large 
migratory flocks infest their fields.
    Beyond the healthy oil both these crops supply as well as the high 
quality canola meal used to supplement dairy herd rations; canola and 
sunflowers also provide needed quality habitat for honey bees as well 
as wild pollinators.
    Honey bees support $15 billion of agricultural production in the 
U.S. through pollination services, but a major decline in honey bee 
health in recent years has put these benefits at risk. This decline in 
bee health has been linked to a variety of factors, including the lack 
of suitable habitat due to increased agricultural monocultures and 
declining wild spaces. Canola and sunflowers provide ideal habitat and 
forage for honey bees when they are not being used for pollination 
services; and are preferred hive sites by beekeepers. Canola fields 
bloom for relatively long periods; some fields can provide bees with a 
good source of nectar for a month or longer under ideal weather 
conditions. Sunflowers bloom in late summer, providing habitat and 
forage at a time when fewer plants are blossoming. Maintaining the 
acreage of cropland planted annually to these two crops is essential to 
the continued viability of the honey bee industry; and increasing the 
acreage by just 2-3 million acres across the U.S. would have an 
immediate positive impact on honey bee health.
    The USCA and the NSA support the creation of an incentive to 
include canola and/or sunflowers in cropping rotations to provide 
habitat for honey bees and wild pollinators. We are uncertain whether 
this incentive should be in the commodity title or the conservation 
title, but are willing to work with the Committee to develop such an 
incentive.
    Thank you Mr. Chairman for your time and attention. I will be happy 
to answer questions the Committee may have for me.

    The Chairman. Thank you, Mr. Rynning.
    I now recognize Mr. Jack Roney, Director of Economics and 
Policy Analysis, American Sugar Alliance. You are recognized 
for 5 minutes.

   STATEMENT OF JACK RONEY, DIRECTOR OF ECONOMICS AND POLICY 
               ANALYSIS, AMERICAN SUGAR ALLIANCE,
                         ARLINGTON, VA

    Mr. Roney. Thank you, Mr. Chairman, Mr. Nolan, Members of 
the Committee. I am Jack Roney, Economist for the American 
Sugar Alliance.
    The ASA is the national coalition of sugarbeet and 
sugarcane growers, processors, and refiners. The U.S. sugar 
producing industry generates 142,000 jobs in 22 states, and $20 
billion per year in economic activity.
    I would like to summarize my written testimony today by 
describing why we have a sugar policy and how it is working.
    The U.S. is the world's fifth largest sugar producer, and 
among the world's most efficient. If we are so efficient then, 
why do we need a U.S. sugar policy? The answer is in the 
tremendous distortion in the so-called world sugar market.
    This chart tracks the world average costs of producing 
sugar over the past 3 decades. The cost has averaged 19 per 
pound over those years. If I added the world average sugar 
prices to this chart, what would you expect? Certainly, we 
would expect prices to average above the cost of production, 
high enough to keep producers in business. But here is the 
reality. The so-called world price, the red line, is averaged 
just 13, almost always well below production costs. The 28 
year average production cost is nearly 50 percent higher than 
the average price. With prices so far below cost, how can any 
sugar producers survive? The answer is in the domestic markets, 
where most sugar is produced and sold. Governments maintain 
much higher prices than the world price so that their farmers 
can stay in business. Only about \1/4\ of sugar is sold at the 
world dump price. The remaining \3/4\ is sold at much higher 
levels in the countries where the sugar is produced. Foreign 
governments subsidize their producers so generously, they tend 
to overproduce. To boost their prices in their domestic 
markets, these governments export their surpluses. That shifts 
their domestic surplus problem onto the world market.
    Absent subsidies for inefficient foreign producers, the 
world price would rise to reflect the cost of producing sugar. 
That is why we support the resolution introduced recently by 
Congressman Yoho of the Agriculture Committee. This zero for 
zero approach says that the U.S. will eliminate its sugar 
policy when foreign countries eliminate theirs. We are ready, 
willing, and able to compete on a level playing field, free of 
government intervention.
    But to give up U.S. sugar policy without any concessions 
from foreign subsidizers would be economic suicide for American 
sugar farmers. Unilateral disarmament is the antithesis of free 
trade, sending good American jobs to countries still 
subsidizing.
    American sugar policy is working well for American 
consumers and taxpayers. American consumers prices for sugar 
are among the lowest in the world, the red bar on this chart. 
Global average retail sugar prices, the green bar, are 20 
percent higher than U.S. prices. Developed country retail 
prices, the yellow bar, are almost 30 percent higher than U.S. 
prices. American consumers get a great deal on sugar that is 
high quality, safe, reliable, and responsibly produced.
    American taxpayers get a great deal, too. As instructed by 
Congress, U.S. sugar policy has run at zero cost to taxpayers 
for 14 of the past 15 years, and is projected to remain zero 
cost. The only exception was 2013, when massive volumes of 
subsidized and dumped sugar from Mexico depressed our market 
and made it impossible for some producers to repay their 
operating loans. USDA projects zero costs for sugar policy over 
the next 10 years. The CBO projects some possible costs several 
years from now, but this is based on the assumption that Mexico 
is allowed to resume dumping.
    Mexican dumping poses the greatest challenge to sustaining 
a no cost sugar policy. After Mexico's dumping in 2013, the 
U.S. ITC unanimously found that Mexico had injured the U.S. 
industry. The Department of Commerce calculated subsidy and 
dumping margins that totaled more than 80 percent. Rather than 
imposing those huge duties, the Mexican and U.S. Governments 
negotiated suspension agreements in late 2014. These were 
intended to allow continued sugar trade without Mexican 
dumping. But the suspension agreements have not been 
successful, and American producers are still hurting. The two 
governments are negotiating improvements. We support these 
efforts, but if they are not successful, we support the 
imposition of duties on subsidized dumped Mexican sugar.
    The American sugar producers have had to endure flat 
pricing for their sugar for most of the past 3 decades. In real 
terms corrected for inflation, prices are down 43 percent since 
1985. We have lost more than \1/2\ of our beet and cane mills, 
57 closures in all. The most recent casualties of Mexican 
dumping has driven Hawaii out of sugarcane after nearly 2 
centuries of high yielding production, and a Wyoming beet mill 
will close permanently later this year. The remaining sugar 
producers will have a chance to survive only if: first, the 
U.S. can implement an adequate response to Mexican dumping; and 
second, the next farm bill contains a sugar policy that 
provides a strong economic safety net.
    Thank you for your attention and your support for American 
sugarbeet and sugarcane farmers.
    [The prepared statement of Mr. Roney follows:]

  Prepared Statement of Jack Roney, Director of Economics and Policy 
            Analysis, American Sugar Alliance, Arlington, VA
U.S. Sugar Policy: Why We Have It and How It's Working
Summary
    The American Sugar Alliance (ASA) is the national coalition of 
sugarbeet and sugarcane growers, processors, and refiners. The U.S. 
sugar-producing industry generates 142,000 jobs in 22 states and $20 
billion in annual economic activity.\1\
---------------------------------------------------------------------------
    \1\LMC International, The Economic Importance of the Sugar Industry 
to the U.S. Economy--Jobs and Revenues, Oxford, England, August 2011.
---------------------------------------------------------------------------
    American sugar policy is working well for American consumers, food 
manufacturers, and taxpayers. It can provide an adequate economic 
safety net for American sugar producers, as long as there is an 
effective response to Mexican subsidizing and dumping.
    The U.S. International Trade Commission, in 2014 and 2015, voted 
unanimously that the Mexican Government and sugar industry had injured 
the U.S. sugar industry. The U.S. Department of Commerce calculated 
subsidy and dumping margins totaling more than 80%. Rather than 
imposing those duties, the U.S. and Mexican Governments negotiated 
Suspension Agreements (SAs) to resume duty-free trade, but eliminate 
harmful dumping.
    These SAs have proven ineffective. The dumping continues and U.S. 
refined sugar prices are hovering near loan-forfeiture levels. Hawaii 
has ceased cane sugar production and a beet factory in Wyoming is about 
to close. Many other American sugar producers are financially 
vulnerable.
    We are encouraging the U.S. and Mexican Governments to correct the 
shortcomings of the SAs or, failing that, to impose the subsidy and 
dumping duties.
    As long as an adequate response to foreign subsidies and dumping 
exists, U.S. sugar policy can function effectively.
Background
    The U.S. sugar industry is a major player in the world sugar 
market. The United States is the world's fifth largest sugar-producing 
country and is among the most efficient.
    The U.S. is the 20th lowest cost among the 95 largest sugar-
producing nations. Most of these are developing countries with far 
lower government-imposed costs for worker, consumer, and environmental 
protections. U.S. beet sugar producers, mostly in northern-tier states, 
are the lowest-cost beet producers in the world.\2\
---------------------------------------------------------------------------
    \2\LMC International, Sugar & HFCS Production Costs: Global 
Benchmarking, Oxford, England, August 2011.
---------------------------------------------------------------------------
    The United States is also the world's fourth largest sugar-
consuming country and the third largest sugar importer. We provide 
guaranteed, essentially duty-free, access to 41 countries. This makes 
the U.S. one of the world's most open markets to foreign sugar. The 
amount of duty-free access is determined under the World Trade 
Organization and other trade agreements to which the United States is a 
party.
    American food manufacturers and consumers depend on a reliable, 
dynamic, geographically-dispersed domestic sugar-producing industry to 
provide safe, high-quality, responsibly-produced sugar at a reasonable 
price. Despite a well-designed sugar policy in the 2014 Farm Bill, the 
low prices caused by Mexican subsidizing and dumping threaten the 
economic viability of American sugar producers.
Justification for U.S. Sugar Policy
    Since U.S. sugar producers are among the lowest cost in the world, 
one might ask why the industry requires a sugar policy at all. The 
answer is found in the distorted, dump nature of the world sugar 
market.
    Foreign governments subsidize their producers so egregiously that 
many of these countries produce far more sugar than their markets 
demand. Rather than store these surpluses, or close mills and lose 
jobs, as the United States has done, these countries dump their 
subsidized sugar onto the world market for whatever price it will 
bring. This subsidized dumping threatens further harm to American 
farmers.
    As a result of these dumped surpluses, the so-called ``world 
price'' for sugar has been rendered essentially meaningless. Rarely in 
the past few decades has the world price reflected the actual cost of 
producing sugar--a minimal criterion for a meaningful market price.
    The world price is so depressed by subsidies and dumping that, over 
the past 28 years, the world average cost of producing sugar has 
averaged nearly 50% more than the world price (Figure 1).\3\
---------------------------------------------------------------------------
    \3\LMC International, World Sugar Prices vs. Costs of Production, 
Oxford, England, March 2017.
---------------------------------------------------------------------------
    One European market expert noted: ``The world market price is a 
`dump' 
price . . . (it) should never be used as a yardstick to measure what 
benefits or costs may accrue from free trade in sugar.''\4\
---------------------------------------------------------------------------
    \4\Patrick Chatenay, Government Support and the Brazilian Sugar 
Industry, Canterbury, England, April 2013.
---------------------------------------------------------------------------
    And researchers at Texas A&M University's Agricultural Policy 
Center wrote: ``Policymakers in the United States have long recognized 
that the world sugar market is heavily distorted by foreign subsidies 
and market manipulations and have provided U.S. sugar farmers with some 
form of safety net for more than 200 years. Major exporters of sugar do 
not respond to the signals of the world market but rather to the 
policies of their governments that enable them to export sugar below 
their costs of production and their own domestic prices.''\5\
---------------------------------------------------------------------------
    \5\Dr. Joe Outlaw and Dr. James Richardson, Analysis of the 
Coalition for Sugar Reform Amendments to U.S. Sugar Policy: Potential 
Effect on Policy and Industry, Agricultural Policy Center, Texas A&M 
University, May 2016.
---------------------------------------------------------------------------
    But how can a world sugar industry exist if the price received for 
the product is just a fraction of the cost of producing it? The answer 
is twofold:

  1.  Only about 20-25% of the sugar produced each year is actually 
            traded at the so-called ``world price.''

  2.  The other 75-80% of sugar is consumed in the countries where it 
            is produced, at prices considerably higher than the world 
            price, and higher than production costs.

    The International Sugar Organization (ISO) surveyed 78 countries to 
learn actual wholesale prices--the price producers in those countries 
receive for their sugar. The ISO documents that, globally, actual 
wholesale refined sugar prices have averaged 46% higher than the world 
price over the past decade. Prices in developed countries have been 
nearly double the world dump market price--averaging 94% higher (Figure 
2).\6\
---------------------------------------------------------------------------
    \6\International Sugar Organization, Domestic Sugar Prices--a 
Survey, MECAS (15)06, May 2015.
---------------------------------------------------------------------------
    This, then, explains how we can have a vast world sugar industry: 
Governments shield their producers from the world dump market sugar and 
maintain prices high enough--above the dump market and above production 
costs--to sustain a subsidized domestic industry and generate and 
defend jobs.
    Further, this explains why we require a U.S. sugar policy--even 
with American sugar producers among the lowest cost, and most 
responsible, in the world. Generous domestic pricing encourages over-
production in many countries, whose governments then seek to export 
their surplus. Absent U.S. sugar policy, those subsidized and dumped 
surpluses would wreck the U.S. market and displace efficient American 
sugar farmers.
    Recent exposure of the U.S. sugar market to Mexican subsidies and 
dumping provides a disconcerting case in point. And Mexico is by no 
means unique. Its behavior is typical of foreign sugar exporters who 
subsidize their exports and shift the burden of their surpluses from 
their domestic markets onto the world market.
Damage from Mexican Subsidized Dumping
    When the NAFTA went into effect in 1994, the Mexican sugar industry 
was struggling financially and an occasional exporter of small volumes 
of sugar. In 2001, the Mexican Government expropriated \1/2\ of all its 
country's sugar mills, rather than allowing them to go out of business. 
With government help, Mexican sugarcane plantings exploded--up about 
60% since NAFTA was signed--though Mexican sugar demand was flat or 
declining (Figure 3).
    Mexico became one of the world's largest sugar exporters, with the 
group of Mexican Government mills by far the country's leading sugar 
producer and exporter. Virtually all those exports have been aimed at 
the U.S. market--which opened fully to Mexican sugar in 2008 under 
NAFTA rules.
    Though the Mexican Government recently officially divested itself 
of its mills, the government remains closely involved in the Mexican 
sugar industry. In addition to government ownership, Mexican growers 
and processors have benefitted from Federal and state cash infusions, 
debt restructuring and forgiveness, government grant programs to 
finance inventory, exports, and inputs, and a cane-grower payment 
system that effectively subsidizes exports.\7\
---------------------------------------------------------------------------
    \7\https://sugaralliance.org/mexican-export-subsidies-injuring-u-s-
sugar-producers/4990.
---------------------------------------------------------------------------
    In 2013, Mexican sugar production soared to an all-time high, a 
stunning 38% higher than the previous year's production. Yet, despite 
the huge domestic market surplus, Mexico was able to sustain sugar 
prices higher than in the U.S. How did they manage to balance their 
market? By dumping their subsidized surplus on the U.S. market. Mexico 
doubled its exports to the U.S., shipping about 1 million more tons 
than the U.S. market could bear (Figure 4). Mexican exports to the U.S. 
in 2013 and 2014, at 2 million tons each year, were about 250 times 
greater than their pre-NAFTA levels.
    The subsidized and dumped Mexican surpluses collapsed the U.S. 
sugar market and caused the first government cost for U.S. sugar policy 
in a dozen years, as American farmers struggled to repay loans they 
normally repay fully, principal plus interest.
    The U.S. sugar industry filed antidumping and countervailing duty 
cases against Mexico in 2014, and won. The ITC ruled unanimously that 
Mexico had injured the U.S. sugar industry and the Department of 
Commerce calculated subsidy margins of 6-44% and dumping margins of 41-
42% (Figure 5).\8\
---------------------------------------------------------------------------
    \8\U.S. Department of Commerce https://www.usitc.gov/publications/
701_731/pub4577.pdf.
---------------------------------------------------------------------------
    U.S. producer prices plummeted by more than \1/2\ from 2010 to 
early 2014, recovered somewhat in late 2014, and have fallen by a 
fourth since then. Mexican subsidized imports continue to harm the U.S. 
sugar industry despite Suspension Agreements the U.S. and Mexican 
Governments implemented in late 2014 with the intention of preventing 
further damage. Much of American sugar production cannot survive under 
current market conditions.
    Unfortunately, the SAs are not working as intended. Mexico, 
basically, has sent the U.S. too little raw sugar and too much refined 
sugar, relative to U.S. market needs. U.S. cane refiners have been 
starved for raw sugar to process and refined beet sugar prices are so 
low that loan forfeitures are a serious threat.
    The U.S. and Mexican Governments are working on modifications to 
the SAs and the U.S. Government will need to impose duties on Mexican 
sugar if the two sides cannot reach a resolution. American sugar 
producers are committed to working with our government to find a 
negotiated solution but it will taking a willing Mexican Government and 
industry to correct the flaws in the SAs.
How U.S. Sugar Policy Is Working
    U.S. sugar policy has had the same structure since the 2008 Farm 
Bill and, with the exception of the effect of Mexican dumping in 2013, 
has been a successful policy.

   American consumers and food manufacturers continue to have 
        access to high-quality, safe, affordable, responsibly-produced 
        sugar supplies.

   American taxpayers benefit from a policy than has run at 
        zero cost in all but 1 of the past 14 years and is projected to 
        remain zero cost for years to come if the Mexican dumping 
        problem is resolved.

   American sugar farmers have retained an economic safety net 
        that has helped many, though not all, to survive an extended 
        period of low prices and the catastrophic effects of Mexican 
        dumping.

    American Consumer Benefits. With U.S. wholesale prices at or below 
world average levels, one would expect American consumer prices, too, 
to be low. They are. World average retail sugar prices are 20% higher 
than U.S. prices; developed-country prices are 29% higher (Figure 6). 
With a stable U.S. sugar policy and industry, American consumers get a 
great deal on high-quality, safe, responsibly-produced sugar.
    American Taxpayer Benefits. Farm bills have long instructed the 
USDA to operate sugar policy at no cost to taxpayers by avoiding sugar 
loan forfeitures. Sugar policy requires USDA to administer U.S. sugar 
policy to ensure sugar processors can repay their operating loans at 
principal plus interest.
    USDA has consistently met this no-cost requirement, except in 2013 
when Mexico dumped subsidized sugar into the U.S. market. USDA took 
action, as directed by law, to minimize loan forfeitures, taxpayer 
costs, and long-term harm to American sugar producers.
    With Suspension Agreements in effect the CBO projects zero cost as 
long as the agreements are in place, with modest costs in the unlikely 
event the SAs, and/or duties, are terminated in 5 years and Mexican 
dumping resumes. USDA and FAPRI project zero cost over the next 10 
years (Figure 7).
    Sugar policy opponents, led by major sugar-containing product 
manufacturers, have urged opening the U.S. market to greater quantities 
of subsidized foreign sugar. But additional, unneeded sugar would 
threaten USDA's ability to administer a zero-cost policy. The Texas A&M 
researchers wrote:

          Our analysis leads us to conclude that food manufacturers' 
        reforms would undermine the no cost requirement of the law, 
        resulting in taxpayer costs, jeopardizing the viability of U.S. 
        sugar farmers and processors, and leading to higher sugar costs 
        for consumers as domestic suppliers are lost and the volatile 
        world sugar market is increasingly relied upon to meet domestic 
        demand. Meanwhile, food manufacturers may benefit in the short 
        term from depressed domestic sugar prices but, in the long-run, 
        they would suffer from the loss of what they say they need: a 
        viable, healthy, and geographically diverse supply of domestic 
        sugar.\9\
---------------------------------------------------------------------------
    \9\Outlaw and Richardson, op. cit.

    Sugar Producer Safety Net. With the exception of the year of 
excessive Mexican dumping, when prices fell below loan forfeiture 
levels, U.S. sugar policy has provided an economic safety net for 
American sugar producers. But not for all producers, and there have 
been numerous casualties.
    Since the loan support price was established in 1985 at 18 per 
pound of raw cane sugar, the loan rate has risen only 4%, to 18.75. 
General price inflation since 1985 has been 123%. Real producer prices, 
corrected for inflation, have fallen 43% since the 1980s.
    Producers who could not reduce production costs enough to keep pace 
with falling real prices for their product have gone out of business. 
We have lost 57 beet and cane operations--more than \1/2\ of all those 
operating in 1985. Hawaii has ceased growing sugarcane after nearly 2 
centuries of high-yielding production that was at the core of Hawaii's 
economic and social development. Another beet factory, in Wyoming, is 
expected to close permanently this year (Figures 8-11).
    More closures would certainly have occurred over time if not for 
vertical integration by beet and cane growers and investment in 
biotechnology and other breeding and processing advancements.
Crop Insurance
    Crop insurance is an essential risk management tool for beet 
growers and is usually a requirement by their bankers. Historically, 
crop insurance has served beet growers with minimal but adequate 
coverage. However, this past year many beet growers were plagued by low 
sugar contents in their beets that insurance needed to cover but did 
not. Beet growers are assessing the problem and will work with the Risk 
Management Agency (RMA) to find a solution. RMA has always worked well 
with our growers and we appreciate their attention to our concerns. 
Beet growers will brief the Committee in the weeks and months ahead to 
achieve an effective solution.
    Louisiana growers are encouraged by changes in the sugarcane policy 
that will fill a significant hole in coverage in Louisiana. These 
changes will be effective for the 2017/18 marketing year. Crop 
insurance policies for sugarcane in Florida and Texas will need to 
realize large scale improvements before most acres can expect to be 
covered with adequate buy-up coverage.
U.S. Sugar Policy in the Next Farm Bill
    As long as there is an adequate response to Mexican subsidizing and 
dumping, U.S. sugar policy, in its current form, can continue to be 
effective for American consumers, food manufacturers, taxpayers, and 
sugar producers.
    The response to Mexican dumping is most likely to take either of 
two forms:

  1.  Anti-dumping and countervailing duties, as calculated by the 
            Department of Commerce, that would severely limit sugar 
            imports from Mexico; or,

  2.  Effective Suspension Agreements, that would permit continued 
            duty-free sugar imports from Mexico, but limit those 
            imports to the amount, and type, of sugar the U.S. market 
            needs, and at minimum reference prices designed to prevent 
            further dumping.

    The U.S. and Mexican Governments are attempting to negotiate 
modifications to the Suspension Agreements that have been in place 
since late 2014 but that have proven ineffective. We support these 
government efforts.
Zero-for-Zero
    U.S. sugar producers recognize that subsidies and other market-
distorting polices must be addressed in order for the world dump market 
to recover and better reflect free market principles. Therefore, 
American producers have publicly pledged to give up U.S. sugar policy 
when foreign producers agree to eliminate their subsidies.
    The American Sugar Alliance has endorsed a Congressional resolution 
introduced by a Member of the House Agriculture Committee, 
Representative Ted Yoho of Florida. This ``zero-for-zero'' resolution 
explicitly calls for the U.S. to surrender its sugar policy when other 
major producers have done the same.\10\
---------------------------------------------------------------------------
    \10\https://www.congress.gov/115/bills/hconres40/BILLS-
115hconres40ih.pdf.
---------------------------------------------------------------------------
    However, to weaken or surrender sugar policy without any foreign 
concessions, as some critics of U.S. sugar policy have called for, 
would amount to foolish unilateral disarmament. We would be sacrificing 
good American jobs in a dynamic, efficient industry in favor of foreign 
jobs in the countries that continue to subsidize.
Conclusion
    U.S. sugar policy is working well for American consumers, food 
manufacturers, and taxpayers. U.S. sugar policy can continue to operate 
at zero cost to taxpayers, and provide a genuine economic safety net 
for American sugar farmers, as long as Mexican dumping on the U.S. 
market does not persist.
    American sugar producers will work hard for an effective 2018 Farm 
Bill for all American farmers. And we strongly support U.S. Government 
efforts to put an end to Mexican dumping of subsidized sugar on the 
U.S. market.
                                Figures
Figure 1
World Raw Sugar Dump Market Price: Historically Does Not Reflect Actual 
        Cost of Producing Sugar
Cents Per Pound


          Sources: World Price: USDA, #11 raw contract, Caribbean 
        ports, monthly average prices, 1970-2017.
          Cost of Production: Sugar Production Cost, Global 
        Benchmarking Report, LMC International, Oxford, England, July 
        2014.
          31-P.
Figure 2
World Average Wholesale Refined Sugar Price Nearly 50% Higher than 
        World Dump Market Price; Developed-Country Average Nearly 
        Double
2005-2014, /lb


          Source: International Sugar Organization (ISO), Domestic 
        Sugar Prices--a Survey, MECAS (15)06, May 2015. A survey of 78 
        countries, representing 79% of world sugar consumption. U.S. 
        2005-14 average: 37; U.S. February 2017 price: 28.63.
          \1\EU-28 and other OECD countries in ISO survey.
          10.
Figure 3
Since NAFTA Began: Mexican Sugar Consumption Up 15%; U.S. Sugar Area 
        Down 15%, Mexican Area Up 58%
1993/94=100


          Sources: USDA; CONADESUCA. North American Free Trade 
        Agreement (NAFTA) went into effect Jan. 1, 1994; U.S.-Mexican 
        free trade in sugar began Jan. 1, 2008.
          Note: Since 1994, 40 U.S. sugar processing plants have 
        closed. In Mexico, the Mexican Government expropriated \1/2\ 
        the sugar mills in 2001, rather than allowing them to close, 
        and until 2015 owned and operated \1/5\ of Mexican sugar mills. 
        Since 2007/08, Mexican domestic sugar demand has fallen 12% 
        because of increased HFCS consumption.
          21-2e.
Figure 4
U.S. Sugar Imports from Mexico, 1994/95-2016/17: Unpredictable, 
        Excessive Volumes, 2007/08-13/14
Thousand Short Tons, Raw Value


          Source: USDA, Global Agriculture Trade System (GATS) (http://
        apps.fas.usda.gov/gats/default.aspx).
          USDA, ERS: Table 24b-2015/16 = forecast; 2016/17 = 
        projection.
          303.

                                Figure 5
 U.S. Anti-Dumping (AD) and Countervailing-Duty (CVD) Cases vs. Mexican
                                  Sugar
------------------------------------------------------------------------
 
------------------------------------------------------------------------
2012/13                            Mexican sugar production rises by
                                    38%; Mexican sugar exports to the
                                    U.S. double (to 2 million tons);
                                    U.S. sugar price collapses.
2014:
  March                            U.S. files AD/CVD cases vs. Mexican
                                    sugar.
  May                              U.S. International Trade Commission
                                    (ITC) preliminary finding, by 5-0
                                    vote, that Mexico has injured the
                                    U.S. sugar industry.
  August                           U.S. Department of Commerce (DOC)
                                    finds that Mexico has been
                                    subsidizing and imposes preliminary
                                    CVDs at 3-17%.
  October                          DOC finds that Mexico has been
                                    dumping (selling below domestic cost
                                    of production or prices) and imposes
                                    preliminary ADs at 40-47%.
                                   U.S. & Mexican Governments announce
                                    draft Suspension Agreements (SAs) to
                                    suspend duties and resume duty-free
                                    sugar trade, with Mexican exports to
                                    the U.S. no longer to exceed U.S.
                                    needs.
  December                         U.S. & Mexican Governments sign the
                                    SAs. Mexico may fulfill 100% of U.S.
                                    import needs above trade
                                    commitments; reference prices and
                                    limit on refined share of imports
                                    set.
2015
  March                            ITC finds, by 6-0 vote, that the SAs
                                    eliminate the injurious effect of
                                    Mexican dumping on the U.S.
                                    industry.
  September                        DOC finds final dumping margins of 41-
                                    42%.
  October                          DOC finds final subsidy margins of 6-
                                    44%. Combined final subsidy and
                                    dumping margins total 48-84%.
                                   ITC final finding, by 6-0 vote, that
                                    Mexico injured U.S. sugar industry.
2016
  October                          U.S. Court of International Trade
                                    (CIT) denies the Imperial Sugar
                                    appeal of the ITC determination that
                                    SAs eliminate the injurious effect
                                    of Mexican dumping and subsidies.
  December                         DOC preliminarily determines in an
                                    administrative review of the SAs,
                                    covering 2015, that some companies
                                    may not be in compliance with the
                                    SAs and that not all statutory
                                    requirements for the SAs are still
                                    being met.
                                   Imperial Sugar appeals the CIT
                                    decision to the U.S. Court of
                                    Appeals for the Federal Circuit.
------------------------------------------------------------------------

Figure 6
Developed Country Average Retail Sugar Price: 29% Higher than U.S.; 
        Global Average: 20% Higher than U.S.
        
        
          Source: SIS International Research, Global Retail Sugar 
        Prices, July 2015, from Euromonitor, International Monetary 
        Fund; 2014 prices.
          Surveyed countries represent 67% of global sugar consumption. 
        Developed countries include OECD member countries and Hong 
        Kong.
          319.
Figure 7
U.S. Sugar Policy Cost: Zero Net Cost Before Mexican Subsidizing and 
        Dumping; Zero with the Cases/Suspension Agreements (SAs)
CBO Projections, Million Dollars


          Source: USDA, 2001/2002-2014/15 (2012/13 is net cost for 
        2012/13-2013/14); CBO, 2015/16-2026/27, January 2017.
          FAPRI = Food and Agricultural Policy Research Institute.
          16.
Figure 8
U.S. Raw Sugar Loan Rate: Real Loan Rate Down by 53% Since 1985


          Data Source: Bureau of Labor Statistics--CPI-U. Annual 
        averages, 1985-2016.
          Loan rate rose 0.25 in FY 2010, 2011, and 2012.
          6d.
Figure 9
U.S. Wholesale Refined Sugar Prices: Real Price Down by 43% Since 1985


          Data sources: BLS--CPI-U. USDA--wholesale refined beet sugar, 
        Midwest markets; annual averages 1985-2016.
          6f.
Figure 10
Wholesale Refined Sugar Prices and Sugar Company Closures: Flat Prices 
        for 3 Decades = 57 Closures from 1985 to 2016
Cents Per Pound


          Source: USDA, annual average wholesale refined sugar prices, 
        Midwest markets, 1985-2016. More operations would have closed 
        had farmers not organized cooperatively to purchase independent 
        beet and cane processing and refining facilities. Sweetener 
        user access to domestic sugar would have suffered more.
          31-S.
Figure 11
With Flat Sugar Prices Since 1985: More than \1/2\ of U.S. Sugar-
        Producing Operations Have Shut Down
        
        
          Source: American Sugar Alliance, 2017.
          54o.

    The Chairman. Thank you. I would like to thank the entire 
panel for your succinct remarks, you were right on time. I 
appreciate that.
    The chair would like to remind Members that they will be 
recognized for questioning in order of seniority for Members 
who were here at the start of the hearing. After that, Members 
will be recognized in order of arrival. I appreciate Members' 
understanding.
    I would like to start with recognizing the Chairman of the 
full Committee, Mr. Conaway, if you have any questions?
    All right. I will recognize myself for 5 minutes.
    In general to anybody that wants to respond, if low prices 
persist, will ARC and PLC in their current forms be a 
sufficient safety net? And I will start with you, Mr. Lee.
    Mr. Lee. I think so, but with some adjustments. For cotton, 
we are not there, we need to be there.
    The Chairman. Right, I understand. Sure. Mr. Gerard?
    Mr. Gerard. As the PLC currently stands with us, our 
reference price where it is, especially if we could accelerate 
payment, a portion of the payment a bit, PLC works for rice as 
is, definitely.
    The Chairman. Okay. Mr. McMillan?
    Mr. McMillan. With peanuts we would like to keep the same 
program that we have now, and that would be sufficient. But we 
need some companion crops that we can grow, because with 
peanuts, we have to rotate those crops. And so we need a 
companion crop like cotton that would have a safety net.
    The Chairman. All right. Mr. Rynning?
    Mr. Rynning. Yes, I believe for both canola and sunflowers, 
the current framework is very workable and is a good framework. 
Both organizations are quite happy with the main framework with 
some tweaking here and here.
    The Chairman. Sure. Mr. Roney?
    Mr. Roney. The sugarbeet and sugarcane farmers are 
ineligible for ARC or PLC programs because of the fact that it 
is our processor who puts the sugar under loan. What we need to 
do is retain our safety net through the non-recourse loan and 
we can maintain no cost operation of that program, assuming we 
can resolve the Mexico dumping problem.
    The Chairman. Okay, thank you.
    Mr. Gerard, rice producers overwhelmingly elected into PLC, 
and I have heard from many farmers in my state that in the 
absence of that policy, a lot of them wouldn't be farming 
today. In fact, you mentioned one of the little problems that 
we have with PLC is the delay, and that may be one of the 
tweaks that we look at. But can you explain why PLC was the 
program of choice for rice producers?
    Mr. Gerard. Yes, sir. Mr. Chairman, PLC works for rice 
because the reference price is a known. It is a known number. 
It is something we bank on. The timing is an issue, but beyond 
that, we have something that we can take to our lender and show 
that we do have a true safety net. We don't need a subsidy when 
the markets go down, we can produce a profit, but when we are 
much below cost of production, we need a safety net that kicks 
in and PLC has worked for us.
    The Chairman. Is ARC workable at all for rice, in your 
opinion?
    Mr. Gerard. The problem that I see is typical with general 
commodities, and we are seeing it happen right now. We get into 
extended periods of over production, global glut, and extended 
period of low prices. If we are looking back at an average 
history of average prices, an average price of $10 rice ends up 
to be a zero safety net. That is the biggest problem that we 
have with it.
    The Chairman. Understood.
    I now recognize the Ranking Member, Mr. Nolan, for 5 
minutes.
    Mr. Nolan. Thank you, Mr. Chairman. I just have a question. 
I would like to ask if each of you would please respond. There 
is a significant group here within the Congress that would like 
to see the farm bill separated from the food and nutrition bill 
when it comes up for consideration before Congress. 
Historically, we have had a strong tradition of the producers 
and the consumers joining together and making it possible for 
us to pass a good bill for both the consumers and the 
producers. I would be curious if each of you could just real 
quickly in the remainder of my time share with the Committee 
your thoughts on whether or not that is a good idea. I will 
start with Mr. Lee.
    Mr. Lee. Well, that is a good question. I can see both 
sides, but the SNAP program, here is a positive side there for 
ag and commodities. My main thought is that we have to be able 
to pass a farm bill, and I don't know that we could do it 
without being together. I do understand that as a grower and 
where I am, that you wonder why sometimes, but I do know that 
that would be difficult.
    Mr. Nolan. Okay. Mr. Gerard?
    Mr. Gerard. As Mr. Lee stated, the representation of 
agriculture in the United States is dwindling and has been over 
the years, and the ability to pass a farm bill on its own has 
concerns. We just trust your judgment in how to get the final 
bill completed. Thank you.
    Mr. Nolan. Well now the McMillan's are big in Minnesota. 
They own the world's largest private corporation, Cargill.
    Mr. McMillan. I will have to check into that and see if 
they are kinfolks or not.
    Mr. Nolan. You might want to check into that.
    Mr. McMillan. I would not be for separating the two out. I 
think they should go in together. This is a national security 
issue with our food, and we need to start from the farm and go 
all the way to consumer with this farm bill.
    Mr. Nolan. Thank you. Mr. Rynning?
    Mr. Rynning. Yes, both organizations I am here to speak for 
both agree that they should be kept together and that is a 
smart policy approach. Personally, it is a must. This will be 
the fourth farm bill I have been involved with, and I know how 
critical that is to keep the two together.
    Mr. Nolan. Mr. Roney?
    Mr. Roney. Mr. Nolan, we feel very strongly in the sugar 
industry that we have to keep those two aspects of the farm 
bill together. American farmers represent, what, only about two 
percent of the population now, and that coalition with the food 
consumers is absolutely critical, I believe, to maintaining a 
strong U.S. agricultural policy.
    Mr. Nolan. Well, in the remainder of my time, I want to 
thank each of you for your candor on that critically important 
issue here, and then please forgive me. I will be reading the 
remainder of your testimony and the questions. I have another 
committee meeting at this moment, so I am going to have to 
leave. But thank you for being here and thank you for your very 
good and candid testimony.
    I yield the balance of my time.
    The Chairman. I thank the gentleman from Minnesota. I 
appreciate you being here, and I recognize the distinguished 
Chairman emeritus from Oklahoma, Mr. Lucas, for 5 minutes.
    Mr. Lucas. At least you didn't refer to me as the old guy, 
Mr. Chairman. I appreciate that.
    I want to express my appreciation to the panel, not only in 
your straightforward testimony today, but in the assistance in 
putting the 2012, that became the 2013, that became the 2014 
Farm Bill together. Those of you at the table and your 
predecessors who worked in that spirit that the Committee did, 
that strange concept that all commodities in all regions all 
had to have a safety net together. That proved to be a bit more 
of a challenge than I would have expected the last time, but at 
least this time we have a framework to work through.
    Mr. Lee, you and my cotton friends, you have a special set 
of circumstances, and we should never forget that this pressure 
that cotton was under and this Committee was under because of 
the WTO case at the time the previous farm bill was put 
together made us do some things that perhaps we were more 
hopeful about than has panned out.
    But I do believe the Committee at the time tried to provide 
a parachute, so to speak, if we got into a real jam, and we had 
difficulties with the previous Administration in getting that 
implemented. I am more optimistic now with the changes that 
face us.
    But just as the panel has reinforced the point about 
nutrition and production from the farm to the consumer, those 
of you who are involved in your groups, let's discuss for just 
a moment how important it is that all commodity groups work 
together, and you have relationships and conversations, and 
many of you farm a variety of things. We had difficulty last 
time. Do you have the spirit or the feel when you talk to your 
colleagues now that everyone understands we have to be on the 
same page this time with the commodity prices generally being 
\1/2\ what they were 2 years ago? Whoever would like to touch 
that.
    Mr. Lee. And I appreciate the comments. I understand what 
you are talking about.
    I am a cotton farmer, but I am also in peanuts, corn, I 
grow most of the commodities. I don't grow rice and canola, but 
I really feel good about where we are today; and hopefully, we 
have the case behind us, and looking at a new farm bill, if we 
can figure out how to get cotton to title I, I think we will 
all be together. I feel that way. I may be wrong, but to get a 
good farm bill, we have to be together.
    Mr. Lucas. And wouldn't you say, gentlemen, that it is 
important that the concept of choice be maintained? We 
discussed briefly here ARC versus PLC. Everyone's crop, 
everyone's farm, everyone's region is a little different, but 
it is important that we have that ability to pick what is in 
our best interest, and with a new farm bill, obviously I would 
assume would reset the clock and everybody can make a choice 
again. Isn't that a fundamentally important principle? Just 
whoever cares to speak.
    Mr. Rynning. Yes, that is very clear in the policy 
discussions at U.S. Canola, and I have been involved somewhat 
with National Barley Growers. I think that is a very critical 
portion of this is maintaining the choice. And going back to 
that it is a farm bill for everyone, all farmers across the 
country. And we understand the purview of this Committee and 
the difficulty in coming up with something that fits everyone, 
and understand that.
    Mr. Lucas. One last question, and again, whoever would care 
to touch it.
    As circumstances have changed between this crop year and 
last crop year rather dramatically, most of it beyond the 
control of the producer, tell me what you and your folks back 
home are saying about the availability of credit to put this 
next crop in or to be prepared for the coming year? Is it 
getting tighter? Is it getting more complicated? Is it getting 
more expensive?
    Mr. Roney. I can take a crack at that. Sugar prices are 
down 50 percent since 2011, and I think that bankers are 
looking with great concern at our ability to maintain the 
safety net. And it becomes critical, I believe, for our bankers 
to see some sense that there is at least a safety net for our 
farmers. It is an enormous concern, moving forward, and it is 
extremely important that the commodity groups stay together on 
this to sustain as strong a safety net as we can manage.
    Mr. Rynning. Just a quick note. We just had our meeting 
with our banker and he informed us that it is taking them 
double the time to review their notes and to go through it with 
farmers and explain things. And there are some that are being 
refused, and yes, it is a critical period right now.
    Mr. Lucas. That just adds to the importance of making 
improvements in this farm bill and continuing to have a safety 
net.
    With that, Mr. Chairman, I yield back.
    The Chairman. I thank the gentleman, and recognize the 
gentleman from Georgia, Mr. Scott, for 5 minutes.
    Mr. David Scott of Georgia. Thank you very much, Mr. 
Chairman. I want to direct my question to two big crop issues, 
cotton and peanuts. And but first, let's go to cotton, Mr. Lee.
    Last year and a little beyond, we worked very feverishly 
with you in terms of the cottonseed oil issue. And under the 
leadership of this Committee and Chairman Conaway, we found a 
fix. And I want to know if this fix is the way we need to go, 
and my understanding of this fix is to designate cottonseed as 
other oilseed so that it is available for both PLC and ARC. Is 
that correct, so that it would be somewhat budget neutral by 
using generic base acres?
    Mr. Lee. Yes, sir. There are two trains of thought there, I 
guess. The Cotton Council has a proposal to designate 
cottonseed as other oilseed as an administrative fix is what we 
talked about to start with, but now we think that we have a 
plan, the Council has a plan to, through appropriations, have 
an opportunity to convert generic base to cottonseed base, and 
you could either convert cottonseed base or other commodities.
    Mr. David Scott of Georgia. I only have 5 minutes, and I 
want to get to peanuts. What I am after is Georgia is the 
number two state in cotton production.
    Mr. Lee. Right.
    Mr. David Scott of Georgia. Second only to the great State 
of Texas. What I want to know is what do you, in a short 
sentence, what is it that you need us on this Committee to do 
in the next farm bill to make the cotton folks happy?
    Mr. Lee. Okay. We feel to get back in title I, that we have 
a plan to try to get back into title I before the new farm bill 
so that we can be at the table in the new farm bill and have a 
baseline.
    Mr. David Scott of Georgia. And to get back into title I, 
what must we do, the Committee.
    Mr. Lee. We need to convert generic base back to a 
cottonseed base, because it was a cotton base. Now we have a 
plan to convert that and have the opportunity to also convert 
generic base to other commodities, too.
    Mr. David Scott of Georgia. Okay.
    Mr. Lee. And I am not really answering that right.
    Mr. David Scott of Georgia. Well that is okay. You know 
that I had an old professor to tell me one time, sometimes it 
is not the right answer that matters, but it is the right 
question that is asked. We will move to make sure we make it 
happen.
    Mr. Lee. Let me just say, we just need you to work with the 
National Cotton Council and any proposal that you have to get 
back into title I.
    Mr. David Scott of Georgia. We will, because you all need 
help, and I want to move to peanuts right quick.
    Mr. McMillan, I must say at the very beginning, when the 
name Enigma came up, I immediately called the line, one of the 
most famous Georgia legislators that made that name, and I 
believe his name was Bobby Rowan.
    Mr. McMillan. That is correct, Mr. Bobby Rowan. That is 
correct. He ran for governor one time.
    Mr. David Scott of Georgia. Yes, he did.
    Mr. McMillan. Yes, sir.
    Mr. David Scott of Georgia. I served with him for 28 years 
in the Georgia Legislature, 8 in the House and 20 in the 
Senate.
    I want to get a comment on that crop rotation situation, 
and tell us as far as the peanut marketplace, what has been the 
impact of the 2014 Farm Bill on the peanut industry?
    Mr. McMillan. Without the 2014 Farm Bill, the peanut 
provisions, I wouldn't be in business today. It has been, I 
want to say a bright spot on our farm is the peanut program. It 
is not a great program, it is just the best program alternative 
we have, and that is part of the problem is we don't have any 
alternatives in the area that I live, other than grow peanuts. 
And we have been forced to plant peanuts and get out of our 
rotation just to be able to try to survive.
    Mr. David Scott of Georgia. Thank you. Thank you, Mr. 
Chairman.
    The Chairman. I thank the gentleman, and we are going to 
continue with Mr. Scott in Georgia for 5 minutes.
    Mr. Austin Scott of Georgia. Thank you, Mr. Chairman.
    Mr. McMillan, I want to continue down that path. Just what 
percentage of the U.S. peanut production do the growers in the 
federation states represent?
    Mr. McMillan. Eighty percent.
    Mr. Austin Scott of Georgia. Eighty percent, and do the 
shellers support your farm bill position and the buying points 
support it as well?
    Mr. McMillan. Yes, the Buying Points Association and the 
Sheller Association is in agreement with us. In fact, I have 
never seen the peanut industry so unified.
    Mr. Austin Scott of Georgia. I heard what you said about 
the lack of a safety net for other crops leading to potentially 
more peanuts being planted than normally would be. Do you 
believe that the $530 a ton reference price is the reason for 
the additional acreage being planted, or do you think it is the 
lack of options that are available for the farmer?
    Mr. McMillan. Congressman Scott, you are on to something 
there. We do not have many options, but when a farmer makes his 
planting decision, he is looking at several things. He is 
looking at the market, he is looking at his rotation, he is 
looking at the farm program, he is looking at the cost of 
production. So that farmer, he is looking at several factors 
when he makes his planting decision.
    Mr. Austin Scott of Georgia. He is also, in many cases, 
having to negotiate with his banker on what he is going to 
plant as well.
    Mr. McMillan. That is correct.
    Mr. Austin Scott of Georgia. Do you believe that we have 
too many peanut acres in the marketplace today?
    Mr. McMillan. No, we do not. The demand and supply is in 
balance. We have about 800,000 tons of excess peanuts, which 
really is not excess. That is just a 90 day supply that carries 
us over into next year. That is healthy. That is where we need 
to be for all parts of the industry. And so we do not plant 
based strictly on the farm policy. It is market and the demand 
and supply is in good shape right now.
    Mr. Austin Scott of Georgia. Mr. Lee, Mr. Lucas talked a 
little bit about STAX and the design and the implementation of 
it. It was initially designed by the National Cotton Council, 
but changes were made from that original design during the 2014 
Farm Bill, and putting it together. Can you briefly explain 
those changes that were made, and what effect they had on this 
crop insurance policy?
    Mr. Lee. Yes, due to the case with WTO of Brazil that had 
been ongoing, the Cotton Council decided the only option we had 
was crop insurance. We came up with STAX crop insurance, and to 
get us a safety net for cotton. The problem was that in the 
process, we had 95 percent coverage and a reference price in 
the crop insurance. In the process, we wound up with 90 percent 
and no reference price. We didn't have any coverage for a long 
time, for a longer turn, downturn in the market. Basically, it 
has not worked. We had 25 percent use of people taking STAX, 
because it is just with the low market, it doesn't pay.
    So that was our only option at that time, and now we have 
that behind us and we need to find a way that we think we can 
get cottonseed back into title I.
    Mr. Austin Scott of Georgia. If I could, Mr. Lee, and I 
have heard a lot of cotton growers express that they don't feel 
like it is worth paying the premium for the coverage.
    Mr. Lee. That is right.
    Mr. Austin Scott of Georgia. Up here, many people would say 
well why don't they just change and plant a different crop, 
people from the metropolitan area, so just briefly, in about 30 
seconds, can you explain why cotton producers don't just switch 
planting to another crop, and the impacts on all of the 
businesses, warehouse ginners through the area?
    Mr. Lee. First of all, we have a great infrastructure. As 
David said, we need a rotation, first. But we have 
infrastructure. Cotton pickers are $700,000 a piece. Gins, 
warehouses, it is a huge infrastructure and it has a large 
ripple effect in the rural economy. We just need cotton in the 
mix.
    Mr. Austin Scott of Georgia. Mr. Lee, thank you. My time 
has expired, but I would just like to remind the Chairman, as 
you know, if you don't like being dependent on foreign oil, 
wait until you are dependent on foreign sources of food.
    With that, I yield the remainder of my time.
    The Chairman. Amen. I recognize the gentleman from Arizona, 
Mr. O'Halleran, for 5 minutes.
    Mr. O'Halleran. Thank you, Mr. Chairman. Mr. Lee, I have a 
couple of questions. The first one deals with the, as I read 
here for the programs--I didn't read it right. ``For the 
intended objectives of this program, the Cotton Competitiveness 
Program, to be met, USDA needs to take steps to update the key 
price data being used.'' Then you go on to state, ``If USDA 
continues to resist this administrative adjustment, then we 
will seek to make the modifications in the next farm bill.'' 
Why is there resistance for this adjustment?
    You had indicated in your written testimony about the ELS 
Cotton Competitiveness Program, and for the intended objectives 
of this program to be met, USDA needs to take steps to update 
the key price data being used. ``If USDA continues to resist 
this administrative adjustment, then we will seek to make the 
modifications in the next farm bill.'' What is the resistance 
by the USDA on making the adjustment?
    Mr. Lee. I think that is to do with the price of pima ELS 
cotton and the support. The market is much higher than the up 
and coming, and I don't think it is on a level playing field as 
it stands, and we need to be competitive of that, and that 
grade of cotton is growing in other countries as well. We need 
to be competitive.
    Mr. O'Halleran. You mention, though, that they are 
resistant in doing that. Why are they resistant in doing that, 
USDA?
    Mr. Lee. Well, they don't recognize China as an exporter of 
ELS cotton, and that is part of it. It is a little bit 
complicated.
    Mr. O'Halleran. Okay, thank you.
    Mr. Lee. I am an upland grower, sir.
    Mr. O'Halleran. You mentioned that returns on other crops 
have decreased, and that is leading to increased cotton acres. 
What crops were you referring to?
    Mr. Lee. I don't know why I am having a hard time 
understanding you. Say that again?
    Mr. O'Halleran. You mentioned either during your testimony 
or your written statement that returns on other crops have 
decreased, and that is leading to increased cotton acres. What 
crops were you referring to that have been decreased?
    Mr. Lee. Have increased?
    Mr. O'Halleran. Decreased.
    Mr. Lee. We have increased peanuts and decreased corn, 
soybeans, wheat. I don't really follow that question, sir.
    Mr. O'Halleran. Okay.
    Mr. Lee. I am sorry.
    Mr. O'Halleran. No problem.
    For any other witnesses, now that we are entering the 
fourth year of the 2014 Farm Bill, can you describe how it has 
affected the rural economy in general? Do you see any 
differences as compared to the 2008 and previous farm bills? 
Anybody can take that question.
    Mr. Roney. Mr. O'Halleran, speaking for the sugar industry, 
we have seen one profound change, and that is that Hawaii has 
gone out of sugarcane production after producing sugar for 
about 170 years. That was the direct result of Mexican dumping 
into our market, and by the same token, all our producers are 
struggling. Wholesale refined beet sugar prices are off 50 
percent over the last several years, and we have a beet mill in 
Wyoming that will be closing this year. Many of our younger 
farmers are having trouble being able to stay afloat, being 
able to get sufficient credit to stay in business.
    So there is a great amount of vulnerability in our industry 
for both beet and cane farmers.
    Mr. O'Halleran. Thank you, and given my time, Mr. Chairman, 
I would like to just make a quick statement that I am very 
concerned about this farm bill as it relates to the ability of 
our farmers and growers to be able to compete against dumping 
and the other pricing mechanisms that other countries are 
using. I yield back.
    The Chairman. I thank the gentleman, and I recognize the 
gentleman from Illinois for 5 minutes, Mr. Bost.
    Mr. Bost. Thank you, Mr. Chairman.
    My question is for Mr. Gerard, if you would. First off, let 
me start, before I ask this question, because I know you are 
familiar with my background and where I come from. Living just 
adjacent but farming in my district, you are familiar that I 
came from a trucking background, and in that trucking 
background, I would have the blessing of whenever I ran the 
business of having my father, my grandfather, it was truly a 
family business. It was also my uncle and now my brother 
actually runs that business. I was in that business for 10 
years. I loved it for 8. But I didn't realize until your 
testimony that each one of us try to catch up and each time we 
are finding out something new if we weren't here for the 
writing of the farm bill that we are under now.
    Can you kind of expand, because you said something and two 
of us were caught off guard. Can you expand on the concerns 
that the producers are having with the actively engaged 
regulations, okay, because a lot of people said all of a sudden 
a member of the family dies, you lose them, now all of a sudden 
the rules change. Can you expand on that, and then can you 
describe how important it is that we correct this as we move 
forward in the new farm bill?
    Mr. Gerard. Yes, this is a very critical topic.
    I will lay out an example that I can understand. It is 
pretty simple. If we have, for example, two brothers that are 
farming and they both have two children, then that is one big 
family partnership operation. There are six people involved. In 
the middle of the cropping year, in the middle of July, one of 
the brothers passes away. That family, that farming operation 
loses three payment limitations that moment. It adds misery to 
grief at that point in time. They have structured their whole 
operation revolving around this, and without intention, their 
operation has lost $375,000 payment limitation. And that is an 
issue. You can't plan financial planning and it is a disaster.
    Mr. Bost. The next question would be then, the language 
that we produce in the next farm bill should say some kind of 
stipulation based on when you first applied, and then it should 
cycle through based on that, correct?
    Mr. Gerard. I agree with you completely. Yes, sir.
    Mr. Bost. All right. That is a concern that many of us 
have, like I said, when you mentioned it in your testimony, 
there were three of us that were sitting here and it never 
clicked that the tragedy could happen and to lose a family 
member for whatever reason, and then all of a sudden those 
agreements become null and void, not null and void, but really 
knock you for a loop.
    Mr. Gerard. Right, right.
    Mr. Bost. And Mr. Chairman, I have no other questions. I 
yield back.
    The Chairman. The gentleman yields. I recognize the 
gentlelady from Delaware, Ms. Blunt Rochester, for 5 minutes.
    Ms. Blunt Rochester. Thank you, Mr. Chairman, and thank the 
panel. I am torn because I have two questions, and I know it 
will take up too much time, so I am just going to plant a seed, 
no pun intended.
    Really, what I want to ask about is young farmers and 
particularly some of the challenges in terms of credit and high 
land prices. But the question I am going to ask first is one I 
asked last week, which applies to all commodities, and last 
week I asked about one of the biggest challenges that we hear 
for farmers and also the ag economy in general is about market 
volatility. Did the 2014 Farm Bill, the programs that were 
enacted, how did they react to price variation? Did the farm 
programs and crop insurance smooth price volatility for your 
commodities? That is for the whole panel.
    Mr. McMillan. Representative, if it is okay, I would like 
to address the young farmers.
    Ms. Blunt Rochester. Okay.
    Mr. McMillan. Will that be okay?
    Ms. Blunt Rochester. Sure.
    Mr. McMillan. Because it is very passionate, and I 
appreciate that question. It is a concern we have had really 
for decades getting young people back into farming, because we 
don't need to lose a generation of farmers.
    The reason it is so passionate for me, and one reason I am 
here today, is I have a 20 year old son who is at University of 
Georgia majoring in agriculture. But I am also very anxious. I 
want him to come back to the farm and I am anxious about that 
because equipment costs, land costs, problems we are having 
with labor now. I am very concerned of whether he will be able 
to make it or not. And I know if he didn't have an uncle and a 
daddy that he could come back to, it would be almost 
impossible. The only way that he is going to be able to make it 
is by us giving him a hand up.
    Ms. Blunt Rochester. Got you. Anyone else on either one of 
those questions?
    Mr. Rynning. Yes, it is a major factor in agriculture is 
that the established generation has to help out the up coming 
generation. Sometimes it just becomes too difficult, and that 
is where you get back to the first question and taking out some 
of the volatility is, of course, a major job of a farm bill, I 
believe, anyway. ARC and crop insurance are susceptible a 
little bit to a long run of lower prices, whereas PLC helps 
establish a more permanent base, but they both serve their 
function and serve it well.
    Ms. Blunt Rochester. Thank you. Anyone else?
    Mr. Roney. Congresswoman, from the point of view of the 
sugar producers, the 2014 Farm Bill provided an excellent 
safety net program, but we were just overwhelmed by subsidized 
sugar from Mexico. Sustaining a program very much like what we 
have will work and will smooth out that volatility, as long as 
in another venue we can negotiate a better arrangement with 
Mexico.
    Ms. Blunt Rochester. Thank you.
    I go back to the young farmer. I had an opportunity to have 
a roundtable with farmers in our state in Delaware, and it was 
one of the issues that most people really were concerned about. 
And as you mentioned, Mr. McMillan, for their families, for 
their future, and it is one of the reasons I am glad to be on 
this Committee.
    So thank you so much for your time. I yield back.
    The Chairman. The gentlelady yields. I recognize the 
gentleman from Florida, Mr. Dunn, for 5 minutes.
    Mr. Dunn. Thank you very much, Mr. Chairman, and thank you 
gentlemen for being here and helping us with this.
    My first question is for Mr. McMillan. In your testimony, 
you stated that Florida's largest peanut grower organization 
supports the current PLC programming and supports continuing it 
in the new farm bill. Now some of my producers don't have base. 
They don't have generic base, or any base. And so what are the 
potential solutions for them, in light of I heard you say that 
the peanut farmers are all unified?
    Mr. McMillan. This is not a problem for me, but it is a 
problem for those peanut producers. Those peanut producers have 
been growing peanuts in the past, and what I would suggest in 
the next farm bill is that we look at possibly allocating them 
some base, based on their past cropping history. My only 
concern is about cost.
    Mr. Dunn. What kind of bases do you personally have in your 
farm, and how did you get those bases?
    Mr. McMillan. On our farm, we have peanut base, we have 
generic base----
    Mr. Dunn. Do you have other bases? I don't know.
    Mr. McMillan. Yes, sir, we have generic base, we have 
peanut base, and we have rye and corn base.
    Mr. Dunn. Okay.
    Mr. McMillan. Those bases were allocated to us over 
different farm bills going all the way back to 1990. I am not 
sure, but the different farm bills that we have had, we have 
been allocated those bases based on our cropping history. 
Almost in every case that is the way it was allocated. Another 
way that you can acquire base is if you buy a farm, the bases 
come with that land. And then we, in 2002, did it kind of the 
old-fashioned way. In 2002 we were able to buy base. We were 
allowed to do that, and we were allowed to do that, and we 
bought base and moved it to our farm.
    Mr. Dunn. Can that still be purchased, base?
    Mr. McMillan. No, sir.
    Mr. Dunn. I actually didn't think it was, I just wanted to 
check with you.
    In the interest of time, let me ask a different question, 
Mr. Roney, are foreign countries now cutting back on their 
subsidies and their programs for their sugar producers?
    Mr. Roney. No, sir, they are not, and thank you for asking. 
There has been a sense that globally we are moving more toward 
free trade, but that certainly has not been the case in the 
sugar industry because of the volatility in the work sugar 
market, and we had prices \1/2\ of what they are now just a 
couple of years ago. Countries are getting more aggressive 
about subsidizing and we have had work done that shows Brazil, 
the biggest exporter in the world, is subsidizing to the tune 
of $2 to $3 billion per year. Thailand, the second biggest 
producer, is subsidizing for just under $2 billion a year. 
India, the second biggest sugarcane producer, is subsidizing $1 
to $2 billion per year, so unfortunately, it is getting worse. 
We seem to be moving further from free trade in sugar than 
closer to it. And that makes it all the more important that we 
sustain the U.S. sugar policy's response to those foreign 
subsidies.
    Mr. Dunn. Thank you for that also, Mr. Roney.
    Some sugar containing product manufacturers, candy, et 
cetera, they claim that U.S. sugar prices are costing them jobs 
and consumers would benefit if the sugar prices were lower. Do 
you see that as true, and if not, can you explain that?
    Mr. Roney. Certainly not, Congressman. When you look at 
sugar containing product manufacturers, that is one of the 
strongest sectors of the economy financially. They have grown 
about 30 percent in the last 10 years or so. They have shed a 
few jobs in that process, but if production is rising and they 
are reducing the number of jobs, that is because of automation, 
mechanization. That is all there is. If you look at a candy bar 
that in 1985 cost 35, it had about 3 worth of sugar in it. If 
you look at a candy bar this year that costs $1.49, it has 
about 3 worth of sugar in it. First, the cost of the sugar is 
minor in their overall costs for producing that product; and 
second, what they are paying for that sugar has stayed 
incredibly stable over the last 30 years. If we gave them the 
sugar for free, I don't think you would see a candy bar go down 
in the slightest.
    Mr. Dunn. Thank you for that clarification.
    Mr. Chairman, I yield back.
    The Chairman. I thank the gentleman, and recognize the 
gentleman from Florida, Mr. Lawson, for 5 minutes.
    Mr. Lawson. Okay, thank you very much. My questions will 
center around Cuba. Can you talk about the parts of creating 
trade market with Cuba around the rice industry? Can you 
elaborate on the potential increase to U.S. rice industry in 
dealing with Cuba? I really have some concerns about that 
because of this new market that is supposed to be opening up. 
Mr. Gerard?
    Mr. Gerard. Yes, sir. At one time, Cuba was our number one 
export destination for U.S. grown rice. They are very close 
proximity, as you well know, to the United States, and it is a 
natural market for USA rice, and I believe we would see a 
significant increase in demand rather rapidly if trade were 
opened.
    Mr. Lawson. Okay. I have a question for sugar. Mr. Roney, 
sugar policy opponents have claimed that they want to modify 
the sugar policy, not repeal it. What changes they are calling 
for such as means testing, operating loans for sugar processors 
penalize sugar farmers?
    Mr. Roney. Thank you, Mr. Lawson, for that question. What 
is vexing for us is that when our opponents say that they just 
want to do some minor modifications to the sugar policy and not 
repeal it, in fact, what they suggested would rip the safety 
net out from under our producers. A study done by the 
Agricultural and Food Policy Center at Texas A&M, Professor 
Outlaw looked at that carefully and decided that looking just 
at what the sugar policy opponents are proposing, so they would 
pull out the safety net. It would put a lot of U.S. producers 
out of business. And ironically, he said that would be a bad 
practice for consumers in general and for these food 
manufacturers, because they would have fewer sources of 
domestically produced sugar for their operations. That is why 
we really prefer to sustain sugar policy in its current form 
and maintain a strong safety net as the policy was designed in 
the last farm bill.
    Mr. Lawson. Okay, and the other question I would have is in 
Florida, there has been considerable amount of elaboration 
between sugar and the environmental industry, especially as it 
relates to the Everglades in Florida having a balance there in 
terms of the importance of the water supply for south Florida. 
And it always comes up in an issue, and I want to know from the 
industry standpoint, how do you feel that the water management 
districts in those areas have been balancing the relationship 
between the sugar industry and the protection of the 
Everglades?
    Mr. Roney. Yes, sir, that is a difficult problem, and one 
within that problem is that so many of the proponents for the 
Everglades are really scapegoating sugar. There are millions of 
people living around that area. There are many other 
operations, ranching and so on, and vegetable operations, and 
sugar tends to be scapegoated. But the sugar farmers in Florida 
have really been using their best agricultural practices and 
have far exceeded the goals or the targets that were given to 
them to reduce phosphorus and other runoff. I am optimistic 
that we can find a balance there and not have to shut down a 
very efficient important sugar industry in that area that is, 
in some rural areas around the Everglades, is virtually the 
only job provider, and work out a balance. I think that the 
sugar producers are very keen on being good stewards of the 
land and maintaining clean water and clean environment, and 
they are fully capable of continuing to achieve that.
    Mr. Lawson. Okay, thank you. I yield back, Mr. Chairman.
    The Chairman. The gentleman yields. I am pleased to 
recognize the full Committee Chairman, Mr. Conaway. Did you not 
want to ask any questions? Okay. Then Mr. Arrington is 
recognized for 5 minutes from Texas.
    Mr. Arrington. Thank you, Mr. Chairman, and thank you, 
panelists. Mr. Lee, good to see you. I enjoyed speaking with 
you out in my district. You guys know, and I know Mr. Lee does, 
that I represent the largest cotton producing district in the 
country, and west Texas and cotton are synonymous. Cotton is 
king. Cotton is life. And we are in a real crisis. It is a real 
disaster, and if we let it continue much longer, it will 
fundamentally alter our economic landscape. And I imagine that 
there are a lot of rural communities in the Cotton Belt that 
are similarly situated, and so I come with grave, grave 
concerns and with a sense of urgency with respect to our cotton 
producers.
    One of our first hearings, I asked an ag economist policy 
expert could the rationale that was applied by the WTO in the 
Brazilian case be applied to other commodities, and the answer 
was yes, it could. My question to you is what would America be, 
how would we be positioned economically and from a national 
security perspective if we pulled all of the commodities out of 
title I? Do you agree with me it would be an epic national 
security crisis? Just yes, no?
    Mr. Gerard. Yes.
    Mr. Lee. Yes, sir.
    Mr. Arrington. Are you all concerned that the next 
commodity to be pulled out of the title I on account of WTO or 
some complaint from another country, maybe Brazil, maybe India, 
maybe China, that will result in your commodity being pulled 
out of the safety net that protects your commodity and your 
farmers from market volatility?
    Mr. McMillan. Yes.
    Mr. Arrington. I am very concerned, and I would like, Mr. 
Lee, if you would just expound a little bit on the seriousness 
of this crisis, the sense of urgency, and its effect on the 
broader ecosystem in the Cotton Belt.
    Mr. Lee. Well, cotton was singled out, as you say, and we 
started a long time ago and we gave up different programs along 
the way. But then in 2014 we gave it all up, I guess, for STAX.
    But I am right there with you. I have been in your area. 
but you only have cotton, basically. We do have other crops, 
and so therefore, peanuts for one, corn, if any one of those 
are singled out, it would be tough, really, really tough.
    Mr. Arrington. Mr. Lee, I want to implore of my 
colleagues----
    Mr. Lee. We wouldn't survive at all.
    Mr. Arrington. I want to implore my colleagues, please help 
us get cotton back in the farm bill. Please help us get cotton 
back as a title I covered commodity. It is the only commodity 
that is not in the farm bill, and we are sucking air. Ag is 
sick. The farmer is in the hospital. Cotton is in the ICU. 
Help. And I don't know how much time we have.
    So let's talk about China. I appreciate Mr. O'Halleran's 
perspective and thoughts and comments about market manipulation 
by countries. It is my understanding that China is the number 
one cotton producing nation in the world. Is that correct?
    Mr. Lee. I think India is now.
    Mr. Arrington. Okay. Well they are one and two.
    Mr. Lee. China is right up there with them.
    Mr. Arrington. Okay, well they are top two. It is my 
understanding also that China is designated as a developing 
nation, according to the World Trade Organization, which allows 
them to subsidize their cotton farmers, much like we support 
our farmers, maybe even more so, but is that true?
    Mr. Lee. That is right. They are subsidizing their growers 
of twice the price of polyester for the cotton, and as I said 
earlier, we are having to compete with China and India on the 
polyester or manmade fibers.
    Mr. Arrington. Mr. McMillan, my understanding also, because 
I represent peanut growers and we have had a mass migration of 
cotton farmers to the peanut production side, and that has a 
negative effect on the price and so my question to you is has 
there been a ripple effect and an adverse impact on the peanut 
growers on account of cotton being taken out of the farm bill?
    Mr. McMillan. There is no doubt we need a companion crop 
with peanuts, and cotton is something that we grow very well 
with peanuts for rotation. But right now, the peanut demand and 
supply is in balance right where we should be, so we have 
probably had some increase in acreage of peanuts because of 
cotton, and anytime supply dictates price. But right now with 
peanuts, we are in a good situation.
    Mr. Arrington. I yield back, Mr. Chairman. Thank you.
    The Chairman. The gentleman yields. I recognize the 
gentleman from Georgia, Mr. Allen, for 5 minutes.
    Mr. Allen. Thank you, Mr. Chairman, and thank you, 
distinguished panel, for coming and talking about, I guess, all 
this depressing news that we are dealing with as far as 
commodity prices and that sort of thing.
    I believe we can all agree that trade and expanding markets 
are vitally important to the agriculture industry and our 
products, and we have already touched on the issues in China. 
My shirt is made of cotton, which probably most everybody in 
here is wearing a shirt made of cotton, and it probably came 
from somewhere near China or Asia. We are the big consumer as 
far as textiles are concerned. We also make the best cotton in 
the world. The cotton which is mentioned, I don't know about 
the cotton in India, but I know the cotton in China is not as 
good as our cotton.
    So with that in mind, as far as our trade policies are 
concerned, Mr. Lee, when we talk about agricultural trade 
issues and competition from foreign producers, what are the 
most challenging issues that U.S. cotton producers face 
globally? In other words, we have the best cotton. We buy most 
of the shirts. It looks like we could figure that out and say, 
``Okay, we have an industry over here that we have to protect. 
How can we do that?''
    Mr. Lee. Well, one thing that we have been doing is the 
program that is public-private that we have helped support the 
domestic mills, and then so they can add mills or add 
equipment, increase capacity, create jobs, and we need to 
continue to do that.
    As far as the cotton side, as I said earlier, we are 
exporting 75 percent of the cotton, 15, 20 percent of the 
textiles. We need to continue to really be focused on the 
export markets. Our largest market for----
    Mr. Allen. Right. As far as the--because we have the next 
farm bill coming up, cotton is not protected in this farm bill, 
and you mentioned the cottonseed issue in your testimony. Can 
we get to the next farm bill without some help here, or I mean, 
we had the commodity folks in here and they said, ``The good 
news is we don't think prices are going down, but the bad news 
is we don't think prices are going up.'' How do we get cotton 
to the next farm bill?
    Mr. Lee. Well first of all, the Council's program or plan 
is a good plan to get there. My first comment I want to make in 
what you just said though is that if we wait until the next 
farm bill, us to grow cotton, we won't get it, any kind of 
support until the fall of 2020. If we don't get something to 
bridge us to get to the table as a farm bill----
    Mr. Allen. Bottom line, something has to be done.
    Mr. Lee. We won't have anything.
    Mr. Allen. Okay, immediately. Okay, and as far as peanuts, 
Mr. McMillan, you had mentioned in your testimony that you use 
the PLC program versus the ARC program. Why did you choose the 
PLC program for participation versus the ARC program?
    Mr. McMillan. I tried to study both of those programs 
before I signed up, and the reason I chose PLC program is 
because I was familiar with it. It was very similar to the 2008 
Farm Bill. And then we had our land-grant universities who are 
doing research and trying to figure out what would be best for 
Georgia farmers, and they were leaning us towards PLC for 
peanuts.
    Mr. Allen. And do you believe that the success of PLC, for 
peanut producers, that we are okay there as far as the future 
is concerned with folks going to that program?
    Mr. McMillan. Yes, sir, the PLC program is what we need for 
peanuts.
    Mr. Allen. Okay. All right, well my time has expired. I 
yield back. Thank you so much.
    The Chairman. The gentleman yields back. I recognize the 
full Committee Chairman, Mr. Conaway.
    Mr. Conaway. Well I thank you, Mr. Chairman. Again, 
gentlemen, thank you for being here today. I appreciate it. You 
have all highlighted just a couple of things we have to get 
done in the next farm bill. Communication is a big deal, 
obviously, and so help us understand the impact that these last 
3 or 4 years have had on you in respect to the 2014 Farm Bill 
was done, things were good enough in agriculture that people 
actually asked do we really need a safety net for production 
agriculture, because prices are never going to go down. Well 
here we are, 2017, 2018 is not anticipated any better. Can you 
share with us better ways we currently have been saying it, the 
impact it has, and why we need a farm bill, why you need these 
programs, and telling your own story since the American 
consumer enjoys the safest, most abundant, and affordable food 
and fiber supply in the world. While producers are obviously in 
favor of a farm bill, SNAP folks are in favor of a farm bill, 
why wouldn't anybody who eats in America be in favor of a farm 
bill that delivers in that deal? They go to the grocery store, 
they get a deal and they don't know it, and they certainly 
don't know why they are getting a deal on their food. And 
restaurants are the same way. And so help us understand the 
impact, the differences between the 2014 back drop and the 2018 
Farm Bill is, and why it is so important that we have this farm 
bill.
    So any thoughts you have in making that happen, please 
start doing that. I want to deputize each one of you to be a 
part of the messaging system that tries to convince that 
monster group out there of those of us who like eat why it is 
in our best advantage to keeping you guys in business. Any 
thoughts you have on how we distinguish between what was going 
on in 2014 versus 2018 that would help us in our communications 
with our constituents back home as to why this program does, in 
fact, work? Anybody on the panel, and then think about that 
moving forward as you do your jobs.
    Mr. Lee. I will start by saying that we have the best story 
to tell, but we are not able to get it out there? Consumers 
just don't get it. The subsidies that we get pass through us to 
the consumer to have cheap food and cheap fiber, and that is a 
hard message to get out there. But that is the way I see it.
    Mr. Gerard. In our case, the PLC program is working for 
rice the way it was designed. I mentioned a few tweaks we can 
do, but in defense of this, all of these commodities simply 
cannot compete with foreign government subsidies, and there are 
producers all over the world that are producing for a subsidy. 
They are overproducing as a result of these lucrative 
subsidies. There is encouragement to plant crops when the 
market tells them otherwise. That distorts the world price of 
commodities and results in costing the American taxpayer money.
    Mr. McMillan. The PLC program is also working very well for 
peanuts, and it is what is really keeping us in our part of the 
world in business right now. But to answer your question about 
the farm bills, it not only affects the farmers and keeps them 
in business, but it keeps your car dealers in town, your 
restaurants in town. It goes out into the rest of that 
community. These farm bills are so important, and without those 
safety nets, I don't think we can stay in business.
    Mr. Rynning. As you alluded, at one time we thought well 
there was the new paradigm. We don't have to worry about these 
things, right? A lot of growers felt the same way, do we need 
this anymore, and the growers themselves have, of course, seen 
the light blaringly in the last 2 years, 3 years, and the 
trouble is getting that across to the general public as to how 
essential these things are. And there are still organizations 
and groups of people that are saying no, it is not needed 
anymore, and I definitely strongly disagree with them and will 
do everything I can to get that word out.
    Mr. Roney. Mr. Chairman, I have had the privilege of 
working for American farmers in this town for 40 years, and I 
have been incredibly proud of that. And I have been discouraged 
at times to see how much the society in general takes 
agriculture for granted, that we have a wonderful, safe, cheap 
food supply, and they don't realize what it takes to produce 
that, how proud we are that we are efficient by world 
standards, all American farmers, while adhering to some of the 
highest standards in the world for defending workers and 
consumers and the environment. And so I would hate to see 
consumers get a rude awakening if we gave up our agricultural 
policies, let our farmers go out of business, and became more 
dependent on foreign food. It would be less dependable. It 
would be lower in quality. It would be in all likelihood less 
safe, and I am sure we would have more volatile pricing than we 
have now.
    You are absolutely right. We do have a major message. It 
has been a battle. I have been witnessing it for decades, but 
to get across to the American people how good we are at what we 
do in American agriculture, and how important it is that we 
have the ability to stay in business and not be put out of 
business by foreign subsidized producers.
    Mr. Conaway. Well if the Chairman would indulge a couple 
more seconds, thank you again. Ronnie has a great story to 
tell. He just had to tell it over and over and over and over to 
you. He is sick of telling it. And then you get to tell it a 
couple more times to make sure that you get your point across.
    Something that I discovered recently from Bart Fischer, my 
economist. If you divided the economic ladder in this country 
into \1/5\, the top 20 percent of the economic ladder, those 
folks spend more on food, think about that. They spend more on 
food than the bottom 20 percent makes. As we look at the 2018 
Farm Bill, what I am decidedly uninterested in is arbitrarily 
capriciously raising the cost of food to the bottom 20 percent. 
The top 50 percent, they don't care what food costs. You can 
add a couple thousand bucks a year to their food bill and they 
are not going to notice it, but that bottom 50 percent will, in 
fact, notice it. You can like the current farm policy or you 
can hate the current farm policy, but it delivers the most 
affordable food supply of anybody, any other developed nation 
in the world.
    And so as we craft these policies and look at the impact it 
is going to have, the family I am going to have in the front of 
my mind is a single mom struggling to make ends meet. Her food 
budget is where she flexes. Her car payment doesn't change and 
her rent payment doesn't change, but her food budget is where 
she flexes. If something unexpected comes up in the middle of 
the month, it comes out of her food budget. I am not interested 
in making her life any tougher by simply raising the cost of 
food. And so that is going to be the fight we are going to 
have. I need to have you at the table fighting, because you 
have the best story to tell, and frankly, you are the best 
people to tell it. But the American consumer gets a deal, a 
really good deal when they go to a restaurant or when they go 
to the grocery store. That bottom 25 percent spends 35 percent 
of their disposable income on food. We are not going to raise 
the cost of food just because we can. You shouldn't do that, 
and so as we start this path together, I need you guys, all of 
you, the commodities who are at the table today, the ones last 
week, and folks who weren't at the table, do the family fight, 
do all the arm wrestling we need to do before we get there. But 
once this thing starts forward, you have to go shoulder to 
shoulder with us to make it happen.
    I thank the indulgence of the Chairman. With that, I yield 
back.
    The Chairman. I thank the Chairman, and I would just like 
to add, there are some recurring themes here, and I don't know 
if it was Mr. Lee that pointed this out, but it has come up 
before and it is important to note that farmers are essentially 
pass-through entities, and the real beneficiary, as the 
Chairman indicated, is the American consumer. And so weaving 
that into your story can go an awful long way to help people 
recognize the value proposition of why we do what we do here 
from the standpoint of farm policy.
    I would also like to say that we can only control what we 
do here in the United States. We can't control what other 
countries do, and so our policy is a response to what is going 
on in the global marketplace. I dare say there is not a Member 
in this body that would love to get, and you would probably 
feel the same way, that you would love to get to a point when 
we don't have to debate farm policy because it is not necessary 
anymore. But we can only control what we do, and it is a direct 
response to what is going on in the rest of the world. As most 
of you have indicated, whether it be sugar or whether it is 
cotton in China and India, whether it is the Cuban marketplace, 
as Mr. Lawson indicated. Our job here is to create a response 
to the circumstances that are dictated to us in the global 
marketplace. And at some point in time, maybe we will get to a 
point where we don't have to have these conversations anymore. 
But until that time, I appreciate the fact that you have taken 
your time to come here and share your story with us and be 
partners with us in doing the best we can to make sure that we 
do continue to enjoy the safest and most abundant and most 
affordable food supply on the planet.
    Thank you all for being here. Under the Rules of the 
Committee, the record of today's hearing will remain open for 
10 calendar days to receive additional material and 
supplementary written responses from the witnesses to any 
question posed by a Member.
    This hearing of the Subcommittee on General Farm 
Commodities and Risk Management is adjourned.
    [Whereupon, at 11:42 a.m., the Subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]
     Submitted Letter by Dwight Stansel, President, Florida Peanut 
                               Federation
April 14, 2017

    Chairman Crawford:

    The Florida Peanut Federation (FPF) is pleased to submit these 
comments, to be included as a part of the record for your Subcommittee 
hearing last week, on behalf of our 150+ members.
    Our peanut industry here in North Central Florida grew out of the 
decisions by the government, starting in 1996, to unravel the 
agriculture commodity supply control mechanisms of the previous 60+ 
years. After 2002, when peanut quota was purchased by the government 
from existing quota holders for $.55/lb., at a cost of $1.3 billion, a 
large number of farmers who held no government allocated crop bases on 
their farms, begin to grow peanuts for the world market. Many of these 
farmers were young and getting into agriculture production for the 
first time. They were encouraged by the provisions of the 2002 Farm 
Bill to make the investments to start up a brand new industry in their 
area.
    Our farmers witnessed three distinct market cycles from 2002-2014, 
in which the free market worked exactly as it should with the growers 
around the nation responding to supply and demand factors. In 2014, 
with the generic base provisions of the new farm bill going into 
effect, the peanut market was immediately distorted. With the cotton 
market at a level below the cost of production and no safety net under 
the growers, the cotton farmers of the SE immediately began to shift 
their generic base acres into peanuts and we quickly experienced record 
production and carry-out levels in the peanut market as those farmers 
were guaranteed a profit in peanuts through the PLC payments, though 
the world market dipped way below production cost levels. As a result, 
our new, young, non-base growers that had started up pursuant to the 
2002 Farm Bill, were now left out in the cold, a market below cost of 
production and no government safety net under them.
    Mr. Chairman, I encourage you and your Members, when writing the 
provisions of title I, to restore the market based provisions of the 
2002 Farm Bill so that these young farmers, who responded to the call 
of Congress then, may continue to grow for a healthy and vibrant world 
market.
    The FPF supports many of the provisions of the peanut title of the 
2014 Farm Bill. The title provides for the orderly marketing of the 
nation's peanut crop. Three key components of the title are necessary 
for its continued success. They are:

  1.  A marketing loan of $355 per ton. This allows the producer up to 
            9 months after harvest to market his crop.

  2.  Storage and handling fees paid by CCC for forfeited peanuts. This 
            companion piece to the marketing loan ensures that the 
            grower will not be under duress as the loan approaches 
            maturity.

  3.  Separate payment limits. Peanuts are a unique crop requiring 
            specialized machinery. The other predominant southern crop, 
            cotton, also requires specialized machinery. The high 
            capital outlay for production and harvesting these crops 
            makes the separate payment limit essential to providing a 
            sound safety net for the average producer.

    Mr. Chairman and Members of the Committee, while the FPF recognizes 
the value of the existing peanut title as mentioned above, we feel that 
we must acknowledge one significant flaw. The financial safety net for 
peanuts is not for all peanut producers. As was stated in our opening 
comments, many peanut producers were not growing peanuts prior to the 
2002 Farm Bill. South Carolina, East Georgia, Mississippi and North 
Central Florida each grew a limited number of peanut acres. Peanut base 
was created from the 1997-2001 production records.
    As such, these regions are significantly under based. Peanut base 
today does not come close to representing the peanut acres being 
produced.
    We ask and encourage the Committee to allocate peanut base to the 
producers in these areas through a base update of existing base using a 
5 year average of acres grown in crop years 2011-2015. Alternatively, 
we would ask that a reference price be available to all producers based 
on their current acres planted.
    An equitable safety net for all seems the best way to encourage 
young farmers to enter into agriculture production and to ensure that 
the nation has an adequate supply of peanuts at a fair, market based 
price.
    Mr. Chairman, we appreciate the difficulty you have before you in 
writing title I of the 2018 Farm Bill, and look forward to the 
opportunity to discuss our proposal in greater detail.

Dwight Stansel,
President, Florida Peanut Federation.
                                 ______
                                 
                          Submitted Questions
Response Submitted by Ronnie Lee, Chairman, National Cotton Council
Question Submitted by Hon. Stacey E. Plaskett, a Delegate in Congress 
        from Virgin Islands
    Question. The Agriculture Department announced to Members of 
Congress last year that cottonseed will not be added to the list of 
crops eligible for support payments under the Agriculture Risk Coverage 
and Price Loss Coverage programs. There are scholars in agriculture 
policy with concerns that such a move could reignite a trade dispute 
with Brazil, which was settled in 2014. What is your response to them?
    Answer. The Brazil cotton dispute focused on policies that have 
been either reformed or repealed. That dispute has been resolved and is 
no longer pending. Moreover, the analysis by the WTO dispute panel and 
Appellate Body concerning the U.S. as a cotton fiber producer and 
exporter were based on circumstances unique to the global market during 
the specific period of time under consideration. Those circumstances 
have changed significantly, and even the outcome of a challenge against 
the same policies could be different if brought today. Of course, 
again, those policies have been either reformed or repealed.
    Nonetheless, any future WTO challenge against U.S. domestic 
support, whether for cotton fiber, cottonseed or one of the other 
current covered commodities, would proceed as a fact-based analysis of 
the specific policy and market circumstances affecting that commodity 
at the time the challenge is filed.
    There is no reason to expect that cottonseed's eligibility as a 
covered commodity would justify a WTO challenge any more than another 
covered commodity. In fact, the U.S. exports on average less than 10 
percent of annual cottonseed production and cottonseed is not heavily 
traded? in the global market. Most U.S. cottonseed is consumed 
domestically, so it is realistic that there would not be reason or 
cause for significant concern by other countries from a global trade 
and market perspective.
Response Submitted by Blake Gerard, Chairman, Board of Directors, USA 
        Rice Farmers, Cape Giarardeau, MO; on behalf of USA Rice 
        Federation
Questions Submitted by Hon. Ralph Lee Abraham, a Representative in 
        Congress from Louisiana
    Question 1. Mr. Gerard, Do you believe that crop insurance is the 
cornerstone of the farm safety net?
    Answer. Congressman Abraham--While USA Rice is supportive of the 
role that crop insurance plays within the farm safety net, for rice it 
is not the cornerstone. The commodity title, specifically, Price Loss 
Coverage, is the cornerstone of our safety net because of its ability 
to provide certainty over multiple years for farmers. The program helps 
protect us from multi-year price declines and will continue to offer 
assistance, if needed, throughout the life of the farm bill. 
Historically, crop insurance has not offered adequate coverage for rice 
farmers as it does for other crops and other growing regions because of 
our predictable yields. We would like to continue to work with this 
Subcommittee to make improvements to crop insurance programs for rice 
farmers as we approach the next farm bill.

    Question 2. Mr. Gerard, you mentioned in your written and verbal 
testimonies that USA Rice supports accelerating the timing that growers 
receive assistance. Could you further elaborate on why this would be 
helpful for rice farmers in particular?
    Answer. Congressman Abraham--Currently, if triggered, we receive 
assistance through PLC in November for the prior crop year. For 
example, in November of 2016 we received PLC assistance for losses 
during the 2015 crop year, more than a year delayed. This delay makes 
it virtually impossible to predict my cash flow and makes accessing 
capital through my banker even more difficult. While we won't argue 
that the assistance we receive is effective, we think it would be more 
effective if we were able to access it sooner in the year to assist us 
in getting our bills paid on time. Anything the Subcommittee could do 
to accelerate the timing on at least a portion of our assistance would 
be much appreciated.

    Question 3. Mr. Gerard, you mentioned in your written testimony 
that you believe AGI limits shouldn't exist at all when it comes to 
qualifying for title I programs, why is that?
    Answer. Congressman Abraham--We are firm believers that what some 
folks consider a ``high'' adjusted gross income should not act as a 
limitation or barrier to receiving title I assistance when growers 
experience losses. A limit ignores economies of scale, the increasing 
need to achieve efficiencies in agricultural production, and the 
complexity of such operations. I firmly believe that larger than 
average farms shouldn't be punished for being profitable because at the 
end of the day, they're economic drivers in their small communities and 
if they fail, so do the communities. We ask that these arbitrary limits 
are not lowered even further or that the Subcommittee work to remove 
them all together.
Response Submitted by Robert Rynning, President, U.S. Canola 
        Association; on behalf of National Sunflower Association
Question Submitted by Hon. Stacey E. Plaskett, a Delegate in Congress 
        from Virgin Islands
    Question. With approx. 25 percent of U.S. sunflower production 
going into export markets, which are important in the Caribbean region, 
what concerns do you have with the changes to our Administration's 
attitude toward international trade agreements?
    Answer. The majority of U.S. sunflowers are produced in the region 
stretching from the Dakotas to the Panhandle of Texas, producing about 
2.5 billion pounds of sunflower seed annually. Seventy-five percent of 
U.S. sunflower oil is consumed domestically with the remainder exported 
to Canada, Mexico and Japan. Exports are extremely important to 
confection sunflower seed producers as seed and kernel exports 
represent approximately \1/2\ of the U.S. confection sunflower 
industry's production. The main markets for confection seed and kernel 
are Spain, Mexico, Canada and Middle East region. Due to the volume of 
sunflowers grown in the U.S. for export, continued market access and 
Free Trade Agreements (FTA) are vital for maintaining and growing U.S. 
exports markets. With limited ability to grow domestic markets 
sunflowers like other commodities rely on building new markets to 
sustain their industry. The National Sunflower Association supports 
maintaining our current FTA and stands ready to assist both Congress 
and the Administration in negotiating future trade deals.


 
                           THE NEXT FARM BILL

                           (CREDIT PROGRAMS)

                              ----------                              


                         TUESDAY, APRIL 4, 2017

                  House of Representatives,
   Subcommittee on Commodity Exchanges, Energy, and Credit,
                                  Committee on Agriculture,
                                                   Washington, D.C.
    The Subcommittee met, pursuant to call, at 2:39 p.m., in 
Room 1300 of the Longworth House Office Building, Hon. Austin 
Scott of Georgia [Chairman of the Subcommittee] presiding.
    Members present: Representatives Austin Scott of Georgia, 
Davis, Comer, Marshall, Faso, Conaway (ex officio), David Scott 
of Georgia, Kuster, Plaskett, and Soto.
    Staff present: Caleb Crosswhite, John Weber, Josh Maxwell, 
Stephanie Addison, Anne Simmons, Lisa Shelton, Matthew 
MacKenzie, John Konya, and Carly Reedholm.

  OPENING STATEMENT OF HON. AUSTIN SCOTT, A REPRESENTATIVE IN 
                     CONGRESS FROM GEORGIA

    The Chairman. Good afternoon. This hearing of the 
Subcommittee on Commodity Exchanges, Energy, and Credit 
entitled, The Next Farm Bill: Credit Programs, will come to 
order.
    I know my colleague, David Scott, will be joining us in 
just a minute, so I am going to go ahead with my opening 
statement and then I will turn it over to David for his.
    Good afternoon, and welcome to today's Subcommittee 
hearing.
    Over the last several weeks, the Agriculture Committee has 
held a series of hearings in preparation for crafting the next 
farm bill. Through this, the Committee has examined the overall 
farm economy, reviewed the safety and soundness of the Farm 
Credit System, and heard from a broad constituency on nearly 
all aspects of the farm bill.
    These hearings have shown that producers nationwide have 
been experiencing a steady decline in net farm income over the 
past 4 years. Due to the current state of the rural economy, 
access to credit is even more essential to keeping farmers and 
ranchers producing a safe, affordable, and abundant supply of 
food and fiber for America and the rest of the world. 
Thankfully, we have a network of commercial and community 
banks, USDA loan programs, and the Farm Credit System that each 
play a crucial role in providing that access.
    In addition to providing access to credit, we must ensure 
that the agricultural credit policies currently in place are 
working and providing the liquidity producers need to meet day-
to-day operating expenses.
    Given the downturn in the farm economy and the erosion of 
cash reserves, securing credit has been a challenge for many, 
but especially for producers just getting their start. These 
younger farmers have not been farming long enough to build up 
reserves for the lean times that inevitably come in production 
agriculture. The Agricultural Act of 2014 included several 
provisions to provide opportunities for young, beginning, and 
socially disadvantaged farmers, including permanent 
authorization of a microloan program and cooperative lending 
pilots to meet the needs of smaller projects. For these 
producers, the Farm Service Agency is the lender of first 
opportunity and has targeted funding for meeting their credit 
needs.
    More generally, the farm bill authorizes direct and 
guaranteed loans through FSA that enable farmers and ranchers 
to gain or continue financing despite volatile commodity 
markets. The last farm bill eliminated term limits on 
guaranteed operating loans, which has given FSA and lenders the 
certainty they need to work together to graduate participants 
to commercial lending institutions.
    However, many farmers and ranchers have been unable to 
access credit through traditional loans, and FSA loan requests 
have increased dramatically. According to USDA, as of September 
2, 2016, FSA had a backlog of 1,900 approved but unfunded 
loans, projecting a 30 percent shortfall of funds for the end 
of the fiscal year.
    As we approach farm bill deliberations, we need to 
prioritize access to credit. Along with a strong farm safety 
net, including crop insurance, credit availability is a tool we 
cannot afford to lose, and modern farming requires modern 
financing. I look forward to a great discussion on the program 
changes necessary to keep pace with the needs of producers of 
all sizes.
    I thank each of our witnesses for being here today, and I 
look forward to hearing your testimony.
    [The prepared statement of Mr. Austin Scott of Georgia 
follows:]

 Prepared Statement of Hon. Austin Scott, a Representative in Congress 
                              from Georgia
    Good afternoon, and welcome to today's Subcommittee hearing.
    Over the past several weeks, the Agriculture Committee has held a 
series of hearings in preparation for crafting the next farm bill. 
Through this, the Committee has examined the overall farm economy, 
reviewed the safety and soundness of the Farm Credit System, and heard 
from a broad constituency on nearly all aspects of the farm bill.
    These hearings have shown that producers nationwide have been 
experiencing a steady decline in net farm income over the past 4 years. 
Due to the current state of the rural economy, access to credit is even 
more essential to keeping farmers and ranchers producing a safe, 
affordable, and abundant supply of food and fiber for America and the 
rest of the world.
    Thankfully we have a network of commercial and community banks, 
USDA loan programs, and the Farm Credit System that each play a crucial 
role in providing that access.
    In addition to providing access to credit, we must ensure that the 
agricultural credit policies currently in place are working and 
providing the liquidity producers need to meet day-to-day operating 
expenses.
    Given the downturn in the farm economy and the erosion of cash 
reserves, securing credit has been a challenge for many, but especially 
for producers just getting their start. These younger farmers have not 
been farming long enough to build up reserves for the lean times that 
inevitably come in production agriculture. The Agricultural Act of 2014 
included several provisions to provide opportunities for young, 
beginning, and socially disadvantaged farmers, including permanent 
authorization of a microloan program and cooperative lending pilots to 
meet the needs of smaller projects. For these producers, the Farm 
Service Agency (FSA) is a lender of first opportunity and has targeted 
funding for meeting their credit needs.
    More generally, the farm bill authorizes direct and guaranteed 
loans through FSA that enable farmers and ranchers to gain or continue 
financing despite volatile commodity markets. The last farm bill 
eliminated term limits on guaranteed operating loans, which has given 
FSA and lenders the certainty they need to work together to graduate 
participants to commercial lending institutions.
    However, many farmers and ranchers have been unable to access 
credit through traditional loans, and FSA loan requests have increased 
dramatically. According to USDA, as of September 2, 2016, FSA had a 
backlog of 1,900 approved but unfunded loans, projecting a 30% 
shortfall of funds for the end of the fiscal year.
    As we approach farm bill deliberations, we need to prioritize 
access to credit. Along with a strong farm safety net--including crop 
insurance--credit availability is a tool we cannot afford to lose. 
Modern farming requires modern financing. I look forward to a great 
discussion on the program changes necessary to keep pace with the needs 
of producers of all sizes.
    I thank each of our witnesses for being here today, and I look 
forward to hearing your testimony. I will now yield to the Ranking 
Member for any remarks he wishes to make.

    The Chairman. I will now yield to my friend, and the 
Ranking Member, Mr. David Scott, for any remarks he wishes to 
make.

  OPENING STATEMENT OF HON. DAVID SCOTT, A REPRESENTATIVE IN 
                     CONGRESS FROM GEORGIA

    Mr. David Scott of Georgia. Thank you, Mr. Chairman. I echo 
everything that you said. This is a very critical hearing, as 
we approach the farm bill and make sure we have access to 
credit where we need it. And so I want to thank this panel of 
expert witnesses here today. I am pleased to be here to talk 
about the various issues that we have, in some cases taken far 
too lightly, and that is adequate credit for our farmers.
    When times are good, as they were when we wrote the last 
farm bill, agriculture credit is an assumption, something taken 
for granted. But farmers are earning a living from the 
marketplace, and they simply do not need to leverage themselves 
as much as they otherwise would.
    To tell you the truth, farmers are struggling and they need 
help. They are struggling under low prices, high inventories. 
We had a hearing here a few days ago where we talked about the 
amount of money it takes to invest in producing 1 acre of corn 
at $680, but the only money they could get back from producing 
that cost of $680 was $635. They are losing like $50 and $60 
per acre every time they plant. That has to change.
    Input costs are increasing. Land prices are not decreasing. 
And with the future of trade unclear at this time, the credit 
picture for farmers, and this is especially true for beginning 
farmers, African American farmers, it is not what it should be. 
And I am very concerned about the scarcity of young farmers. As 
I keep mentioning, the average age of our farmers is going up 
now, it is at 60 years of age, and we have young people wanting 
to get into farming but they don't have the capital. I mean 
just to get in, an acre of land costs you on an average about 
$5,000 or $6,000, and just to get a tractor, a decent one, I 
mean you have to pay $80,000 or $90,000. It takes money. Access 
to capital is the biggest challenge beginning farmers face when 
looking to start their own operation.
    And I want to single out Farm Credit and AgSouth for the 
great job that they are doing, and have been doing, for they 
have been pioneers on getting out in front and addressing this 
national crisis of helping beginning farmers with the financial 
wherewithal to keep our American economy strong, and especially 
where it counts the most; in agriculture, the food we eat, the 
clothes we wear, the energy we have, all is agriculture. And 
when we have this soaring age of average producers, 
manufacturers in agriculture in the 60 and 50 range, we would 
be not doing our duty if we do not bring attention to the 
necessity of making sure that our beginning farmers have that 
credit that they need.
    So, Chairman, I look forward to this hearing, and I want to 
thank you very much for having it.
    The Chairman. Thank you, Congressman Scott.
    The chair would request that other Members submit their 
opening statements for the record so the witnesses may begin 
their testimony, and to ensure that there is ample time for 
questions.
    Our first witness is Mr. Douglas Thiessen, CEO, Alabama Ag 
Credit, Montgomery, Alabama, on behalf of the Farm Credit 
System. Our next presenter will be Mr. Timothy Buzby, President 
and Chief Executive Officer, Federal Agricultural Mortgage 
Corporation, Washington, D.C. Then Mr. Nathan Franzen, 
President Ag Division, First Dakota National Bank, Yankton, 
South Dakota, on behalf of the American Bankers Association. 
Mr. Steve Handke, President and CEO of the Union State Bank of 
Everest, Everest, Kansas, on behalf of the Independent 
Community Bankers of America. Mr. Scott Marlow, Executive 
Director of the Rural Advancement Foundation International--
USA, Pittsboro, North Carolina, on behalf of the National 
Sustainable Agriculture Coalition.
    Gentlemen, before we start, the stop light in front of you, 
green means go, yellow means slow, and red means stop.
    Mr. Thiessen, please begin when you are ready.

         STATEMENT OF DOUGLAS THIESSEN, CHIEF EXECUTIVE
         OFFICER, ALABAMA AG CREDIT, MONTGOMERY, AL; ON
                  BEHALF OF FARM CREDIT SYSTEM

    Mr. Thiessen. Mr. Chairman, Ranking Member Scott, and 
Members of the Subcommittee, thank you for allowing me to 
testify here today.
    I will make one correction. Actually, my last name is 
Thiessen, and it is okay. But I am Doug Thiessen, I am the CEO 
of Alabama Ag Credit, headquartered in Montgomery, Alabama.
    Alabama Ag Credit makes loans for farmers and ranchers in 
the lower 40 counties of Alabama. We are a cooperative, owned 
and governed by our 3,600 customer-owners, and have offices in 
Demopolis, Dothan, Enterprise, Montgomery, Monroeville, 
Opelika, Selma, Spanish Fort, and Tuscaloosa.
    Alabama Ag Credit is part of the nationwide Farm Credit 
System. Farm Credit's mission is to support rural communities 
and agriculture with reliable, consistent credit and financial 
services today and tomorrow.
    Since the full Agriculture Committee just last week held an 
oversight hearing on Farm Credit, my testimony today will focus 
on the coming farm bill, especially the credit title.
    Last month, the House Agriculture Committee heard testimony 
from Federal Reserve Bank of Kansas City economist, Nathan 
Kauffman, who described the outlook for the U.S. farm economy 
as subdued, with producers realizing a modest increase in 
financial stress over the past year, and we agree with that. 
Commodity prices have fallen, while the cost of raising crops 
has remained high. Many rural crop farmers found profits 
elusive the past 3 years, and are projecting barely break-even 
or losses for the 2017 crop year. Cotton farmers are even 
harder hit, with many now facing multiple years of losses. 
Forecasters see little chance of a quick commodity price 
rebound, barring unexpected changes in commodity demand, 
supply, or both.
    Fortunately, the industry balance sheet was mostly strong 
entering this cycle, after several years of profitable 
agricultural production. While we have seen debt-to-asset 
ratios increase slightly in the past 3 years, they remain 
nearly even with the 30 year average, and far below the levels 
seen in the mid-1980s. The trend, however, is concerning.
    The current cycle in agriculture makes this Committee's 
work on the next farm bill crucial. We need a strong farm bill 
to provide a safety net against sustained market downturns. We 
pledge our support for this Committee's efforts to pass a 
strong farm bill next year.
    We strongly support maintaining and improving the Federal 
Crop Insurance Program, along with the Agricultural Risk 
Coverage and Price Loss Coverage programs. These are the heart 
of a strong farm bill.
    Farm Credit believes crop insurance must provide more 
coverage options for specialty crops, while continuing to serve 
its traditional commodities constituency. Without the risk 
protections provided by crop insurance, agricultural lenders 
would have to tighten underwriting standards, making it harder 
for farmers to plant crops and replace capital assets. Economic 
growth would slow, rural communities would suffer.
    Robust export markets are vital to a strong economy. 
Thirteen percent of the U.S. corn crop, 50 percent of the 
soybean crop, ten percent of cattle produced are shipped 
overseas. American farmers and ranchers are the most efficient 
in the world, and will lead the effort to feed a planet of nine 
billion people by the year 2050.
    As the farming economy continues to soften, programs like 
Farm Service Agency guaranteed and direct lending programs will 
continue to be important tools for producers, particularly 
those that are young and beginning.
    Like others in the agricultural community, Farm Credit 
institutions are observing an increase in the costs associated 
with agricultural production. It is important that FSA direct 
and guaranteed loan programs have appropriate loan limits. That 
is why Farm Credit supports Representative Mike Bost's 
legislation that would increase the FSA guaranteed loan limit 
to $2\1/2\ million.
    We recognize increasing the loan limits could have the 
unintended consequence of having fewer producers served by 
programs because the current level of funding does not reflect 
the actual costs associated with production. To that end, we 
are also supporting the increase of the level of funding for 
both FSA guaranteed and direct loans.
    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, port 
facilities all need major investments.
    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, secure power for rural America.
    The scope of investment is staggering, and that is why Farm 
Credit helped organize the Rebuild Rural coalition of more than 
200 organizations. And all of these organizations are 
emphatically behind the rebuilding of rural America.
    While we don't necessarily have specific proposals, we are 
prepared to work with the Committee and our partners in the 
community banking sector to find ways all of us can contribute.
    Thank you again for allowing us to testify here today, and 
I would be happy to answer any of your questions.
    [The prepared statement of Mr. Thiessen follows:]

   Prepared Statement of Douglas Thiessen, Chief Executive Officer, 
   Alabama Ag Credit, Montgomery, AL; on Behalf of Farm Credit System
    Mr. Chairman, Ranking Member Scott, and Members of the 
Subcommittee. Thank you for allowing me to testify today on behalf of 
the Farm Credit System. My name is Doug Thiessen, and I am CEO of 
Alabama Ag Credit, headquartered in Montgomery, Alabama.
    Alabama Ag Credit makes loans for farmers and ranchers in 40 
counties in southern Alabama. We are a cooperative, owned and governed 
by our 3,600 customer-owners, and have offices in Demopolis, Dothan, 
Enterprise, Montgomery, Monroeville, Opelika, Selma, Spanish Fort and 
Tuscaloosa.
    Since the full Agriculture Committee just last week held an 
oversight hearing on Farm Credit, I will only briefly describe Farm 
Credit. My testimony today will focus on the coming farm bill, 
especially the credit title.
    In particular, I'll talk about the importance of a robust farm 
safety net, the immediate need to expand our export markets, and the 
challenges many farmers have in securing an adequate workforce. I will 
also discuss specific credit title topics including the need to 
modernize FSA loan limits and the challenges rural communities face as 
they look to rebuilding their infrastructure.
    Alabama Ag Credit is part of the nationwide Farm Credit System. 
Farm Credit's mission is to support rural communities and agriculture 
with reliable, consistent credit and financial services, today and 
tomorrow.
    Farm Credit is a nationwide network of 77 borrower-owned lending 
institutions that share a critical mission assigned to them by 
Congress. These independent, privately owned institutions include four 
wholesale banks and 73 direct lending local associations, all of which 
are cooperatively owned by their customers: farmers, ranchers, farmer-
owned cooperatives and other agribusinesses, rural utilities and others 
in rural America.
    We have a specific mission, assigned to us by Congress more than 
100 years ago, to ensure that farmers and rural communities have a 
reliable, consistent source of financing irrespective of cycles in the 
economy or vagaries of the financial markets. Hundred of thousands of 
farmers around the nation put together a farm operating plan this year 
knowing that Farm Credit has the financial strength and strong desire 
to finance that plan and to help them succeed.
    There is no Federal funding in Farm Credit. Instead, the four Farm 
Credit System banks together own the Federal Farm Credit Banks Funding 
Corporation that markets to the investing public the debt securities 
that fund the lending operations of all Farm Credit institutions. 
Diversification of lending portfolios is a source of Farm Credit's 
financial strength. Through diversification of our lending--by 
geography, industry, and loan size--Farm Credit manages risk and 
provides a buffer against the cyclical nature of the industries we 
serve.
    Farm Credit makes extraordinary efforts to support young, 
beginning, and small (YBS) farmers and ranchers. Each year, the Farm 
Credit Administration compiles data on Farm Credit YBS lending and 
reports it to Congress. Based on reports from the Federal Farm Credit 
Banks Funding Corporation and the Farm Credit Administration:

   Farm Credit made more than 64,000 loans to young producers 
        (under age 36) in 2016 for a total of $9.3 billion. Those are 
        actual new loans originated in 2016. When Farm Credit first 
        began reporting this specific information in 2001, new loan 
        levels were at 33,000 loans to young producers for $3.1 
        billion.

   Farm Credit made more than 81,000 loans to beginning 
        producers (10 years or less experience) for $12.7 billion in 
        2016. This is double the number and triple the dollar amount of 
        beginning farmer loans made in 2001 when Farm Credit made 
        37,000 loans for $4.2 billion to beginning farmers.

   Farm Credit institutions made more than 155,000 loans to 
        small producers (less than $250,000 in annual sales) for $12.2 
        billion in 2016, a substantial increase from the 114,000 loans 
        for $7.6 billion made in 2001.

    To put Farm Credit's lending to small farmers and ranchers into 
perspective, at year-end 2016 Farm Credit had more than one million 
loans of all kinds outstanding, and slightly more than 500,000 of those 
loans outstanding were to small farmers and ranchers.
    The numbers above cannot be combined. A single loan to a 25 year 
old rancher in her third year of ranching with annual sales of $100,000 
could be counted in the young, beginning, and small categories. We 
report this way for two reasons: our regulator requires it and, more 
importantly, it is the most accurate portrayal of who we serve.
    Farm Credit institutions go beyond just providing loans to YBS 
farmers, in many cases offering special incentives, education, and 
other support to these producers. Farm Credit organizations nationwide 
provide training and host seminars on topics such as intergenerational 
transfer of family farms, risk management techniques, and establishing 
and maintaining effective business plans.
    We engage across the spectrum with those entering agriculture, 
whether they are focused on conventional, organic, sustainable, local 
food-related operations, direct-to-retail, or other emerging business 
models.
    As I mentioned earlier, Farm Credit is a customer-owned 
cooperative. The net income we generate can be used in only two ways: 
retained within a Farm Credit institution as capital to build financial 
strength that ensures continued lending, OR passed to customer-owners 
by way of cooperative dividends, which effectively lowers the cost of 
borrowing for our customers. For 2016, Alabama Ag Credit returned \1/2\ 
of its earnings to our customers. That was $7.8 million we returned to 
customers this spring and was tremendous boost to the local economy. We 
retained the other \1/2\ to strengthen the organization and ensure we 
can continue meeting the needs of Alabama farm families.
    Farm Credit's mission is as vital today as it's ever been. Farm 
Credit supports rural communities and agriculture with reliable, 
consistent credit and financial services, today and tomorrow. Farm 
Credit's mission is to help these areas grow and thrive by financing 
critical infrastructure and communication services and providing 
farmers and agribusinesses with the capital they need to make their 
businesses successful. Because a steady flow of credit means more jobs 
and economic growth, Farm Credit is also helping ensure the vibrancy of 
communities throughout rural America.
    Farm Credit's mission extends well beyond the farmgate. Our mission 
includes financing for farmer-owned cooperatives and other 
agribusinesses that farmers depend on to succeed. Farm Credit has 
financed over $5 billion in exports of U.S. agricultural products. We 
make more than $7 billion in loans for families to buy homes in very 
rural areas.
    Rural infrastructure is also a critical part of Farm Credit's 
mission. Farm Credit finances more than $27 billion in rural 
infrastructure, including rural electric co-ops, rural water systems, 
and rural telecommunications and broadband providers. These loans 
improve the quality of life in our rural communities, providing clean 
drinking water, broadband for our schools, and reliable energy for 
rural families and businesses.
    Last month, this Committee heard testimony from Federal Reserve 
Bank of Kansas City economist Nathan Kauffman, who described the 
outlook for the U.S. farm economy as ``subdued,'' with producers 
realizing a modest increase in financial stress over the past year. We 
agree.
    Commodity prices have fallen while the cost of raising crops has 
remained high. Many row crop farmers found profits elusive the past 3 
years and are projecting barely break-even or losses for the 2017 crop 
year. Cotton farmers are even harder hit, with many now facing multiple 
years of losses. Forecasters see little chance of a quick commodity 
price rebound barring unexpected changes in commodity demand, supply, 
or both.
    Fortunately, the industry balance sheet was mostly strong entering 
this cycle after several years of favorable profits in agriculture. 
While we have seen debt-to-asset ratios increase slightly in the past 3 
years, they remain nearly even with the 30 year average and far below 
the levels seen in the mid-1980s. The trend, however, is concerning.
    Depending on geography and land type, the impact of the downturn on 
farmland values has been mixed. As farmland values rose sharply in the 
past decade, particularly in areas that produce cash grains, farmers 
and lenders both became increasingly conservative in leveraging real 
estate assets. Farmers bought increasingly high-cost ground but largely 
were using cash generated from higher commodity prices and borrowing 
less on a percentage basis. For the most part, Farm Credit lenders and 
commercial banks were unwilling to loan much more than 50 to 60 percent 
of farmland values in areas where prices had jumped most aggressively. 
Some even put hard caps on the dollar amount loaned per acre.
    Crop input prices, including cash rent, have not yet fallen in step 
with commodity price declines, squeezing profitability at the 
individual farm level. While we anticipate adjustments will come, it 
remains difficult to accurately predict timing. Perhaps the best news 
for farmers is that interest rates remain historically low, another key 
difference compared to the downturn in the 1980s. While forecasters 
predict slightly rising rates over the coming months, those small 
increases start from an extremely low level. Debt costs are expected to 
remain low by historical standards.
    Similar to the producers we serve, Farm Credit built financial 
strength in anticipation of this challenging economic cycle. We have 
been fulfilling our mission for more than 100 years and have deep 
experience in the inevitable cycles of agriculture. Like most in 
agriculture, we could not predict with accuracy when this cycle would 
begin or end. But we knew it was coming, and our institutions prepared 
for it. We built capital. We loaned conservatively. Today, Farm Credit 
is financially the strongest it has ever been and is prepared to use 
that strength to support our customers and fulfill our mission.
    We continue to see modest loan growth in both our agricultural and 
rural infrastructure loan portfolios. The credit quality of our loan 
portfolio remains high as our members continue to meet their 
obligations. Credit quality in Farm Credit loan portfolios hit all-time 
highs during the years of high commodity prices but has now fallen back 
in line with historical averages. While we anticipate some 
deterioration in our loan quality as this cycle continues, we are 
committed to working with our customers.
    Our philosophy on credit today is this: we know our customers well, 
understand and respond to their needs, and work cooperatively with them 
to analyze and structure our transactions to give them the best chance 
to succeed.
    We have been working for some time to help our customer-owners plan 
for the current environment. Many of our institutions, including my 
own, have allocated more resources specifically to work with producers 
most impacted by lower commodity prices. We are proactively reaching 
out and helping our customers understand their financial position so 
they can work through business plans and make good decisions that, 
hopefully, lead to the most positive outcome for them. We are 
restructuring debt to spread out payments and are providing other loan 
structuring options when necessary and appropriate. We are working to 
make sure that our members have the best information to help them 
manage costs and strengthen their risk-bearing capacity.
    As price forecasts stay low, most producers' only option is to very 
closely manage the cost structure of their operations. We are seeing 
many producers eliminate non-essential expenses, scale back expansion 
plans, and delay new equipment purchases. This is also a time when 
supporting key tools such as crop insurance, the current farm bill, the 
renewable fuels standard, and promoting strong export markets has never 
been more important to maintaining the viability of the industry. 
Passage of a strong farm bill next year is essential.
    Farm Credit is committed to remaining reliable and supportive of 
rural communities and agriculture, just as we have for the last 100 
years. That means we are staying abreast of industry cycles, 
identifying risks, and consulting with our customers about them. We 
know we must be patient and allow time for adjustments, while 
potentially exploring enhanced controls on terms, collateral, and 
conditions as appropriate. We continue to have a positive long-term 
outlook for U.S. agriculture, with the knowledge that Farm Credit's 
financial strength and expertise position us well to support our 
customer-owners through industry cycles.
    We understand that being dependable does not mean that we can save 
every operation. It does not mean that we are able to ignore good 
credit judgment or make credit decisions that are not constructive for 
the customer-owner or us as a lender. It does not mean that we will 
undertake undue risk or make all of the adjustments. We and our 
customer-owners will both need to make adjustments--and we are working 
hard to take those steps together.
    Farm Credit is fortunate that our independent Federal regulator, 
the Farm Credit Administration (FCA), has deep knowledge of agriculture 
and considerable experience in the inevitable business cycles our 
members face. Their ability to look holistically at a customer's 
operation and understand an individual customer's risk-bearing capacity 
and equity position will, in many cases, determine whether we can 
continue with that customer. If the FCA is overly restrictive in its 
approach, it might tie our hands as we work to help members through 
this cycle. We are optimistic about the FCA's continued good judgment.
U.S. Farmers and Ranchers Need a Strong Farm Bill
    The current cycle in agriculture makes this Committee's work on the 
next farm bill crucial. We need a strong farm bill to provide a safety 
net against sustained market downturns. We pledge our support for this 
Committee's efforts to pass a strong farm bill next year.
    We strongly support maintaining and improving the Federal Crop 
Insurance Program along with Agricultural Risk Coverage and Price Loss 
Coverage programs. These are the heart of a strong farm bill.
    Congress created the crop insurance system through the Federal Crop 
Insurance Corporation (FCIC) to promote the economic stability of 
agriculture. A successful public-private partnership, crop insurance is 
federally regulated and delivered by the private sector to help farmers 
maintain the country's safe, affordable food supply. Crop insurance is 
food insurance.
    Crop insurance protects farmers and ranchers against financial 
losses caused by natural disasters (hail, drought, freezes, floods, 
fire, insects, disease and wildlife) and market disruptions resulting 
in lower prices for agricultural products. In 2015, USDA's 1.2 million 
Federal crop insurance policies covered 120 different crops grown on 
approximately 300 million acres with an insured value of more than $102 
billion.
    A viable Federal Crop Insurance Program is vital to the flow of 
credit to farmers and ranchers, particularly young and beginning 
farmers and ranchers who typically have less collateral and equity.
    Given the trend in recent years of lower prices for commodities and 
declining farmer net income, it is critical for policy makers to 
maintain a strong farm policy that includes affordable crop insurance.
    Participation by producers of all types--small and large--is vital 
to the safety and actuarial soundness of the crop insurance program. 
Impairments to the program, such as shrinking the risk pool, could make 
crop insurance unavailable or unaffordable to producers.
    Farm Credit believes crop insurance must provide more coverage 
options for specialty crops, while continuing to serve its traditional 
commodities constituency.
    Without the risk protections provided by crop insurance, 
agricultural lenders would have to tighten underwriting standards. The 
consequence of tighter credit would make it harder for farmers to plant 
crops and replace capital assets. Economic growth would slow, and rural 
communities would suffer.
Export Markets Are Vital
    Robust export markets are vital to a strong farm economy. Thirteen 
percent of the U.S. corn crop, nearly 50 percent of the soybean crop, 
ten percent of the cattle produced in the U.S. Are shipped overseas. 
American farmers and ranchers are the most efficient in the world and 
will lead the effort to feed a planet of nine billion people by the 
year 2050.
    We strongly encourage continued efforts to open markets for U.S. 
farm products. Our producers can compete with any in the world but 
trade barriers in other countries often tilt the playing field against 
them. Farm Credit works hard to support our farmers by financing more 
than $5 billion in exports of U.S. agricultural products. Our private 
export financing for U.S. exports often competes against financing 
programs backed by foreign governments. The primary U.S. Government 
export financing program, GSM-102, has been handcuffed by World Trade 
Organization rulings, putting U.S. farmers at a disadvantage in some 
markets.
U.S. Farms Need a Stable Workforce
    Farming in America is a growth industry and a world-class example 
of something America does better than anyone else. The many 
agricultural products we produce, harvest and process comprise one of 
the few sectors of our economy in which the U.S. has a trade surplus 
with the rest of the world.
    However, the economic health of food and fiber producers, and the 
rural communities in which they live, is threatened by the lack of a 
reliable, stable and legal workforce. Our farmers face growing 
shortages of legally authorized and experienced workers each year. Jobs 
in agriculture are physically demanding, conducted in all seasons and 
are often transitory. This shortage of labor negatively impacts our 
economic competitiveness, local economies, and jobs. Reforms are 
necessary to address the agricultural labor shortage.
    A common misconception is that agriculture is a low wage paying 
industry. However, according to the U.S. Department of Agriculture, 
wages for U.S. fieldworkers rose 36 percent over the past decade 
through the conclusion of last year's harvest in October, compared with 
27 percent wage increases for non-farm employees. Not only is 
agriculture competitive with other industries in terms of wages, many 
U.S. jobs are created for each farmworker hired, and those U.S. jobs 
tend to be year-round 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.
    Many of those American jobs will be lost if access to agriculture's 
current workforce is jeopardized without providing a mechanism for 
future legal workers. The economic health of many rural economies is 
largely dependent on a strong agriculture sector. Yet the loss of the 
foreign-born workforce in rural communities will have the same economic 
impact on those communities as factories closing and moving to other 
countries.
    Farm Credit strongly supports legislative and regulatory proposals 
to create a workable agricultural guest worker program which assures 
both seasonal and year-round reliable sources of agricultural workers 
to support the needs of all of agriculture, and that provides a means 
by which experienced farm workers can remain on the farm.
Farm Service Agency Lending
    As the farm economy continues to soften, programs like Farm Service 
Agency (FSA) guaranteed and direct lending programs will continue to be 
important tools for producers, particularly those who are young and 
beginning. The FSA guaranteed loan programs provide Farm Credit 
institutions additional flexibility to help customers survive a 
potentially extended economic downturn. Farm Credit participation in 
FSA's guaranteed loan program totals $5.1 billion and represents about 
\1/3\ of outstanding FSA guarantees.
    In addition, like others in the agriculture community, Farm Credit 
institutions are observing an increase in the costs associated with 
agriculture production. The cost of land, equipment and inputs have all 
increased in the past several years. As producers look to begin 
agricultural businesses, grow existing businesses or simply sustain 
their current operations through this downturn, it is important that 
FSA direct and guarantee loan programs have appropriate loan limits. 
That is why Farm Credit supports Rep. Mike Bost's BALE Act, H.R. 831, 
which among other things, would increase the FSA guaranteed loan limit 
to $2.5 million. This update to the current FSA loan limits reflects 
the increased cost of agriculture and will allow Farm Credit and other 
lenders to better partner with USDA to provide needed credit to 
producers.
    Finally, Farm Credit recognizes that increasing the loan limits 
could have the unintended consequence of having fewer producers served 
because by these programs because the current level of funding does not 
reflect the actual costs associated with agriculture production and the 
need for larger loan limits. To that end, we also support increasing 
the level of funding for both FSA guaranteed and direct loans.
Rebuilding Rural Infrastructure
    American agriculture truly feeds the world and creates millions of 
jobs for U.S. workers. 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 if we are to continue efficiently getting our agricultural 
products to market. For example, \1/4\ 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 
are in need of 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. The Federal 
Government must continue to play an important role in providing 
funding. Moreover, Federal investments should increase, but Federal 
resources likely cannot fill the need entirely. Creative solutions for 
raising a portion of the funds necessary to close the rural 
infrastructure gap include combining pair Federal investments, state 
and local government investments and private sources of capital hold 
promise.
    That is why Farm Credit helped organize the Rebuild Rural coalition 
of more than 200 organizations representing agricultural producers, 
rural businesses, rural communities and rural families to advocate for 
aggressive efforts to meet the unique infrastructure needs of rural 
communities and agriculture. We have asked President Trump to 
specifically address rural infrastructure needs as part of his 
Administration's comprehensive infrastructure renewal efforts. We have 
been very encouraged by our coalition's discussions with White House 
and USDA officials who seem to understand rural needs are indicate a 
willingness to seek creative solutions to the infrastructure problems 
in rural communities.
    We look forward to working with the Administration, this Committee, 
and others in Congress as the infrastructure initiative takes shape 
over the next few months.
    Rural infrastructure is a critical part of Farm Credit's mission. 
Our institutions finance more than $27 billion in rural infrastructure, 
including rural electric co-ops, rural water systems, and rural 
telecommunications and broadband providers. These loans improve the 
quality of life in our rural communities, providing clean drinking 
water, broadband for our schools, and reliable energy for rural 
families and businesses.
    Farm Credit has also partnered with community banks and USDA 
Community Facilities program to finance needed improvements to vital 
infrastructure projects, including walk-in health clinics, critical 
access hospitals, and senior care facilities in rural towns. These 
projects are just examples of how Farm Credit can do more to support 
rural communities.
    Farm Credit's unique cooperative structure means that the customer-
owners who sit on our board of directors are living, working, and 
raising their families in rural communities. They are deeply invested 
in the success of those communities and are interested in finding more 
ways for Farm Credit to contribute to that success.
    Farm Credit reverses the normal flow of capital, raising money in 
urban financial centers and bringing it to rural communities. We 
believe we can play an even bigger role in rural development, 
revitalizing rural infrastructure, strengthening the rural economy, and 
creating good jobs for rural families. While we don't necessarily have 
specific proposals at this point, we are prepared to work with the 
Committee and our partners in the community banking sector to find ways 
that all of us can contribute more to the vitality and success of our 
rural communities.
    Thank you again for allowing us to testify here today. We look 
forward to working with the Committee on the farm bill and I would be 
pleased to answer any questions Subcommittee Members might have.

    The Chairman. Thank you, Mr. Thiessen.
    Mr. Buzby.

 STATEMENT OF TIMOTHY L. BUZBY, PRESIDENT AND CHIEF EXECUTIVE 
OFFICER, FEDERAL AGRICULTURAL MORTGAGE CORPORATION, WASHINGTON, 
                              D.C.

    Mr. Buzby. Chairman Scott, Ranking Member Scott, and 
distinguished Members of the Subcommittee, thank you for your 
invitation to appear today to testify on behalf of the Federal 
Agricultural Mortgage Corporation, commonly known as Farmer 
Mac.
    My name is Tim Buzby, and I am the President and CEO of 
Farmer Mac. You have already seen my written testimony, so I 
would like to take this time to provide you with a summary of 
the testimony, and of Farmer Mac in general.
    In response to the financial crisis that gripped 
agriculture and farm lenders in the 1980s, this Committee and 
Congress created Farmer Mac as a new source of liquidity and 
long-term credit for agricultural lenders so that they may 
provide your constituents with low interest rates on favorable 
terms, tailored to meet their financing needs and keep pace 
with farming's capital-intensive environment.
    Farmer Mac's role as the secondary market for rural 
America: We work closely with lenders of all sizes, including 
commercial and community banks, Farm Credit System 
institutions, and rural utility cooperative lenders, to offer 
more financial choices to their rural customers. Since Farmer 
Mac's creation in 1988, we have helped fund loans to over 
76,000 rural borrowers in all 50 states, which has resulted in 
more than $43 billion of investments in rural America.
    These indicators of mission fulfillment have been achieved 
while Farmer Mac has also demonstrated strong financial 
performance, and safe and sound operations. We consistently 
exceed all applicable regulatory capital requirements, and are 
well capitalized with more than $600 million in core capital, 
and a Tier 1 capital ratio of 12.7 percent as of December 31. 
Our low historic credit losses, which equate to about one basis 
point per year, demonstrates our longstanding focus on sound 
underwriting and high credit quality. Truly, Congress' vision 
of creating a vibrant secondary market that benefits rural 
America has been realized.
    I understand that the Subcommittee is interested in 
discussing ways to improve access to credit for agricultural 
and rural communities. Farmer Mac was created by Congress to do 
exactly that.
    We have remained steadfast in seeking to fulfill this 
important mission, however, as stated in my written testimony, 
some policies related to the rural finance have not kept pace 
with the way agricultural production and operations have 
evolved over time, including several provisions of Farmer Mac's 
charter. For example, the 1,000 Acre Rule is having a limiting 
effect on the liquidity, capital, and risk management tools 
that Farmer Mac can provide directly to rural lenders, and 
indirectly to America's farmers and ranchers.
    Under our charter, we are limited in the amount of the loan 
that we can purchase or guarantee if the land securing the loan 
is more than 1,000 acres. We have heard from many customers who 
believe that this restriction is counterintuitive and 
inconsistent with Farmer Mac's mission of increasing the 
availability of credit, because it limits the amount of loans 
for larger operations that generally have a significant need 
for capital, while smaller operations with generally lower 
capital needs have no statutory loan limit.
    For the reasons described in more detail in my written 
testimony, we believe that the elimination of the 1,000 Acre 
Rule would better reflect current farm ownership sizes and the 
capital needs of agricultural producers. We request Congress 
alleviate the adverse effects of this restriction by removing 
this specific provision in our charter, which will help all 
types of lenders who request Farmer Mac to purchase or 
guarantee farm and ranch loans.
    Farmer Mac will continue to provide a stable source of 
liquidity, capital, and risk management tools to help rural 
lenders meet the evolving and varied financing needs of their 
customers and your constituents, both in periods of prosperity 
and in market downturns. With a diverse array of lending 
products and capital sources, we will remain resolute today and 
always in our commitment to bringing new, low-cost capital to 
the agricultural and rural communities that we are honored to 
serve.
    Thank you for this opportunity. I would be happy to answer 
any questions you may have.
    [The prepared statement of Mr. Buzby follows:]

 Prepared Statement of Timothy L. Buzby, President and Chief Executive 
  Officer, Federal Agricultural Mortgage Corporation, Washington, D.C.
Introduction
    Chairman Scott, Ranking Member Scott, and distinguished Members of 
the Subcommittee, thank you for your invitation to appear today to 
testify on behalf of the Federal Agricultural Mortgage Corporation, 
which is commonly known as ``Farmer Mac.'' My name is Tim Buzby, and I 
am the President and Chief Executive Officer of Farmer Mac. I 
appreciate the opportunity to appear before your Subcommittee today to 
provide some input on the next farm bill.
Farmer Mac
    Farmer Mac's position at the intersection of Main Street and Wall 
Street allows us to provide a unique perspective about the current 
environment for agricultural credit and what might be beneficial to the 
secondary market in ensuring a vibrant credit environment. Congress has 
charged Farmer Mac with the mission of providing a secondary market for 
a variety of loans made to borrowers in rural America, including 
mortgage loans secured by agricultural real estate, loans made to rural 
utility cooperatives, and certain loans guaranteed by the U.S. 
Department of Agriculture (USDA). This secondary market increases the 
availability of long-term credit at stable interest rates to America's 
rural communities, including farmers, ranchers, rural residents, and 
rural utility cooperatives, and provides those borrowers with the 
benefits of capital markets pricing and product innovation. In Farmer 
Mac's role as the secondary market for rural America, we work closely 
with lenders of all sizes, including commercial and community banks, 
Farm Credit System institutions, credit unions, rural utility 
cooperative lenders, and insurance companies to offer more financial 
choices to their rural customers.
    For nearly thirty years, Farmer Mac has played a vital role in 
financing rural America by helping America's rural lenders meet the 
evolving needs of their customers, bringing the financial strength, 
flexibility, and innovation of the secondary market for agriculture 
right to their customers' farms and ranches. Since Farmer Mac's 
creation in 1988, over 1,400 lenders across the nation have used Farmer 
Mac's programs and solutions to increase liquidity and lending capacity 
while better managing capital, interest rate risk, and credit risk. 
This translates into Farmer Mac having helped fund loans to over 76,000 
rural borrowers in all 50 states for more than $43 billion of 
investments in rural America since 1988. By working with such a vast 
network of rural lenders, Farmer Mac introduces more competition, more 
types of loan products, and efficient funding into the marketplace, 
which helps your rural constituents receive low interest rates on 
favorable terms tailored to meet their financing needs and keep pace 
with today's capital-intensive environment. Farmer Mac has also been 
successful in encouraging the inclusion of loans for small farms and 
family farmers in the agricultural mortgage secondary market. In 2016, 
46% of loans in the Farm & Ranch line of business were to small farms 
(less than $350,000 in annual gross farm income) and 96% of loans in 
the Farm & Ranch and USDA Guarantees lines of business were to family 
farming operations. The two figures below provide more information 
about Farmer Mac's growing importance in financing rural America.
Farmer Mac's New Business Volume for the Last 3 Years (2014-2016) by 
        Line of Business and Customer Type
        
        
Farmer Mac's Total Outstanding Business Volume by Line of Business


    Farmer Mac grew out of the financial crisis that gripped 
agriculture and farm lenders during the mid-1980s. As this Committee 
and Congress contemplated solutions to this crisis, it became clear 
that the rural credit market would benefit from a new source of 
liquidity and long-term credit that could help provide new risk 
management tools to lenders and the necessary capital and liquidity 
demanded by the producers of agricultural commodities and products. 
That vision and the related solution resulted in the creation of Farmer 
Mac.
    The agricultural credit conditions in the 1980s that led to the 
creation of Farmer Mac are somewhat different compared to current 
conditions, but they are similar in many ways. Currently, many 
producers in several sectors of the agricultural economy have seen 
significant declines in income and experienced other challenges for the 
past few years. The existence of a strong, vibrant secondary market 
continues to be essential because it can still be difficult to attract 
capital to invest in rural America like it was when Farmer Mac was 
created. Simply put, rates of return in rural communities are generally 
not as high as in urban areas, so obtaining capital to meet the lending 
needs of rural America can be challenging and is often more expensive. 
Congress has always responded to the unique challenges faced by rural 
America, which has resulted in tremendous improvements in the lives of 
your constituents and Americans in general. Rural Americans provide the 
food and fiber that all Americans and much of the world relies upon. 
The legislative initiatives that your predecessors on the Agriculture 
Committee supported to increase the availability of credit in rural 
America, such as the Farm Credit Act, the Rural Electrification Act, 
and the creation of Farmer Mac, were designed to ensure that we as a 
nation can grow and prosper. As times and business practices change, so 
can some of these programs to better reflect the current realities of 
rural finance and the needs of rural borrowers.
Proposals That Could Enhance Farmer Mac's Financing of Rural America
    U.S. agriculture represents one of the greatest success stories in 
America's modern history. In the span of only 50 years, the United 
States has more than doubled its total agricultural production while 
substantially increasing efficiency. The share of disposable income 
spent on food in the country is only about 9.8%--a number that the 
world at large strives toward. This has been achieved while the share 
of the population directly involved in agriculture has shrunk to such 
historically low numbers that each commercial scale farm is responsible 
for feeding over 200 people. However, although actual agricultural 
production and operations have evolved over time, some policies related 
to rural finance enacted through legislation, including several 
provisions of Farmer Mac's charter, have not kept up with the changing 
landscape.
``1,000 Acre Rule''
    On a near daily basis, Farmer Mac receives requests from lenders of 
all types to either purchase or provide credit protection for 
agricultural mortgage loans secured by parcels of land larger than 
1,000 acres. Unfortunately, we must reject many of those requests 
because our charter limits our activities related to those loans unless 
the loan amount is equal to or less than $12.6 million (an amount that 
is adjusted annually for inflation). We have heard from many customers 
who believe that this ``1,000 acre rule'' is counterintuitive and 
inconsistent with Farmer Mac's mission of increasing the availability 
of credit in rural America because it limits the amount of loans for 
larger operations that generally have a significant need for capital, 
while smaller operations with generally lower capital needs have no 
statutory loan limit.
    The legislative history of Farmer Mac's charter does not explain 
the policy reason for this limitation on Farmer Mac's authority to 
offer the benefits of a secondary market to the lenders and borrowers 
on loans secured by more than 1,000 acres. However, whatever the 
original purpose of the limitation was, the most likely reasons for the 
1,000 acre rule's inclusion in Farmer Mac's charter no longer apply to 
the same degree as when Farmer Mac was created and therefore should be 
removed for the following reasons:

   If the 1,000 acre rule was originally designed as a means of 
        mitigating risk to ensure the safety and soundness of a start-
        up operation, Farmer Mac now has a demonstrated track record of 
        sustained strong financial performance, sound underwriting, a 
        diversified portfolio, and minimal credit losses that argue 
        against the need for the limitation. Indeed, Farmer Mac is 
        well-positioned to manage the risks associated with higher loan 
        limits for larger operations, with a Tier 1 capital ratio of 
        12.7% as of December 31, 2016.

   If the original intent of the 1,000 acre rule was to limit 
        the benefits of Farmer Mac's programs available to large farms 
        owned by passive investors outside of rural America, the rule 
        is now preventing benefits from flowing to many large 
        operations owned and operated by individuals and families. 
        Outside and passive investors have not come to dominate 
        agricultural production as once feared, as family farms 
        continue to dominate farm production. Family farms currently 
        make up approximately 97% of all farms, 90% of land operated, 
        and 85% of the value of agricultural production, so most of the 
        tracts of agricultural real estate of more than 1,000 acres are 
        owned by families.

   If the original intent of the 1,000 acre rule was to limit 
        the benefits of Farmer Mac's programs available to very large 
        operations, the limitation is now also preventing benefits from 
        flowing to even mid-size operations because the acreage limit 
        was not indexed to increase over time to reflect changes in the 
        agricultural economy and production practices. When Congress 
        created Farmer Mac, \1/2\ of agricultural production occurred 
        on farms with 589 acres or less. Today, based on USDA's most 
        recent Agricultural Census in 2012, the midpoint cropland farm 
        size has increased to 1,200 acres, meaning that more than \1/2\ 
        of agricultural production takes place in operations that could 
        be adversely affected by the 1,000 acre rule. Elimination of 
        this limitation in Farmer Mac's charter would better reflect 
        current farm ownership sizes and the capital needs of 
        agricultural producers.

    The 1,000 acre rule constraint on Farmer Mac's activities is having 
a detrimental effect on the liquidity, capital, and risk management 
tools that Farmer Mac can provide directly to rural lenders and the 
pricing and product benefits that Farmer Mac can provide indirectly to 
America's farmers and ranchers. This negative effect applies not only 
to Farmer Mac's loan purchase and credit protection products, but also 
to its institutional credit products designed to provide efficient, 
low-cost wholesale funding advances to rural lenders. Therefore, the 
elimination of the 1,000 acre rule would also increase the eligible 
collateral that would facilitate these wholesale funding advances. 
Congress can alleviate the negative effects of the antiquated 1,000 
acre rule by eliminating this limitation in Farmer Mac's charter 
altogether. This would allow Farmer Mac's board of directors to set 
overall loan limits without regard to acreage as a part of the 
company's overall risk management, subject to appropriate oversight by 
Farmer Mac's independent safety and soundness regulator--the Farm 
Credit Administration.
Eligible Borrowers
    Another simple proposed change to Farmer Mac's charter that would 
reflect the evolution and current realities of agricultural lending and 
better serve the needs of rural borrowers is to expand the definition 
of the borrowers who are eligible to have their loans participate in 
Farmer Mac's programs. Under Farmer Mac's charter, the company's 
secondary market activities related to Farm & Ranch loans are limited 
to the obligations of individuals or private corporations or 
partnerships. This limited definition of the eligible borrowers for 
qualified loans does not contemplate other borrowing and land ownership 
vehicles that have become much more common over time, including family 
trusts and other business entities and family farming ownership 
structures such as limited liability companies. In particular, the 
family trust structure has become a much more common way to own 
agricultural land and to borrow money secured by that land. Including 
trusts and other business entities as eligible borrowers for loans 
included in Farmer Mac's Farm & Ranch line of business would simply 
recognize the reality that these types of ownership vehicles are 
widely-used structures now, unlike in 1988 when Farmer Mac was created, 
and would increase Farmer Mac's ability to serve America's farmers and 
ranchers.
USDA Guaranteed Loans
    Congress revised Farmer Mac's charter in 1990 to authorize Farmer 
Mac to purchase the guaranteed portions of loans guaranteed by the 
Secretary of Agriculture under the Consolidated Farm and Rural 
Development Act (the ``ConAct''). The business permitted by this 
expanded operating authority is known as Farmer Mac's USDA Guarantees 
line of business, which offers lenders ready access to competitive 
funding rates available in the capital markets. Lenders can in turn 
pass those benefits on to borrowers in the form of longer-term rates, 
lower rates, or both.
    At the time of the creation of Farmer Mac's USDA Guarantees line of 
business, it appears that Congress used the ConAct as a proxy for all 
the USDA guarantee programs that could benefit rural America and did 
not envision rural-related loans that USDA might one day guarantee 
under authority other than the ConAct. Since 1990, USDA has continued 
to expand the programs it offers to qualified rural borrowers through 
various programs. However, with Farmer Mac's limited authorities to 
purchase only the guaranteed portions of loans guaranteed under the 
ConAct--primarily Farm Service Agency (FSA) loans, Community Facility 
(CF) loans, and Business & Industry (B&I) loans--Farmer Mac has been 
unable to provide liquidity to lenders making loans under new and other 
longstanding non-ConAct USDA programs that benefit rural America. Many 
rural lenders want to make additional USDA guaranteed loans but need a 
secondary market for the liquidity it provides. USDA could expand 
service, lending, and liquidity to rural America through Farmer Mac's 
secondary market if Congress amended Farmer Mac's charter to authorize 
the purchase or securitization of the portion of any loan guaranteed by 
USDA. This expanded authorization would include USDA's guarantee 
programs related to agricultural exports, rural housing, rural 
utilities, and renewable energy, all of which have the potential to 
benefit rural America. As with the other two proposed charter updates 
described above, all types of lenders who use Farmer Mac would both 
benefit from these proposed changes.
Crop Insurance
    As the Committee begins its preparation for the next farm bill, I 
would also like to point out the importance of Federal crop insurance 
programs to the agricultural lending community and express Farmer Mac's 
strong support for this essential part of the safety net for 
agriculture. Crop insurance has become the cornerstone of farmers' risk 
management activities, allowing a very capital intensive industry to 
make production decisions that include considerable external risk from 
weather and market vagaries, and achieve the remarkable efficiency and 
productivity noted earlier. Some key points about the Federal crop 
insurance programs:

   Crop insurance has undergone a modernization and scaling 
        that parallels production agriculture with total program 
        liability that has grown from about 1.1 million policies with 
        $840 million in premium and $12.8 billion in liability in 1990 
        to over 2.2 million policies with $9.3 billion in premium and 
        over $100 billion in liability in 2016.

   Crop insurance programs now cover virtually all the 
        commercially important acreage of major row crops, and there 
        are now nearly 200 total different crop policies.

   Farmers' use of crop insurance has moved dramatically toward 
        higher coverage level elections and toward revenue products, 
        further signaling the successful design and deployment of the 
        programs.

    The effects of crop insurance are profound both for insured 
producers and for those beyond the farmgate. For example, in 2012 the 
eastern Corn Belt experienced a historic drought, and crop insurance 
worked as intended, largely filling in the deepest gaps and preventing 
widespread financial disasters while allowing affected farmers to 
continue in production in future years. Additionally, there were no ad 
hoc disaster payments that year, and very minor spillover effect to 
lenders and other capital providers. In the absence of crop insurance, 
it is safe to say that the financial malaise in the drought stricken 
areas likely would have been of historic proportions. Clearly, lenders 
rely indirectly, but very importantly, on the coverage provided to 
their borrowers and would be less able to provide financing in the 
absence of these critical programs.
    In terms of possible designs of safety nets, those studying crop 
insurance note several positive features including the direct 
countercyclicality of insurance--it pays when revenues are low and not 
when revenues are higher thus directly reducing financial risk. 
Furthermore, farmers have a direct stake or deductible in the program 
and are induced to continue to improve efficiency and make best 
management practices along the way while customizing their coverages 
and unit designs for their own circumstances. Crop insurance coverage 
also allows meaningful marketing and advance pricing decisions to be 
made, thereby improving related management practices as well. Finally, 
and perhaps most importantly, modern crop insurance programs allow 
farmers to make efficient use of debt, and allow lenders to more 
confidently lend to an industry in which one of the key risks is 
related to weather risk outside of the control of the managers.
    Social benefits have also been noted related to crop insurance, 
including the fact that lower risk production systems likely reduce the 
cost of food to consumers. Crop insurance also has appropriate 
classification in the World Trade Organization (WTO) support 
classification system, and most importantly, has preferred attributes 
relative to ad hoc disaster programs which it has largely offset. A 
final critical point is that crop insurance naturally ``scales'' 
relatively easily. As farm sizes have continued to grow, and as the 
costs of production and capital intensity of agriculture have 
increased, crop insurance remains proportional to the risks covered by 
its very design. In this regard, it is a mechanism that is naturally 
indexed to the changing scale and intensity of agricultural production 
units, a desirable feature of any program that is intended to continue 
to serve the agricultural sector as it evolves further toward ever 
increasing scale and efficiency.
Conclusion
    I want to thank you for this opportunity. Farmer Mac serves as an 
essential bridge between investment capital and main street rural 
America, and we are honored to collaborate with our customers in 
helping to build stronger rural communities. Throughout the inevitable 
agricultural economic cycles, Farmer Mac remains resolute in our 
commitment to provide financial tools to extend the type of flexible, 
low-cost financing that is necessary to help allow rural America to 
adapt, grow, and flourish. Our commitment to our mission has never been 
stronger or more important at this time when significant portions of 
the agricultural economy continue to face challenges. Because Farmer 
Mac does not depend on funding from taxpayers, Farmer Mac's secondary 
market is one of the few resources that can be brought to bear to help 
increase the availability of credit in rural America without running up 
against Federal budget restraints. By updating our charter to recognize 
the ever-evolving financing mechanisms that facilitate modern farming, 
we will be better able to bring the power of the secondary market to 
our customers and your constituents.

    The Chairman. Thank you, Mr. Buzby.
    Mr. Franzen.

         STATEMENT OF NATHAN E. FRANZEN, PRESIDENT, AG
DIVISION, FIRST DAKOTA NATIONAL BANK, YANKTON, SD; ON BEHALF OF 
                  AMERICAN BANKERS ASSOCIATION

    Mr. Franzen. Chairman Scott, Ranking Member Scott, and 
Members of the Subcommittee, my name is Nate Franzen, I am 
President of the Agribusiness Division at First Dakota National 
Bank in Yankton, South Dakota. We are a family-owned and 
locally controlled community bank, with $890 million in 
agricultural loans. We have 19 branches, six loan production 
offices, and employ 375 people in South Dakota and Nebraska.
    I appreciate the opportunity to present the views of the 
ABA on credit issues in the upcoming farm bill. The topic of 
today's hearing is very timely. While farm and ranch incomes 
over the past 5 years have been some of the best in history, 
there is no question that the agricultural economy is slowing. 
As a matter of fact, approximately 50 percent of my ag clients 
lost money this year, compared to 40 percent a year ago.
    Despite this, the banking industry is well positioned to 
meet the needs of U.S. farmer and ranchers. Interest rates 
continue to be near record lows, and banks have the people, 
capital, and liquidity to help America's farmers and ranchers 
manage through any turbulence in the economy. Importantly, with 
the farm bill in place, farmers, ranchers, and their bankers 
have certainty from Washington about future ag policy.
    In 2015, farm banks, defined as any bank with more than 
15\1/2\ percent of their loans made to farmers or ranchers, 
increased ag lending eight percent, and now provide over $100 
billion in total farm loans. Small farmers rely particularly on 
banks for funding. Farm banks hold $48 billion in small loans, 
and $11\1/2\ billion of that is micro-small farm loans.
    Farm banks are healthy and continue to be forward-looking, 
growing capital and increasing reserves. This provides 
flexibility to serve our nation's farmers, and manage risks 
associated with any downturn in the agricultural sector.
    First Dakota National Bank was the first preferred lender 
in the country, so we have a long history with Farm Service 
Agency loan programs. Additionally, we have two very unique 
programs for our farmers. The first is our Beginning Farmer and 
Rancher Program. It is a 1 year financial education program 
that sharpens our producers' skills. The second is our Keep 
Farmers Farming Program, which deals with the challenges 
producers face, including transition planning and best business 
practices, and both areas are extremely important to enhance 
the legacy of today's family farms. I am very proud of these 
programs.
    I would like to thank Congress, especially the Agriculture 
Committees, for repealing borrower term limits on USDA FSA 
guaranteed loans in the last farm bill. Banks worked closely 
with the USDA to make additional credit available by utilizing 
the Guaranteed Farm Loan Programs.
    On the subject of USDA farm loan programs, I believe that 
Congress needs to consider reforms to the programs; 
specifically, to raise the cap on these loans due to the rising 
costs of agriculture, along with modernizing the programs. The 
USDA FSA loans have allowed farmers to continue to access 
credit from banks like mine as they grow, ensuring credit 
access for farmers across the country. This is why the ABA has 
endorsed Representative Bost's BALE Act which provides a 
pathway for increasing the limit on FSA loans.
    It should be noted that with any increase in loan limits, 
there needs to be an increase in funding for the loan programs. 
When funding is not available for these programs, it hurts 
farmers and ranchers the most as they often rely on the loan 
programs to run their operations.
    Another area of concern is the need for more technology and 
staff, especially at FSA. With loan officers retiring, and more 
and more retiring in the future, there needs to be a workforce 
trained and ready to step in. It is disheartening when an FSA 
loan officer retires as we lose valuable knowledge and 
experience. This hurts even more in challenging economic times 
in rural America. FSA needs the ability to hire good staff. 
Additionally, there needs to be major updates to technology at 
USDA. Currently, we have to call a loan officer to ask 
questions on rates and terms on loans, which could be done 
online instead. This is slowing down the loan-making process, 
and adding more work to everyone.
    Finally, I need to discuss the importance of Farmer Mac to 
my bank. We use Farmer Mac as a way to mitigate risk in our 
portfolio, while helping farmers, especially beginning farmers, 
get credit. ABA believes that the 1,000 Acre Rule should be 
eliminated on Farmer Mac loans. Banks like mine are proud of 
the work we do to support our nation's farmers and ranchers. 
The agricultural community is a critical part of our economy, 
and America's banks remain committed to serve it through good 
times and bad.
    Thank you, and I would be happy to answer any questions.
    [The prepared statement of Mr. Franzen follows:]

 Prepared Statement of Nathan E. Franzen, President, Ag Division, First
    Dakota National Bank, Yankton, SD; on Behalf of American Bankers
                              Association
    Chairman Scott, Ranking Member Scott, and Members of the 
Subcommittee, my name is Nate Franzen, and I am the President of Agri-
Business at First Dakota National Bank in Yankton, South Dakota. First 
Dakota National Bank is a family owned and locally controlled community 
bank with $1.5 billion in assets and $890 million in agricultural 
lending. We have 375 employees and have 19 branch locations and six 
loan production offices serving South Dakota and Nebraska.
    First Dakota National Bank was the first bank to become a Farm 
Service Agency Preferred Lender in March of 1999 and has been involved 
in guaranteed and direct loans ever since. But there are two unique 
agricultural programs that bring me great pride due to their success. 
The first is our Beginning Farmer and Rancher program. This program was 
established in 2012 and provides a 1 year educational experience for 
young and beginning farmers and ranchers. Throughout this yearlong 
educational program we expose our beginning farmer and rancher 
participants to leading educators and industry leaders. We do this with 
one goal in mind: educating and sharpening the skills of our beginning 
farmers and ranchers to increase their odds of future viability and 
success. The second program was established in 2013. It is a consulting 
department within our agriculture division called Keep Farmers Farming. 
Its intent is to help our farms and ranches deal with the most 
important challenges they face. These challenges include strategic 
planning, estate planning, transition planning, best business 
practices, as well as marketing and risk management. We are making a 
real difference in our Ag industry by helping our farms and ranches 
enhance their performance and plan for transition and legacy. These two 
programs will help bring young and beginning farmers and ranchers back 
to their family operations and keep our family farms and ranches viable 
for generations to come.
    I am also a past Chairman of the American Bankers Association's 
Agricultural and Rural Bankers Committee. I appreciate the opportunity 
to present the views of rural bankers on credit issues in the upcoming 
farm bill.
    The American Bankers Association is the voice of the nation's $16 
trillion banking industry, which is composed of small, midsize, 
regional and large banks that together employ more than two million 
people, safeguard $12 trillion in deposits and extend nearly $8 
trillion in loans. ABA is uniquely qualified to comment on agricultural 
credit issues as banks have provided credit to agriculture since the 
founding of our country. Over 5,000 banks--over 82% of all banks--
reported agricultural loans on their books at year end 2015 with a 
total outstanding portfolio of over $171 billion.
    The topic of today's hearing is very timely. There have been many 
successes within the 2014 Farm Bill that have directly affected 
agricultural lenders. However, the agricultural landscaped has changed 
considerably since the passage of the last farm bill. Agricultural 
lenders have often been the first group to feel the effects of the 
changing agricultural landscape, and the role that public policy has 
played in shaping that landscape.
    The agricultural economy has been slowing, with farm sector 
profitability expected to decline further in 2017 for the fourth 
consecutive decline. However, farm and ranch incomes for the past 5 
years have been some of the best in history. With the 2014 Farm Bill in 
place, farmers, ranchers, and their bankers achieved a level of 
certainty from Washington about future agricultural policy. Interest 
rates continue to be at or near record lows, and the banking industry 
has the people, capital and liquidity to help American farmers and 
ranchers sustain through any turbulence in the agricultural economy.
    Banks continue to be one of the first places that farmers and 
ranchers turn when looking for agricultural loans. Our agricultural 
credit portfolio is very diverse--we finance large and small farms, 
urban farmers, beginning farmers, women farmers and minority farmers. 
To bankers, agricultural lending is good business and we make credit 
available to all who can demonstrate they have a sound business plan 
and the ability to repay.
    In 2015, farm banks--banks with more than 15.5% of their loans made 
to farmers or ranchers--increased agricultural lending 7.9 percent to 
meet these rising credit needs of farmers and ranchers, and now provide 
over $100 billion in total farm loans. Farm banks are an essential 
resource for small farmers, holding $48 billion in small farm loans, 
with $11.5 billion in micro-small farm loans (loans with origination 
values less than $100,000). These farm banks are healthy and well 
capitalized and stand ready to meet the credit demands of our nation's 
farmers large and small.
    In addition to our commitment to farmers and ranchers, thousands of 
farm dependent businesses--food processors, retailers, transportation 
companies, storage facilities, manufacturers, etc.--receive financing 
from the banking industry as well. Agriculture is a vital industry to 
our country, and financing it is an essential business for many banks, 
mine included.
    Banks work closely with the USDA's Farm Service Agency (FSA) to 
make additional credit available by utilizing the Guaranteed Farm Loan 
Programs. The repeal of borrower limits on USDA's Farm Service Agency 
guaranteed loans has allowed farmers to continue to access credit from 
banks like mine as they grow, ensuring credit access for farmers across 
the country.
    Entities like Farmer Mac provide another avenue for banks to 
increase credit availability. By purchasing loans from banks, Farmer 
Mac allows banks to lower interest rates for their customers and 
provide better loan products. With the agricultural economy potentially 
going through some stressful times in the near future, Farmer Mac will 
need legislative changes. ABA believes the most needed change is the 
removal of the current 1,000 acre limitation.
    We remain concerned with certain areas of the agricultural credit 
market. In particular, we are worried that the Farm Credit System--a 
government sponsored entity--has veered away from its intended mission 
and now represents an unwarranted risk to taxpayers. The Farm Credit 
System was founded in 1916 to ensure that young, beginning, and small 
farmers and ranchers had access to credit. It has since grown into a 
$320 billion behemoth offering complex financial services. To put this 
in perspective, if the Farm Credit System were a bank it would be the 
seventh largest in the United States, and larger than 99.9% of the 
banks in the country.
    Our nation's farmers and ranchers are a critical resource to our 
economy. Ensuring that they continue to have access to adequate credit 
to thrive is essential for the well-being of our whole nation. 
America's banks remain well equipped to serve the borrowing needs of 
farmers of all sizes.
    In my testimony today I would like to elaborate on the following 
points:

  b Banks are a primary source of credit to farmers and ranchers in the 
        United States;

  b The 2014 Farm Bill can be considered a success for its protection 
        of crop insurance, the Conservation Reserve Program (CRP), and 
        the removal of term limits on FSA Guaranteed Loan Programs;

  b The next farm bill will require some changes to FSA loan programs 
        including higher lending limits, enhancements in technology, 
        and addressing the rapid retirement rates of FSA staff. 
        Additionally, changes will need to be put forward on commodity 
        programs and data collection;

  b Farmer Mac is a valuable partner for lenders and the farm bill will 
        need to be a vehicle to improve Farmer Mac; [and]

  b The Farm Credit System has become large and unfocused. It should 
        refocus its mission on helping farmers and ranchers in need of 
        subsidized credit.
I. Banks Are a Primary Source of Credit to Farmers and Ranchers in the 
        U.S.
    For my bank and for many of our members, agricultural lending is a 
significant component of their business activities. ABA has studied and 
reported on the performance of ``farm banks'' for decades and, we are 
pleased to report that the performance of these highly specialized 
agricultural lending banks continues to be strong. ABA defines a farm 
bank as one with more than 15.65 percent farm or ranch loans (to all 
loans).
    At the end of 2016, there were 1,912 banks that met this 
definition. Farm lending posted solid growth during 2016. Total farm 
loans at farm banks increased by 5.3 percent to $103.4 billion in 2016 
up from $98.3 billion in 2015. Approximately $1 in every $3 lent by a 
farm bank is an agricultural loan.
Farm Banks Exhibit Strong Local Growth
$ Billions 


          Source: Federal Deposit Insurance Corporation & American 
        Bankers Association Analysis.

    Farm real estate loans grew at a faster rate than farm production 
loans. Outstanding farm real estate loans grew at a pace of 9.2 
percent, or $4.5 billion, to a total of $54.0 billion. Farm production 
loans rose by 1.3 percent, or $641 million, to $49.4 billion. Farm 
banks are a major source of credit to small farmers--holding more than 
$48.4 billion in small farm loans (origination value less than 
$500,000) with $11.5 billion in micro-small farm loans (origination 
value less than $100,000) at the end of 2016. The number of outstanding 
small farm loans at farm banks totaled 766,762 with the vast majority--
over 495,600 loans--with origination values less than $100,000. Farm 
banks are healthy and well capitalized and stand ready to meet the 
credit demands of our nation's farmers large and small.
Farm Banks Increase High-Quality Capital
$ Billions 


          Source: Federal Deposit Insurance Corporation & American 
        Bankers Association Analysis.

    Equity capital--often thought of as the strongest form of capital--
at farm banks increased 3.7 percent to $48.4 billion in 2016. Since the 
end of 2007, farm banks have added $20.9 billion in equity capital, 
building strong high-quality capital reserves. These capital reserves 
will enable farm banks flexibility as the agricultural sector adjusts 
to lower commodity prices--allowing bankers to work with and serve the 
needs of our nation's famers--and will also act as a buffer, proving 
insulation from the risks associated with any downturn in the 
agricultural sector.
    One area of concern for farm bankers and their customers has been 
the rapid appreciation in farmland values in some areas of the country. 
The run up in farmland values has not been a credit driven event. Farm 
banks are actively managing the risks associated with agricultural 
lending and underwriting standards on farm real estate loans are very 
conservative. The key consideration in underwriting any loan is the 
ability of the customer to repay regardless of the collateral position 
in the loan. To further manage risk, we regularly stress test our loan 
portfolios to judge repayment capacity under different scenarios.
    After several years of large increases in farmland values, the 
consensus view among bankers I know is that the increase in cropland 
values has slowed. USDA estimates of lower commodity prices for the 
third consecutive year in 2016 seem to have modestly cooled off the 
demand for farm real estate. We watch the farm real estate market very 
closely, as do my customers. In recent years, over \4/5\ of the 
agriculture sector's asset values were held in real estate. USDA 
estimates a 1.2 percent decline in the value of farm real estate in 
2016.
II. The Agricultural Act of 2014 Had Many Successful Components
    One success of the 2014 Farm Bill was the continued support of crop 
insurance programs. Agricultural lenders use crop insurance as a 
guarantee to help secure financing for operating credit. With crop 
insurance, a lender has the ability to provide support based on 
individual producers' proven crop yields. This allows lenders to tailor 
a loan to a producer's operation and allow for year-to-year adjustments 
within that operation. Without crop insurance acting as a safety net, 
producers would be in a much more challenging financial situation in 
the event of disaster. Crop insurance has allowed lenders to provide 
the best possible terms for operating loans because it helps to lower 
the risk for the lender. ABA has been a long-time supporter of crop 
insurance programs and would like to see the programs expanded to help 
as many producers as possible.
    Another success of the 2014 Farm Bill was the continuation of the 
Conservation Reserve Program (CRP). CRP is vital in rural areas as it 
provides another use for land that may be otherwise unsuitable for 
farming. From a lender perspective, CRP is another tool in the toolbox 
for landowners to use when they are trying to diversify their holdings. 
Additionally, CRP can provide a steady stream of income for producers, 
especially older producers.
    I would like to thank Congress, especially the Agricultural 
Committees, for repealing borrower term limits on USDA Farm Service 
Agency guaranteed loans in the 2014 Farm Bill. Term limits restricted 
farmer access to capital, and with the expansion of the farm economy 
over the past 10 years, there are some farmers who are not able to 
obtain credit from banks like mine without a guaranty from USDA. The 
USDA's Farm Service Agency guaranteed loan program has been a 
remarkable success. Today, nearly $12 billion in farm and ranch loans 
are made by private sector lenders like my bank and are guaranteed by 
the USDA. There are nearly 43,000 loans outstanding--of course some 
farmers have more than one guaranteed loan, so this number is not to be 
confused with the number of individual farmers and ranchers, but the 
numbers of individuals accessing credit under this program is very 
significant.
    This program has grown over the past 5 years, with less than $9 
billion outstanding at the close of FY08 to nearly $12 billion today. 
The loans made by banks like mine under this program are modest in 
size. The average outstanding guaranteed real estate loan is $439,000 
and the average outstanding guaranteed non real estate secured loan is 
$250,000. Clearly, we are reaching customers who have modest-sized 
operations, who are in the process of starting their farm or ranch 
operation, or who are recovering from some sort of financial set-back. 
Despite the fact that these customers do not have either the earnings 
or collateral to qualify for conventional credit, losses in the program 
have been extremely small. Over the last 5 fiscal years losses have 
ranged from a high of 0.6% in FY10 to a low of 0.3% in FY13. These are 
extremely low losses--especially for customers who are perceived to be 
a higher risk than other customers, hence the need for the USDA credit 
enhancement. Bankers who utilize the guaranteed farm loan programs 
offered by USDA know what they are doing and work very closely with 
their farm and ranch customers to properly service these loans. The 
Farm Service Agency deserves a great deal of credit for administering 
such a successful public/private partnership. We urge you to continue 
to support this very worthwhile program.
III. Changes Needed in the Next Farm Bill from a Banker's Perspective
    I want to reiterate that the 2014 Farm Bill was very successful 
from a lender's perspective. However, there are some substantial 
changes that need to be considered as Congress starts working on the 
next farm bill.
    The most important change that should be made to the next farm bill 
is an increase to the current loan limit of $1.399 million on FSA 
Guaranteed Loans. The formula for indexing the programs has not kept up 
with the increasing costs of agriculture. It is much more costly for a 
young, beginning or small farmer to get into agriculture, and the 
guaranteed loan programs need to reflect that reality. ABA has endorsed 
H.R. 831, the Beginning Agriculturist Lifetime Employment Act of 2017 
(BALE Act), introduced by Representative Mike Bost. This legislation 
would increase the cap on GFOs and GOLs to $3.5 million. We believe 
this increase is necessary for lenders to be able to help as many 
producers as possible going forward. The BALE Act would also increase 
the size of Direct Operating Loans and Direct Ownership Loans from 
$300,000 to $600,000. This legislation is an important first step to 
modernizing FSA loan programs.
    With any increase to Guaranteed Loan Programs, there will need to 
be an increase in funding for the programs. It is vital that the 
necessary funds are appropriated for the programs because there has 
been a shortage of funds for the past 3 years. These programs continue 
to create a great public-private partnership between lenders and USDA, 
and future funding should reflect the strength of programs.
    Another step in modernizing loan programs would be upgrading and 
improving technology. This would create a more efficient and responsive 
USDA. As I mentioned before, ABA is very involved in FSA Guaranteed 
Loan Programs, but the lack of basic upgrades to technology has greatly 
delayed the industry's ability to process loans at an efficient rate. 
Without simple updates, such as better functioning websites to check on 
loan balances, we are creating unnecessary work for FSA staff. As we 
have learned in the banking industry, updating technology can create 
greater efficiency across an organization, which ultimately benefits 
our customers.
    Along with the changes to the loan programs and upgrades to 
technology, there needs to be serious consideration for increasing 
staff levels at FSA. As veteran staff retires, there isn't enough new 
staff being trained to take over their loan portfolios. This is 
creating a knowledge gap within FSA loan programs and is making it much 
harder to turn around loans in a timely fashion. When it comes to 
financing agriculture, especially operating loans, loans need to be 
made as quickly as possible so farmers can get back into the field. As 
the Agriculture Committee is aware, windows for planting or harvesting 
can close very quickly and our loan programs need to keep pace.
    I believe FSA should consider bringing back their interest 
assistance program. This program helps to buy down the cost of interest 
for young and beginning farmers, which is timely considering the rising 
interest environment we are entering. In the past, the program allowed 
FSA to buy down as much as four percent of all guaranteed operating 
loans. If this program were to be reinstated, ABA suggests that the 
program would be no more than two percent, would be eligible for only 
beginning and young farmers, and would be eligible for all FSA 
guaranteed loan programs.
    Another issue that should be further examined by the Agriculture 
Committee is the National Environmental Policy Act (NEPA) regulations 
that have been put in place for Confined Animal Feeding Operations 
(CAFO) for FSA loan programs. I fully understand why the regulations 
have been put in place, but there needs to be serious examination on 
potential changes to the regulations. Additionally, I have found that 
the regulations can vary from state to state and county to county, 
making it very difficult to properly put together the loan. The 
Agriculture Committee should consider offering changes to the NEPA 
regulations on CAFOs so lenders can better serve this constituency into 
the future.
    When the 2014 Farm Bill was written and approved, commodity prices 
were considerably higher than after implementation of the programs. As 
you are aware, the 2014 Farm Bill required that the producer make a 
one-time election between Agriculture Risk Coverage (ARC) and Price 
Loss Control (PLC). This became problematic because while producers 
were making the election in July 2013, corn futures were over $7 per 
bushel, with wheat futures being over $9 per bushel. Now, corn is less 
than $4 per bushel, and wheat is $4.50 per bushel. This dramatic drop 
in prices could not be foreseen by any producers.
    Coupled with the drop in prices, the decision to use county yields 
instead of state yields should have provided assistance to the 
individuals most in need when yields were low, but this was often not 
the case. Instead, due to the variability in National Agriculture 
Statistics Service (NASS) data, two fields on each side of a county 
line, may have drastically different payments, with my customers seeing 
the difference as high as $90 per acre. Additionally, from a lender's 
point of view, NASS data has not been as accurate as data from the Risk 
Management Agency (RMA), which led to problems on yield calculations.
    While crop prices and a one-time program election were both issues, 
the timing of payments greatly affected lenders. Payments could not be 
calculated until the final county yield was determined and the 
marketing year was complete. This means producers do not receive their 
payments during the same year in which they planted their crops, and 
lenders had to deal with the fallout of this timing issue. For example, 
we are currently completing renewals for our farm customers. We look at 
their financial progress for 2016 and set their operating lines for 
2017. However, we cannot calculate 2016 payments until October of 2017. 
From a lender perspective, this has caused a real problem with our 
regulators, as we cannot use a payment that may be received a year 
later in the profits calculation for this year. Lastly, we should not 
be making educated guesses on what payment may be received. Instead, 
there should be certainty within the programs to allow for an accurate 
calculation.
IV. Farmer Mac Is a Valued Partner for the Banking Industry
    Farmer Mac is a valuable tool in the toolbox for agricultural 
bankers because it provides another avenue for banks to increase credit 
availability. By purchasing loans from banks, Farmer Mac allows banks 
to lower interest rates for their customers and provide better loan 
products. With the agricultural economy potentially going through some 
stressful times in the near future, Farmer Mac will need legislative 
changes. ABA believes the most needed change is the removal of the 
current 1,000 acre limitation. The 1,000 acre limitation was put in 
place in the 1987 Farm Credit Act and has become outdated with the 
increasing size and scope of modern agriculture.
    ABA also believes there should be a serious discussion about Farmer 
Mac being able to buy all guaranteed loans from USDA. This flexibility 
would encourage more banks to be involved in guaranteed loan programs 
across USDA. It should be noted, that these proposals would not only 
benefit banks, but also the Farm Credit System, who is our biggest 
competitor. ABA believes that we need to do everything in our power to 
help finance all of agriculture, and we are all in this together.
V. The Farm Credit System Is a Large Government-Sponsored-Enterprise 
        That Primarily Serves Large Borrowers at the Expense of 
        Taxpayers
    I mentioned earlier in my testimony that the market for 
agricultural credit is very competitive. I compete with several other 
banks in my service area, finance companies from all of the major farm 
equipment manufacturers, several international banks, credit unions, 
life insurance companies and finance companies owned by seed and other 
supply companies, to name a few. The most troublesome competitor I face 
is the taxpayer-backed and tax-advantaged Federal Farm Credit System 
(FCS). The FCS was chartered by Congress in 1916 as a borrower-owned 
cooperative farm lender at a time when banks did not have the legal 
authority to make long-term farm real estate loans. Over the ensuing 
100 years the FCS has received numerous charter enhancements, and has 
ventured into areas that are not appropriate for a farmer-owned farm 
lending business.
    Today the FCS is a large and complex financial services business 
with $320 billion in assets. If it were a bank, it would be the seventh 
largest bank in the United States. It is tax-advantaged and enjoyed a 
combined local, state, and Federal tax rate in 2015 of only 4.0 percent 
(a significant decrease from the effective tax rate of 4.5 percent in 
2014). The tax advantages enjoyed by the FCS in 2015 were worth $1.296 
billion or 28% of the Farm Credit System's net income in 2015.\1\
---------------------------------------------------------------------------
    \1\Federal Farm Credit Banks Funding Corporation; 2015 Annual 
Information Statement of the Farm Credit System; March 7, 2016. Page F-
3.
---------------------------------------------------------------------------
The Farm Credit System Is a Government-Sponsored-Enterprise
    In spite of their size, profitability, and tax advantages the Farm 
Credit System presents the same kind of potential threat to the 
American taxpayer as Fannie Mae and Freddie Mac. As a government 
sponsored enterprise (GSE) like Fannie Mae and Freddie Mac, the 
American taxpayer is the ultimate back stop should the Farm Credit 
System develop financial problems. This reality was formalized in 2013 
when the Farm Credit System Insurance Corporation (FCSIC) arranged a 
$10 billion line of credit ``with the Federal Financing Bank, a Federal 
instrumentality subject to the supervision and direction of the U.S. 
Treasury--to which the Federal Financing Bank would advance funds to 
the [Farm Credit System] Insurance Corporation. Under its existing 
statutory authority, the [Farm Credit System] Insurance Corporation 
will use these funds to provide assistance to the System Banks in 
exigent market circumstances which threaten the Banks' ability to pay 
maturing debt obligations. The agreement provides for advances of up to 
$10 billion and terminates on September 30, 2014, unless otherwise 
extended.''\2\
---------------------------------------------------------------------------
    \2\Federal Farm Credit Banks Funding Corporation; 2013 Annual 
Information Statement of the Farm Credit System; February 28, 2014, 
page 23.
---------------------------------------------------------------------------
    We believe the farmers who own stock of the Farm Credit System--and 
the American taxpayers who back it--deserve a better understanding of 
what transpires between the Farm Credit System and the U.S. Treasury, 
but very little information is available to the public. Unlike the 
housing GSEs which are subject to reform efforts to lessen the 
taxpayer's exposure, the Farm Credit System seems to be increasing its 
dependence upon the U.S. Treasury.
    Congress created the Farm Credit System as a public option for farm 
finance when farmers were having trouble getting the credit they needed 
from non-government sources. The conditions that led to the creation of 
the Farm Credit System nearly 100 years ago no longer exist, and yet we 
continue to have a government-assisted, tax-advantaged farm lender 
providing credit to customers who would be able to easily borrow from 
taxpaying institutions like mine. In fact, the heavily subsidized 
credit that FCS lends goes to those who need it least. Despite 
amendments to the Farm Credit Act of 1980 requiring each FCS lender to 
have a program for furnishing credit to young, beginning and small 
farmers and ranchers (YBS), the share of new YBS loans to total new FCS 
loans continues to be dismal--even as the assets of the System have 
expanded enormously. Loans to small farmers have steadily dropped over 
the past several years, with small farm loans declining from a high of 
30 percent of total new loan volume in 2003\3\ to just 14.1 percent in 
2015. Clearly, those who would benefit the most from the highly 
subsidized credit made available by the FCS are not receiving the 
benefits that Congress intended them to receive.
---------------------------------------------------------------------------
    \3\``FCA's Annual Report on the Farm Credit System's Young, 
Beginning, and Small Farmer Mission Performance: 2013 Results''. Office 
of Regulatory Policy, June 12, 2014 Board Meeting.
---------------------------------------------------------------------------
Conclusion
    The banking industry is well positioned to meet the needs of U.S. 
farmers and ranchers. U.S. agriculture has begun to adjust to lower 
commodity prices after enjoying one of the longest periods of financial 
prosperity in history. USDA projected that at year-end 2016, farm and 
ranch solvency ratios--debt-to-asset and debt-to-equity ratios--would 
rise to 13.23 and 15.25 percent, respectively. Even as these measures 
have increased, each remains low relative to historical levels. During 
the past few years, while farmers experiences unprecedented high 
commodity prices and rising farm profits, farmers used their excess 
cash profits to retire debt and to acquire additional equipment and 
land. As a result, farmers and ranchers today have the capacity to tap 
their equity should there be a decline in farm profitability resulting 
in diminished cash flows. While no farmer or rancher wants to take on 
additional debt, the strength of the U.S. farm and ranch balance sheet 
gives producers options to do so if the need arises.
    The banking industry remains cautious as it looks forward to the 
next farm bill. There is a very real concern that declining commodity 
prices will negatively affect the farm economy and make credit 
situations tighter. This is why the banking industry will continue to 
be involved in the farm bill process and will offer assistance to 
Congress as it writes the next farm bill. With the changes that have 
been outlined earlier, the banking industry will continue to help 
producers be strong into the future. Bankers still see great 
opportunities in agriculture and they will stand with their partners in 
agriculture to develop the best farm bill for all.
    Thank you for the opportunity to express the views of the American 
Bankers Association. I would be happy to answer any questions that you 
may have.

    The Chairman. Thank you, Mr. Franzen.
    Steve, at risk of mispronouncing your last name, we will 
just go with Steve, since I missed two of the last three.

 STATEMENT OF STEVEN J. HANDKE, PRESIDENT AND CHIEF EXECUTIVE 
   OFFICER, UNION STATE BANK OF EVEREST; AT-LARGE DIRECTOR, 
     INDEPENDENT COMMUNITY BANKERS OF AMERICA, EVEREST, KS

    Mr. Handke. That will work, Mr. Chairman. Thank you.
    Well, Mr. Chairman, I am Steve Handke. I am President and 
Chief Executive Officer of the Union State Bank in Everest, 
Kansas. I am also Vice Chairman of the ICBA's Agricultural 
Rural America Committee.
    Union State Bank of Everest was chartered 116 years ago, 
still operates out of our main office in Everest, Kansas, a 
community of 300 people. We manage over $300 million in assets, 
and serve seven Kansas and Missouri communities. We focus on 
lending to corn and soybean production because our communities 
are solely dependent upon agriculture.
    Our nation's 5,800 community banks are vital to agriculture 
as they make a majority of all the farm loans from the banking 
sector. They also provide approximately 40 percent of all the 
small business loans. USDA guaranteed farm and Rural 
Development loans are very important to our bank and our 
community.
    We have heard some say that we are only one normal harvest 
away from dire conditions in the farm economy. USDA calculates 
that ten percent of farmers are highly leveraged. Farm real 
estate debt is projected to peak at $240 billion, which is a 
historic high.
    Community banks have been especially successful at lending 
to farmers at these historic low interest rates; however, the 
decline in farm income has stressed the abilities of borrowers 
to cash flow. Here is what our ag bankers from around the 
United States that serve on the ICBA's Ag Committee have to 
say. Most producers are feeling financial stress. Some 
producers are diverse enough to still be profitable. Many 
problems have been the result of low commodity prices, high 
rental rates, living expenses, farm machinery, and health care. 
Reducing expenses needs to be a focus, but it is difficult. 
Some costs are negotiated years in advance. Competition for the 
farmland makes it hard to reduce the land rental rates.
    Many farmers have strong equity but not enough working 
capital and positive cash flow. Some have decided to exit 
farming, and the demand for debt restructuring or rebalancing 
of the balance sheets will increase. Bankers are concerned 
regulators may overreact, classifying loans with negative cash 
flows despite strong equity in farmland.
    Our recommendations on the USDA credit programs are as 
follows. First, provide adequate funding. USDA guaranteed loan 
programs seem to run out of money. There needs to be more 
flexibility in USDA programs to allow the transfer of funds 
within USDA for these programs. Second, raise the loan cap 
volumes. The dollar amounts of these loans or the low volume 
caps should increase significantly. The guaranteed loan 
programs have only minimal cost, so any volume limit should be 
on the high side and not risk of hitting the caps. Third, raise 
the loan limits. The $1.4 million current limit should be 
raised to between $2.5 and $3.5 million. This would help 
bankers restructure loans and work with more borrowers with 
little, if any, Federal cost. Next, minimize loan origination 
fees which can discourage use. Next, minimize the paperwork 
requirements, a problem often cited by our bankers. Next, 
remove the USDA's recently imposed requirement to have an 
environmental assessment within the past 12 months prior to 
refinancing a livestock facility. Provide uniformity when 
financing loans across state lines, as USDA requirements are 
often different from state to state. Increase USDA staffing 
levels to lessen approval times. Allow banks to choose which 
USDA FSA office to work with to ensure a timely loan approval 
process. Better software solutions that provide better 
integration as applications move between the bank and USDA.
    One way to help us prevent the next ag crisis would be to 
alleviate the Farm Credit crunch. Regulators classify farm 
loans if a farmer misses an occasional payment, even if the 
farmer has strong equity. Many farmers are cash-poor but land-
rich. USDA loans of 90 percent guarantees reduce the amount of 
loans classifications by 90 percent. This 90 percent reduction 
ensures the bank has time to work with producers without 
regulators bringing on `enforcement action' against the bank. 
Under the current regulatory environment, if 40 percent of our 
capital becomes classified with cash flow loans that are loans 
that do not cash-flow even though farmers have strong equity 
and assets, we will be pushed under enforcement actions.
    In conclusion, yes, we need a strong farm safety net and a 
strong crop insurance program, both vital to producers and 
lenders. We also need a very robust USDA Guaranteed Loan 
Program which can keep thousands of farmers farming into the 
stressful times ahead.
    Thank you. We look forward to working with you.
    [The prepared statement of Mr. Handke follows:]

 Prepared Statement of Steven J. Handke, President and Chief Executive
 Officer, Union State Bank of Everest; At-Large Director, Independent 
               Community Bankers of America, Everest, KS
Introduction
    Mr. Chairman and Members of the Subcommittee thank you very much 
for the opportunity to testify today on a topic of great interest to 
thousands of community banks serving rural America and the banking 
industry in general.
    My name is Steve Handke and I serve as the President and CEO of the 
Union State Bank of Everest, in Everest, Kansas. I am testifying today 
on behalf of the Independent Community Bankers of America (ICBA).\1\
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    \1\About ICBA
    The Independent Community Bankers of America', the 
nation's voice for more than 5,800 community banks of all sizes and 
charter types, is dedicated exclusively to representing the interests 
of the community banking industry and its membership through effective 
advocacy, best-in-class education and high-quality products and 
services. With 52,000 locations nationwide, community banks employ 
760,000 Americans, hold $4.7 trillion in assets, $3.7 trillion in 
deposits, and $3.2 trillion in loans to consumers, small businesses, 
and the agricultural community. For more information, visit ICBA's 
website at www.icba.org.
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Union State Bank of Everest
    The Union State Bank of Everest was chartered 116 years ago in 1901 
and still operates out of the main office in Everest, a small community 
of 300 people. Today the bank manages over $300 million in total assets 
and operates in the fertile agricultural counties of five northeast 
Kansas communities and two northwest Missouri communities. Fifty 
percent of our loans are to farmers, primarily corn and soybean 
producers, although the communities we serve are almost entirely 
agricultural dependent.
    Our bank provides an array of services to the seven communities we 
serve to satisfy their banking and credit related needs. Our bank is 
staffed by wonderful employees who work tirelessly to assist the 
communities we do business in. We live and work with the citizens in 
these communities and we do whatever we can to enhance their financial 
livelihoods and quality of life. We know our customers on a first name 
basis and we strive to build relationships through the individualized, 
hands-on service we provide to our customers and borrowers. I have been 
privileged to be one of four bank Presidents to serve over 20 years as 
the bank's CEO and my family has farmed near Everest for four 
generations.
The Role of Rural Community Banks
    On a broader scale, community banks play an important role in the 
nation's economy. There are approximately 5,800 community banks in the 
U.S. Thousands of community banks are in small, rural, and even remote 
communities. Community banks provide approximately \1/2\ of all 
agricultural credit from the banking sector. Community banks under $1 
billion in assets extend approximately 56 percent of non-real estate 
loans to the farm sector and 62 percent of the real estate credit. 
Community banks also provide approximately 40 percent of all small 
business loans even though they hold only ten percent of banking 
industry assets. Therefore, I believe it is important the authors of 
the next farm bill keep in mind the important role that community banks 
play in agricultural finance and keeping our rural communities healthy 
and vibrant.
Focus of Testimony
    Our testimony touches on the interaction between the current state 
of the farm economy from a community banker perspective and the 
necessity of USDA credit programs. My testimony explains how we can 
help prevent or alleviate a potential farm credit crunch from 
developing over the next couple of years if continued low commodity 
prices persist.
    Some observers of the ag credit markets have said recently we are 
only one normal harvest away from dire conditions in the farm economy. 
Last year we may have dodged a bullet. In 2016 we had a convergence of 
two important factors that prevented the worsening farm financial 
situation from escalating more than it did. These factors were a very 
bountiful harvest in many crop producing areas of the U.S. and 
significant farm program payments. It is possible that one or both of 
these factors will not occur this year.
The Current Credit Situation in Rural America
    USDA's February farm income forecasts, relative to 2016 levels, 
projects farm sector profitability measures for 2017 to range from 
nearly flat to declining. Net cash farm income, one measure of 
profitability, is forecast at $93.5 billion, up 1.8 percent compared to 
the 2016 forecast. Net farm income, a broader measure of profitability 
because it includes noncash values such as inventory flows and economic 
depreciation, is forecast at $62.3 billion for 2017, down 8.7 percent 
compared to 2016.
Net Farm Income and Net Cash Farm Income, 2000-2017F
$ Billions, Nominal


          Note: F = forecast.
          Source: USDA, Economic Research Service, Farm Income Wealth 
        and Statistics.
          Data as of February 7, 2017.

    USDA has also calculated that ten percent of farmers are highly or 
extremely leveraged. Farm real estate debt in 2017 is expected to reach 
a historic high of $240.7 billion in nominal terms. An additional 
contributing factor to the increase in farm real estate debt is 
increasing use of real estate as collateral to secure non-real estate 
borrowing. Farm non-real estate debt is expected to continue to 
increase in 2017. Real debt levels are approaching where they were 
prior to the 1980s farm financial crisis.
Farm Sector Solvency Ratios, 1970-2017F
Percent


          Note: F = forecast; data for 2016 and 2017 are forecasts.
          Source: USDA, Economic Research Service, Farm Income Wealth 
        and Statistics.
          Data as of February 7, 2017.

    USDA notes debt is predicted to grow and the value of farm assets 
is anticipated to decline, leading to an increase in the farm sector 
debt-to-asset ratio and debt-to-equity ratios. Such trends reflect a 
modest increase in farm financial risk exposure from 2015. The 2017 
debt/asset and debt/equity ratios, if realized, would be the highest 
since 2002. Liquidity ratios have weakened over the past several years 
and working capital has diminished. The 2017 debt service ratio, which 
measures the share of production available for debt payments, at 0.28 
is at its highest since 2002. The times interest earned ratio, which 
measures the farm sector's ability to meet interest payments out of 
current net farm income, at 4.4 is at its lowest since 2002.
Community Bank Perspective
    Over the last several years, community banks have been able to 
serve their farm borrowers by providing ample credit at near 
historically low interest rates. However, the decline in farm income 
has placed stress on the ability of farm borrowers to cash flow. Higher 
expected interest rates may add to this stress. ICBA conducted a survey 
of its Agriculture--Rural America Subcommittee which consists of over 
25 bankers from all farm regions of the U.S. Following are some of the 
findings in response to questions.
    Some community banks have as high as eighty percent, possibly more, 
of their loans made solely to farmer or ranchers. However, in rural 
communities such as Everest, where my bank is located, the entire 
community is dependent on agriculture. In these communities all of the 
banks' lending is entirely related to agriculture.
    When asked what the level of financial stress is within their 
portfolios, in many cases bankers stated that 75 to 100 percent of 
their producers were feeling financial stress due to low farm prices. 
In some cases the percentage was much smaller, around ten percent, and 
was dependent on which commodities were produced as some producers are 
diverse enough to still be profitable.
    Other causes of financial stress included high rental rates, living 
expenses that are too high relative to farm income, too great of an 
investment in farm machinery, and other factors such as weather. 
Healthcare can be a major living expense impacting producers.
    When asked if producers could strengthen their financial situation 
by lowering their expenses, including family living expenses, some 
bankers indicated this may be possible, although producers have already 
tightened their financial belts in many cases. Producers are having a 
hard time trying to reduce input costs such as fertilizer expenses or 
renegotiating rental rates due to the willingness of other farmers to 
pay the higher rental rates. Producers are trying to reduce expenses on 
seed, chemical and fuel costs through pre-payments or changing vendors. 
Even with these possible reductions, their ability to cash flow will be 
difficult. Some producers have already locked in expenses for several 
years into the future.
    As producers have moved from expansion mode to survival mode there 
will be greater demand for debt restructuring such as through extending 
loan maturities. Many farmers with tight cash flows are using up 
working capital and are expected to borrow more in the future. Bankers 
also report an increase in credit demand from producers who are being 
told by the Farm Credit System (FCS) to look elsewhere for credit.
    Due to financial stress and the projected farm financial 
deterioration over the next couple of years, some farmers have made the 
decision to exit farming. They have decided to exit due to the expected 
difficulty of being profitable in the current environment. Most farmers 
still have adequate to strong equity; however, their working capital 
and cash-flows are not sufficient to continue operating. While some 
producers have sufficient capital to withstand losses over the next 
couple of years, other producers will sell assets like land to remain 
viable. However, we expect bank regulators will challenge banks who are 
trying to work with producers if they are projected to have negative 
cash flows for the next several years despite having a strong equity 
position. This is where USDA guaranteed loan programs could have a 
tremendously positive impact as explained below.
    Community ag banks would report that many of their farm borrowers 
are at best breaking even if borrowers have low debt including low 
carryover debt or have a diversity of commodities including commodities 
that have a degree of profitability. In the worst position would be 
young, beginning and small farmers particularly if they have high debt 
levels or if they have little to no backing from their extended family 
or their parent's farm assets.
    These are the farmers that would be most at risk of having to exit 
production agriculture. However, if low farm prices continue over the 
next couple of years we are likely to witness a larger exodus of 
farmers from agriculture, including larger farmers and ranchers.
USDA Credit Programs
    Many banks are using the USDA guaranteed farm loan programs and 
Farmer Mac to help borrowers restructure debt to get their annual cash 
needs down. There was much less interest in these programs 3 to 4 years 
ago at a time when you wrote the last farm bill. However, things have 
changed for the worse and these types of programs will have a much 
greater demand in the years ahead.
    Provide Adequate Funding--One issue that seems to regularly occur 
is that the programs often tend to run out of funding. There needs to 
be enough flexibility in USDA programs to allow the transfer of funds 
within USDA to these programs in the event they temporarily run out of 
funding. Additionally, the authorization for the dollar amount for 
various loan categories needs to be raised significantly. Some 
programs, such as the guaranteed operating loan program, are self 
funding and therefore have no costs. Why should the dollar volume 
related to these loans be limited?
    Bankers report often having loans approved that cannot get funding 
from USDA. This causes additional stress upon borrowers. Bankers stress 
that time can be of the essence for many producers who are not able to 
simply wait for Congress to act by authorizing and appropriating 
additional funding.
    Raise Loan Limits--It is extremely important that Congress raise 
the lending limits for the USDA guaranteed farm operating and ownership 
(real estate) programs from the current $1.4 million loan limit to $2.5 
million or greater to reflect the higher cost levels of modern day 
agriculture. There is not a cost for guaranteed farm operating loan 
program as this program is self-funding based on the origination fee. 
There is only a very slight cost to the guaranteed farm ownership 
program. Therefore, Congress could accommodate billions of dollars in 
additional credit to farm borrowers with only a minimal cost to the 
Federal Government, ensuring the survival of thousands of family 
farmers.
    Legislation (H.R. 5733) was introduced in the previous Congress by 
Congressman Bost to raise the loan limits on guaranteed farm loans to 
$2.5 million to $3.5 million. Our survey showed strong support for 
these higher loan levels indexed to an inflation adjustment. For some 
banks serving producers with higher production costs, a $2.5 million 
loan is their average loan size. The higher loan limits would help 
producers cope with the higher cost of land, machinery, and other 
costs. Bankers state the current $1.4 million loan limit is simply too 
low and it often prevents banks from restructuring loans or causes many 
farmers to not qualify for guaranteed loans.
    The direct loan programs are also a valuable financing tool for 
many farmers and ranchers, especially younger ones that are buying 
land. These programs assist the ability of farmers to cash flow and 
have attractive interest rates benefiting producers over the life of 
their operation. The programs can help young farmers in either getting 
started in farming or in transitioning a family farm to the next 
generation.
    If direct loan limits are increased, these programs need to ensure 
that direct financing from USDA is leveraged with bank financing to 
ensure larger direct loans don't detract from financing already being 
provided by banks. Also, since these programs have a `credit-elsewhere' 
test this requirement should be tight enough to ensure producers don't 
shop for credit denials, for example, from money center banks that are 
not making small farm loans anyway. In addition, many borrowers 
apparently do not pursue direct loans due to the amount of paperwork 
they have to fill out. Paperwork requirements should be examined. 
Additional funding would need to be appropriated to ensure such 
expansion doesn't undermine existing guaranteed lending.
Other Recommendations for USDA Credit Programs
    Bankers in our survey made a number of recommendations to improve 
USDA credit programs. Some of these suggestions include:

   Minimize origination fees as they can discourage use of the 
        programs;

   Minimize paperwork requirements--a need cited by many 
        bankers;

   Remove the USDA's recently imposed requirement that 
        producers have an environmental assessment within the past 12 
        months prior to financing a livestock facility;

   Provide lenders flexibility when financing USDA loans across 
        state lines as the requirements often differ, making use of the 
        programs much more difficult in these instances;

   Important to increase USDA staffing levels to providing more 
        lending staff which will decrease approval times for direct and 
        guaranteed loans;

   To free up USDA staff, reduce taxpayer expense, and reduce 
        wait times for farmers, crop reporting needs to be done through 
        private crop insurance agents instead of requiring double 
        reporting through agents and USDA personnel;

   Allow banks to choose which USDA-FSA office to work with to 
        help ensure a timely loan approval process and minimize any 
        loan approval issues in certain counties; [and]

   Improve requirements for loss settlements in the case of 
        borrower liquidation.
Farmer Mac Recommendations
    We are aware that Farmer Mac has three technical changes they would 
like to make to their charter. One change deals with the eligibility of 
farms organized as family trusts; a second change deals with Farmer 
Mac's ability to purchase the guaranteed portion of USDA guaranteed 
loans not under the ConAct of 1972; and the third provision would 
remove an arbitrary loan limit for loans of less than 1,000 acres. 
Based on our understanding of these provisions, we believe community 
banks would be supportive of these changes. We would be happy to 
discuss these changes further with the Committee.
One Way To Help Prevent a Farm Credit Crisis
    We have heard from bankers that regulators are now very closely 
scrutinizing bankers' ag loan portfolios during examinations. Since 
stressful times in agriculture may persist for several years, it is 
important regulators not over react and put unnecessary pressures on ag 
lenders. Ag lending is often cyclical in nature with good times 
followed by bad times and good farm lenders know how to weather the 
normal ups and downs of agricultural markets. As has been said, many of 
the best loans are made in difficult times.
    For example, regulators typically require banks to keep a list of 
farmers who didn't make all scheduled payments on their loans, 
regardless of the amount of their equity. If regulators see the 
farmers' names a second time in a subsequent exam, they will tend to 
classify the loan. If the volume of these loans reaches forty percent 
of bank capital, then the bank will be placed under a so-called 
`enforcement action.' My bank has $30 million (10%) capital. If we have 
$12 million in classified farm loans, we would be subject to an 
enforcement action. These loans could be classified even if the 
producer has a huge amount of equity as can often be the case. 
Producers can often be land rich and cash poor. Yet, their loans could 
be classified if the producer has missed an occasional payment.
    I read recently where the Federal Reserve Bank of Kansas City said 
thirty percent of farmers cannot make all of their payments. It would 
not take many farm loans, at approximately $1 million in size or 
greater, for a bank's classified loans to reach forty percent of their 
capital.
    A solution to this potential dilemma for the bank is to make these 
loans as USDA guaranteed loans. With a $1 million loan, a ninety 
percent USDA guarantee would reduce the amount of a loan classified by 
the regulator from $1 million to $100,000--a ninety percent reduction 
in the amount that counts against the bank's capital.
    Banks fear that regulators may over-react to the downturn in 
commodity prices and begin classifying loans. Having a much expanded, 
robust and well-financed guaranteed loan program could remove pressures 
on banks to withhold financing from many farm customers, thus 
significantly helping to avoid a farm credit crunch.
    This Subcommittee and other Congressional committees may want to 
conduct a hearing with banking regulators to discuss how they will deal 
with stress in the farm economy to be sure they have the insight they 
need to deal with future agricultural credit issues.
Conclusion
    Congress has the power to help avoid a farm credit crisis. Yes, we 
need a strong farm safety net for commodities and we need a strong crop 
insurance program--both vital to producers and lenders. But we now need 
to also elevate the status of USDA guaranteed lending programs in the 
next farm bill. Things have changed in the farming sector and not for 
the better. We need to stop thinking about USDA guaranteed lending 
programs as a less important add-on to the farm bill and begin thinking 
about it as a major tool, along with commodity programs and crop 
insurance, to keeping thousands and thousands of farmers in business in 
what may be severely stressful times ahead.
    Thank you for holding this hearing. ICBA and the community banking 
industry looks forward to working with you in writing the next farm 
bill.

    The Chairman. Thank you, Mr. Handke.
    Mr. Marlow.

    STATEMENT OF W. SCOTT MARLOW, EXECUTIVE DIRECTOR, RURAL 
 ADVANCEMENT FOUNDATION INTERNATIONAL--USA, PITTSBORO, NC; ON 
                       BEHALF OF NATIONAL
               SUSTAINABLE AGRICULTURE COALITION

    Mr. Marlow. Good afternoon. Thank you for the opportunity 
to testify today.
    My name is Scott Marlow, and I am here on behalf of the 
Rural Advancement Foundation International, the National 
Sustainable Agriculture Coalition, and our partners across the 
country who work one-on-one with farmers in crisis to help them 
stay on the farm and in their homes.
    Based in Pittsboro, North Carolina, RAFI works from the 
very local to international levels on policies and markets that 
promote sustainable, socially just family farms. But today, I 
am representing our Farm Advocacy Program which provides in-
depth financial counseling to 100 farmers per year facing 
financial crisis. RAFI staff members have had the privilege of 
serving diverse farms ranging in size from 2 acres to 20,000 
acres since the 1980s.
    Past witnesses have explained why the current situation 
differs from the farm crisis of the 1980s. While we may not 
have reached the upheaval of the 1980s, I assure you that the 
fact that it was worse then is cold comfort to the many farm 
families who are struggling to make ends meet now.
    We at RAFI are seeing a different picture. We are seeing a 
significant increase in calls this winter, along with an 
increase in both the severity and the level of frustration of 
those calls, especially from commodity farmers who have been 
turned down for their operating loans.
    My first point to you is that the numbers about farm income 
and foreclosure rates represent families that are struggling to 
stay afloat, to care for their land, and to find a way to bring 
their kids back to the farm. We know the toll financial stress 
takes on farm families. Increased rates of substance abuse, 
depression, divorce, and suicide are all tied closely to the 
availability of credit. As you deliberate the next farm bill, I 
urge you to remember the families behind the numbers, and the 
devastating impact on rural America that the financial crisis 
leaves.
    In times of financial duress, USDA loans take on added 
importance, and three things must be true for these loan 
programs to be effective. There must be sufficient funding to 
meet the current and projected demand, there must be enough 
people to administer these programs, and those people must 
administer the programs well.
    Right now, we are working with 15 farm families whose loans 
have been approved but are waiting on funding. A farm does not 
wait on politics. The seed does not wait, and the weeds and the 
bugs do not wait. And I cannot stress enough how critically 
important it is that credit programs are administered in a 
timely way, and that USDA farm loan programs have access to the 
funds they need and when they are needed.
    Some lenders have urged you to increase FSA loan limits 
across the board. We urge you to resist that idea. And in 
recent years there have been excess demand for FSA financing at 
the current loan caps, and the average loan size for both 
direct and guaranteed loans is far below the current loan cap.
    Across the country, FSA offices are woefully understaffed. 
In one district in North Carolina, just three loan officers are 
servicing 280 existing loans, and approximately 85 new loan 
applications across 14 counties. It doesn't matter how much 
loan funding is made available if FSA doesn't have the capacity 
to administer these loans in a timely and effective way.
    We work with many caring and skilled people within USDA, 
and are proud to partner with both FSA and Farm Credit, but we 
must also acknowledge the powerful role that FSA lending 
offices play in determining the success or failure of a farm, 
and the responsibility that role entails. It is critical that 
Congress and the Administration make clear that the abuse or 
discrimination in the administration of Federal programs will 
not be tolerated.
    With low commodity prices, farmers will struggle with loan 
feasibility, and there are several steps Congress can take to 
extend loan feasibility in USDA loan programs, including 
funding the Interest Assist Program for guaranteed loans, and 
extending the loan term limits. But the greatest benefit that 
farmers can receive to address loan feasibility is a profit. 
For many mid-scale farmers that means connecting to consumers 
or markets in new ways, and brining a greater share of the food 
dollar back to the farm. For instance, between 2007 and 2012, a 
time of record high commodity prices, farms that sold into 
direct markets had a significantly higher survivability rate 
than those who did not, at all scale levels. The bankers before 
you will no doubt confirm the importance of a diversified 
portfolio to weather these difficult times, and to allow our 
rural communities to thrive, farmers must also have a 
diversified portfolio. Farm families have the creativity and 
drive to bring entrepreneurship onto the farm, if only we 
invest in them.
    It is also important to understand the interconnection of 
credit programs with other USDA programs. Crop insurance is 
absolutely key to lending but doesn't cover all crops, and 
rarely covers income from high value, direct, or specialty 
markets. USDA grants, like the Value-Added Producer Grant 
Program, reduce the borrowing burden on the enterprise and 
increase lender comfort with the investment, leveraging private 
capital. Conservation programs create assured income or assets 
that can be borrowed against, while improving soil health. But 
these programs must be funded and they must work together to 
encourage entrepreneurship.
    In our experience, many of the issues that you will 
consider in the next farm bill boil down to the fact that most 
production agriculture in our country today does not provide 
enough of a return on investment to pay for production costs, 
living expenses, and still invest in the future of the farm. 
For farmers to bring their sons or daughters back to the farm, 
for them to care for their farmland, and provide the food and 
fiber we need for a growing population, they must have the 
opportunity to develop innovative enterprises. And as you 
consider the many different programs and titles in the upcoming 
farm bill, I encourage you to look closely at how they interact 
with access to agricultural credit, and the ability of farmers 
to stay in business and develop new innovative enterprises. And 
with the help of other innovative programs, USDA credit 
programs can once again fuel agricultural entrepreneurship that 
will be the lifeline for our future agricultural economy.
    That concludes my opening statement, and thank you very 
much.
    [The prepared statement of Mr. Marlow follows:]

    Prepared Statement of W. Scott Marlow, Executive Director, Rural
Advancement Foundation International--USA, Pittsboro, NC; on Behalf of 
               National Sustainable Agriculture Coalition
Agricultural Credit: Setting the Stage for the Next Farm Bill
    Subcommittee Chairman Scott, Ranking Member Scott and Members of 
the Subcommittee, thank you for the opportunity to testify regarding 
the state of agricultural lending and the importance of farm credit 
programs to our nation's farmers and rural communities. My name is 
Scott Marlow, and I am here today on behalf of the Rural Advancement 
Foundation International (RAFI), our partners in the National 
Sustainable Agriculture Coalition, and our partners across the country 
who work one-on-one with farmers in crisis to help them stay on the 
farm and in their homes.
About RAFI
    RAFI is a nonprofit organization based in Pittsboro, North 
Carolina. We work from the very local to the international level on 
policies, markets and communities that promote sustainable, socially 
just family farms. But for this afternoon, I am representing our Farm 
Advocacy Program, which provides in-depth financial counseling to 
farmers in financial crisis, and assistance for individual farm 
families to help them navigate the complex world of agricultural 
lending regulations, lending institutions and Federal programs. RAFI 
staff members have responded to farmers' calls since the Farm Crisis of 
the 1980's, and have had the privilege of serving farms ranging in size 
from 2 acres to 20,000 acres, representing the full diversity of 
agriculture in our home state of North Carolina and across the 
southeastern United States. In addition, approximately 40 percent of 
our cases each year focus specifically on planning for the great 
challenge of bringing the next generation back to the farm. We are also 
privileged to be a part of a network of farm advocates from across the 
country, connected through Farm Aid and their 1-800 Farm-Aid crisis 
hotline, that provide similar services to farmers in need.
    In our work with individual farm families, it has become clear that 
for mid-scale farms to thrive, they need to access markets and products 
that allow them to increase their return on investment by bringing more 
of the food dollar back to the farm, and connecting to consumers in new 
ways. To us this is a core strategy for addressing farm survival, 
especially in these times of low commodity prices. To that end, RAFI 
also provides technical assistance and funding to farmers to spur 
entrepreneurship in order to respond to or develop new markets. Our 
programs foster creativity and entrepreneurship within rural 
communities rather than adopting prescriptive solutions. In other 
words, we work from the understanding that farmers and rural folks are 
innovative, smart and entrepreneurial and their creativity is a 
critical asset in solving the complex problems before us.
While Not the 1980s, Farmers Are Still in Crisis
    I am here today to talk to you about the credit needs of those farm 
families who are currently in or headed into crisis, as well as the 
unique credit needs of farmers who are creating new or alternative 
enterprises to ensure the viability of their farm into the future. 
Several who have testified before me, both today and in previous 
hearings, have talked about the projections for farm income in the near 
future. Though I won't take the time here to repeat these underlying 
assumptions, it is important to note that net farm income for 2017 is 
expected to be down another 8.7 percent from 2016--a drop of 50 percent 
since the high water mark in 2013.
    While median farm household income is projected to increase 
slightly over the next 2 years, median household income from farming is 
expected to drop from a net loss of $765 in 2015, a net loss of $1,328 
in 2016, to a net loss of $1,437 in 2017. Once again, it will become 
even more important in the future that farm families continue to work 
off the farm to subsidize their farming habit.
    Past witnesses to the Committee have taken great lengths to explain 
why the current situation differs from the farm crisis of the 1980's 
that so many in the farm sector lived through. While we may not have 
reached the great upheaval of the 80's farm crisis, I assure you that 
the fact that it was worse then, is cold comfort to the many farm 
families who are struggling to make ends meet.
    We at RAFI are seeing a different picture. Our calls are up, 
especially from commodity farmers who have been turned down for their 
operating loans. The severity and sense of frustration of those calls 
have increased. Our partners at Farm Aid are seeing a significant 
increase in calls this winter, with a 27 percent increase year to date 
over the same time period and an increase in the severity of the calls. 
No matter how we measure the severity of the need, whether the number 
of farmers or the level of crisis of the call, this year is 
significantly worse than last year.
    My first point to you is that these numbers represent families that 
are struggling to stay afloat, to care for their land and their 
families, and to find a way to bring their kids back to the farm. Their 
hope is that they can show their kids that, rather than leaving the 
farm for a better life, that farming is the better life. With the 
current income projections, we know the toll financial stress takes on 
farm families. While each community and farm is different, we know that 
this type of farm economic downturn is accompanied by an equivalent 
increase in rates of substance abuse, depression, divorce and suicide--
all tied closely to the availability of credit. Recent studies show 
stunning increases in suicide and other ``deaths of despair'' in rural 
communities since the early 2000s. As you continue to hear reports 
about farm income and foreclosure rates, I urge you to remember the 
families of the farms behind the numbers, and the devastating impact on 
Rural America that the financial crisis leaves.
Improving FSA Loan Programs
    We have seen repeatedly that in times of financial duress, USDA 
Direct and Guaranteed loans take on added importance, both in their 
continued existence, and in how they are implemented. Three things must 
be true for these loan programs to be effective. First, there must be 
sufficient funding in the programs to meet the current and projected 
demand. Second, there must be enough people to administer these 
programs at the county level. And, finally, those people must 
administer the programs well. Two of the three, sufficient funding and 
sufficient staffing, are up to Congress. Both are inadequate at this 
time and will fall further short if changes are not made.
    Timely Funding: Right now, we are working with 15 farm families 
whose loans have been approved, but are waiting on funding. In fact, 
farm loan programs have run out of funding repeatedly in recent years, 
leaving farm families waiting on loans and being forced to take steps 
to be able to farm during the delay--like credit card debt or delaying 
paying other bills--that significantly harm the feasibility of their 
loans over time. A farm does not wait on politics. The seed does not 
wait, and the weeds and the bugs do not wait. When a loan is delayed, 
the family cannot farm in a timely way, or is forced to find funding 
through alternate means like high-interest credit cards that will only 
exacerbate their financial situation. I cannot stress enough how 
critically important it is to farmers that credit programs are 
administrated in a timely way, and that USDA farm loan programs have 
the flexibility to access the funds they need when they are needed.
    Loan Limits: Some lenders have urged you to increase FSA loan 
limits across the board as you consider the next farm bill. We strongly 
urge you to resist that idea. Any policy changes proposed relating to 
the appropriate cap on Federal loan amounts should be measured against 
current program usage and demand, historical funding levels, and 
performance targets with respect to lending to beginning farmers and 
other under-served customers.
    The loan limits on Direct Farm Ownership Loans, for example, have 
not been adjusted since 2008, while farmland real estate values have 
increased by 40 percent over that same time. Taken together with the 
fact that FSA has not obligated all of the available funding for these 
loans in recent years, Congress should seriously consider increasing 
these limits to provide new and beginning farmers a better chance to 
get started in areas with high real estate values.
    However, for all other FSA loan programs, there has been excess 
demand at the current statutory loan caps in recent years. Demand for 
loan funding was especially high in 2016, and required an additional 
emergency appropriation to address the significant backlog of farmers 
seeking FSA financing to cover year-end operating expenses. We don't 
expect 2017 to be any different from last year, and FSA faces a real 
threat of running out of loan funding again this year unless Congress 
provides additional funding. The only loan program that did not expend 
all of the appropriated funds in FY16 was Direct Farm Ownership loans.
    In addition to the excess demand for FSA financing at the current 
loan caps, the average loan size for both direct and guaranteed loans 
is far below the current statutory loan cap. In other words, demand is 
quite high for loans far below the current caps and that is unlikely to 
change.
    These trends illustrate how important FSA financing is for small 
and mid-sized family farms, beginning farmers, minority farmers, and 
others who are not well served by commercial credit. If loan caps are 
increased across the board in the next farm bill in order to 
accommodate the needs of the largest farms--those with the best chance 
to find private sources of credit and capital--family scale farms, 
including beginning and socially disadvantaged farmers, will ultimately 
feel the brunt of the impact and face fiercer competition for a limited 
pool of Federal loan funding. Those borrowers deserve to be the focus 
of your concern.
    Additionally, statutory target rates for beginning and socially 
disadvantaged farmers are currently not being met across all loan 
programs--with guaranteed lenders performing the most poorly. While FSA 
direct loan programs have met their statutory targets for beginning 
farmers in recent years, private lenders receiving guaranteed loan 
funding have been unable to meet their statutory targets since the 
target participation rates were put in place by Congress in 1992. This 
strongly suggests that any increases to guaranteed loan limits will 
benefit the largest operations at the expense of family scale and 
beginning operations, who face a much more difficult time securing 
financing in the commercial credit market. Any increase to guaranteed 
loan limits will mean that private lenders will only be further away 
from meeting their targets.
    In order to extend scarce funds, USDA lending does and should 
leverage lending from private banks, acting as risk mitigation for 
private loans, rather than providing the entire loan package. To 
increase the loan limits would ultimately reduce the number of farmers 
served with limited loan funds. In addition, we are very concerned that 
increased limits would encourage beginning farmer investment in very 
large single-use facilities that leave them over-leveraged and 
dependent on single markets, placing all of their family's assets at 
risk as collateral.
    FSA Capacity: Across the country, Farm Service Agency offices are 
woefully understaffed. In one FSA district office in North Carolina, 
just three loan officers are servicing 280 existing loans and 
approximately 85 new loan applications across 14 counties. Our 
understanding is that this is not unusual across the system. The 
programs that county staff are administering are more complicated and 
the loan applications more difficult now than they were just a decade 
ago, especially with the growing interest from diverse farmers who are 
walking into the doors of FSA for the first time. FSA staffing has not 
kept pace with the tremendous growth in demand for FSA loan financing. 
Since 2008, FSA's total loan volume has increased by 30 percent, while 
staffing capacity has remained relatively flat. What's more concerning 
is the estimated 40 percent of current FSA loan officers who are 
nearing retirement in the next several years. It doesn't matter how 
much funding is made available for FSA loans if FSA doesn't have the 
capacity to administer these loans in a timely and effective way.
    We work with many caring and skilled people within USDA, from the 
counties up. They deserve our support. But we must also acknowledge the 
powerful role that lending officers play in determining the success or 
failure of a farm, and the responsibility that this role entails. It is 
critical that Congress, along with the Administration, make clear that 
abuse or discrimination in the administration of Federal programs will 
not be tolerated, and to maintain clear processes for such abuse, if 
and when it happens, to be redressed with accountability for the 
action. I wish that such redress was unnecessary at this time, but that 
is not our experience out in the field.
Addressing Loan Feasibility
    With low commodity prices, farmers will struggle with loan 
feasibility. There is just not enough of a return on investment to pay 
back the loan. One of the tools that USDA loan officers could use to 
increase marginal loan feasibility is the Interest Assist program. In 
this program, the loan officer can buy down the interest rate of a 
guaranteed loan by three percent if the reduced costs make the loan 
feasible. The program exists, and funding this program is a cost 
effective way to extend loan feasibility. I urge you to speak with your 
colleagues on the Appropriations Committee about funding this important 
tool.
    With long-term low prices and widespread natural disasters, we must 
also extend the term limits on both direct and guaranteed loans, not 
just guaranteed loans. Statute and regulations already require that 
farmers seek credit from private sources before receiving FSA loans and 
assuring that they will return to private credit as soon as plausible. 
In this farm financial environment, there is simply not enough profit 
to expect that farmers devastated by natural disasters or market 
upheaval would have the ability to recover sufficiently in the time 
allotted for direct loans. I urge you to make adjustments in the new 
farm bill.
    In addition to the eroding farm financial condition, changes in 
commodity programs in the 2014 Farm Bill had the unintended consequence 
of making it more difficult for lenders to include Federal commodity 
payments in income projections, further eroding loan feasibility 
calculations. ARC and PLC payments cannot be counted on in income 
projections because they are calculated after the season based on 
overall market prices, and lenders do not have the ability to predict 
these payments.
    Similarly, the availability of crop insurance is inextricably 
linked to the ability to secure credit, and can create a real barrier 
to accessing credit when crops or enterprises have either ineffective 
crop insurance policies or no policy at all, as is the case for many of 
the farmers we work with in the southeast and is true in other regions 
as well. And while conservation programs help farmers build soil 
health, they can also create guaranteed cash flow and bring assets that 
can become part of loan feasibility or collateral. I therefore urge you 
to maintain and increase funding in the new farm bill for the farm bill 
conservation programs.
    The greatest benefit that farmers can receive to address loan 
feasibility is a profit. Our current credit and risk management 
programs primarily support large-scale commodity and livestock 
operations, all of which at this point are not realizing a significant 
return on investment. And as long as credit is targeted solely to these 
areas, then farmers will not be able to generate enough income to bring 
the next generation back to the farm. In essence, if we only lend the 
way we've lent, then farmers will continue to be stuck in enterprises 
that do not bring enough profit back to the farm to support the next 
generation. What we desperately need are programs that mitigate risk 
for entrepreneurial activities that allow farmers to tap into new 
markets and generate more profit. It will be these value-added 
enterprises that will become the cash flow that farmers so desperately 
need to support the other parts of their enterprise.
    In this way, every issue that you will consider in the next farm 
bill is affected in some way by the ability of farmers to access credit 
to make a profit. Credit programs are inextricably linked to bringing 
the next generation back to the land, farmland preservation, 
conservation, and national security. In our experience, these issues 
often boil down to the fact that most of production agriculture in our 
country today does not provide enough of a return on investment to pay 
for production costs, living expenses and still invest in the future of 
that farm--whether it is bringing back the next generation or investing 
in the health of the soil. For farmers to bring their sons or daughters 
back to the farm, for them to care for their farmland and provide the 
food and fiber we need for a growing population and with a dwindling 
natural resource base, they must have the opportunity to develop 
enterprises that bring more of the food dollar back to the farm--and 
that opportunity requires credit.
    The loss of farms, especially mid-scale farms of the middle, is not 
new. A running joke in my line of work is that if things keep going the 
way they are going, then one guy is going to farm the whole country and 
his wife will still have to work in town to buy groceries. And I beg 
the forgiveness of the Committee for the gender stereotype, especially 
considering that a vital and growing portion of farmers are women. 
Early in my career, longer ago than I care to admit, I walked a farm in 
Northampton County, North Carolina with a farmer who was a good bit 
older than the average age of farmers back then. He described to me the 
11 families that in his youth made a living from the land that he now 
farmed by himself. Some of those 11 families lived in the poverty and 
exploitation of sharecropping. Others did not. But the land that 
supported 11 families now barely supported one, and there was not 
enough net income from the farm to bring his son back until the farmer 
retired. That story always brings to my mind Isaiah, chapter 5, verse 
8: ``Woe to those who join house to house, who add field to field, 
until there is no more room, and you are made to dwell alone in the 
midst of the land.''
    In difficult times, it is important to look at the bright spots, 
and we see many. Bringing more of the food dollar back to the farm 
means connecting to new markets with new products in new ways. The 
bankers before you will no doubt confirm the importance of a 
diversified portfolio. To weather these difficult times, and to allow 
our rural communities to thrive, farmers must also have a diversified 
portfolio. Farm families have the creativity and drive to bring 
entrepreneurship onto the farm, if we invest in them. Part of that 
investment is loans to enterprises that a few years ago might have 
sounded a little crazy. It is also understanding the interconnection of 
credit programs with other USDA programs. Crop insurance is absolutely 
key to lending, but doesn't cover all crops, and only rarely covers 
income from direct or specialty markets. USDA grants, like the Value-
Added Producer Grant (VAPG) program, reduce the borrowing burden on the 
enterprise and increase lender comfort with the investment, leveraging 
private capital. VAPG is a stellar program that increases market 
returns for farmers and deserves increased direct farm bill support in 
the new farm bill. Conservation programs create assured income or 
assets that can be borrowed against while improving soil health. But 
these programs must be funded, and must work together to encourage 
entrepreneurship.
    The only way that we as a nation are going to move the needle on 
beginning farmers, land transition, and farm viability is to find a way 
to add more value to the farm. And in order to do that, aspiring farm 
entrepreneurs must have access to credit programs that encourage, 
rather than discourage, value-added agriculture, diversification, 
entrepreneurship, and innovation.
    I know that much of the testimony you have heard has been dire, 
including mine, and I would like to end with a hopeful story. Last week 
I spoke with Neil Moye in eastern North Carolina. Years ago, his family 
realized that their turkeys and hogs and row crops would not bring in 
enough income for them to bring their son back into the operation. 
Their answer, which I am sure would give all of you pause, was to build 
a dairy. With the help of a Value-Added Producer Grant, they were able 
to borrow the money to build a bottling plant. Their son has now 
returned to the farm and the milk from their Simply Natural Creamery is 
sold through their farm store and through over 150 stores in their 
area. Last September, Hurricane Matthew brought devastation to much of 
eastern North Carolina, and many of their friends were concerned about 
how the Moyes weathered the storm. They struggled, but not in the way 
you would expect. For over a week they worked 24 hours a day because 
their milk was the only milk available to their community, and the 
communities around them, and was the only milk on the grocery store 
shelves.
    At a time when farm income is low, and projected to remain low into 
the near future, I encourage you to invest in the hard work and 
entrepreneurship of our farm and rural families. As you consider the 
many different programs and titles in the upcoming farm bill, I 
encourage you to look closely at how they interact with farm credit, 
and the ability of farmers to stay in business and develop new, 
entrepreneurial enterprises to address an environment of low commodity 
prices. With the help of other innovative programs, USDA credit 
programs can once again fuel agricultural entrepreneurship that will be 
the lifeline for our future agricultural economy.
    Mr. Chairman and Ranking Member, that concludes my opening 
statement and I am happy to answer any follow up questions you might 
have now or later for the record.

    The Chairman. Thank you, gentlemen.
    The chair would like to remind Members that they will be 
recognized for questioning in order of seniority for Members 
who were here at the start of the hearing. After that, Members 
will be recognized in order of arrival. I appreciate Members' 
understanding.
    I know Congressman Scott had to leave to chair another 
meeting, but plans to come back.
    Gentlemen, all of you spoke about timeliness at the USDA. 
It would be very helpful if you would encourage your Senators 
to go ahead and have the vote so that our Secretary of 
Agriculture could be seated prior to the Easter break. And if 
you could help with that, I would be very thankful, and I think 
it would be in your best interests. I don't think there are any 
questions about the votes, the votes are there, it is just a 
matter of delays that are, quite honestly, from other things, I 
guess. Obviously, the management of the agency depends upon 
having a leader at the agency. I think you will be happy with 
Governor Perdue. I think you will find him to be a good, honest 
man and hard worker, that understands the issues, both from a 
banking standpoint and from a production agricultural 
standpoint.
    You mentioned the 1,000 Acre Rule, Mr. Buzby, and then 
others mentioned it: 1,000 acres in Tift County may cost $4 
million, but 1,000 acres in Iowa would cost significantly more 
than that. Even in the State of Georgia, county by county it 
would vary greatly depending on which county you were in. Where 
did the 1,000 Acre Rule come from? Are there financial caps as 
well tied to the 1,000 acres, and if so, what are those caps?
    Mr. Buzby. My written testimony outlays some possible 
theories as to why the 1,000 Acre Rule was put in place. We are 
not exactly sure what it was. And the way it is written is if a 
farm is greater than 1,000 acres, the amount of loan that could 
be made on that farm is capped at $12.6 million currently. 
Using Ranking Member Scott's math of $6,000 an acre at 1,000 
acres, all of a sudden you are at $6 million, and as you get to 
a 2,000 acre farm, 3,000 acre farm, and beyond, pretty quickly 
that $12.6 million gets eclipsed.
    If you think about the typical size of farms, when Farmer 
Mac was created more than 25 years ago the average size of a 
farm was roughly 600 acres in the United States. In 2012, that 
number was 1,200 acres. Pretty quickly you have more than \1/2\ 
of the farms in the country that may be ineligible for the 
Farmer Mac program.
    If you also move to other commodities, not typical row 
crops, but you look at almond orchards, vineyards, and other 
areas where the value per acre is many multiples of that pretty 
quickly there are a number of customers that we are unable to 
serve.
    One of the big concerns is for small lending institutions, 
whether it be a community bank or another financial 
institution, as farms grow and they outgrow their bank, those 
institutions look to Farmer Mac for assistance, and when we are 
unable to help, sometimes those customers end up going 
elsewhere.
    The Chairman. Mr. Thiessen, from your testimony I gathered, 
obvious support for the farm safety net, crop insurance, and 
exports, I am very concerned about trade agreements and 
potential retaliation, infrastructure, all are important to the 
farmers. Farmer Mac is also extremely important to the farmers 
in Alabama. This morning we heard from folks about the need for 
a fix to the cotton program. After the 2014 Farm Bill, the STAX 
Program fell short for many producers. From your perspective as 
a lender, how dire is the need for an adequate safety net for 
cotton producers?
    Mr. Thiessen. Being that my board is comprised mainly of 
producers and farmers and ranchers from across the territory, 
my last board meeting, one of my board members used the word 
dire himself, and he is a cotton farmer. I would simply say 
over the last 3 or 4 years, they have gone through most of the 
equity that they had built, the profits, the liquidity that 
they had, and today you are looking at a very serious situation 
in Alabama, as well as elsewhere.
    The Chairman. I know many of the cotton producers that I 
have talked with don't feel like it is even purchasing the 
product.
    In your testimony, most of you described the need to 
increase both guaranteed and direct loans. For you, Mr. 
Franzen, how has the shortage of funds within the Guaranteed 
Loan Program affected your lending ability? Do you believe that 
one is more valuable than the other? How do you use direct 
loans as a lender?
    Mr. Franzen. Yes, as I mentioned, we were the first 
preferred lender with FSA in March of 1999, and we use that 
program very heavily. It is very important to us to manage our 
risk through downturns in the ag cycles, and to keep farmers of 
all sizes and all ages financed.
    It is hard to say which is more important, the limits or 
the funding. They go hand in hand. We need to have adequate 
funding for the guarantee programs. As a couple of others 
mentioned, when funding isn't available, the loans are approved 
but sit and wait and can't be closed. And so those farmers know 
they have a loan coming, but they just don't know when. And 
that is real problematic, as you can imagine.
    The loan limit issue is an issue as well though. And I can 
speak to several young and beginning farmers in our area that 
we serve that will get up against those limits, and it limits 
our ability to keep them funded as they are trying to build 
that valuable core equity and liquidity in the early years of 
their agricultural career. I would say both the increase in 
limits and assurance that funding is in place is vital.
    The Chairman. Thank you for that. I know from a timing 
standpoint the loan has to come before the planting season. And 
again, it would be very helpful if we could get them.
    Mr. Handke. Mr. Chairman, could I add onto that?
    The Chairman. Yes, sir, briefly.
    Mr. Handke. We would just encourage Congress to set those 
boundaries high for funding. Hopefully, the Appropriations 
committees will take your lead. But what we are saying is 
please don't make us as bankers make those hard choices on who 
would win--who would get the funding that they would need to 
continue farming, particularly as these programs have very 
minimal costs. Very little expense to the government for 
guaranteed loan programs, but they give us vast amounts more of 
time and resources to work with farmers, and it is going to 
take three, four crops, and the current regulatory environment 
will not allow us to do that.
    The Chairman. I made notes of your comments about the 
enforcement actions. And certainly, whichever area you are in, 
if that commodity that is one of the keys to your banking 
success is the loser that year, then obviously that could lead 
to that enforcement action. I made notes of that from your 
testimony.
    Gentlemen, thank you. I apologize for going beyond.
    Ms. Kuster from New Hampshire, 5 minutes.
    Ms. Kuster. Thank you very much, Mr. Scott. The prerogative 
of the chair. Thank you, and thank you to all of you for being 
with us today.
    I am from New Hampshire and represent smaller farmers in 
New England, and we have had a great deal of discussion about 
access to credit as a critical tool for farmers in New England. 
For most of the producers, the startup costs of acquiring the 
land, the machinery, the animals can reach, in our world, over 
$1 million. I know for parts of the Midwest and West that is a 
lowball number. But credit programs offered through USDA have 
helped many of our farmers accomplish their dreams, so I want 
to continue to work with you to have a successful program.
    We have been particularly concerned about what is happening 
to our dairy industry. We have talked about this in other 
hearings, but the Margin Protection Program was not successful, 
we had a drought, we have had issues with Canada and New 
Zealand and Europe. And in any event, since the beginning of 
2016, 19 dairy farms went out of commercial dairy operation. 
And just to give you a sense, that is out of a total of 120, so 
this has been a real problem for us with our dairy farmers.
    My question for the whole panel, whoever wants to jump in. 
Dairy producers are struggling with low prices. What I am 
wondering is that we now know that dairy will have high 
beginning stocks and higher than expected milk production in 
2017. Can you speak to what stress you are seeing in the dairy 
industry, if any of you have experience with that?
    Mr. Franzen. Certainly. In our part of the world in central 
South Dakota and the center of the Midwest we are seeing an 
expansion of dairies. We have a situation where we have very 
good access to dairy-quality feed, and so that is attracting 
some dairies. We understand some of the stress you are talking 
about.
    Ms. Kuster. Maybe we could just get the feed a little 
closer to New England?
    Mr. Franzen. There you go. There you go. That has been 
helpful for us, and it is why we have seen some dairies migrate 
to us. It is trying to be more efficient in access, lower their 
cost of feed. But at least prices have stabilized recently, and 
we are hoping that stays the case, but you raise valid points, 
valid concerns.
    Ms. Kuster. Anyone else, any thoughts with your experience?
    Mr. Marlow. We are also seeing a great deal of stress in 
the dairy industry, and we work with more of the mid-scale 
farms that are a bit smaller than what was referenced before. 
What we are seeing is dairy is one of the places where being 
able to move into value-added markets is extremely important.
    Ms. Kuster. Yes.
    Mr. Marlow. The ability to move into either on-farm 
bottling, cheese-making, other ways of getting into local 
markets. And we see that as being absolutely a deal breaker in 
terms of dairies in our area, that if they are not able to do 
that, they really are not being competitive over time. A lot of 
USDA programs are extraordinarily important for their ability 
to do that; things like the reference before to the Value-Added 
Producer Grants, or other grants, are critically important, as 
well as looking at crop insurance and other types of ways of 
having risk mitigation for higher-value markets.
    Ms. Kuster. We have seen that as well, the value-added, we 
have one dairy, a young woman with unbelievable pudding, but 
also cheeses, yogurts, et cetera.
    One more question. Farm income is projected in 2017 to be 
\1/2\ of what it was in 2013. We are seeing increasing farm 
debt, decreasing liquidity, and farm debt-to-assets level 
climbing. Are farmers going to have access to the credit they 
need to get a crop in the ground for this upcoming season?
    Mr. Handke. I might respond to that. There was an 
interesting presentation from Dr. Boehlje from Purdue. Those 
numbers are actually masked somewhat by the fact that we had 
some once in a lifetime crops in the U.S. last year, plus there 
was a higher level than expected government payments, neither 
of which are likely this year. It could be worse than that.
    Also, looking at net farm incomes, you are pulling in a lot 
of the smaller farms that have significant off-farm income 
sources. In the larger production section of agriculture they 
would probably be worse.
    Ms. Kuster. Well, that is a cheerful outlook.
    Anyone else?
    Mr. Franzen. Yes. Unfortunately, I tend to agree. We are 
right at a real interesting point in much of agriculture across 
the country. If we wouldn't have had the bumper yields that 
many of us have referred to, it would have been much worse. I 
mentioned 50 percent of our clients lost money this past year, 
and the outlook, I am a cup-half-full guy so I am hoping prices 
rally a little bit and give us some margin, but really 
realistic outlook doesn't give us much hope for that. We are in 
a sustained period of tight margins, and every program is going 
to be real important and be real necessary.
    Ms. Kuster. Well, we certainly appreciate your advice, 
going forward, and we will all try to abide by, first, do no 
harm, as we move forward with the farm bill.
    So thank you.
    The Chairman. Mr. Comer.
    Mr. Comer. Thank you, Mr. Chairman. And I want to thank you 
all for not only being here, but for what you do. I am a farmer 
from Kentucky. I was a director of a community bank for 12 
years, so I worked with a lot of family farmers in our area to 
help them obtain financing. I am a customer of Farm Credit 
Services. I owe them a lot of money, so hopefully I am in 
decent standing with them. And then when I was getting started 
in farming I got an FSA loan. I appreciate all that you do. I 
know it is a challenging endeavor to help farmers get access to 
credit, because farming doesn't have your typical business 
model and your typical predictable cash flow projections like 
most industries. I appreciate what you are doing.
    I have a few questions. Mr. Marlow, when funds for FSA 
loans run out, which that happens a lot, what other options do 
producers face? Are there any short-term financing options?
    Mr. Marlow. What we see very frequently is people moving to 
either delaying the paying of other bills, that can be 
healthcare bills, household bills. We see moving to credit card 
debt, which can be extraordinarily destructive.
    Mr. Comer. Yes.
    Mr. Marlow. One of the things that we are very concerned 
about is that as those gaps can go weeks or months, that the 
steps that families have to take in between to be able to farm 
in the meantime, because the season doesn't wait, that really 
damages their ability to come back and have the loan 
feasibility, because they are driving up credit card debt, 
other forms of debt, other forms of unsecured debt. That delay 
can be quite disastrous.
    Mr. Comer. Yes. Mr. Handke, did I pronounce that right? I 
am from a small town, I pronounce everything wrong.
    Mr. Handke. You did very well, yes.
    Mr. Comer. All right. Agriculture, as I mentioned earlier, 
is different from every other industry, however, regulators 
don't often see it through the same lens. Within our 
jurisdiction, what steps can this Committee make to encourage 
regulatory flexibility to allow lenders to work with farmers on 
restructures through these rough times, with commodity prices 
where they are?
    Mr. Handke. Well, you bring up a very good point. And 
because of the difficulties in the commercial banking sector in 
2009 and 2010, the regulators are very nervous about being 
called on the carpet for this impending ag credit issue. But 
they are using the same tools they used for commercial credit, 
which they are now applying to ag, and they are two different 
business models.
    Mr. Comer. Right.
    Mr. Handke. Commercial real estate is a different asset 
class than a farm. But what that also means is that if they 
classify these not on equity, but on cash flow, then banks are 
going to rapidly accumulate volumes of classified assets. Now, 
regulators think in terms of your next exam. That is 18 months, 
maybe a year. They want something done. Farmers work their way 
out of these problems in, like I said, over two to three crops. 
There is a discourse between the time that we need to either 
have to exit a substandard loan, or rehabilitate, and we may 
not have that chance. And there is only one tool on my desk 
right now to accomplish that, and that is USDA guaranteed 
loans.
    I started my banking career around the time of the 1985 
Farm Bill, in about 1984, and if it had not been for the 
guaranteed farm program our bank may not have survived. I 
wouldn't be sitting here today, because it immediately reduces 
that classified asset by 90 percent, and then we get the time 
to work with those producers through crop two, crop three.
    Mr. Comer. Right. Real quickly, this question will be for 
anyone on the panel. Are there any regulations that we can undo 
to make it easier for farmers, especially beginning farmers, to 
have access to credit? Specifically regulations like Dodd-
Frank, would that make a difference, the repeal of Dodd-Frank, 
would that make a difference in access to credit? Anyone?
    Mr. Franzen. Certainly, the regulatory burden has been a 
challenge for banks. To speak to a couple of specifics, one of 
the challenges we have out in the rural landscape is just rural 
housing loans. Dodd-Frank has really made it challenging for us 
to lend a family money for their home out of town, out in the 
country, for a couple of reasons. Certainly, one of them is 
finding a qualified appraisal can be very, very challenging. 
And then the other is, as residential lending regulations have 
been incorporated into Dodd-Frank, they have been written for 
W-2 earners; folks that bring home a wage. They have not been 
written very well for self-employed businesspeople like farmers 
and ranchers. And so that has been an extreme challenge for us.
    The other one that is worthy of noting are the challenges 
that USDA has today with the NEPA regulations, the NEPA rules, 
that has really slowed down the process of getting a loan 
closed. And if we have a young farmer that is trying to put up 
a finishing barn for swine, for example, or any other type of 
animal feeding facility that qualifies, has really slowed that 
process down, and makes it very challenging to get those loans 
in place and funded.
    Mr. Comer. Okay.
    Thank you, Mr. Chairman.
    The Chairman. Ms. Plaskett, I apologize, 5 minutes.
    Ms. Plaskett. No problem. Thank you so much, Mr. Chairman. 
And thank you, gentlemen, for coming and testifying this 
afternoon, and presenting your views on Farm Credit policy as 
we consider the next farm bill.
    I was reading through some of the written testimony, and, 
Mr. Thiessen, is it, Thiessen?
    Mr. Thiessen. Thiessen.
    Ms. Plaskett. Thiessen. I was really interested in the 
discussion you have about the Farm Credit's mission in rural 
infrastructure, and that the Farm Credit finances more than $27 
billion in rural infrastructure, including rural electrical co-
ops, water systems, rural telecommunications, broadband.
    This is a question really for any of the witnesses. I have 
heard also a bit about the Rebuild Rural effort. Can you 
describe to me the role that Farm Credit and the banks can play 
in this investment in our rural infrastructure?
    Mr. Thiessen. Well, and I will start, the infrastructure 
authorities that lie within Farm Credit, primarily lie within 
an organization called CoBank, and to the extent in my 
institution, headquartered in Montgomery, Alabama, if I ever 
see that there are needs in rural communities, I can 
immediately contact my sister institution and they are very 
quick to respond. In essence, we are all in this together, 
trying to help support rural communities.
    But they do have authorities that help them with rural 
water infrastructure.
    Ms. Plaskett. Right.
    Mr. Thiessen. Like you said, rural utilities, broadband----
    Ms. Plaskett. Which do you find the most that people are 
requesting? What areas do you find the most need in some of 
these rural communities?
    Mr. Thiessen. Well, I am going to give you one particular 
answer, but I will actually tell you I will research that with 
CoBank and get you a specific answer.
    Ms. Plaskett. Okay.
    Mr. Thiessen. In my world, with the farmers that I help and 
the rural people that I help, you do hear a lot of the 
connectivity, broadband. I have farmers that can literally sit 
in Montgomery and turn their irrigation systems on 4 hours 
away, and monitor how effective that that is. On rural 
infrastructure, we have been asked before about water treatment 
facilities, but we will get you further information from 
CoBank.
    Ms. Plaskett. Got it. Okay, great. Thank you.
    And the discussion also about water, antiquated water 
systems in some areas, those can lead to really disastrous 
consequences for communities. Some of our communities are 
struggling to update water infrastructure, and you talked a bit 
about the Farm Credit's role in providing financing for this 
type of infrastructure. In the Virgin Islands where I live, one 
of the islands, St. Croix, is primarily flat and has a lot of 
agriculture, and it is really trying to dispense water 
throughout the island. But on the island of St. Thomas, we also 
have a lot of tiered farming, and farmers that are farming 
actually in the hills and in the mountains, and trying to 
create water systems there can be really difficult for them. Do 
any of you have any suggestions or ways that you see that some 
of the Farm Credit funding can be supportive of that?
    Mr. Thiessen. Well, I guess that one is to me too.
    Ms. Plaskett. It is me and you here.
    Mr. Thiessen. Absolutely. And I tell you, I am going to 
have to probably defer to that one as well to my sister 
institution. Again, they have the expertise, the CEO testified 
in here last week about those very ideas. To the extent, in 
areas like what you are talking about, always get people to 
band together you will always find much greater successes in 
some of those outcomes.
    Ms. Plaskett. And that is the one thing that we are really 
looking at right now is in terms of cooperatives.
    But, Mr. Franzen, I know you want to say something.
    Mr. Franzen. Yes, Congresswoman, just a comment from a 
banking industry perspective. Financing infrastructure is 
challenging, it is low-rate terms and usually long-term fixed 
rates required to make them feasible, and so in the banking 
industry, they become challenging to underwrite. But one of the 
ways we could make enhancements to allow us to take a more 
active role is through Rural Development guarantees, and then 
making sure that those guarantees are saleable to Farmer Mac, 
that would give the banking industry the ability to also 
participate at a greater level.
    At our bank, we have done a little infrastructure 
financing, but it is always through bonded projects so they 
have to have a bond associated with it.
    Ms. Plaskett. Got it. May I ask, when you bring this up 
about the banking, I know that there has been a new accounting 
rule on banks. FASB has one, particularly, in effect of 
community banks in rural areas. They released new accounting 
standards that require community lenders to look forward, 
foreseeable future, and consider all losses that may happen to 
a loan in question, and to book those losses. Have you seen 
this, and do you have an opinion on how this may affect some of 
our rural farmers?
    Mr. Franzen. Yes, it is probably too soon to have a strong 
opinion on that. We have----
    Ms. Plaskett. But we can, we are Members of Congress, we 
always have an opinion. I don't know why you don't have one. 
Even for something that we don't know anything about. But you 
haven't been able to determine anything as yet?
    Mr. Franzen. We have had to, on a few loans, look forward 
with that FASB ruling, but again, it hasn't had a significant 
impact at this point for our bank.
    Ms. Plaskett. Thank you so much, Mr. Chairman, for your 
indulgence.
    The Chairman. Thank you, ma'am.
    Mr. Marshall.
    Mr. Marshall. Yes. Thank you, Mr. Chairman.
    My first question for Mr. Handke. I see your tie is yellow, 
and was wondering, when purple and orange are together, which 
team do you root for?
    Mr. Handke. I am a seasonal fan.
    Mr. Marshall. Very----
    Mr. Handke. Purple in the fall and gold in the basketball 
season.
    Mr. Marshall. Okay. All right. Well, hang in there with me.
    I will stick with you, Mr. Handke. Certainly, the 
conditions for agriculture in my community of Great Bend look 
pretty tough, and it is getting worse the further west I get. 
You are more north central Kansas. I assume that is wheat and 
some soybeans probably. You say you are a harvest away from a 
dire condition. How is this coming harvest looking for you 
guys?
    Mr. Handke. Well, we have decent moisture right now, but 
this downturn has basically been precipitated by commodity 
prices, so I don't think there is, again, I like to quote Dr. 
Boehlje because he has said agriculture is characterized by 
sudden spikes and earnings, and then long periods of resource 
reallocation. There is no reason to believe we are not in a 
long period of resource allocation to adjust to lower ethanol 
fuel exports. We are in a long period of readjusting the 
balance sheets. And farmers, they like to store wealth in their 
balance sheet, on their land particularly, so being able to use 
these USDA guarantees to solve these cash-flow problems, that 
is going to be so important. But, we manage until our next 
regulatory report.
    Mr. Marshall. Yes, the bigger problem I am hearing back 
home is more their operating loans----
    Mr. Handke. Yes.
    Mr. Marshall.--and I shouldn't ask a question that I don't 
know the answer, but do the operating loans, do they ever work 
with the Farm Credit. the FSA and that stuff, or do they never 
react to each other? Mr. Franzen?
    Mr. Franzen. Yes. For operating loans, you input a 
guarantee on an operating loan as well, guaranteed loans apply 
to both farm ownership, real estate, or operating.
    Mr. Marshall. Okay. Sorry, I didn't know that. I am going 
to stick with you, Mr. Franzen. I am really intrigued with some 
of your young farmers programs you have going on. And 
certainly, if I have learned anything on this journey, that 
farming is a very much a business, a small business. All the 
problems that any small business owner has, farmers have those 
as well. Health care is \1/6\ of their cost, and on and on and 
on.
    Tell me a little bit more about your program, what is 
working, what is not working, what can we do to empower you?
    Mr. Franzen. Yes, well, I appreciate the question. And it 
has been a real rewarding program for us. What we really try to 
do is just increase the financial literacy of young farmers out 
there so that they can be as proactive as possible when they 
deal with these cycles that come in agriculture. And those of 
us that have been in agriculture a while know that they come on 
a regular basis, these cycles. And so we work very closely with 
that.
    Actually, the second program I talked about, our Keep 
Farmers Farming Program, came right out of our Beginning Farmer 
Program, and it was trying to match up the generations, and 
help them work through transition effectively so that their 
farm can stay in the family from generation to generation. And 
we were very worried, and still are, as the average age of 
farmers rises, which was talked about earlier, how do we make 
sure that we get those farms transitioned to the next 
generation as effectively as possible so that we don't lose 
more farms just because of lack of planning and lack of 
understanding of the tools that they have.
    Mr. Marshall. Okay. I am going to stick with you, Mr. 
Franzen. You mentioned something about working with FSA and the 
number of upgrades and interaction. When we had the big prairie 
fires very recently in Kansas, 600,000 acre, 5,000 cattle, tens 
of millions of dollars of loss, one of the problems is that 
just the number of FSA workers aren't as many as they used to 
be, and it has really slowed down the process, are they ready 
and willing? What type of problems are you encountering with 
the FSA?
    Mr. Franzen. Yes. About the time the last farm bill was 
written, we had the devastating blizzard in South Dakota that 
is somewhat comparable to the fires that you just experienced, 
and thank goodness for the Livestock Indemnity Program that FSA 
has to offer. But you are right, staffing is a big concern and 
that is why we mentioned it in our testimony. With so many FSA 
employees now eligible for retirement, and especially in maybe 
a tougher economic cycle time, we are worried about retirees 
continuing at a heavy pace and not having the staffing levels 
behind it. And that is going to create some challenges if the 
funding isn't in place and a big priority made on it.
    Mr. Marshall. I am going to jump in, a quick question to 
Mr. Handke. You made a nice list of to-do, things we could do 
to improve them, I think was your testimony.
    Mr. Handke. Yes.
    Mr. Marshall. Is that something new, have you presented 
those types of problems before to this type of committee, is it 
getting worse, is it getting better? And I have used all my 
time, sorry. Do you want to go ahead and answer?
    Mr. Handke. I think this list is a recommendation from the 
bankers that serve on our committee, so it is difficult to get 
at an historical perspective, but looking forward, these are 
the things we would like to see addressed in this new farm bill 
with the ag credit title issue.
    Mr. Marshall. Thank you.
    I yield back.
    The Chairman. Mr. Soto, for 5 minutes.
    Mr. Soto. Thank you, Mr. Chairman.
    And now for the other side of the country. I represent the 
central Florida area, and we are predominantly a citrus and 
cattle-producing area. Citrus has been taking a huge hit, as 
many of you may know about. We are down 70 percent production 
over the last 10 years.
    And so my first question was what kind of lending programs 
do we have in place or can we put in place to encourage 
replanting and to have our citrus growers hang on as we grapple 
with this greening issue?
    Mr. Thiessen. Well, and I will jump in. Not living that far 
away, we have Farm Credits that are down there that have 
explained the greening issue that you do have. I will actually 
find that information out for you and provide that back to the 
Committee, since that is not something that I particularly deal 
with, but because we are connected with Farm Credit down there, 
I promise you there are issues or resolutions to many of those 
problems.
    It is not just yours, to the extent we have other issues, 
whether it be in Alabama or all across the country, we all have 
ways with which we are trying to deal with credit, get cash 
flows down during these times, even in the situation you have 
described, lengthen out terms, use equity, get working capital 
back in peoples' hands. Those are things that we are doing 
everywhere, and I am sure we are doing them down there too.
    Mr. Soto. Well, it would be great to have some feedback on 
some things you would like to see in our farm bill.
    Now, on the cattle lending, how is cattle ranch lending 
going so far nationwide, and are there any tweaks we should be 
making?
    Mr. Franzen. In the cattle business, I would make a couple 
of comments. We have a strong cattle influence in our part of 
the country. Cattle feeding, the finishers of cattle have had a 
tough couple of years. Matter of fact, I mentioned the losses 
in our portfolio, some of the most substantial are in the 
cattle feeding business. Fortunately, the first quarter of this 
year is looking a little brighter, so hopefully they can start 
to have some opportunity again, but they have some big holes to 
dig out of because of the challenges the last 2 years.
    The cow/calf industry on the other side was----
    Mr. Soto. Which is what we do best.
    Mr. Franzen. Which is what you do. I have a client that 
sells a lot of bulls down to Florida, so I have some 
familiarity. It was very strong a year ago, and is now rapidly 
falling off in prices as well. Calf crops this year are coming 
in close to \1/2\ the value of a year ago, so there is some 
significant strain coming in on that business as well.
    Mr. Soto. This is more a question, and this is one we asked 
to another group the other day. With profits being very 
limited, is it more of a supply or demand problem, or a little 
bit of both that we are experiencing?
    Mr. Franzen. I will give my opinion, and I am sure others 
will too. It is primarily a supply problem, in my opinion. And 
if you look at the data demand for ag products around the globe 
is still strong, but we have had bumper crops in most sectors 
of agriculture and we are swimming in supply. And so it is 
always agriculture's challenge, right, the yields we talked 
about saved us. Well, they saved us this year in some years, 
but they compounded the supply problem that is really the root 
cause of the longer-term issue we are dealing with here. 
Somebody else needs the drought, other than an American farmer, 
hopefully, and we will fix that. But that is the only way.
    Mr. Thiessen. If I may, all of that makes absolute sense. 
That is one of the reasons that we encourage you, working with 
the Administration, to deal with export markets, open up more 
global markets so we can have an impact on demand then as well.
    Mr. Marlow. And what we are seeing in terms of the other 
side of the demand is a very rapidly growing demand for 
specialty meats coming out of, and we are hearing constantly 
from small and mid-scale farmers who are cattle farmers that 
their access to slaughter and access to processing is a huge 
problem, they are having to transport animals a very long way 
in order to get access to slaughter, but are able to get into 
much higher-value markets, growing markets, either both 
wholesale and direct retail, especially in areas like where you 
have that proximity to larger-scale markets.
    Mr. Buzby. As Farm Credit does, Farmer Mac lends all around 
the country, and just in this brief hearing we have heard about 
cattle, we have heard about cotton, dairy, corn, soybeans, 
citrus, the problems are widespread throughout the country in 
agriculture right now. And it was Nate that said, last year was 
a tough year but yield saved it. Next year is going to be an 
even tougher year, regardless of where yields go. The 
availability of credit to farmers is very important, whether 
that comes from the banks, Farm Credit insurance companies, or 
other financial institutions.
    Mr. Soto. Thank you.
    Mr. Handke. Where we are seeing that diversity too is 
sometimes you have one sector cycling up, like cow/calf when 
cash grain is going down, but we seem to all be cycling down, 
you are not going to be able to average like maybe we have in 
some of the past years.
    Mr. Soto. Thank you. And I yield back.
    The Chairman. Mr. Faso, 5 minutes.
    Mr. Faso. Thank you, Mr. Chairman.
    Mr. Buzby, you mentioned in your testimony that you 
supported the change in the 1,000 Acre Rule, and I am 
wondering, how long has that rule been in effect?
    Mr. Buzby. Farmer Mac was created in the late 1980s, and it 
has been in place ever since the original statute was drafted.
    Mr. Faso. And does the rest of the panel agree that that 
would be a beneficial thing to lift that limitation on 1,000 
acres?
    Mr. Handke. Absolutely. We are an active Farmer Mac 
participant, and that would be very helpful. As he said, as 
these farms have grown, the median size has doubled. It appears 
to be outdated.
    Mr. Faso. Yes.
    Mr. Franzen. We would agree as well. Yes, it is very 
important. As we have said, to get through down cycles, we need 
all the tools we can, from FSA guaranteed lending, to Farmer 
Mac, and other tools to manage our risk.
    Mr. Thiessen. And Farm Credit is looking at this as we 
speak. We have concerns about structural issues, but at the end 
of the day, if you will give us a chance, we will come back to 
the Committee with what our concerns are.
    Mr. Faso. Okay.
    Mr. Marlow. And we have concerns about increasing the 
limits significantly. We have concerns that, as we have heard 
today, we frequently run out of funding, that when you increase 
those limits that means fewer, larger loans. We are very 
concerned that there be enough funding, and that it is more 
important that everyone who needs it has availability to it, 
rather than just it covering everything. What we see very 
frequently is FSA directing guaranteed loans used as a part of 
a loan package, rather than having to cover the entire package. 
And so they can be used as a base, but it is critically 
important that that base is available to everyone who needs it, 
and in a timely way.
    Mr. Buzby. If I could just clarify that the issue that we 
have talked about quite a bit, the other panel members, about 
the FSA loan limit, which is roughly $1.4 million, and raising 
that limit and what impact that might have on small farmers, 
that is a different issue than the loan size limit for a Farmer 
Mac loan.
    Mr. Faso. Sure. And I recognize that. The region I 
represent in the Catskills and Hudson Valley in New York State, 
we have a lot of smaller farmers, and I am just wondering if 
there is a certain geographic disparity in terms of that need 
as you see it to raise that 1,000 acre limitation, because my 
concern would be, to some degree, what Mr. Marlow was saying, 
that I wouldn't want to crowd out the ability of smaller farms' 
operations to participate.
    Mr. Buzby. And we certainly wouldn't want to do that 
either. We have had a focus for many years on small, beginning, 
and young farmers. Currently about \1/2\ of the loans in Farmer 
Mac's portfolio are to small farms, defined as gross income of 
less than $350,000. It is really looking at serving all 
farmers, both small and large.
    Mr. Faso. Could you provide the Committee with information 
as to the geographic dispersal of those loans as well around 
the country?
    Mr. Buzby. Certainly.
    Mr. Faso. I would be certainly interested in hearing it.
    And one thing Mr. Marlow said just a moment ago piqued my 
interest because we have a lot of cattle operations that have 
arisen in the last few years in the Hudson Valley, and I do 
hear from people about the difficulty of getting processing 
facilities, and the length of time and the distance that they 
often have to travel. And I am wondering have any of you looked 
at the question of financing for those processing facilities, 
and whether there is an overall need for those, or is this 
something that might strictly be limited to my part of the 
country?
    Mr. Marlow. We are seeing that the need for that kind of 
processing is across the board. And when you are talking about 
a smaller scale farm, it is obvious from what we are talking 
about in terms of prices, that those commodity markets are not 
something that is going to be sustainable for a small-to-mid-
scale farm. And so looking at both the financing and other 
issues that can cover that infrastructure that moves between 
the farmer and the market, but also looking at in terms of 
access to credit the crop insurance for specialty crops and for 
higher-value markets, like the Whole Farm Revenue Crop 
Insurance Policy, which is fairly new, these things are geared 
more towards allowing smaller, more diversified operators to 
get into credit and to be able to borrow. And being able to 
extend the safety net into specialty crops, higher-value 
markets, the types of things that are going to be more 
important in your district, is a very important part of the 
process as we move through the farm bill.
    Mr. Faso. Yes, I agree. I mean it is interesting because I 
have operations that send their product down to Chelsea Market 
in Manhattan and they are selling strip steaks for $30 a pound. 
And, of course, no one in my district would pay that but down 
in Chelsea Market they will. And so it is really important that 
we nourish and allow to prosper this thriving agricultural 
sector, these small processors, new processors, a lot of young 
farmers coming in. I appreciate the panel's testimony here 
today.
    And with that, Mr. Chairman, I yield back.
    The Chairman. Thank you.
    Gentlemen, all of you mentioned technology and the need to 
update the technology at the USDA. I want to invite you to all 
give this Committee specific recommendations in writing that we 
can submit to our new Secretary, as soon as Mr. Perdue is 
confirmed, and certainly we will be happy to work with you on 
that issue.
    I know Mr. Scott is in a Financial Services meeting. As you 
know, votes pushed this meeting into others, and we are close 
to having votes again. I want to thank you for your testimony 
and the role that you play in not just the agricultural 
economy, but in the rural economies throughout the country.
    And with that said, under the Rules of the Committee, the 
record of today's hearing will remain open for 10 calendar days 
to receive additional materials and supplementary written 
responses from the witnesses to any question posed by a Member.
    This hearing of the Subcommittee on Commodity Exchanges, 
Energy, and Credit is adjourned.
    [Whereupon, at 3:54 p.m., the Subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]
  Submitted Letter by Roger Johnson, President, National Farmers Union
April 4, 2017

 
 
 
Hon. K. Michael Conaway,             Hon. Collin C. Peterson,
Chairman,                            Ranking Minority Member,
House Committee on Agriculture,      House Committee on Agriculture,
Washington, D.C.;                    Washington, D.C.;
Hon. Austin Scott,                   Hon. David Scott,
Chairman,                            Ranking Minority Member,
Subcommittee on Commodity            Subcommittee on Commodity
 Exchanges, Energy, and Credit,       Exchanges, Energy, and Credit,
Washington, D.C.;                    Washington, D.C.
 

    Dear Chairman Conaway, Chairman Scott, Ranking Member Peterson, and 
Ranking Member Scott:

    Thank you for holding today's hearing entitled, The Next Farm Bill: 
Credit Programs. As you are well aware, the current state of the farm 
economy requires robust access to credit. As this Committee works 
towards the drafting of a new farm bill, ensuring that the credit 
programs match the current and future needs of farmers and ranchers is 
particularly important.
    Economic indicators of farm and ranch health have continued to 
erode from the highs experienced in 2013. Since that peak, net farm 
income has declined by 50 percent, putting significant stress on 
agricultural operations. If uncorrected, this multiyear downward trend 
will do even greater harm to family farmers than what we have already 
witnessed. The U.S. Department of Agriculture (USDA) projected 
financial liquidity measures, including working capital, are forecasted 
to weaken again in 2017. National Farmers Union (NFU) is concerned over 
increases in non-performing loans, decline in real estate values, 
higher collateral requirements, weaker debt-to-asset ratios, increased 
rolling of short and medium-term debt into long-term debt, and high 
demand for Farm Service Agency (FSA) loans.
    When credit markets tighten demand for FSA loans increases. We have 
witnessed demand spike over the last 2 years. As of March 28th, FSA had 
made 19,696 loans for a total of roughly $2.9 billion. Current lending 
levels have FSA on track to match last year's record spending, when FSA 
ran out of money and had a severe backlog of applications at local 
offices. As an example, guaranteed ownership loan demand increased by 
$500 million.
    Last year's continuing resolution (CR) provided FSA additional 
flexibility to meet increased demand from 1 fiscal year to the next. 
FSA is running out of money provided by the last CR and is now 
requesting permission to utilize the flexibility granted last year. The 
core problem is that the portfolio needs additional resources to meet 
demand. As this Committee looks to the next farm bill, NFU urges you to 
keep this increasing demand for agricultural credit in mind.
    In addition to increased demand, NFU also urges this Committee to 
examine current loan limits. NFU supports increasing individual limits 
for FSA loans. Our members' attention is particularly focused on the 
direct loan portfolio. Current limits of $300,000 are no longer 
adequate and are not reflective of the costs of operating or owning a 
farm. Within the guaranteed portfolio, our members support a modest 
increase in the lending levels to better align with current market 
conditions. All of our support for increases is predicated on 
additional funding for the entire loan portfolio. Increasing the 
individual limits without increasing overall funding levels would end 
up doing more harm than good.
    Another important consideration for this Committee is the current 
state of FSA loan office capabilities. Serious investments into 
updating FSA's information technology tools are required. Basic 
abilities, like checking loan balances online, do not exist. 
Additionally, in 2019, 40 percent of FSA loan officers will be eligible 
for retirement. Should there be widespread retirements among the 1,100 
staffers within FSA's loan division, the ability to service existing 
loans will be severely eroded.
    An important part of the next farm bill will be to build off the 
beginning farmer progress made in the last farm bill. There is strong 
demand for new and innovative credit programs that are responsive to 
the needs of beginning farmers. Our beginning farm members benefited 
from the higher microloan limits and the loosened administrative 
requirements for eligibility. Since inception, FSA has made 25,070 
Direct Operating Microloans for a total of $574.5 million and 274 
Direct Farm Ownership Microloans for a total of nearly $10 million. In 
the context of the current farm economy, demand for these programs will 
continue to grow and funding levels will need to be more robust. 
Protecting existing and expanding future credit options for beginning 
farmers is essential.
    Our members have shared stories of private loan officers creatively 
working to provide needed credit. At the same time we have heard other 
situations where our members, despite having strong debt-to-asset 
ratios, are increasingly challenged to obtain operating credit without 
selling off assets. As this trend continues, FSA loans will be more 
important than ever. Ensuring FSA has the necessary tools is critical 
for the continued viability of distressed farm operations.
    As financial indicators continue their slow decline, the work of 
this Committee becomes ever more important. NFU appreciates the 
Committee taking the time to better understand credit conditions and 
programs vital to producer health. We look forward to continuing our 
work with this Committee for the benefit of America's farmers and 
ranchers.
            Sincerely,
            
            
Roger Johnson,
President, National Farmers Union.
                                 ______
                                 
    Submitted Letter by Hon. Jim Matheson, Chief Executive Officer, 
            National Rural Electric Cooperative Association
April 3, 2017

 
 
 
Hon. Austin Scott,                   Hon. David Scott,
Chairman,                            Ranking Minority Member,
Subcommittee on Commodity            Subcommittee on Commodity
 Exchanges, Energy, and Credit,       Exchanges, Energy, and Credit,
 House Committee on Agriculture,      House Committee on Agriculture,
Washington, D.C.;                    Washington, D.C.
 

    Dear Chairman Scott and Ranking Member Scott:

    Thank you for holding this week's hearing on credit programs as you 
work toward the next farm bill. On behalf of the over 900 rural 
electric cooperatives that make up the National Rural Electric 
Cooperative Association, I would like to submit this letter in support 
of policies that would improve credit programs under your 
Subcommittee's jurisdiction.
    As you know, the 2008 Farm Bill provided Farmer Mac with the 
authority to include in its secondary market activities loans made by 
cooperative utility lenders to rural cooperative utilities. 
Cumulatively through the end of 2016, Farmer Mac has purchased nearly 
$1.5 billion of utility loans, provided just under $1 billion of credit 
protection on utility loans, and provided over $5 billion of wholesale 
financing to cooperative rural utility lenders. As a direct result of 
the 2008 Farm Bill, rural electric cooperatives and their consumer 
owners benefit through low interest rates on favorable terms, passing 
along those savings to their members, and your constituents.
    Farmer Mac is instrumental in providing capital for rural America 
through several methods, including a Farm & Ranch portfolio of 
agricultural real estate holdings, a portfolio of USDA guaranteed 
loans, and through rural utility financing. We understand that Farmer 
Mac, like most financial institutions, is mindful of the 
diversification of the sources of its business as part of its overall 
approach to risk management. Therefore, we believe that growth in some 
parts of Farmer Mac's business could also lead to growth in others as 
Farmer Mac strives to maintain balance and diversity in its overall 
portfolio.
    Farmer Mac's charter currently limits the size of an eligible farm 
or ranch mortgage loan to $12.6 million (adjusted for inflation) for 
loans secured by more than 1,000 acres of agricultural real estate. 
Since Farmer Mac's creation in 1988, the farming and ranching community 
has obviously grown to incorporate larger operations, and this limit 
has severely limited Farmer Mac's support for this industry. Farmer Mac 
is requesting that its charter be updated to reflect today's farming 
and ranching operations so that the company can determine appropriate 
loan amount and acreage limits as a part of its overall risk 
management.
    NRECA supports this request not only because it is a reasonable 
adjustment for today's farming economics, but because by removing this 
burden, Farmer Mac will more easily be able to grow its entire 
portfolio in support of rural America. This could lead to growth in the 
rural utility portion of its business and bring more benefits to rural 
electric systems.
    To be sure, NRECA's members' first priority is to deliver 
affordable and reliable electricity to their members. However, as you 
well know, rural electric cooperatives are more than just utilities. 
They are the engines of rural economies and their members, many of whom 
are farmers, ranchers, and others involved in agriculture experiencing 
stresses in their operations. NRECA supports efforts such as this 
proposal by Farmer Mac to assist borrowers in alleviating these 
stresses in a safe and sound manner.
    Thank you for your consideration.
            Sincerely,
            
            
Hon. Jim Matheson.
CC:

  The Honorable K. Michael Conaway.
  The Honorable Collin C. Peterson.
                                 ______
                                 
  Submitted Statement by Coalition of Agricultural Mediation Programs
    Dear Chairman Scott and Members of the Subcommittee:

    The Coalition of Agricultural Mediation Programs (CAMP) appreciates 
the opportunity to submit testimony on behalf of the 40 USDA certified 
state agricultural mediation programs. CAMP serves as the voice for the 
state programs to enhance their effectiveness in supporting agriculture 
across the United States.
    CAMP respectfully requests your support in the following three 
areas:

   Expansion of cases covered under the USDA Agricultural 
        Mediation Program.

   Reauthorization and designation of funding for the program 
        as mandatory under the farm bill.

   Funding levels to match the increase in the number of state 
        programs and anticipated increase in demand for mediation 
        services.
Context and Background
    The U.S. increasingly relies on foreign countries for its food. In 
2015, the U.S. trade deficit in fresh and processed fruits and 
vegetables totaled more than $11 billion.\1\ At the same time, the 
agricultural workforce continues to age: the average age of farmers has 
increased from 50.5 to 58.3 years over the last 30 years.\2\ If the 
U.S. hopes to have a semblance of agricultural independence, Congress 
needs to support effective tools that help farmers and ranchers resolve 
credit problems, secure access to arable lands, and develop transition 
plans to keep ag lands in agriculture.
---------------------------------------------------------------------------
    \1\Johnson, R. (2016). The U.S. Trade Deficit Situation for Fruit 
and Vegetable Products (CRS Report RL34468). Washington D.C.: 
Congressional Research Service.
    \2\USDA National Agricultural Statistic Survey (2014). 2012 Census 
of Agriculture Highlights. Farm Demographics--U.S. Farmers by Gender, 
Age, Race, Ethnicity, and More. ACH 12-3.
---------------------------------------------------------------------------
    The Agricultural Mediation Programs are especially well suited to 
help address these issues. Congress created the state-certified program 
in 1988 in response to the 1980s credit crises as part of the 
Agricultural Credit Act of 1987. Since their inception, these programs 
have functioned as Federal/state partnerships to provide a 
confidential, neutral forum to discuss and resolve complex agricultural 
loan and credit issues. USDA and state funding allow trained mediators 
to provide these services free of charge for eligible cases. The 
mediations take place in a confidential and non-adversarial setting, 
outside the traditional legal process of foreclosure, bankruptcy, 
appeals and litigation. Mediation allows people to develop their own 
solutions tailored to the uniqueness of their situation. Mediated 
settlements benefit the entire agricultural economy, including 
producers, lenders and creditors.
    Each year, the USDA mediation programs help agricultural producers, 
creditors and USDA agencies resolve thousands of cases, including USDA 
adverse decisions and other disputes. Most cases involve farm loans or 
credit problems, such as denial of loan applications, restructuring, 
and foreclosures. Producers can fall behind on farm loan or credit 
payments for any number of reasons, including depressed commodity 
prices, equipment repairs, labor shortages, and poor harvests due to 
weather or agricultural pests. Financial problems can cascade; with a 
poor credit history or negative cash flow, banks, USDA's Farm Service 
Agency (FSA) and other creditors may refuse to issue further credit. 
Unable to qualify for a farm loan and unable to pay back creditors, the 
producer may feel like there are no options left other than to give up 
on farming. This scenario is especially common for small-scale farmers, 
which make up nearly 90 percent of all farms in the U.S.\3\
---------------------------------------------------------------------------
    \3\USDA, Economic Research Service, Farm Income and Weight 
Statistics, as of February l7, 2017.
---------------------------------------------------------------------------
    Agricultural economists have forecast decreased farm revenue across 
many sectors of the agricultural economy for 2017. According to USDA, 
``net farm income . . . is forecast at $62.3 billion ($54.8 billion 
after adjusting for inflation) for 2017, down 8.7 percent compared to 
2016. The calendar year 2016 net cash farm income and net farm income 
forecasts are $91.9 billion and $68.3 billion, down 12.2 percent and 
15.6 percent from their respective 2015 levels.''\4\ Agricultural 
mediation programs across the country have observed an increase in loan 
delinquencies for both FSA and commercial lenders' loans. Not 
surprisingly, both USDA and agricultural economists anticipate an 
increased need for mediation program services in FY17 and FY18. 
Additional information about CAMP and the USDA Agricultural Mediation 
Program is provided in Exhibit 1.
---------------------------------------------------------------------------
    \4\2017 Farm Sector Income Forecast, USDA ERS.
---------------------------------------------------------------------------
    The following outlines potential steps Congress could take to 
enhance the overall effectiveness and efficiency of the Agricultural 
Mediation Program.
Expand Covered Cases To Meet Evolving Needs of the Agricultural 
        Community
    Over the past several years, CAMP has been working with USDA to 
expand the types of cases that programs can mediate under the program. 
The original focus of the program was on adverse USDA lending 
decisions, but Congress has expanded the scope on several occasions to 
meet evolving needs of the agricultural community.\5\ USDA also has 
added covered cases through the administrative process.\6\ The current 
list includes: farm loans, credit issues, adverse decisions on USDA 
programs, wetlands determinations, rural water loan programs, rural 
development loans, grazing on national forest system lands, pesticide 
issues, and such other issues as the Secretary of Agriculture considers 
appropriate. Since the last expansion of services, over 10 years ago, 
the complexion of agriculture has changed dramatically.
---------------------------------------------------------------------------
    \5\USDA Reorganization Act of 1994 and the Grain Standards Act of 
2000, adding wetland determinations, conservation compliance, rural 
water loan programs, grazing on National Forest System lands, 
pesticides, and other issues the Secretary considers appropriate.
    \6\USDA Departmental Regulations 4710-001 April 6, 2006, adding 
rural housing loans, rural business loans, crop insurance.
---------------------------------------------------------------------------
    Due to the price of land, many farmers, especially young farmers, 
turn to leasing because they cannot afford to purchase land outright. 
These leases are critical to the farming operations but disagreements 
can arise between the parties concerning the terms of the lease. With 
many farmers approaching retirement age, there is an increasing need 
for assistance with family farm transitions, which can involve complex 
family dynamics and financial issues. In addition, suburban 
encroachment on farmland has led to many conflicts between farmers and 
neighbors; disputants often turn to local hearing boards or state 
courts, which can be costly and time-consuming.
    USDA has encouraged CAMP to work with Congress because the agency 
believes it cannot add these issues without Congressional 
authorization. USDA's Office of General Counsel has interpreted the 
statute to require that; (1) any additional issues added must be under 
USDA's jurisdiction, and (2) both parties be ``covered persons'' under 
the statute. As a result, all but one of CAMP's many suggestions to add 
covered cases have been turned down. Just before leaving office, 
Secretary Vilsack signed a memorandum approving organic certification 
as a covered case for the mediation program. The memorandum is 
currently on hold pending approval from the new Secretary, once 
confirmed.
    CAMP believes the agricultural community would benefit by allowing 
the state agricultural mediation programs to work on lease issues, 
family farm transitions, and right-to-farm cases. While the list of 
potential suitable issues for mediation is significantly larger, CAMP 
has identified these three areas as the highest priority for immediate 
expansion. Additional justification for including these cases is 
provided in Exhibit 2.
    CAMP also proposes that each state program be authorized to tailor 
its program to meet the needs of its agricultural community. For 
example, in some states, right-to-farm issues are a high priority, 
while other states need mediation between GMO and non-GMO farmers. 
Ideally, the Secretary of Agriculture in each state should be able to 
designate additional issues that the state can cover under its program. 
This flexibility would require minor amendments to the statute to 
clarify that the issue only has to be under the general jurisdiction of 
USDA, only one party needs to be a covered party under the statute, and 
in addition to the USDA Secretary of Agriculture, the participating 
state's Secretary of Agriculture can add covered cases for that 
particular state. See Exhibit 3.
Reauthorize the Program and Designate Funding as a Mandatory 
        Expenditure Under the Farm Bill
    Authorization for the Agricultural Mediation Program was included 
in the last farm bill and expires in 2018. This program meets critical 
needs of the agricultural community and should be reauthorized through 
2023.
    With few exceptions, over the past 10 years, USDA issued the grants 
to the agricultural mediation programs during the second quarter of the 
fiscal year. For example, over the last several years, grants for the 
first continuing resolution have arrived in mid-February. Some state 
programs are associated with universities or state departments of 
agriculture, but most are administered by small nonprofit 
organizations, which cannot dip into other revenue sources while 
awaiting grant funding. As a discretionary expenditure within the farm 
bill, the delay in funding will re-occur each year because OMB will not 
transfer grant funding to USDA when the first continuing resolution is 
passed. Operating a high-demand program without funding is not 
possible. Many programs are forced to choose between taking out loans, 
not paying staff for extended periods of time, or temporarily closing 
down, which results in services not being available to producers some 
times of the year.
    To deliver grant funding in a timely manner, the USDA agricultural 
mediation program should be designated as a mandatory expenditure under 
the farm bill. This would result in grants being issued closer to the 
beginning of the fiscal year. Farmers face enough uncertainty due to 
weather and commodity prices. They should have mediation services 
available when they need them.
Increase Funding To Match the Expansion in the Number of State Programs
    Under the statute, funding for the agricultural mediation program 
is capped at $7.5M. Since 2000, the program has expanded from 25 states 
to 40 states, a 60 percent increase (Exhibit 4). For many years, 
funding levels kept pace with the growth in the number of programs. 
However, funding has dropped considerably since 2014 despite the 
continued increase in programs. The Senate Appropriations 
Sub[c]ommittee on Agriculture, Rural Development, Food and Drug 
Administration, and Related Agencies proposed increasing funding for 
the agricultural mediation program for FY17 from $3.4M to $3.9M. We 
believe this budget would enable the 40 state agricultural mediation 
programs to provide mediation services necessary to help the 
agricultural community work through these challenging times.
    Thank you for your favorable consideration of these issues.
                               exhibit 1
USDA Certified State Agricultural Mediation Programs
    Benefits of Mediation:

   Mediation provides a confidential forum to discuss complex 
        issues.

   Mediators are neutral. They do not make decisions. They help 
        parties find solutions.

   Mediation builds strong working relationships with 
        producers, lenders and government agencies.

   Decisions are made rapidly by involved parties, reducing 
        government involvement.

   Mediation supports stability and diversity in rural 
        economies.

    Growth:

   The number of states with a USDA Certified State 
        Agricultural Mediation Program has grown from 15 to a total of 
        40 states in 2016.

    Key Components and Issues:

   Neutrality. Mediation programs are neutral in practice as 
        well as in perception. Agricultural producers and USDA program 
        participants must have confidence that the program settles 
        disputes in a fair manner.

   Confidentiality. Confidentiality is vital to the integrity 
        and success of the mediation process. Without it, participants 
        may be apprehensive or unwilling to discuss personal financial 
        and emotional matters.

   Autonomy. USDA certified mediation is a state and Federal 
        partnership. Congress authorized this program as a grassroots 
        effort to help deal with disputes unique to each state's 
        agriculture.

    Background:

   In 1988, Congress authorized USDA to help develop and 
        participate in Certified State Farm Mediation Programs under 
        the USDA Farm Loan Mediation Program--part of the Agricultural 
        Credit Act of 1987.

   In 1992, Congress increased Federal matching funds to 70 
        percent in support of state programs.

   In 1994, Congress expanded the program under the USDA 
        Reorganization Act, authorizing USDA to offer mediation as part 
        of the informal appeals process on adverse decisions on USDA 
        farm program issues.

   Mediation programs assist agricultural producers, their 
        creditors and various USDA agencies to address agricultural 
        credit problems, USDA adverse decisions and other disputes. The 
        programs do this in a confidential and non-adversarial setting 
        outside the traditional legal process of foreclosure, 
        bankruptcy, appeals and litigation.
CAMP Mission Statement
    The purpose of the Coalition of Agriculture Mediation Programs 
(CAMP) is to serve as a presence and voice for the use of mediation in 
rural disputes. CAMP serves as a clearinghouse and forum for sharing 
ideas; examining commonalties and differences; and for enhancing 
decisions about the conduct of rural mediation programs.
Participating States
    Alabama, Arizona, Arkansas, California, Colorado, Connecticut, 
Florida, Georgia,* Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, 
Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, 
Missouri, Montana, Nebraska, New Hampshire, New Jersey, New Mexico, New 
York, North Carolina, North Dakota, Oklahoma, Oregon, Pennsylvania, 
Rhode Island, South Dakota, Texas, Utah, Vermont, Virginia, Washington, 
Wisconsin, and Wyoming.
---------------------------------------------------------------------------
    *Application submitted to USDA, pending authorization.
---------------------------------------------------------------------------
                               exhibit 2
Potential Additional Covered Cases
Agricultural Lease Issues
    Overview: Leasing of land, equipment, and other farm assets can be 
a vital part of a farm's overall financial strategy. Farmers unable to 
purchase land because of high land values, limited access to capital, 
or lack of suitable land turn to leasing. This approach can be a cost-
effective way for new farmers to get started and for established 
farmers to expand. Increased lease restrictions or loss of a lease can 
negatively affect a farm's cash flow, ability to service debt, and long 
term viability. In some cases, resolving a lease dispute has been the 
key to USDA Farm Services Agency making or restructuring a loan for a 
producer.

    Example 1: Mission Farms operates a grain farm on 1,000 acres, \3/
4\ of which is leased from a local businessman. After seeing commodity 
prices double, the farmer's landlord said the rent would increase by 
65%. Such an increase would significantly reduce the farm's profits, 
but losing access to the land would be even worse. Through mediation, 
the parties were able to agree on, and structure, a rental rate more in 
line with local market conditions, thus preserving the continued 
viability of the farm operation.

    Example 2: John Bailey has leased 30 acres from a farm widow for 
the last 20 years. During this time, he's developed the farm into a 
successful fruit and vegetable operation, establishing it as a source 
for high quality products at local farmers' markets. He recently 
invested in and opened an onsite farm stand to further expand direct 
market sales. Shortly before renewing his 10 year lease, John's 
landlady passed away. Her children, long removed from the farm, were 
inclined to let the lease expire and cash out. John suggested he and 
the family discuss some options with a mediator first. Through the 
mediation, a solution was found: the family would pursue selling the 
farm's development rights and then sell John the farm at its lower 
preserved value, under the condition that John shoulder the work for 
moving the preservation application forward.
Farm Transition Issues
    Overview: Farm/ranch families often face the challenge of how to 
pass on the agricultural enterprise from one generation to the next. 
Transition issues may include: land division, asset and debt 
distribution, responsibility for repayment of farm loans, farm 
viability, managing interests and responsibilities of off-farm heirs, 
and intergenerational conflict and responsibilities.
    Unresolved family and business conflicts often complicate the 
process when FSA is considering loan applications. Family and business 
restructuring can have direct and significant impacts on debt 
management and producers' ability to manage USDA credit, USDA program 
obligations, and other agricultural credit. Issues can include FSA 
Beginning Farmer Loans, limited resource loans, guaranteed loans, or 
direct loans for the producer who is taking over the operation. 
Resolving disputes and developing business plans help FSA make loans to 
eligible farmers. Resolving issues collaboratively, rather than through 
litigation, has the potential to keep farms viable. In many states, FSA 
Farm Loan Program personnel, farm financial consultants, human services 
consultants, and commercial bankers report that family farm transition 
mediation is an essential service.

    Example 1: The owners of the Smith Family Farm developed an estate 
plan years ago and it is common knowledge that the farm will pass on to 
their son who farms with them. The son has never had any farm equity, 
but he works side by side with his parents. Suddenly, the father has an 
unexpected health setback and accumulates substantial medical bills. 
The only way the parents see to recoup the money needed is to sell part 
of the farm. The farming son would have to pay top dollar to purchase 
the property, but the only collateral he has is a farm truck. The 
parents won't co-sign a loan because they need the cash, not more debt. 
The parents sell a portion of the farm to someone else. His sweat 
equity is worth nothing and his ability to secure a loan is negligible. 
With the help of financial counseling and mediation, the son was able 
to develop a plan to restructure loans and work out a leasing agreement 
with a neighbor who was interested in buying the adjoining fields.

    Example 2: The owners of Jones Family Farm have not developed a 
farm transition plan. With several on- and off-farm heirs to consider, 
the family has a complicated situation. The Jones want to develop a 
plan that ensures the farm stays in operation, but they must also find 
a way to provide retirement income for the older generation. Other 
issues include the farm's operating loans, the transfer of farm assets 
to the next generation, and consideration of off-farm heirs and spouses 
(whose income and interests will impact the process). The family 
decides to use a mediator to help them discuss the issues and develop a 
plan that meets everyone's needs.
Right to Farm and Farmer/Neighbor Nuisance Issues
    Overview: As rural areas are developed into residential 
communities, farmers increasingly encounter neighbors who are 
unfamiliar with and unsympathetic to typical and essential farming 
practices. New residents might complain about farm noise, hours, dust, 
pesticide application, manure management, odors, runoff, irrigation 
practices, fences, or newly constructed buildings. Local governments' 
familiarity with the normal sights, sounds, and smells of agriculture 
also may diminish. Conflicts can arise with municipal ordinances, such 
as fence height limits, impervious cover limitations, prohibitions on 
specific farming activities, and restrictions on farm building 
lighting, signs, ingress/egress, and parking.
    In addition to neighbors complaining about farm operations, farmers 
might be impacted by neighbors' activities, including trespassing, 
noises that disturb livestock, feeding animals without permission, and 
damage to fences or boundary issues. Some agricultural communities have 
enacted state and local Right to Farm (RTF) regulations in response, 
hoping to promote agriculture and protect responsible farms from 
nuisance complaints and overly restrictive local regulations.
    Disputes that escalate into community conflicts involving multiple 
stakeholders can last several years as decisions are appealed and 
lawsuits filed. Associated legal fees can have a negative impact on a 
farm's viability, access to credit, and ability to pay debts. 
Protracted disputes can cause irreparable damage to relationships in 
the community. Mediation enables farmers to limit time and money spent 
on hearings and litigation and can help parties maintain or restore 
relationships and prevent future conflicts.

    Example 1: Heyward Farm has been operating as a dairy farm for six 
generations. After an adjacent parcel was developed, new residents 
started complaining about early tractor noise, activity on weekends, 
unbearable odors and flies, and concerns about manure runoff in yards 
where children play. The neighbors filed a complaint with the local 
agricultural board, which normally would have triggered a long and 
costly public hearings process, but the parties decided to try 
mediation. Through mediation, the parties were able to express their 
points of view. The neighbors gained a better understanding of how the 
farm operated and enough concerns were addressed that the formal 
complaint was withdrawn and lawsuits were avoided.

    Example 2: Hope Vineyards decided to expand its business in two 
phases. Phase one, planting an additional 40 acres of grapes, was 
completed without incident. Phase two, expanding the winery production 
facilities with a new 9,000\2\ ft. building, ran into barriers with the 
township. The zoning officer said the building was too high, might not 
be permitted in the zone, had an improper setback, required paved 
parking, and needed full site plan review. Through mediation involving 
the farmer, town, and local agricultural board, an agreement was 
reached that gravel parking and a more limited site plan review would 
suffice, saving the vineyard thousands of dollars and allowing it to 
build the new facilities.
Summary of Benefits of Mediation
   Conflict resolution to promote continued farm viability.

   Risk management to avoid escalation of conflict.

   Litigation mitigation.

   Direct impact on current and prospective credit stability.

   Better management of farm capital.

   Preservation of positive local relationships.
                               exhibit 3
Proposed Amendments to 7 U.S.C. 5101 and 5106, relating to 
        Agricultural Mediation Programs.
    Proposed new text is [italicized] proposed deletions are shown in 
strike-through.
    The proposed amendments occur only in 7 U.S.C. 5101 and 5106. 
Sections 5102-5105 have been omitted for brevity.
  Title 7--Agriculture, Chapter 82--State Agricultural Loan Mediation 
                                Programs
7 U.S.C. 5101 (2015)
5101. Qualifying States

(a) In general

    A state is a qualifying state if the Secretary of Agriculture 
(hereinafter in this subtitle referred to as the ``Secretary'') 
determines that the state has in effect a mediation program that meets 
the requirements of subsection (c).

(b) Determination by Secretary

    Within 15 days after the Secretary receives from the Governor of a 
state a description of the mediation program of the state and a 
statement certifying that the state has met all of the requirements of 
subsection (c), the Secretary shall determine whether the state is a 
qualifying state.

(c) Requirements of state mediation programs

        (1) Issues covered

                (A) In general

                          To be certified as a qualifying state, the 
                        mediation program of the state must provide 
                        mediation services to persons described in 
                        paragraph (2) that are involved in agricultural 
                        loans (regardless of whether the loans are made 
                        or guaranteed by the Secretary or made by a 
                        third party).

                (B) Other issues

                          The mediation program of a qualifying state 
                        may provide mediation services to persons 
                        described in paragraph (2) so long as at least 
                        one eligible person is that are involved in one 
                        or more of the following issues under the 
                        general jurisdiction of the Department of 
                        Agriculture:

                                  (i) Wetlands determinations.
                                  (ii) Compliance with farm programs, 
                                including conservation programs.
                                  (iii) Agricultural credit.
                                  (iv) Rural water loan programs.
                                  (v) Grazing on National Forest System 
                                land.
                                  (vi) Pesticides.
                                  (vii) Agricultural lease issues
                                  (viii) Family farm transitions
                                  (ix) Farmer neighbor conflicts
                                  (vii) (x) Such other issues as the 
                                Secretary or the state Secretary of 
                                Agriculture of the state of the 
                                authorized mediation program considers 
                                appropriate.

        (2) Persons eligible for mediation

                (A) In general

                          Subject to subparagraph (B), the persons 
                        referred to in paragraph (1) include--

                                  (i) agricultural producers;
                                  (ii) creditors of producers (as 
                                applicable); and
                                  (iii) persons directly affected by 
                                actions of the Department of 
                                Agriculture.

                (B) Voluntary participation

                        (i) In general

                                  Subject to clause (ii) and section 
                                503, a person may not be compelled to 
                                participate in mediation services 
                                provided under this Act.

                        (ii) State laws

                                  Clause (i) shall not affect a state 
                                law requiring mediation before 
                                foreclosure on agricultural land or 
                                property.

        (3) Certification conditions

                  The Secretary shall certify a state as a qualifying 
                state with respect to the issues proposed to be covered 
                by the mediation program of the state if the mediation 
                program--

                          (A) provides for mediation services that, if 
                        decisions are reached, result in mediated, 
                        mutually agreeable decisions between the 
                        parties to the mediation;
                          (B) is authorized or administered by an 
                        agency of the state government or by the 
                        Governor of the state;
                          (C) provides for the training of mediators;
                          (D) provides that the mediation sessions 
                        shall be confidential;
                          (E) ensures, in the case of agricultural 
                        loans, that all lenders and borrowers of 
                        agricultural loans receive adequate 
                        notification of the mediation program; and
                          (F) ensures, in the case of other issues 
                        covered by the mediation program, that persons 
                        directly affected by actions of the Department 
                        of Agriculture receive adequate notification of 
                        the mediation program.

(d) Definition of mediation services

    In this section, the term ``mediation services'', with respect to 
mediation or a request for mediation, may include all activities 
related to--

          (1) the intake and scheduling of cases;
          (2) the provision of background and selected information 
        regarding the mediation process;
          (3) financial advisory and counseling services (as 
        appropriate) performed by a person other than a state mediation 
        program mediator; and
          (4) the mediation session.
7 U.S.C. 5106 (2015)
5106. Authorization of Appropriations

    There are authorized to be appropriated to carry out this subtitle 
$7,500,000 for each of the Fiscal Years 1988 through 2018 2023.
                               exhibit 4
USDA State Agricultural Mediation Grants




 
                           THE NEXT FARM BILL

  (THE FUTURE OF INTERNATIONAL FOOD AID AND AGRICULTURAL DEVELOPMENT)

                              ----------                              


                        WEDNESDAY, JUNE 7, 2017

                  House of Representatives,
                                  Committee on Agriculture,
                                                   Washington, D.C.
    The Committee met, pursuant to call, at 10:00 a.m., in Room 
1300, Longworth House Office Building, Hon. K. Michael Conaway 
[Chairman of the Committee] presiding.
    Members present: Representatives Conaway, Thompson, 
Goodlatte, Lucas, King, Gibbs, Austin Scott of Georgia, 
Crawford, Hartzler, Denham, LaMalfa, Yoho, Allen, Rouzer, 
Abraham, Kelly, Marshall, Bacon, Faso, Dunn, Arrington, 
Peterson, David Scott of Georgia, Costa, Walz, Fudge, McGovern, 
Vela, Lujan Grisham, Kuster, Nolan, Bustos, Maloney, Plaskett, 
Adams, Evans, Lawson, O'Halleran, Panetta, Soto, and Blunt 
Rochester.
    Staff present: Ashton Johnston, Bart Fischer, Caleb 
Crosswhite, Callie McAdams, Rachel Millard, Stephanie Addison, 
Liz Friedlander, Matthew MacKenzie, Troy Phillips, Nicole 
Scott, and Carly Reedholm.

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

    The Chairman. Good morning. Let's get started.
    I am going to ask Congressman Scott to start us off with a 
brief prayer.
    Austin.
    Mr. Austin Scott of Georgia. Thank you, Mr. Chairman.
    If I may, before I say the brief prayer, I keep these words 
in my pocket. It is from a song from Sidewalk Prophets. I will 
just read them real quick: ``Be strong in the Lord. Never give 
up hope. You are going to do great things, I already know. God 
has got his hand on you, so don't live life in fear. Forgive 
and forget, but don't forget why you are here. Take your time 
and pray. Thank God for each day. His love will find a way. 
These are the words I would say.''
    If you will bow your heads with me just very briefly. Lord, 
we thank you so much for the many blessings you have given us. 
We know our country has a special place. You have been so 
generous to us. We just pray that we would continue to find the 
ways to give back to those in the world that may not be as 
fortunate as we are. We ask that you bless this meeting, bless 
the leadership of this country, and bless those who are here to 
help move this world in a direction that would be pleasing to 
you. In Christ's name we pray. Amen.
    The Chairman. Thank you.
    This hearing of the Committee on Agriculture entitled, The 
Next Farm Bill: The Future of International Food Aid and 
Agricultural Development, will come to order.
    Good morning and thanks to all of you for joining us this 
morning. Before we get started, I want to extend our 
condolences to our friends at Didion Milling. John Didion 
testified before the Committee in September 2015 about the 
important work they are doing in milling grain into specially 
designed food aid products. Unfortunately, 1 week ago today, 
Didion Milling experienced a catastrophic explosion that took 
the lives of three of their employees and injured several 
others. Our thoughts and prayers go out to the folks affected 
by this tragedy.
    As we begin our work today, this hearing builds on the work 
that the Committee did last Congress to extensively review 
international food aid and agricultural development programs. 
At the time, I was adamant that discussions about potential 
reforms to the programs occur during the development of the 
next farm bill, and that time has arrived. This hearing is also 
particularly timely, given the recent release of the 
Administration's budget proposal, which calls for drastic cuts 
to international food aid programs and the elimination of 
funding for both McGovern-Dole and Food for Peace Programs.
    I know we will hear from several of you today about the 
shortsightedness of such a proposal, and I tend to agree. 
Americans are big-hearted folks who love seeing the U.S. flag 
on donated rice and other U.S. commodities. As my colleague 
Chairman Aderholt noted, there should be no shame in using 
taxpayer dollars to buy American food from American farmers to 
send overseas to those who literally have nothing else to eat, 
especially when the proposed alternative, providing cash-based 
assistance, can result in hard-earned taxpayer dollars being 
misappropriated or going directly to our agricultural 
competitors. International food aid programs not only 
contribute to jobs in the United States in the agriculture 
sector, but they also create American jobs in the manufacturing 
and maritime sectors as well. Eliminating such programs seems 
to be contrary to the role of any robust America first policy.
    While less drastic than proposed elimination of these 
programs, I also fear the continued efforts to chip away at the 
core of food aid programs and to increasingly turn them into 
cash-based assistance programs will ultimately erode the 
alliance of domestic agriculture and maritime supporters that 
have long advocated for these programs. That said, I recognize, 
as the President does, that there are efficiencies to be gained 
within our food aid and ag development programs. In the near 
term, as we approach the next farm bill, we take seriously the 
task of looking for ways to enhance the programs in a way that 
will build consensus and support their ongoing role of American 
philanthropy and U.S. agriculture.
    Finally, while there are always emergency needs, the budget 
constraints we face are real. In the long run, these 
constraints will require us to increasingly focus on helping 
other countries make structural changes to better assist their 
own populations. I look forward to hearing from each of our 
witnesses today on how we can achieve these goals.
    [The prepared statement of Mr. Conaway follows:]

  Prepared Statement of Hon. K. Michael Conaway, a Representative in 
                          Congress from Texas
    Good morning and thank you all for joining us.
    Before we get started, I wanted to extend my condolences to our 
friends at Didion Milling. John Didion testified before the Committee 
in September 2015 about the important work they do in milling grain 
into specially designed food aid products. Unfortunately, 1 week ago 
today, Didion Milling experienced a catastrophic explosion that took 
the lives of three employees and injured several others. Our thoughts 
and prayers are with all those affected by this tragedy.
    As for our work here today, this hearing builds on the work the 
Committee did last Congress to extensively review international food 
aid and agricultural development programs. At the time, I was adamant 
that discussions about potential reforms to the programs occur during 
the development of the next farm bill.
    That time has come.
    This hearing is also particularly timely given the recent release 
of the Administration's budget proposal, which calls for drastic cuts 
to international food aid programs and the elimination of funding for 
both the McGovern-Dole and Food for Peace Programs.
    I know we will hear from several of you today about the 
shortsightedness of such a proposal. I tend to agree. Americans are big 
hearted folks who love seeing the U.S. flag on a donated bag of rice.
    As my colleague Chairman Aderholt noted, there should be no shame 
in using taxpayer dollars to buy American food from American farmers to 
send overseas to those who literally have nothing else to eat--
especially when the proposed alternative, providing cash-based 
assistance, can result in hard-earned taxpayer dollars being 
misappropriated or going directly to our agricultural competitors.
    International food aid programs not only contribute jobs in the 
U.S. agricultural sector, but also create American jobs in the 
manufacturing and maritime sectors. Eliminating such programs seems 
contrary to the role they play in a robust ``America-first'' policy.
    While less drastic than the proposed elimination of these programs, 
I also fear that continued efforts to chip away at the core of food aid 
programs, and to increasingly turn them into cash-based assistance 
programs, will ultimately erode the alliance of domestic agriculture 
and maritime supporters that have long advocated for these programs.
    That said, I recognize, as the President does, that there are 
efficiencies to be gained within our food aid and ag development 
programs. In the near-term, as we approach the next farm bill, we take 
seriously the task of looking for ways to enhance the programs in a way 
that will build consensus and support for their ongoing role in 
American philanthropy and U.S. agriculture.
    Finally, while there will always be emergency needs, the budget 
constraints we face are real. In the long run, these constraints will 
require us to increasingly focus on helping other countries make the 
structural changes needed to better assist their own populations.
    I look forward to hearing from each of our witnesses today on how 
we can achieve those goals. I now yield to my Ranking Member, Mr. 
Peterson for any comments he may have.

    The Chairman. And I now yield to my friend, Mr. Peterson, 
for any comments he would like to make.
    Collin.

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

    Mr. Peterson. Thank you, Mr. Chairman.
    We are here today to continue the Committee's work ahead of 
the next farm bill.
    I welcome today's witnesses to the Agriculture Committee.
    The United States, for more than 60 years now, has led the 
way in providing food for those in need around the world. 
Through partnerships with private organizations, millers, and 
shippers, we have delivered more than $80 billion in domestic 
product, benefiting hundreds of millions in need around the 
world since World War II. These facts and the testimony we will 
hear today illustrate the importance of these programs.
    As trade deals continue to dominate the discussion, it is 
worth pointing out that 11 of our top 15 trading partners in 
2017 were once recipients of U.S. assistance. Unfortunately, 
the budget put forward by the Administration would completely 
eliminate two key U.S. assistance programs, the Food for Peace 
Program and the McGovern-Dole Program. I would urge the 
Administration and Members of Congress to consider today's 
testimony and to look to the work that we did as part of the 
last farm bill to improve these programs when considering 
potential budget cuts.
    I hope our witnesses will be able to share some examples of 
program successes but, also, as we approach a new farm bill, 
any areas that might be in need of improvement and what 
changes, if any, we should consider within the next farm bill.
    So, again, I thank the Chairman and look forward to today's 
testimony and yield back.
    The Chairman. The gentleman yields back.
    I want to thank our witnesses today for coming to our 
hearing.
    We have, first, Mr. Ron Suppes, wheat producer from 
Dighton, Kansas?
    Mr. Suppes. Yes. Dighton, Kansas.
    The Chairman. Dighton, Kansas.
    All right. On behalf of U.S. Wheat Associates; Ms. Margaret 
Schuler, Senior Vice President of the International Programs 
Group, World Vision, Inc.--U.S., here in D.C.; Ms. Navyn Salem, 
Founder and Chief Executive Officer of Edesia Nutrition, 
Kingston, Rhode Island; Mr. Brian Schoeneman, Political and 
Legislative Director here in D.C. with Seafarers International 
Union, AFL-CIO, and on behalf of USA Maritime; and Dr. Thomas 
Jayne, University Foundation Professor, Michigan State, 
Kalamazoo, Michigan, on behalf of the Farm Journal Foundation.
    I apologize if I butchered your names too badly. I am from 
west Texas, and we have very limited pronunciation talents.
    Mr. Suppes, you will begin, 5 minutes.
    Mr. Denham. Mr. Chairman, a point of order, if I may. It 
appears that these fine USAID products here may require a 
napkin. If Members are so apt to follow Mr. Marshall's lead 
here, napkins may be in order for today's hearing.
    Mr. Marshall. Thank you, sir.
    The Chairman. He is wearing it, as opposed to eating it? Is 
that what you are telling me?
    Mr. Suppes, you are recognized for 5 minutes.

   STATEMENT OF RONALD J. SUPPES, DRYLAND WHEAT AND SORGHUM 
   PRODUCER, DIGHTON, KS; ON BEHALF OF U.S. WHEAT ASSOCIATES

    Mr. Suppes. I appreciate your introductions on food aid. 
Between you and Mr. Peterson, I don't think I need to give my 
speech. You have taken all my talking points.
    The Chairman. Yes. But I would still like to hear from you, 
though, just for the record.
    Mr. Suppes. At any rate, I would like to thank you, 
Chairman Conaway, Ranking Member Peterson, and all the Members 
of this House Agriculture Committee for allowing me some of 
your time to talk to you.
    I am from western Kansas. I am a farmer. My name is Ron 
Suppes. I farm equal distance from Oklahoma, Colorado, and 
Nebraska. During my lifetime, I have had a lot of opportunities 
to represent farmers, both Kansas and U.S. wheat farmers. But 
on no occasion has there been a more paramount topic that we 
need to address. And that is food security. This is a topic I 
think we can all agree on.
    You probably can't see what I am holding in my hand. But I 
assure you that it is something that all respective Kansas 
wheat farmers don't leave home without. It is a little bit of 
wheat seed.
    Wars have been fought over this little seed. Lives have 
been lost. Countries have fallen because of lack of food. Food 
aid was designed to help curtail such happenings.
    The United States continues to be the world leader for food 
donations, and these programs give us farmers a reason to be 
proud. The wheat I grow is doing good halfway around the world. 
I recently had the opportunity to learn more about the 
important work by visiting Food for Progress projects in 
Tanzania. The Hard Red Winter wheat my family produced may well 
have gone to the country receiving wheat from a food aid 
program. I speak directly to the value of these programs to the 
United States and to the participating farmers.
    Food aid continues to matter. In the long-term, it helps 
generate good will in other countries, a sentiment I saw 
firsthand in Tanzania. These programs also involve a 
significant amount of wheat, a fact not lost on Kansas farmers 
with full grain bins and more wheat piled on the ground from 
last year's historic harvest. We have enough surplus that no 
one should be going hungry.
    In the marketing year 2015/16, we sent almost 600,000 
metric tons or 22 million bushels of Hard Red Winter as food 
aid. That makes almost ten percent of last marketing year's 
exports, and only Japan, Nigeria, and Mexico imported more Hard 
Red Winter. A significant portion of these donations went to 
Ethiopia because the country was facing famine. And 8,000 miles 
away, wheat farmers in Kansas were helping prevent starvation.
    Monetization is an important food aid tool. The value of 
monetizing a commodity goes beyond the important development 
work it funds. Monetization creates local business 
opportunities and increases food availability. A supplementary 
benefit of these programs is the good will they foster, which 
can build relationships with future trade partners. Being able 
to go to Tanzania and talk to the NGO groups left me with a 
better understanding of how monetization works.
    Talking to farmers and other participants of the program 
gave me the feeling that we were doing food aid through 
monetization in the correct manner. I visited four of the 
projects funded by wheat monetization in the country and talked 
to the project participants. These people aren't looking for 
charity but for a way to build a better life for their families 
and communities, and the programs aren't based on handouts. 
Each participant has to have skin in the game. By helping 
encourage agricultural development in Tanzania, we are spurring 
economic growth, which means Tanzania is more likely to be a 
stronger trading partner in the future. It is vital that the 
U.S. continue to fund food aid programs overseas.
    Farmers are unique stakeholders in the international food 
aid conversation, and we have been loyal partners and advocates 
of these programs for over 60 years. I want to see us continue 
our trend of excellence in providing food aid to the countries 
that need it most.
    Mr. Chairman, your leadership in this area is appreciated. 
And I applaud this Committee's efforts to recognize the 
valuable role that the agriculture industry plays in 
international food aid.
    There is still so much work to feed our growing worldwide 
population. But, we are on the right track, and the U.S. 
continues to be a strong leader in helping hungry populations 
around the world.
    Thank you for allowing me to submit testimony this morning.
    [The prepared statement of Mr. Suppes follows:]

   Prepared Statement of Ronald J. Suppes, Dryland Wheat and Sorghum 
       Producer, Dighton, KS; on Behalf of U.S. Wheat Associates
    Chairman Conaway, Ranking Member Peterson, and Members of the 
Committee,

    As a wheat farmer from Dighton, Kansas and a Past Chairman of U.S. 
Wheat Associates, food aid is a topic of deep interest to me, and I 
recently had the opportunity to learn more about smart American 
generosity by visiting USDA Food for Progress projects in Tanzania 
funded by wheat monetization. The Hard Red Winter (HRW) wheat my family 
produced may very well have gone to Tanzania, or to another country 
receiving wheat from a food aid program, so I can speak directly to the 
value of these programs to the United States and to American farmers in 
particular.
Wheat in Food Aid
    The wheat industry has been a strong partner in U.S. food aid for 
more than 60 years, and American farmers take great pride in being able 
to share their bounty with people most in need. More wheat is used in 
U.S. in-kind aid than any other commodity, averaging 40 percent of the 
total. It is also the most popular commodity for monetization. It is a 
versatile product and of key dietary importance--bread products are 
staples in diets around the world. Wheat is the source of 20 percent of 
the world's caloric intake and provides 20 percent of protein for the 
world's most vulnerable four billion people.
    The United States continues to be the world leader of in-kind food 
aid donations and total development assistance, and maintaining these 
programs gives us farmers a reason to be proud--the wheat I grow is 
doing good halfway around the world. Food aid has changed a lot since 
the Office of Food for Peace was created over 60 years ago by President 
Eisenhower (a Kansan, I might add). Now we have a range of tools 
available that can be used in more nuanced ways and to best fit the 
needs of each situation. Food for Peace does a great job of getting 
U.S. commodities in large quantities to populations that need them. 
McGovern-Dole, another program with a Kansas founder (are you sensing a 
theme here?), works with smaller quantities of food but targets school 
feeding and improving nutrition for children, and as we all know, 
children are the future. Then you have programs like Farmer to Farmer, 
that bring farmers and other experts to communities overseas to provide 
short-term technical assistance.
    Food aid continues to matter for several reasons. In the long-term, 
it helps generate goodwill in other countries, a sentiment I saw 
firsthand in Tanzania. But in the short-term, these programs also 
involve a significant amount of wheat, a fact not lost on Kansas 
farmers with full grain bins and more wheat piled on the ground from 
last year's historically high harvest. Moving toward more cash or local 
and regional procurement in title II programs would impact U.S. farmers 
and hurt a vulnerable population. While these tools have a place in 
foreign assistance programs, U.S. commodities play an important role in 
helping regions unable to produce wheat and other commodities on their 
own due to drought, conflict or other circumstances. We have enough 
surplus that no one should be going hungry.
    In Marketing Year 2015/16, we sent almost 600,000 metric tons (MT), 
or about 22 million bushels, of HRW as food aid. That makes up almost 
10% of last marketing year's HRW exports, and only Japan, Nigeria, and 
Mexico imported more HRW. Total wheat donations last year were over 
700,000 MT, about 26 million bushels, and ranked as a top ten 
destination. In addition to HRW, the U.S. sent Hard Red Spring, Soft 
White, and Soft Red Winter wheat overseas as food aid. Creating markets 
isn't the point here, but we can't discount the size of those 
donations. A significant portion of these donations went to Ethiopia 
because the country was facing famine. 8,000 miles away, wheat farmers 
in Kansas were helping Food for Peace prevent starvation. According to 
the World Food Program, four countries are currently at risk of or 
experiencing famine now, the worst crisis seen since World War II; in a 
time of wheat surplus and low prices, U.S. commodities remain a vital 
tool to fight hunger.
Monetization as a Powerful Tool in Agricultural Development
    Monetization is a food aid tool that provides necessary commodities 
to food-insecure areas and benefits development programs by generating 
funding from the sales of donated U.S. commodities. The long-term value 
of monetizing a commodity goes beyond the important development work it 
funds. Monetization creates local business opportunities and increases 
food availability. It can also give local small- and medium-sized 
buyers a competitive advantage because it is priced comparably to what 
a large buyer would pay. Well timed monetization deliveries can help 
stabilize food availability all year, which also helps reduce local 
market price volatility. Finally, monetizing U.S. wheat helps stimulate 
local milling industries--providing an economic engine and valuable 
employment opportunities.
    U.S. Wheat Associates also works with NGOs to make sure that wheat 
monetization does not disrupt any existing commercial markets. Wheat as 
a commodity is a good fit in many countries because there is limited 
domestic production, if any. Countries near the equator typically must 
import wheat anyway, so wheat monetization doesn't disrupt markets for 
domestic farmers.
    A supplementary benefit of these programs is the goodwill they 
foster, which can build relationships with future trade partners. In 
fact, historically, monetized commodities into South Korea and the 
Philippines introduced those markets to U.S. exports, and now they're 
both top ten markets for U.S. wheat. More recently, monetized U.S. 
wheat introduced the benefits of superior quality milling wheat to one 
of Ethiopia's larger flour mills. In a traditionally price-driven 
market, this positive experience demonstrated an opportunity for future 
U.S. wheat imports and generated funding for a local agricultural 
development project. The money from the monetization, along with the 
bran byproduct from the milled wheat, went to ACDI/VOCA's Feed for 
Enhancement for Ethiopian Development project, where the bran was a key 
ingredient in the livestock feed concentrates used by the people who 
benefit from the project.
    Monetizing commodities to fund projects can yield results that 
simply giving cash does not. Thanks to monetization through title II 
funding, Mozambique grew from two mid-sized mills in the 1990s to more 
than seven in 2015. This is because, more than commercial or cash 
interactions, monetization transactions have less restrictive payment 
terms, allowing millers time to build capital with longer payment 
periods. Additionally, the mills were able to conduct transactions in 
their local currency when access to foreign currency was limited. The 
monetization programs allowed the mills to produce better quality wheat 
flour with readily available U.S. wheat, and because U.S. Wheat 
Associates followed up on those wheat purchases with technical support 
to millers and bakers in the country. These benefits are all on top of 
the developmental gains to the country from the original NGO project 
the sale funded.
Food for Progress and Tanzania
    In Tanzania, I saw how the Hard Red Winter and Hard Red Spring 
wheat monetized there allowed the miller purchasing the wheat to pass 
along savings to their poorer customers. I also visited four of the 
projects funded by wheat monetization in the country. These projects 
are versatile and fully embody the Food for Progress program's devotion 
to building commercial capacity in agriculture. Two of the projects, 
run by Global Communities and Small Enterprise Assistance Funds, 
targeted small and medium-sized enterprises so that they could better 
expand and work with smallholder farmers. The other two projects, run 
by Catholic Relief Services and FINCA International, focused on working 
directly with farmers to enhance their production and, even more 
importantly, help connect them with markets for their product.
    These people aren't looking for charity, but rather for a way to 
build a better life for their families and communities. I could not 
farm without access to credit, which these farmers and agribusinesses 
often lack. Even when they're successful, agriculture is considered too 
risky by lenders, so any growth has to come from saved capital. These 
projects help overcome that challenge by providing credit to farmers as 
well as training and market connections. By helping encourage 
agricultural development in Tanzania, we're ultimately spurring 
economic growth, which means Tanzania is more likely to be a stronger 
trading partner in the future. And the tangible presence of U.S. wheat 
in that equation is a symbol that cash can't match. It is vital that 
the U.S. continue to fund food aid programs overseas.
    Monetization programs are a powerful tool for agricultural 
development overseas, but USDA's Food for Progress program is severely 
hindered by a transportation cap that hasn't increased to match rising 
transportation costs. If the $40 million transportation cap was raised, 
we would be able to help more farmers and agribusinesses in developing 
countries.
Wheat Industry Working Together on Food Aid
    The wheat industry has adopted the following resolutions, which 
represent the full range of tools available to U.S. agencies and PVOs. 
These resolutions clearly reflect a priority on choosing the right tool 
to address a given instance of food insecurity, rather than blanket 
support of in-kind food aid. These principles thoroughly capture the 
industry's commitment to food aid and its belief that these programs 
are vitally important. Those principles are:

   Promote wheat as a nutritious component of international 
        food aid.

   Support funding of P.L. 83-480 Title II food assistance 
        programs at $2.5 billion, the full amount authorized by law.

   Support a strong, flexible U.S. food aid program that 
        contains both in-kind donations and monetization.

   Support funding and implementation of local and regional 
        procurement programs through the Foreign Disaster Assistance 
        Act and USAID.

   Support USDA administration of Food for Progress.

   Encourage an increase to the Food for Progress 
        Transportation Cap and efforts to mitigate the effect of Cargo 
        Preference rules on cost recovery calculations.

   Support the U.S. Government's agricultural development 
        initiatives as a supplement to existing emergency and non-
        emergency humanitarian assistance programs such as P.L. 83-480 
        Title II programs.
Conclusion
    Farmers are unique stakeholders in the international food aid 
conversation, and we've been loyal partners and advocates of these 
programs since they started. I want to see us continue our trend of 
excellence in providing food aid to the countries that need it most. I 
want to be able to tell my grandchildren that wheat from my farm is 
helping food-insecure populations in rural Sub-Saharan Africa develop 
their agricultural infrastructure. And I want our industry to be able 
to continue working cooperatively with millers and NGOs in other 
countries who see the extensive value of U.S. wheat donations.
    This is a year when the U.S. wheat farmer has been a world leader 
in producing a surplus of wheat. It is a year when the U.S. needs to be 
a world leader in helping provide for this in need with these ample 
supplies. When blessed with good fortunes and yields, it is an 
obligation to help provide for those who cannot provide for themselves. 
It is a humanitarian issue, and food security is the answer to 
achieving stability around the world.
    Mr. Chairman, your leadership in this area is appreciated, and I 
applaud this Committee's efforts to recognize the valuable role that 
the agricultural industry plays in international food aid. There's 
still so much work to do to feed our growing worldwide population, but 
I think we're on the right track, and the U.S. continues to be a strong 
leader in helping hungry populations around the world. Thank you for 
allowing me to submit testimony for this timely hearing.
            Sincerely,

Ron Suppes.

    The Chairman. Thank you.
    Ms. Schuler, 5 minutes.

           STATEMENT OF MARGARET SCHULER, SENIOR VICE
 PRESIDENT, INTERNATIONAL PROGRAMS GROUP, WORLD VISION, INC.--
                     U.S., WASHINGTON, D.C.

    Ms. Schuler. Chairman Conaway, Ranking Member Peterson, and 
Members of the Committee, thank you for the opportunity to 
testify before you today on U.S. international food aid 
programs. Your continued leadership and focus on these programs 
is critical, especially noting the unprecedented level of 
famine and near famine-like conditions currently present in 
four countries around the world.
    My name is Margaret Schuler, and I am the Senior Vice 
President for International Programs at World Vision. Prior to 
assuming this position last month, I served as the Regional 
Vice President in East Africa, a region currently in the grips 
of one of its worst food crises in decades. I have been on the 
ground in places like South Sudan where millions of vulnerable 
people, mostly women and children, are in a day-to-day fight 
for survival. These are lives turned upside down by violence, 
who fled searching for safety. In many cases, families watched 
their children die along the way. But once they reached their 
destination, it was often generous food assistance from the 
U.S. Government that allowed their remaining children to 
survive.
    As a mother, these stories break my heart. Yet, I feel a 
sense of hope for the future when people can access the 
valuable nutrition they require, oftentimes renewing their 
dignity and hope for the future. After all, wanting your 
children to be healthy and thrive is one of the great 
equalizers in this world.
    Days before I left East Africa, I declared a multi-country 
hunger emergency at World Vision's highest level of alert. 
Today, 25 million people are at significant risk in four 
countries of that region: Somalia, South Sudan, Ethiopia, and 
Kenya.
    As we respond to these crises in East Africa and around the 
world, World Vision remains grateful for the support of the 
U.S. Government to address global hunger needs, including the 
additional funding provided through the Fiscal Year 2017 
omnibus for emergency famine relief.
    However, as we look at Fiscal Year 2018 and the 
Administration's recent budget proposal, we remain deeply 
concerned by the recommendation to zero out funding for both 
the Food for Peace Program and the McGovern-Dole International 
Food for Education and Child Nutrition Program.
    Famines don't recognize fiscal years. We must do everything 
we can in the moment to keep pace with increased and growing 
needs both in humanitarian and development settings. And, 
therefore, we urge Congress to continue to robustly fund Food 
for Peace and McGovern-Dole. Food security programming builds 
more prosperous and stable societies and is fundamentally 
aligned with America's role as a global leader. These programs 
are essential to shaping a world where our national interests 
will thrive. Proposals to eliminate funding for these critical 
accounts will have life-and-death consequences for the poorest 
people in the world and will threaten America's own safety and 
security in the process.
    While we continue to advocate for strong funding, we also 
stand as ready partners to improve foreign assistance so it 
saves more lives and uses taxpayer dollars wisely. Therefore, 
World Vision recommends the following measures in the upcoming 
farm bill:
    First, continuing this Committee's strong support for the 
multi-year, multi-sector funding of the development food 
assistance activities, including a minimum of at least $350 
million each fiscal year. I have personally been involved with 
these title II development programs for almost 20 years. I 
cannot overstate how important they are to millions of people. 
We view this safe box programming as critical in our efforts to 
help countries tackle the root causes of poverty by putting 
people on the path to self-reliance. World Vision acknowledges 
the critical need for emergency food aid this year. But we also 
believe funding for these long-term development programs must 
remain a priority in the next farm bill, as they help to 
prevent and mitigate future food emergencies and the need for 
emergency assistance.
    Second, eliminating the minimum monetization requirement 
under the Food for Peace Program and support use of the 
Community Development Fund and 202(e) funding within Food for 
Peace non-emergency development programs.
    Third, continuing to provide food aid implementers 
discretion in using various food aid modalities, including cash 
transfers, vouchers, and local and regional procurement in 
addition to U.S.-sourced commodities.
    Fourth, affirming the Food for Peace strategy of focusing 
on host-country government reform which addresses root causes 
for poverty and food insecurity by helping people hold their 
governments accountable to spend U.S. assistance and domestic 
resources effectively and make it sustainable.
    World Vision understands program improvements are difficult 
to make, as evidenced by our evolving position on the practice 
of monetization. But as we reviewed this practice further in 
our programming and considered it alongside other food aid 
options, we concluded there are often more effective processes 
available that would ultimately serve more communities and 
serve them better.
    Last, I want to reiterate that your leadership counts. We 
have made tremendous progress in our fight against hunger. And 
because of that effort, the number of hungry people has dropped 
by 200 million since 1992.
    Thank you, again, for allowing me to testify today. Food 
assistance programs are some of the most effective programs 
when measured by the number of people helped per U.S. dollar 
spent, and we cannot walk away from the poorest and most 
vulnerable by eliminating lifesaving programs.
    I would be happy to answer any questions you have.
    Thank you.
    [The prepared statement of Ms. Schuler follows:]

    Prepared Statement of Margaret Schuler, Senior Vice President, 
  International Programs Group, World Vision, Inc.--U.S., Washington, 
                                  D.C.
    Chairman Conaway, Ranking Member Peterson, and Members of the 
Committee, thank you for the opportunity to testify before you today on 
U.S. international food aid programs. Your continued leadership and 
focus on these critical programs is more important than ever, 
especially noting the unprecedented level of famine and near famine-
like conditions present in four countries.
    I testify before you today as the Senior Vice President for 
International Programs with World Vision--U.S. Prior to assuming this 
position last month, I served as the Regional Vice President of World 
Vision in East Africa--a region currently in the grips of one of its 
worst food crises in decades.
    I have been on the ground in places like South Sudan, where 
millions of vulnerable people--mostly women and children--impacted by 
the violence and crisis in that country, have fled their homes and 
often have a day-to-day fight for survival. People whose lives were 
turned upside-down by the violence and who fled searching for safety. 
In many cases, families watched their children die along the way, but 
once they reached their destination, it was often generous food 
assistance from the U.S. Government that allowed their remaining 
children to survive. Days before I left the region, I declared a multi-
country hunger emergency at World Vision's highest level of alert. 
Today, 25 million people are at significant risk in four countries of 
the region: Somalia, S. Sudan, Ethiopia and Kenya.
    Throughout my remarks today, I hope to address the importance of 
U.S. international food aid programs, but also highlight the lives of 
individuals most impacted by hunger in this region and around the 
world. I will conclude by providing policy and program recommendations 
based on World Vision's experience implementing food security programs 
in nearly 100 countries around the world.
World Vision Partnership
    World Vision is a Christian relief, development, and advocacy 
organization serving millions of children and families. Our 45,000 
employees are dedicated to tackling the root causes of poverty and 
injustice.
    World Vision--U.S. has more than one million private donors in 
every state and Congressional district, partners with over 16,000 
churches in the United States, and works with corporations and 
foundations. We are motivated by our Christian faith to serve every 
child in need and their family; those of any faith, or none. We partner 
with faith leaders throughout the world, equipping them to meet the 
needs of their communities.
    We are part of a global World Vision Partnership, which last year 
implemented more than $2.6 billion in programming to help children, 
families and communities through international relief, development, and 
advocacy assistance. Although private donors support much of our work, 
the U.S. Government is an invaluable partner. We leverage this 
partnership to reach many more vulnerable children and ensure that the 
precious resources of the American taxpayer are prudently used to 
promote and protect the well-being of children and communities abroad.
World Vision's Approach to Food Security Programming
    World Vision joins the international community and other partners 
in seeking to achieve the global goal of ending hunger by 2030. In 
pursuit of this hunger-free world, World Vision works alongside 
families to help smallholder farmers to produce their own food and 
improve their livelihoods, through increasing their access to markets. 
However, when disasters such as drought or conflict occur, World Vision 
provides emergency food assistance to ensure children and communities 
receive life-saving and nourishing food.
    Food assistance is one of the critical global safety nets that 
supports the most vulnerable families in managing shocks like 
disasters, while empowering them to become more resilient against 
future food insecurity, and other drivers of poverty.
    In our work, World Vision ensures its programming promotes dignity, 
fosters innovation, and is effective in creating lasting change. World 
Vision develops tailored and diverse responses based on local contexts. 
Our food assistance programming includes the distribution of U.S. as 
well as locally and regionally procured food commodities, cash 
transfers, and vouchers, which allow hungry families to purchase food 
and other essential household items. Additionally, World Vision 
implements school meals programs, and resilience building programming 
such as cash or food for work or assets.
    World Vision's Food Security and Livelihoods team draws upon a 
group of technical experts who ensure quality food assistance programs 
in nearly 40 countries, often combining various programming modalities 
and services to best meet the needs of impacted communities. World 
Vision operates food assistance programs in partnership with the United 
Nations World Food Program (with whom we are the largest implementing 
NGO partner), USDA, USAID, and other partners.
Four Looming Famines and East Africa Food Crisis
    With four famines possibly being declared this year, the world is 
currently in the midst of its worst humanitarian crises since 1945. As 
noted earlier, famine was officially declared in parts of South Sudan, 
while people face starvation in Somalia, Nigeria and Yemen. In Ethiopia 
and parts of Kenya, drought is contributing to growing food insecurity. 
In just the past year alone, the rate of global acute food insecurity 
increased by 35 percent, a massive increase from 80 million people in 
2015 to 108 million today.
    Currently, the majority of global humanitarian need is driven by 
civil conflicts, instability, and unresolved political disputes. The 
famine in South Sudan is largely a man-made catastrophe and in Somalia, 
the humanitarian crisis is a result of the combined effects of the 
drought and ongoing conflict. In recent years, World Vision has worked 
in 39 of the 56 Organisation for Economic Co-operation and Development 
(OECD) declared fragile states, and we remain committed to scaling up 
interventions that prove effective in supporting countries as they 
transition out of fragility towards greater stability and lasting 
peace. All of the East African countries affected by the food security 
crises are among the fragile states as identified by the OECD. These 
fragile states are an increasing focus of World Vision's global 
strategy to help promote peace, end extreme poverty, and limit the 
impacts of disasters--all elements that bear on U.S. national security 
and economic interests.
    In East Africa, a region characterized by high levels of fragility 
and vulnerability, the current food crisis is affecting over 25 million 
people, requiring urgent, life-saving assistance. More than 3.5 million 
children under 5 are acutely malnourished, and 844,900 children are 
severely malnourished, with an estimated 14.4 million people in need of 
health assistance. Most of those affected live in rural areas and 
depend on agriculture and/or livestock for their food and income. In 
Kenya, South Sudan, and Somalia, certain areas have already reached, or 
are approaching, famine levels. At the same time, the number of people 
escaping conflict and hunger is dramatically increasing across the 
region with more than 3.3 million refugees, 59 percent of whom are 
children, fleeing into neighboring countries. Many of the refugees are 
from South Sudan, seeking refuge in Uganda, Kenya and Ethiopia. Uganda 
is now hosting over one million refugees, nearly 900,000 of whom are 
from South Sudan. This is the largest refugee population in all Sub-
Saharan Africa.
    The immediate needs in this crisis are clear--we must get food and 
nutritional support in the region quickly and scale up efforts by donor 
governments and the international community to respond. We know the 
U.S. Government cannot do it alone, but its leadership inspires and 
promotes the actions of other donors. And, we also cannot ignore the 
long-term impact of malnutrition, particularly in children and pregnant 
mothers. Should we fail to address this crisis soon, not only will we 
witness more deaths from hunger, but we will see an increase in 
stunting in children that will have long-lasting detrimental impact on 
the mental and physical development of children and the economic and 
social development of communities.
    While emergency funding is critical in this immediate crisis, the 
longer-term solution is programs that build more resilient, productive 
and economically productive rural communities. A core strategy to 
achieve this objective is supporting smallholder agriculture 
development, including through programs such as the Food for Peace's 
Development Food Security Activities.
FY17 Omnibus and Famine Supplemental
    Thanks to Congressional leadership, including from Members of this 
Committee, $990 million in emergency famine relief, including $300 
million for Food for Peace in war-torn South Sudan, Somalia, Yemen and 
Nigeria, was recently included in the FY17 omnibus bill.
    World Vision joined with partners and other stakeholders to 
advocate for this additional funding and we now seek to ensure these 
resources are distributed and allocated in a timely and efficient 
manner to the regions and people in greatest need. We seek to work with 
this Committee to ensure expeditious and effective implementation of 
the additional funding, especially the resources directly appropriated 
to Food for Peace.
The Administration's FY18 Budget Proposal
    As it relates to international food aid programming, the 
Administration's FY18 budget request released on Tuesday, May 23rd 
included a series of problematic proposals including: a zeroing out of 
both Title II, Food for Peace (with any funding for emergency food aid 
shifted into the International Disaster Assistance Account (IDA), and 
the McGovern-Dole International Food for Education and Child Nutrition 
program.
    World Vision joins with our partners and strongly opposes these 
recommendations, which propose eliminating and/or severely cutting 
effective, life-saving funding that help create a safer and more secure 
world. Furthermore, the FY18 request from the Administration includes 
funding for emergency food needs within the International Disaster 
Assistance (IDA) account, yet the Administration also proposes to 
reduce IDA from $3.2 billion to $1.65 billion. When comparing the FY18 
request to FY16, the cut to IDA is ten percent. Factoring in the 
elimination of Title II Food for Peace (although the Food for Peace 
office appears to remain and emergency food aid assumed to be now 
funded from IDA), the cut to IDA when comparing FY16 to the FY18 
request is about 48 percent.
    At a time of historic and unprecedented need, when close to 1.4 
million children could die this year from famine-like conditions 
according to UNICEF, we urge Congress to continue to robustly fund the 
Food for Peace program (both emergency and development programs) and 
McGovern-Dole International Food for Education and Child Nutrition 
program in FY18. The International Disaster Assistance account must 
also be funded at FY17 or levels or above which includes the Emergency 
Food Security Program.
    The Administration's budget proposal reframes the purpose of the 
International Affairs Budget, noting that ``international programs help 
to advance the national security interests of the United States by 
building a more democratic, secure, and prosperous world.'' The goal of 
the budget appears to focus more assistance on national security-
aligned interests, as opposed to long-term development or anti-poverty 
initiatives, but in the view of World Vision, these are not mutually 
exclusive priorities.
    Food security programming builds more prosperous and stable 
societies, and is fundamentally aligned with America's global 
leadership. These programs are essential to shaping a world where our 
national interests will thrive. Disproportionate cuts to these accounts 
will not make the world safer. In fact, according to a recent report 
published by the Chicago Council on Global Affairs, in 2007-2008, 
destabilizing rises in food prices produced widespread social unrest 
and toppled governments in Haiti and Madagascar and conflicts over food 
policy and prices are also linked to the Arab Spring in 2011. Proposals 
to eliminate funding for these critical accounts will have life-and-
death consequences for the poorest people in the world, and will harm 
America's own safety and security in the process.
    Last, as World Vision seeks to ensure greater efficiency and 
effectiveness in the U.S. international development and humanitarian 
assistance programs, we stand as ready partners willing to improve 
foreign assistance so it saves more lives, builds resilience, and 
reduces poverty. To this end, we affirm our openness to identifying 
reforms to improve programming (we're all in this as partners 
together), but not when it means fewer lives saved, or turning our 
backs on what we know works.
    As such, we are aware of the Administration's interest related to 
ongoing reform efforts pertaining to the activities of USAID's Office 
of Foreign Disaster Assistance and the Office of Food for Peace. As 
these efforts evolve, we affirm the role of Congress and the relevant 
authorizing committees in overseeing and leading any reform efforts to 
our international development and humanitarian assistance programs, and 
support continued stakeholder engagement including with the private-
sector and NGOs.
Title II Food for Peace Program
    Since 1954, Food for Peace (FFP) has enabled the United States to 
reach more than four billion people with food assistance. As the 
largest U.S. Government food aid program, Food for Peace Title II 
includes emergency response that distributes food to people in the 
grips of natural disasters, conflict, and other food security crises. 
Food for Peace also provides funding for non-emergency, development 
programs that reduce poverty and build the capacity of beneficiaries to 
feed themselves.
    Between 2010 and 2015, FFP programs reached an average of 52 
million people in 50 countries per year. In addition to meeting food 
needs, Food for Peace fosters stability and builds resilience in 
regions that might otherwise pose possible national security risks.
    FFP's development programs are particularly important in efforts to 
end hunger, as they go beyond the ``free hand out'' paradigm by 
addressing the root causes of food insecurity. Development Food 
Assistance Activities uses a multi-sectoral approach--inclusive of key 
areas like resilience, nutrition, and livelihoods--that puts whole 
communities on a sustainable path towards self-reliance. Projects are 
typically 5 years in length, which give implementers enough time to 
achieve real results, like revitalizing a watershed or making a lasting 
impact on farmers' skill sets. Food for Peace development programs 
primarily serve the poorest communities, using income levels, stunting 
rates, and other indicators of extreme poverty to direct resources to 
the countries and communities most in need. World Vision is the lead 
implementer of three Food for Peace development projects in Zimbabwe, 
Ethiopia, and Bangladesh.
    The 2014 Farm Bill established funding for development programming 
at $350 million per year with the authority to increase this funding to 
30% of overall Food for Peace appropriations with the remainder of 
funds supporting emergency activities. We view this ``safe box'' 
programming as critical in our efforts to help countries tackle the 
root causes of poverty, by putting people on the path to self-reliance. 
Additionally, as part of our efforts to promote nutrition and food 
security, according to the FY17 Congressional Budget Justification, 
development food assistance was the second largest source of funding 
for nutrition programming in U.S. assistance, accounting for $87M in 
the FY 2017 request.
    World Vision acknowledges the critical need for emergency food aid 
this year, but we also believe funding for these long-term development 
programs must remain a priority in the next farm bill, as they help to 
prevent and mitigate future food emergencies and the need for emergency 
assistance. To further illustrate, Congress appropriated close to an 
additional $1 billion to meet emergency needs in FY17. To draw that 
funding from development programs would have completely depleted 
funding for development programming, undermining existing multiyear 
investments, and leaving these beneficiaries vulnerable to reversing 
back into poverty.
Food for Peace in Zimbabwe and Haiti
    In Zimbabwe, World Vision through the Enhancing Nutrition, Stepping 
up Resilience and Enterprise (ENSURE) (http://www.wvi.org/food-
assistance/ensure-zimbabwe), a USAID funded program, empowers poor, 
rural households in Manicaland and Masvingo provinces to become more 
food-secure. In Fiscal Year 2016, 4,682 persons were trained in 
disaster preparedness (130 percent of target met), 107 community 
assets--like dams, irrigation schemes and gardens--were created or 
rehabilitated (445 percent of target met), and 217 producer groups were 
supported in goat and poultry value chains (238 percent of target met). 
To this end, the quality of food consumption, especially of children 
under 23 months as well as pregnant and lactating mothers, was 
significantly enhanced, breaking the inter-generational cycle of 
malnutrition and poverty.
    During the massive El Nino-induced drought in Zimbabwe last year, 
World Vision received a $19 million cost modification to our title II-
funded ENSURE program. This flexibility provided by the U.S. Government 
enabled us to quickly respond to the rapidly increasing food deficits 
experienced by households in the east and southeast of the country, 
some of the hardest hit by the drought, with more than 18,000 metric 
tons of U.S. commodities. Through this cost modification we provided a 
supplemental feeding ration to more than 313,000 people who were 
affected by the drought. Additionally, this also protected early gains 
made by the development program, by ensuring that many households were 
able to protect assets they had generated through U.S. Government 
assistance, instead of selling them off, thereby adding to their 
longer-term resilience. World Vision and the families with whom we are 
engaged greatly appreciate this flexibility and the rapid response it 
allowed.
    In Haiti, another development food assistance program, Kore Lavi is 
supporting 18,150 households with monthly food vouchers in five out of 
the ten departments across the island. The program is being led by CARE 
and the Government of Haiti, in partnership with WFP, Action Against 
Hunger and World Vision, with funding from USAID. This 4 year long 
program has the goal of strengthening the Haitian national social 
safety net and improving the food security and nutritional status of 
vulnerable populations.
    In addition to the ongoing voucher program, Kore Lavi was 
reinforced with a ``crisis modifier'' from USAID following the impact 
of Hurricane Matthew (http://wvi.org/food-assistance/article/planting-
seeds-hope-among-ruin). For 3 months after the hurricane, some 1,100 
families received 3,000 Haitian Gourdes (the equivalent of U.S. $50) 
per household, per month. This crisis modifier injects emergency 
funding into existing development programs to rapidly address emerging 
humanitarian needs.
    In the words of one beneficiary, a young widow named Dachena, 
``[t]he program is really helpful for the boys and me. It has allowed 
me to feed them better with the rice, beans, oil and vegetables that I 
buy,'' and ``I have observed an improvement in their physical health 
and energy. They are gaining some weight.'' For families like 
Dachena's, cash transfer programming and emergency crisis modifiers 
have been a life-line. Furthermore, they have protected development 
gains by enhancing resilience made in disaster prone areas with high 
levels of vulnerability, and in this way, help to address the 
humanitarian-development divide.
Food for Peace and Private Sector Linkages
    World Vision, together with its private-sector and NGO partners, 
have also developed innovative approaches to link food-insecure farmers 
to suppliers and buyers. Under the USAID Food for Peace TOPs learning 
platform, World Vision provided training on market linkages to four 
USAID Food for Peace Development Food Assistance Activities and one 
USAID Niger Economic Growth funded project. As part of our 
collaboration with the TOPS learning platform and with support from 
USAID, World Vision produced the Integrating Extremely Poor Producers 
into Markets Field Guide (https://agrilinks.org/library/integrating-
extremely-poor-producers-markets-3rd-edition). The Field Guide includes 
a set of over 20 tools for market development professionals to use in 
order to strengthen the commercial relationships between food-insecure 
and extremely poor farmers with private-sector suppliers and buyers. 
These commercial market linkages with the private-sector provide 
sustainable business relationships that will last well beyond the life 
of the USAID funded project.
Food for Peace, Social Accountability, and Good Governance
    World Vision's Bangladesh Nobo Jatra Food for Peace Development 
Food Assistance Activity is seeking to address underlying causes of 
chronic food insecurity through advocacy and government reforms. By 
engaging local authorities through this social accountability approach, 
Nobo Jatra is working with farmers and government agricultural staff to 
identify agricultural service delivery gaps--using social auditing, 
community services scorecards, and ``town-hall style'' interface 
meetings for citizens with service providers and government officials.
    Citizen feedback on services will be used to advocate for 
governance reform across the target ministries of health, water and 
sanitation, and agriculture. Citizen monitors and committees will work 
with government officials to monitor progress and address gaps through 
ongoing advocacy. Food for Peace's adoption of social accountability as 
a top line objective in its new global strategy issued last year--along 
with World Vision's own pioneering of this kind of work--has the 
potential to revolutionize these already successful programs by 
integrating bottom-up, people-driven governance reforms, which improves 
public services and keeps corruption in check.
The McGovern-Dole International Food for Education and Child Nutrition 
        Program
    The McGovern-Dole International Food for Education and Child 
Nutrition Program provides the donation of U.S. agricultural 
commodities to reduce hunger and malnutrition and promote literacy and 
primary education in food-insecure countries. For highly vulnerable 
communities, there is an incentive for parents to send their children 
to school as they receive the dual benefit of access to both education 
and nutritious food. For girls, the program has shown an increase in 
school attendance, driving literacy and educational attainment and 
helping to institute greater gender balance.
    McGovern-Dole has reached 40 million children with food at school 
and it is currently active in 24 countries. As implementers of the 
McGovern-Dole Food for Education, World Vision is particularly focused 
on the long-term sustainability of the program, and engaging host 
governments to ensure the program continues beyond the duration of the 
grant. World Vision implements these programs in Mozambique and 
Nicaragua.
Food for Education: Mozambique
    World Vision is implementing a Food for Education project in 
Mozambique known as ``Educating Children Together.'' The aim of the 
project is to improve the literacy of school-aged children in grades 1-
7, increase the use of health and dietary practices, improve the 
quality of literacy instruction, and student and teacher attendance. 
Across the two districts in which World Vision currently implements 
Food for Education, 8,000 metric tons of food are being used to feed 
64,000 beneficiaries, improving food security, and boosting school 
attendance especially among girls. Literacy rates have also improved 
from two percent at the inception of the project to about 35 percent 
because of USDA interventions. In most cases, the lunch provided 
through this program is the only meal these children receive all day. 
Further, the food provided is fortified with much needed 
micronutrients.
    The USDA Local and Regional Procurement (LRP) program, made 
permanent by the 2014 Farm Bill, is intended to be used in conjunction 
with McGovern-Dole programming to fill in nutritional or food 
availability gaps for targeted populations through purchasing of 
locally sourced food that will help transition management of school 
feeding to local governments. World Vision received a $2 million award 
in 2016 to implement an LRP project under the current McGovern Dole 
Food for Education project in Mozambique. The project leverages the 
resources, skills and partnerships built with 43 farmer groups to 
supplement school meals with beans, groundnuts and orange fleshed sweet 
potatoes in 43 target schools.
    In FY16, the project experienced a pipeline break because the 
commodities from the U.S. did not arrive on time. During this period, 
64 schools out of the 150 target schools received 114 metric tons of 
locally sourced food such as maize, beans, groundnuts, sweet potatoes 
and vegetables (cabbage, lettuce, onion, tomatoes, etc.) for school 
meals before the arrival of the imported Corn Soya Blend (CSB+). This 
was, and remains, an effective and efficient way to promote dietary 
diversity and demonstrate sustainability.
    Food for Education is designed to ensure that school meal programs 
can, after a transition period, be transferred to a national or local 
government to operate on its own. Indeed, the success of World Vision's 
McGovern-Dole program in Mozambique demonstrates the importance of 
partnerships with the Government of Mozambique and farmer groups to 
strengthen the local supply chain. World Vision views LRP as critical 
to the sustainability of school lunch programs. These efforts empower 
local farmers to grow the quality and quantity produce needed for 
school lunches. Additionally, LRP spurs investment in food processing 
industries, and often results in the procurement and the promotion of 
culturally appropriate food commodities. As a result of this 
collaboration, a sustainable school feeding model has been developed, 
resulting in nutritional gains for nearly 64,000 children, and it also 
supports the Government of Mozambique efforts to stimulate its own 
market development.
Recommendations
    World Vision promotes public policy initiatives and legislation 
that advance efficient food security and nutrition programming. As 
Congress works on the Agricultural Act of 2018, World Vision urges the 
enactment of the following policy recommendations that will further 
ensure the greatest number of beneficiaries are reached in an 
effective, efficient, and culturally-sensitive manner.
Improving Food Assistance Programs in the Farm Bill of 2018

   Support and advance the increased use of various food 
        assistance modalities including cash, food vouchers, food 
        commodities, and local and regional procurement in Food for 
        Peace and McGovern-Dole Food for Education.

     Considering the estimated 70 million people across 45 
            countries in need of emergency food assistance during 2017, 
            World Vision recommends lowering or eliminating the current 
            requirement that mandates 100 percent of food aid be grown 
            in the United States, additional modalities can be used 
            including locally and regionally procured (LRP) 
            commodities, vouchers, and cash transfers--whichever is the 
            most efficient option.

     An initial LRP pilot project conducted by USDA through 
            the 2008 Farm Bill found that use of LRP commodities allows 
            the U.S. to feed more people quicker and at a lower cost. 
            Additionally, as described above, the LRP program in 
            Mozambique is encouraging local governments to assume 
            responsibility for school lunch programs, while also 
            building the capacity of local farmers. We anticipate the 
            government will be better able to take the program over 
            when funding of the grant ends, ensuring the sustainability 
            of the initial gains achieved.

   Provide discretion to food aid implementers on the use of 
        various food aid modalities.

     While a range of various food assistance modalities 
            exist, there is no ``right'' intervention. In consultation 
            with donors, World Vision believes implementers, who often 
            have the most adequate and up to date knowledge on current 
            conditions, should have discretion over the type(s) of 
            modalities used in its food aid programming.

     Before selecting a modality/modalities to be used in 
            food aid programming, a comparison of all options should be 
            considered and evaluated based on the following factors: 
            appropriateness based on market conditions, feasibility and 
            likelihood of success, objectives of the program, and the 
            overall cost of the intervention.

     World Visions supports and uses U.S. grown commodities 
            in its food aid programs when local markets are not 
            functioning or there is insufficient food available to meet 
            the local food need. When local market conditions are 
            favorable and adequate quantities of food are available, 
            local commodities can be purchased and then used in country 
            or regional response efforts. We also utilize cash 
            transfers which allow qualifying beneficiaries to purchase 
            food and other household items in local markets and 
            vouchers as a form of cash based transfers that are used 
            when there is a perceived risk of transferring cash or if 
            there is a need to ensure people receive a specific type of 
            food.

   Eliminate the minimum monetization requirement and support 
        use of the Community Development Fund and 202[(]e[)] funding 
        within Food for Peace non-emergency, development programs.

     Under current U.S. law, at least 15% of non-emergency 
            food aid funding must be made available to qualifying 
            nongovernmental organizations (NGOs) for monetization.

     Due to costs associated with monetization, including 
            current U.S. law that requires using more expensive U.S. 
            cargo ships for transportation of U.S. commodities, World 
            Vision recognizes monetization can often be an ineffective 
            practice.

     Community Development Funds (CDF) are a portion of 
            Development Assistance funding that complement Food for 
            Peace Title II development programming.

     CDF funds should continue be used to support 
            community-level development activities so that title II 
            non-emergency monetization is not undermining other U.S. 
            Government efforts to boost local agriculture production 
            and local markets. This will ensure title II development 
            programs are using U.S. taxpayer money as efficiently as 
            possible to build self-reliance in food-insecure 
            communities.

     The 2014 Farm Bill increased the amount of Food for 
            Peace funding available to 202[(]e[)] allowing USAID to 
            expand the use of these funds to include cash-based food 
            assistance, when appropriate, in recipient countries where 
            a title II program is already operating. World Vision 
            supports both the use of 202[(]e[)] funds, as well as 
            Community Development Funds, allowing our programs to avoid 
            using the costly, and time-consuming process of 
            monetization.

   Eliminate Cargo preference.

     Cargo preference is a law that requires at least 50 
            percent of the gross tonnage of all government generated 
            cargo, meaning food procured, furnished, or financed by the 
            U.S. Government, to be transported on privately owned, 
            U.S.-flag commercial vessels. Often, food aid can be 
            shipped on non-U.S. vessels at much lower rates, resulting 
            in more beneficiaries being served through additional 
            resources being spent on food and not shipping costs. World 
            Vision urges Congress to consider eliminating or reducing 
            the minimum tonnage of food aid to be shipped on U.S. 
            flagged vessels.

   Leverage crisis modifiers in Food for Peace with more 
        frequency and depth to enhance resilience to shocks and protect 
        development gains in agriculture, food security and livelihoods

     USAID has pioneered the use of crisis modifiers to 
            quickly inject emergency funds during crises into existing 
            development programs. These funds allow partners to respond 
            rapidly to address humanitarian needs, reducing livelihood 
            and other development losses.

     Crisis modifiers are agile and respond quickly to 
            changing needs. Emergency food aid is used to reach 
            vulnerable beneficiaries, and once these needs are met, 
            often a return to the original development activities in 
            the area is resumed.

   Further leverage good governance and social accountability 
        programs in Food for Peace and McGovern-Dole Food for Education 
        to empower vulnerable and disadvantaged populations to improve 
        their own food security through more transparent and responsive 
        public and private institutions. World Vision affirms the Food 
        for Peace strategy of focusing on host country government 
        reform which addresses root causes of poverty and food 
        insecurity by helping people hold their own governments 
        accountable to spend U.S. assistance and domestic resources 
        effectively and make it sustainable. The World Vision 
        Development Food Assistance Activity in Bangladesh mentioned 
        earlier illustrates the impact of this critical Food for Peace 
        program component.

     World Vision's Citizen Voice and Action programming 
            has been highlighted above in our Food for Peace 
            programming which serves as an effective model in promoting 
            social accountability and good governance. By facilitating 
            relevant, tangible and high quality civic education on 
            government policies and planning for food security, WV 
            supports civil society with the knowledge and confidence to 
            engage with local government officials on whether and how 
            government programs and policies are effective.

     Through simple but compelling social accountability 
            approaches, World Vision is helping community leaders, 
            farmers, and other stakeholders to identify their key 
            priorities and needs, while facilitating local and national 
            platforms for them to address these priorities directly to 
            key decision makers in government.

     World Vision's evidence-based best practices in this 
            area, addressing root causes and supporting greater self-
            reliance, combined with Food for Peace strategy and 
            practice--both supporting communities to engage directly 
            with their governments over the most fundamental need of 
            food security--are a strategic combination. Social 
            accountability--or citizen-state engagement--is now an 
            `operational model' helping Food for Peace and its partners 
            to achieve better governance and sustainability for food 
            security, including in fragile states. Emerging World 
            Vision research is showing that this work increases state 
            legitimacy in fragile contexts, thus mitigating cycles of 
            ongoing conflict that threaten food security.

   Further invest in development food assistance programming in 
        fragile contexts through Food for Peace.

     Much of the humanitarian need today has been driven by 
            civil wars, instability, and unresolved political disputes 
            including in South Sudan and to some extent in Somalia. By 
            intervening in fragile states before they become failed 
            ones, future famines and food insecurity crises can be 
            averted.

     Implement innovative and flexible approaches to 
            addressing wide-spread extreme poverty and vulnerability, 
            including through adopt multi-year, flexible funding.
Conclusion
    At World Vision, our organization's theme this year is life in all 
its fullness, as Christians, as people of faith we take this prophetic 
call seriously, its central to our mission and all we do.
    World Vision will remain focused and dedicated, alongside many 
partners, in responding to the immediate needs of affected communities 
throughout East Africa and beyond. But the window of opportunity to 
avert a larger catastrophe is rapidly closing. We believe that if 
governments including the U.S., international donors and humanitarian 
actors all act swiftly, we can prevent this crisis from worsening, but 
the time to act is now. If we don't, we will have failed in living out 
our American values, and for many of us, our Christian call to care for 
the least of these.
    We hope that Congress and this Committee will reject the 
Administration's budget proposal related to food aid programming and 
continue to provide strong leadership and advocate for the funding and 
programs that are needed to respond to this crisis. Additionally, we 
stand ready as partners to work with the Committee to make improvements 
to our food aid programs, so that the can better meet the needs of the 
world's most vulnerable populations, while ensuring greater peace and 
stability around the globe. We also urge Members of this Committee to 
demonstrate strong support for the International Affairs Budget as 
discussions around 2018 appropriations begins.
    Thank you for the opportunity to testify today.
                                Appendix
World Vision East Africa Hunger Response Situation Report No. 5
25 May 2017


Key Highlights
   Vulnerable populations in Somalia, southeastern Ethiopia, 
        and northern Kenya continue to face life-threatening acute food 
        insecurity, following delayed and erratic seasonal rains across 
        the Horn of Africa, according to the Famine Early Warning 
        Systems Network (FEWS NET).

   Despite an unprecedented scale-up in donor contributions to 
        address the humanitarian crisis and prevent Famine[*] in 
        Somalia, additional relief assistance is urgently needed. The 
        late onset of seasonal rains, increased malnutrition levels, 
        and the ongoing cholera outbreak--all of which are compounded 
        by humanitarian access constraints--are immediate challenges to 
        be addressed.
---------------------------------------------------------------------------
    *Famine: `A catastrophic food shortage affecting large numbers of 
people due to climatic, environmental and socioeconomic reasons,' UN 
DHA, Glossary of Humanitarian Terms, 2008.

   Severe drought has dried up water resources in half of 
        Kenya's 47 counties. An estimated three million people lack 
        access to clean water. Hygiene promotion activities and the 
        rehabilitation of water points, boreholes and water trucks are 
        urgently required, including in schools and health clinics. 
        Poor sanitation and shortage of safe drinking water is leading 
        to an increase of waterborne diseases, especially among 
---------------------------------------------------------------------------
        children under age 5.

   5.5 million people in South Sudan are severely food-
        insecure. The onset of the rains has added a set of natural 
        barriers, making it difficult to reach people in need of 
        assistance. The total number of people in need of humanitarian 
        and protection services is 7.5 million.

   World Vision has received 37 percent of its desired funding 
        of an appeal for $110 million USD. While this money has enabled 
        a response to some of the most affected communities, the need 
        is far much greater and urgent. The unmet sum of over $69 
        million USD is urgently needed to scale up humanitarian 
        assistance in the four countries. Kenya remains the lowest 
        funded at 0.04 percent.
Situation Highlights


                  25M are in crisis and need humanitarian assistance.
                
                
                  $110.3M[**] required for humanitarian assistance.
---------------------------------------------------------------------------
    [**]All financial figures in U.S. dollars.
    
    
                  3.5M children under 5 are acutely malnourished.
                
                
                  844,900 children are severely malnourished.
                
                
                  14.4M people require health assistance.
Humanitarian Situation Overview
    Ethiopia: Humanitarian requirements have increased with at least 
2.2 million people needing food assistance, in addition to the 5.6 
million relief food beneficiaries identified at the beginning of the 
year. A scaled-up response is critical in curbing the spread of an 
Acute Watery Diarrhoea (AWD) outbreak within Somali and other at-risk 
regions. The region is the worst affected by the current outbreak of 
AWD, accounting for 91 per cent of the reported cases.
    Kenya: More than 2.6 million Kenyans are severely food-insecure and 
this number is rapidly rising. Many pastoralist households are 
experiencing crisis levels of acute food insecurity (IPC Phase 3). 
During the lean season (July to September) many families will 
experience emergency acute food insecurity (IPC Phase 4), just one step 
away from famine. High levels of malnutrition are also prevalent across 
the arid and semi-arid lands. Three sub-counties report Global Acute 
Malnutrition rates of 30 percent, double the emergency threshold. An 
estimated 553,000 children under age 5 and pregnant and lactating women 
will require Blanket Supplementary Feeding in five counties over the 
next 6 months.
    Somalia: The humanitarian situation continues to deteriorate and 
the possibility of famine in 2017 persists. Acute malnutrition is on 
the rise across the country, increasing the risk of diseases. UNICEF 
projects that over 275,000 children face or will suffer life-
threatening severe acute malnutrition in 2017. Major disease outbreaks 
such as AWD/cholera and measles are spreading.
    South Sudan: South Sudan is the world's fastest growing refugee 
crisis. Among those seeking safety in Uganda, Sudan, Ethiopia, Kenya, 
the Democratic Republic of the Congo (DRC) and the Central African 
Republic (CAR) are around one million children. According to the latest 
report from OCHA, 1.9 million people are internally displaced while 1.7 
million South Sudanese refugees are living in foreign countries.
What World Vision Is Doing
Ethiopia


    392,130 people reached with livelihood assistance.


    84,510 people reached with health and nutrition services.


    75,400 people reached with WASH services.


    138,220 people reached with direct food assistance.
Kenya


    202,680 people reached with livelihood assistance.


    2,940 people reached with health and nutrition services.


    8,580 children reached with protection and education assistance.


    21,500 people reached with WASH services.
Somalia


    57,645 people reached with livelihood and food assistance.


    100,020 people reached with health and nutrition services.


    1,380 people reached with protection and education services.


    175,700 people reached with WASH services.
South Sudan


    187,590 people reached with livelihood and food assistance.


    83,625 people reached with health and nutrition services.


    28,750 people reached with education and protection services.


    167,500 people reached with WASH services.
People In Need of Assistance


                  2.7 million people targeted for humanitarian 
                assistance.
                
                
                  >1.5 million people reached with humanitarian 
                assistance.
Response Highlights


                  840,045 people reached with livelihood and direct 
                food assistance.
                
                
                  271,095 people reached with health and nutrition 
                services.
                
                
                  440,100 people reached with water, sanitation and 
                hygiene.
                
                
                  38,710 children reached with child protection and 
                education interventions.
                
                
                  30,034 people reached with shelter and non food items 
                interventions.
Gaps and Funding Requirements
(in millions U.S.$)


          110.3M required for hunger crisis response.
        
        
World Vision Humanitarian Donors and Partners


Primary Contact Information
  Christopher M. Hoffman,
  Regional Humanitarian and Emergency Affairs Director.
  E-mail: [email protected].
  Skype: chrishoffmandrm.

  Khary Dickerson,
  Regional Resource Development Director.
  E-mail: [email protected].
  Skype: mansa31.

  Mark Nonkes,
  Response Communication Manager.
  E-mail: [email protected].
  Skype: marknonkes.

    The Chairman. The gentlelady's time has expired.
    Ms. Salem, 5 minutes.

STATEMENT OF NAVYN SALEM, FOUNDER AND CHIEF EXECUTIVE OFFICER, 
                   EDESIA INC., KINGSTOWN, RI

    Ms. Salem. Thank you, Chairman Conaway, Ranking Member 
Peterson, and the Members of the Committee.
    My name is Navyn Salem, and I am the Founder and CEO of 
Edesia, a social enterprise on a mission to treat and prevent 
malnutrition for the world's most vulnerable populations.
    From my office in North Kingstown, Rhode Island, I can look 
out and see thousands of boxes run on conveyor belts outside my 
office on the factory floor with a familiar USAID logo and a 
message from the American people. This message, which my team 
of 70 has helped spread to 50 countries, holds real meaning. 
Inside this miracle food packet, next time, I will provide 
napkins, includes peanuts from Texas and Georgia; milk powder 
from Pennsylvania, New York, Indiana, and Michigan; vegetable 
oil from Kentucky and Maryland; vitamins and minerals from 
Illinois and New Jersey. What the American farmers and ranchers 
sow and reap, what the American plants have processed with 
utmost regard for quality is carried across state lines from 
hard-working American truckers to my factory in Rhode Island so 
that my team can take every ingredient and turn it into an 
alchemy of lifesaving, ready-to-use therapeutic food, or RUTF, 
that has the power to save lives.
    Allow me to share a brief story with you. A year ago, I was 
in a health clinic in rural Liberia passing by mothers sitting 
on wooden benches waiting their turn to see the doctor. The 
Ebola outbreak had just ended, and a semi-sense of normalcy was 
returning. A young mother entered the clinic with a baby so 
small I thought she wasn't real. I pulled her out of a long 
line of patients waiting to be checked by healthcare workers 
and placed her on a scale. She was 7 months old, and she 
weighed 7 pounds. This is the same weight as my daughter, Mia, 
was the day she was born. The little girl's name was Surprice, 
and she was quickly diagnosed with severe, acute malnutrition. 
Someone in her condition is too malnourished to be treated with 
basic foods. I handed her this RUTF packet with the USAID logo 
on it. After a few bites, everyone in clinic watched her perk 
up right before our eyes. And it was that miracle that I have 
witnessed so many times in rural clinics all over Africa.
    With a solution so simple this little girl was given life 
and renewed hope. And thanks to the combined efforts of 
American farmers, manufacturers, transporters, Edesia, and 
USAID, she may just grow up to be one of Liberia's next 
leaders.
    I am not the typical face of a nonprofit. I solve problems 
through business and set goals that are sustainable, 
measurable, and scalable. I run a world-class, advanced 
manufacturing, state-of-the-art, 83,000\2\ plant that creates 
jobs. We are laser focused on innovation and determined to save 
the lives of those suffering from malnutrition. We have 
purchased over a hundred million dollars of agricultural 
commodities from 15 states. We are the largest international 
exporter in our state. My team is busy working 24 hours a day 
to make life possible.
    Since 2010, these collective efforts have helped reach over 
five million malnourished children in partnership with the 
USDA, USAID, UNICEF, and the World Food Programme, agencies 
which heroically deliver this critical food aid and assistance 
in some of the hardest to reach, most inhospitable places on 
Earth.
    It was this week 70 years ago, June 5, 1947, that George 
Marshall delivered a powerful speech. He said: ``Our policy is 
directed not against any country or doctrine, but against 
hunger, poverty, desperation, and chaos. Hunger and insecurity 
are the worst enemies of peace.'' His words rang true, and they 
ring ever true now. After World War II, it was France, Italy, 
Germany that suffered from drought and extreme hunger. Today, 
as we gather for this hearing, catastrophic famines are looming 
in Yemen, Somalia, South Sudan, and Nigeria. Extreme hunger and 
malnutrition threaten the stability and nations of our world.
    If we want to fight terrorism, feeding people is one of the 
most effective tools that we have to spread peace and 
stability. Products like RUTF not only save lives, but they 
build the brain trust of the next generation so that these 
children have the tools to study in school, to become 
productive members of their community, and to be our collective 
future. When I see a box of RUTF from Rhode Island sitting in a 
dusty clinic in Liberia, I am proud. I am proud because it 
reflects the best of American agriculture, manufacturing, and 
ingenuity. We in this room hold the power to continue this 
heroic work, which for millions of malnourished children is a 
matter of life and death. With strong, decisive leadership, you 
as Representatives of the American people, can show the world 
that there is no smarter way to put America first than by 
helping to feed the world's most vulnerable populations.
    I urge you, Members of this distinguished Agriculture 
Committee, to do everything in your legislative power to 
safeguard international food aid, including Food for Peace 
Title II Program. It is a true and meaningful gift from the 
American people.
    [The prepared statement of Ms. Salem follows:]

Prepared Statement of Navyn Salem, Founder and Chief Executive Officer, 
                       Edesia Inc., Kingstown, RI
Introduction
    As the Founder and CEO of Edesia and a private citizen, I 
appreciate the opportunity to submit testimony to the United States 
Agriculture Committee Hearing for the Next Farm Bill: The Future of 
International Food Aid and Agriculture Development. I would like to 
thank the Members of this Committee for their commitment to food 
security and agricultural development, both here and abroad. The robust 
U.S. agricultural supply chain and food aid programs make businesses 
like mine, and the impact they make, possible. Edesia\1\ is a Rhode 
Island-based nonprofit social enterprise and manufacturer that works in 
partnership with the U.S. Government to promote global stability and 
national security for America by supplying evidence-based, lifesaving 
nutritional support to vulnerable children worldwide. International 
Food Aid is a critical part of the U.S. economy and an important tool 
for our national security--it is an America first policy.
---------------------------------------------------------------------------
    \1\https://www.edesianutrition.org/.
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    Let me begin by sharing a story with you that I believe well 
illustrates why I am here and why your continued commitment to food 
security and agriculture development is so critical to creating a world 
of hope and security for all Americans. A year ago I was in a health 
clinic in rural Liberia, passing by mothers sitting on wooden benches 
waiting their turn to see the doctor. The Ebola virus outbreak had just 
ended and a semi-sense of normalcy was returning. A young mother 
entered the clinic with a baby so small I thought she wasn't real.
    I pulled her out of the long line of patients waiting to be checked 
by the healthcare worker. The little girl's name was Surprice. I 
unbundled her from her mother's back and placed her on the scale. She 
was 7 months old and weighed only 7 pounds, the same weight as my 
daughter was at birth.
    Surprice had severe acute malnutrition. I handed her a packet of 
ready-to-use therapeutic food, commonly known as Plumpy'Nut, a 
lifesaving and revolutionary fortified peanut paste, specifically 
designed to treat severely malnourished children, that does not require 
refrigeration or the addition of water. It can reach the most remote 
villages because of its 2 year shelf life and its simplicity allows 
mothers to treat their children at home, freeing up critical hospital 
beds and healthcare resources.
    The foil packet I gave to Surprice was marked with the USAID logo 
and the message ``Gift of the American People.'' Those were not empty 
words. They held real meaning. Inside were peanuts from Texas and 
Georgia, milk powder from Pennsylvania, New York, Indiana, and 
Michigan. Vegetable oils from Kentucky and Maryland. Vitamins and 
minerals made in Illinois and New Jersey. What the American farmers had 
sewn and reaped and what the American processing facilities had 
processed with utmost regard for quality, was carried across state 
lines by hardworking American truckers to the Rhode Island factory so 
that my team of 70 could turn every ingredient into an alchemy of 
lifesaving ready-to-use therapeutic food--so that this one little girl 
in Liberia could have her chance at life. After a few bites of the 
fortified peanut paste, Surprice started to perk up and breathe easier 
right before our eyes. We no longer felt so worried because we knew 
this little girl was going to make it.


    That is what we do at Edesia. With the help of American farmers, 
manufacturers, and transporters, we strengthen the fabric of our world 
one malnourished child at a time. There are 28 million pounds of 
American agricultural products that go into our lifesaving efforts each 
year. Through our work, we have infused well over $100 million dollars 
into the U.S. economy.
Edesia and Our Products
    Millions of children throughout Africa, Asia, Latin America, and 
the Middle East are dying needlessly from severe acute malnutrition--a 
completely preventable condition caused by a lack of adequate nutrients 
in the diet--and this crisis is having an immediate and lasting adverse 
impact on the stability of entire regions. The reality of something so 
unimaginable in this day and age was what led me to start Edesia to 
tackle this problem while creating jobs for my state and throughout the 
supply chain.
    Since our first USAID grant helped Edesia launch operations in 
2010, we have manufactured enough lifesaving peanut-based ready-to-use 
therapeutic and supplementary foods to help reach over five million 
malnourished children in 50 countries in partnership with USAID/USDA 
along with UNICEF and the World Food Programme, whose every day heroic 
efforts to deliver aid and assistance in some of the hardest-to-reach, 
most inhospitable places on our planet mostly go unsung.
    In any given year on our planet there are over 35 million children 
throughout Africa, Asia, Latin America, and the Middle East quietly 
suffering from some form of acute malnutrition that will either rob 
them of life or of their true potential. They desperately need 
innovative solutions, including the kind of evidence-based, ready-to-
use therapeutic and supplementary foods we make in our factory. Only 
20% of that need is being met, not due to lack of capacity, but due to 
lack of funds and adequate programming.
GDP, Emerging Markets, and Global Security
    The World Bank estimates that malnutrition reduces the GDP of 
countries by as much as ten percent. This is not why we help save 
lives, but the productivity increase is certainly a critical part of 
what we do. Higher GDP leads to stronger markets for American products. 
High-income countries are the biggest consumers of America's high-value 
agricultural and food products, but demand is increasing at a robust 
16% pace in lower-middle-income and low-income countries.\2\
---------------------------------------------------------------------------
    \2\Andrea Durkin. March 2017. Growing Markets, Growing Incomes: 
Leveraging Trade Facilitation for Farmers. Chicago Council on Global 
Affairs. https://www.thechicagocouncil.org/sites/default/files/
leveraging_trade_facilitation_farmers_march17.pdf.
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    While rising global economies expand markets for American goods; 
hunger, food insecurity, and malnutrition are concurrently linked to 
violence, conflict, migratory activities, and potentially 
radicalization leading to political instability that ultimately affects 
the United States.\3\ Ending malnutrition is fundamental to fighting 
terrorism. A healthy, well-nourished child stays in school, stays out 
of the clinic and out of trouble, and gives back to his or her family, 
community, and world in significant and positive ways.
---------------------------------------------------------------------------
    \3\Cullen S. Hendrix. April 2016. When Hunger Strikes: How Food 
Security Abroad Matters for National Security at Home. Chicago Council 
on Global Affairs. https://www.thechicagocouncil.org/sites/default/
files/Report_When_Hunger_Strikes_1604.pdf.
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    In a February 2017 letter, 120 retired military generals, from all 
branches of the armed forces, wrote to Congressional leadership in 
support of diplomacy and international aid and development.\4\ They 
spoke out strongly that military inventions are not enough to confront 
the crisis facing our nation and that the best way to keep our 
military's men and women out of harm's way is to support stability in 
vulnerable regions abroad.
---------------------------------------------------------------------------
    \4\http://www.usglc.org/downloads/2017/02/
FY18_International_Affairs_Budget_House_
Senate.pdf.
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Edesia-U.S. Government Partnerships
    In 2010, Congress allocated $10 million to USDA's Foreign 
Agriculture Services for a Micronutrient-Fortified Food Aid Pilot 
Program (MFFAPP) intended to work with the public and private-sector to 
develop new nutritional products. Edesia partnered with the National 
Soybean Research Lab and a food factory in Haiti to develop a 
specialized food for school children who otherwise did not have access 
to hot lunch due to lack of water or cooking facilities.
    USAID commissioned Tufts University in 2011 to evaluate how to 
improve upon the nutritional aspects of their food aid baskets through 
the Food Aid Quality Review.\5\ They found that putting nutrition at 
the heart of the food aid agenda enhanced the impact and credibility of 
USAID title II programming. This included an emphasis on products that 
are ``fit-for-purpose,'' such as ready-to-use foods and fortified 
blended foods (ex: corn-soy blend) for the treatment and prevention of 
malnutrition, in addition to the standard bulk commodities that are 
required to feed the general population during times of need. While 
these enhanced nutritional products may be costlier per pound, their 
positive impact on specific measurable nutrition outcomes that add to 
the resilience of communities makes them a smart investment with a high 
rate of return.
---------------------------------------------------------------------------
    \5\Webb, Patrick, Beatrice Lorge Rogers, Irwin Rosenberg, Nina 
Schlossman, Christine Wanke, Jack Bagriansky, Kate Sadler, Quentin 
Johnson, Jessica Tilahun, Amelia Reese Masterson, Anuradha Narayan. 
2011. Improving the Nutritional Quality of U.S. Food Aid: 
Recommendations for Changes to Products and Programs. Boston, MA: Tufts 
University.
---------------------------------------------------------------------------
    Edesia has since 2010 participated in the farm bill-authorized, 
International Food Relief Partnership (IFRP) program. This program 
provides shelf-stable products to predominately faith-based groups 
assisting especially vulnerable populations. In this climate of 
austerity, we ask the Members of the House Agriculture Committee to 
protect these vital programs in next farm bill.
President's Budget and National Security
    While not a directly in the scope of this Committee, I wanted to 
take the opportunity to address the President's proposed budget. The 
White House budget proposal that requests removal of funding from Title 
II Food Aid of the Agricultural Trade Development and Assistance Act of 
1954 (Public Law 83-480) is in opposition to the humanitarian nature of 
the American people and will result in job losses here in America. We 
can be both America First and responsible global citizens. Financial 
contributions generously provided by the American people and authorized 
by Congress support the critical work the humanitarian sector and 
government are doing, through Food for Peace, to further America's 
mission abroad.
    The world is currently in the midst of the worst cluster of 
humanitarian disasters in recent memory, putting over 20 million people 
at risk. With a famine declared in South Sudan and Somalia, Nigeria, 
and Yemen headed in the same direction, on top of the ongoing conflict 
and crisis in Syria, continued financial support of food aid and 
humanitarian assistance, and strong leadership from the United States 
is needed now more than ever. We saw support from Congress for the FY 
2017 budget, and we hope to see that support continue in the budget for 
FY 2018 and with the reauthorization of the 2018 Farm Bill. 
Humanitarian aid is good for recipients, as well as the citizens of the 
United States, as it provides both jobs and economic development here, 
future trading partners abroad, and improved global security.
    Hunger has the power to threaten the stability of nations. After 
WWII, it was France, Germany, and Italy that suffered from drought and 
extreme hunger. Today it is Yemen, Somalia, and Nigeria where terrorism 
grows amid hunger. If our goal is to fight terrorism, then feeding 
people is one of the most effective tools we have to spread peace and 
stability and thereby keeping U.S. national security interests at the 
forefront of our agenda.
    For decades, humanitarian aid and food aid have garnered bipartisan 
support from Congress and the White House. It was this week 70 years 
ago that George Marshall delivered a powerful speech. He said, ``Our 
policy is directed not against any country or doctrine but against 
hunger, poverty, desperation and chaos. Hunger and insecurity are the 
worst enemies of peace.''
    His words rang true then and they ring ever true now. With global 
food insecurity at all-time high levels--the highest since World War 
II--this is nowhere near the time to pull away from the American 
tradition of compassion and striving toward a better world for all. 
Ending malnutrition is how the world gets stronger, safer, and more 
resilient.
Conclusion
    As the CEO of a U.S. social enterprise, I solve problems through 
business in ways that are sustainable, scalable, and measurable. Edesia 
creates jobs, is laser-focused on innovation and determined to save the 
lives of those suffering from the deadly consequences of conflict, 
drought, and natural disasters. For over 70 years, humanitarian aid and 
food aid have garnered bipartisan support from Congress and the White 
House, who understood not only the moral imperative of these actions, 
but also the important national security benefits and the increased 
economic opportunities that are created for our farmers, manufacturers, 
and transporters. We, as Americans, need to continue demonstrating 
strong, decisive leadership in this area and show the world that 
Americans do not turn their back on human suffering.
    A failure to act now could lead to not only an increase in hunger 
and malnutrition but also to greater worldwide instability and 
insecurity that will cost us far more in the future. With strong U.S. 
leadership, we can consolidate the gains made in the past decade and 
accelerate progress toward the elimination of extreme hunger and 
malnutrition, to benefit both the United States as well as the world, 
especially its most vulnerable people.
    Members of this distinguished Committee, I urge you to do 
everything within your legislative power to safeguard and shield the 
funding that, as a true and meaningful gift of the American people, is 
powerfully helping American farmers, manufacturers, and transporters 
put food on their tables while it also does the critical work of 
healing the wounds of our world that so desperately need mending.
    In summary, we ask that this Committee preserve the positive 
benefits of international food aid through:

   Authorizing a farm bill that includes Food for Peace and 
        McGovern-Dole.

   Acknowledging that science-based, high-impact commodities 
        hold a crucial place in food aid, in addition to staple 
        commodities.

   Maintaining fit-for-purpose products, like ready-to-use 
        foods and fortified blended flours, that effectively treat 
        malnutrition in vulnerable populations.

   Continuing to support research that positions the U.S. as a 
        leader in innovative products and advanced manufacturing.

    Thank you again for providing me the opportunity to testify, and 
thank you for holding this hearing--the support and involvement of the 
agricultural community has been and will continue to be crucial in 
keeping these important programs running. Please do not hesitate to 
contact me if the Committee has any questions or would like further 
information as you continue the 2018 Farm Bill process.
Edesia's New State-of-the Art 83,000\2\ Factory


Edesia Uses 100% American Commodities


Boxes of RUTF Ready-To-Ship to Somalia


Box of USAID Procured RUTF in Liberia Clinic


Before and After Treatment With Ready-To-Use Therapeutic Food


Edesia's Procurement 2017--by U.S. State


Edesia's Agricultural Procurement 2017



    The Chairman. Thank you, ma'am.
    Mr. Schoeneman, 5 minutes.

     STATEMENT OF BRIAN W. SCHOENEMAN, J.D., POLITICAL AND 
LEGISLATIVE DIRECTOR, SEAFARERS INTERNATIONAL UNION (AFL-CIO), 
          WASHINGTON, D.C.; ON BEHALF OF USA MARITIME

    Mr. Schoeneman. Thank you, Chairman Conaway, Ranking Member 
Peterson, and Members of the Committee, for allowing me the 
opportunity to testify before you today. My name is Brian 
Schoeneman, Legislative Director for the Seafarers 
International Union, AFL-CIO. I am here today representing USA 
Maritime, a coalition of American vessel owners and operators, 
trade associations, and maritime labor.
    President Trump announced in his inaugural address his 
Administration would adopt an America first policy following 
two simple rules: Buy American and Hire American. Those words 
resonated deeply for those of us in America's maritime 
industry, whether it was striking the first blow for 
independence on the high seas in 1775, braving German torpedoes 
in 1942, or Somali pirates in 2009, or even the natural dangers 
of the sea each and every day, America's merchant mariners, 
some of whom are with us in the audience today, have always 
answered our nation's call to bring supplies to our soldiers, 
commerce to our partners, and food, like Navyn talked about, to 
hungry people.
    America's humanitarian aid programs have always put America 
first. From the beginning, these programs represented the best 
ideals America had to offer. American food, grown in American 
soil and harvested by American farmers, is shipped through 
American ports on vessels crewed by American mariners to feed 
millions of hungry people, all through the generosity of the 
American taxpayer. This partnership has kept these programs 
strong for over 60 years.
    Yet, despite that strength, for the last decade or more, 
these programs have been subjected to a protracted campaign to 
eliminate the very thing that has made them so successful: 
Americans.
    USAID, along with foreign think tanks and their fellow 
travelers, have done everything in their power to take America 
out of American food aid. Well, everything except American 
money. Claiming the need for added flexibility and efficiency, 
these so-called food aid reformers have twisted these programs. 
Not so long ago, the single biggest cost in the P.L. 83-480 
Food for Peace Program was food. Today, according to the GAO, 
food and ocean transport represent slightly more than \1/3\ of 
the total outlays for P.L. 83-480. Added flexibility has 
resulted in less food aid and more cash giveaways, food 
vouchers, and foreign commodity purchases, all using money 
intended for buying and shipping American food. This is wrong. 
Congress should put an end to it.
    I can't put it any plainer than this: Food aid is essential 
to the American merchant marine. It is one of the largest 
sources of cargo for our fleet today. We have seen what happens 
when we lose that cargo. In 2012, Congress reduced the 
percentage of food aid reserved for American flag ships from 75 
percent to 50 percent. At the same time, USAID has been 
diverting money away from the purchase and shipment of U.S. 
commodities. The direct result has been the loss of 25 ships, 
that is the equivalent of \1/4\ of our fleet, since 2011. But 
more important than the ships, which are easily replaceable, 
you give me enough money, I will buy you a ship today, is the 
loss of jobs. These losses represent the equivalent of over 
2,400 seafaring jobs. America depends on its merchant marine to 
support our warfighters overseas. And without a merchant 
marine, we would be held hostage to foreign interests in any 
future conflict.
    The same can be said for our foreign commerce. Our merchant 
mariners are a vital national and economic security asset. And 
food aid and cargo preference help keep those mariners working 
in peace time so that they are available in wartime. Without 
them, we cannot defend this country. It is that simple.
    The men and women you see with me today are apprentices 
from the Paul Hall Center for Maritime Training and Education, 
Piney Point, Maryland. They are about to embark on a new career 
in the maritime industry. Many of these men and women are 
veterans. All of them are patriots. And all of them, if they 
end up sailing deep sea, at some point, will carry food aid. It 
is inevitable. We owe them a debt of gratitude for their 
service, not the casual slander we often see in food aid reform 
debates. Just yesterday, a Senate Foreign Relations Committee 
staffer referred to them, to my face, as greedy and deserving 
of no empathy in these conversations; they are merely an 
inefficiency to be removed. He was wrong. These apprentices 
represent the future of the merchant marine and our country, 
and they deserve to be treated with respect, not accused of 
greed or of starving children simply because they want to serve 
their country at sea and get paid a living wage to do it.
    American farmers and mariners have been the backbone of 
advocacy in support of these humanitarian aid programs for 
years. We have long warned that cutting us out of these 
programs would lead eventually to their repeal. And what has 
happened? For the first time in history, the President of the 
United States is openly calling for the elimination of Food for 
Peace and McGovern-Dole. This would be a disaster for America's 
farmers and mariners and for hundreds of thousands, millions of 
people, hungry people, around the world. The next farm bill, 
you all should reject the calls for elimination of these 
programs and return them to their America first roots. Congress 
should roll back the added flexibility USAID has abused. It 
should consider whether USAID is even the most appropriate 
agency to continue implementation of these programs.
    The USDA has run these programs for many years, and we were 
very pleased with our support from them. And we would love to 
see these programs back in the USDA. I would like to thank you 
all for allowing me to speak before you. I am happy to answer 
any of your questions.
    [The prepared statement of Mr. Schoeneman follows:]

    Prepared Statement of Brian W. Schoeneman, J.D., Political and 
    Legislative Director, Seafarers International Union (AFL-CIO), 
              Washington, D.C.; on Behalf of USA Maritime
    Good morning, Chairman Conaway, Ranking Member Peterson, and 
Members of the Committee.
    I thank you for conducting this hearing and for giving me the 
opportunity to testify. I would also be remiss if I did not thank all 
of you for your continued support of the U.S. Merchant Marine, the 
American farmers, and our international food aid programs. I am 
testifying today on behalf of USA Maritime. USA Maritime includes 
American vessel owners and operators, trade associations, and maritime 
labor, and is committed to ensuring that the United States Merchant 
Marine continues to sail, protecting America by supporting our 
warfighters, enhancing our economy through trade, and providing good-
paying jobs to tens of thousands of Americans across our country. USA 
Maritime stands to ensure that we, as a nation, are not soon wholly 
dependent upon foreign interests to connect our economy to the world.
    President Trump announced in his inaugural address that ``a new 
vision will govern our land. From this moment on, it's going to be 
America First.''\1\ The President announced his desire that his new 
Administration ``follow two simple rules: Buy American and hire 
American.''\2\
---------------------------------------------------------------------------
    \1\President Donald J. Trump, Inaugural Address (Jan. 20, 2017).
    \2\Id.
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    For the United States Merchant Marine, these are words that 
resonate deeply. The men and women of the United States Merchant Marine 
have been putting America first for our entire existence. It was 
American merchant mariners, angered by British threats to bombard 
Machias, Maine, for no other reason than the residents were unwilling 
to load a cargo of lumber destined to be turned into British barracks 
in Boston, who struck the first blow for American liberty and 
independence on the high seas in 1775.\3\ Fully a year before the 
Declaration of Independence, these Merchant Mariners risked their lives 
to defend what would become the United States of America.
---------------------------------------------------------------------------
    \3\See generally, 1 Gardner Weld Allen, A Naval History Of The 
American Revolution 8-10 (1913).
---------------------------------------------------------------------------
    To put it simply--America's mariners have been putting America 
first even before there was an America. Throughout the decades and 
centuries that followed, American mariners would continue to risk their 
lives, braving British men-o-war, Confederate commerce raiders, German 
torpedoes, and the inherent dangers of the high seas to bring supplies 
to our soldiers, commerce to our partners, and food to hungry people 
around the world.
    In peace and war, the United States Merchant Marine has answered 
America's call and we have always put America first. Unfortunately, 
when it comes to America's international food aid programs, too many of 
our colleagues and friends in previous Administrations, and even some 
Members of this House, have signaled they do not agree with this 
approach.
    As the House begins its deliberations on the next farm bill, we 
urge the House Agriculture Committee to ignore the siren calls for 
``greater flexibility'' from the so-called ``food aid reform 
advocates'' who would like to fundamentally change our international 
food aid programs from what they are today--reliable, time-tested, and 
transparent U.S. commodity donation programs--into yet more foreign 
cash giveaway programs that the American people do not support and will 
not continue to fund. In fact, recent polling by Rasmussen indicates 
that 57% of Americans view the level of foreign aid the U.S. Government 
will give in this fiscal year alone as already too much.\4\
---------------------------------------------------------------------------
    \4\Rasmussenreports.com, Most See U.S. Foreign Aid As A Bad Deal 
for America, http://www.rasmussenreports.com/public_content/politics/
general_politics/march_2017/most_see_u_s_
foreign_aid_as_a_bad_deal_for_america (last visited June 1, 2017).
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    What has made America's in-kind food aid programs, including our 
flagship P.L. 83-480 Food for Peace program,\5\ different has been 
these programs' ``America first'' approach to foreign aid.\6\ American 
agricultural commodities, grown in American soil and harvested by 
American farmers, are shipped through American ports on vessels crewed 
by American mariners to feed the hungry people of the world, all as a 
result of the generosity of the American taxpayer. America remains the 
single largest donor of international food assistance, giving over $2.5 
billion in aid annually.\7\
---------------------------------------------------------------------------
    \5\Agricultural Trade Development and Assistance Act of 1954, Pub. 
L. No. 83-480 (1954), amended by the Food, Conservation, and Energy Act 
of 2008, Pub. L. No. 110-246 (2008).
    \6\In Secretary of State Tillerson's recent speech to State 
Department employees, he stated that translating ``America first'' into 
our foreign policy would be America first for national security and 
economic prosperity. No other program under State's control translates 
this vision like Food for Peace. Remarks of Rex. W. Tillerson, U.S. 
Secretary of State (May 3, 2017), available at https://www.state.gov/
secretary/remarks/2017/05/270620.htm.
    \7\U.S. Gov't Accountability Office, GAO-17-224, International Food 
Assistance: USAID Has Controls for Implementation and Support Costs But 
Should Strengthen Financial Oversight 1 (2017). [hereinafter 2017 GAO 
Report].
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    Over \1/2\ of that, roughly $1.5 billion, is funded through the 
Food for Peace program.\8\ Food for Peace is overseen by the United 
States Agency for International Development (USAID), while the Food for 
Progress\9\ and McGovern-Dole\10\ programs are overseen by the United 
States Department of Agriculture (USDA) Foreign Agricultural Service 
(FAS).
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    \8\Id.
    \9\ Food Security Act of 1985, Pub. L. No. 99-198, Title XI, 1110, 
99 Stat. 1354, codified as amended at 7 U.S.C. 1736o (2017).
    \10\Farm Security and Rural Investment Act of 2002, Pub. L. No. 
107-171, Title III, 3107, 116 Stat. 295, codified as amended at 7 
U.S.C. 1736o-1 (2017).
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    Under America's cargo preference laws,\11\ at least \1/2\ of all 
civilian agency cargoes, including title II commodities, must be 
shipped on U.S.-Flag vessels. These laws make up a critical part of the 
Federal Government's mix of laws and programs designed to ensure that 
the United States maintains a merchant marine capable of carrying a 
portion of our waterborne commerce. This has been the official policy 
of the Federal Government since 1936,\12\ but it has long been a 
cornerstone of American national defense.
---------------------------------------------------------------------------
    \11\See Military Cargo Preference Act of 1904, as codified at 10 
U.S.C. 2631 (2017), and Cargo Preference Act of 1954, as codified at 
46 U.S.C. 55305 (2017).
    \12\See Merchant Marine Act of 1946, 46 U.S.C. 50101 (2017).
---------------------------------------------------------------------------
    Thanks to the strong domestic constituency that supports Food for 
Peace--America's farmers, mariners, and the private voluntary 
organizations that oversee implementation of these programs in various 
countries around the globe--this program has enjoyed strong and 
consistent support in Congress and in past Administrations. For more 
than 60 years, this domestic support has shielded Food for Peace from 
harsh spending cuts and efforts to significantly change the program.
    Despite our best efforts, however, the ``food aid reform'' 
community has been moderately successful in its efforts to undermine 
the simple formula that has made Food for Peace a success for over 60 
years--sending American food overseas on U.S.-Flag vessels. Knowing it 
could not essentially change a popular program that continues to work 
as it was intended, it has adopted a ``death by a thousand cuts'' 
strategy, diverting more and more funding away from the core mission of 
the program in the name of ``flexibility'' that already exists in other 
Department of State programs under the Foreign Assistance Act or Global 
Food Security Act.
    For example, the 2014 Farm Bill again increased funds that can be 
diverted for ``Section 202(e)'' administrative and overhead costs.\13\ 
USAID took that expanded authority and used it primarily to fund cash, 
voucher, and foreign commodity purchase programs.\14\ This has led to a 
major increase in these administrative and overhead costs within the 
Title II Food for Peace program. In FY 2011, 202(e) costs were 
approximately $180.7 million.\15\ In FY 2015, 202(e) rose sharply, to 
$288.5 million, a 62% increase in less than 5 years.\16\ At the same 
time that USAID is using 202(e) administrative funds to support these 
cash and voucher projects, it is diverting massive amounts of funding 
away from U.S. commodity purchases to ``internal transport shipping and 
handling'' (ITSH) accounts and using these funds to support cash, 
voucher, and foreign commodity purchase programs contrary to the 
requirements of the Food for Peace Act.\17\ Further, GAO found that 
USAID has failed to collect detailed information such as receipts or 
other documentation to determine where all of this 202(e) and ITSH 
funding is even going.\18\ As GAO noted: ``Cash transfers and food 
vouchers are associated with different risks than U.S. in-kind food 
assistance, such as risks related to the potential diversion of cash, 
counterfeiting of food vouchers, and diversion of food voucher 
reimbursement funds.''\19\
---------------------------------------------------------------------------
    \13\2017 GAO Report at 6.
    \14\Id. at 12, noting that ``[o]bligations of 202(e) funding for 
cash transfers, food vouchers, and local and regional procurement in 
Fiscal Years 2014 and 2015 constituted 75 percent and 96 percent, 
respectively, of the additional authorized 202(e) funding that the 
agency utilized for those years.''
    \15\ See Hearing on Agriculture, Rural Development, Food and Drug 
Administration, and Related Agencies Appropriations for 2016 Before the 
Subcomm. On Agriculture, Rural Development, Food and Drug 
Administration and Related Agencies of the H. Comm. on Appropriations, 
114th Cong. 1232-34 (2016). (responses of USAID to written 
interrogatories from Subcommittee Chairman Aderholt).
    \16\Id. at 1232.
    \17\2017 GAO Report at 33-34.
    \18\Id. at 23.
    \19\Id. at 35 n. 59.
---------------------------------------------------------------------------
    Over the 5 year period between FY 2011 and 2015, 202(e) and ITSH 
funding accounted for 44% of all Food for Peace funding, according to 
GAO.\20\ Yet USAID's own submission for the record before the House 
Appropriations Committee indicated that as of 2015, 202(e) and ITSH 
costs, which do not even include ocean shipping costs, now account for 
nearly 60% of all the P.L. 83-480 Title II Food for Peace funding--
close to $800 million of the program's $1.3 billion in outlays.\21\ Of 
the funding appropriated for Food for Peace, only 25% of it, roughly 
$332 million, is used to purchase U.S. commodities and $106 million is 
spent on ocean freight costs, or 8.2% of the total funding outlays for 
Food for Peace.\22\
---------------------------------------------------------------------------
    \20\Id. at 8.
    \21\Supra note 15 at 1234 (FY 2015 data).
    \22\Id. Notably, only approximately \1/2\ of this cargo is 
allocated to U.S.-Flag vessels.
---------------------------------------------------------------------------
    This is where we are today. Food for Peace sees only 35% of its 
funding going to the purchase and ocean shipment of American-grown 
commodities, while almost \2/3\ of the program is spent on nebulous 
administrative costs, cash handouts, vouchers, and foreign commodity 
purchase programs, all of which have other funding mechanisms elsewhere 
within USAID's control. Using the generous but limited flexibility 
Congress gave it in the 2014 Farm Bill, USAID has converted too much of 
Food for Peace from a time-tested, transparent, reliable in- kind 
program that promotes economic development at home, assisting both the 
agriculture and maritime sectors, into a backdoor cash giveaway program 
that GAO has concluded in multiple reports lacks appropriate oversight. 
In light of these failings, and their apparent absence in USDA-run 
programs, now may be the time to consider restoring more authority to 
USDA for overseas humanitarian assistance.
    Maritime industry proponents of Food for Peace have long decried 
the constant watering-down of America's food aid programs, arguing that 
by weakening the use of American-grown in-kind aid shipped on U.S.-Flag 
vessels, the ``food aid reform'' community would damage Food for 
Peace's credibility and domestic popularity.\23\ We are generally 
shouted down by those interests, accused of starving children and 
lining our pockets with U.S. taxpayer dollars.\24\ Our response has 
invariably been that by removing American agriculture and maritime 
interests from Food for Peace, the ``food aid reform'' community would 
be undermining the future stability of these programs by destroying 
their natural domestic constituency, and that eventually they would be 
viewed as unnecessary, unsustainable spending with no domestic benefit. 
That, coupled with the fact that Europe and other nations are lagging 
significantly behind the United States in their humanitarian assistance 
programs,\25\ it would be increasingly difficult to justify to the 
American taxpayer giving away so much money when other nations are not 
paying their fair share.
---------------------------------------------------------------------------
    \23\See generally, Joint Hearing on U.S. International Food Aid 
Programs: Transportation Perspectives Before the Subcomms. on Coast 
Guard and Maritime Transportation of the H. Comm. on Transportation and 
Infrastructure and Livestock and Foreign Agriculture of the H. Comm. on 
Agriculture, 114th Cong. 1 (2015) (statements of Phillip J. Shapiro and 
Brian W. Schoeneman) [hereinafter Joint Food Aid Hearing].
    \24\See, e.g., Reforming Food Aid: Desperate Need to Do Better: 
Hearing Before the H. Comm. on Foreign Affairs, 114th Cong. 5-6 (2015) 
(statement of Christopher B. Barrett, Cornell University). Dr. Barrett 
stated at the hearing that Congressional support for cargo preference 
represented ``the trade [of] 11 or 12 children's lives for a single 
job.''
    \25\2017 GAO Report, supra note 7.
---------------------------------------------------------------------------
    This is exactly what has happened.
    For the first time since the program's creation in 1954, the 
President of the United States has openly advocated for the elimination 
of the Title II Food for Peace program, and the McGovern-Dole program 
along with it.\26\ Using the same argument that the ``food aid reform'' 
community has been making over the years, the President's budget would 
dismantle Food for Peace and McGovern-Dole, indicating that these needs 
could be better met through the International Disaster Assistance (IDA) 
Account--while at the same time calling for cuts to that account.
---------------------------------------------------------------------------
    \26\Office of Mgmt. & Budget, Major Savings and Reforms, Budget of 
the U.S. Government Fiscal Year 2018 73 (2017).
---------------------------------------------------------------------------
    This would be a disaster for America's farmers and mariners, and 
would have a direct, damaging impact on American national security.
    We urge Congress to oppose the elimination of Food for Peace, 
oppose the elimination of McGovern-Dole, and oppose efforts from the 
``food aid reform'' community to fundamentally alter the Title II Food 
for Peace program--a program that still partially continues to work as 
intended, providing economic benefits to American farmers, millers, 
mariners, longshoremen, and transport workers, while ensuring that 
life-saving food makes its way into the hands of needy people across 
the world. Finally, we would urge Congress to review whether USAID is 
the most appropriate agency to continue oversight and implementation of 
these programs, ``given the continued, unresolved lapses GAO has noted, 
and the comparative absence of concerns with USDA's handling of these 
programs throughout most of their history.''
    It is difficult to understate the importance of food aid to the 
United States Merchant Marine. While some in the ``food aid reform'' 
community have attempted to downplay the importance of food aid to the 
maritime industry,\27\ those in the industry understand its critical 
importance as one of the largest sources of government-impelled cargo 
available to U.S.-Flag vessels today. The Maritime Administration 
(MARAD) has made it clear\28\ that changes made to cargo preference in 
the Moving Ahead for Progress in the 21st Century Act of 2013 (MAP-
21),\29\ which reduced the percentage of food aid cargoes reserved for 
the Merchant Marine from 75% to 50%, have reduced the U.S.-Flag 
international fleet from 106 vessels in 2011 to 81 as of May 1, 
2017.\30\
---------------------------------------------------------------------------
    \27\See, e.g., Reforming Food Aid: Desperate Need to Do Better: 
Hearing Before the H. Comm. on Foreign Affairs, 114th Cong. 5-6 (2015) 
(statement of Christopher B. Barrett, Cornell University.
    \28\Joint Food Aid Hearing (statement of Paul N. Jaenichen, 
Administrator, Maritime Administration, U.S. Department of 
Transportation). Administrator Jaenichen testified that the U.S.-Flag 
international fleet declined from 106 to 78 in 2015, with the decline 
corresponding directly to MAP-21. He went on to state that the loss of 
preference cargo has had a ``dramatic effect'' on the maritime 
industry, and is the primary cause of the U.S.-Flag fleet's decline 
over the last 7 years.
    \29\Moving Ahead for Progress in the 21st Century Act, Pub. L. No. 
112-141 100124, 126 Stat. 915 (2012).
    \30\U.S. Mar. Admin., United States Flag Privately-Owned Merchant 
Fleet Report 1 (2017). MARAD produces this report monthly; it then 
posted on its website and may be retrieved at https://
www.marad.dot.gov/consolidated_20170501/.
---------------------------------------------------------------------------
    This is a devastating blow to our national defense sealift 
capability.
    The Consolidated Appropriations Act of 2014\31\ required MARAD to 
prepare a report to Congress on the current and future impacts of 
reductions in government-impelled cargo on the U.S. Merchant Marine as 
a result of changes to cargo preference requirements, including those 
made as part of MAP-21 and reductions to P.L. 83-480. The report, which 
was transmitted to Congress on April 21, 2015, paints a clear picture--
without cargo preference, most of the U.S.-Flag fleet would disappear 
and the reductions in food aid cargoes have had a real, meaningful 
impact on the decline of the merchant marine.\32\ Over the last decade, 
food aid has made up more than half of the preference cargo tonnage 
carried by U.S.-Flag carriers--more than even Department of Defense 
cargoes which, unlike food aid, are subject to a 100% cargo preference 
requirement.\33\
---------------------------------------------------------------------------
    \31\Consolidated Appropriations Act of 2014, Pub. L. No. 113-76, 
169, 128 Stat. 598 (2014).
    \32\See U.S. Mar. Admin., Report for Congress on the Impacts of 
Reductions In Government Impelled Cargo on the U.S. Merchant Marine 2-3 
(2015).
    \33\Id.
---------------------------------------------------------------------------
    We have seen a major drop in the amount of food aid cargo carried 
by the U.S.-Fleet, with total cargo amounts dropping 77% from 2000 to 
2013. In 1999, 103 American ships carried 6,361,000 gross tons of food 
aid cargo, both pre-packaged and bulk. In 2013, the fleet dropped to 76 
ships, carrying only 1,070,000 tons of food aid.\34\ Although some 
critics have wheeled forward various theories questioning the role of 
food aid cargoes in sustaining the merchant marine,23 the correlation 
between the decline of food aid tonnage and the decline of our fleet is 
undeniable.
---------------------------------------------------------------------------
    \34\Id.
---------------------------------------------------------------------------
    Since 2010, the size of the U.S.-Flag fleet has dropped by 23%, 
from 99 vessels to 81, and that number is expected to continue to drop 
unless something is done to strengthen the cargo base.\24\
    More important than the loss of the ships, however, is the loss of 
peacetime merchant mariner jobs--and the mariners who work them. Amidst 
all the discussion about ships and cargo, it is easy to forget (and 
those who are most critical of cargo preference always do) the most 
important aspect of the American Merchant Marine--what makes the 
merchant marine fundamentally American--are the men and women who crew 
these vessels.
    These men and women, some of the most highly trained and skilled 
mariners in the world, are the heart of our merchant marine. They are 
the one irreplaceable asset in any discussion of maritime policy. These 
are the same men and women who willingly brave the dangers of the sea, 
who sail into combat zones with military cargo, or pirate-infested 
waters with critical, life-saving food aid, who helped evacuate 
Manhattan Island on September 11, 2001, and who provided the critical 
sealift necessary to support our warfighters in every American conflict 
from the earliest days of the Revolution to Operations Enduring Freedom 
and Iraqi Freedom. While a ship may be bought in a day, it can take 
years to train and certify a merchant mariner.\35\
---------------------------------------------------------------------------
    \35\For more in-depth analysis on the difficulties in replacing 
merchant mariners see generally Joint Hearing Testimony, supra note 23.
---------------------------------------------------------------------------
    Our mariner pool is already at the breaking point, and General 
Darren McDew, commander of the United States Transportation Command 
(USTRANSCOM), has testified at multiple hearings in the House and 
Senate that we do not have the number of mariners necessary to meet the 
sealift requirements of a Desert Shield/Desert Storm-sized military 
response abroad.\36\ The resulting loss of ships due in no small 
measure to the reductions in food aid has resulted in the loss of 
approximately 1,000 mariner jobs since 2010 alone.\37\
---------------------------------------------------------------------------
    \36\See Joint Hearing Testimony, supra note 23. General McDew 
stated in his comments before the two subcommittees that the mariner 
pool is ``on the very hairy edge of being able'' to sustain immediate 
sealift requirements, and would not be able to meet sustained 
requirements beyond the first 4 to 5 months of a conflict. This 
sustainment also does not include potential casualties or losses. See 
also Hearing on the State of the United States Transportation Command 
Before the Senate Armed Services Committee, 115th Cong. 1 (2017) 
(statement of General Darren W. McDew) and Hearing on the Current State 
of U.S. Transportation Command Before the House Armed Services 
Committee, 115th Cong. 1 (2017) (statement of General Darren W. McDew).
    \37\MARAD Impacts Report at 8.
---------------------------------------------------------------------------
    Supporting the military has been fundamental to the American 
Merchant Marine for its entire existence. For example, since 2009, 
privately owned U.S.-Flag commercial vessels and their civilian U.S. 
citizen crews have transported more than 90% of the sustainment cargo 
needed to support U.S. military operations and rebuilding programs in 
Iraq and Afghanistan.\38\
---------------------------------------------------------------------------
    \38\Hearing on the Maritime Administration's Fiscal Year 2016 
Budget Request Before the Subcomm. on Coast Guard and Maritime 
Transportation of the H. Comm. on Transportation and Infrastructure, 
114th Cong. 2 (2015) (statement of Paul N. Jaenichen, Administrator, 
Maritime Administration, U.S. Department of Transportation).
---------------------------------------------------------------------------
    Ensuring that we have an adequate mariner pool to crew the 
privately owned U.S.-Flag international fleet (which includes vessels 
enrolled in the Maritime Security Program (MSP)\39\ and non-MSP 
vessels), our government fleets (including the civilians who crew 
vessels of the Military Sealift Command), and our reserve fleets 
(including the Ready Reserve Force and the National Defense Reserve 
Force) has been the fundamental purpose of Federal maritime policy in 
modern times and we are dangerously close to failing to achieve that 
purpose.
---------------------------------------------------------------------------
    \39\46 U.S.C. 53101-53111 (2017). The Maritime Security Program 
is a jointly administered Defense Department and Maritime 
Administration program of 60 militarily useful and commercially viable 
ships. In exchange for a yearly stipend payment of $5 million designed 
to help offset, but not completely cover, the increased cost of 
maintaining a vessel under the U.S.-Flag, the Department of Defense has 
access to the ships, mariners and intermodal networks of all the 
contracted companies. The MSP fleet is the backbone of the U.S.-Flag 
international fleet, but it can only function in conjunction with 
government-generated cargo, including defense and food aid. Without 
cargo, the vessels in the program are not commercially viable and would 
not be sustainable, even if stipend payments were significantly 
increased.
---------------------------------------------------------------------------
    Without the cargoes made available under cargo preference through 
Food for Peace and related foreign aid programs, it is clear the U.S.-
Flag fleet would continue its decline and the pool of mariner jobs 
needed to provide the necessary mariners for national security needs 
would dry up. Food aid is a critical component of America's strategic 
sealift program. It is vital that Congress continue its steadfast 
support for in-kind food aid and cargo preference as part of our 
Federal support for the Merchant Marine.
    Furthermore, it is critical that any changes made to Food for Peace 
in the farm bill go towards returning the program back to its roots--as 
an in-kind, America-first program fueled by American commodities 
shipped on American vessels crewed by American mariners--and away from 
the cash giveaway, voucher, and foreign commodity purchase programs 
that USAID has carved out of Food for Peace. USAID has abused the added 
discretion it was given in the 2014 Farm Bill for 202(e) and we would 
urge Congress to rescind the intrusion of these programs into Food for 
Peace. At the same time, USAID should be directed to introduce greater 
oversight and financial accountability to the 202(e) and ITSH accounts, 
including capping both of them at a more responsible percentage of the 
overall title II program and limiting ITSH to the support of U.S. in-
kind food aid, so that the bulk of Food for Peace funding goes where it 
is supposed to go--getting wholesome American commodities to those 
facing the worst food insecurity. Finally, we would urge Congress to 
review whether USAID is the most appropriate agency to continue 
oversight and implementation of these programs, given the continued, 
unresolved lapses GAO has noted, and the comparative absence of 
concerns with USDA's handling of these programs throughout most of 
their history.
    The maritime industry stands ready and willing to continue our 60 
year partnership with Congress and the agricultural community to make 
our foreign food aid programs a continued success. As always, we are 
willing to work together to find better solutions to speed up 
deliveries, reduce costs and promote greater efficiency in our 
international food assistance programs. What we will not do, however, 
is sit back and allow the misguided good intentions of the ``food aid 
reform'' community to permanently destroy these programs. They do too 
much good for too many people at home and abroad and they must be 
preserved.

    The Chairman. Thank you, sir.
    Dr. Jayne, 5 minutes.

        STATEMENT OF THOMAS S. JAYNE, Ph.D., FOUNDATION
         PROFESSOR OF AGRICULTURAL, FOOD, AND RESOURCE
 ECONOMICS AND CO-DIRECTOR, ALLIANCE FOR AFRICAN PARTNERSHIP, 
  MICHIGAN STATE UNIVERSITY, KALAMAZOO, MI; ON BEHALF OF FARM 
                       JOURNAL FOUNDATION

    Dr. Jayne. Yes. Mr. Chairman, Ranking Member Peterson, 
Members of the Committee, thank you for holding this hearing 
today on the next farm bill and the future of international 
food aid and ag development. Much of my statement today will 
reflect policy recommendations that appear in a brief that I 
coauthored in work that the Farm Journal Foundation has 
commissioned and released earlier this year. It is on the web. 
I am not going to go into too many details on recommendations 
now because of the time.
    But, my basic message, Mr. Chairman, is very simple. It is 
that U.S. agricultural development assistance is in the U.S. 
national interest. It creates jobs in the U.S. and win-win 
situations both here at home and overseas. I am going to divide 
this into two pieces.
    I would first like to explain all of the various ways in 
which that win-win occurs and why it is in the United States' 
interests to continue to promote U.S. ag development 
assistance; and second, to go into a little bit about how 
taxpayer money spent on this could be actually made more 
effective and create actually greater win-wins for the U.S. and 
for our partners overseas.
    First of all, why should the United States use taxpayer 
money to promote agricultural development in developing regions 
like Africa? Well, as most of you, I am sure, know, the 
population growth in the world over the next several decades is 
going to occur basically outside our borders. Africa is a place 
right now that is growing rapidly. The population in Africa 
today is one billion. But in 30 years, it is going to be two 
billion people and account for 24 percent of the world's 
population. This is where the demand for agricultural products 
is growing most rapidly. And so it is in our interests to 
convert those two billion people from food aid recipients into 
people who have the purchasing power to demand food and to 
encourage greater stability in the world and greater trade and 
investment between developing regions and ours. The potential 
for job growth over the next decade in the U.S. agribusiness 
and farm growth is very clear. All of the research evidence 
that has been done on this points it in the direction that it 
is very much in our interests to promote agricultural 
development in developing countries.
    Nigeria, a country that used to be a big food aid 
recipient, now is the third largest importer of U.S. wheat; 
Ghana, is in the top ten rice importers of U.S. products; and 
Angola, is the fourth largest importer of broiler meat from the 
U.S. These are just examples of how U.S. agribusiness and 
farmers can benefit from rising incomes in the third world.
    So now why is it in our interests to promote agriculture? 
Why agriculture in particular? Well, in regions like Africa 
where 70 percent of the population is engaged in farming, the 
best way to promote income growth, most effectively, is to help 
develop those 70 percent of the population so that they have a 
little bit more money in their pockets. And when they start 
spending that money, they are spending it on all manner of non-
farm goods as well as food. And this is what accelerates the 
transition of developing countries from agrarian societies into 
non-farm diversified economies that are more plugged into world 
trade. And so the potential here for win-wins with U.S. 
agribusiness and farmers cannot be overemphasized.
    A second major advantage to promoting U.S. ag development 
assistance is because it promotes peace and stability. And many 
of the prior speakers have emphasized this. I recall hearing 
General Mattis on a television program about 2 or 3 weeks ago 
talk about how effective each dollar spent on U.S. ag 
development assistance can actually avert the need for five 
times more money on bullets and military expenditures down the 
line to quell civil unrest down the road. And it can also avert 
the need for humanitarian disaster assistance to a much greater 
proportion. It could be money well spent from the standpoint of 
promoting peace and stability and averting future costs that 
the U.S. might need to incur.
    The third reason why it is a win-win for us is because it 
promotes soft power. It projects soft power around the world 
for the United States. Many of you understand that the good 
will that is created by U.S. assistance cannot be 
overemphasized. China certainly understands this well too. And 
you might know that about a thousand Africans each year are 
educated in Mandarin and then, after they become fluent in 
Mandarin, are brought back to China to participate in advanced-
degree training in China. Then they come back to fill high-
level positions in African governments and in the private-
sector in Africa. And, as you can imagine, the influence that 
those people have in determining future trade relations, future 
private-sector investment, and so forth, is going to be quite 
significant.
    So we wouldn't want to wake up 10 years from now finding 
that many of our opportunities to invest in Africa and to 
derive benefits from trade relations in Africa are locked up 
from us because of foresight of other countries to develop 
these inroads while we don't do that.
    So there are three reasons. And, by the way, if you go to--
--
    The Chairman. Dr. Jayne, I am going to have to ask you to 
summarize, you are way over time.
    Dr. Jayne. Okay. All right. Thank you very much, Mr. 
Chairman.
    [The prepared statement of Dr. Jayne follows:]

 Prepared Statement of Thomas S. Jayne, Ph.D., Foundation Professor of
 Agricultural, Food, and Resource Economics and Co-Director, Alliance 
 for African Partnership, Michigan State University, Kalamazoo, MI; on 
                   Behalf of Farm Journal Foundation
American Investment in Global Food Security
    Mr. Chairman, Ranking Member Peterson, Members of the Committee, 
thank you for holding this hearing today on, The Next Farm Bill: the 
Future of International Food Aid and Agricultural Development. I 
appreciate the opportunity to provide testimony on U.S. Agricultural 
Development efforts and its potential to sustainably promote food 
security, rising living standards, the development of markets and 
trade, and more stable and secure nations in developing regions around 
the world.
    I am Thomas Jayne, University Foundation Professor of Agricultural, 
Food, and Resource Economics at Michigan State University and Co-
Director of the Alliance for African Partnership. Much of my statement 
today will reflect policy recommendations which appear in a brief that 
I co-authored, in work that the Farm Journal Foundation commissioned 
and released earlier this year, on the subject of human and 
institutional capacity-building for African agriculture and its 
benefits to the United States. Two other policy briefs were also 
commissioned and released by the Foundation earlier this year on the 
topics of agricultural research and agricultural trade technical 
assistance. These papers were commissioned to provide recommendations 
on how U.S. agriculture can more effectively improve living standards 
in developing areas while simultaneously benefitting U.S. agriculture 
and agribusiness more generally. Fundamentally, I believe that these 
three briefs demonstrate the great value that U.S. investments in 
agricultural development provide to the American people, and that U.S. 
Agricultural Development and Research investments should continue to be 
fully funded.
    In this written testimony, I will first provide evidence that 
agricultural growth in Africa accelerates broad economic growth and 
represents a win-win for both Africans and Americans, especially U.S. 
farmers and agribusiness. Second, I argue that in order to capitalize 
on these win-wins for the U.S. and for Africa, U.S. development 
assistance needs to emphasize the sustainable development of African 
agricultural institutions--the same types of organizations that U.S. 
farmers benefited from so greatly in our own country. Third, I provide 
some specific recommendations to enable U.S. development assistance to 
effectively achieve these win-win outcomes.
Promoting Agricultural Development in Africa Is In the U.S. National 
        Interest
    U.S. investments in development builds markets and trade, 
contributes to rising living standards, promotes stability, and creates 
win-wins for host countries and US interests. According to USAID, 43 of 
the top 50 consumer nations of American agricultural products were once 
U.S. foreign aid recipients. One of these countries, Indonesia, has 
gone from being the largest recipient of USDA food assistance just ten 
years ago, to becoming the United States' ninth-largest export market 
for agricultural, fish and forest products. In fiscal year 2010, the 
United States exported $2.3 billion worth of agricultural goods to 
Indonesia, a six-fold increase over the course of a decade. Similarly, 
South Korea, once a major US aid recipient is the 6th largest importer 
of US agricultural products in 2016, importing US corn, meat, and other 
commodities (USDA).
    Africa is going to be the next big growth market for U.S. 
agriculture and agribusiness. This is because of the region's rapid 
population growth, income growth, and urbanization. Roughly 70% of 
Africans are currently engaged in agriculture. But this statistic is 
declining swiftly as the region develops. Success in promoting 
agricultural productivity will provide millions of African farmers with 
more income, which they spend in the local economy, raising the demand 
for goods and services in the non-farm economy. In this way, and just 
as it has in Europe and the USA over the past 150 years and more 
recently in Asia, agricultural productivity growth generates new jobs 
and new investment in agribusiness and in the broader economy, 
contributing to a transformed and diversified economy in which the 
majority of people live in urban areas and are in non-farm jobs.
    The data presented in the tables in the Annex shows the following: 
(1) because of rapid population growth, food imports into Africa are 
almost certain to continue to rise dramatically; this will especially 
be the case with continued strong economic growth, as this causes more 
rapid urbanization and transition of the labor force from farming to 
non-farm activities; (2) the rate of economic growth in Africa will 
continue to be tied to the performance of its agricultural sector; and 
(3) strong agricultural growth in Africa and the broader income growth 
that it generates, will accelerate the rate of food imports, and most 
of the main food imported into Africa are crops exported by North 
American agribusiness. With the exception of South Africa, the region's 
agricultural exports (mainly tea, cocoa, coffee, cotton, tropical 
fruits, and cut flowers) generally do not compete with U.S. farmers.
    To summarize so far:

  1.  Agricultural productivity growth is at the heart of Africa's 
            economic transformation. With nearly 75 percent of poor 
            people in developing countries living in rural areas, 
            growth in the agriculture sector has been found by the 
            World Bank, on average, to be at least twice as effective 
            in reducing poverty as growth in other sectors. Over the 
            past 15 years, African governments that have effectively 
            promoted farm productivity growth have enjoyed faster rates 
            of poverty reduction, higher rates of labor productivity in 
            the non-farm segments of the economy, and a more rapid exit 
            of the labor force out of farming. Because the economies of 
            most African countries still depend largely on the 
            performance of agriculture, public investments in 
            agricultural productivity growth will be an important 
            component of an effective youth employment strategy. Young 
            people between 15 and 34 years of age account for roughly 
            60 percent of Africa's labor force. Often considered more 
            of a burden than a benefit, Africa's youthful workforce 
            could open up a wide range of economic opportunities in 
            farming, in the downstream stages of agrifood systems and 
            in the broader non-farm economy, with the right mix of 
            policies and public investments toward agriculture.

  2.  Africa's economic growth is in the United States' economic and 
            national security interests, for the following reasons:

     Sub-Saharan Africa imports roughly $45 billion of food 
            products annually--7 times more than it did in 2000. The 
            region's food imports will continue to rise rapidly, 
            especially if the region continues to develop as it has 
            recently. By 2050, sub-Saharan Africa will contain 2.1 
            billion people--23 percent of the world's population 
            compared to 12 percent today. Rapidly rising population and 
            incomes in Africa will increase the demand for a safe, 
            affordable, and sustainable global food supply. U.S. 
            farmers and agribusiness can help themselves by helping 
            Africa to meet its rapidly growing food needs, by investing 
            in the region's agrifood systems, and by supporting a 
            sustainable and efficient global food system.

     Data from USDA's Foreign Agricultural Service confirms 
            that sub-Saharan Africa is one of the fastest-growing 
            regions for U.S. agricultural exports. Looking forward, 
            middle class growth in Sub-Saharan Africa is expected to 
            grow by more than 80 percent by 2022, and will lead all 
            regions, except South Asia, in growth of food sales, which 
            are expected to increase by nearly 60 percent over the next 
            decade. 2016 export figures from USDA show that Nigeria is 
            now the third-largest U.S. wheat market, Angola is the 
            four-largest broiler meat market, and Ghana ranks as one of 
            the top ten U.S. rice markets.

     In addition to creating U.S. export opportunities, 
            sustainable agricultural development in Africa also 
            promotes political and economic stability in the region, 
            contributing to U.S. national security. It is increasingly 
            understood that effective U.S. development assistance 
            programs will avert the need for subsequent and more costly 
            military and disaster response expenditures. Ultimately, a 
            country that can ensure adequate food for its people is 
            more likely to be politically stable. Retired military 
            leaders in the U.S. agree. On 27 February 2017, 120 retired 
            three and four-star U.S. military generals and admirals 
            sent a letter to Congressional leadership to share their 
            ``strong conviction that elevating and strengthening 
            diplomacy and development alongside defence are critical to 
            keeping America safe.''
Toward More Effective U.S. Development Assistance Programs
    While the evidence is clear that promoting agricultural growth in 
Africa is in the U.S. national interest, the realization of these win-
wins will require that U.S. development assistance is actually 
effective in promoting agricultural growth. U.S. development assistance 
must therefore be as effective as it can possibly be to have its 
desired effects. Fortunately, there is plenty of evidence to guide us. 
Those who oversee development programs need to recognize how 
dramatically the socioeconomic and political landscape in Africa has 
changed over the last several decades. There are at least three major 
differences to be taken into account:

   First, many more Africans today possess job expertise 
        related to agrifood systems, both in the public and private-
        sectors, than 25 years ago. Many were educated internationally, 
        possess valuable technical skills, and can operate effectively 
        in their countries given superior knowledge of local culture 
        and connections with centers of local power. Many are eloquent 
        spokespersons and advocates for African agriculture and are 
        capable of influencing their own governments' investments and 
        policies. An effective U.S. strategy toward African 
        agricultural development will engage African professionals more 
        than in the past.

   Second, African governments increasingly insist that 
        international support be guided to build their own public R&D, 
        extension, and policy analysis institutes. They increasingly 
        disapprove of, and are frustrated by, foreign development funds 
        setting up parallel channels that compete with the mandates of 
        their own public agricultural institutions.

   The U.S. (and westernized countries more generally) are now 
        facing greater competition from very different forms of 
        development assistance, namely from China. China is today 
        investing major economic, political and social capital into 
        Africa to build markets for Chinese business. And it is 
        starting to pay dividends. Each year, China trains over 1,000 
        prominent Africans in Mandarin, many of whom subsequently 
        travel to China to obtain advanced graduate degrees in various 
        subjects. Upon their return to Africa, these Chinese-trained 
        professionals assume high-level positions in African 
        governments and the private-sector, and may look favourably at 
        future alliances and business ventures with Chinese firms, much 
        as U.S.-trained African professionals did in the 1970s and 
        1980s before their numbers were sharply curtailed starting 
        around 1990. See https://en.wikipedia.org/wiki/
        Confucius_Institute and https://en.wikipedia.org/wiki/Hanban to 
        get an appreciation of the extensive ways in which Chinese 
        educational and development organizations are influencing the 
        political and economic environment in a rapidly growing and 
        developing region that constitutes potentially valuable growth 
        markets for U.S. business.
Strengthening the U.S. Approach: A New Model of Technical Assistance
    How can U.S. agricultural development assistance more effectively 
help achieve Africa's agricultural development vision? We know what 
institutions have helped U.S. agriculture become among the strongest 
such sectors in the world over the past 150 years--national 
agricultural research and extension systems (e.g., USDA, extension 
service), policy institutes and think tanks (e.g., ERS, foundations, 
institutes), science-based land grant universities producing and 
extending new technologies and know-how to farmers, agricultural 
training colleges and vocational schools. Strengthening those same 
types of institutions in Africa can help to sustainably launch their 
agricultural sectors as well.
    Building agricultural institutions all over the world has entailed 
three components: talented people with technical skills, facilities 
(lab equipment, budgets for field trials and other recurrent costs) and 
operations management.
    Of all types of agricultural expenditures, spending on research and 
development is among the most crucial to growth, yet most African 
agricultural research systems are woefully under-funded. Their 
weaknesses constrain the pace of agricultural productivity growth in 
the region. Asian farmers benefit from the fact that their governments 
spend over eight times more annually on agricultural R&D on average 
than African governments. Not surprisingly, the pace of agricultural 
productivity growth in Asia has eclipsed that of Africa over the last 
several decades.
    And because the benefits of most agricultural R&D investments 
accrue broadly and cannot be captured by firms investing in them, there 
is a strong role for sustained support for public R&D. Enhancing the 
capacity of African public agricultural R&D and extension systems 
should be a priority area for U.S. assistance.
    Unfortunately, little progress has been made over the past several 
decades in creating African universities and scientific crop and 
livestock institutes capable of developing improved technologies 
appropriate for the wide range of African farming conditions. 
Similarly, little progress has been made to rehabilitate weak national 
agricultural extension systems. U.S. development assistance has 
typically addressed these weaknesses by providing grants to 
international organizations, private development-oriented companies, 
and international universities, developing alternative modes of 
technology transfer and extension. A key challenge for U.S. development 
assistance will be to find cost-effective ways of building the capacity 
of local institutions--those providing R&D, extension, education, 
policy analysis, and dissemination--to support agricultural 
productivity growth and broader economic transformation in the region. 
To do so, it is necessary to identify the parts of U.S. assistance that 
are working well, those that aren't, and find ways to improve outcomes.
    U.S. development assistance can better leverage the expertise of US 
Agriculture in this process. The United States has one of the most 
dynamic and productive agricultural systems in the world. Historians 
and economists point to the land-grant university system, the U.S. 
Cooperative Extension Service, the USDA and its Economic Research 
Service (ERS), and other public agricultural institutions as major 
drivers of US agricultural growth. The United States is capable of 
providing needed leadership and expertise to support the development of 
strong agricultural institutions in Africa - a precondition for the 
region's sustainable development.
    Bottom line: We propose that the main thrust of a new approach be 
to shift the role of U.S. institutions from providing the technologies, 
services, and answers to equipping African organizations to do so 
themselves. Over the span of the next 1 or 2 decades, this will be the 
most effective and cost-saving approach to achieving win-win outcomes 
for African and U.S. interests.
How To Develop Mutually Beneficial Partnerships Between U.S. 
        Development Partners and Local Agricultural Organizations
    If we are looking to transform Agricultural Development to generate 
better results, with fewer financial resources, helping African 
institutions more directly to do more will allow U.S. dollars to go 
farther. Grantees raise revenues through overhead rates on the grant 
and enhance preeminent capacity in particular thematic areas. Overhead 
charges may account for as much as 50 percent of the total value of 
U.S. grants to some grantees, such as international organizations, 
universities, NGOs, and private for-profit companies and interests may 
not align with the grantor's interest in building capacity to phase out 
over time.
    As a result, capacity building assistance is often less effective 
than it could be. International universities play an important `public 
goods' role in producing policy-relevant knowledge and new technologies 
that can be successfully adapted in developing countries and by 
discovering emerging trends that shape public discussions on important 
topics in African agriculture. Continuing this type of work is crucial 
but should be done in a way that engages local African institutions in 
the process as equal partners.
    U.S. capacity building programs must also consider how to make 
long-term individual capacity building more cost-effective. The 
training of scientists with master's and doctoral degrees at major 
land-grant universities in the United States costs at least $65,000 per 
year when relocation costs, living costs, and overheads are counted. 
The total cost is five times that of producing MSc graduates through 
the African Economic Research Consortium's Collaborative Masters in 
Agricultural Economics and Extension sandwich program at the University 
of Pretoria, which may serve as a model for experimentation and 
replication in other fields. This program allows graduate students from 
developing countries to get classroom training at the University of 
Pretoria, but conduct field research for their theses in their home 
countries under the joint supervision of local and international 
professors. Where regional demand is sufficient, U.S. universities may 
also consider providing affordable graduate-level training at overseas 
campuses in collaboration with one or more African universities.
Stop Bypassing Local African Policy Institutes and Universities
    Few African-led policy institutes or universities have been 
centerpieces of long-term U.S. capacity building support. Despite some 
notable successes in recent years whereby U.S. development assistance 
has built the capacity of local policy research institutes, progress 
has generally been very limited. The perception that these institutions 
are weak has effectively sidelined them in policy-oriented grant-making 
processes. Instead, significant grants intended to assist in developing 
agricultural policy, monitoring and data generation capacity have been 
allocated to international organizations that provide important 
services to local organizations, such as ministries of agriculture, but 
that devote a small fraction of their budgets to helping African 
organizations deliver such services themselves.
    The task of transforming African agriculture should therefore shift 
to encouraging leadership from African experts and organizations, even 
as both international and local players remain involved. It is not an 
either/or issue but one of achieving the appropriate balance, with 
dynamic, cooperative partnerships as the foundational principle. 
Effective U.S. assistance will also recognize that collective action is 
required to address many types of challenges, such as climate change, 
sustainable agricultural intensification, and promoting free and fair 
trade. Currently, development assistance tends to side-step many 
collective action problems by creating parallel organizations and 
systems that can be sustained only as long as donor projects remain 
funded.
    The U.S. Congress should consider an approach that more effectively 
encourages relevant U.S. agencies to recognize the long-term nature of 
capacity building work in key agricultural institutions in developing 
countries, and give them the authority to provide appropriate funding 
and oversight frameworks. It is crucial that U.S. efforts also involve 
significant investment on the part of the national governments in 
Africa--they must have `skin in the game', to leverage U.S. 
investments, ensure sustainability and bolster national agrifood 
systems to maintain progress once donor funds are no longer available.
    As a response to the global food crisis in 2007-9, several Members 
of the 111th U.S. Congress introduced legislation that would have 
created a U.S. global food security strategy that included the 
establishment of a Higher Education Collaboration for Technology, 
Agriculture, Research, and Extension (HECTARE) Program designed to 
develop and sustain the education, research, and institutional support 
for a developing country's agricultural science and education sector. 
The bill was not enacted into law.
    Global leaders committed themselves to addressing global U.S. 
assistance at a G8 Summit in L'Aquila Italy in 2009. The United States 
responded by establishing the Feed the Future program. While 
comprehensive in a number of areas such as support for women and 
smallholder farmers, market development, and access to seeds, a strong 
higher education and human and institutional capacity program is 
absent.
    A single HECTARE-type program has been established, and that one, 
Innovative Agricultural Research Initiative (iAGRI) is funded at the 
USAID Mission level in Tanzania. Ohio State leads a consortium of six 
U.S. universities--Michigan State, Virginia Tech, University of 
Florida, Tuskegee, Iowa State--working to build both human and 
institutional capacity at Tanzania's Sokoine University. The iAGRI 
program has been very successful in helping the Tanzanian agricultural 
sector, and represents an example worth emulating.

    Recommendations to consider in the Farm Bill:

   Capitalize on USDA's extensive knowledge and technical 
        expertise to enhance capacity within (1) local agricultural 
        extension systems working with millions of farmers; working 
        from a local institutional base and (2) policy analysis units 
        in developing nations, especially on SPS technical regulations, 
        trade facilitation, and overcoming barriers to markets. USDA 
        should undertake to develop monitoring and evaluation 
        techniques that are more suitable for the long-term investments 
        and payoffs that are characteristic of institution-building 
        efforts. For instance;

     The current Farmer-to-Farmer program could be 
            augmented to address intuitional capacity building needs in 
            the areas they are serving, from a local institutional 
            base.

     Congress could also give USAID the flexibility to 
            offer USDA extension personnel and other agricultural 
            specialists long-term assignments to work with counterpart 
            institutions in Africa. This approach might allow USDA to 
            apply its domestic extension experience internationally to 
            strengthen counterpart African public sector extension 
            systems.

   Expand the Innovative Agricultural Research Initiative 
        (iAGRI) program model established at the University of Sokoine 
        in Tanzania to a multi-country pilot to scale up teaching, 
        research, and extension programs that address organizational 
        development challenges by providing management training and 
        matching local organizations with sister organizations in the 
        U.S., at a fraction of the cost of training in the U.S. The 
        iAGRI project represents a unique combination of fostering a 
        range of agricultural institutions within Tanzania, and similar 
        efforts should be encouraged elsewhere in Sub-Saharan Africa. 
        In addition to costing a fraction of what a U.S. based model 
        costs, the host African institutions provide resources, further 
        leveraging U.S. dollars and building sustainability.

   Open the Cochran Fellows program to training government 
        officials and private-sector employees charged with overseeing 
        SPS standards-setting testing and certification of food and 
        agricultural products, with the aim of bringing those efforts 
        up to international standards.

   Bolster funding and flexibility for USDA's Foreign 
        Agricultural Service, both to expand coverage of agricultural 
        attache offices in developing countries and to increase the 
        level of expertise in existing offices, in order to better 
        assist U.S. agribusiness firms operating within developing 
        countries and those development activities requiring 
        agricultural expertise, especially as they relate to trade.

   Create mechanisms to help land-grant faculty members with 
        agricultural experiment station appointments through funding 
        from the Hatch Act to identify and recruit scientists from 
        universities in developing countries to build local programs of 
        agricultural research, extension and market information 
        dissemination.

   Under the current Peace Corps program, create a 1 to 2 year 
        agricultural specialization program for recent agriculture 
        graduates and faculty from U.S. institutions in partnership 
        with 4-H or Future Farmers of America (FFA) that focuses on 
        strengthening the capacity of agricultural education and 
        extension in developing countries. AgriCorps is a great private 
        U.S. model that could be authorized and supported.

   As some development agencies and private foundations do, 
        mandate lower overheads on grants to international development 
        partners.

   For grants where the lead grantee is an international 
        partner, consider putting greater oversight and direction on 
        the activities of U.S. partners--universities, NGOs, and 
        private development firms--so that their activities directly 
        target capacity building objectives within the grant. In many 
        cases, this will require more intensive official review of 
        grant budgets to ensure that sufficient grant funds are flowing 
        to recipient organizations and that the effort expended by U.S. 
        university staff is devoted to directly supporting particular 
        objectives of the grant. This could apply across USDA programs 
        to ensure more sustainable outcomes and local ownership.

   Where appropriate, require that substantial shares of total 
        project funds be subcontracted to local African partners 
        (perhaps with a minimum threshold) with oversight of how such 
        funds are allocated.

   In addition to ensuring that U.S. assistance contributes to 
        national plans, Congress should consider requiring that to the 
        extent possible, U.S. development assistance be contingent upon 
        financial or in-kind commitments from the host government to 
        ensure mutual ownership and sustainability.

   USDA may wish to build exit strategies into international 
        programs that aim to graduate over time. To do this, USDA 
        should consider mandating that capacity building efforts with 
        national and local institutions be built into requests for 
        proposals, and include appropriate budget lines with 
        milestones. These aspects should be evaluated to ensure that 
        international development partners support national systems 
        rather than parallel ones, and build the capacity needed to 
        phase down U.S. assistance.

     For instance, the McGovern Dole program was authorized 
            in 2002, and includes flexible funding in support of 
            capacity building to facilitate government ownership and 
            support the eventual phase out of U.S. assistance. To 
            further incentivize capacity building and government 
            ownership, we recommend that the House Agriculture 
            Committee consider report language to incentivize better 
            coordination and grantee support to local institutions by 
            making USDA awards contingent on direct capacity building 
            support with clear goals, budget lines and timelines for 
            the eventual graduation of U.S. assistance and hand over of 
            programs to national partners, where appropriate.

     Consider new models of partnership between U.S. and 
            African universities to reduce the costs of educating the 
            next generation of advanced degree holders in Africa. As 
            indicated above, programs such as iAGRI and the African 
            Economic Research Consortium's Collaborative Masters in 
            Agricultural Economics and Extension may be models to 
            explore. Where regional demand is sufficient, U.S. 
            universities may also consider partnering with African 
            universities to provide affordable graduate-level training 
            at overseas campuses.

    Domestically, U.S. Agriculture needs to maintain its comparative 
edge. After 150 years of investing in Public Agricultural Research, 
U.S. farmers are the most productive in the world, but China, Brazil 
and India are catching up and the three countries outspend the U.S. by 
$2.66 for every $1 the U.S. spends. To ensure U.S. agriculture 
maintains its edge in productivity and innovation, we need ensure that 
we have adequate funding for agricultural research here at home. On the 
authorizing side, recommendations to consider under the research title 
to better leverage R&D resources and expertise could include;

   Giving USDA the flexibility to fund basic and applied 
        research projects that are conducted outside the United States 
        by lowering bureaucratic barriers for USDA (and State 
        Agricultural Experiment Stations (SAESs)) engagement in 
        international R&D by amending Section 1402 of the National 
        Agricultural Research, Extension, and Teaching Policy Act of 
        1977. This would facilitate more work which is beneficial to 
        both U.S. and foreign producers, such as on plant or animal 
        disease, and could also strengthen the collaborative 
        relationship between USDA and USAID on agricultural research, 
        both in terms of research planning and execution.

   Revisit the basis of the formula funds provided for state 
        agricultural experiment stations, putting more weight on the 
        relative values of agricultural production and nutrition as the 
        bases for cross-state allocation. Combined with more stringent 
        state-matching requirements, moves in this direction could 
        strike a balance between Federal versus state funding, in which 
        efficient financing principles would call for financing 
        ``local'' public goods using ``local'' taxes. This shift could 
        also spur more emphasis on nutrition.

   Create a commodity check-off program or research assessment 
        aimed specifically at generating funds for agricultural 
        research to be managed outside existing U.S. check-offs 
        programs. To make such a program palatable to grower groups, 
        the government could offer matching funds (up to some 
        predetermined limit), thus splitting the R&D burden between 
        check-off programs and general tax revenues. Including other 
        industries that benefit from agricultural R&D in the scheme 
        (such as input suppliers and food processors) would allow for 
        even more agricultural R&D and, if implemented wisely, 
        substantially correct the persistent under-investment in 
        agricultural R&D.
Conclusions
    The time has arrived for the United States to invest directly in 
long-term capacity building of African universities, agricultural 
training colleges, vocational schools, national crop science research 
organizations, extension systems, and policy analysis institutes. 
International private companies, universities, and NGOs have important 
but increasingly redefined roles that put African institutions in the 
lead. African governments should show greater financial commitment to 
building the capacity of public agricultural organizations, and 
innovative cost-sharing arrangements among foundations, international 
development agencies, and African governments might provide scope for 
leveraging greater mutual commitment to the development of African 
agrifood systems.
    There are strong mutually shared aspirations in the United States 
and throughout Africa that could be realized through more effective 
support for African agriculture. U.S. and African governments share 
core interests in promoting private investment in African food systems 
in partnership with local firms and in supporting fair agricultural 
trade and a sustainable global food system. It is increasingly 
recognized that African agricultural exports in the majority of cases 
do not compete with U.S. farm interests and are in most instances 
highly complementary. Rising farm incomes in Africa promote growth 
multipliers that expand private investment and employment opportunities 
in African agrifood systems and more broadly in the rest of the 
economy. Rising incomes in Africa also promote U.S. export interests. 
Moreover, sustainable agricultural development in Africa promotes 
political and economic stability in the region. These are the benefits 
that would emerge from strong partnerships between African governments, 
the private-sector and millions of African farmers and entrepreneurs 
supported by enlightened U.S. development assistance programs.
    The United States can help the stronger African universities and 
research institutes to carry out many of the land-grant activities that 
U.S. universities undertake at home, providing know-how and extension 
support to farmers and local agribusiness firms, and training the next 
generation of young Africans to contribute to their nations' 
development. Once enacted, the proposals made here will take time to 
generate their full impact. This is why there is no time to waste in 
getting started.
          * * * * *
    All three agricultural policy briefs commissioned by the Farm 
Journal Foundation can be downloaded at the following URL: http://
www.farmersfeedingtheworld.org/policy-briefing/.
                                 Annex
Figure 1. Sub-Saharan Africa's Share of World Population Will Rise From 
        12% to 23% to 35% Between 2015 to 2050 to 2100
        
        
          Source: Jayne, et. al., 2017.
Figure 2. GDP Growth in Sub-Saharan Africa Tracks Agricultural GDP 
        Growth, 1970-2014
        
        
          Source: ACET, 2017.
Figure 3. Value of Food Imports by Sub-Saharan African Countries and 
        Top Commodities Imported

 
 
 
Trends in Food Imports (1,000$), 1961-  Share of Top Ten Food Imports
                        2013             (2013), % Total Food
 

                                        
                                        
          Source: ACET, 2017.

Table 1. The Top Five Foods and the Top Five Food Imports in Sub-Saharan
                       Africa, By Sub-Region, 2013
------------------------------------------------------------------------
  Top five       Western        Middle        Eastern        Southern
    foods         Africa        Africa         Africa         Africa
------------------------------------------------------------------------
                               Consumption
------------------------------------------------------------------------
Top five      1. Rice        1. Cassava    1. Maize       1. Maize
 foods (by    2. Cassava     2. Maize      2. Wheat       2. Wheat
 caloric      3. Vegetable   3. Vegetable  3. Rice        3. Vegetable
 intake)       oils           oils         4. Cassava      oils
              4. Maize       4. Wheat      5. Pulses      4. Sugar
              5. Yams        5. Rice                      5. Rice
Percent of             52             50            53             71
 calories
 supplied by
 top five
 foods
 (kilocalori
 es per
 capita per
 year)
------------------------------------------------------------------------
                                 Imports
------------------------------------------------------------------------
Top five      1. Rice        1. Wheat      1. Wheat       1. Vegetable
 food         2. Wheat        products      products       oils
 imports       products      2. Poultry    2. Vegetable   2. Fruits and
 (percent of  3. Vegetable    meat          oils           vegetables
 total         oils          3. Rice       3. Sugar       3. Rice
 imports by   4. Palm oil    4. Vegetable  4. Rice        4. Wheat
 value)       5. Sugar        oils         5. Fruits and   products
                             5. Sugar       vegetables    5. Sugar
Top five               78             56            74             54
 food
 imports
 (percent of
 total food
 imports by
 value)
Food imports           14             12            13               4
 (percent of
 total
 imports by
 value)
------------------------------------------------------------------------
Source: FAOSTAT Online, ACET, 2017


    The Chairman. Thank you, sir.
    The chair would like to remind Members that they will be 
recognized for questioning in order of seniority for Members 
who were here at the start of the hearing. After that, Members 
will be recognized in order of arrival. I appreciate Members' 
understanding.
    I now recognize myself for 5 minutes.
    This is the face of five little girls eating lunch, or 
breakfast, at a McGovern-Dole program site. I had an 
opportunity to go to this school in Ethiopia, Addis Ababa, last 
May, May of 2016, to see these programs at work. We got to 
watch these little girls eat. If they go to school a certain 
number of days in a month, they get to take an extra ration of 
oil home with them to their families to give them an incentive 
so the families keep these little girls in school.
    We went from this program to a mountainous region at a 
final distribution point for emergency food aid to watch that 
process happening. I watched a slightly built young fellow as 
two other big fellows dropped a 110 pound sack of rice on his 
back. He kind of slumped under it, walked over to his donkey, 
put it on there, and came back for the other food that he was 
getting. And at least for the next several days, that family 
would not go hungry. And these little girls will not be hungry 
either.
    The entire time I was there I thought about the wonderful 
stuff we are doing. This is really good stuff. These kids are 
eating. They are going to school. It was also in the back of my 
mind the entire time that we have mortgaged our own children's 
future doing good things and that one of these days we may face 
a very daunting challenge of how to continue to do the good 
work we are doing here but also respect the challenges and the 
threats to the long-term survival of this country with $20 
trillion in debt and growing. And one of these days, either me 
or somebody in this position is going to face those hard 
choices and have to decide between American children and 
Americans and the great work we are doing overseas. And it is 
going to require the Wisdom of Solomon to make that happen.
    At least, this President has highlighted that with his 
budget. I disagree with what he has done. But we are now 
talking about it in much more meaningful terms than we were 
before the submission of that budget. And it is important that 
we do this because we are going to have to make hard choices 
between good stuff. The easy stuff that we shouldn't spend 
money on, that is just going to go away. But we are going to 
have to make hard choices between the good stuff.
    Dr. Jayne, I cut you off a second ago. How can we move 
toward self-sufficiency in countries versus continuing to do 
the emergency feeding? What can we do--in lieu of, just 
continuing to provide food--to allow these countries to 
transition to self-sufficiency?
    Dr. Jayne. Okay. Thank you.
    We have made progress over the last decade or two on this. 
And you can see a progressive weaning of developing countries 
off of food aid as they develop, more of the same. But it is 
possible to make our development assistance even more effective 
than it has been. And that is by emphasizing the same kind of 
development of local agricultural institutions much in the same 
way that the United States, 150 years ago, and its farmers 
benefited from the USDA Cooperative Extension Program, the 
land-grant universities that worked on crop science and 
developed new varieties for farmers. These are the nuts-and-
bolts kinds of investments that we can be using to develop 
those countries and wean them off of the need for food aid.
    The Chairman. In your testimony, you mentioned AgriCorps. 
Would you brief the group as to what AgriCorps does, Dr. Jayne?
    Dr. Jayne. I don't think it was me who said AgriCorps, Mr. 
Chairman.
    The Chairman. All right.
    Well, then I will talk about AgriCorps.
    Dr. Jayne. Okay. Thanks.
    The Chairman. AgriCorps is a privately funded group of 
young men and women who graduated from our universities with 
agriculture degrees.
    Dr. Jayne. Sure.
    The Chairman. They have grown up on farms, and this group 
sends them to Ghana. And they are now in Liberia this year 
setting up 4-H programs in these schools. The one we visited, 
the junior high school, which is as far as it can go in Ghana--
their programs of learning how to grow things and make money--
supports four scholarships to high school students under this 
4-H program. And when 4-H started there, the pregnancy rate 
among young middle school kids was something like 60 percent. 
Today, for the kids that participate in 4-H, the pregnancy rate 
is zero. These are good programs. This has no taxpayer dollars 
involved, just a program coming out of Throckmorton, Texas, 
where some local folks decided we need to spread that 4-H 
program, you mentioned the extension programs, to Ghana and 
Liberia. There is good stuff going on.
    With that, I recognize Mr. Peterson for 5 minutes.
    Mr. Peterson. Thank you, Mr. Chairman.
    As you guys have noted, the World Food Programme and Famine 
Early Warning System predicts these four famines this year. And 
some of you have alluded to this in your testimony. But if you 
have experience, any of you, of the current conditions in these 
countries, could you give us your perspective of what is 
happening on the ground? Some of you did this, to some extent, 
but if you could elaborate a little more specifically of what 
is going on, on the ground, and how these programs are going to 
be used to try to alleviate that?
    Ms. Schuler. Thank you.
    So I can speak to the situation in East Africa. As I said, 
I just came from East Africa. And there were four countries in 
particular that were at crisis level. Ethiopia, South Sudan, 
and Somalia: South Sudan and Somalia actually were at famine 
stage. People and children were already dying in those 
countries. The situation in South Sudan is dramatic. In many 
places, because of the violence and just the general crisis 
situation and insecurity in that country, it is very difficult 
even to deliver food aid into certain places. There are food 
drops, for example, that happen. And I actually was out there a 
couple of months ago and saw a team of our staff from World 
Vision who had just come back from the field, and these guys 
are out in the field waiting for those food drops so that they 
can ensure that that food gets to the most vulnerable people.
    In Somalia, the same situation, World Vision and other 
development actors are on the ground implementing programs with 
title II resources and in partnership with WFP that often uses 
U.S. Government food resources. These programs are critical. 
They are a critical piece of our programming in response to 
this famine in East Africa. And what is beautiful is that there 
is a general effort by everyone to bring in more resources from 
the U.S. Government. But we also have a lot of private citizens 
around the U.S. that also bring in private resources, care 
about people on the ground who are starving, care about 
children. And when we talk about the fact that we partner with 
the U.S. Government to provide food aid, they like that. They 
feel there is leverage there, and that it is a partnership. 
There are 25 million people in East Africa alone at risk of 
starvation and food insecurity. And these programs are 
important today. Many of those children will starve if we cut 
these programs.
    Thank you.
    Mr. Peterson. Is the basis for this coming from these 
programs? The folks that are getting this out into the 
countryside, is this food that we have shipped under the Food 
for Peace Program, and then they are the ones trying to get it 
out into the country? Is that how it is working?
    Ms. Schuler. I will give you an example of Ethiopia, a 
country that I have worked in for almost 20 years. You 
mentioned that you recently visited Ethiopia. Fantastic 
progress has been made in Ethiopia because of a program like 
the Joint Emergency Program that a number of PVOs are a part 
of. It is an emergency food assistance program led by Catholic 
Relief Services. And there is also quite a large title II 
development program in that country.
    And so, in these places where there is severe food 
insecurity and possibility of famine, the title II program is 
being implemented. And that food is going to people in that 
country, right now, today, through that JEOP and through the 
title II development program. With the JEOP, it is more 
emergency food assistance. With the title II development 
program, this is trying to mitigate the impact of future 
disasters by building resilience in the communities. 
Absolutely, title II programming is helping organizations like 
World Vision deliver food to very vulnerable people in these 
countries.
    Mr. Peterson. I yield back.
    The Chairman. Mr. Gibbs, 5 minutes.
    Mr. Gibbs. Thank you, Mr. Chairman.
    Thanks for having this hearing. I think it is important.
    If you look back at history, American action after World 
War I versus what we did after World War II with the Marshall 
Plan paid much dividends, Food for Peace, and all that work we 
did.
    Mr. Schoeneman, you commented about, it used to be, I 
guess, USAID's budget, most of it went for food and 
transportation. Now it is about \1/3\. Can you expound a little 
bit about what is occurring there?
    Mr. Schoeneman. Sure. What we are seeing is the constant 
push for added flexibility that folks in the reform community 
have been trying to make has eaten up a large portion of the 
funding that goes to title II. My written testimony, if you 
take a look at it, about \1/4\ of what we spend on outlays for 
title II is going to buy commodities. Less than ten percent 
goes on ocean freight. Less than ten percent is inland freight 
in the United States. Twenty percent, including the lockbox 
funding, is 202(e), which in the 2014 Farm Bill was plussed-up 
and increased. And almost all of that increase has gone to cash 
programs and food voucher programs and local/regional purchase. 
And then you have a huge amount of money that is going for 
inland transportation, storage, and handling.
    Now, that doesn't make any sense to me. GAO highlighted 
that in their last report because ITSH should be going down if 
the amount of title II American food is being reduced in 
country, because that is only supposed to be used to move and 
warehouse American food.
    I have a hard time trying to figure out why the numbers are 
looking the way that they are doing, particularly as commodity 
prices have been going down. At the end of the day, we really 
need better oversight.
    Mr. Gibbs. I guess I am confused. The cash payments are 
going to buy commodities here in this country or going to 
commodities elsewhere?
    Mr. Schoeneman. Elsewhere. GAO's last report basically said 
that of the increase that was given, the added flexibility 
given to USAID in the 2014 Farm Bill, something like 90 percent 
in the last year of that increase went to cash assistance, food 
voucher programs, local-regional purchase, not buying American 
commodities.
    Mr. Gibbs. We are hurting American farmers, American 
agriculture.
    Mr. Schoeneman. Correct. And that is the biggest issue. And 
Chairman Conaway pointed this out. When we do these local-
regional purchase programs, I understand that there is a need 
for it, and we support some flexibility. But we have to keep in 
mind, American farmers compete internationally, and this is a 
global market. Every dollar that an American taxpayer sends 
overseas to buy foreign food is not a dollar being spent here 
in the United States. It is not economic activity in the United 
States. It is not cargo that is going to be shipped on an 
American ship coming out of Texas or anywhere in the Gulf. That 
is a big issue for us, and that is why we are really concerned 
with the way the program has been going.
    Mr. Gibbs. Another thing I want to make sure is 
highlighted, you mentioned in your testimony the cargo 
preference and the Jones Act, having a viable merchant marine 
industry and the impact it has when they are at the beck and 
call of the Defense Department when there is an emergency. The 
best example probably was when we kicked Saddam Hussein out of 
Kuwait, when the merchant marine had to haul all of that 
equipment over there and the cost we would have for the United 
States Navy to maintain those kinds of ships to be available 
every once in a while when needed would be a lot more. That is 
an important point that needs to be made that people don't 
quite understand. You highlighted the cargo preference keeps 
merchant mariners operating because of that. Do you want to 
expound a little bit on that?
    Mr. Schoeneman. Sure. Congressman Gibbs is absolutely 
right. The bottom line: A ship is like a car. And cargo is like 
gasoline. If you don't have cargo, the ship doesn't move. If 
you don't have gas, the car doesn't move.
    You can buy as many ships as you want. You can have them 
sitting up, tied next to the quay. If there is no cargo to keep 
them commercially viable in peacetime, then my members aren't 
sailing. They are not making money. The companies aren't making 
money, and all this is, is a drain on the taxpayer. The whole 
point of cargo preference is to provide a cargo base that is of 
things we are already buying and already shipping anyway. It is 
not like we are going out of our way to buy stuff that we don't 
need to send it over to Africa or Asia or even defense cargo. 
We are taking stuff that we are already going to buy, and we 
are just requiring it to be moved on U.S. ships. And that way 
we provide the cargo base that keeps my members working. That 
is critical. And if we don't have that, the merchant marine 
goes away. And that is why these programs have been around 
since 1904 and 1954, respectively.
    Mr. Gibbs. I am almost out of time.
    Ms. Salem, I am just curious. What is the cost of a packet 
like this?
    Ms. Salem. That is interesting that you bring that up, 
because running a business, one of our most important things is 
to look at costs. And since we started this just 8 years ago, 
the cost of these packets has gone down dramatically. Where a 
box used to cost $55, we are now down to $38. And that is due 
to efficiencies, economies of scale, et cetera, per packet, it 
is about 30.
    Mr. Gibbs. Thank you. My time is up. I yield back.
    The Chairman. Ms. Fudge, 5 minutes.
    Ms. Fudge. Thank you, very much, Mr. Chairman. And thank 
you all for being here today.
    With leadership comes responsibility. If, in fact, we are 
the leaders of the world, we need to take some responsibility, 
if indeed we still are. Of all the things we could cut, we 
would cut food. We have become complicit, or will become 
complicit, in the starvation of women and children.
    How many guns do we need? How much ammunition do we need?
    It is immoral. It is heartless, and it is not even 
strategic for our world relations. It cuts jobs in this 
country. It is the most ridiculous thing I have ever heard. If 
we are leaders, it comes with some responsibility.
    Ms. Schuler, the McGovern-Dole Program does provide 
agricultural commodities to reduce hunger and promote literacy. 
For young girls in these developing countries, the program has 
shown some additional benefits. Could you address that, please?
    Ms. Schuler. Thank you.
    So the McGovern-Dole Program is a really smart and 
important program. I will give you an example of a McGovern-
Dole Program that we have in Mozambique. It supports thousands 
of children to go to school and supports school feeding for 
those children. And the outcomes then are improved nutrition 
for those children, more girls in school, and improved literacy 
rates. It is one of the most critical programs that we can do.
    We all care about the well-being of children around the 
world. The programs I have seen that improve literacy rates, 
for example, it is amazing what you find when kids can read. 
You ask the kids: ``Can you read?'' And they hold up their 
book. They are so proud that they can read. Their parents are 
peering in the window. I have seen this all over Africa. This 
is a fantastic way to spend our money.
    Being able to go to school, having good nutrition, it helps 
learning outcomes. It is a fantastic and important way to use 
U.S. Government resources.
    Ms. Fudge. Thank you very much. I am really not going to 
ask any other questions. I just want to close with this. When 
we question the viability of NATO, when we no longer want to be 
in the Paris accord, when we pick fights with mayors that we 
don't need to pick fights with, at some point, it will not be 
America first; it will be America alone.
    I yield back.
    Ms. Plaskett. Madam, if you would yield just a moment to 
me? Right here.
    Ms. Fudge. Yes.
    Ms. Plaskett. Thank you.
    Ms. Schuler, just when you talked about literacy, besides 
just the pride, what economically happens in African countries 
and African villages when women, and particularly girls, are 
educated and can read? Economically, not just in sense of 
pride.
    Ms. Schuler. Educating women and girls is one of the most 
important things that we can do in Africa to build communities, 
to build households. Oftentimes, if you think of a household, 
the women in a household in Africa are often responsible for 
management of that household like in many, many places. And so, 
if you have uneducated women and poorly educated women, they 
are less able to manage their household in terms of economics. 
And I will talk about that in a minute. But they are also less 
able to keep their children healthy, less able to understand 
how to keep their family healthy. But, oftentimes, when women 
are more educated, they are able to start, for example, if you 
can link them with a microfinance program, they are able to 
start a small business. And when you give a woman a loan, boy, 
she will take that, and she will do something fantastic with 
that.
    And we have seen that in so many cases where educated 
women, educated girls, have stronger households, better economy 
in the household, are able to have small businesses and to 
thrive. And that helps the overall economy of the country.
    Ms. Plaskett. Thank you so much.
    Thank you, Congresswoman, for yielding to me. Because if we 
don't want to take on the responsibility, at least let's just 
be strategically smart about this.
    Mr. Suppes. Mr. Chairman, could I comment on Ms. Schuler's 
comments?
    The Chairman. Yes.
    Mr. Suppes. I saw what she is talking about firsthand in 
our visit to Tanzania pertaining to the ladies, the women. 
Probably 70 percent of the farmers there, maybe 65 percent, are 
women.
    The bankers, they are not from Tanzania, the bankers are 
like FINCA and some of these organizations, prefer to deal with 
the ladies. The ladies are more comprehensive. They are 
probably more apt to repay their loans. One individual lady 
there had been in the program for 19 years, I believe. And they 
started out by being loaned basically $200, pretty high 
interest rate. And they are expected to pay it back. But this 
lady was able to acquire an acre or two and get it paid for. 
She was able to send her children through school. It doesn't 
cost much, but it costs a lot there in relationship to their 
dollar. I would like to verify what she has been talking about. 
The women are kind of running things over there. Whether that 
is good or not, I am not sure.
    The Chairman. The gentlelady's time has expired.
    Mr. Scott.
    Mr. Austin Scott of Georgia. I don't know if you intended 
to destroy any future political career. But you just did. 
Yours, not ours.
    Ma'am, Ms. Salem, we have a gentleman named Mark Moore who, 
in 2009, founded MANA in Fitzgerald, Georgia, where they 
manufacture a very similar product. I shared that product with 
one of the finest men I have ever met, General Kelly at the 
time, now it is Secretary Kelly, as we were discussing the 
importance of these types of programs throughout the world.
    He had one suggestion on the package. This is from someone 
who knows what they are talking about, not me. And the MANA 
package had the same USAID symbol on it. The American flag 
should probably be more prominently displayed on the package. 
Just a suggestion from someone. I have made that same 
suggestion to others as well. Because while I am glad, as Ms. 
Schuler has said, the education is improving, many people can't 
read the packages. And the American flag is a global symbol for 
good. And any way it can be more prominently displayed, I would 
appreciate.
    Ms. Salem. Okay. And those decisions are made strictly by 
USAID. We are taking direction from the higher-ups at USAID.
    Mr. Austin Scott of Georgia. We will give USAID a little 
instruction there.
    But I do appreciate what you do. It is an extremely 
important mission. And thousands, if not millions, of people 
have benefited from the work of you and organizations like MANA 
and the people that volunteer their time.
    I am very familiar with merchant marines. My father-in-law 
was a merchant marine. I have been to Kings Point. I had the 
discussion with the Navy this past week about the value of our 
merchant marines, and certainly we are extremely concerned 
that, over the last several years, while there are 10,000 more 
ships in the fleet worldwide, that the U.S. fleet is down by 
about 30 percent to 169 of the 41,674 merchant vessels in the 
world. Please don't take this question as anything other than 
just asking for the facts.
    How much more does it cost us to ship it on a U.S.-flagged 
vessel than it would cost on a non-U.S.-flagged vessel?
    Mr. Schoeneman. That is a very difficult question to 
answer.
    Mr. Austin Scott of Georgia. I just mean container to 
container.
    Mr. Schoeneman. Well, that is the problem. It changes every 
day. If I had to ballpark it, and somebody is going to yell at 
me for saying this, I would say maybe ten percent more. But, at 
the end of the day, the economic benefit and the value to the 
taxpayer way outweighs whatever that differential would be.
    Mr. Scott of Georgia. We cannot win a fight overseas if we 
cannot get our equipment there.
    Ms. Schuler, is that the calculation, ten percent more that 
other people, is that number approximately?
    Ms. Schuler. I don't have that number calculation. I do 
know that currently, \1/2\ of food aid budget is spent on 
shipping and related costs. For my comment on just efficiency 
and ensuring that we work together to look for ways to get the 
most resource to the people in need.
    Mr. Schoeneman. If I can comment on that, briefly, 
Congressman Scott?
    Mr. Scott of Georgia. We have to maintain the merchant 
marine fleet.
    Mr. Schoeneman. We do. And let's be clear, the shipping 
amount, the amount of money that goes to shipping, it is easy 
to conflate that, because that includes everything. That is not 
just the ocean side, which is about 8.2 percent. That includes 
the inland freight in the United States. It includes all of the 
getting and transporting, and handling of the materials in 
country that would be charged no matter who or where we sourced 
the products from. At the end of the day, it is always going to 
cost some kind of money to get the products from the port to 
get into the hands of folks.
    I just wanted to make clear that, at least on the ocean 
side, we are minuscule compared to the amount of money that the 
overall program has.
    Mr. Scott of Georgia. I would be interested in seeing the 
calculations. And, again, I recognize and had this discussion 
with the highest levels in the Navy this past week, literally, 
about the value of the Merchant Marines Academy.
    With that said, let me just thank you for what you do. It 
is an important part of who we are as America, and I look 
forward to continuing to support you.
    With that, Mr. Chairman, I yield the 13 seconds.
    The Chairman. The gentleman yields back.
    Mr. McGovern, 5 minutes.
    Mr. McGovern. Thank you. Mr. Chairman, I would like to ask 
for unanimous consent to insert into the record a letter sent 
to us from 100+ Christian leaders urging that we support these 
international food aid programs.
    The Chairman. Without objection.
    [The information referred to is located on p. 1173.]
    Mr. McGovern. I want to thank all of you for being here. I 
appreciate your thoughtful and insightful testimony. I am 
encouraged by the support you have all expressed for our 
international food programs. I am particularly grateful for 
your support for Food for Peace, and McGovern-Dole, and you all 
kind of represent very different perspectives. And so let me 
say, I agree with you. And you are right. These are all 
important programs.
    And like you, I have seen many of these programs up close 
and personal firsthand. I have witnessed U.S. NGOs, 
humanitarian aid workers, and our own USDA and USAID field 
officers responding on the ground with emergency food and water 
and medical attention to deal with the masses of refugees 
fleeing violence or natural disasters, or drought or what have 
you. But their courage and compassion and their professional 
expertise just takes my breath away. We have some incredible 
people responding to these emergencies. And it makes me proud 
to be an American, quite frankly, when I see these programs in 
action.
    I have seen how these programs provide kids with nutritious 
meals in school settings, like McGovern-Dole, and allows these 
kids to be able to learn. You can't learn on an empty stomach. 
It encourages parents to send their kids to school, because 
there is food there. It encourages parents to send more girls 
to school, and they are incredibly successful.
    I have had mothers come up and thank me when I visited 
McGovern-Dole programs, thank the people in the United States 
for what they are doing. I remember I was in Colombia many 
years ago visiting a McGovern-Dole program, and a mother came 
up to me and introduced me to her 11 year old son and said that 
every day in this terrible slum they were living in, one of the 
armed actors comes through the neighborhood asking this mother 
to give up her 11 year old son so he can join one of the armed 
groups. And she said, and they say to her that we can give him 
something you can't, and that is we can feed him.
    Because of the programs that the U.S. taxpayers support, 
this mother can now send her kid to school. He is getting fed, 
and he is going to learn to read and write and maybe be a 
leader in that country. And she says to send my thanks the 
people of the United States.
    I just have this kind of radical idea that that kind of 
stuff is good for us. It is good for our national security. 
When people like you, they don't want to blow you up. Yet, we 
are having this crazy battle now with the President's budget.
    And I am sorry. It is heartless. It is reckless. It is 
self-defeating, and it is stupid. Why would we even go after 
these programs that not only deal with a humanitarian crisis, 
but actually help us. I am grateful to the farmers who grow the 
food. I am grateful to the railroads, the truckers, the port 
workers who transport and warehouse the commodities and other 
supplies, to the shippers, the U.S. Merchant Marines, everybody 
who transport our food around the world, to all the NGOs and 
humanitarian aid workers. Nothing could be more in the 
immediate and long-term national security interest as well as 
our economic and social interest of the United States.
    I tell people all the time that hunger is a political 
condition. We can eliminate it. You guys all have ideas how to 
eliminate it. It is we that don't have the political will. We 
should be debating about how we enhance this. This is 
ridiculous that we are talking about cutting or eliminating it. 
I am embarrassed, quite frankly, that a budget like this is 
before us.
    Since the President's budget is supposed to be a national 
security budget, let me throw the question out to you. How do 
you view these programs as contributing to the U.S. national 
security interests both in the immediate and the long-term? 
Anybody?
    Dr. Jayne?
    Dr. Jayne. Thank you very much.
    So there are particular programs that have been proven to 
promote development and goodwill and all of the things that you 
mentioned.
    Okay. AgriCorps is one of them that the chair mentioned. 
Another one is the Farmer to Farmer Program. That is a USDA 
program where retired farmers from the U.S. with expertise of 
some kind, go over to a developing country, work with farmers 
there. There are many ambassadors of goodwill, and they are 
promoting development at the same time.
    Those programs really need to be expanded in order to 
promote a win-win situation.
    Mr. McGovern. Right. It gets to the point that, look, 
extreme poverty and hunger leads to chaos and war and conflict. 
This is where terrorists go to find recruits. It is in our 
national security.
    Ms. Schuler?
    Ms. Schuler. Yes. Just speaking about Somalia, which I am 
more familiar with, in East Africa, Somalia is a place where 
the U.S. Government with its colleagues in Ethiopia and other 
countries are trying to reduce the threat of Al Shabaab. By 
supporting programs like this, we have an OFDA and Food for 
Peace emergency program in Somalia. We can imagine. We are 
feeding people. We are supporting people. They are getting to 
know us as the good heart of America. You could imagine that 
people would join those terrorist groups if they had nothing. 
Like you said, they have nothing.
    They might be enticed with something else. But these 
programs make a difference in places like Somalia, and it 
directly reduces the influence of Al Shabaab and reduces the 
number of people that will join those terrorist groups.
    Mr. McGovern. We are very generous. It is worth fighting 
for. Thank you.
    The Chairman. The gentleman's time has expired.
    Mr. Crawford, 5 minutes.
    Mr. Crawford. Thank you, Mr. Chairman.
    Ms. Schuler, in your testimony concerning USAID and 
maritime mentions that monetization continues to form its 
existing food programs that could actually damage the program's 
credibility, domestic support over time. Is that of concern to 
World Vision?
    Ms. Schuler. Thanks.
    Ms. Salem. I am in the middle here.
    Ms. Schuler. For World Vision and for many humanitarian 
organizations, our number one objective is to improve the well-
being of the poorest people in the world. That is kind of where 
we focus our efforts.
    And what is beautiful about this title II program, for 
example, and I have been involved in this program for years in 
different ways, both at headquarters and also in the field, is 
the partnership that we have between NGOs, shippers, farmers, 
government. And it is just a really nice partnership. If you 
have ever been to Kansas City in the meetings there, it is just 
a nice feel. It is a good partnership.
    But, the program has been going for 60 years. It is always 
good to look at constant improvement and review. And so for us, 
we just believe that all of these parties that are partnering 
should get together and look at ways to improve the way we do 
business and reform the system if necessary so that we can get 
the most resource to the most people. And that is really what 
we hope.
    We would never hope that those efforts to improve 
efficiency would result in a cutting of the program overall. 
That would never be our intent. But, it is good business to 
look at reviewing and improving as necessary.
    Mr. Schoeneman. Congressman Crawford, if I could throw in 
there. The benefit and the advocacy that farmers like Ron and 
the mariners like my guys sitting in the back row here have 
provided over the years puts a human face and American face on 
a program that otherwise could be characterized as just another 
excuse for Americans to run up the credit card to give away 
money to people overseas.
    I have heard that phraseology used about programs like 
this. And it is completely wrong, and that is what makes this 
program good. As Chairman Conaway pointed out, we are $20 
trillion in debt. If we are going to be spending money on these 
programs, we have to be spending it in the best way possible in 
a way that helps to provide an economic and a political benefit 
at home not just overseas, and that is what this program has 
always done.
    And that is why you have American mariners, you have 
American farmers coming up here hand in glove working together 
to make sure that this program stays viable, and that is why it 
has worked for 60 years. And if we cut American farmers out, if 
we cut American mariners out of these programs, then all we are 
going to have left is a check, and checks don't vote.
    Mr. Crawford. Well, let me just say, I am for P.L. 83-480. 
I am for these programs, but I want to make a distinction 
between those commodities that we use as a part of these 
programs versus cash, which is oftentimes a point of debate.
    So my point being this: Cash has a habit of turning into 
things these programs weren't designed for. What I would like 
to find out is, GAO has indicated cash assistance can be 
susceptible to fraud and abuse. Have any of your organizations 
implemented any kind of protections to combat that type of 
phenomena from taking place?
    Because I agree with you. I want to get nutrition to people 
who need it, but I don't want to put cash in the hands of 
people who might use that against the folks that need our 
assistance. Any comments there?
    Ms. Salem?
    Ms. Salem. Yes. It is kind of ironic that this is the 
program that we are threatening to cut, because most of the 
countries in the world are giving cash, and the U.S. is the one 
who is holding on to trying to keep the Americans in mind when 
we are adding these items to the budget.
    And so it is a program that is very much in our own self-
interest. And so to me, it is kind of ironic that it is slated 
to be deleted from the budget. In the field we are always able 
to monitor very closely what products are where, how much they 
are getting used. We are doing monitoring and evaluation 
everywhere to make sure that we are seeing actual outcomes.
    I just also want to say that while sometimes we feel like 
the world is falling apart, and we have famines, and we have 
all these issues, like, overall, we are trending in the right 
direction, that these 60, 70 years of these policies have 
dramatically increased the state of the world.
    We used to have two billion people who lived under $2 a 
day. Now we have a billion. That is a massive improvement. When 
I got started in this business, we had five million children 
who would die from severe acute malnutrition every year. It is 
down to three. That is just in 7 years. These programs and all 
of these efforts that all of us at this table are working on 
are working. And we are trending in the right direction, and we 
are making a big dent in changing these lives. We can't stop 
now.
    Mr. Crawford. Thank you.
    I yield back.
    The Chairman. The gentleman's time has expired. Mr. Evans, 
5 minutes.
    Mr. Evans. Thank you, Mr. Chairman.
    I would like to ask this question of everyone at the table. 
As we head into consideration of the farm bill expiring in 
September of 2018, what would each of you set forth as top 
issues for consideration?
    Dr. Jayne. Thank you, Mr. Evans.
    Any kind of program that helps to build capacity locally so 
that there is sustainable capacity being developed in 
developing countries that will encourage these countries to 
become more committed to private trade and investment that will 
always be a win-win for them and for the United States.
    In general terms, any kind of program that is going to 
support those objectives should be nurtured. And my colleagues 
here, I am sure, will agree with me. That even though there is 
always going to be a need for food aid when there are 
disasters, by far the preference both here as well as in 
developing countries, will be to help them become self-
sufficient, as the chair mentioned earlier, and to become more 
commercial partners rather than dependent disaster partners. 
Anything that promotes that objective would be in our interest.
    Mr. Schoeneman. Congressman, the point that I made earlier, 
at least for us, our biggest goal would be that whatever 
changes or reforms that the Congress is looking at in the farm 
bill, we focus on returning Title II, P.L. 83-480, to the 
program it was and always has been, which is an in-kind program 
that is designed to get food in the hands of the hungry people.
    I think we have enough flexibility. We have done enough 
tinkering in all of these programs over the last 10 years to 
give USAID and other folks the flexibility they need in other 
accounts with different pots of money that they can use to 
address immediate issues that they need. And that this program 
should remain an in-kind program.
    The other thing I would say is, this Committee needs to do 
oversight on USAID. I know they are not in within your 
jurisdiction, but get it back, because our biggest concern when 
I look at some of these numbers, they just don't make any sense 
to me. And if they are not making sense to me, I am sure they 
are not making any sense to you.
    And I would like to hear from USAID directly where are 
their controls. Where is the transparency? Where is the 
accountability? Because I don't want to see any of the funds 
that were supposed to go to buy food, supposed to go in the 
hands of kids ending up where it is not supposed to be. We all 
can take a wild guess where that would be.
    Ms. Salem. I would echo that the Food for Peace Title II 
programs that we are currently working in, the products that we 
make are evidence-based, and this was done in collaboration 
with USAID, who commissioned a study through Tufts to make sure 
that our American food aid basket was the best that is there, 
and that we are looking at what the issues are on the ground 
and then delivering evidence-based solutions for that.
    You all have a before-and-after picture that I submitted 
with our written testimony. That picture and that 
transformation is proof that this is the impact that we can 
make. That is as evidence-based as I can think of. And that is 
as measurable as I can think of.
    And to watch children be able to transform like that in a 6 
week period from near death to running around and playing like 
a 2 year old should, those are important programs of Food for 
Peace. We are proud to have been partners with them to make 
this impact significant.
    Ms. Schuler. Yes, thank you.
    As per my testimony, I will reiterate by maybe giving a 
little context. Continuing to fund the multi-year, multi-
country development programs is critical. In years like this, 
even though there are emergencies, you still need that 
development programming, the long-term programing, to prevent 
and kind of mitigate these emergencies. That is just a critical 
piece of what we do, building resilience in households and the 
communities for longer-term sustainability. That has to 
continue. That will be something we would like to say.
    And then also, this idea of continuing to leave a little 
bit of flexibility in the way that we program. Programming with 
cash or vouchers or commodity, in different contexts you might 
need different ways of programming and to reach different 
groups of people at different times.
    This idea that it is all commodity-based maybe is not the 
best way to look at it, and that is something we would like to 
see a little bit more flexibility in the way that we use the 
resources.
    Then as I said, eliminating the minimum monetization 
requirement, because it is costly and often an inefficient way 
to do business.
    The Chairman. The gentleman's time has expired.
    Mr. Lucas, 5 minutes.
    Mr. Evans. Mr. Chair----
    Mr. Lucas. Thank you, Mr. Chairman.
    And I apologize for having stepped out briefly for another 
committee hearing. My neighbor up in Kansas, could I turn to 
you for a moment. And I realize that this question has already 
been asked. I apologize. But let's expand on it for a moment.
    When we send the actual commodity out into the food 
programs out into the world, there are certain quality 
standards that have to be met. Can you discuss for a moment 
what it takes to be a U.S. participant in providing actual 
product to these programs that go around the world?
    Mr. Suppes. It probably depends on the country and what 
product they are trying to make and who is going to be the 
recipient of that process.
    Mr. Lucas. Well, give us an example of the most challenging 
extreme and then give us an example of the simplest, just to 
give us a feel----
    Mr. Suppes. Well, I can give you an example. The U.S. 
probably has some of the strictest grading standards in the 
world as far as wheat. I can speak to wheat.
    Take Argentina, for example. They are in the Mercosur with 
Brazil, which is similar to NAFTA. And since they are in close 
proximity, the transportation is less than if we ship something 
there, but if we try to ship something to Brazil, there is a 
ten percent tariff coming in there, so we are at a disadvantage 
there. But, yet, Argentine wheat doesn't meet the specs that 
the Brazilians want, so they prefer to have U.S. wheat. And 
that happens in other countries.
    If, for example, a flour mill has Russian wheat, and it 
doesn't quite meet their specifications, they will buy some 
U.S. wheat to blend with that and strengthen it. I don't know 
that I can specifically answer your question, but we do from 
start to finish, for example, our research in Kansas or in 
Oklahoma or wherever it is, start out with a lot of perimeters 
that those researchers go by. These are the things that we want 
to end up with. They will grow these little plants of wheat, 
and every year they throw thousands away because they don't 
meet their specs.
    Once those things are in production, we do milling and 
baking tests based on criteria sent to us by the millers in the 
U.S. We have to meet their specifications. Then when the 
harvest completes, FGIS is in there inspecting again, and 
especially when shipments go out of the country. But when it 
goes to a foreign country, it is based specifically on specs 
coming from that position, like if a certain country wants 
certain specs, they write it in the contract.
    Mr. Lucas. When it comes to the quality of the product and 
the nutrition programs that we have, the U.S. generally, it is 
fair to say the recipients are ensured the highest quality 
product on nutrition?
    Mr. Suppes. Yes. You will be getting probably the best 
quality wheat in the world. And that is why we are having a 
problem competing with the Black Sea wheat coming out. We can't 
price our quality that low. We don't want to price our quality 
that low. It is a better product.
    The thing you run into by buying wheat from next door, for 
example, in Africa, it will be inconsistent. You may have some 
good quality wheat. You may have some poor. But what the world 
likes about U.S. wheat is the quality as well as the 
consistency so they don't have to change their mill settings. 
The thing we are concerned about with buying next door is 
protein content and gluten, and you are kind of mentioning 
that. And so in our research, we try to develop those 
strengths.
    So we are the most reliable source of wheat in the world. 
And you go visit these customers we have, and they will tell 
you that. Then they are faced with the fact, can they afford 
it? A lot of times they don't.
    Mr. Lucas. But ultimately, if we are using public 
resources, and we are trying to help our fellow citizens on the 
planet, we have a responsibility to make sure they get the 
maximum benefit from that?
    Mr. Suppes. Yes. And that would be a point that I would add 
to what Mr. Evans asked. We need continued financing for ARS 
research as well as private coming into it. But the ARS is very 
important. That has been cut back, and so the U.S. farmers have 
had to pick up a lot of that tab, which we do.
    If you have ever been to the innovation center in Kansas 
that we have, it is fantastic. We have people coming in. They 
are from General Mills teaming up with our scientists there. 
They are doing some wonderful things there.
    Mr. Lucas. Mr. Chairman, my time is about to expire, and I 
yield back.
    The Chairman. The gentleman yields back.
    Mr. Panetta, 5 minutes.
    Mr. Suppes. Excuse me. Could I answer Mr. Evans's question?
    The Chairman. We are supposed to each get 5 minutes, and so 
you can submit your answer for the record if you would like to, 
sir.
    Mr. Suppes. I see, okay.
    Mr. Panetta. Mr. Chairman, thank you.
    The first thing, if I may, Mr. Chairman, and I apologize 
for not saying this earlier, I would like to introduce into the 
record per unanimous consent two letters that I have here. The 
first letter being from 121 retired three- and four-star flag 
and general officers from all branches of the armed services 
stressing the strengthening of diplomacy and development 
alongside defense, which are critical to keeping America safe.
    The second letter is from over 200 business leaders to 
Secretary of State Tillerson, which talks about how we can 
advance our interests overseas and support jobs here in our 
country through the need of strong international affairs 
budget.
    The Chairman. Without objection.
    [The letters referred to are located on p. 1174.]
    Mr. Panetta. Thank you.
    Ladies and gentlemen, thank you very much for being here. I 
appreciate the preparation. I appreciate your testimony being 
willing to come and talk to all of us.
    As you have heard today from many of the questions, many of 
the statements of us on the Agriculture Committee, it is one of 
the reasons why I enjoy being on this Committee. You find a lot 
of bipartisan support here for a number of issues, and that we, 
I believe, based on the districts that we come from throughout 
this nation, we truly understand what it means to be secure not 
only in this country but abroad.
    We understand our future food security. We understand our 
national security, and clearly, these areas that you have 
talked of today definitely demonstrate that. We appreciate you 
being here to reinforce that. Thank you very much.
    It is clear that when it comes to the United States and our 
affairs abroad, we have a responsibility to play, and that when 
we don't live up to that responsibility, when we don't lead, 
that vacuum is filled, and we have seen that over and over. Be 
it as you mentioned in Africa with China, be it in Syria with 
Russia, be it in South Sudan with the devastation that is going 
on right now.
    I have an article in front of me that basically says, if 
America does nothing, 50 percent of South Sudan's population 
could be gone.
    It is clear that being American, as I have heard, being 
American means that we bear the burden of serving be it in this 
country, be it abroad. I truly agree with that. It sounds like 
all of you do. I know that many of us on this Agriculture 
Committee agree with that as well. And so that is why you are 
hearing so much support for these programs.
    Obviously, we want to work to save these programs, but 
let's talk about if they were saved, give me some of the 
improvements that could be made. What could be improved with 
the programs that you have spoken of today?
    Dr. Jayne, if you could.
    Dr. Jayne. Thank you. I appreciate your impassioned and 
well-articulated views on that.
    Okay. In terms of what we could do to improve it. In the 
long run, as I mentioned in response to Mr. Evans, that the 
programs that are developing local capacity should really be 
the emphasis.
    Many of us have this image of developing countries or 
Africa as a place where there is no expertise; we have to 
really fill the void ourselves to do that. That is certainly 
not the case anymore. It is a really outdated mode.
    By the way, I should mention this: Of my 30 years that I 
have worked in this area, I have lived in Africa for 7 of those 
years. And I have been able to see over the span of 3 decades 
the amazing increase in technical expertise that is locally 
there. And any kind of coherent U.S. development policy towards 
them is going to engage those people more directly in our 
programs.
    Because they can be advocates, they can influence 
government policy in important ways. Bringing them into the 
equation into our programs is really going to be in our 
interests as well as in their interests just in the same way 
that China is doing right now.
    Mr. Schoeneman. Congressman, I would say at least on the 
maritime side, we have been working very hard to increase our 
efficiency to try to speed up deliveries to make sure we get 
food where it needs to be faster. One of the easiest things we 
think USAID could do would simply be to adopt commercial terms 
in their contracting with other companies. It would make things 
a lot easier.
    It would not create the issues now where we are having very 
odd ways of handling the cargo and getting ships booked to get 
them overseas. If we were using commercial terms, it would make 
things a lot easier on our side and speed things up.
    The other thing I would say is, we know in advance where a 
lot of these famines are going to be. We have gotten the early 
forecasting. We have been doing a lot of warehousing and 
prepositioning of food overseas. I would like to see us 
continue to do that and strengthen that so that we are moving 
things closer, moving American food to positions that are 
easier to get inland using American ships.
    The Chairman. The gentleman's time has expired.
    Mr. Abraham, 5 minutes.
    Mr. Abraham. Thank you, Mr. Chairman.
    I thank the panel for being here. I have been many places 
over the world, in a previous life, on humanitarian missions, 
and I certainly understand the badge of honor that we as 
Americans carry but that also carries responsibility and 
accountability.
    I am an advocate of President Trump's America First policy. 
I totally believe that when America carries a burden of food 
aid to these underdevelopment and unfortunate countries and 
these unfortunate people that we should also bear the 
responsibility and the accountability of delivering this food 
economically and safely.
    I don't trust the cash. I don't trust the vouchers. I am 
hopeful that we can trust the locally and regionally produced 
food; however, it is malpractice if we spend three to five 
times per bushel of wheat on a local production when we can buy 
more American wheat and feed more people. That 7 month old that 
weighs 7 pounds, and that may be shortsighted, you say, on my 
end, but that 7 month old that weighs 7 pounds, her and her 
mother really don't care 5 years down the road. They are just 
trying to live until tomorrow. And we need to deliver more 
American commodities to them with American flagged ships. It 
does go back to U.S. security; it does go back to national 
security, and it goes back to food security.
    Mr. Schoeneman, we have often with wars and rumors of wars, 
which continue to pop up globally, have proverbially been 
caught with our pants down, because we have not had the 
shipping to move troops and tanks and planes to areas of 
criticality very quickly. And that is where the merchant 
marines come in, the merchant mariners.
    Expound on how important that is that we can't afford to 
have 25 less ships than we had in previous years as far as a 
national security issue is concerned.
    Mr. Schoeneman. Absolutely, Congressman.
    The bottom line for us is the vast majority of military 
cargo that goes overseas to sustain our warfighters goes on 
American commercial ships not Navy ships. It is the American 
commercial maritime industry that carries a vast majority of 
these products. They need cargo in peace time so that those 
ships are available and those mariners, more importantly, are 
available to crew those vessels.
    We have approximately right now, in the industry sailing 
deep sea, about 11,300 mariners. That is barely enough for us 
to cover our commercial fleet as well as the surge fleet that 
the Maritime Administration and the Department of Defense 
maintain, and we can only do that for about 4 months at a time.
    And if we had to fulfill sustained combat operations for 
more than 4 months, we would be in trouble, because we don't 
have the mariners. And the issue, really, with these jobs is it 
takes a long time to grow a mariner. Each of my members sitting 
in the back there, they are going to work and study for at 
least a year before they are ready to start an entry-level job 
in the industry.
    And to train a senior-level mariner, a captain, or a chief 
engineering, it takes 10+ years plus the sea time and all the 
accreditations, all the licensing requirements, all the medical 
requirements. You can't just pick somebody off the street and 
send them to war even as a merchant mariner. And we have done 
that in the past, and it has caused a lot of problems.
    World War II, we had to ramp up so quickly that to the 
extent that we were losing a ship a day in 1942. One in every 
26 merchant mariners during World War II perished on the high 
seas. We cannot sustain that in a modern setting right now. If 
we even lost one ship, it would be catastrophic, because that 
is how much this fleet has atrophied.
    We need these programs. We need cargo preference to keep 
these cargoes on these vessels. In fact, we need more. Right 
now, we carry about 50 percent, after the MAP-21 law changed 
the percentage, 50 percent of this in cargo. I wish we carried 
100 percent of it. Because anything that keeps these ships 
moving provides jobs for these folks that need them that can 
crew these vessels in wartime, and they are absolutely 
critical, and we can't go to war without them.
    Mr. Abraham. Thank you, Mr. Chairman. I will yield back.
    Mr. Suppes. Could I comment?
    The Chairman. Yes, sir. You have 30 seconds.
    Mr. Suppes. Okay. One thing that has come up, that I have 
noticed, that kind of bothers me, is that there are some Food 
for Progress projects that are not funding because the 
transportation line item has been used up.
    So apparently, when the transportation of $40 million runs 
out, the programs cease. Perhaps we should take a look at maybe 
increasing that line item so that we can fulfill more of the 
projects that USDA has in mind. Thank you.
    The Chairman. The gentleman yields back.
    Ms. Blunt Rochester, for 5 minutes.
    Ms. Blunt Rochester. Thank you, Mr. Chairman.
    And thank you to the panel. What is really special is to 
see the different perspectives up here, all pretty much saying 
the same thing in terms of the importance of food security. And 
I have had the opportunity last month with my friend and 
colleague, Roger Marshall, to actually have a conversation in a 
video on Global Week of Action on Hunger and Famine. And it 
just reiterates why many of us like being on this Committee, 
because when we have common goals, we are able to achieve some 
great things for our country.
    As someone who has lived and worked abroad, I have worked 
in Ethiopia, Uganda, I have had the opportunity to live in 
China for 4 years and seeing exactly what you talked about in 
terms of the expansion of African nations and just the synergy 
that is happening there. This really is important to me, 
because it is not just about benefiting other nations and other 
people, but it is also about the respect and up lifting the 
United States of America.
    I have a couple of questions, and I hope to get to the main 
two, but they are for the whole panel. The first is, there has 
been a lot of support for agriculture development from the 
private-sector, including companies like Delaware's own DuPont, 
Coca-Cola, and others. And many people think that because of 
this, there is really not a need for the government to invest 
in this type of work, and that the private-sector can do it.
    What would happen if the U.S. were to stop investing in 
agriculture development, and can the private-sector make up the 
difference?
    Dr. Jayne. Thank you so much. It wouldn't stop the 
development of these areas, but it would retard the pace at 
which they develop.
    So the private-sector certainly is understanding that 
because of demographic change in the world, most of the 
increased demand for food is going to be in developing 
countries. They see that market.
    But what they may not see is that the pace at which the 
demand grows in these countries is going to depend on the 
extent to which development assistance can effectively promote 
income growth in these countries. Because the rate of food 
demand is going to increase not just on population growth but 
also on income growth.
    So to the extent that U.S. development assistance can be 
effective in promoting income growth, it is going to be a win-
win for everybody, for our partners in Africa as well as for 
our private-sector partners.
    Ms. Blunt Rochester. Thank you.
    Anybody else can jump in, or I can go to my quick second 
question?
    Mr. Suppes. As I mentioned earlier in our innovation center 
in Kansas, we do a lot of co-op with private and public and see 
no problem with that. We share information. We share research, 
but I do see a problem with the public getting clear out of it.
    Ms. Blunt Rochester. Thank you. Thank you.
    And then my second question is more about reorganization. 
There is a lot of reorganization happening across the 
Administration and some in the field of agriculture. And I just 
wanted to get your opinions as stakeholders, all of you are 
different stakeholders, could you talk a little bit about reorg 
for agriculture?
    Mr. Schoeneman?
    Mr. Schoeneman. I was vocal about this. We have had 
experience working with USDA for quite a number of years. We 
have had experience working with USAID. My biggest concern with 
USAID is that very many times they forget the first two letters 
of USAID are US, the United States. And all too often, they are 
focused entirely on their mission, and they don't think about 
any of the political realities at home or even why these 
programs were created in the first place.
    I work with KCCO, and the folks in Kansas City have always 
been excellent. They have been great supporters of these 
programs for years. A lot of us in maritime feel a lot more 
comfortable with them than we do with USAID. And it is 
unfortunate, because we have done our best to try to work with 
these folks over the last 10 years, but I will tell you, we are 
constantly vilified; we are constantly treated like we are 
starving kids because we want to create good-paying jobs for 
Americans. I don't agree with that. From our perspective, we 
would love to see USDA take a larger role in P.L. 83-480.
    Dr. Jayne. My partner and I have to have a beer later on to 
try to work this out. In my view USAID and Global Food Security 
Act has done tremendous things to promote development. In line 
with my previous point, the private-sector and the U.S. 
interests broadly are well served by development in general, 
which is what USAID is doing.
    Even though there may be particular aspects that Mr. 
Schoeneman, I may agree with him on, overall, in the main, the 
development agenda that USAID has is promoting national 
interests for us. Thank you.
    Ms. Blunt Rochester. Thank you.
    I yield back.
    The Chairman. The gentlelady yields back.
    Mr. Yoho, 5 minutes.
    Mr. Yoho. Thank you, Mr. Chairman.
    Thank you for holding this important hearing. And I 
appreciate the panel sitting here.
    The Chairman. Is your microphone on?
    Mr. Yoho. Yes, sir. Well, it is now.
    The Chairman. It is a tough concept.
    Mr. Yoho. I know it.
    Welcome.
    Thank you, Mr. Chairman. I am pleased the Agriculture 
Committee is holding this important hearing on the future of 
foreign aid as it pertains to the farm bill. It is crucial that 
this Committee, indeed, all the Members of the House evaluate 
how we structure our nation's foreign aid.
    The world has changed and our methods of delivering foreign 
aid need to change as well. We must focus on efficiently 
transitioning aid recipient countries to trading partners. We 
need a paradigm shift from aid to trade. And I know a lot of 
people might want to take a hatchet and cut foreign aid off and 
say we are not doing a good job.
    I came up here 4 years ago. I am in my fifth year. I came 
up here to get rid of foreign aid, but I have become a lot more 
learned in those 4 years. And what I have learned is what 
General Mattis said. If you cut foreign aid, buy more 
ammunition, because you are going to need it.
    We need to transition, and we need to be more effective at 
how we do what we do. I am the Chairman of the Caucus on 
Effective Foreign Assistance, and this is something that we are 
very passionate about. We have done some good things in the 
program with the different farm bills and the different 
initiatives that have come out here, but we rely on you guys in 
the industry to make this more effective.
    I know there are a lot of things on the table. Do we put 
more grain over into an area, or do we put more money in there. 
We need all the above depending on the circumstance.
    My background is agriculture. When you have an emergency 
situation, a humanitarian situation, you need to get food there 
now. But long-term, I think there is a need to have a cash-base 
portion of this, but not all of it. I don't think you want to 
go for all of it. But the other thing you need to do while we 
are doing that, and this is where we have seen us change, is 
the development of the foreign production of food.
    Our university where I come from, they are doing meat 
production in northern Africa. And if I were to ask you the 
areas that you guys deal with the most, what continent is it, I 
would assume it is probably Africa. Is that correct?
    Dr. Jayne. Yes.
    Mr. Yoho. All right. And you look at the amount of money 
that we have put over there, it is in the billions of dollars, 
and there is 1.11 billion people that live there: 650 million 
people today in the 21st century don't have electricity. You 
can't really help a nation if the governments aren't willing to 
help. We have to pick those governments that are willing to be 
adaptable, and that is what I like some of the things in OPEC 
and things like that.
    I am sorry I wasn't here earlier. When you look at the way 
we go forward, and we have the debate about do we ship raw 
products over there, and I am all for supporting our American 
farmers, and I am all for supporting people in those other 
countries, but we have to do it to where it doesn't break the 
domestic market.
    And we have just seen the recent example with peanuts in 
Haiti. And I forget how many tons we dumped into Haiti, but it 
took the incentive from the indigenous farmers to stop growing 
peanuts, because there was no market for them to market their 
products. As we do this, I would like to hear from whoever best 
can answer this.
    Ms. Salem, go ahead. And how do you direct this, and how do 
you work, and more importantly, work with a government to get 
them on the same page? And that is where I like what we do with 
OPEC and MCC, because they do a great job, because they hold 
those governments accountable. What is your experience?
    Ms. Salem. It is a great question. We can't have these 
programs eliminated, but we do have to make them more efficient 
to some degree. The world is a big place. And while I am in 
very much in support of sending things from the U.S., I 
strongly believe there has to be a combination of the two. And 
in my industry, we actually are part of the partnership.
    And so we have eight factories that are local suppliers in 
countries like Niger, Ethiopia, India, Haiti, and they are in 
malnutrition hot spots. They can produce those types of food 
locally. And then what we do from Edesia is we subsidize the 
other countries. Because we can't have a factory in Syria. That 
doesn't make any sense.
    So by working together, by having both local production and 
support from the U.S., we have the flexibility to, depending on 
the situation, to be able to respond the most efficiently, cost 
effectively, and the smartest way to really----
    Mr. Yoho. I am going to cut you off there, because I am 
about out of time.
    With our budgetary restraints that we are facing as a 
nation, we have to be more effective at what we do, and we rely 
on you to become more effective at that and focus on aid not 
trade, and let's transition these countries off as soon as we 
can.
    Thank you, and I yield back.
    The Chairman. The gentleman's time has expired.
    Ms. Adams, 5 minutes.
    Ms. Adams. Thank you, Mr. Chairman.
    And I want to thank all of the witnesses for your 
testimony.
    I have read often in the Bible that there are probably more 
than 3,000 references to how we treat the poor, the least of 
us.
    We have always been a compassionate nation, and I guess 
sometimes if your belly doesn't growl because you are hungry, 
maybe you just don't understand. But having said that, I 
represent the 12th District in North Carolina. And I have seen 
firsthand the issues of food insecurity just in my district, 
and even my state ranks high in food insecurity. I am real 
passionate about this issue.
    Having said that, with South Sudan, and Somalia, and Yemen, 
and Nigeria facing famine conditions, and 52 million children 
worldwide suffering from acute malnutrition, the U.S. foreign 
assistance is crucial. I certainly appreciate all the comments 
you all have made in support of that.
    Ms. Schuler, international food aid has been a component of 
United States foreign policy with bipartisan support for over 6 
decades. And I am real delighted to be on this Committee 
because of the bipartisan compassion that we seem to have. 
President Reagan, when signing the proclamation establishing 
World Food Day said that all Americans can be proud of our 
country's continuing efforts to battle world hunger.
    President Trump's budget, however, would zero out and 
severely cut funding for those vital international programs, 
and with the long tradition of bipartisan support for these 
programs, do you feel that there is justification for abruptly 
zeroing out these programs?
    Ms. Schuler. No, I do not feel there is justification. I 
think it would be a huge mistake. It would impact millions of 
people, and it would damage our reputation as a country almost 
immediately. As I said before, these programs are some of the 
best, most effective programs in terms of helping millions of 
people, and they absolutely need to be kept, yes.
    Ms. Adams. Thank you. You mentioned in your testimony that 
70 million people worldwide would face severe food insecurity, 
and thank you for bringing that to our attention.
    Mr. Suppes, you were not able to respond to a question of 
my colleague here, so I wanted to give my brother an 
opportunity to get that back in.
    In terms of the question that he asked about the top issue 
for our consideration as we consider the farm bill that would 
be expiring in September, if you would like to comment, I would 
like to hear what you have to say about that.
    Mr. Suppes. Well, first of all, I am here because I think 
monetization is very important. In fact, I am currently 
planting sorghum right now and my tractor is idle. That is how 
important it is, I need to be here to talk to you about it.
    The other thing is getting off topic a little bit, you talk 
about the farm program, we need to really take a little crop 
insurance, and that is the only thing I really have to hang my 
hat on as far as a farmer. Whatever the word sustainable means, 
it keeps me there.
    And as I mentioned before, research, ARS research. And in 
wheat. We need to continue that. We have been cutting back. And 
in cutting back, then it throws the burden back to the farmer 
itself, which is okay. We are willing to pick some of that up, 
but it also goes to the private companies. As long as we have 
kind of an equal representation, there. We are in pretty good 
shape.
    Ms. Adams. Great. Well, thank you very much.
    Mr. Suppes. Thank you.
    Ms. Adams. Mr. Chairman, I will yield back my few minutes.
    The Chairman. The gentlelady yields back.
    Mr. Marshall, you are cleaned up?
    Mr. Marshall. Yes, sir. I am ready to go.
    The Chairman. All right.
    Mr. Marshall. Thank you, Mr. Chairman.
    Mr. Suppes, you and I live in the largest agricultural 
producing district in the country. We grew up in the backyard 
of one of the coauthors of the McGovern-Dole bill, or as we 
call it, the Dole-McGovern bill back home. Despite that, we 
literally have mountains of grain and nowhere to go with them.
    Despite that, we have food insecurities in our own 
district, in our own state, and in our own world. You chose to 
be here. Most of your colleagues are back home planting 
sorghum, as you just said, and you have been overseas. Why do 
you do this? What is your passion? What drives you?
    Mr. Suppes. Well, just being a farmer and being outdoors 
and being an agriculturist, a conservationist, an economist, 
and a humanitarian probably brings me to that. I can only 
imagine, I have been in enough countries representing farmers 
through U.S. Wheat Associates, that I have seen a lot of this 
stuff not necessarily food aid, but talking to flour millers.
    As you are in country, you could see what is going on in 
Africa, in Nigeria, or these other countries. And you are 
thinking, well, the U.S. has a presence there in a lot of 
places. We probably need more. I suppose my exposure to those 
things have brought me here.
    Mr. Marshall. Okay. Thank you.
    Ms. Salem, I have looked at your package here. And there is 
one ingredient missing. Mr. Suppes there has the highest 
protein content of wheat in the world that he grows. And we 
just want to make a little push to get some wheat in there.
    And I want to ask you kind of the same question. You are 
basically a volunteer for your organization. What is your 
passion? What brought you here to start this company?
    Ms. Salem. One thing, being a mom. I have four daughters, 
but my family is from Tanzania, the last three generations. I 
have seen too many times firsthand what it looks like to lose a 
child and to hear those sounds and to sit with a mother who has 
lost her child. And that is the only reason I am here. That is 
the only reason I get up every morning to take on this fight, 
which is never easy.
    It is for those mothers who have had to lose children for 
the most ridiculous reason. We know how to treat severe acute 
malnutrition. It doesn't take any research. It just takes will 
and action to make it happen.
    Mr. Marshall. Thanks. Thanks for your passion.
    I, too, have been blessed to travel to places from Haiti to 
Africa. And typically, I saw more kwashiorkor syndrome as 
opposed to marasmus. I am just curious in the world, the places 
you are treating, are you seeing more than the other? Is it 
more protein? Is it more calorie-based nutrition issues?
    Ms. Salem. You are getting very technical now, Mr. 
Marshall.
    Mr. Marshall. Yes.
    Ms. Salem. I think that what we are trying to do, we don't 
just make this one product. We make an entire range.
    Mr. Marshall. Oh, okay.
    Ms. Salem. About eight. And obviously, very focused also on 
innovation too. We are looking at all of the different the 
issues that are going, from prevention of malnutrition for 
under 2s, severe acute, moderate acute, chronic, stunting, 
pregnant and lactating women. We are looking at all the issues 
and trying to design specific products that can help design 
nutritional outcomes that are measurable and have clinical 
trials along with it to be able to prove these outcomes.
    Whatever the problem is, we are looking at solutions and 
innovative solutions and willing to work with partners on the 
ground who are seeing things to create something that can work 
well in the field.
    Mr. Marshall. Is it more a protein deficiency in Africa or 
in Haiti, or is that more of just a caloric intake or both?
    Ms. Salem. At this point, I would say more caloric because 
of the drought. And when you add a drought plus war, you are 
really just lacking food in general. Not as much the diet 
diversity maybe what we are seeing more in Central America.
    Mr. Marshall. There is not a better protein source, of 
course, than Kansas beef. Have you guys tried to do anything 
with beef as far as prepared product like this, is it just too 
costly?
    Ms. Salem. Yes.
    Mr. Marshall. Surely, it is an incredible protein source?
    Ms. Salem. Right. It is definitely a cost issue. And 
peanuts are something that are grown here, but also in all of 
Africa and Latin America too. These types of formulas are being 
able to be produced locally and here as well. Beef might knock 
us out of the----
    Mr. Marshall. Well, a big chunk of your expense is cost, it 
sounds like transportation. Is that 50 percent of the product, 
getting it from Point A to B? Is that a big chunk of it?
    Ms. Salem. No. If you are shipping a container that is 
valued with about $60,000 worth of products, an average 
shipping cost would be $5,000. The majority is spent on the 
food.
    Mr. Marshall. All right. Thank you.
    And I yield back.
    Ms. Salem. Thank you.
    The Chairman. Mr. Soto, 5 minutes.
    Mr. Soto. Thank you, Mr. Chairman.
    A lot of us are concerned we are at a real crossroads with 
regard to American leadership abroad, whether it was with 
support of NATO, whether it was a withdrawal from the Paris 
climate accord, or now with the elimination or proposed 
elimination of the McGovern-Dole Food for Education Program.
    But for argument's sake, let's start with America, first. I 
would like to ask, first, Mr. Suppes, with regard to domestic 
hunger, do we have enough of our commodities remaining in the 
United States to be able to feed the United States like wheat 
or other key commodities?
    Mr. Suppes. There is no problem there.
    Mr. Soto. Okay.
    And then, Dr. Jayne, what would you say are the current 
causes of domestic hunger? Is it the foreign aid program or 
there are other factors?
    Dr. Jayne. No, I don't think it has anything to do with the 
foreign aid program. It is purchasing power issues, access to 
cash to purchase food. There are some significant poverty 
issues in this country.
    Mr. Soto. And then let's turn to American jobs that would 
be lost.
    Mr. Schoeneman, what would be the number of jobs lost among 
our seafarers if this program is eliminated?
    Mr. Schoeneman. It is hard to say. It would depend on the 
number of ships that were lost. But I will tell you, we have 
lost about 2,400 just in the last 5 years since we changed the 
percentage that we carry.
    But the maritime industry alone accounts for hundreds of 
thousands of jobs direct and indirect that are involved 
specifically in this program, and those jobs would probably go 
away if these programs went away.
    Mr. Soto. We are talking about hundreds of jobs, thousands 
of jobs, or tens of thousands of jobs? Just as an estimate.
    Mr. Schoeneman. I would say at least tens of thousands if 
not more.
    Mr. Soto. And then going to keeping America safe, if we 
pull away from these programs, I would like to ask Ms. Schuler 
and Ms. Salem, who fills this vacuum, and what effect would it 
be on keeping America safe?
    Ms. Schuler. Well, as I talked about Somalia, Somalia is 
one of the countries where the U.S. is fighting hard against a 
terrorist group, Al Shabaab, where we have seen many attacks in 
Kenya, Ethiopia, and elsewhere. They would fill the gap. If we 
pulled out of Somalia with our assistance, kids, young people, 
people who felt there was no hope, they would turn toward those 
terrorist groups, and America would be a loser.
    Mr. Soto. And would it be fair to say that there would be a 
increase in piracy among Somalians and others who in the past 
have made that region unstable?
    Ms. Schuler. Possibly, yes.
    Mr. Soto. And then what is your opinion, Ms. Salem? Who 
would fill the void for a lot of these programs if we left?
    Ms. Salem. Yes, I agree. One of the areas that we are very 
involved in Nigeria. In the north when Boko Haram was defeated 
and humanitarian aid workers went in, they found 250,000 
severely malnourished kids. That means that is \1/4\ million 
people who are basically near death. And so this is what the 
terrorists are doing to people in these countries, and so we 
need to continue to fight to be the leader in those regions and 
defeat that way of thinking, you have another question?
    Mr. Soto. Thank you.
    Mr. Suppes, I want to go back to emerging markets for 
agriculture. We had great growing season, but prices were low. 
How do you think this would affect growth in agriculture, going 
forward, if we didn't lead in with some of these food aid 
programs in emerging markets?
    Mr. Suppes. Well, it is probably not the place to talk 
about rankings, but as far as exports?
    Mr. Soto. As far as growth in exports based upon a lead-in 
on these programs.
    Mr. Suppes. Okay. If you put together all the food aid 
programs that we currently do in a year and take the wheat and 
add the wheat all up, wheat in my area, it would amount to 
probably the fourth largest customer that I have, which would 
be called Food Aid. If you look at the Pacific Northwest, that 
would be about number ten as far as customer.
    Now, we are not here to look at customers, but eventually 
after you produce food aid for these people, a lot of those 
countries do end up becoming our customers.
    Mr. Soto. I don't want to interrupt but one last question. 
What type of job loss do you think would happen among, for 
instance, our wheat industry if this program was eliminated?
    Mr. Suppes. Well, you are looking at elevator systems. You 
are looking at rail lines that handle the commodity. You are 
looking at the maritime. It is all connected. You might even 
lose a few more farmers. You are talking about a lot of jobs.
    Mr. Soto. Thank you.
    The Chairman. The gentleman's time has expired.
    Mr. Allen, 5 minutes.
    Mr. Allen. Thank you, Mr. Chairman.
    Thank you all for being here today to tell your stories and 
experiences on how international food aid programs are 
important to your organizations, and how they continue to 
benefit various sections of the U.S. economy.
    With the new Administration, we have heard a different 
approach in platform, and we have heard it here today about 
America first. The equivalent of that would be certainly, I 
would want to donate to your worthy cause, but it would be 
improper for me to go to the bank and borrow the money to 
donate to you to have my children cosign that note and have 
them pay that debt at some point in time.
    So that is just an illustration of where this country is. 
As we know for years, we have historically been a leading 
provider in international food aid, and in sum, you mentioned 
your organization is just that, American agriculture 
commodities, grown and harvested by American farmers, and I 
want to thank you for highlighting that today in your 
discussion.
    Mr. Schoeneman, I was particularly interested in hearing 
your testimony, as it provided, and we touched on it, about the 
U.S.-flagged vessels and the reduction of those U.S.-flagged 
vessels. Is this a politically correct issue?
    Mr. Allen. If it is our food and we are sending it over 
there, shouldn't it be on our ships?
    Mr. Schoeneman. Absolutely. I don't think it is a 
politically correct issue. It all comes down to money. I think 
that is the real concern.
    Mr. Allen. Okay.
    Mr. Schoeneman. Unfortunately, we are the quiet service. We 
do our jobs. Our members, we go to work every day. I go to work 
every day to make sure my members go to work every day. Unless 
something bad happens, you don't usually hear about the 
maritime industry. We keep our heads down, and we get our work 
done. And that has made it very easy, unfortunately, in some of 
these debates, to use us as a pay-for or use us as a means of 
trying to balance something out somewhere else. MAP-21 is a 
perfect example of that. That was a transportation bill in 
2012, under a deal that was cut back in the 1980s, we were to 
carry 75 percent of all food aid cargoes. That was reduced by 
25 percent to 50 percent in MAP-21. And in addition to that, in 
the next year's budget, there was a program called Ocean 
Freight Differential that essentially would require the Federal 
Government, the Maritime Administration, to reimburse USDA, the 
Food For Peace Program, for whatever the difference was in the 
cost of transporting all this grain on American ships versus 
what it would have cost them if it was foreign. It was 
mandatory spending. It was automatic. There was never an issue.
    But, unfortunately, the Budget Committee hates mandatory 
spending, and that was something that they zeroed out. Now we 
have a self-fulfilling prophesy of transportation costs that 
are going up, and the result, because we are not covering 
those. It is difficult for us when we are looking at this 
program, we see that the appropriations have stayed about flat, 
and the amount of money we are spending on transportation is 
going up. The amount of money we are spending on food is going 
down. We need to find ways to fix this. But cutting the 
mariners out is horrible for national security.
    Mr. Allen. How are we getting the food over there?
    Mr. Schoeneman. Well, that is part of the problem. A lot of 
the new flexibility ideas that folks have put out there is to 
either provide cash. Now, I have been told that that is a very 
minuscule amount of money, but it is still more money than is 
going to buy food. We have vouchers. We are buying food 
locally, but then it is being shipped on foreign-flagged 
vessels from a new point of origin over there, not on American 
ships. And, unfortunately, since we are only carrying \1/2\, we 
love to remind USAID that the 50 percent is a minimum, not a 
maximum. We can carry as much cargo as they want to give us. 
But, unfortunately, they do their best to try to keep it at 
that 50 percent level, and that makes it hard.
    Mr. Allen. Ms. Schuler, Ms. Salem, thank you for your work. 
It is amazing what you are doing there, Ms. Salem, with your 
business. And just one last question.
    In this country, we have an obesity problem. In this 
country we waste more food than we eat. And there are people 
starving around the world. Why can't we solve this?
    Ms. Salem. You bring up a great point. If we were able to 
eliminate the waste alone, we would be able to feed the whole 
world a couple times over. We are wasting 30 percent of all 
food that is----
    Mr. Allen. And then get our U.S. fleet to take it over to 
these countries----
    Ms. Salem. I hope it is not wasted----
    Mr. Allen. Ms. Schuler, you have any closing comments?
    Ms. Schuler. Well, I would just say that, in many 
countries, you also have issues related to conflict. Many of 
the countries that we are talking about that have huge food 
assistance needs are countries with conflicts. We need to work 
together with government and provide leadership to solve those 
crises.
    Mr. Allen. Right and provide leadership. Yes. Exactly.
    Thank you.
    I yield back.
    The Chairman. The gentleman's time has expired.
    Mr. Lawson, 5 minutes.
    Mr. Lawson. Thank you.
    And I have learned a great deal from you all this morning. 
Because I have not been involved in international food 
programs. I have heard a whole lot about them. But to just 
listen to you all has been very stimulating.
    Two things I am concerned about is, one, what might have 
been Ms. Salem talking about how China trains some of the 
people from Africa in their language, and then they go back, 
and they come back again. And they eventually are going to be 
leaders in their country and so forth.
    How does that affect us in America?
    Dr. Jayne. Yes. Okay. Thank you. I think that was me.
    China observes an opportunity in developing countries. They 
are going for it. They are investing heavily in both soft and 
hard forms of infrastructure, training, and all of this.
    How is that affecting the United States? It sort of depends 
on how the United States responds. If the United States 
responds recognizing that these are opportunities for win-win 
situations, and they go after those opportunities through the 
programs of USAID and USDA, and the kind of programs that we 
are looking at here, we have an opportunity to get the America 
first objectives, which many people here have kind of talked 
about. We can get those objectives through a U.S. development 
assistance program that is well articulated.
    I would say that even if the view is just America first, it 
is in America first interests to get out there and promote 
development in other countries because our private-sector is 
going to win from that. China is doing what is in China's best 
interests. And how can we fault them for that? It would be 
unfortunate if all of the opportunities available for the 
United States to benefit from promoting trade and development 
in Africa, that we don't take advantage of that. That is where 
we are at risk, if we don't carry forward some of the programs 
that have been discussed during this hearing.
    Thank you.
    Mr. Lawson. Yes.
    Ms. Schuler. If you remember, George W. Bush was seen as a 
leader on HIV and AIDS across Africa, for example. And people 
still talk about that in Africa, how great of a job the U.S. 
did in terms of helping to reduce the impact and mitigate the 
impact of HIV/AIDS. Why can't we be a leader in ending hunger 
and being a leader in the world in that regard? That would be a 
beautiful way to strengthen the U.S. reputation around the 
world and help the America first cause.
    Mr. Lawson. Okay. If we can still be a leader in the Food 
for Progress Program, which increases our capacity around the 
world, who are we in competition with? Is that just where we 
want to be?
    Dr. Jayne. Yes, sir. Thank you.
    One of the questions that we frequently hear people say is, 
``Why should we promote agricultural development in countries? 
They are just going to take away our markets and compete with 
us.'' Well, if you look at the kind of crops that are exported 
out of Africa, it is usually cocoa, tea, coffee, cut flowers, 
tropical fruits, to a lesser extent cotton. Okay? With the 
exception of cotton, none of these other crops really compete 
with our U.S. exports. That is why it is increasingly a win-win 
to promote development in both areas. They are very compatible 
and synergistic with each other. Our farmers, and our broader 
agribusiness community, stand to gain a lot by development in 
these areas of the world.
    Mr. Lawson. Mr. Chairman, with that, I yield back.
    The Chairman. The gentleman yields back. Thank you.
    Mr. Goodlatte, 5 minutes.
    Mr. Goodlatte. Thank you, Mr. Chairman.
    This has been a very good hearing. I really appreciate all 
of your participation, and I agree with some of what almost all 
of you have said.
    I agree with Dr. Jayne that food production in these 
countries and sustainability is absolutely critical. We have to 
have that. But I also agree with Mr. Schoeneman and our wheat 
grower and probably Ms. Salem that as much of this as we can do 
to promote growth in the United States of support for this 
program by producing it, processing it, and shipping it from 
the United States to handle emergency food aid is vitally 
important to keep the support for this program, or you are 
going to see more and more public support for the kind of 
proposals that do completely cut these programs out.
    Dr. Jayne, let me start with you. I am concerned about the 
efficiency of some of these programs that are run to encourage 
that production. I have been to Ethiopia as well. I have been 
to schools, just like the Chairman has, seen children being 
fed, very nutritious, and also some pretty inexpensive food 
that gets them to school and gets them through the day. But 
then, as I drove there, I saw the most archaic, and this is in 
Ethiopia, with beautiful farmland, being farmed with animals, 
basically. I saw very little mechanized equipment.
    What is USAID doing, and are there other U.S. Government 
programs, or is it primarily relying on USAID, to get a place 
like that modernized and more efficient so they can take 
advantage of that farmland and produce for their own people?
    Dr. Jayne. That is a great question. USAID, I believe, is 
doing the bulk of U.S. Government programs toward development 
assistance. And, of course, the fact----
    Mr. Goodlatte. How efficient are they? I get the impression 
that a lot of money is wasted. I have been to Haiti, too, where 
Congress appropriated $2 billion, not just for food aid but for 
rebuilding a devastated country that was the worst in the 
Western Hemisphere before the earthquake and then just totally 
devastated after the earthquake. And I see a lot of waste. What 
is going on?
    Dr. Jayne. Well, certainly, almost all of these programs 
could be made more efficient. That is true.
    One example I can give you right off is that our capacity-
building programs, which are designed to train the next 
generation of scientists locally and extension workers and 
farmers locally, that can be done much more efficiently.
    Mr. Goodlatte. Are we paying Americans to go over and do 
this like the Chinese are doing? Are we bringing people from 
these countries to the U.S. like the Chinese?
    Dr. Jayne. We are mostly bringing them to the U.S. And it 
costs us $65,000 a year to bring someone overseas into a land-
grant U.S. system for training, $65,000 per year.
    Mr. Goodlatte. Why?
    Dr. Jayne. It costs about $7,000 per year to train someone 
locally. And we are starting----
    Mr. Goodlatte. Is a U.S. person going over there to train 
them? Because I want the U.S. to get credit for this.
    Dr. Jayne. Of course. Yes. And we are needing to innovate, 
and we are seeing ways in which we need to partner more with 
universities overseas to develop----
    Mr. Goodlatte. I want to ask Ms. Salem a question or two as 
well. I never heard of this before. I think it is phenomenal. I 
am really impressed. And I am interested in knowing what you 
think about what overall percentage of U.S. food aid should be 
fortified, nutrient-dense products like those produced by 
Edesia.
    Ms. Salem. Yes. It is a good question. Our product is not a 
silver bullet for hunger. We are really focused on very 
specific cases of malnutrition, specifically moderate----
    Mr. Goodlatte. Immediate, get it there quickly, it can be 
prepositioned?
    Ms. Salem. But also for the right people. You want the bulk 
grains to be used for adults and people who don't fall into the 
most vulnerable categories. We want to save this just for those 
that are really at the brink of death, who are in clinics, it 
is like a food by prescription. Think of it as a medical food 
versus grains. That is really what we need to be using these 
for, not for the masses.
    Mr. Goodlatte. How do you pronounce your name, sir?
    Mr. Suppes. Suppes.
    Mr. Goodlatte. Like it looks.
    Mr. Suppes. In Tanzania, the wheat that we sent over there 
to that flour mill, it is a very large flour mill; is, of 
course, fortified. And they told us that they were selling this 
to the underprivileged at a cheaper rate.
    Mr. Goodlatte. You are happy to sell it over there. You are 
happy to sell it to the U.S. Government to distribute over 
there. And you are also happy to sell it to Ms. Salem, right?
    Mr. Suppes. Absolutely. She could make crackers and put 
this peanut butter in between. It would be phenomenal.
    Ms. Salem. So many new ideas.
    Mr. Goodlatte. My time has expired. Thank you, Mr. 
Chairman.
    The Chairman. The Chairman of the Nutrition Subcommittee, 
Mr. Thompson.
    Mr. Thompson. Mr. Chairman, thank you. Thank you for all 
members of the panel. This is a very important hearing that we 
are having. Nutrition does matter. It certainly matters here at 
home, and it matters overseas in areas where we have talked 
about what we can do to improve. I happen to believe, and maybe 
I am wrong. Maybe I am just naive. I have been accused of that 
on occasion. I happen to believe the United States has been the 
most effective force for good of putting food in the bellies of 
hungry people overseas.
    Am I wrong? Am I naive on that? We are looking at how we 
can improve, right? But we are not really here to mourn the 
fact that we have failed. I think that we should be very proud 
of what this nation has done, what American farmers and farm 
families have provided. I actually think that is kind of a 
bias, being from a pretty rural area. Looking out for your 
neighbors is sort of a characteristic of rural America. I 
always say the best part of living in a rural community is that 
everybody knows your business. The worst part is everybody 
knows your business. And the fact is that we do have an impact 
around the world.
    I want to come back to how we get things there briefly.
    Mr. Schoeneman, and you have talked about this a little 
bit, it is my understanding that our agriculture and maritime 
communities have developed an enduring bipartisan partnership 
in these programs. How would this partnership be impacted by 
proposals to turn these programs into more overseas cash 
handouts, which I have concerns with when I look at the news 
headlines over the past 10, 12 years? I mean, I know food winds 
up in hungry bellies. Cash sometimes winds up different places. 
Or perhaps a voucher program or by weakened cargo preference 
requirements, how would that impact support for funding these 
programs?
    Mr. Schoeneman. What we have been telling folks for the 
last 10 years is, if you remove the domestic constituency 
between the American farmer, the American mariner, the PVOs, 
and the other organizations that provide this aid, these 
programs are going to die. They are going to get zeroed out. It 
is an inevitability. Because when you look at these programs, 
if there is not a domestic support for them politically, then 
what do they become? As Mr. Yoho and Mr. Allen pointed out, 
they are just giveaway programs. And we don't have the money to 
do it anymore.
    As the Chairman said, we are $20 trillion in debt. If we 
are going to be spending our taxpayer dollars, it has to be on 
something that has a domestic benefit. You cut out the 
political constituencies for these programs at home, they are 
going to go away. And the President's budget is a perfect 
example of that. No other President has taken a shot at 
McGovern-Dole and P.L. 83-480 the way that President Trump did. 
The only reason he was able to do that is because we so 
undermined the domestic program that we have cut out the 
Americans in it, and it makes it easy to cut away. I am very 
concerned if we do not put the Americans back in this program, 
that these programs are going to go away, period.
    Mr. Thompson. Can you elaborate on the efforts made by 
shippers to ensure efficient delivery? You made reference to 
this, but I wondered if you could flesh that out a little more, 
efforts to ensure efficient delivery of food aid cargoes in 
emergency situations. Are there other steps that could be taken 
to improve the speed of delivery of U.S. in-kind commodities 
during emergencies?
    Mr. Schoeneman. As I noted earlier, if we can try to mirror 
the commercial industry's practices in the food aid sector, 
that would make things much easier on our guys trying to handle 
the inland transportation as well as the port transportation 
getting them on the ships. Commercial terms would be a big 
impact on that.
    Prepositioning, doing more prepositioning would be 
beneficial so that we can cut down on the travel times. And 
then, frankly, a lot of the issues I see the USAID members 
trying to play the game of how do we get to that 50 percent 
threshold and those types of things. If we simply carried all 
the cargo, it would make it much easier. From that perspective, 
if we were able to increase the percentage that we carry, and 
then we can work together with USAID to find creative ways to 
be innovative and to move things faster, I am fully confident 
that the industry can do that, and we look to working with them 
to do that in the future.
    Mr. Thompson. Thank you.
    Ms. Schuler, based on your experience in the field, do you 
believe PVOs are currently able to provide the appropriate mix 
of food aid modalities in response to world hunger needs while 
protecting against fraud and abuse?
    Ms. Schuler. Yes. I think that the PVO community is working 
very hard on looking at ways to hold partners accountable and 
communities accountable and their own agencies. World Vision, 
for example, has a program called Citizen Voice in Action. It 
actually engages people at the community level to hold their 
governments, to hold other partners, accountable. And this is a 
great tool and has been very successful in reducing fraud with 
food aid programs but also with other programs.
    Mr. Thompson. Thank you, Mr. Chairman.
    The Chairman. The gentleman's time has expired.
    Thank you very, very much. What a terrific panel today. 
Each of you have brought a face and a perspective to this 
important issue, and I appreciate you coming to D.C. to make 
that happen.
    Sonny Perdue, our new Secretary of Agriculture, has a new 
motto for USDA. It is: ``Do Right and Feed Everybody.'' And 
clearly that is on the front of your minds. This is a hard 
subject. In addition to going to see the McGovern-Dole Program 
and the emergency program, we also went to Jordan to see the 
voucher-cash assistance program in a Syrian refugee camp just 
south of the Syrian border. You don't go into a refugee camp of 
some 80,000 people and come out the same person that you went 
in. And those vouchers actually were being used to buy U.S. 
rice. It was in smaller packages in the grocery store that was 
set up in the camp.
    It is clear we are going to need a blend of cash and 
products. And every one of you made good points. Whether it is 
one of the references Ms. Adams made to the poor in the Bible, 
where Christ said: ``You will have the poor with you always.'' 
You are not going to be able to work your way out of a job. We 
are going to always have the poor with us, and there is going 
to be some responsibility. And we all bear some responsibility 
to feeding, whether it is reacting to natural disasters, 
droughts, hurricanes, earthquakes, other things that happen, or 
it is in response to man's inhumanity to man. The wreck in 
Venezuela, that is just a government that mistreated its 
people, corruption, mismanaged, whatever it is in these 
countries that have these problems. We, as Americans, with the 
blessings we have, do have the responsibility to assist where 
we can.
    As I also mentioned, we have tough sledding ahead for our 
own country. We don't have an unlimited checkbook, even though 
it appears that way. We don't. We are going to be using the 
Wisdom of Solomon to try to figure out how we continue to do 
the very best we need to do around the world and create that 
leadership that everyone talks about. America is a leader. You 
don't hear any other country who is referenced in response to 
these kinds of issues the way America is referenced. And that 
is a point of pride for us. We have done good stuff around the 
world, as G.T. mentioned, and we will continue to do it, 
whether it is through governments, Ms. Salem and the private-
sector doing what you do best. We are going to continue to 
help. And each of you have helped us this morning gain a better 
understanding of how tough this is going to be. Please pray for 
our decision makers, because these are going to be hard 
priorities to set and hard things to do that are coming at us a 
whole lot quicker than maybe we even thought.
    Again, what a great panel you were this morning. I thank 
each of you very, very much.
    Under the Rules of the Committee, the record of today's 
hearing will remain open for 10 calendar days to receive 
additional material and supplementary written responses should 
any of the witnesses want to respond to something that you 
needed to get into the record. We will take that for any 
question posed by the Member.
    This hearing of the Committee on Agriculture is adjourned.
    Thank y'all.
    [Whereupon, at 12:23 p.m., the Committee was adjourned.]
    [Material submitted for inclusion in the record follows:]
Submitted Press Release by Hon. James P. McGovern, a Representative in 
                      Congress from Massachusetts
March 16, 2017
http://www.usglc.org/2017/03/16/100-christian-leaders-tell-
congressional-leadership-protect-foreign-assistance/
Press Release
U.S. Global Leadership Coalition
100+ Christian leaders tell Congressional leadership: Protect foreign 
        assistance
          Catholic and evangelical leaders, pastors, artists, and other 
        high-profile Christians urge lawmakers to support resources for 
        the State Department and USAID

    Washington, D.C.--More than 100 Christian leaders from across the 
United States are calling on Congress to avoid disproportionate cuts to 
America's foreign assistance programs that make up less than 1% of the 
Federal budget.
    In a letter to the House and Senate leadership, the signers write: 
``It is our moral responsibility to urge you to support and protect the 
International Affairs Budget'' noting ``we cannot turn our back on 
those in desperate need.''
    The signers--representing the Catholic and evangelical 
communities--include national leaders, pastors, heads of faith 
organizations, recording artists and authors. Cardinal Timothy Dolan 
and Rev. Samuel Rodriguez--who spoke at the 2017 Inauguration--also are 
among the signers.
    As the budget process moves to Capitol Hill, the leaders stress 
that America must remain that ``shining city on a hill'' that ``brings 
hope to poor, hungry, [and] vulnerable.''
          * * * * *
March 16, 2017

 
 
 
Hon. Mitch McConnell,                Hon. Charles E. Schumer,
Majority Leader,                     Minority Leader,
U.S. Senate,                         U.S. Senate,
Washington, D.C.;                    Washington, D.C.;
Hon. Paul Ryan,                      Hon. Hon. Nancy Pelosi,
Speaker,                             Minority Leader,
U.S. House of Representatives,       U.S. House of Representatives,
Washington, D.C.;                    Washington, D.C.
 

    Dear Majority Leader McConnell, Minority Leader Schumer, Speaker 
Ryan, and Minority Leader Pelosi,

    As Christian leaders, it's an honor to represent dedicated and 
faithful citizens living in every Congressional district in this 
country. We're writing to share our support for the International 
Affairs Budget that every day brings hope to poor, hungry, vulnerable 
and displaced men, women and children around the world.
    America is blessed with fertile land, abundant natural resources, a 
strong economy, and faithful citizens who value religious freedom. But 
beyond our borders, many countries experience unparalleled suffering 
and loss of life due to extreme poverty, disease, natural disasters, 
and conflict. Today, there are 65 million displaced people, the most 
since World War II, and 795 million people still go to bed hungry every 
night.
    Matthew 25 tells us when we serve the least of these, we are 
serving the Lord. As people of faith, we cannot turn our back on those 
in desperate need. We are grateful for America's global development and 
diplomacy programs that have been instrumental in saving lives, 
safeguarding religious liberties, and keeping America safe and secure. 
Both Republican and Democratic Administrations have strong legacies of 
supporting humanitarian and development programs that enable countless 
people to pull themselves out of poverty and live life with dignity. It 
is through these diplomatic and development tools that we've seen 
countries and communities build peaceful, productive societies that do 
not turn to violence or terrorism.
    At a time when we're especially security conscious, the 
International Affairs Budget is crucial to demonstrating our values to 
the world, building friendships with other nations, and lowering 
security risks around the world.
    With just one percent of our nation's budget, the International 
Affairs Budget has helped alleviate the suffering of millions; 
drastically cutting the number of people living in extreme poverty in 
half, stopping the spread of infectious diseases like HIV/AIDs and 
Ebola, and nearly eliminating polio. Additionally, it promotes freedom 
and human rights, protecting religious freedom for millions around the 
world.
    As followers of Christ, it is our moral responsibility to urge you 
to support and protect the International Affairs Budget, and avoid 
disproportionate cuts to these vital programs that ensure that our 
country continues to be the ``shining city upon a hill.''
    Thank you for your consideration.

 
 
 
Timothy Cardinal Dolan, Archbishop   Bishop Horace E. Smith, MD, Senior
 of New York                          Pastor, Apostolic Faith Church
Rev. Dr. Samuel Rodriguez,           Ted Esler, President, Missio Nexus
 President, National Hispanic        Rev. Dr. Michael L. Henderson,
 Christian Leadership Conference      Senior Pastor, New Beginnings
                                      Church
Leith Anderson, President, National  Dr. G. Craig Williford, President,
 Association of Evangelicals          Multnomah University
Rich Stearns, President, World       Carmen Fowler Laberge, President,
 Vision USA                           Presbyterian Lay Committee
Bishop Gregory J. Mansour, Chairman  Colin P. Watson, Sr., Director of
 of the Board, Catholic Relief        Ministries and Administration,
 Services                             Christian Reformed Church in North
Michael W. Smith, Singer/Songwriter   America
Dr. George O. Wood, General          Dr. Don Argue, Ambassador at Large,
 Superintendent, Assemblies of God    Convoy of Hope
Dr. Ronnie Floyd, Immediate Past     Scott Ridout, President, Converge
 President, Southern Baptist
 Convention
Amy Grant, Singer/Songwriter         Rev. Dr. Liz Mosbo VerHage,
                                      Associate Pastor, Quest Church
Shirley V. Hoogstra, J.D.,           Gregory Loewer, Pastor for
 President, Council for Christian     Missions, Columbia Baptist Church
 Colleges & Universities
Tom Lin, President & CEO,            Jim Lyon, General Director, Church
 InterVarsity Christian Fellowship    of God Ministries
Third Day, Christian Rock Band       Constantine M. Triantafilou,
Jonathan Reckford, CEO, Habitat for   Executive Director & CEO,
 Humanity                             International Orthodox Christian
                                      Charities (IOCC)
Mark Labberton, President, Fuller    Alan Robinson, National Director,
 Theological Seminary                 Brethren in Christ, U.S.
Jo Anne Lyon, General                Mark S. Young, President, Denver
 Superintendent Emerita, The          Seminary
 Wesleyan Church
Most Reverend Jerome E. Listecki,    M. Craig Barnes, President,
 Archdiocese of Milwaukee             Princeton Theological Seminary
Most Reverend Salvatore J.           Adam Pray, Minister, theChurch.at
 Cordileone, Archbishop of San
 Francisco
David Wilson, General Secretary,     Dennis Hollinger, Ph.D., President,
 Church of the Nazarene               Gordon-Conwell Theological
                                      Seminary
Rev. Gabriel Salguero, President,    Alan Cureton, President, University
 National Latino Evangelical          of Northwestern
 Coalition
Most Reverend Joseph E. Kurtz,       Jon Middendorf, Pastor, OKC First
 D.D., Archbishop of Louisville       Church of the Nazarene
Santiago ``Jimmy'' Mellado,          Rev. Bobby Griffith, Jr., Pastor,
 President & CEO, Compassion          City Presbyterian Church
 International
John Crosby, Senior Pastor, Christ   Rev. David Cassidy, Pastor, Christ
 Presbyterian Church                  Community Church
Rev. Johnnie Moore, Author           Dr. Timothy J. Brooks, Lead Pastor,
                                      South Portland Church of the
                                      Nazarene
Bob Bouwer, Reverend, Faith Church   Rev. Doug Serven, Pastor, City
 (8 locations)                        Presbyterian Church
John K. Jenkins Sr., Senior Pastor,  Rev. Dan Claire, Rector, Church of
 First Baptist Church of Glenarden    the Resurrection
Keith Stewart, Senior Pastor,        Rev. Joel St. Clair, Pastor, Mosaic
 Springcreek Church                   Community Church
Alec Hill, President Emeritus,       Dr. O. Alan Noble, Assistant
 InterVarsity Christian Fellowship    Professor of English, Oklahoma
                                      Baptist University
Scott Arbeiter, President, World     Rev. Dr. Irwyn Ince Jr., Pastor,
 Relief Corporation                   City of Hope Presbyterian Church
Martha Newsome, President & CEO,     Rev. Russ Whitfield, Pastor, Grace
 Medical Teams International          Mosaic Church
J. Ron Byler, Executive Director,    The Right Rev. Dr. Steven A.
 Mennonite Central Committee          Breedlove, Diocese, Christ our
Mike Mantel, President & CEO,         Hope, Anglican Church in North
 Living Water International           America
Carol Bremer-Bennett, Executive      Rev. Alan Cross, Executive
 Director, World Renew                Director, Community Development
Gary Edmonds, President & CEO, Food   Initiatives, Montgomery Baptist
 for the Hungry                       Association
Anita Smith, President, Children's   Rev. Dr. James C. Howell, Senior
 AIDS Fund                            Pastor, Myers Park United
                                      Methodist Church
Shepherd Smith, President,           Rev. Don Flowers, Jr., Senior
 Institute for Youth Development      Pastor, Providence Baptist Church
Bruce Wilkinson, President & CEO,    The Most Rev. Dr. Foley Beach,
 Catholic Medical Mission Board       Archbishop, Anglican Church in
                                      North America
Steve Stirling, President & CEO,     Dr. Chris Ellis, Minister of
 MAP International                    Mission and Outreach, Second
                                      Baptist Church
Peter Vander Meulen, Coordinator in  Dr. Stephen Cook, Senior Pastor,
 Office of Social Justice,            Second Baptist Church
 Christian Reformed Church in North  Dr. Christopher Pollock, Lead
 America                              Pastor, Midtown Church
Joel K. Johnson, Pastor, Westwood    Peter Greer, CEO, HOPE
 Community Church                     International
James H. Barnes III, President,      David W. Kendall, Bishop, Free
 Bethel University                    Methodist Church, USA
Steve Moore, Board Chair, World      David T. Roller, Bishop, Free
 Relief                               Methodist Church, USA
Deborah Smith Pegues, Board of       Matthew A. Thomas, Bishop, Free
 Directors, World Vision USA          Methodist Church, USA
Rev. Jonathan Odom, Pastor, Asbury   Justin B. Fung, Pastor of Teaching
 UMC                                  & Formation, The District Church
Dr. Mark Wilbanks, Senior Pastor,    Jason Surratt, Pastor of
 Wieuca Road Baptist Church           Stewardship and Global Missions,
                                      Seacoast Church
Dr. Stephen Treash, Senior Pastor,   Dr. Gregg Okkesson, Dean, Asbury
 Black Rock Church                    Theological Seminary
Laura Truax, Senior Pastor, LaSalle  Stephanie Summers, CEO, Center for
 Street Church                        Public Justice
Jeffrey Moes, Senior Pastor,         Ruth Anne Reese, Ph.D., Professor
 Sunnybrook Community Church          of New Testament, Asbury
Gino Grunberg, Co-Pastor, Harbor      Theological Seminary
 Christian Center
Rev. Jay Madden, Pastor for          Brandon Heath, Singer/Songwriter
 Mission, Peachtree Presbyterian
 Church
Chris Cramer, Pastor, Orchard Grove  Dr. Stephen Offutt, Assistant
 Community Church                     Professor of Development Studies,
Chad Hayward, Executive Director,     Asbury Theological Seminary
 Accord Network
Galen Carey, Vice President of       Matt Maher, Singer/Songwriter
 Government Relations, National      Jonathan Martin, Writer and Speaker
 Association of Evangelicals
Scott Garber, Author                 Aaron Graham, Lead Pastor, The
                                      District Church
Ken Wytsma, Senior Pastor, Antioch   Rev. Eugene Cho, Lead Pastor &
 Church                               Founder, Quest Church/One Day's
                                      Wages
William Minchin, Pastor of Business
 Administration, Grace Fellowship
 Church
 

CC:

Hon. Donald Trump, President;
Hon. Mike Pence, Vice President;
Hon. Rex Tillerson, Secretary of State.
                                 ______
                                 
 Submitted Letters by Hon. Jimmy Panetta, a Representative in Congress 
                            from California
February 27, 2017

 
 
 
Hon. Paul Ryan,                      Hon. Mitch McConnell,
Speaker of the House,                Majority Leader,
U.S. House of Representatives,       U.S. Senate,
Washington, D.C.;                    Washington, D.C.;
Hon. Nancy Pelosi,                   Hon. Charles E. Schumer,
Minority Leader,                     Minority Leader,
U.S. House of Representatives,       U.S. Senate,
Washington, D.C.;                    Washington, D.C.
 

    Dear Speaker Ryan, Minority Leader Pelosi, Majority Leader 
McConnell, and Minority Leader Schumer:

    As you and your colleagues address the Federal budget for Fiscal 
Year 2018, we write as retired three and four star flag and general 
officers from all branches of the armed services to share our strong 
conviction that elevating and strengthening diplomacy and development 
alongside defense are critical to keeping America safe.
    We know from our service in uniform that many of the crises our 
nation faces do not have military solutions alone--from confronting 
violent extremist groups like ISIS in the Middle East and North Africa 
to preventing pandemics like Ebola and stabilizing weak and fragile 
states that can lead to greater instability. There are 65 million 
displaced people today, the most since World War II, with consequences 
including refugee flows that are threatening America's strategic allies 
in Israel, Jordan, Turkey, and Europe.
    The State Department, USAID, Millennium Challenge Corporation, 
Peace Corps and other development agencies are critical to preventing 
conflict and reducing the need to put our men and women in uniform in 
harm's way. As Secretary James Mattis said while Commander of U.S. 
Central Command, ``If you don't fully fund the State Department, then I 
need to buy more ammunition.'' The military will lead the fight against 
terrorism on the battlefield, but it needs strong civilian partners in 
the battle against the drivers of extremism--lack of opportunity, 
insecurity, injustice, and hopelessness.
    We recognize that America's strategic investments in diplomacy and 
development--like all of U.S. investments--must be effective and 
accountable. Significant reforms have been undertaken since 9/11, many 
of which have been embodied in recent legislation in Congress with 
strong bipartisan support--on human trafficking, the rights of women 
and girls, trade and energy in Africa, wildlife trafficking, water, 
food security, and transparency and accountability.
    We urge you to ensure that resources for the International Affairs 
Budget keep pace with the growing global threats and opportunities we 
face. Now is not the time to retreat.
            Sincerely,

 
 
 
    1. General Keith B. Alexander, USA (Ret.), Director, National
 Security Agency (2005-2014), Commander, U.S. Cyber Command (2010-2014)
    2. General John R. Allen, USMC (Ret.), Commander, NATO International
 Security Force (2011-2013), Commander, U.S. Forces-Afghanistan (2011-
 2013)
    3. Lt. General Edward G. Anderson III, USA (Ret.), Vice Commander,
 U.S. Element, North American Aerospace Defense Command/Deputy
 Commander, U.S. Northern Command (2002-2004)
    4. Lt. General Thomas L. Baptiste, USAF (Ret.), Deputy Chairman,
 NATO Military Committee (2004-2007)
    5. Lt. General Ronald R. Blanck, USA (Ret.), Surgeon General of the
 United States Army (1996-2000)
    6. Lt. General H. Steven Blum, USA (Ret.), Deputy Commander, U.S.
 North American Aerospace Defense Command and U.S. Northern Command
 (2009-2010)
    7. Lt. General Steven W. Boutelle, USA (Ret.), Chief Information
 Officer and G6, United States Army (2003-2007)
    8. Admiral Frank L. Bowman, USN (Ret.), Director, Naval Nuclear
 Propulsion (1996-2004)
    9. General Charles G. Boyd, USAF (Ret.), Deputy Commander in Chief,
 U.S. European Command (1992-1995)
    10. General Bryan Doug Brown, USA (Ret.), Commander, U.S. Special
 Operations Command (2003-2007)
    11. General Arthur E. Brown, Jr., USA (Ret.), Vice Chief of Staff of
 the United States Army (1987-1989)
    12. Vice Admiral Michael Bucchi, USN (Ret.), Commander of the United
 States Third Fleet (2000-2003)
    13. Lt. General John H. Campbell, USAF (Ret.), Associate Director of
 Central Intelligence for Military Support, Central Intelligence Agency
 (2000-2003)
    14. General Bruce Carlson, USAF (Ret.), Director, National
 Reconnaissance Office (2009-2012)
    15. General George W. Casey, Jr., USA (Ret.), Chief of Staff of the
 United States Army (2007-2011)
    16. Lt. General John G. Castellaw, USMC (Ret.), Deputy Commandant
 for Programs and Resources (2007-2008)
    17. Lt. General Dennis D. Cavin, USA (Ret.), Commander, U.S. Army
 Accessions Command (2002-2004)
    18. General Peter W. Chiarelli, USA (Ret.), Vice Chief of Staff,
 U.S. Army (2008-2012)
    19. Lt. General Daniel W. Christman, USA (Ret.), Superintendent,
 United States Military Academy (1996-2001)
    20. Lt. General George R. Christmas, USMC (Ret.), Deputy Chief of
 Staff for Manpower and Reserve Affairs (1994-1996)
    21. Admiral Vern Clark, USN (Ret.), Chief of Naval Operations (2000-
 2005)
    22. Admiral Archie R. Clemins, USN (Ret.), Commander in Chief, U.S.
 Pacific Fleet (1996-1999)
    23. General Richard A. ``Dick'' Cody, USA (Ret.), Vice Chief of
 Staff, United States Army (2004-2008)
    24. Lt. General John B. Conaway, USAF (Ret.), Chief, National Guard
 Bureau (1990-1993)
    25. General James T. Conway, USMC (Ret.), Commandant, U.S. Marine
 Corps (2006-2010)
    26. General John D.W. Corley, USAF (Ret.), Commander, Air Combat
 Command (2007-2009)
    27. General Bantz J. Craddock, USA (Ret.), Commander, U.S. European
 Command and NATO Supreme Allied Commander Europe (2006-2009)
    28. Vice Admiral Lewis W. Crenshaw, Jr., USN (Ret.), Deputy Chief of
 Naval Operations for Resources, Requirements, and Assessments (2004-
 2007)
    29. Lt. General John ``Mark'' M. Curran, USA (Ret.), Deputy
 Commanding General Futures, U.S. Army Training and Doctrine Command
 (2003-2007)
    30. General Terrence R. Dake, USMC (Ret.), Assistant Commandant,
 U.S. Marine Corps (1998-2000)
    31. Lt. General Robert R. Dierker, USAF (Ret.), Deputy Commander,
 U.S. Pacific Command (2002-2004)
    32. Admiral Kirkland H. Donald, USN (Ret.), Director, Naval Nuclear
 Propulsion (2004-2012)
    33. Lt. General James M. Dubik, USA (Ret.), Commander, Multi
 National Security Transition Command and NATO Training Mission-Iraq
 (2007-2008)
    34. Lt. General Kenneth E. Eickmann, USAF (Ret.), Commander,
 Aeronautical Systems Center, U.S. Air Force (1996-1998)
    35. Admiral William J. Fallon, USN (Ret.), Commander, U.S. Central
 Command (2007-2008)
    36. Admiral Thomas B. Fargo, USN (Ret.), Commander, U.S. Pacific
 Command (2002-2005)
    37. Admiral Mark P. Fitzgerald, USN (Ret.), Commander, U.S. Naval
 Forces Europe (2007-2010) and U.S. Naval Forces Africa (2009-2010)
    38. General Ronald R. Fogleman, USAF (Ret.), Chief of Staff of the
 United States Air Force (1994-1997)
    39. Lt. General Benjamin C. Freakley, USA (Ret.), Commander, U.S.
 Army Accessions Command (2007-2012)
    40. Lt. General Robert G. Gard, Jr., USA (Ret.), President, National
 Defense University (1977-1981)
    41. Admiral Jonathan W. Greenert, USN (Ret.), Chief of Naval
 Operations (2011-2015)
    42. Lt. General Arthur J. Gregg, USA (Ret.), Army Deputy Chief of
 Staff (1979-1981)
    43. Lt. General Wallace C. Gregson, USMC (Ret.), Commanding General,
 Marine Corps Forces Pacific and Marine Corps Forces Central Command
 (2003-2005)
    44. Vice Admiral Lee F. Gunn, USN (Ret.), Inspector General, U.S.
 Navy (1997-2000)
    45. General Michael W. Hagee, USMC (Ret.), Commandant, U.S. Marine
 Corps (2003-2006)
    46. Lt. General Michael A. Hamel, USAF (Ret.), Commander, Air Force
 Space and Missile Systems Center (2005-2008)
    47. General John W. Handy, USAF (Ret.), Commander, U.S.
 Transportation Command and Commander, Air Mobility Command (2001-2005)
    48. Admiral John C. Harvey, Jr., USN (Ret.), Commander, U.S. Fleet
 Forces Command (2009-2012)
    49. General Richard E. Hawley, USAF (Ret.), Commander, Air Combat
 Command (1996-1999)
    50. General Michael V. Hayden, USAF (Ret.), Director, Central
 Intelligence Agency (2006-2009)
    51. General Paul V. Hester, USAF (Ret.), Commander, Pacific Air
 Forces, Air Component Commander for the U.S. Pacific Command Commander
 (2004-2007)
    52. General James T. Hill, USA (Ret.), Commander, U.S. Southern
 Command (2002-2004)
    53. Admiral James R. Hogg, USN (Ret.), U.S. Military Representative,
 NATO Military Committee (1988-1991)
    54. Lt. General Walter S. Hogle Jr., USAF (Ret.), Commander, 15th
 Air Force (2000-2001)
    55. Lt. General Steven A. Hummer, USMC (Ret.), Deputy Commander for
 Military Operations, U.S. Africa Command (2013-2015)
    56. Lt. General William E. Ingram, Jr., USA (Ret.), Director, U.S.
 Army National Guard (2011-2014)
    57. General James L. Jamerson, USAF (Ret.), Deputy Commander in
 Chief, U.S. European Command (1995-1998)
    58. Lt. General Arlen D. Jameson, USAF (Ret.), Deputy Commander in
 Chief, U.S. Strategic Command (1993-1996)
    59. Admiral Gregory G. Johnson, USN (Ret.), Commander, U.S. Naval
 Forces Europe/Commander in Chief, Allied Forces Southern Europe (2001-
 2004)
    60. Admiral Jerome L. Johnson, USN (Ret.), Vice Chief of Naval
 Operations (1990-1992)
    61. Lt. General P.K. ``Ken'' Keen, USA (Ret.), Chief, Office of the
 U.S. Defense Representative to Pakistan (2011-2013)
    62. Lt. General Richard L. Kelly, USMC (Ret.), Deputy Commandant,
 Installations and Logistics (2002-2005)
    63. Lt. General Claudia J. Kennedy, USA (Ret.), Deputy Chief of
 Staff for Army Intelligence (1997-2000)
    64. General Paul J. Kern, USA (Ret.), Commanding General, U.S. Army
 Materiel Command (2001-2004)
    65. General William F. Kernan, USA (Ret.), Supreme Allied Commander,
 Atlantic/Commander in Chief, U.S. Joint Forces Command (2000-2002)
    66. Lt. General Donald L. Kerrick, USA (Ret.), Deputy National
 Security Advisor to The President of the United States (2000-2001)
    67. Lt. General Bruce B. Knutson, USMC (Ret.), Commanding General,
 Marine Corp Combat Command (2000-2001)
    68. Vice Admiral Albert H. Konetzni, Jr., USN (Ret.), Deputy
 Commander, U.S. Fleet Forces Command and U.S. Atlantic Fleet (2001-
 2004)
    69. General Charles Chandler Krulak, USMC (Ret.), Commandant of the
 Marine Corps (1995-1999)
    70. Lt. General William J. Lennox, Jr., USA (Ret.), Superintendent,
 United States Military Academy (2001-2006)
    71. Vice Admiral Stephen F. Loftus, USN (Ret.), Deputy Chief of
 Naval Operations for Logistics (1990-1994)
    72. General Lance W. Lord, USAF (Ret.), Commander, U.S. Air Force
 Space Command (2002-2006)
    73. Admiral James M. Loy, USCG (Ret.), Commandant, U.S. Coast Guard
 (1998-2002)
    74. Vice Admiral Joseph Maguire, USN (Ret.), Deputy Director for
 Strategic Operational Planning, National Counterterrorism Center (2007-
 2010)
    75. Admiral Henry H. Mauz, Jr., USN (Ret.), Commander in Chief, U.S.
 Atlantic Fleet (1992-1994)
    76. Vice Admiral Justin D. McCarthy, SC, USN (Ret.), Deputy Chief of
 Naval Operations, Fleet Readiness, and Logistics (2004-2007)
    77. Lt. General Dennis McCarthy, USMC (Ret.), Commander, Marine
 Forces Reserve (2001-2005)
    78. Vice Admiral John ``Mike'' M. McConnell, USN (Ret.), Director of
 the National Security Agency (1992-1996)
    79. General David D. McKiernan, USA (Ret.), Commander, International
 Security Assistance Force in Afghanistan (2008-2009)
    80. General Dan K. McNeill, USA, (Ret.), Commander, International
 Security Assistance Force (ISAF) in Afghanistan (2007-2008)
    81. General Merrill A. McPeak, USAF (Ret.), Chief of Staff, U.S. Air
 Force (1990-1994)
    82. Lt. General Paul T. Mikolashek, USA (Ret.), Inspector General,
 U.S. Army/Commanding General of the Third U.S. Army Forces Central
 Command (2000-2002)
    83. Vice Admiral Joseph S. Mobley, USN (Ret.), Commander, Naval Air
 Force, U.S. Atlantic Fleet (1998-2001)
    84. General Thomas R. Morgan, USMC (Ret.), Assistant Commandant of
 the U.S. Marine Corps (1986-1988)
    85. Lt. General Carol A. Mutter, USMC (Ret.), Deputy Chief of Staff,
 Manpower and Reserve Affairs, Marine Corps (1996-1998)
    86. Admiral Robert J. Natter, USN (Ret.), Commander, Fleet Forces
 Command/Commander, U.S. Atlantic Fleet (2000-2003)
    87. General William L. Nyland, USMC (Ret.), Assistant Commandant,
 U.S. Marine Corps (2002-2005)
    88. Lt. General Tad J. Oelstrom, USAF (Ret.), Superintendent, U.S.
 Air Force Academy (1997-2000)
    89. Admiral Eric T. Olson, USN (Ret.), Commander, U.S. Special
 Operation Command (2007-2011)
    90. Lt. General H.P. ``Pete'' Osman, USMC (Ret.), Commanding General
 II MEF (2002-2004)
    91. Lt. General Jeffrey W. Oster, USMC (Ret.), Deputy Administrator
 and Chief Operating Officer, Coalition Provisional Authority, Iraq
 (2004), Deputy Commandant for Programs and Resources, Headquarters
 Marine Corps (1998)
    92. Admiral William A. Owens, USN (Ret.), Vice Chairman, Joint
 Chiefs of Staff, (1994-1996)
    93. Lt. General Frank A. Panter, Jr., USMC (Ret.), Deputy Commandant
 for Installations and Logistics (2009-2012)
    94. Vice Admiral David Pekoske, USCG (Ret.), Vice Commandant, U.S.
 Coast Guard (2009-2010)
    95. General David H. Petraeus, USA (Ret.), Director, Central
 Intelligence Agency (2011-2012); Commander, Coalition Forces in
 Afghanistan (2010-2011) and Iraq (2007-2008)
    96. Vice Admiral Carol M. Pottenger, USN (Ret.), Deputy Chief of
 Staff for Capability Development, NATO Allied Command Transformation
 (2010-2013)
    97. Admiral Joseph W. Prueher, USN (Ret.), Commander in Chief, U.S.
 Pacific Command (1996-1999)
    98. Lt. General Harry D. Raduege, Jr., USAF (Ret.), Director,
 Defense Information Systems Agency/Commander, Joint Task Force for
 Global Network Operations/Deputy Commander, Global Network Operations
 and Defense, U.S. Strategic Command Joint Forces Headquarters,
 Information Operations (2000-2005)
    99. Vice Admiral Norman W. Ray, USN (Ret.), Deputy Chairman, NATO
 Military Committee (1992-1995)
    100. Lt. General John F. Regni, USAF (Ret.), Superintendent, United
 States Air Force Academy (2005-2009)
    101. General Victor ``Gene'' E. Renuart, USAF (Ret.), Commander,
 North American Aerospace Defense Command and U.S. Northern Command
 (2007-2010)
    102. General Robert W. RisCassi, USA (Ret.), Commander in Chief,
 United Nations Command/Commander in Chief, Republic of Korea/U.S.
 Combined Forces Command (1990-1993)
    103. Lt. General Norman R. Seip, USAF (Ret.), Commander, 12th Air
 Force /Air Forces Southern (2006-2009)
    104. General Henry H. Shelton, USA (Ret.), Chairman, Joint Chiefs of
 Staff (1997-2001)
    105. Admiral William D. Smith, USN (Ret.), U.S. Military
 Representative, NATO Military Committee (1991-1993)
    106. Admiral Leighton W. Smith, Jr., USN (Ret.), Commander in Chief,
 U.S. Naval Forces Europe/Commander in Chief, Allied Forces Southern
 Europe (1994-1996)
    107. Lt. General James N. Soligan, USAF (Ret.), Deputy Chief of
 Staff for Transformation, Allied Command Transformation (2006-2010)
    108. Admiral James G. Stavridis, USN (Ret.), Commander, U.S.
 European Command and NATO Supreme Allied Commander, Europe (2009-2013)
    109. Lt. General Martin R. Steele, USMC (Ret.), Deputy Chief of
 Staff for Plans, Policies and Operations, U.S. Marine Corps (1997-1999)
    110. General Carl W. Stiner, USA (Ret.), Commander in Chief, U.S.
 Special Operations Command (1990-1993)
    111. Vice Admiral Edward M. Straw, USN (Ret.), Director, Defense
 Logistics Agency (1992-1996)
    112. Vice Admiral William D. Sullivan, USN (Ret.), U.S. Military
 Representative to NATO Military Committee (2006-2009)
    113. Lt. General William J. Troy, USA (Ret.), Director, Army Staff
 (2010-2013)
    114. Admiral Henry G. Ulrich, USN (Ret.), Commander, U.S. Naval
 Forces Europe/Commander, Joint Forces Command Naples (2005-2008)
    115. General Charles F. Wald, USAF (Ret.), Deputy Commander, U.S.
 European Command (2002-2006)
    116. General William S. Wallace, USA (Ret.), Commanding General,
 U.S. Army Training and Doctrine Command (2005-2008)
    117. Lt. General William ``Kip'' E. Ward, USA (Ret.), Commander,
 U.S. Africa Command (2007-2011)
    118. General Charles E. Wilhelm, USMC (Ret.), Commander, U.S.
 Southern Command (1997-2000)
    119. General Michael J. Williams, USMC (Ret.), Assistant Commandant,
 U.S. Marine Corps (2000-2002)
    120. General Ronald W. Yates, USAF (Ret.), Commander, Air Force
 Materiel Command (1992-1995)
    121. General Anthony C. Zinni, USMC (Ret.), Commander in Chief, U.S.
 Central Command (1997-2000)
 

CC:

Secretary of State Rex Tillerson,
Secretary of Defense James Mattis,
National Security Advisor H.R. McMaster.

May 22, 2017

  Hon. Rex Tillerson,
  Secretary,
  U.S. Department of State
  Washington, D.C.

    Dear Secretary Tillerson,

    As business leaders, we are writing to voice our strong belief in 
the return on investment from the U.S. International Affairs Budget in 
advancing America's economic interests overseas and supporting jobs at 
home.
    With 95 percent of the world's consumers outside the United States 
and many of the fastest growing economies in the developing world, now 
is the time to double down on America's global economic leadership. 
America's diplomats and development experts help build and open new 
markets for U.S. exports by doing what only government can do: fight 
corruption, strengthen the rule of law, and promote host country 
leadership to create the enabling environment for private investment. 
Our country's investments have generated impressive results: eleven of 
America's top fifteen export markets are in countries that have been 
recipients of U.S. foreign assistance.
    Strategic investments in diplomacy and development make America 
safer and more prosperous. American companies depend on robust U.S. 
engagement overseas, especially in the fast growing markets in the 
developing world. Our embassies and consulates around the world are 
essential partners for American businesses to ensure we can compete on 
a level playing field. Trade promotion programs have helped drive 
American exports, which today make up almost 13 percent of America's 
$18 trillion economy and support about one in five American jobs.
    The State Department and USAID are increasingly partnering with 
American businesses to catalyze and leverage private-sector expertise 
and resources to create sustainable solutions at scale on a range of 
challenges such as energy, health, and agriculture. And today, host 
countries themselves are driving policy changes to compete for American 
investments. Moreover, America's global economic leadership also 
embodies our country's values--promoting economic freedom, prosperity, 
and entrepreneurship that can mitigate the drivers of violent extremism 
in the world today. In today's global economy, we have a significant 
opportunity to strengthen the State Department, USAID, and our 
development agencies and the capacity to partner with the private-
sector to address global challenges and to expand opportunity.
    We are committed to working with you in your role as Secretary of 
State to share our perspectives on the importance of U.S. international 
affairs programs to boost our exports abroad and our jobs here at home, 
and we urge your support for a strong International Affairs Budget for 
Fiscal Year 2018.
            Respectfully,

 
 
 
Chris Policinski, President and      Terry Grant, President, Utah
 CEO, Land O'Lakes                    Market, KeyBank
Andrew Tisch, Co-Chairman, Loews     Trey Grayson, President & CEO,
 Corporation                          Northern Kentucky Chamber of
David MacLennan, Chairman and CEO,    Commerce
 Cargill
Sarah Thorn, Senior Director,        Keith Guller, CEO, Essex Industries
 Global Government Affairs, Walmart  Dan Haley, President & CEO,
                                      Colorado Oil & Gas Association
Caroline Roan, Vice President,       David Hart, Executive Vice
 Corporate Responsibility, Pfizer,    President, Florida Chamber of
 Inc.; President, Pfizer Foundation   Commerce
Kate Rumbaugh, Vice President,       Chris Henney, President, Ohio
 Government Relations, The Coca-      Agribusiness Association
 Cola Company                        Aaron Hermsen, Director of Business
John Murphy, Senior Vice President    Development, China Iowa Group
 for International Policy, U.S.      Dave Hofferbert, President, Bond
 Chamber of Commerce                  Technologies, Inc.
Jim Collins, Executive Vice          Gregory Hopkins, Partner &
 President, DuPont                    President, Solitude Wealth
Brad Figel, Vice President Public     Management
 Affairs North America, Mars, Inc.   Kevin Hougen, President & CEO,
                                      Aurora Chamber of Commerce
Connie Justice, President, Planson   Galen Hull, President, Hull
 International                        International
Paul Neureiter, Executive Director   Thomas Hulseman, Managing Director,
 for International Government         Metro Chicago Exports
 Affairs, AMGEN                      Mark Ingrao, President & CEO,
Kathryn Reilly, Global Director       Greater Reston Chamber of Commerce
 Public Affairs, Aon
Tara Hogan Charles, Associate        Bob Jameson, President & CEO, Fort
 Director, Global Government          Worth Convention & Visitors Bureau
 Relations, Procter & Gamble
H.C. Shin, Executive Vice            Andrea Jett Fletcher, Executive
 President, International             Director, French-American Chamber
 Operations, 3M                       of Commerce
Michael Boyle, CEO, Boyle Energy
 Services & Technology
Bill Lane, Chair Emeritus, U.S.      John Kalaras, CEO, Quality Training
 Global Leadership Coalition          Institute
Jeff Rowe, President of Global       Jeffrey B. Kendall, President, JBK
 Seeds and North America, Syngenta    Integrated Solutions, LLC
                                     Robert Kill, President & CEO,
                                      Enterprise Minnesota
Philip de Leon, Director, Public     Joseph Kirk, Executive Director,
 Affairs & International Business,    Mon Valley Progress Council
 AGCO Corporation                    Wally Kocemba, Chairman & CFO,
                                      Calhoun Companies
Hugh Welsh, President, DSM           Katie Kruger, CEO, Denver Metro
 Nutrition                            Commercial Association of
Peter Tichansky, President,           REALTORS
 Business Council for International  Matt Krupp, Co-Owner, Desantis
 Understanding                        Krupp, LLC
Doug Galen, CEO, RippleWorks         Kitty Kurth, President, Kurth Lampe
David Wilhelm, Partner & Chief       Emily Lane, Vice President of
 Strategy Officer, Hecate Energy      Sales, Calendar Islands Maine
Pamela Venzke, Global Government      Lobster
 Affairs & Policy, General Electric  Craig Lang, President, The Prairie
                                      Strategy Group
Florizelle Liser, President & CEO,   Lloyd Le Page, President & CEO,
 Corporate Council on Africa          Heartland Global, Inc.
Kathryn D. Karol, Vice President,    Kirk Leeds, CEO, Iowa Soybean
 Global Government & Corporate        Association
 Affairs, Caterpillar Inc.           Donna Lindquist, President, Soleil
                                      Global Communications
Dan Gaynor, Global Communications,   Lou Ann Lineham, President, Linehan
 Nike                                 Associates, LLC
Kevin Kolevar, Vice President,       Doug Loon, President, Minnesota
 Global Government Affairs, The Dow   Chamber of Commerce
 Chemical Company                    Kevin Lutz, President, Armstrong
                                      Printery, Inc.
Laura Lane, President, Global        Kevon Makell, Founder & CEO, Seww
 Public Affairs, UPS                  Energy
Melissa Froehlich-Flood, Vice        Dr. Toby Malichi, Founder, Global
 President, Government Affairs,       Chief Executive, and Ambassador of
 Marriott                             Trade, Malichi Group Worldwide
Gary M. Cohen, Executive Vice        Ron Marston, President & CEO, HCCA
 President and President, Global      International
 Health and Development BD (Becton,  Frances Martinez, Founder & CEO,
 Dickinson and Company)               North Shore Latino Business
Lisa Malloy, Senior Director,         Association, Inc.
 Global Policy Group, Intel          Nick Mastronardi, Founder & CEO,
 Corporation                          POLCO
Kris Charles, Senior Vice            Jason Mathis, Executive Director,
 President, Global Corporate          Downtown Alliance
 Affairs, Kellogg                    Robert Mayes, CEO, Keel Point
Ambassador Richard Holwill, Vice     Eddie McBride, President & CEO,
 President, Public Policy, Amway      Lubbock Chamber of Commerce
Jeffrey N. Simmons, President,       Sandi McDonough, President & CEO,
 Elanco Animal Health                 Portland Business Alliance
Tom Halverson, CEO, CoBank
Ken Fletcher, CAO, Pike Enterprises  Candace McGraw, CEO, Cincinnati/
Peter M. Robinson, President & CEO,   Northern Kentucky International
 United States Council for            Airport
 International Business              Larry McQueary, COO, Indy Fuel
Karl Jensen, Senior Vice President,  Daniel McVety, President, Japan
 National Governments, CH2M           China Carolina
                                     J. Patrick Michaels, Founder,
                                      Chairman & CEO, CEA Group
Ward Brehm, Founder, Chairman, The   David Milton, Chief Supply Chain
 Brehm Group                          Officer, Payless ShoeSource
Chris Keuleman, Vice President,      Mortada Mohamed, Executive
 Global Government Relations,         Director, Texas International
 International Paper                  Business Council
Frederick S. Humphies, Jr.,          Aneezal Mohamed, General Counsel,
 Corporate Vice President, U.S.       Compliance Officer & Secretary,
 Government Affairs, Microsoft        Commercial Vehicle Group
 Corporation
Dave Adkisson, President & CEO,      Beau Morrow, Owner, Left Hand
 Kentucky Chamber of Commerce         Design
                                     Wilfred Muskens, President & CEO,
                                      Stevens & Lee
Joseph Albert, Owner, Eli H. Albert  Ron Ness, President, North Dakota
 Agency                               Petroleum Council
Diane Alleva Caceres, Principal,     Laura Ortega, Executive Director,
 Market Access International, Inc.    International Business Council,
                                      Illinois Chamber of Commerce
Luis Arguello, President & CEO,      Ersal Ozdemir, President & CEO,
 DemeTECH                             Keystone Corporation
Jeremy Arthur, President & CEO,      Saul Newton, Executive Director,
 Chamber of Commerce Association of   Wisconsin Veterans Chamber of
 Alabama                              Commerce
Connie Bacon, Commissioner, Port of  Jerry Pacheco, President, Border
 Tacoma                               Industrial Association
Doug Badger, Executive Director,     Jim Page, President & CEO, Chamber
 Pacific Northwest International      of Commerce of West Alabama
 Trade Association
Travis Barnes, President & Founder,  Richard Paullin, Executive
 Hotel Tango Artisan Distillery       Director, The International Trade
                                      Association of Greater Chicago
Gene Barr, President & CEO,          Raymond Pilcher, President, Raven
 Pennsylvania Chamber of Business     Ridge Resources
 and Industry                        Heather Potters, Chief Business
Kurt R. Bauer, President & CEO,       Development Officer, PharmaJet,
 Wisconsin Manufacturers & Commerce   Inc.
Lane Beattie, President & CEO, Salt  Ramiro Prudencio, President & CEO,
 Lake Chamber                         Burson-Marsteller Latin America
Jon Bennett, Vice-President of       Robert Quick, President & CEO,
 Business Development, Catalyze       Commerce Lexington
 Dallas                              Laurie Radke, President, Green Bay
                                      Area Chamber of Commerce
Thomas Bentley, Owner & Chairman of  Rona Rahlf, President & CEO, Utah
 the Board, Bentley World Packaging   Valley Chamber of Commerce
John Bernloehr, President,           Brooks Raiford, President & CEO,
 Consolidated Metal Products, Inc.    North Carolina Technology
Carl Blackstone, President & CEO,     Association (NCTA)
 Greater Columbia Chamber of         Michael Ralston, President, Iowa
 Commerce                             Association of Business and
Silvia Bonillam, Director, Small      Industry
 Business Development Center,        Bede Ramcharan, President & CEO,
 Illinois Hispanic Chamber of         Indatatech
 Commerce
Antonio Boyd, President, Think Tank  Olga Ramundo, President, Express
 Consulting Group, LLC                Travel
Tony Braida, Vice President,         Josh Rawitch, Senior Vice
 Bankers Trust Global Banking         President, Communications, Arizona
Becky Brooks, President & Executive   Diamondbacks
 Director, Ruidoso Valley Chamber    Joe Reagan, President & CEO, St.
 of Commerce                          Louis Regional Chamber
Kelly Brough, President & CEO,       Jeff Reigle, President & CEO, Regal
 Denver Metro Chamber of Commerce     Ware, Inc.
                                     Gene Reineke, CEO, Hawthorne
                                      Strategy Group
Cindy Brown, President, Chippewa     John Reinhart, CEO & Executive
 Valley Bean                          Director, Port of Virginia
John Bruntz, President & CEO, The    Colin Renk, Executive Director,
 Boulder Company                      America China Society of Indiana
Anne Burkett, Executive Director,    Sandra Renner, CEO, FasTrack Global
 North Alabama International Trade    Expansion Solutions, Inc.
 Association                         Jim Roche, President, Business &
Bob Burleson, President, Florida      Industry Association of New
 Transportation Builders              Hampshire
 Association                         Bob Rohrlack, President & CEO,
Jay Byers, President & CEO, Greater   Greater Tampa Chamber of Commerce
 Des Moines Partnership
Steve Cain, President, Triangle      Robert Rotondo, President, Rotondo
 North Carolina British American      Enterprises, Inc.
 Business Council                    Jack Roy, Owner, Jax Enterprises
William Canary, President & CEO,     David Rudd, Partner, Ballard Spahr,
 Business Council of Alabama          LLP
Ben Cannatti, Executive Director,    Rebecca Ryan, Founder, Next
 Main Street Jobs Coalition           Generation Consulting
John Casper, President & CEO,        Mel Sanderson, Vice President of
 Oshkosh Chamber of Commerce          International Affairs, Freeport
Kip Cheroutes, President, Japan-      McMoRan, Inc.
 U.S. Network, Inc.
Lalit Chordia, President & Founder,  Lydia Sarson, Executive Director,
 Thar Tech                            German American Chamber of
Gil Cisneros, Chairman & CEO,         Commerce of Philadelphia
 Chamber of the Americas
Jay Clemens, President & CEO,        Joe Savarise, Executive Director,
 Associated Oregon Industries         Ohio Hotel & Lodging Association
Jonathan Coffin, Vice President,
 VOX Global
Harvey Cohen, President, KZB, Inc.   Chris Saxman, Executive Director,
                                      Virginia FREE
Todd Connor, CEO, Bunker Labs        David Schaffert, CEO, Olympia
Caralynn Nowinski Collens, CEO, UI    Thurston County Chamber of
 LABS                                 Commerce
Alfonso Cornejo, President,          Dean Schieve, President, Victus
 Hispanic Chamber Cincinnati USA      Motion and DMD Consulting
Bill Cronin, President & CEO, Pasco  Michael Schmitt, Executive
 Economic Development Council, Inc.   Director, America-Israel Chamber
                                      of Commerce Chicago
Joe Crookham, President, Musco       Bret Scholtes, President & CEO,
 Lighting                             Omega Protein Corporation
Maryann Crush, Manager, South        Ralph Schulz, President, Nashville
 Boston Transit Systems, LLC          Area Chamber of Commerce
Dan Culhane, President & CEO, Ames   Mike Shanley, Founder & CEO,
 Chamber of Commerce                  Konektid International
Yuri Cunza, President & CEO,         Stephanie Simpson, Vice President,
 Nashville Area Hispanic Chamber of   Texas Association of Manufacturers
 Commerce
Eric Dallimore, Owner, Leon Gallery  Bill Sisson, President & CEO,
                                      Mobile Chamber of Commerce
Sarah Davasher-Wisdom, COO, Greater  Nathan Slonaker, President,
 Louisville, Inc.                     Columbus International Affairs
Daniel Davis, President & CEO,        Opportunity
 Jacksonville Chamber of Commerce    Jim Spadaccini, CEO & Creative
                                      Director, Ideum
Richard Dayoub, President & CEO,     Bruce Steinberg, President, Relyco
 Greater El Paso Chamber of          Michael Strange, President, Bassett
 Commerce                             Ice Cream
Ryan Deckert, President, Oregon      Carol Stymiest, President, Canadian
 Business Association                 Business Association of North
Connor Deering, President, Cemen      Carolina
 Tech, Inc.
Dustin DeVries, Co-Founder,          Greg Summerhays, President & CEO,
 Technology Consultant, Caffeine      Sandy Area Chamber of Commerce
 Interactive Technologies            David Taylor, President,
Brian Dicken, Vice President of       Pennsylvania Manufacturers
 Advocacy & Public Policy, Toledo     Association
 Regional Chamber of Commerce
Billie Dragoo, Founder & CEO,        Christian Thwaites, Chief
 RepuCare                             Strategist, Brouwer & Janachowski
Steve Dust, President & CEO,         Jon Troen, President & CEO, Mittera
 Greater Cedar Valley Alliance and    Group
 Chamber                             Brett Vassey, President & CEO,
Barry DuVal, CEO, Virginia Chamber    Virginia Manufacturers Association
 of Commerce
Lauri Elliott, Chairman & Executive  Liane Ventura, Senior Vice
 Director, Afribiz Group, Inc.        President, Greater Miami Chamber
Jason Espinoza, President, New        of Commerce
 Mexico Association of Commerce and  Chad Vorthmann, Executive Vice
 Industry                             President, Colorado Farm Bureau
Joe E. Evans, Owner, Evtex           Chris Wallace, President, Texas
 Companies                            Association of Business
Keith Evans, President, Key          Jeff Wasden, President, Colorado
 Financial Insurance Agency, Inc.     Business Roundtable
Teresa Faidley, Senior Vice          Joyce Waugh, President & CEO,
 President, Schaumburg Bank & Trust   Roanoke Chamber of Commerce
 Company N.A.                        Cherod Webber, President & CEO,
Terry Fankhauser, Executive Vice      Innovative Global Supply, LLC
 President, Colorado Cattlemen's     Ed Webb, President & CEO, World
 Association                          Trade Center Kentucky
Ronald J. Finlayson, CEO, E-Systems  Deborah Wilkinson, President,
 Corporation                          Wilkinson Global Connections
Beverly Flaten, Vice President of    Sheryl Wohlford, Owner, Automation-
 International & Domestic             Plus
 Marketing, JM Grain                 Richard Yang, President, Carolinas
Henry Florsheim, President & CEO,     Chinese Chamber of Commerce
 Wichita Falls Chamber of Commerce   Steven Zylstra, President & CEO,
                                      Arizona Technology Council
Michael Ford, Chairman, Mid-         Howard Glicken, Founder, Chairman &
 Atlantic District Export Council     CEO, The Americas Group
Nathan Frampton, President,
 Fanimation
Stephanie Freeman, President & CEO,  Neel Gonuguntla, President, U.S.
 Dunwoody Perimeter Chamber           India Chamber Of Commerce DFW
Jenny Fulton, Founder, Miss Jenny's  Dean Gorder, Executive Director,
 Pickles                              North Dakota Trade Office
David Gessel, Executive Vice         Matt Glazer, Executive Director,
 President, Utah Hospital             Austin Young Chamber of Commerce
 Association
 

                                 ______
                                 
  Supplementary Material Submitted by Navyn Salem, Founder and Chief 
                     Executive Officer, Edesia Inc.
[June 27, 2017]

    I appreciate the opportunity to submit additional information for 
the Congressional record. On behalf of myself and the people who work 
with me to make transformational, evidence-based ready-to-use foods, I 
want to say thank you for the opportunity to give a voice to those who 
have none, and who's lives and the lives of their children are in grave 
danger. Since 2010, I have appreciated the partnership of USAID and the 
USDA, two U.S. agencies that have never wavered in their shared 
commitment to help promote a more stable and secure world through the 
power of food aid.
    I applaud the Committee's commitment to their efforts, which are 
both doing good in the world and creating economic opportunities in our 
communities. While all of the reasons below--national security, 
economic stability, increased GDP, job creation are important, Edesia 
is here first and foremost because we have the opportunity to the save 
lives. Together, we have the power to make a difference in the life of 
millions.
    There are several issues that I wish to address in response to 
common themes of the hearing and Members' questions:

          Mr. McGovern. . . . Since the President's budget is supposed 
        to be a national security budget, let me throw the question out 
        to you. How do you view these programs as contributing to the 
        U.S. national security interests both in the immediate and the 
        long-term? Anybody?

    Food security is national security and to this end USAID's Food for 
Peace is a critical partner in ensuring America's security. Hunger, 
food insecurity, and malnutrition are linked to violence, conflict, 
migratory activities, and potentially radicalization. These elements 
lead to political instability and terrorism that ultimately affect the 
United States. Food for Peace's food aid works to combat extreme 
deprivation, understanding that political stability depends on people's 
basic needs being met. We strongly support the comments of General 
Mattis and other military leadership on this issue--food aid is an 
essential tool for defense and is cheaper than bombs.

          Mr. Evans. . . . I would like to ask this question of 
        everyone at the table. As we head into consideration of the 
        farm bill expiring in September of 2018, what would each of you 
        set forth as top issues for consideration?

    Maintaining level funding authorization for food aid programs, 
especially Food for Peace, Title [II] of Public Law 83-480, is critical 
for American jobs and our mission in the world. In this climate of 
austerity, we ask that the Committee continue to protect food aid 
programs in the next farm bill. While we support some additional 
flexibility in food aid, we feel that in-kind food aid is an important 
part of the U.S. humanitarian response that creates economic 
opportunity at home, future trading partners abroad, and improved 
global security.
    The commitment by this Committee, and the Agencies it oversees, to 
science-based, results-driven innovation has positioned American, 
companies, like Edesia, as industry leaders. This includes putting 
nutrition at the center of the food aid basket by focusing on the need 
for nutritional commodities that are effective and ``fit for 
purpose'',\1\ such as ready-to-use foods and corn-soy blend, for 
vulnerable populations (young children, pregnant women, people living 
with HIV/AIDS) in addition to bulk commodities for feeding the general 
population. Ready-to-use foods currently account for only 1.5% of the 
food aid basket purchase and we would like to see this percentage 
doubled in the program in order to meet more of the current needs of 
children with acute malnutrition. Investments in nutrition-specific 
solutions have a positive impact on long-term GDP growth and overall 
issues of safety and security both at home and abroad. In 1984, there 
were zero practical remedies for Ethiopian children enduring the 
extreme pain of famine. In 2017, the very best solutions are readily 
available and can easily be deployed anywhere famine exists. Tackling 
and ending the global health crisis of malnutrition in our time is now 
possible.
---------------------------------------------------------------------------
    \1\Webb, P., B. Rogers, I. Rosenberg, N. Schlossman, C. Wanke, J. 
Bagriansky, K. Sadler, Q. Johnson, J. Tilahun, A. Reese Masterson, A. 
Narayan. 2011. Delivering Improved Nutrition: Recommendations for 
Changes to U.S. Food Aid Products and Programs. Boston, MA: Tufts 
University.

          The Chairman. . . . How can we move toward self-sufficiency 
        in countries versus continuing to do the emergency feeding? 
        What can we do--in lieu of, just continuing to provide food--to 
---------------------------------------------------------------------------
        allow these countries to transition to self-sufficiency?

    Early intervention with the right ``fit-for-purpose'' nutritional 
products can lead to a lifetime of health and productivity for children 
who do not succumb to malnutrition or its effects. The nutritional 
support that USAID provides through food aid improves long-term 
stability and economic development. Reductions in chronic malnutrition 
rates can increase GDP by 4-11% in Asia and Africa,\2\ creating 
countries which are more stable, and productive. These counties are 
able to not only support themselves but transition to becoming 
consumers in the global market. Along with food aid, development 
programs that focus on supply chains, agricultural markets, and 
nutrition education move countries toward self-sufficiency.
---------------------------------------------------------------------------
    \2\World Bank. 2016. Investing in nutrition: the foundation for 
development--an investment framework to reach the global nutrition 
targets. Washington, D.C. : World Bank Group. http://
documents.worldbank.org/curated/en/963161467989517289/Investing-in-
nutrition-the-foundation-for-development-an-investment-framework-to-
reach-the-global-nutrition-targets.
---------------------------------------------------------------------------
                                 ______
                                 
Supplementary Material Submitted by Thomas S. Jayne, Ph.D., Foundation 
    Professor of Agricultural, Food, and Resource Economics and Co-
Director, Alliance for African Partnership, Michigan State University; 
                  on behalf of Farm Journal Foundation
          The Chairman. . . . How can we move toward self-sufficiency 
        in countries versus continuing to do the emergency feeding?

    A recent U.K. study in Kenya and Ethiopia estimates that every $1 
invested in resilience will result in $2.90 in reduced humanitarian 
spending and avoided losses as well as improved poverty, hunger, and 
malnutrition outcomes.
    With roughly 70% of Africans currently engaged in agriculture, the 
U.S. should invest in; (a.) Agricultural Development that will help 
farmers grow more of their own food (b.) capacity building to 
strengthen agricultural and academic institutions, and (c.) technical 
assistance to strengthen local food systems and markets. These measures 
will address the root causes of food insecurity. A resilient food 
system and strong institutions will ultimately lessen the need for more 
costly humanitarian assistance when shocks like drought occur, and will 
help governments' better respond to their own needs.
    Here are two examples of how U.S. Feed the Future investments are 
already having an impact, helping people to feed themselves and 
reducing the need for emergency aid;

    Malawi--A comparison of two communities in Malawi between 2016 and 
2017 illustrates the point.

   Last year, Malawi's 10 month humanitarian response cost the 
        USG a total of $126 million in Food for Peace emergency, and 
        some repurposed Feed the Future and ENV resources. According to 
        the World Food Programme, the estimated cost to deliver food to 
        one of the families was approximately $390 per household over 
        the 10 month response period (including rations, transportation 
        of food, and administrative costs). Other than the food rations 
        the village had received, there was no other development 
        assistance--their situation strongly suggested that they would 
        likely require food again during the next shock.

   By contrast, a community in which USAID invested an 
        estimated $376 per household over 5 years did not require food 
        assistance during last year's emergency. Over the long-term, 
        this comparison suggests that the savings from helping people 
        become more self-sufficient could be extraordinary.

   Feed the Future is also assisting the private-sector and the 
        Government of Malawi by providing technical assistance with 
        warehouse receipts to help farmers store grain and achieve 
        better prices, while also supporting food needs during deficit 
        periods. This will help Malawi to be more resilient and less 
        reliant on the U.S. for emergency assistance.

    Ethiopia:

   Data USAID collected from the same households every 2 months 
        over the course of the 2016 El Nino drought in Ethiopia's 
        lowlands provides even more powerful evidence in this regard. 
        Among those that experienced the most severe drought 
        conditions, households in communities reached by Feed the 
        Future's comprehensive resilience programs were largely able to 
        maintain food security during the 2016 drought with only minor 
        impacts on household nutrition despite the fact that the 
        drought was more severe and farther reaching than the 1985 
        drought that led to widespread famine. By contrast, households 
        in other communities that did not receive assistance with their 
        agricultural practices experienced a significant, 30% decline 
        in their food security status and required food assistance.

          The Chairman. . . . What can we do--in lieu of, just 
        continuing to provide food--to allow these countries to 
        transition to self-sufficiency?

    U.S. assistance can be more targeted to help transition to local 
ownership. A more cost-effective, direct approach should include;

  1.  A new approach that would shift the role of U.S. institutions 
            from providing the technologies, services, and answers to 
            equipping African organizations to do so themselves.

  2.  Significant investment on the part of the national governments in 
            Africa--they must have `skin in the game', to leverage U.S. 
            investments, ensure sustainability and bolster national 
            agrifood systems to maintain progress once donor funds are 
            no longer available, similar to what the Millennium 
            Challenge Corporation (MCC) requires for country compacts.

  3.  The U.S. could provide more technical assistance to help 
            governments maintain and rotate their grain reserves to use 
            them more effectively. Government grain reserves exist 
            across Africa in countries for instance, in: Malawi, 
            Ethiopia, Kenya, Mali, Zimbabwe, Nigeria, Tanzania and 
            Zambia. Ethiopia has been successful to some extent in 
            managing their reserves, but others have been less 
            successful with poor control of grain condition, management 
            and rotations causing grain to rot, rather than be 
            available when the countries need it most.

  4.  Proposals from U.S. grantees that include a plan from the outset 
            that allows for a transition to nationally owned and 
            operated programs

       The World Food Programme and the World Bank published a 
            report
              entitled ``Rethinking School Feeding: Social Safety Nets, 
            Child Development,
              and the Education Sector (https://
            openknowledge.worldbank.org/
              bitstream/handle/10986/2634/48742.pdf).'' On pages 39 and 
            40, they re-
              port on ``Key Elements of the School Feeding Program 
            Transition Process''.
              They found that successful transitions to nationally 
            funded and operated
              school feeding programs usually include an agreement at 
            the outset. They
              recommend that a successful plan include an agreement 
            between the gov-
              ernment and implementing partners about the duration of 
            external assist-
              ance, and clear time frames and milestones for the 
            transition process. This
              kind of approach could be applied to U.S. food aid 
            programs like McGovern-
              Dole as host countries experience greater economic and 
            agricultural growth.
              McGovern-Dole can step up the capacity building and Feed 
            the Future
              would support the Agricultural side, connecting 
            productive farmers to the
              school feeding market.

  5.  One could look at the viability of private initiatives, like the 
            famine insurance scheme now overseen by the African Union. 
            Theoretically, it might be an effective public-private 
            partnership to reduce the need for emergency aid and could 
            bring in more donor money. Having host governments and 
            other donors contribute to insurance could reduce the U.S. 
            humanitarian outlays significantly in strategic geographies 
            in Africa.

          The Chairman. Would you brief the group as to what AgriCorps 
        does, Dr. Jayne?

    AgriCorps is an innovative private model that uses recent 
agriculture graduates and faculty from U.S. institutions in partnership 
with 4-H or Future Farmers of America (FFA) to strengthen the capacity 
of agricultural education and extension in developing countries. They 
provide direct technical assistance to developing country partners at a 
fraction of the cost of International or U.S. partners. In 2016, they 
had 19 dynamic young fellows who volunteered for 1 year and embedded 
within a community or local organization in Ghana, sharing their 
technical expertise to improve practices. When the fellows return to 
the U.S., the impact of their work in Africa will continue. To reap all 
of the benefits of this program--not just overseas, but here at home as 
well--the Committee could recommend that returning AgriCorps 
participants be considered for key positions in American agriculture 
including those positions identified by USDA in workforce and 
succession planning. This would be a great model public-private model 
for the Agriculture Committee to consider in the farm bill to provide 
the kind of capacity building we suggest for Agricultural Development 
in our written testimony.

          Mr. McGovern. . . . Since the President's budget is supposed 
        to be a national security budget, let me throw the question out 
        to you. How do you view these programs as contributing to the 
        U.S. national security interests both in the immediate and the 
        long-term? Anybody?

    Of the estimated 800 million people facing hunger globally, \1/2\ 
are farmers. Helping farmers feed their families and have enough to 
sell on the local market will help their communities thrive. Locally 
gained food security through agricultural productivity and an improved 
food system will contribute to stability by stemming the flow of human 
migration and trafficking while reducing the number of people who join 
armed groups out of desperation to feed their families and make an 
adequate living.
    Throughout the developed world, agriculture accounts for a 
significant share of countries' GDP and labor force. When agricultural 
development assistance from the United States and other donor nations 
is provided, this helps to improve the agricultural productivity of 
smallholder farmers and thus income generated by that sector in a given 
country. This contributes to creating greater economic prosperity which 
tends to be shared fairly widely among the population. As individual 
farming households gain more discretionary income, they can afford to 
get their children educated, which improves the family's long-term 
financial prospects and when these gains are aggregated across villages 
and provinces, also bolsters the national economy and contributes to 
more secure nations.
    Under such improved economic conditions, evidence suggests that the 
likelihood of sustained civil conflict or widespread militia/insurgent 
activity is reduced. On the other side of the coin, where poor economic 
opportunities persist, the likelihood of conflict grows. Recent 
examples abound--we know that the food price volatility experienced 
globally in 2007-08 spurred food riots in dozens of countries, and is 
seen as a major factor in the unrest, which toppled several governments 
during the Arab Spring. An extended drought in Syria between 2006 and 
2009, limited local food availability and is considered a contributing 
factor in the civil conflict that arose in that country in 2011 and 
which has driven millions of Syrians to either become displaced 
internally or to migrate in search of safety and the opportunity to 
feed their children.
    Today, there are an estimated 65 million people who have been 
forcibly displaced because of the threat that military conflict and/or 
food insecurity posed to them in their home countries, the highest 
number since the end of the Second World War. That total includes more 
than 22 million refugees primarily from the Middle East and Africa, who 
have placed large economic burdens on neighboring countries and created 
political backlashes in many other countries that are farther removed 
geographically.
    When countries can produce more of their own food, they are less 
reliant on accessing the international market. Such markets are doubly 
risky because world food prices move not only because of commodity 
price shifts but also due to energy price volatility affecting the cost 
of ocean transport. The food price crisis of 2007-08 was amplified by 
energy price volatility over the same period, as oil prices soared from 
$70/barrel in January 2007 to $156/barrel in June 2008. Countries in 
Sub-Saharan Africa that had invested in agriculture and food systems 
fared better than African countries that rely heavily on imports to 
meet their basic food needs. For instance, in Uganda, when the prices 
of expensive imported commodities rose during the crisis, families 
purchased less expensive, locally grown alternatives on the market. As 
a result, Uganda's food security remained relatively stable.
    A broader example of this relationship can also be seen in Rwanda. 
In 1994, a vicious civil war between two tribal groups broke out, which 
is estimated to have cost at \1/2\ million lives. At the time, the 
country had a per capita GDP of about $107, and corn yields averaging 
only 1.2 tons per hectare in the 5 years leading up to the conflict. 
Since that conflict, and especially over the last several years, both 
the Rwandan Government and donor countries (the United States among 
them) have invested heavily in the country's agricultural sector--the 
latter to the tune of nearly $50 million per year, and maize yields 
have nearly doubled, to more than 2.3 tons per hectare. The country's 
per capita GDP is now about $700 per year, and child stunting rates 
have fallen. According to Worldwide Governance Indicators calculated by 
professional statisticians at the World Bank and the Brookings 
Institution, Rwanda was in the top \1/4\ of Sub-Saharan African 
countries in terms of their political stability as of 2015.
    In a March 2017 letter to Congressional leadership, spearheaded by 
the U.S. Global Leadership Coalition, more than 120 retired Three- and 
Four-Star Generals and Admirals asserted that ``elevating and 
strengthening diplomacy and development alongside defense are critical 
to keeping America safe.'' This letter was sent in response to the 
release of President Trump's s ``skinny budget'', which called for 
reducing funding at the U.S. Agency for International Development by 31 
percent for Fiscal Year 2018. The full text of the letter can be found 
at this link: http://www.usglc.org/2017/02/27/over-120-retired-
generals-admirals-on-state-and-usaid-budget-now-is-not-the-time-to-
retreat/.

          Mr. Evans. . . . I would like to ask this question of 
        everyone at the table. As we head into consideration of the 
        farm bill expiring in September of 2018, what would each of you 
        set forth as top issues for consideration?

    No one does Agriculture as well as the U.S. The upcoming farm bill 
offers Congress the opportunity to encourage USDA and the land-grant 
university system to leverage their strengths in agricultural research 
and institutional expertise in agricultural education and extension 
more effectively in U.S. global food security efforts. Recommendations 
are outlined in the written testimony, with some specifics below.
    Increasing public sector funding for agricultural research and 
development is crucial to ensure that U.S. Agriculture maintains its 
comparative edge in productivity. Funding for U.S. public Ag R&D over 
the years has flat lined. China, Brazil and India now outspending the 
U.S. $2.66 for every $1 the U.S. spends. We can leverage federal 
funding with State and Private-Sector funding to strengthen U.S. public 
R&D efforts.
    We believe that such assistance not only benefits producers in 
developing countries, but over the long run, creates economic benefits 
for the United States as well, in terms of expanded market 
opportunities. This view was well expressed in an Op-Ed penned by 
Senator Jerry Moran in the June 2, 2017 issue of Agri-Pulse. In that 
Op-Ed, he pointed out that ``by investing in global agriculture 
development, not only can we guide food-insecure countries down a path 
that leads to greater peace and prosperity, but we can also develop 
long-term trading partners who purchase Kansas grown food and 
agriculture products. That's a win-win.'' That Op-Ed can be found at 
the following link: https://www.agri-pulse.com/articles/9315-opinion-
global-agriculture-development-benefits-americas-farmers.
    The following steps be considered in relevant legislation:
Farm Bill Research Title
    (1) Give USDA the flexibility to fund basic and applied research 
projects that are conducted outside the United States by lowering 
bureaucratic barriers for USDA (and State Agricultural Experiment 
Stations (SAESs)) engagement in international R&D by amending Section 
1402 of the National Agricultural Research, Extension, and Teaching 
Policy Act of 1977 to ``encourage intramural and extramural science 
programs in research, extension and teaching that strengthen American 
agriculture through global partnerships and engagement.'' This language 
would facilitate more work which is beneficial to both U.S. and foreign 
producers, such as on plant or animal disease, and could also 
strengthen the collaborative relationship between USDA and USAID on 
agricultural research, both in terms of research planning and 
execution.
    (2) Update the basis of the formula funds provided for state 
agricultural experiment stations, putting more weight on the relative 
values of agricultural production as a basic determinant for cross-
state allocation.
    (3) Create a commodity check-off program or research assessment 
aimed specifically at generating funds for agricultural research to be 
managed outside existing U.S. check-offs programs. The government can 
offer matching funds (up to some predetermined limit), thus splitting 
the R&D burden between check-off programs and general tax revenues. 
Including other industries that benefit from agricultural R&D in the 
scheme (such as input suppliers and food processors) would allow for 
even more agricultural R&D and, if implemented wisely, substantially 
correct the persistent underinvestment in agricultural R&D.
Farm Bill Trade Title
    (4) The U.S. Government made crucial investments through the 
African Graduate Fellowship Program beginning in the 1960s and 1970s to 
help developing countries create their own agricultural institutions 
and research capacity, but such long-term training efforts are largely 
a thing of the past today. In order to bring back some of this 
capability, we should consider bolstering funding for the Borlaug 
Fellows program, and provide at least some of the Fellows sufficient 
resources to pursue a full graduate degree.
    (5) Coordinate Farmer-to-Farmer, Cochran and Borlaug Fellowships 
from an oversight perspective, and allow USDA flexibility to offer 
extension personnel and other agricultural specialists longer-term 
assignments to follow up on work with counterpart institutions in 
Africa, building on previous work conducted under Farmer-to-Farmer, 
Cochran and Borlaug projects.
    (6) Capitalize on USDA's extensive knowledge and technical 
expertise to enhance capacity within (1) local agricultural extension 
systems working with millions of farmers; working from a local 
institutional base and (2) policy analysis units in developing nations, 
especially on SPS technical regulations, trade facilitation, and 
overcoming barriers to markets. USDA should undertake to develop 
monitoring and evaluation techniques that are more suitable for the 
long-term investments and payoffs that are characteristic of 
institution-building efforts. For instance;

  a.  Open the Cochran Fellows program to training government officials 
            and private sector employees charged with overseeing SPS 
            standards-setting testing and certification of food and 
            agricultural products, with the aim of bringing those 
            efforts up to international standards.

  b.  Augment the current Farmer-to-Farmer program to address 
            intuitional capacity building needs in the areas they are 
            serving, from a local institutional base. Congress could 
            consider effective private capacity building models like 
            AgriCorps, potentially through Farmer to Farmer. Upon 
            returning to the U.S., these AgriCorps fellows should be 
            considered for employment in U.S. agriculture, including at 
            USDA as the Department implements its workforce and 
            succession plans.

  c.  Congress could also give USAID the flexibility to offer USDA 
            extension personnel and other agricultural specialists 
            long-term assignments to work with counterpart institutions 
            in Africa. This approach might allow USDA to apply its 
            domestic extension experience internationally to strengthen 
            counterpart African public sector extension systems.

    (7) Modify the statutory responsibilities of USDA agricultural 
attaches to include providing assistance to U.S. agribusiness firms 
engaged in commerce within developing countries, not just to those 
conducting trade with such countries.
Global Food Security Act Reauthorization
    (8) Make U.S. capacity building programs more cost-effective by 
supporting more local African policy institutes, implementers and 
universities by encouraging leadership from African experts and 
organizations, even as both international and local players remain 
involved.
    (9) Consider supporting programs that train scientists in Africa 
rather than in the U.S. to reduce costs.
    (10) Require that national governments in Africa prioritize 
agriculture and provide budgets for these activities to leverage U.S. 
investments and ensure sustainability, similar to what the Millennium 
Challenge Corporation (MCC) requires for country compacts.
    (11) Expand the Innovative Agricultural Research Initiative (iAGRI) 
program model established at the University of Sokoine in Tanzania to a 
multi-country pilot to scale-up teaching research, and extension 
programs that address organizational development challenges by 
providing management training and matching local organizations with 
sister organizations in the U.S., at a fraction of the cost of training 
in the U.S. The iAGRI project represents a unique combination of 
fostering a range of agricultural institutions within Tanzania, and 
similar efforts should be encouraged elsewhere in Sub-Saharan Africa. 
In addition to costing a fraction of what a U.S. based model costs, the 
host African institutions provide resources, further leveraging U.S. 
dollars and building sustainability.

          Mr. Yoho. . . . It is crucial that this Committee, indeed, 
        all the Members of the House evaluate how we structure our 
        nation's foreign aid.
          The world has changed and our methods of delivering foreign 
        aid need to change as well. We must focus on efficiently 
        transitioning aid recipient countries to trading partners. We 
        need a paradigm shift from aid to trade.

    In Sub-Saharan Africa, 41 African countries have signed compacts 
under the Comprehensive Africa Agriculture Development Program (CAADP), 
which commits them to review the needs in their own agricultural 
sectors and invest their own resources in addressing them. There are 
two concrete goals associated with such compacts--(1) allocate at least 
ten percent of their own government expenditures to the agricultural 
sector, and (2) achieve six percent annual growth in agricultural GDP.
    As a result, on average, public agricultural expenditures have 
risen by more than seven percent per year across Africa since 2003, 
nearly doubling public agricultural expenditures since the launch of 
CAADP. USAID and USDA should consider requiring national governments in 
Africa to provide significant investment in Agriculture to ensure 
sustainability and bolster national agrifood systems, similar to what 
the Millennium Challenge Corporation (MCC) requires for country 
compacts. It might be necessary to ratchet up the required level of 
national investment through their national budgets gradually over a 
several year period, but the concept of requiring 'skin in the game' is 
a sound one. It helps ensure that the national government has a stake 
in maintaining funding to sustain those activities once U.S. funding 
flows have ended.
Shifting USAID to Trade
    With Africa's projections for growth detailed in the written 
testimony, supporting Ag Development in Sub-Saharan Africa will lead to 
an exponential increase in economic growth in their economies, with 
positive market growth for U.S. Agriculture, and the broader U.S. 
economy. Here are some statistics on how the U.S. economy stands to 
benefit from trade versus aid;

  1.  Many countries once dependent on food aid are now big buyers of 
            U.S. food products. According to USAID, 43 of the top 50 
            consumer nations of American agricultural products were 
            once U.S. foreign aid recipients. One of these countries, 
            Indonesia, has gone from being the largest recipient of 
            USDA food assistance just ten years ago, to becoming the 
            United States' ninth-largest export market for 
            agricultural, fish and forest products. In Fiscal Year 
            2010, the United States exported $2.3 billion worth of 
            agricultural goods to Indonesia, a six-fold increase over 
            the course of a decade. Similarly, South Korea, once a 
            major U.S. aid recipient is the 6th largest importer of 
            U.S. agricultural products in 2016, importing U.S. corn, 
            meat, and other commodities (USDA).

  2.  Africa's food import bill has risen seven-fold in the past 15 
            years to roughly $45 billion annually and will likely 
            continue to expand rapidly especially with income growth.

  3.  Estimates of job created in the U.S. resulting from increased 
            U.S. food exports (greater demand for transport services, 
            finance, insurance, reinsurance, port facilities, storage, 
            input supply, and farming) are significant. See below;

        U.S. agricultural exports more than doubled in value between 
            2006 and 2014, from $82 billion to $168 billion. Based on 
            2014 USDA/ERS estimates of the multiplier effects of U.S. 
            agricultural exports, that increase supported nearly 
            650,000 jobs and generated $109 billion in additional U.S. 
            economic activity over that period.
        With respect to Sub-Saharan Africa, the $2.3 billion in U.S. 
            agricultural exports shipped annually to that region on 
            average over the last 5 years (2012-2016) supported 17,440 
            jobs throughout the U.S. economy and generated an 
            additional $2.9 billion in U.S. economic activity each year 
            here at home.

          For concrete proposals from the written testimony that could 
        be considered for the Farm Bill or GFSA Reauthorization, see 
        the response to Mr. Evans.
                                 ______
                                 
      Joint Submitted Statement by Action Against Hunger, et al.*
---------------------------------------------------------------------------
    *Statement submitted by: Action Against Hunger, The Borgen Project, 
Bread for the World, CARE, Catholic Relief Services, Church World 
Service, Global Citizen, Interaction, Mercy Corps, Modernizing Foreign 
Assistance Network, ONE, Oxfam America, Save the Children, World Food 
Program USA, World Vision U.S.
---------------------------------------------------------------------------
    Chairman Conaway and Ranking Member Peterson, as international 
humanitarian and development organizations devoted to addressing the 
needs of the most vulnerable people around the world, we would like to 
thank you for holding a hearing on June 7, entitled The Next Farm Bill: 
The Future of International Food Aid and Agricultural Development. We 
especially appreciate your words of support for these programs, and the 
steadfast commitment you have shown them over the years. We stand as 
ready partners to work with you and other Members of the House 
Committee on Agriculture and with the members of the House 
Appropriations Subcommittee on Agriculture, Rural Development, Food and 
Drug Administration and Related Agencies to ensure their continued 
funding in annual appropriations bills and that their reauthorization 
in the next farm bill retains existing flexibilities and improves how 
these programs function, while using taxpayer dollars as wisely as 
possible.
    As U.S.-based charities and faith-based organizations, many of 
which are implementing these programs, we strongly oppose the 
elimination of funding for the Food for Peace and McGovern-Dole 
programs, as outlined in the Administration's FY 2018 Budget Proposal. 
Cutting lifesaving programs does not improve upon assistance or stretch 
dollars to reach more people. Instead, the Administration's proposal 
would gut our country's two largest food aid programs.
    Cutting funding to the Food for Peace Title II program would leave 
over 41 million people without assistance,\1\ 33 million of whom would 
almost certainly face hunger and starvation without such assistance.
---------------------------------------------------------------------------
    \1\Food for Peace--Fiscal Year 2016 Programs, U.S. Agency for 
International Development, undated https://www.usaid.gov/sites/default/
files/documents/1866/FY_2016_Fact_Sheet_
FINAL_6.1.2017.pdf.
---------------------------------------------------------------------------
    The McGovern-Dole program provides school lunches for poor children 
in primary and secondary school. Oftentimes, the food distributed 
through the program is the only meal these children receive each day, 
and as a result, school attendance in program areas is greatly 
increased, especially for girls who likely would not receive an 
education without the incentives provided by the program. To date, 
McGovern-Dole has reached 40 million children and is active in 24 
countries.
    At a time when more than 20 million people in four countries are 
currently at risk of famine, adequate funding levels from both 
authorizers and appropriators for these critical food aid programs is 
more important than ever. We therefore respectfully request that both 
the McGovern-Dole and Food for Peace be reauthorized in the next farm 
bill.
    During the hearing, a number of questions were raised regarding how 
international food assistance programs are implemented, and their 
associated costs. We would like to respond to some of these points.
Integrity of Food Assistance
    It was suggested during the hearing that the use of ``cash'' in 
programs was less secure than the use of commodities in programs. In 
this case, ``cash'' refers to cash transfers, vouchers, and local and 
regional procurement of food commodities. As many implementing 
organizations know, there are challenges to ensuring the security of 
any aid program, and many safeguards are put into place to protect the 
integrityof programs of both types of assistance.
    Implementing organizations identify and deliver assistance under 
strict compliance requirements and take the necessary measures to 
ensure that resources reach the intended recipients. In commodity and 
cash programs, meticulous records are kept to ensure assistance is 
distributed to the right people and is not diverted to other purposes. 
In most programs, there is no government entity involved in handling 
these resources (the largest exception in current programs is the off-
market monetization of food aid commodities arranged with the 
Government of Bangladesh). USAID implementing partners are accountable 
to the agency, and to Congress, in how they utilize these resources. 
They know who is receiving commodities, and they know what is being 
bought with vouchers and cash transfers. In both cases, implementers 
use real time data to monitor these programs. The scenario that some 
critics of different food aid modalities have painted of corrupt 
government officials skimming off the top is highly unlikely in either 
cash or commodity programs.
Cargo Preference
    Several Committee Members inquired as to the costs related to cargo 
preference and the impact it has on food aid programs. The estimate 
that the costs associated with U.S.-flagged shipping is only about ten 
percent higher than competitively bid foreign flag vessels offered by 
the witness for USA Maritime at the hearing is lower than reported in 
recently published studies. Available data demonstrates the costs are 
much higher.

   In 2015, a report by the U.S. Government Accountability 
        Office (GAO) found that cargo preference laws increased the 
        cost of shipping across all food aid programs by 23 percent on 
        average between 2011 and 2014, and by 36 percent just on USDA 
        administered food aid programs.\2\ The GAO also noted that this 
        resulted in food aid programs spending approximately $107 
        million more on ocean freight during this period than they 
        otherwise would have if cargo preference laws were not applied.
---------------------------------------------------------------------------
    \2\International Food Assistance: Cargo Preference Increases Food 
Aid Shipping Costs, and benefits are Unclear, GAO-15-666, August 26, 
2015 https://www.gao.gov/products/GAO-15-666.

   Looking at food aid shipments from 2012 through mid-2015, 
        the American Enterprise Institute (AEI) found that packaged 
        shipments on U.S.-flagged vessels cost $61 more per ton and 
        bulk shipments cost $33 more per ton.\3\ According to AEI, 
        cargo preference requirements added $50 million more a year to 
        ocean freight costs during this period.
---------------------------------------------------------------------------
    \3\Stephanie Mercier & Vincent H. Smith, Military readiness and 
food aid cargo preference: Many costs and few benefits, American 
Enterprise Institute, September 28, 2015, http://www.aei.org/
publication/military-readiness-and-food-aid-cargo-preference-many-
costs-and-few-benefits/.

   And, in a 2011 study by the Maritime Administration, it was 
        found that operating costs for U.S.-flagged vessels were 2.7 
        times more expensive than equivalent foreign flag vessels.\4\
---------------------------------------------------------------------------
    \4\Comparison of U.S. and Foreign-Flag Operating Costs, U.S. 
Department of Transportation, Maritime Administration, September 2011, 
https://www.marad.dot.gov/wpcontent/uploads/pdf/
Comparison_of_US_and_Foreign_Flag_Operating_Costs.pdf.

    It was also suggested during the hearing that cargo preference 
requirements for food aid programs be increased from the current 50 
percent requirement. Given the impacts cargo preference requirements 
have on reducing beneficiary reach, we strongly oppose this idea and 
note it will only mean more food aid dollars going to ocean freight and 
less going to the purchase of food for people in need. We in fact 
encourage the Committee and all of Congress to find ways to reduce the 
impact of cargo preference on food aid programs. This could be done by 
reducing or eliminating the current 50 percent requirement, and/or 
changing how cargo preference laws are applied. For instance, USDA food 
aid programs require that the minimum percentage be met by each awarded 
project, in each country, in each year. Moving away from such a narrow 
approach in calculating cargo preference would also reduce its impact 
on programs.
Monetization in Title II
    Currently, the farm bill requires that 15 percent of the 
commodities used for development programs in title II be monetized. 
This means the commodities must be sold in foreign markets to raise 
proceeds that are then used to fund development programs. As the GAO 
reported in 2011, proceeds made through monetization on average only 
account for 75 percent of the total cost to purchase and ship those 
commodities in the first place, making monetization an inefficient 
means to fund programs.\5\
---------------------------------------------------------------------------
    \5\International Food Assistance: Funding Development Projects 
through the Purchase, Shipment, and Sale of U.S. Commodities Is 
Inefficient and Can Cause Adverse Market Impacts, GAO-11-636, June 
2011, http://www.gao.gov/assets/330/320013.pdf.
---------------------------------------------------------------------------
    We recommend that the requirement to monetize in title II programs 
be replaced with permissive authority to utilize monetization. This 
will preserve the ability to use monetization in instances where it 
makes sense, while allowing programs to continue to move away from 
monetization when benefits do not outweigh its inherent inefficiencies. 
We also underscore that shifting monetization from a requirement to a 
permissive authority will not result in a change in the amount of U.S. 
commodities shipped overseas; it will simply end a requirement to sell 
those commodities once they arrive in a developing country.
Community Development Fund and Title II
    The 2008 Farm bill established a minimum funding level for non-
emergency, development programs under title II. These programs, 
referred to as the ``safebox'' or Development Food Aid Programs 
(DFAPs), are multi-sectoral, multi-year programs that address root 
causes of hunger. Without the assurance provided by the safebox, some 
believe that funding for long-term development could be diverted during 
times of high emergency needs, such as those we are currently 
experiencing. Stable funding for development programs is critical, as 
these programs often focus on building the resilience of vulnerable 
regions to withstand shocks, which can ultimately reduce the number of 
people in need of emergency assistance in future crises.
    For the last several years, USAID has used waiver authority to 
substitute some title II funding going towards the safebox with funding 
from the Development Assistance account, under the auspices of the 
Community Development Fund (CDF). With the funding made available 
through the CDF, and additional funding for direct program costs made 
possible by changes in the 202(e) account during the last farm bill, 
USAID has substantially reduced the use of monetization in title II 
programs, thus making them more efficient. It is also important to note 
that use of CDF provides programs additional direct cash funding in a 
way that does not reduce the amount of U.S. commodities made available 
through title II--they are simply shifted to emergency uses.
    We strongly recommend that the Committee support this arrangement 
in the next farm bill, and provide a means to USAID to implement this 
approach without relying on its waiver authority. Specifically, we ask 
the Committee to adopt provisions that allow USAID to use other funds 
it is appropriated in the implementation of title II safebox programs, 
and that funds used in this way may be counted towards the minimum 
required funding levels for non-emergency programs. Through this, the 
reliance of monetization is reduced, programs have more flexibility in 
the modalities they can utilize, and the level of commodities used in 
programs is not reduced.
Implementation of the Food for Peace Program
    It was also suggested by the USA Maritime witness that USDA assume 
responsibility for implementing the Food for Peace program. We can only 
assume this suggestion was made because USA Maritime prefers to work 
under USDA's narrower interpretation of the cargo preference law that 
would result in greater use of U.S.-flagged vessels, as our experience 
in the actual management of programs does not present any reason to 
make such a drastic change.
    Title II programs are managed by USAID's Office of Food for Peace 
(OFFP). In addition to title II, the OFFP also manages implementation 
of the Emergency Food Security Program (EFSP), which funds cash-based 
emergency food assistance programs. This gives OFFP the ability to 
coordinate the entire U.S. emergency food assistance response, ensuring 
the commodities and cash made available are used in the most 
appropriate ways. The OFFP also works closely with the Office of 
Foreign Disaster Assistance (OFDA), which responds to non-food 
emergency needs, to ensure the full scope of emergency needs is 
addressed. Together, this allows USAID to effectively coordinate 
emergency response, despite the multiple funding streams that 
contribute to the response. Moving implementation of title II programs 
to an entirely different agency would likely diminish current 
coordination with EFSP and OFDA programming, making our emergency 
response efforts less effective.
Conclusion
    Given the Administration's misguided decision to recommend the 
elimination of funding for these programs, now more than ever it is 
necessary to work together and redouble our efforts to fully fund these 
programs. We need to ensure that U.S. food and nutrition assistance 
reaches as many people as possible and responds to emergencies as 
quickly as possible. Updating food aid programs to allow them to 
operate more efficiently and help more people in need, while 
maintaining strong bipartisan support, should be everyone's goal. The 
ability of USAID to use the right tools at the right time to address 
hunger and malnutrition--including food vouchers, cash transfers, local 
and regional procurement, and U.S. commodities--is vital to ensuring 
that we can respond to crises effectively and that United States 
assistance reaches millions more people at no additional cost.
    We look forward to working with your Committee, other Members of 
Congress and the range of interested stakeholders to strengthen food 
aid programs, fully fund food assistance in order to meet urgent 
humanitarian needs and build resilience in poor communities over the 
long term, to protect the core focus of helping hungry, malnourished, 
and vulnerable people, and to continue to increase the effectiveness of 
existing food assistance programs. Together, we can help ensure U.S. 
international food aid remains an American and global success.
                                 ______
                                 
                          Submitted Questions
Response from Margaret Schuler, Senior Vice President, International 
        Programs Group, World Vision, Inc.--U.S.
Questions Submitted by Hon. Stacey E. Plaskett, a Delegate in Congress 
        from Virgin Islands
    Question 1. Why does Food for Peace use multiple modalities in its 
operations, including commodities and cash transfers?
    Answer. While a range of various food assistance modalities exist, 
there is no ``right'' intervention. General food distributions in times 
of emergency and non-emergency ensures beneficiaries receive sufficient 
calories, while supplementary food distributions often emphasize 
nutritious foods among pregnant and lactating women and their young 
children in the first 1,000 days of life.
    In the U.S. context, through the Food for Peace program, U.S. grown 
commodities are sold to the U.S. Government by American farmers to be 
used in food assistance programming. This type of food aid is ideal 
when local markets are not functioning or there is insufficient food 
available to meet the local food need. When local market conditions are 
favorable and adequate quantities of food are available, local 
commodities can be purchased and then used in country or regional 
response efforts. In both contexts, this food assistance can be 
exchanged for participation in programs known as food for assets or 
food for work which are designed in an effort to address underlying 
causes of hunger and poverty, by building up the capacities and 
institutions of the impacted communities.
    Additional modalities include cash transfers, which allow 
qualifying beneficiaries to purchase food and other household items in 
local markets. Vouchers are a form of cash-based transfers that are 
used when there is a perceived risk of transferring cash, or if there 
is a need to ensure people receive a specific type of food.
    Before selecting a modality or multiple/modalities to be used in 
food assistance programming, a comparison of all options are considered 
and evaluated based on the following factors: appropriateness based on 
market conditions, feasibility and likelihood of success, objectives of 
the program, and the overall cost of the intervention.
    The ability of USAID to use the right tools at the right time to 
address hunger and malnutrition--including food vouchers, cash 
transfers, local and regional procurement, and US commodities--is vital 
to ensuring that we can respond to crises effectively and that United 
States assistance reaches millions more people at no additional cost.

    Question 2. How do organizations like yours make sure taxpayer 
dollars are protected from waste, fraud and abuse?
    Answer. It was suggested during the hearing that the use of 
``cash'' in programs was less secure than the use of commodities in 
programs. In this case, ``cash'' refers to cash transfers, vouchers, 
and local and regional procurement of food commodities. As many 
implementing organizations know, there are challenges to ensuring the 
security of any aid program, and many safeguards are put into place to 
protect the integrity of programs of both types of assistance.
    Implementing organizations identify and deliver assistance under 
strict compliance requirements and take the necessary measures to 
ensure that resources reach the intended recipients. In commodity and 
cash programs, meticulous records are kept to ensure assistance is 
distributed to the right people and is not diverted to other purposes. 
In most programs, there is no government entity involved in handling 
these resources (the largest exception in current programs is the off-
market monetization of food aidcommodities arranged with the Government 
of Bangladesh).
    USAID implementing partners are accountable to the agency, and to 
Congress, in how they utilize these resources. They know who is 
receiving commodities, and they know what is being bought with vouchers 
and cash transfers. In both cases, implementers use real time data to 
monitor these programs. The scenario that some critics of different 
food aid modalities have painted of corrupt government officials 
skimming off the top is highly unlikely in either cash or commodity 
programs.
Response from Brian W. Schoeneman, J.D., Political and Legislative 
        Director, Seafarers International Union (AFL-CIO); on Behalf of 
        USA Maritime*
---------------------------------------------------------------------------
    *There was no response from the witness by the time this hearing 
was published.
---------------------------------------------------------------------------
Question Submitted by Hon. David Rouzer, a Representative in Congress 
        from North Carolina
    Question It seems to me that one thing that food aid reformers 
overlook are the economic benefits of sourcing our humanitarian 
assistance cargoes at home. Can you talk a little more about the 
different parts of the economy that benefit from the food aid programs?
    Answer.
Questions Submitted by Hon. Stacey E. Plaskett, a Delegate in Congress 
        from Virgin Islands
    Question 1. The U.S. has established a 200 mile perimeter from its 
coastlines within which maritime vessels are required reduce their 
emissions.
    To meet strict requirements triggered in 2015, ships have been 
switching to cleaner-burning, lower-sulfur fuel when they reach this 
zone.
    Additional emission caps are pending for 2020 or 2025, which will 
apply to all shipping routes, including outside the 200 mile perimeter.
    An OECD report concluded that this could have a significant impact 
on shipping costs.
    What is your take on the effect this will have on shipping costs, 
and prices for end-users?
    Answer.

    Question 2. What do you believe is the appropriate role for the 
shipping industry in the area of environmental protection?
    Answer.


 
                           THE NEXT FARM BILL

                  (SNAP TECHNOLOGY AND MODERNIZATION)

                              ----------                              


                         THURSDAY, JUNE 8, 2017

                  House of Representatives,
                                 Subcommittee on Nutrition,
                                  Committee on Agriculture,
                                                   Washington, D.C.
    The Subcommittee met, pursuant to call, at 10:00 a.m., in 
Room 1300 of the Longworth House Office Building, Hon. Glenn 
Thompson [Chairman of the Subcommittee] presiding.
    Members present: Representatives Thompson, DesJarlais, 
Hartzler, Davis, Yoho, Marshall, Faso, Arrington, McGovern, 
Adams, Evans, Lujan Grisham, Lawson, and Panetta.
    Staff present: Caleb Crosswhite, Callie McAdams, Jennifer 
Tiller, Mary Rose Conroy, Rachel Millard, Stephanie Addison, 
Kellie Adesina, Lisa Shelton, Troy Phillips, and Carly 
Reedholm.

 OPENING STATEMENT OF HON. GLENN THOMPSON, A REPRESENTATIVE IN 
                   CONGRESS FROM PENNSYLVANIA

    The Chairman. Good morning. This hearing of the 
Subcommittee on Nutrition entitled, The Next Farm Bill: SNAP 
Technology and Modernization, will come to order.
    Good morning once again. Welcome to everyone to today's 
Nutrition Subcommittee hearing on SNAP technology and 
modernization. Thank you to everyone for taking the time to be 
here, especially our four witnesses.
    As many of you know, our Committee has conducted a thorough 
review of SNAP over, well, at this point, over the past 2\1/2\ 
years. And I want to take a moment to share why this was done 
and what we hope to achieve as we move to farm bill 
reauthorization.
    First, this program touches more than 42 million Americans 
each month. It is the largest domestic hunger safety net 
program in the country. We have a responsibility to ensure that 
we evaluate how this anti-poverty program is serving those it 
intends to help.
    Second, we need to get the policy right. As we approach the 
upcoming farm bill it is critical we understand opportunities 
to amend and improve the program to properly account for the 
changes that come with our evolving, technological world. This 
hearing's purpose is to discuss technology and modernization of 
SNAP, including areas to enhance program integrity, streamline 
delivery of services, improve the customer experience, and ease 
administrative burdens.
    Today we will hear about two distinct systems SNAP state 
agencies utilize to determine program eligibility and issue 
benefits. On the issuance side, electronic benefits transfer, 
or EBT, is an electronic system that allows a recipient to 
authorize the transfer of their government benefits from a 
Federal account to a retailer account to pay for products 
received. It is important to note that the transition to EBT, 
completed in 2004, represented a tremendous step forward in 
improving the program's integrity, administrative efficiency, 
and customer service.
    Prior to issuing benefits to households, state agencies 
determine whether households qualify for the program. To 
qualify for SNAP, applicants must meet the eligibility and 
income requirements mandated by Congress, which are tied to the 
Federal poverty level. New eligibility systems are rules-based, 
with SNAP law, regulations, and policy built in, generating 
eligibility calculations using program rules when workers enter 
households' data. Most states also rely on integrated 
eligibility systems, IESs, which determine eligibility for SNAP 
along with other benefits, such as Medicaid and TANF.
    In addition to EBT and eligibility system modernizations, 
many states and counties are working on improving the 
experience of SNAP households through enhancements to their 
business processes and customer-facing technologies. Now, these 
and other technology initiatives, combined with data-driven 
business process improvements, can enhance administrative 
efficiency at the state level while making the process of 
applying for SNAP benefits more streamlined for households in 
need.
    I want to thank all of our witnesses for sharing their time 
and their expertise. I look forward to hearing from experts in 
EBT, eligibility systems, customer-centric business processes 
and technology applications, and about how the evolution and 
innovation within those arenas helps to improve the efficiency 
of this important program.
    [The prepared statement of Mr. Thompson follows:]

Prepared Statement of Hon. Glenn Thompson, a Representative in Congress 
                           from Pennsylvania
    Good morning, and welcome to today's Nutrition Subcommittee hearing 
on SNAP technology and modernization. Thank you to everyone for taking 
the time to be here, particularly our four witnesses.
    As many of you know, our Committee has conducted a thorough review 
of SNAP over the past 2 years. I want to take a moment to share why 
this was done and what we hope to achieve as we move to farm bill 
reauthorization.
    First, this program touches more than 42 million Americans each 
month--it is the largest domestic hunger safety net program in the 
country. We have a responsibility to ensure we evaluate how this anti-
poverty program is serving those it intends to help.
    Second, we need to get the policy right. As we approach the 
upcoming farm bill it is critical we understand opportunities to amend 
and improve the program to properly account for the changes that come 
with our evolving, technological world. This hearing's purpose is to 
discuss technology and modernization of SNAP, including areas to 
enhance program integrity, streamline delivery of services, improve the 
customer experience, and ease administrative burdens.
    Today we will hear about two distinct systems SNAP state agencies 
utilize to determine program eligibility and issue benefits. On the 
issuance side, electronic benefits transfer, or EBT, is an electronic 
system that allows a recipient to authorize transfer of their 
government benefits from a Federal account to a retailer account to pay 
for products received. It is important to note that the transition to 
EBT, completed in 2004, represented a tremendous step forward in 
improving the program's integrity, administrative efficiency, and 
customer service.
    Prior to issuing benefits to households, state agencies determine 
whether households qualify for the program. To qualify for SNAP, 
applicants must meet the eligibility and income requirements mandated 
by Congress, which are tied to the Federal poverty level. New 
eligibility systems are rules-based, with SNAP law, regulations, and 
policy built in, generating eligibility calculations using program 
rules when workers enter households' data. Most states also rely on 
integrated eligibility systems which determine eligibility for SNAP 
along with other benefits programs, such as Medicaid and TANF.
    In addition to EBT and eligibility system modernizations, many 
states and counties are working on improving the experience of SNAP 
households through enhancements to their business processes and 
customer-facing technology. These and other technology initiatives, 
combined with data-driven business process improvements, can enhance 
administrative efficiency at the state level while making the process 
of applying for SNAP benefits more streamlined for households in need.
    I want to thank all of our witnesses for sharing their time and 
expertise. I look forward to hearing from experts in EBT, eligibility 
systems, and customer-centric business processes and technology 
applications, and about how the evolution and innovation within these 
arenas helps to improve the efficacy of this important program.
    I now recognize Mr. McGovern for any opening comments he would like 
to make.

    The Chairman. I now recognize my friend and colleague, Mr. 
McGovern, our Ranking Member, for his opening comments.

 OPENING STATEMENT OF HON. JAMES P. McGOVERN, A REPRESENTATIVE 
                 IN CONGRESS FROM MASSACHUSETTS

    Mr. McGovern. Well, thank you, Mr. Chairman. And I want to 
thank all of our witnesses for being here today, and I am 
pleased that we have the opportunity to discuss SNAP technology 
and modernization as we prepare for the next farm bill.
    Modernizing our IT infrastructure to increase efficiency 
and improve access to benefits is certainly an important goal; 
one that I strongly support. We can constantly find ways to 
make improvements, and we know that there are some issues out 
there. I cringe every time I hear a story about a mother who is 
working two jobs and trying to raise a family, who ends up 
going to a grocery store and, for whatever reason, there is a 
glitch and her EBT card doesn't work and she can't buy her 
groceries. That is something that should not happen, and 
especially with all of our advanced technologies it shouldn't 
happen, and we certainly need to find ways to improve that.
    But, I should also point out that a lot of the IT 
improvements that are moving forward, just like many other 
improvements we have discussed in our over 21 hearings on SNAP 
in this Committee, cost money. And I am deeply concerned about 
the availability of additional resources for SNAP, given the 
devastating budget that President Trump released a few weeks 
ago.
    The President's budget, in case you forgot, cuts SNAP; our 
nation's first line of defense against hunger, by $193 billion. 
That is a 25 percent cut. What baffles me about the White House 
proposal is it attempts to gut a program that is working. And 
that is what we have learned in the 21 hearings that we have 
had here. It is one of the most efficient and effective Federal 
programs that we have. It helps to alleviate poverty, promote 
long-term health, and lessen hunger in communities all across 
this country.
    In our hearings we have heard from witnesses, both 
Democratic witnesses and Republican witnesses, about the power 
of SNAP and our anti-hunger safety net. We learned that the 
current benefit level, which averages about $1.40 per person, 
per day, is inadequate and certainly should not be cut. Among a 
number of other important points, we learned that supporting 
innovations in the program, creating evidence-based programs 
and good case management takes well-funded Federal investments.
    President Trump's own Secretary of Agriculture, Sonny 
Perdue, told this Committee last month that SNAP is, ``a very 
important, effective program.'' He told us that there was no 
need to dramatically reform the program because, ``you don't 
try to fix things that aren't broken.''
    Now, I agree with Secretary Perdue on those points, and 
encourage President Trump and his OMB Director, Mick Mulvaney, 
our former colleague, to listen to the experts when it comes to 
SNAP and other anti-hunger programs.
    In all of the hearings, we haven't heard from one witness 
who suggested cutting SNAP. President Trump's budget is 
reckless, and in my opinion, if it ever gets enacted, is 
heartless. We should do everything in our power to stop these 
dangerous proposals from advancing in this Congress.
    So again, I welcome the conversation about IT modernization 
in SNAP. And let's continue to support good ideas, let's make 
this all better, let's make it easier for people to recertify. 
Again, a lot of the people we are talking about are working, 
and their lives are filled so they don't have time for endless 
bureaucracy or endless waiting, or making appointments, and 
they certainly should be able to make sure that their card 
works when they go into a grocery store. That means it is 
important that we realize to make these advancements, we cannot 
cut the program. SNAP cannot be an ATM machine for other 
priorities.
    I look forward to hearing from our witnesses. I thank you 
for being here. And I yield back my time.
    The Chairman. I thank the gentleman.
    The chair would request that other Members submit their 
opening statements for the record so the witnesses may begin 
their testimony, and to ensure that there is ample time for 
questions.
    And I would like to welcome our witnesses to the table. We 
are joined by Mr. Jason Boswell, Vice President for Programs, 
of Conduent, out of Sandy Springs, Georgia; Mr. Steve Mathison, 
Senior Vice President of Network Relations, First Data, Omaha, 
NE; Ms. Vickie Yates Brown Glisson, Secretary, Kentucky Cabinet 
for Health and Family Services, Frankfort, Kentucky; and Ms. 
Lauren Aaronson, Assistant Deputy Commissioner, Office of 
Business Process Innovation, Human Resources Administration, 
New York, New York.
    You see the lights in front of you. All of the Members have 
received your written testimony. We thank you for that 
preparation ahead of time. Well done. And so we are going to 
proceed with 5 minutes of oral testimony. You will see that it 
will be a green light, and when it gets to yellow, it gives you 
basically a minute left, and when you get to red, I would just 
ask at that point wrap up whatever current thought or statement 
that you are in the middle of. And then we will proceed after 
all four members of the panel have presented your oral 
testimony, then we will do a question and answer opportunity at 
that point with the Members.
    Mr. Boswell, please begin when you are ready.

         STATEMENT OF JASON BOSWELL, VICE PRESIDENT FOR
 PROGRAMS, CONDUENT, STATE AND LOCAL SOLUTIONS, INC., FLORHAM 
                            PARK, NJ

    Mr. Boswell. Good morning. On behalf of Conduent and 
myself, I would like to thank the Committee for the opportunity 
to speak with you today, to discuss SNAP technology and 
modernization as it applies to the services we provide or 
influence.
    Conduent is the world's largest provider of diversified 
business process services, with a tremendous focus on public-
sector services for each level of government; Federal, state, 
and local. A significant portion of our business services are 
directed to health, human, and social service programs, with 
payments capability such as EBT being a centerpiece of those 
services.
    As you know, EBT is the SNAP benefit delivery technology 
utilized by all states, and is the services and industry in 
which I have served, and had the opportunity to serve in, for 
the last 15 years. My written testimony provides more detailed 
insight into our view of how SNAP and EBT delivery may embrace 
and benefit from new and modern technologies, but to briefly 
highlight some of those areas for our discussion today, our 
view is that EBT and the end-to-end SNAP eligibility process 
would greatly benefit from a greater embrace of mobile 
technologies, not only for immediate recipient services, but to 
align the EBT industry to be positioned to better adapt to a 
changing payments culture and infrastructure.
    Mobile solutions for EBT processors, such as Conduent, can 
not only provide customer service on EBT accounts, but can be a 
vehicle for program communications, education, and incentive 
for healthy and nutritional choices. From an eligibility 
management perspective, mobility offers more streamlined 
approaches to document intake, verification, communication, and 
appointment scheduling, just as examples.
    In addition to mobile services, the private-sector can, 
with the collaborative partnership with our state and Federal 
customer partners, offer a variety of additional services into 
the end-to-end SNAP eligibility and delivery process to reduce 
cost, increase efficiency, and provide greater tools for 
program integrity, monitoring, and enforcement. These may 
include the adoption of EBT-specific business intelligence and 
data analytics tools which Conduent offers, changes in the EBT 
card program policy as it relates to use and design, as well as 
relaxing or removing restrictions that prevent states from 
seeking private-sector assistance with SNAP eligibility 
process.
    While we appreciate the position that final determination 
of eligibility belongs with the merit employees, there are a 
variety of eligibility service components that could be 
performed by the private-sector not only to introduce program 
efficiency, but to ensure that the merit employees can focus 
more centrally and specifically on the more complex aspects of 
each case they manage.
    FNS should approve the use of non-merit personnel, 
including contractor staff in the constituent call centers that 
involve client contact during the application and case 
management process. This includes conducting interviews and 
certifying households, simplifying the intake process, 
telephone inquiries, case management, and appointment 
scheduling are just a few examples where states could 
potentially reduce costs and infrastructure, facilities, and 
other overhead through employing a private-sector vendor with 
the experience, capacity, scalability, to perform those 
services. These changes can improve a state's service delivery 
model across human service programs, address the increase in 
workload due to the changes in the integrated eligibility 
systems, and provide worker relief across programs so that 
merit workers may focus on eligibility final determination and 
services.
    Thank you.
    [The prepared statement of Mr. Boswell follows:]

   Prepared Statement of Jason Boswell, Vice President for Programs, 
      Conduent, State and Local Solutions, Inc., Florham Park, NJ
    I am pleased to submit this statement for the record to the House 
Committee on Agriculture, Subcommittee on Nutrition. My name is Jason 
Boswell and I'm a Vice President with Conduent, State & Local 
Solutions, Inc. We appreciate the opportunity to participate in a 
discussion on how technology and modernization can be leveraged to 
improve delivery and access to SNAP. Conduent is on the technological 
forefront in its use of automated systems and is committed to 
integrating the latest technology across all our business lines to 
increase efficiencies and improve services to individuals. Our 
portfolio includes closed proprietary network programs such as SNAP and 
WIC and open network programs that use a prepaid debit card for TANF, 
Child Support, Unemployment and other cash programs. Our experience in 
providing technology solution for government benefit services in 34 
states can be seen below:

   20 years of experience operating EBT, WIC, Debit Card, and 
        eCC programs.

   109,600 POS devices currently deployed.

   $86 billion in benefits/payments issued in 2016.

   More than 3.2 billion transactions processed per year.

   913 million IVR calls in 2016.

   25.7 million CSR calls in 2016.

   25 EBT SNAP programs.

   7 EBT WIC programs.

   110 Debit card programs.

   9 Electronic Child Care programs.

    As the national leader in providing EBT services our goal is to 
continually improve access to benefits, use technology to provide SNAP 
participants with benefit information to support decisions for making 
healthy choices, and to continually implement new technologies that 
help us achieve these goals. In order to utilize and take advantage of 
new technologies the EBT program must evolve. In the following pages we 
discuss different options available in the marketplace today.
    Mobility--A relatively new offering for SNAP benefit recipients is 
the availability of a mobile app to view program balances, 
transactions, and enable cardholder alerts. Our mobile app is available 
for both Android and iOS users and is free to download in the 
respective app stores. By providing three options for cardholders to 
obtain program information, the Interactive Voice Response (IVR) toll 
free number, the Internet and a mobile app, cardholders are able to 
access information in the manner which is most easy for their 
lifestyle. Providing a mobile app also helps to empower recipients to 
monitor their account for potential fraudulent use by others that may 
have access to their SNAP benefit card. Additionally the mobile app can 
be a tool to convey important program information quickly to recipients 
or could be used to influence spending behavior by offering incentive 
(e.g., coupons) for healthy food purchases.
    Another innovation that is on the cusp for SNAP with respect to 
mobility is the potential use of mobile wallets for making purchases. 
As point of sale equipment has been upgraded in recent years, many 
retailers have installed new credit card readers capable of accepting 
near field communication (NFC) or contactless transactions. Mobile 
Wallets such as Samsung Pay or Apple Pay are now more mainstream. 
Mobile wallets allow individuals to carry credit card or debit card 
information in a digital form on their mobile device. Instead of using 
a physical plastic card to make purchases, individuals can pay with 
their smartphone, tablet, or smart watch. Mobility does not need to be 
limited to credit cards or debit cards and indeed can be a successful 
tool in reducing costs for the EBT program. Mobile payments is fast 
becoming a preferred method to allow individuals to make purchases 
using either a secure passcode or utilize the fingerprint option to pay 
for purchases. Not only is the use of mobile payment secure but the 
transaction is quick and easy for the consumer. EBT could greatly 
benefit from the implementation of mobile payments even in the closed 
network environment.
    Fraud Analytics--Data Warehouses and business intelligence tools 
are utilized by most states however, advance fraud analytics, specific 
to EBT, are not common. These tools are generally not requested in RFPs 
however where deployed by Conduent, they offer predictive modeling to 
assist in identifying potential fraud. Our Intelligent Analysis Portal 
(IAP) uses a weighted formula to factor in 20 different key fraud 
indicators to produce targeted lists of suspicious behavior that states 
can use as a foundation for investigations. Rather than combing through 
hundreds of pages of individual reports, states using the advanced 
fraud tools have access to short, clear targeted reports of the 
suspicious transactions that are most likely to be fraudulent. This 
streamlines administrative efforts in order to achieve maximum results. 
Advanced analytics and intelligent fraud tools can aid both the USDA 
and states in rapid fraud identification and generate reports specific 
to each states need.
    As an example of the effectiveness of the IAP, Conduent recently 
received the following from the South Carolina Attorney General's 
office.

          ``I am writing to thank you for your involvement in the trial 
        in York County, South Carolina last week. You handled yourself 
        very well on the witness stand and I appreciate your 
        preparation and patience with the process. The state secured a 
        guilty verdict, and I believe a large portion of that was due 
        to getting the records into evidence through you as a records 
        custodian for Conduent. I also believe presenting the records 
        in an organized format through use of the data warehouse was a 
        vital part of the trial.''

    Within the Conduent IAP, analytical analysis can be performed on a 
variety of identification measures including but not limited to:

   Rapid or repeated transactions which identifies merchants 
        who perform abnormal, rapid transactions in a short time.

   Early morning manual swipes to identify merchants who do 
        abnormal early morning manual transactions.

   Travel distance to merchant which identifies recipients who 
        travel more than the average travel time to do the transaction 
        for that area.

   Deposit amount--identify the recipients with abnormal 
        deposit in terms of dollar amount or frequency.

   Multiple card replacement, for example greater than four 
        cards replaced in the last 12 months.

   High percent of total available benefits taken in one 
        transaction or at one location.

   Odd hours transactions for large amounts or large percent of 
        total availability.

   Alert on merchant activity that increases or decreases by 
        certain amounts.

   Alert on top vendors for sales, returns, credits (outside 
        frequently used big box retail or grocers).

   Address changes across large ZIP [C]ode differentials.

   Shopping patterns across large geographic differentials.

   Out-of-state spending activity over 50 percent in last 3 
        months.

   Out-of-state and out-of-border state spending activity over 
        50 percent in last 3 months.

   Identify ``frequent flyers'' for disputes or fraud claims

    Analytical techniques include a variety of methods including:

   Outlier Detection--Compares data to automatically find 
        retailers, recipients, and shopping patterns that stand out 
        from their peers.

   Network Analysis--Locates and links retailers and recipients 
        that are connected to each other and highlights groups with 
        similar suspect behavior patterns.

   Temporal Analysis--Uses time to identify retailers whose 
        sales, adjustments, or return volume has suddenly spiked upward 
        or downward when nothing else has changed.

   Peer Analysis--Various retailer or recipient behavior events 
        are identified as ``key fraud indicators''. These events are 
        scored separately and in combination to identify the highest-
        risk retailers or recipients.

    As more and more states implement fraud analytic tools and 
technology enhancements, the benefits to reducing fraud will continue 
to grow.
    Call Personalization--Conduent has recently implemented advance 
technology for SNAP recipients calling the IVR to obtain program 
information. By levering ANI (Automatic Number Identification), our 
system identifies the originating phone numbers for incoming calls. 
Through innovative data analysis (or ``smart learning'') we are able to 
determine the normal call patterns of a caller such as card number 
entered, language choice and menu options for information being 
requested. The system then shortens the call by requesting only 
abbreviated information from a caller and then presenting them with the 
call flow most similar to their prior requests. A caller always has the 
option for the full menu after providing them their customized options 
based on historical calls.
    Building on the success of call personalization, Conduent has the 
ability to leveraging meta data from caller's ANI information and 
historical IVR data to identify fraudulent callers as they are in 
process. We expect to provide this information to state personnel to 
assist with internal investigations and prosecution.
    Photo ID Cards--There are recent innovations with respect to for 
photo cards on SNAP benefit cards that are still being monitored for 
their impact. The recent final rule issued by FNS regarding SNAP Photo 
EBT Card Implementation Requirements, is one such example.
    One benefit of adding recipient photos to SNAP cards is the 
fraudulent selling of the cards to other non-authorized persons for 
some smaller value than the benefits on the card. The industry calls 
this ``hand-to-hand'' fraud. If photos are present, a cardholder may be 
less likely to ``sell'' the card and PIN to those persons seeking to 
``buy'' an EBT card and PIN. Where photos are added to cards, a policy 
change to require cardholders to pay for replacement cards may also cut 
down on this type of fraud. Suspending benefits for cardholders who 
have excessive card replacement requests may also be another fraud 
deterrent.
    As equipment has evolved at the point of sale, generally a person 
does not hand their card to a sales person to perform a transaction but 
instead ``swipes'' their own card and returns it to their wallet. This 
impacts the ability to verify the photo on the card with the person 
making the purchases. Enhanced mandates can be implemented that would 
require this added security check but would impact the checkout process 
for retailers and recipients. Current policies would also need to be 
evaluated as there are current FNS guidelines that prohibit denying 
transactions. An example would be if a recipient provided their card to 
a caregiver to make food purchases on their behalf, the card currently 
would be accepted if the person had the physical card in their 
possession and enters the associated PIN to complete the transaction.
    We are committed to the monitoring programs where photo cards have 
been implemented for ongoing program efficiencies and work with the 
states and FNS on additional enhancements to provide fraud reduction 
and administrative support.
    In closing, I would like to thank you for your time and for the 
opportunity to discuss this important topic. We look forward to 
continuing to support the SNAP community with innovative technology for 
all participating stakeholders.

    The Chairman. Mr. Boswell, thank you so much for your 
testimony.
    Mr. Mathison, go ahead and proceed with your 5 minutes when 
you are ready.

 STATEMENT OF STEVE MATHISON, SENIOR VICE PRESIDENT OF NETWORK 
          RELATIONS, FIRST DATA CORPORATION, OMAHA, NE

    Mr. Mathison. Good morning, Chairman Thompson, Ranking 
Member McGovern, and Members of the Committee. My name is Steve 
Mathison, I am the Senior Vice President of Network Relations 
at First Data Corporation, and I am pleased to be here today on 
behalf of myself and my company, and appreciate the opportunity 
to share with you our perspective on the modernization of the 
SNAP program.
    By way of background, First Data sits at the center of 
actual global electronic commerce. We serve approximately six 
million business locations and 4,000 financial institutions 
around the world, and we facilitate the secure routing of card 
transactions between those two constituents.
    By way of example, in 2016 we powered 88 billion global 
transactions; more than 2,800 transactions each second, 
totaling approximately $2.2 trillion U.S. last year.
    First Data's role in the SNAP system is to enable retailers 
to accept SNAP cards in their stores, and ensure that each 
transaction is routed to the appropriate state for both the 
authorization and settlement process.
    As we think about the future of SNAP and the desire for a 
more modern system, technology availability comes immediately 
to mind. In the bank card world, the infrastructure supporting 
the payments rails is subject to a series of rules, agreements, 
and oversight that ensures that outages do not regularly occur. 
For example, Visa and MasterCard take an active role in 
ensuring that there are service-level agreements and sufficient 
technology and infrastructure across the entire payments 
ecosystem so that if a systems issue were to occur, there are 
redundancies and business continuity plans to ensure that 
commerce is not disrupted. And as a secondary level, there are 
multiple Federal and governmental oversight controls, risk 
management protocols, and departments that have oversight of 
the financial and service industry, including players like 
First Data, like the FFIEC, the FDIC, the OCC, and the Federal 
Reserve, that also play an active role in making sure that the 
continuity of the program is ensured.
    The lack of similar service standards and requirements for 
SNAP processing tends to lead to the SNAP cards not working for 
a large number of cardholders on a fairly frequent basis. As 
you can imagine, system-wide outages have negative impacts on 
SNAP recipients by reducing their access and creating extra 
inefficiencies and costs. We think this is an area that the 
Federal Government should explore.
    When we think about payment security, we generally focus on 
criminals attempting to compromise the card number. This stolen 
card information can be used to create counterfeit cards, and 
criminals can use those cards to make purchases fraudulently. 
What we see across our retailer base is the broader government 
benefit card environment has very small amounts of counterfeit 
fraud. The reason for this is because each SNAP recipient must 
use their PIN to perform a transaction. They have to have their 
physical card and a PIN as something that only they know. 
Because this two-factor authentication is an effective method 
for preventing fraud, we believe PINs should continue to be 
mandatory. As retailers move into the online grocery space 
where a traditional PIN pad is not necessarily present for the 
purchase, we think it is important for the government agencies 
to explore enhanced security in this space. Specifically, we 
recommend that the Federal Government explore requiring that 
SNAP transactions made online should have this two-factor 
authentication. Fraud in the e-commerce space is much higher 
than the physical point of sale, and as such, having a way to 
keep fraud rates manageable and low in these higher-risk 
transactions will be an important factor in keeping SNAP funds 
flowing as benefits to recipients, rather than fraud losses to 
criminals. Maintaining and protecting the integrity of the 
program is crucial.
    Finally, we believe the government should be taking steps 
to encourage competition among the payment processors that 
contract with state agencies. Currently, there are few 
processors that occupy this space. While there is some limited 
competition during the bidding process, once a contractor wins 
a bid from a state, the processor effectively becomes a 
monopoly for how that state's transactions must be processed. 
Retailers that wish to offer SNAP acceptance in their stores 
must process with that contractor, and only that contractor. 
This has become problematic because of the introduction of new 
fees by the processors and contractors to the retailers. 
Retailers are essentially forced to accept any fee that is 
assessed because there is no other option for processing the 
SNAP transaction for that state.
    We generally believe that the Federal Government should 
take the position that the imposition of fees for enabling SNAP 
in their stores; fees that don't necessarily go to the states, 
should be prohibited. As an alternative, we suggest the 
creation of a mechanism for a retailer to negotiate these fees, 
and/or process their SNAP transactions with a competing 
contractor for a given state in a competitive environment.
    In conclusion, we commend the Committee for exploring ways 
to modernize the SNAP program. Many Americans rely on the 
program to improve their lives, and we believe these Americans 
should have the same positive experiences when transacting with 
their SNAP cards as others do when transacting with traditional 
bank-issued credit and debit cards.
    As one of the entities that provides the infrastructure 
used to transport payment card data securely and efficiently, 
we appreciate the opportunity to provide our perspective, and 
look forward to keeping an open dialogue with the Committee 
Members as new ideas are brought to bear.
    Thank you, and I will be happy to answer any questions that 
anyone may have.
    [The prepared statement of Mr. Mathison follows:]

Prepared Statement of Steve Mathison, Senior Vice President of Network 
              Relations, First Data Corporation, Omaha, NE
    Good morning, Chairman Thompson, Ranking Member McGovern, and 
Members of the Committee.
    My name is Steve Mathison, and I am Senior Vice President of 
Network Relations at First Data Corporation. I am pleased to be here 
today on behalf of First Data, and I appreciate the opportunity to 
share with you our perspective on the modernization of the Supplemental 
Nutrition Assistance Program (SNAP) and efforts to make it more 
efficient and effective for the millions of Americans who rely on these 
benefits in their everyday lives.
    After providing an overview of First Data's role in the SNAP 
system, I will focus my comments on three primary areas: (1) 
technological availability; (2) payments security; and (3) increased 
competition.
    First Data sits at the center of global electronic commerce. 
Founded more than 40 years ago, First Data serves approximately six 
million business locations and 4,000 financial institutions around the 
world. We are one of the largest retailer payment processor and bank 
issuer processors in the world, enabling businesses to accept 
electronic payments, helping financial institutions issue credit, 
debit, and prepaid cards, and routing secure transactions between them. 
In 2016, we powered 88 billion global transactions, or more than 2,800 
transactions every second of every day, totaling $2.2 trillion per 
year, which is equivalent to nearly 10% of U.S. Gross Domestic Product. 
In addition, First Data owns the STAR debit network, with over one 
million point of sale (POS) and ATM locations nationwide.
Overview of SNAP Payment Processing
    In order to consider our comments in the appropriate context, it is 
important to understand the basic transaction flow for a cardholder 
using an electronic benefit transaction (EBT) card. Technology 
providers like First Data enable commerce by facilitating the 
transaction processing connections between retailers, networks, and 
payment card issuers. Behind the scenes, the process is broken down 
into two distinct transaction processes: authorization and settlement.
    When a consumer uses a payment card to purchase goods, the retailer 
must obtain authorization for the purchase from the bank that issued 
the card. This authorization is confirmation that the consumer's 
account is in good standing and that there are sufficient funds 
available in the consumer's account to cover the purchase. And, if the 
authentication process includes the consumer's Personal Identification 
Number (PIN), that PIN is also validated by the issuer to ensure the 
legitimate consumer is the one attempting the purchase. In the case of 
SNAP EBT cards, the state holding the SNAP funds is considered to be 
the card issuer (and the state may contract that service out to a third 
party to manage the accounts on the state's behalf). The authorization 
is, essentially, a request to make funds available to the retailer for 
the purchase.
    If the authorization request meets the card issuer's requirements, 
and the PIN passes the issuer's PIN validation algorithm, a reply is 
returned to the retailer, via the retailer's payment processor, 
indicating that the request has been approved. If the authorization 
request does not meet the card issuer's requirements, or if the PIN 
validation is unsuccessful, the retailer is informed that the requested 
transaction has been declined.
    The final step is the ``settlement'' process in which funds are 
received in aggregate from the card issuer (i.e., the state holding the 
EBT account) for all approved SNAP transactions occurring at all 
retailers accepting SNAP cards during that business day. Funds are then 
separated into the proper amounts for each respective retailer, and 
those funds representing all the approved SNAP transactions processed 
at a retailer's location are then transmitted to each retailer's bank 
account.
    First Data's role in the SNAP system is to enable retailers to 
accept SNAP cards in their stores and ensure that each SNAP transaction 
is routed to the appropriate state for both the authorization and 
settlement processes: we authorize SNAP transactions for retailers 
accepting the cards, our STAR network also authorizes cash transactions 
in authorized locations for SNAP cardholders, and we settle the 
accounts for our retail customers for approved SNAP transactions that 
have occurred during the day.
Technology Improvements
    As we think about the future of SNAP and the desire for a more 
modern system, technological availability comes immediately to mind. In 
the bank-issued card world, the infrastructure supporting the payments 
rails is subject to a series of rules and agreements to ensure that 
outages do not regularly occur.
    Quest is the network that provides the operating rules that govern 
the distribution of government benefits including SNAP. Quest is 
governed by the National Automated Clearing House Association and 
encourages that government entities incorporate the Quest rules in 
their contracts with third party entities used to distribute benefits.
    There are differences in how the oversight and controls for the 
bank-issued credit and debit cards are managed by global payments 
networks such as Visa or MasterCard versus how the oversight and 
controls are managed relative to the Quest network. For example, in the 
case of a Visa or MasterCard network, those two entities take an active 
role in ensuring that there are service-level agreements and sufficient 
technology infrastructure across the entire payments ecosystem so that 
if a systems issue were to occur at a payment processor, the network, 
or at a financial institution that issues the cards, there are 
redundancies and business continuity plans to ensure that commerce is 
not disrupted. The lack of similar service standards and requirements 
for SNAP processing leads to the SNAP cards not working for large 
numbers of cardholders on a fairly frequent basis. As you can imagine, 
system-wide outages have negative impacts on SNAP recipients by 
reducing their access to necessary purchases, causing frustration for 
retailers and cardholders alike, creating extra inefficiencies and 
costs, and undermining confidence in the program.
    We think this is an area that the Federal Government should 
explore. Adding baseline standards not only provides an incentive for 
state agencies and SNAP providers to improve, it will also lead to 
increased systems availability, lower costs, and an overall improvement 
in throughput which ultimately will ensure the consumers standing in 
the checkout lanes can get their benefits when they need them.
Payments Security
    Additionally, we think the SNAP program could benefit from taking a 
more modern look at payments security. When we think about payments 
security in this space, we generally are thinking about criminals 
attempting to compromise the card number. This can occur when a 
criminal steals the card information at the card swipe, or steals it by 
hacking into the systems where card information is stored. The stolen 
card information is then used to create counterfeit cards by encoding 
the card information onto the magnetic stripe of generic plastic cards. 
Or, criminals can use that card number online to make unauthorized 
purchases.
    The traditional bank-issued debit and credit cards have been 
undergoing a transition from relying solely on the magnetic stripe on 
the back of the card to including a more secure chip that interfaces 
with a point of sale terminal for the transmission of transaction data. 
The chips have microcomputers in them that are able to produce dynamic 
cryptograms and algorithms that make the cards much more difficult to 
counterfeit than the card data from a magnetic stripe, which holds only 
static information. Since the chip data is very difficult to reproduce, 
this lowers the incentive a criminal might have to steal card 
information--since the stolen card data from a chip card is very 
difficult to monetize via the conventional process of creating a 
counterfeit card and making fraudulent purchases, there is little to no 
benefit from stealing the card data in the first place.
    However, chip technology, while certainly more advanced than the 
magnetic stripe, is not a panacea for all card fraud; its benefits are 
limited to stopping counterfeit card production.
    There is an unresolved industry question about whether state 
agencies should be prescribing chip technology for SNAP cards. From 
what we see across our retailer base, the broader government benefit 
card environment has very small amounts of counterfeit fraud (i.e., 
stealing the card information from a legitimate SNAP card, reproducing 
a duplicate of the original card, and using that duplicate to make 
purchases), because PINs are required for all government benefit cards, 
including SNAP cards. In other words, First Data isn't seeing much 
counterfeit card production in the government space; and since adding a 
chip primarily only addresses counterfeit cards used at the physical 
point of sale, we don't believe that prescribing chip implementation in 
SNAP cards will create material fraud reductions or cost savings across 
the SNAP payments ecosystem.
    However, the reason the counterfeit fraud is low is because each 
SNAP recipient must use two-factor authentication to make a SNAP 
purchase--the cardholder must present his/her physical card and must 
enter a PIN for each and every transaction. And because the two-factor 
authentication is an effective method for preventing fraud, First Data 
believes PINs should continue to be mandatory.
    The Payment Card Industry Data Security Standard (PCI DSS) governs 
data security for credit and debit cards, and PCI requires, for 
example, a certain level of hardware security. For example, PIN pads 
today self-destruct if anyone tries to tamper with them or even open 
them to access their internal technology.
    When a consumer enters a PIN on a PIN pad at a retailer location, 
the PIN is encrypted, leading to a much more secure transaction.
    Several years ago, only about \1/2\ of the 8-10 million retailers 
that accept credit and debit cards had PIN pads. With the migration to 
chip cards, however, many retailers have decided to upgrade their point 
of sale terminals to be able to securely accept and process the chip 
card that's presented.
    It's now fairly standard in the industry for a retailer to have a 
standard PIN pad, because the keys for the security chips are also in 
the PIN pads.
    As more retailers move into the online grocery space--where a 
traditional PIN pad is not present because the consumer is transacting 
from his/her computer or smart phone--we think it's important for 
government agencies to explore enhanced security.
    Specifically, we recommend that the Federal Government explore 
requiring that SNAP transactions made online or in an eCommerce 
environment (i.e., the consumer does not transact within the retailer's 
physical store, but rather initiates the transaction remotely via a 
computer or a mobile phone) should have two-factor authentication. Two-
factor authentication involves data other than simply authenticating 
that the individual attempting the transaction has an account number.
    In addition to something the individual has (such as their SNAP 
card), the second factor of authentication typically takes the form of 
either something the individual knows (such as a PIN or the answer to 
security questions) or something the individual is (such as fingerprint 
scans).
    Additional forms of cardholder authentication are key in order to 
enable SNAP redemptions for emerging opportunities such as online 
grocery shopping and remote ordering for in-home delivery. Fraud in the 
eCommerce space is much higher than the physical point of sale. As 
such, having a way to keep fraud rates manageable and low in these 
higher-risk transactions will be an important factor in keeping SNAP 
funds flowing as benefits to recipients rather than fraud losses.
Increased Competition
    Finally, as we think about a sustainable future of SNAP that leads 
to positive cardholder experiences, we believe the government should be 
taking steps to encourage competition among the payment processors that 
contract with state agencies to manage the state's SNAP programs.
    Currently, there are few processors that occupy this space. And 
while these processors compete with each other as they bid to be a 
state's SNAP contractor, generally the state selects only those 
contractors with the lowest cost bids, which creates a cost prohibitive 
environment for other processors to try to enter the market.
    While there is limited competition during the bidding process, once 
a contractor wins a bid from a state, that processor effectively 
becomes a monopoly for how that state's SNAP transactions must be 
processed. Retailers that wish to offer SNAP acceptance in their stores 
must process with that contractor. There is no alternative; the 
retailer must simply acquiesce to the demands of the contractor. This 
has become especially problematic because of the introduction of new 
fees by the dominant processors in an effort to supplement the thin-
margin bids used to win the state's SNAP contract. These fees impact 
the retailers accepting the cards and the retailer processors like 
First Data who route the transaction from the retailer location to the 
network and the state.
    Retailers and merchant processors are in a tough situation where 
they are essentially forced to accept any fee that is assessed by these 
state processors because there is no other option for processing a SNAP 
transaction for that state.
    Generally, we believe the Federal Government should take the 
position that the imposition of processing and transaction fees for 
state processors is prohibited. Simply put, charging the retailers a 
fee for allowing a SNAP beneficiary to buy groceries at their store is 
unfair. The imposition of these fees could have the chilling effect of 
retailers deciding to curtail or cease acceptance of SNAP benefits 
altogether.
    Or, as an alternative, we suggest the creation of a mechanism for a 
retailer to negotiate and/or process their SNAP transactions with a 
competing contractor for a given state. If fees must be imposed, they 
could be market-driven, competitive, and negotiated rather than imposed 
unilaterally.
    In conclusion, as the electronic payments system continues to adapt 
to respond to innovative technologies as well as growing cyber threats, 
we commend the Committee for exploring ways to modernize the SNAP 
program. Clearly many Americans rely on the program to improve their 
lives, and we believe these Americans should have the same positive 
experiences when transacting with SNAP cards as others do when 
transacting with traditional bank-issued credit and debit cards.
    As one of the entities that provides the infrastructure used to 
transport payment card data securely and efficiently along the payments 
rails, we appreciate the opportunity to provide our perspective on 
modernization efforts and look forward to keeping an open dialogue with 
the Committee Members as new ideas are brought to bear.
    Thank you, and I will be happy to answer any questions you may have 
at this time.

    The Chairman. Mr. Mathison, thank you for your oral 
testimony.
    Secretary Glisson, please go ahead and proceed with your 5 
minutes whenever you are ready.

         STATEMENT OF VICKIE YATES BROWN GLISSON, J.D.,
  SECRETARY, KENTUCKY CABINET FOR HEALTH AND FAMILY SERVICES, 
                         FRANKFORT, KY

    Ms. Glisson. Good morning, Chairman Thompson, Ranking 
Member McGovern, and Members of the Subcommittee.
    Thank you for the opportunity to come and speak to you 
today. I am Vickie Yates Glisson. I am Secretary of Kentucky's 
Cabinet for Health and Family Services, and I have been invited 
today to discuss Kentucky's experience in creating an 
integrated benefits eligibility and enrollment system.
    Prior to my tenure as Secretary, the Federal Government, as 
you may know, strongly encouraged states through enhanced 
funding to create an integrated modular system for eligibility 
and enrollment. When I became Secretary, I inherited from the 
former Administration the responsibility to implement what we 
were led to believe was a completed, a vetted, and a ready IT 
platform that would serve as an upgraded, integrated 
eligibility and enrollment system for our health and human 
service programs. Unfortunately, our experience was quite the 
opposite.
    In 2016, Kentucky became the first state to implement an 
integrated eligibility and enrollment solution known as 
benefind, and it was on the .NET platform, and that included 
both Medicaid, the Qualified Health Benefit Plans, the advanced 
premium tax credits, SNAP, and TANF.
    Implementation of this experimental system was not without 
significant challenges. We were only able to achieve our goal 
of an integrated eligibility and enrollment system through 
reactive changes to resolving issues as they arose. Hopefully, 
by sharing our experience today and lessons learned, other 
states may proactively address similar issues and avoid them 
during their system implementation.
    Almost immediately upon rollout, we realized some system 
latency issues were caused and had caused increased processing 
time. We upgraded server capacity within the first few days, 
and processing did speed up and improved. As time went on 
though, we realized that there were more serious issues. These 
issues included system design issues, policy decisions that had 
been made, and data quality. These issues snowballed with 
nearly catastrophic results, causing a massive backlog with 
some of our members who actually did temporarily lose their 
benefits.
    An example of how one issue can snowball into a larger 
problem involves data quality that is used to support an 
integrated eligibility and enrollment system. This new system, 
as supported by the Federal Government, was designed to ping 
the Federal incarceration database, for instance, to determine 
whether a household member was currently incarcerated and 
thereby ineligible for benefits. Our system was functioning as 
it had been designed. During the transition to benefind, the 
system sent a query to the Federal database, which responded 
with requested data about a member's incarceration status. If 
the query returned a match that someone was incarcerated, the 
system automatically sent a notice to that member that 
eligibility was being terminated unless documentation to the 
contrary was provided. The problem, however, is that the data 
was highly inaccurate, and resulted in tens of thousands of 
erroneous letters being sent automatically to members. This 
single issue snowballed enormously; first, because these 
letters went out via mail. There was a time lag with the state 
being able to get feedback that there were erroneous letters 
out in the state. By the time this issue was identified, we had 
already passed the point where returning to the former 
eligibility and enrollment system; the legacy system, now was 
no longer feasible. Further, these letters caused confusion and 
panic among our members, who flooded our call centers and our 
lobbies. Instead of performing their typical case management 
duties, our caseworkers spent hours dealing with the fallout 
from these erroneous letters.
    This was on the top of the increased caseload associated 
with the system conversion, and in addition to caseworkers now 
getting used to a new eligibility and enrollment system. This 
is just one example of a problem that could not have been 
easily identified in the system testing before the system 
performed, because it performed as designed.
    Another complication is the lack of coordination between 
Federal agencies to support an integrated eligibility and 
enrollment system for benefits. FNS policies on who may access 
data and assist with applications does not match up with CMS 
policies. Remember, this is an integrated system. CMS allows 
contractors to assist with applications, while FNS does not.
    We have hundreds of contractors available in Kentucky who 
can assist with Medicaid eligibility applications, give 
information about Medicaid application status, but are 
prohibited from using that exact same information to assist 
with SNAP applications. Benefind automatically determines 
eligibility for Medicaid and SNAP if all of the information is 
entered and verified. Benefind is not permitted to use that 
same information if entered by a contractor to determine SNAP 
eligibility because FNS requires a state merit employee 
caseworker only to process the SNAP eligibility. Benefind was 
intended to determine eligibility for all services and benefits 
with one application, including SNAP and Medicaid. FNS policy 
permits only state merit employees to process SNAP 
applications, which results in a duplication of efforts and has 
impeded the efficiencies that are expected of this system. If 
this policy were changed, then the system could be optimized 
and truly be a one-stop shop with no wrong door in order to 
enter the system. Issues with Federal databases, and 
disconnected and uncoordinated policies between Federal 
agencies could not have been foreseen prior to the rollout.
    Last, benefind was implemented at the urging of the Federal 
Government. We, therefore, urge the Federal Government to be 
proactive and to address these issues. First, the inadequacies 
of the Federal database, such as the Federal incarceration 
database, must be addressed. These databases should be 
accurate, they should be updated frequently, in order to avoid 
erroneous decisions. And then last, we urge that the Federal 
Government require better coordination between agencies to 
allow the same authorized workers to work through the entire 
process for both FNS and CMS benefit applications. Resolution 
of these impediments will greatly enhance our experience and 
cause the system to be much more efficient, as it was intended.
    Thank you for your time.
    [The prepared statement of Ms. Glisson follows:]

  Prepared Statement of Vickie Yates Brown Glisson, J.D., Secretary, 
     Kentucky Cabinet for Health and Family Services, Frankfort, KY
Kentucky's Experience in Implementing an Integrated Eligibility and 
        Enrollment System
Introduction
    Good morning. I am Vickie Yates Brown Glisson, Secretary of 
Kentucky's Cabinet for Health and Family Services and I have been 
invited to discuss Kentucky's experience in creating an integrated 
benefits eligibility and enrollment system.
    I became Secretary of Kentucky's Cabinet for Health and Family 
Services on December 9, 2015. My Cabinet is responsible for the 
administration of Kentucky's human services and health care programs, 
including Medicaid, SNAP, TANF and foster care. When I became 
Secretary, I inherited from the former Administration the 
responsibility to implement what we were led to believe was a 
completed, vetted and ready IT platform that would serve as an upgraded 
integrated eligibility and enrollment system for our health and human 
services programs. Unfortunately, our experience was quite the 
opposite.
    We experienced numerous challenges from the beginning that could 
have been avoided and some that could not have been avoided. While the 
ultimate outcome did result in an upgraded integrated eligibility 
system, we only got there through reactive changes to resolving issues. 
Hopefully, by sharing our experience and lessons learned other states 
may proactively address similar issues and avoid them during their 
system implementation.
Benefits of an Integrated Eligibility and Enrollment System
    An Integrated Eligibility and Enrollment System housed within a 
single Cabinet has many benefits. First, as alluded to above, the 
Department for Medicaid Services, the Department for Community Based 
Services (which oversees family support benefits such as SNAP and 
TANF), and Information Technology staffs are all located within my 
Cabinet. This alignment allows for a more streamlined and coordinated 
project team and leadership. Because the agencies work together, our 
Cabinet may better collaborate and plan while ensuring representation 
of each program area's interests. We work together to determine how 
those interests best fit into the new integrated system while also 
supporting the no wrong door concept and maximizing the use of shared 
services for eligibility determination and other core business 
processes.
    Another benefit of benefind, our integrated eligibility system, is 
the modernized infrastructure. It allows for real-time eligibility and 
enrollment processing for benefits. It was intended to improve workflow 
and automation features, including appeals and complaints. It also 
brought our eligibility system in line with new Federal guidelines and 
policies.
    Finally, benefind was designed to have system modularity. The 
application architecture was designed in a way that allowed for 
deployment of common services/functionalities to support integration of 
additional HHS programs. For example, the Child Care Assistance Program 
is scheduled for integration in September 2017.
    In summary, the primary benefits of an integrated eligibility 
system include: (1) Improved access--self-service portal, telephonic, 
in person and paper/mail-in applications; (2) Improved efficiency and 
effectiveness--one application for all benefits; information collected 
one time in one system--Reduces duplication of effort; (3) Continuously 
improved business operations, transparency and accountability through 
data reports and performance information.
Background
    Prior to my tenure, the Federal Government had strongly encouraged 
states, through enhanced funding, to create an integrated modular 
system for eligibility and enrollment. In 2011, the former Governor of 
Kentucky requested and received approval from the Federal Government to 
use a waiver to build an IT system to integrate eligibility and 
enrollment determination functions for a health benefits exchange and 
for all state-administered health and human services programs using an 
integrated data base. In 2012, the former Administration entered into a 
contract providing for a multi-stage production that was intended to 
create a horizontal fully integrated Eligibility and Enrollment 
platform with two doors.
    The first door, therefore, was the state-run health benefits 
exchange, which was used for Medicaid expansion eligibility 
determinations and enrollment.
    The second door is a one-stop shop for benefits, including SNAP, 
TANF, K-TAP, Foster Care, Kinship Care, Medicaid and some waiver 
programs, that was intended to work concurrently with the prior 
release. The system was expected to streamline the application process 
by using one application, along with Federal data, to determine 
eligibility for all benefits. Release 5, known as benefind, was 
initially scheduled by the former Governor for release on December 4, 
2015. The former Administration delayed that release until December 29, 
2015, because of suspected system issues.
     Prior to December 29, 2015, the current Governor was inaugurated 
and I became Secretary of the Cabinet. Rather than release the platform 
without any review during the middle of QHP open enrollment, we delayed 
the project and initiated a review of system readiness. That review 
included written documentation from the vendor that 7,000 user test 
cases had passed, 240 performance tests were satisfactorily completed, 
and more than 200 testers had been employed across the Cabinet. We 
received multiple assurances that benefind had been thoroughly tested 
and piloted and that all necessary staff had been thoroughly trained. 
Vendor testing predicted that no severe defects would exist upon roll-
out and that any minor issues would have a work-around. We were further 
assured that all USDA technical and programmatic guidelines had been 
met. The vendor assured us that the system was ready but that 
contingency plans were in place to address any issues that might arise. 
Kentucky also had an IV&V vendor who reviewed risk and contingencies, 
and gave us no reason to delay further.
Roll-Out Brought Significant Issues to Light\1\
---------------------------------------------------------------------------
    \1\A listing of post-launch issues and their resolutions is 
attached to this presentation.
---------------------------------------------------------------------------
    Kentucky was the first state to implement the integrated 
eligibility and enrollment system on a .NET platform with the broad 
spectrum of services. In consultation with CMS, we scheduled a go-live 
date for February 29, 2016. Almost immediately, we realized some system 
latency issues were causing longer than anticipated durations during 
screens. Server capacity was upgraded within the first few days and 
processing speed improved. As time went on, however, we realized there 
were more serious issues. These included issues with system design, 
policy decisions data quality, and system issues. While there was a 
roll-back contingency in place in the event the system conversion was 
not successful, it was no longer a feasible or prudent option, by the 
time many of the issues were identified.
    An example of how one issue can snowball into a larger problem 
involves data quality. Our new system was designed to ping the Federal 
Incarceration Database to determine whether a household member was 
currently incarcerated and, therefore, ineligible for benefits. Our 
system was functioning as designed. During the transition to benefind, 
the system sent a query to the database, which responded with requested 
data about a member's incarceration status. If the query returned a 
match that someone was incarcerated, the system automatically sent a 
notice to that member that eligibility was being terminated unless 
documentation to the contrary was provided.
    The problem, however, is that the data was highly inaccurate and 
resulted in tens of thousands of erroneous letters being automatically 
issued. This single issue snowballed enormously. First, because these 
letters went out via mail, there was some delay in the state getting 
feedback about the erroneous letters. By the time this issue was 
identified, we had already passed the point where returning to the 
legacy system was not feasible. Further, these letters great caused 
confusion and panic among our members, who flooded our call centers and 
our lobbies. Instead of performing their typical case management 
duties, our caseworkers spent hours dealing with the fallout from these 
erroneous letters. This was on top of the increased case load 
associated with the system conversion, and on top of their getting used 
to using a new system.
    That is just one example of how one issue can cause big problems. 
And it is one that could not have been easily identified in system 
testing.
    Another complication was the fact that FNS policies on who may 
access data and assist with applications do not align with CMS 
policies. CMS allows contractors to assist with applications while FNS 
does not. We have hundreds of contractors available who can assist with 
Medicaid eligibility applications and give information about Medicaid 
application status but who are prohibited from using the exact same 
information to assist with SNAP applicants. Benefind automatically 
determines eligibility for Medicaid if all of the information is 
entered and verified. Benefind is not permitted to use that same 
information, if entered by a contractor, to determine SNAP eligibility 
because a merit employee case worker is required to process the SNAP 
eligibility. Benefind was intended to determine eligibility for all 
services, including SNAP and Medicaid with one application. This FNS 
policy, however, requires duplication of efforts and has impeded the 
efficiencies expected of the system.
    Additional complications included a decision on the part of the 
former Administration to shift workload from our local caseworkers and 
to replace the face-to-face model with a call-in center. This change in 
workflow did not align well with our new system. Our shift to a 
statewide model caused us to lose specialized expertise. This was then 
compounded by a lack of adequately trained staff. All of these issues 
snowballed with nearly catastrophic results causing an enormous 
backlog, long wait times, full lobbies and for some members to be 
dropped from receiving benefits.
Immediate Action Was Taken to Resolve the Issues
    Because most of these issues were not evident prior to roll-out, we 
had to combat the problems from behind. In order to avoid further 
disruption to essential services, I employed an all-hands on deck 
approach. I immediately empanelled a team comprised of senior 
leadership, program policy experts, vendor management and programmers, 
and representatives from field offices for daily meetings, including 
meetings on weekends to address identified defects. As issues mounted, 
we supplemented field operations with 120 additional IT staff to 
provide technical assistance with case processing and targeted training 
to improve worker efficiency. We distributed a daily targeted plan to 
field supervisors with direction to prioritize cases based on due dates 
to lessen impact on SNAP and Medicaid applicants and recipients. We 
developed a Rapid Fire Team to improve customer service and to handle 
critical cases escalated for possible loss in benefits, and a team 
comprised of 100 field staff was located to Frankfort's technology 
command center to provide centralized processing. This team enabled the 
vendor to troubleshoot programming issues and identify solutions to 
incorporate into future programming and facilitated hands-on system 
training so users could serve as field mentors. We augmented staffing 
within the Office of Ombudsman to address increased call volume and to 
ensure that every individual who reported a concern received a follow-
up call within twenty-four hours of initial contact. We created a 
cross-department team to review all auto-generated notification letters 
programmed into the system to ensure accuracy. After each daily session 
with the vendor and senior management, we identified specific 
programming solutions for implementation and targeted a release date. 
We also hosted telephonic and in-person conferences with Federal 
Medicaid and United States Department of Agriculture partners and 
received approval to extend coverage in an attempt to minimize a lapse 
in benefits. Finally, we employed additional security in field offices 
to assist with workflow and to ensure that client and employee safety 
received the highest priority.
Importance of a Proactive Stance
    Today, most of the issues have been fully resolved. Many of these 
issues could have been avoided altogether had proper planning and 
oversight procedures been enacted from the beginning. First, better 
communication, coordination and oversight of the vendor, along with the 
inclusion of performance metrics and sanctions for non-performance in 
the contract, is essential to gaining full knowledge of the true status 
of the system. Communication with the vendor was lacking initially, and 
the testing was not as robust and inclusive as we believed. Had the 
vendor been more closely monitored, we could have asked better 
questions, we would not have had to rely on their assurances, testing 
could have been more thorough and representative, and a better 
contingency plan could have been developed including reversion to the 
prior system. The inclusion of performance metrics and sanctions for 
non-performance in the contract would have enhanced monitoring and 
vendor communications. Next, comprehensive training and adequate 
staffing should be in place and a workflow developed that is reflective 
of the IT system should all be in place well prior to roll-out to 
ensure that issues may be identified and handled as expeditiously as 
possible.
    Finally, if we are to have a truly integrated system, we need the 
Federal Government to assist. Proactivity on the Federal Government's 
part would be an enormous help in minimizing issues. Federal databases, 
like the Federal Incarceration Database, should be accurate and updated 
frequently to avoid erroneous decisions. The Federal Government should 
also take an integrated approach to policies to ensure that they are 
consistent and that they align with the IT design it has encouraged. 
The FNS policy prohibiting anyone but merit employees to assist with 
SNAP applications must be changed. Currently, CMS has determined that 
contractors may assist with Medicaid eligibility applications. 
Recently, CMS has further reduced burdens on the application process by 
allowing insurers and brokers to access the Federal platform. This 
disconnect prohibits us from using the contractors who have access to 
the same information for Medicaid to assist with SNAP applications 
which results in duplication of efforts and an impediment to the 
efficiencies expected of the system.
    Resolution of these impediments would greatly enhance our 
experience and cause our system to be as efficient as intended. If 
these issues were addressed, then the system could be optimized and 
truly be a one-stop shop with no wrong door.
Conclusion
    We continue to monitor our system and work with our vendor closely 
to confirm that any future releases will result in a system that is 
reliable and stable. We conduct frequent reviews of system operations 
to ensure that any defects are quickly identified and resolved. We are 
committed to facilitating the process for our population.
                              [Attachment]
Post Launch Issues and Resolutions
   Issue: Significant costs associated with delaying rollout.

      KY Response: Renegotiated additional costs associated with a 
        delayed roll-out down approximately 50%.

   Issue: UAT testing needed more involvement of business 
        analysts in test scenario planning and for correspondence 
        generation.

      KY Response: Enhanced testing of processes and software.

   Issue: ``Go live'' did not include adequate roll back/
        contingency plan.

      KY Response: By the time the scope and magnitude of systematic 
        issues were fully identified the contingency plan, reversion 
        back to Kentucky Automated Management Eligibility System 
        (KAMES), was not feasible to implement. However, benefind 
        provides the ability for workers to override emergency cases.

   Issue: Center for Medicare and Medicaid Services and Food 
        and Nutrition Services policies contradict each other in the 
        integrated system, and did not properly allow utilization of 
        kynectors/application assisters.

      KY Response: Requested and received approval from FNS for 
        kynectors affiliated with nonprofits to assist with SNAP 
        applications. This change did little to solve the problem as 
        merit employees were still required to perform the interview 
        and eligibility determination for SNAP. Kentucky recommends 
        additional flexibility and better program eligibility policy 
        alignment across Federal eligibility programs.

   Issue: Training was inadequate; no proficiency test for 
        staff prior to roll-out. Also, what training was performed was 
        done several months in advance of go-live. That lag resulted in 
        a system that has several changes between training and go live, 
        and high attrition meant many workers were not trained in 
        advance of roll-out.

      KY Response: Proficiency thresholds and timeframes will be 
        established and verified prior to any future system roll-outs. 
        Will also ensure some training takes place in close proximity 
        to system rollout.

   Issue: Pilot project was insufficient; not fully 
        representative of local offices.

      KY Response: Future pilot programs will incorporate all special 
        populations and geographic areas.

   Issue: Clear communication between vendor and CHFS was 
        lacking.

      [KY Response:] Streamlined operations and communication by 
        requiring twice weekly meetings and implementing morning and 
        afternoon status reports.

   Issue: 2013 DCBS workforce study recommended a statewide 
        structure that has proven inadequate for operating the benefind 
        system.

      KY Response: Several specialized teams were created and some 
        shift of responsibilities back to local level has occurred. 
        CHFS is currently undergoing a formal examination of workflow 
        for more permanent and substantial changes to better align with 
        benefind system.

   Issue: Long phone wait times and case review times 
        associated with benefind roll-out.

      KY Response: Established a Rapid Response Team (RRT)--this group 
        of 10-20 vendor and CHFS staff gave us the ability to quickly 
        respond to cases that required immediate action. Additionally, 
        CHFS improved the phone system Interactive Voice Response 
        (IVR). Improvements made to the phone systems have greatly 
        decreased wait times by providing a specific queue for citizens 
        seeking benefits status or reporting changes.

   Issue: Sizeable case backlog associated with benefind roll-
        out.

      KY Response: Established Operation Field to Frankfort (O.F.F.)--
        this team of 60-100 employees from across the state, assisted 
        by 12-15 vendor employees, was consolidated in Frankfort to 
        address high volume of cases, specialized populations 
        experiencing issues, and to receive additional training. This 
        team has successfully processed hundreds of thousands of cases 
        and has been instrumental in identifying system issues 
        experienced during the benefind roll-out process.

   Issue: Incorrect notifications mailed to constituents.

      KY Response: Completed a detailed review of all possible system-
        generated correspondences/notifications for accuracy and 
        software errors, and identified trigger threshold improvements. 
        CHFS and vendor continue to review policies associated with 
        notifications, in order to eliminate confusion.

   Issue: Small populations saw a disproportionate volume off 
        errors during roll-out.

      KY Response: Worked with community partners such as KY Center for 
        Equal Justice, KY Association of Health Care Facilities, KY 
        Refugee Ministries, and Catholic Charities to ensure we are 
        addressing citizens' concerns, while implementing changes to 
        the organizational processes in order to better serve the 
        citizens.

    The Chairman. Secretary Glisson, thank you for your 
testimony.
    Ms. Aaronson, go ahead and proceed with your 5 minutes of 
testimony when you are ready.

 STATEMENT OF LAUREN AARONSON, ASSISTANT DEPUTY COMMISSIONER, 
                   OFFICE OF BUSINESS PROCESS
           INNOVATION, NEW YORK CITY HUMAN RESOURCES
                  ADMINISTRATION, NEW YORK, NY

    Ms. Aaronson. Good morning. Thank you, Chairman Thompson, 
Ranking Member McGovern, and Members of the Subcommittee, for 
giving me the opportunity to testify today.
    My name is Lauren Aaronson, and I lead the Office of 
Business Process Innovation at New York City's Human Resources 
Administration. I am pleased that you are recognizing the work 
that Mayor Bill de Blasio and HRA have undertaken to modernize 
the way New York City administers the SNAP program.
    Today I will focus on our work to improve the client 
experience, and the agency's ability to adapt to and 
incorporate new and emerging technologies in its service 
delivery model.
    Currently, nearly 1.7 million New York City residents 
receive SNAP benefits. HRA has invested in the creation of a 
self-directed service model for our SNAP population. In 
addition to providing an enhanced customer experience, this 
lower-touch model frees up our eligibility workers' time, and 
allows them to focus on those clients who truly need their 
support. Some of these technologies include an innovative 
online tool called ACCESS HRA, where residents can retrieve 
benefit information and apply and recertify for SNAP. This 
portal allows clients to create an account to gain real time 
access to over 100 case-specific data points. Additionally, 
clients can make limited changes, view e-notices, and opt into 
text message and e-mail alerts. As of this month, there are 
more than 300,000 HRA online accounts for SNAP households.
    Using an USDA grant, HRA launched a self-service mobile app 
to give clients the ability to use their mobile device to 
better manage their cases on-the-go. The app allows clients to 
utilize their mobile device to capture and submit images of 
SNAP eligibility documents to the agency, and allows us to 
leverage innate mobility tools such as push notifications, 
mapping, and calendaring. HRA uses an iterative design approach 
and techniques such as A/B testing as a way to put the user 
first, and allow us to optimize the functionality of these 
apps. Clients have downloaded this app over 112,000 times, and 
uploaded over one million images. For those clients that prefer 
to transact with us in our centers, we provide a suite of self-
service tools, including self-service check-in kiosks, PC banks 
to use ACCESS HRA, and self-service scanning.
    In an effort to simultaneously address improving the client 
experience and increasing worker efficiency, in 2016 HRA 
implemented a new call center for recertification eligibility 
interviews. This new operation takes advantage of a waiver from 
the USDA, and allows clients to conduct SNAP eligibility 
interviews on an On-Demand basis, rather than waiting for a 
scheduled interview. This is an improvement for our clients as 
well as an efficiency improvement for workers, who no longer 
call to schedule and reschedule interviews.
    The clearest success of On-Demand is the increased number 
of interviews taking place by phone. Before On-Demand, only 52 
percent of SNAP recertification interviews were held by phone, 
we can now report as high as 76 percent of interviews on the 
phone. Each of these improvements represents a reduction or 
elimination of a significant barrier. By mitigating the 
barriers to access, we can ensure clients maintain benefits and 
reduce the churn of clients at recertification, which can tax 
our resources.
    Technology has changed the way we communicate with each 
other and our institutions. We recognize that our work to 
improve the client experience must not stop at optimizing 
digital systems and improving online communication efforts. 
Through data analysis, client interviews, and research, we 
identified certain behavioral patterns that lead to the churn 
of clients at recertification. We crafted behaviorally-informed 
notices, informing clients that they would lose their benefits 
if they did not act, and we found that those clients who 
received these notices were more likely to initiate their 
recert application, and completed phone interviews earlier in 
the recertification period; a low-cost approach to improving 
outcomes. Over time, these collective investments will reduce 
our physical footprint, and save on expensive lease costs, 
while removing barriers to access and making it easier for 
clients to apply for and maintain their benefits.
    The de Blasio Administration will continue to work to 
expand access and remove barriers to SNAP using online tools 
and technology innovations. Our work has resulted in a better 
customer experience and a more efficient operation for HRA.
    Modernization of client and worker facing tools and 
processes can only take us so far. There is a need to review 
the underlying Federal regulations that guide SNAP, to help 
jurisdictions take full advantage of the continuous technology 
advances, changes in population needs, and shifts in the 
workforce. There is an administrative burden on states and 
Federal oversight that could benefit from building more 
flexibility into the regulations so that every innovation does 
not require a waiver.
    We would also like to take this opportunity to work with 
you to protect low-income and vulnerable Americans, as well as 
Americans with disabilities, against any proposed Federal cuts 
in the SNAP program. Not only would cuts to the SNAP program 
reverse years of gains that cities and states like New York 
have made in service delivery, it would also harm local 
economies. In New York City, SNAP recipients purchase more than 
$3 billion worth of food, generating about $5.4 billion of 
economic activity largely within small businesses.
    We look forward to continued collaboration with the 
Committee as we continue to innovate and modernize the SNAP 
program. For a detailed account of these efforts, I invite you 
to review my submitted testimony.
    Thank you. I look forward to your questions.
    [The prepared statement of Ms. Aaronson follows:]

 Prepared Statement of Lauren Aaronson, Assistant Deputy Commissioner, 
 Office of Business Process Innovation, New York City Human Resources 
                      Administration, New York, NY
    Good morning. Thank you, Chairperson Thompson and Members of the 
House Agriculture Committee Subcommittee on Nutrition for giving us 
this opportunity to testify and respond to Committee questions today.
    My name is Lauren Aaronson and I am an Assistant Deputy 
Commissioner of the Office of Business Process Innovation at the New 
York City Human Resources Administration (HRA). I am pleased that you 
have invited me here today to testify and that you are recognizing the 
work that New York City Mayor Bill de Blasio and HRA have undertaken to 
modernize the way New York City administers the SNAP program. We 
believe we are well on our way to achieving the two primary and equal 
goals of our modernization efforts--improved customer experience and 
optimized operational efficiency. I will focus this testimony on the de 
Blasio Administration's work to improve the client experience and the 
Agency's ability to adapt to and incorporate new and emerging 
technology in its service delivery model while addressing the needs of 
the most vulnerable New Yorkers, including older New Yorkers and those 
with limited sight, mobility and technology and broadband access. These 
continuous efforts and reforms are helping the Administration to move 
towards its goal of eliminating hunger in New York City and ensuring 
that every New Yorker who is eligible for SNAP has unencumbered access 
to this critical nutrition support while utilizing fewer administrative 
resources.
    As this Committee knows, SNAP is the nation's most important anti-
hunger program, assisting more than 45 million low-income Americans, 70 
percent of whom are families with children and more than one in four 
are households with seniors or individuals with disabilities. 
Currently, nearly 1.7 million New York City residents receive SNAP, 
including nearly 600,000 children (35%) and 415,000 seniors (25%). 
Compared to 1 year ago, the SNAP caseload increased by 1,254 cases 
(0.1%), which was a decrease of 7,269 recipients (^0.4%). Since Mayor 
de Blasio took office in January 2014, we have worked to implement both 
immediate and long-term measures to combat economic inequality and to 
ensure that each New Yorker has access to, as well as, the resources 
and supports they need to thrive and avoid hunger.
    Over the past 3 years, HRA has invested in the creation of a self-
directed service model for our SNAP population. These self-service 
tools are available to all SNAP enrollees, and a large segment of our 
SNAP population is interested and able to take advantage of this model. 
In this day and age, our clients are accustomed to using self-service 
tools at train stations, banks, airports and supermarkets. In addition 
to providing an enhanced customer experience, this lower-touch model 
frees up our eligibility workers' time and allows them to focus on 
those clients who truly need their support.
    I will now spend a few minutes discussing some of these technology 
improvements and other initiatives aimed at reducing barriers to access 
and bringing our service delivery model further into the 21st century.
New and Improved Technology
    The goal of our modernization effort is to create a self-directed 
service model that allows applicants and clients to transact with the 
Agency without the burden of having to physically come to an HRA 
location. Over time these investments will help the City to reduce our 
physical footprint and save on expensive lease costs while removing 
real barriers to access, and making it easier for clients to apply for 
and maintain their benefits. We know from national studies that the 
point of recertification is where many eligible clients across the 
country often lose their benefits.
Launched ACCESS HRA
    To improve access to benefits and information on a pending or 
active case, NYC developed an online portal available to New Yorkers 
anywhere an Internet connection is available. ACCESS HRA is an 
innovative tool that allows New York residents to retrieve benefit 
information and apply and recertify for SNAP and other benefits. This 
portal allows clients to create an ACCESS HRA account to gain access to 
over 100 case-specific points of information in real-time, including 
application and case statuses, upcoming appointments, account balances, 
and documents requested for eligibility determinations. Additionally, 
clients can make changes to contact information, view eligibility 
notices electronically, and opt into text message and e-mail alerts. We 
continue to improve this tool to add new functionality and will soon 
allow recipients to submit their Periodic Report in addition to 
reporting changes in circumstances. As of May 31, 2017 there are more 
than 300,000 HRA online accounts for SNAP households, and we receive 
over 33,000 submissions each month.
    ACCESS HRA also allows clients to:

   View E-notices that remain accessible for 365 days.

   Go Paperless! Clients are able to opt-in to reduce the 
        number of paper notices sent from HRA.

   Request an electronic budget letter from the Case Details 
        page, which will appear as an e-notice the next business day.

   Recertify SNAP and Cash Assistance cases.

   Document Reuse: Select documents on file at HRA for 
        identity, age, and other eligibility documents to re-use when 
        submitting an online application.

   Opt into text message and e-mail alerts about their case. 
        For example, a client can now receive a text when their SNAP 
        recertification period begins.

   After submitting a recertification form, track the date it 
        is received by HRA on the Case Details page.

    HRA complies with NYC local laws by making ACCESS HRA available in 
seven languages (English, Arabic, Chinese, Haitian Creole, Korean, 
Russian and Spanish), and the tool was designed and tested to make its 
content more accessible to people with disabilities, which means it is 
compliant with WCAG 2.0 (Web Content Accessibility Guidelines), AA 
standard. We have taken great pains in ensuring that we perform User 
Acceptance Testing with a diverse cross section of users, including 
those with disabilities.
Launched HRA Mobile App
    In an effort to decrease the digital divide, HRA was awarded a U.S. 
Department of Agriculture grant to launch a self-service mobile app to 
give clients the ability to use their mobile device to better manage 
their cases. Implementing mobility as a tool is significantly different 
than designing an online web portal. Mobile devices are powerful tools 
in their own right, and taking advantage of a phone's innate 
capabilities is critical to successful implementation. Though the app 
allows clients to utilize their mobile device to get access to much of 
the same information that is available on the web portal, it also 
allows clients to use the camera to capture and submit images of SNAP 
and Cash Assistance eligibility documents to the Agency. In addition, 
it allows us to use push notifications to remind clients about 
important case milestones such as recertification, as well as access 
integrated functions such as mapping and calendaring.
    Designing for a mobile device has certain challenges including the 
need to create a highly intuitive user interface. For this reason, HRA 
uses an iterative approach to design that puts the user first and 
allows us to optimize the functionality of the apps. Techniques such as 
A/B testing, where we go directly to our clients in the HRA Centers to 
test candidate designs to are utilized regularly. Since the 
application's launch, clients have downloaded the mobile app 112,000 
times, and uploaded over one million images. Not needing to return 
documents at our centers saves clients and staff time, images are also 
of significantly better quality and already connected to the pending 
case action so that the eligibility worker does not have to waste time 
searching.
On-Site Self-Service Tool
    For those clients that prefer to transact with us inside of our 
centers we have provided a suite of self-service tools. These tools 
include self-service check-in kiosks and PC Banks to utilize ACCESS HRA 
and self-service scanning.
    The scale of our centers necessitates ticketing and routing for an 
efficient client flow. Self-service check-in allows clients to identify 
the purpose of their visit and automatically receive a ticket 
appropriately routing them within the center.
    Across NYC almost 80 percent of applicants that come to our centers 
to apply for SNAP are interested in applying online in our PC Banks. In 
some cases, applicants do not have access to a computer or feel more 
comfortable submitting online with the assistance of a facilitator in 
our offices. We have also been able to use the PC banks as a forum to 
solicit client feedback on the usability of the ACCESS HRA tool, and 
identify improvements to the application questions, communications with 
clients, and efficiencies in our operation. This feedback loop allows 
us to hear the ``voice of the client'' and adjust our technology and 
processes to create a better overall client experience. The overall 
impact of these usability adjustments have impacted the foot-traffic in 
our centers, as close to 65% of our online applications are being 
submitted on computers and mobile devices outside of an HRA location.
    There are currently 15 SNAP centers and 103 community-based 
organizations across the City where clients can quickly and easily scan 
and submit documents electronically. Clients are able to use the self-
service areas to submit documentation in support of case changes such 
as the addition or removal of a family member, and change in rent or 
address. In addition, 12 Job Centers have scanners and ten Job centers 
have self-service kiosks. The self-service document scanning option 
allows clients to submit documents at locations convenient to them, not 
only at our SNAP centers.
On-Demand Interviews
    In an effort to simultaneously address improving the client 
experience and increasing worker efficiency, at the beginning of 2016, 
HRA implemented a new call center to handle recertification eligibility 
interviews for SNAP. This new operation takes advantage of a waiver 
from United States Department of Agriculture Food and Nutrition 
Services (FNS) and allows clients to conduct their SNAP Eligibility 
interviews on an On-demand basis at their convenience, rather than wait 
for a call during a 4 hour window, or come into a center and wait for 
an in-person interview. This is an improvement for the client, as well 
as an efficiency improvement for the workers who no longer have to call 
to schedule and reschedule interviews. The clearest success indicator 
for On-Demand has been the channel shift of interviews taking place in-
person at centers, to interviews being over the phone at the clients' 
convenience. In October 2015, before the implementation of the On-
Demand call center, only 52% of the completed SNAP recertification 
interviews were held via telephone. We now have reached as high as 76% 
of the interviews held by phone--a 24% increase. As we continue to 
increase our capacity, we will begin to introduce on-demand telephone 
interviews for new SNAP applicants by this Fall.
    Each of these technological improvements alone represents a 
reduction or elimination of a significant barrier. Together they 
represent a wholesale change to the ways in which clients apply for and 
recertify for benefits--ultimately reducing the number of clients who 
do not receive this vital benefit because it is too hard to apply and 
recertify or the investment of their time is too great. By mitigating 
the barriers to access we can ensure clients maintain their benefits 
and reduce the churn of clients at recertification, which can tax 
resources across the system.
Behavioral Based Notification
    Technology-from computers to mobile devices, to Facebook, Twitter 
and Snapchat, to text messages--has become an important way for New 
Yorkers to communicate with each other and institutions and to get the 
information that they need. This is precisely why the de Blasio 
Administration has committed to bringing every New Yorker affordable, 
high-speed Internet access by 2025 and prompted the launch of LinkNYC, 
the world's largest and fastest free municipal WiFi network with more 
than one million users. Notwithstanding these incredible advances, the 
de Blasio Administration remains laser focused on helping New Yorkers 
overcome obstacles not necessarily related to technology and broadband 
access.
    At HRA, we recognize that our work to improve client experience 
must not stop at optimizing our digital systems and improving our 
online communication efforts. Through data analyses, client interviews, 
and research, we were able to identify certain behavioral patterns that 
lead to churn of clients at recertification. For example, SNAP notices 
weren't catching clients' attention. In response to this, we crafted a 
behaviorally-informed reminder notice to clients that they'd lose their 
benefits if they didn't act in a timely manner. What we found was that 
those clients who received the behaviorally-informed notice:

   Were 5.5% less likely to miss the form submission step than 
        clients who did not;

   Were more likely to submit recertification forms and 
        completed phone interviews earlier in the recertification 
        period; and

   Were 12.9% more likely to have submitted a recertification 
        form than the control group.

    Now I would like to briefly discuss how these low and high tech 
innovations are allowing HRA to meet clients in the setting where they 
feel most comfortable, both online and offline.
SNAP Outreach
SNAP Outreach Online
    In April 2015, HRA launched an advertising campaign to encourage 
New Yorkers struggling to afford food to seek help, especially 
targeting low-income seniors and immigrants. Through FoodHelp.nyc, 
potential clients are redirected to ACCESS HRA where they are able to 
determine if they qualify for SNAP and other City, state, and Federal 
benefits. In addition to the website, the campaign consists of print 
advertisements in English and the six New York City Local Law languages 
in locations throughout the City. The campaign also includes digital 
advertisements and video testimonials of past and current SNAP clients. 
Since the inception of the SNAP Helps campaign in April 2015, 
FoodHelp.nyc has seen approximately 131,000 lifetime users with roughly 
74% being new users. Additionally, there were approximately 58,000 
click-throughs from FoodHelp.nyc to ACCESS HRA, representing 44% of 
site visitors.
SNAP Outreach in the Community
    HRA's SNAP Support Services unit manages out-stationed staff at 
three community-based ``Paperless Office System'' sites providing 
online access to benefits with an 88% approval rate for approved 
applications. SNAP Support Services staff also provides technical 
assistance to 103 community-based organizations that provide SNAP 
facilitated enrollment and recertification services. Over the past 
year, SNAP Support Services provided outreach services at more than 
1,676 individual community events and prescreened more than 9,526 
potentially eligible applicants.
    Now I would like to briefly discuss how this Committee can help the 
City and State of New York continue to leverage technology in pursuit 
of improved program efficiencies and outcomes.
A-87 Cost Allocation Waiver
    Families in need often require assistance from more than one 
program, which can mean visiting multiple offices, completing multiple 
applications, and providing the same documents to more than one 
program. Improvements in technology can streamline the delivery of 
programs, making the process more efficient for service providers, and 
helping to ensure that families and individuals receive program 
services in a more holistic manner. The current A-87 cost allocation 
waiver provides incentives for states to streamline service delivery, 
efforts towards which have begun in many states. In New York, these 
efforts will create a ``no-wrong-door'' service system for families 
that will help to ensure that they receive all the help they need, no 
matter which program they approach first. This coordinated approach to 
service delivery, will help families get back on their feet and off of 
assistance more quickly. However, this work is not done, and the 
expiration on December 31, 2018, of the increased Federal reimbursement 
available under the A-87 cost allocation waiver threatens to slow or 
halt this important work in New York and elsewhere. For this reason, 
New York strongly recommends that this Committee work with the United 
States Department of Health and Human Services' Centers for Medicare 
and Medicaid Services and the U.S. Department of Agriculture to extend 
or make permanent this waiver in order to incentivize states to 
continue to develop the types of technological advances and outcomes 
described in this testimony.
Conclusion
    The Administration will continue to work to expand access and 
remove barriers to SNAP by using online tools and technology 
innovations. The results of these implementations have been multi-
faceted. For clients, it has resulted in shorter wait times to complete 
their transaction, and a better customer experience for our low touch 
population as well as for our clients in need of a more in depth worker 
intervention. Our workers are spending time helping clients when 
needed, rather than completing the scanning tasks, routing clients 
manually, and data entry. Modernization of client and worker facing 
tools and processes can only take us so far. We believe there is a need 
to review the underlying Federal regulations that guide this program to 
help states and local jurisdictions take full advantage of the 
continuous technology advances, changes in our population needs, and 
shifts in the workforce. There is administrative burden on both the 
states and the Federal oversights that could benefit from building more 
flexibility into the regulations so that every innovation does not 
require a waiver.
    We would also like to take this opportunity to work with you to 
protect low-income and vulnerable Americans as well as Americans with 
disabilities against any proposed Federal cuts to the SNAP program or 
other safety net programs. Not only would cuts to the SNAP program 
reverse years of gains that cities and states like New York have made 
in service delivery it would also harm local economies. In New York 
City, SNAP recipients purchase more than $3 billion in food, generating 
about $5.4 billion of economic activity largely within small 
businesses. We look forward to continued collaboration with you as we 
continue to innovate and test and learn from new technology and tools
    I look forward to your questions.
    Thank you

    The Chairman. Ms. Aaronson, thank you so much for your 
testimony.
    The chair would like to remind Members that they will be 
recognized for questioning in order of seniority for Members 
who were here at the start of the hearing. After that, Members 
will be recognized in order of arrival. I appreciate Members' 
understanding.
    I now recognize myself for 5 minutes of questioning.
    Mr. Mathison, your testimony provides some encouraging news 
about the security of SNAP EBT card technology, indicating that 
the two-factor authentication provided by the use of a magnetic 
strip card with a PIN is an effective method for preventing 
fraud. However, you also indicated that there is still room for 
innovation with regards to secure two-factor authentication in 
situations where the card is not present, such as online 
transactions; e-commerce.
    My question is how might we accomplish this in SNAP so that 
we can maintain both access for recipients and the integrity of 
the program for different types of transactions?
    Mr. Mathison. Yes. Thanks for the question, Mr. Chairman. 
As we think about what is happening out in the retail 
marketplace, as these physical grocers start to provide online 
services; whether it is online shopping or providing remote 
delivery in the home, where the cardholder and the benefit 
recipient doesn't necessarily go to the physical location, the 
card simply isn't present. As we try to facilitate these 
transactions on an online basis there are technologies 
available such as virtual PIN pads or secondary authentication 
methods where something that the benefits holder would have, 
like a fob or a token, or some other kind of administrative 
function that would identify that as a legitimate benefits 
holder, is paramount to making sure that, as these transactions 
happen, there isn't an explosion of fraud. The reason I say 
that is because as we think about what happens in the bank card 
world, the difference between the fraud levels that happen at 
the physical point of sale and the fraud that happens in the e-
commerce world is very different because of this 
authentication. When you are in the store, I have the ability 
to look a person in the eye, I have the ability to extract a 
PIN from them that authenticates that they know that they are a 
legitimate cardholder, but in the e-commerce space those two 
ingredients are not necessarily available. I don't get to see 
the person, and they don't actually have a credential that 
authenticates that they are the person that is authorized to 
use that card.
    So making sure that these kind of second-factor 
authentication technologies go along for the ride as we start 
to deliver SNAP benefits into the e-commerce space is going to 
be very important to make sure that fraud does not occur.
    The Chairman. Thank you.
    Secretary Glisson, you have been very frank about some of 
the challenges your department faced in launching your 
eligibility system, and the lessons you learned in the process. 
It seems that there was a complex set of issues from 
contracting, oversight, IT, to policy. With 20/20 hindsight, 
what would you advise other states embarking on these projects 
to prioritize at the outset to mitigate some of these 
complications, and what can the Federal Government do to 
support states in these efforts?
    Ms. Glisson. Thank you. Thank you, Chairman Thompson. I 
appreciate your question.
    I think some of the things that I could say to the states, 
and I will just note that we did try to make a list in our 
written testimony that we provided, in our white paper, so I 
would encourage folks to go and look at the white paper. I 
think that there are things that I would remind them about that 
we learned and they were tough lessons, one of those is around 
the training aspect. We were told by the vendor that there had 
been a lot of training, that had been done appropriately and so 
forth, but training is essential. And we found out that 
training needs to be done very close to the actual time of the 
rollout. When you are doing a whole state-wide rollout, that 
can be very difficult because it can encompass a lot of 
training over a larger period of time. Maybe phasing in, if 
that is possible, that was not something we could do, we had to 
do a complete state rollout, but having training and having 
training that is close to the time of the rollout can be very 
helpful.
    One of the things that was most beneficial is that we also 
put together a team of individuals that came to Frankfort, and 
they worked on some of the harder cases that we have to deal 
with. These are cases that are more complex. The SNAP cases 
generally are not quite as complex as some of the other cases 
that are in an integrated system. But we brought a dedicated 
group of workers that all they did was sit and work on cases. 
This was like maybe upwards to 100 workers that came to 
Frankfort and spent all day just working on particularly hard 
cases. That was also very beneficial because once you were in 
our local offices, we have 120 counties in Kentucky, we have a 
local office where you can get your SNAP benefits in every one 
of those 120 counties, those folks were being overwhelmed at 
the time. Having a group of individuals that came and that was 
all they did; they did not have to deal with the folks coming 
in the door at a local office, that they could just work on the 
issues around trying to work more difficult cases, that was 
also very helpful.
    I also think it is very important that there needs to be 
really good communication between the vendor and the state. You 
need to have the right kind of a team that can talk the 
language and understand the language, make sure that you 
understand what is going on. There needs to be adequate 
testing. We were told that there was adequate testing, but that 
testing had not been done on some of these more complex cases 
that are part of an integrated system. You have to remember 
that when you are having an integrated system, you have SNAP 
cases, but now you have Medicaid and other benefits, and they 
can be very complex, particularly around the Medicaid area and 
long-term care cases. You may feel that the testing has been 
adequate, but make sure that you've tested on all aspects of 
the case, including those more difficult Medicaid, or maybe 
what we call AMA cases for long-term care.
    Also, make sure you have a backup plan. We had understood 
that there was a backup plan, but that it is also helpful to 
see if there is something that is kind of off-the-shelf, these 
plans are all customized, very expensive, lots of money has 
been spent on them just for that state. It would be helpful if 
you truly have a backup plan, is there something that could be 
purchased off-the-shelf, something that is out there that you 
could look at, take, and it could fill in the gap until you can 
get this thing back on its feet.
    So make sure you have a backup plan. And be careful that 
you have the right folks in the committees making decisions, 
particularly around policy decisions. These policy decisions 
are some of the earliest decisions that are made around these 
integrated systems. A cabinet or those that are using these 
integrated systems, you must make certain that you have the 
right folks at the table, understanding when they make a policy 
decision, like in Kentucky, that they are going to ping a 
Federal database, and that these Federal databases are not 
really adequate. They need to understand that. The vendor needs 
to have an understanding of that, and there needs to be that 
good communication, and you need to be very careful as you are 
making these policy decisions about how you are going to be 
verifying information.
    Those are just some of the areas that I would suggest that, 
if I had 20/20 vision, some of the things that could be helpful 
for other states.
    The Chairman. Very good. Thank you very much.
    I now recognize the Ranking Member for 5 minutes.
    Mr. McGovern. Well, thank you very much. And thank you all 
for your testimony.
    One of the things that bothers me is when I hear reports, 
as I mentioned in my opening statement, of individuals who are 
on SNAP who go to a grocery store or market and then cannot use 
their benefit. Does anyone have any idea how many people we are 
talking about who that happens to on a monthly or yearly basis?
    These outages are not a rare occurrence.
    Mr. Mathison. I guess the way I would try to benchmark that 
for you is, let me give you an example of one that happened, it 
was in the first week of May. There was an outage for the State 
of Louisiana. It happened for 3 minutes over the lunch hour, 
and there were 2,800 cardholders that were unable to get their 
SNAP benefits as they went shopping over their lunch break. 
From a frequency perspective, it really does vary. It can be 
everywhere from sporadic, one or two a month, because you have 
over 70 different jurisdictions, right?
    Mr. McGovern. Right.
    Mr. Mathison. Each one of them has their own ups and downs.
    Mr. McGovern. Right.
    Mr. Mathison. But on any given day, what I would say is, as 
we process for over the 70 jurisdictions, there is very rarely 
a day goes by that at least one of them doesn't have some kind 
of an outage.
    Mr. McGovern. Well, that is a problem. And so what happened 
to those shoppers in Louisiana who went with their SNAP cards 
and were told that they couldn't purchase their food?
    Mr. Mathison. Yes, typically what happens is, if the outage 
is short in a matter of minutes, they will usually just wait 
and retry the transaction, because you have to think about the 
lane experience, they are standing there in the checkout lane, 
they have a shopping cart full of groceries and they are trying 
to check-out. Usually they are just trying to stand there and 
wait until the system comes back up, or sometimes they will go 
over to the customer service desk and they will try to complete 
their transaction over there when the system comes back online.
    Mr. McGovern. And what happens if it is not a quick fix?
    Mr. Mathison. Yes. Usually, what they do is they will 
abandon the shopping cart and just leave.
    Mr. McGovern. Yes, that is obviously unacceptable. 
Typically we have people who are on SNAP who are working, who 
have families, who are trying to juggle a million different 
things.
    Mr. Mathison, you mentioned the lack of redundancies in 
SNAP systems in your testimony, is this the cause of outages 
that prevent SNAP clients from being able to use their cards, 
and how do we fix this?
    Mr. Mathison. Yes, one of the things we do, I mentioned in 
my testimony the idea that there are, in the bank card world, 
there are actually legislative entities that manage the 
integrity of the financial system. They have oversight over 
Visa, MasterCard, they have oversight over the card issuers in 
that world, and they actually have oversight of First Data. 
While we are not a financial institution, per se, since we 
process approximately ten percent of the GDP through our 
systems on any given year, they do come in and they monitor us. 
There is oversight around what are our risk management 
policies, what are our oversight and controls over 
redundancies, what are our business continuity programs. And so 
we are required to have all those policies and procedures in 
place, and be able to document what we are going to do in such 
an outage.
    What I would suggest is, with the different states all 
contracting separately, each with a different contractor, find 
out how their program runs, and if we have a disparity of how 
that works across the different jurisdictions.
    Mr. McGovern. Right.
    Mr. Mathison. Each one probably has their own policy in 
place, but they are necessarily not consistent.
    Mr. McGovern. But to fix this, I assume it will cost money.
    Mr. Mathison. Yes. At the end of the day it is going to 
come down to, to the extent that there is not a secondary 
system that can come online when the first one fails, for 
example, there will probably be an investment needed to be 
made.
    Mr. McGovern. Right. The investment by the state and by the 
Federal Government, who would pay for this?
    Mr. Mathison. Typically, since the states have outsourced, 
and perhaps Mr. Boswell could weigh-in on this as well, but 
since the states tend to outsource that function to the 
contractors, as part of that initial arrangement is where the 
actual building and spending would happen.
    Mr. McGovern. Right. But I would assume some of it would be 
Federal money, right? Ms. Aaronson, I was pleased to learn 
about the innovations in New York City and we certainly applaud 
that, but you mentioned that you received a grant from USDA to 
make some of those improvements. Would you have been as 
successful in implementing these innovations without Federal 
investment, and what can this Committee do to help New York 
City and cities and states across the country to continue to 
make technological progress to improve delivery and access to 
services?
    Ms. Aaronson. Thanks, Ranking Member McGovern. I think that 
these innovations would not have been possible without--sorry. 
Thanks, Ranking Member McGovern, for that question. I don't 
think that these innovations would have been possible without 
investment from the USDA, and without a very large budget to 
invest.
    Mr. McGovern. Right.
    Ms. Aaronson. And it is important for us in the city, our 
scale is quite large, and in order to manage a caseload the 
size of ours we need the technical infrastructure in place to 
do so, otherwise you would have ballooning headcount just to 
handle the caseload. Technology helps us to increase 
efficiencies and to make our customer experience better.
    Mr. McGovern. Okay. And I guess my final point would just 
simply be: we are all for moving ahead with new advancements 
and technology. We want the experience for those who are the 
clients to be better, and we certainly do not want to have 
people show up at grocery stores and be told we can't take your 
card. That is just unacceptable. But to do that and to do the 
kinds of things that you guys did in New York City is going to 
require continued investment. In the long-run it will certainly 
benefit everybody. We are having this hearing in the context of 
a budget proposal that would significantly slash budgets that 
are designed to support these kind of innovations.
    I thank you all for your testimony.
    The Chairman. The gentleman yields back.
    I now recognize the gentleman from Kansas, Mr. Marshall, 
for 5 minutes.
    Mr. Marshall. Yes, thank you, Mr. Chairman.
    I guess I will start with Ms. Aaronson. How long have you 
been working in New York City?
    Ms. Aaronson. This is my 19th year with New York City.
    Mr. Marshall. Compared to 19 years ago, what is our 
efficiency like? In other words, if we have a Federal budget of 
$80 billion in a year, and you spent $3 billion, how do you 
measure efficiency over the past 19 years?
    Ms. Aaronson. Well, I haven't always been in this 
particular position, but I can say that the efficiencies that 
we have gained through the investments that we have made in the 
modernization that we have undergone recently can be seen in 
the fact that we have shifted many of our workers from front 
offices to back offices, where they are doing much more 
eligibility-related tasks, rather than working on scanning 
documents and data entering, they are actually determining 
eligibility. We have decreased the number of in-person 
transactions in our centers by 31 percent. And we can measure 
churn by the fact that at the point of recertification, for 
instance, we have decreased the number of failed-to-keep 
interviews by ten percentage points since we implemented----
    Mr. Marshall. Well, excuse me, do you measure just the cost 
of administering this from year to year, since you introduced 
all this technology?
    Ms. Aaronson. It is really hard to specify specific costs. 
We have just recently implemented these modernizations, and we 
haven't yet determined what the ideal staffing model is. Moving 
a system this large over time is difficult to do.
    Mr. Marshall. You don't measure how much it costs from year 
to year?
    Ms. Aaronson. We certainly do measure that, and I can get 
you more specific data, but I don't have----
    [The information referred to is located on p. 1237.]
    Mr. Marshall. Has there been improvement in it, do you 
think?
    Ms. Aaronson. Well, I have seen improvements in the 
outcomes for our clients, and I have seen improvements in terms 
of the number of transactions that we have needed to complete 
in-center versus----
    Mr. Marshall. But not the cost?
    Secretary, how long have you been in your position?
    Ms. Glisson. I have been in my position since December of 
2015.
    Mr. Marshall. December 2015. Do you have any idea if your 
efficiencies improved anything? I mean just the cost to 
administer the program, has it improved in the past 5 years and 
10 years with all this technology we are introducing?
    Ms. Glisson. I don't have the numbers in front of me about 
whether we could quantify that for you, anecdotally, I would 
say that there are some improvements that we have seen. We have 
been able to cut down on our overtime. When I came into the 
Cabinet, out in the counties most of those counties were on 
overtime, so we have been able to slash the overtime that they 
are using. We are seeing some reduction in staff. We are seeing 
some efficiencies.
    I will tell you that there are, and the Chairman asked me 
this question, and I don't think I really quite got a chance to 
answer that and follow up on your second part of that question, 
which is how could you help us so we can get some of those 
efficiencies. What I would suggest is that there is a way to 
actually get efficiencies, because if we were able to work with 
the Federal Government and get certified modules, remember, 
this is an integrated eligibility and enrollment system. Many 
of these states are not prepared to be able to understand all 
of the different vendors that come to their doors, and you have 
all of these vendors, and different vendors are working with 
every state.
    Mr. Marshall. Yes.
    Ms. Glisson. If we were able to actually work more closely 
with the Federal Government to identify certified modules, 
whether it is through an app perhaps, or working with the 
Federal Government to decide this has been successful in 
certain states and we would suggest that you contract with 
these particular vendors. That could be very helpful.
    Mr. Marshall. Yes, my goal is that we would get the most 
number of dollars that we spend, as many of them to the 
customer as possible.
    Ms. Glisson. Exactly.
    Mr. Marshall. And I understand that.
    State to state there is probably some variation, and I am 
not sure if anyone, Mr. Boswell, Mr. Mathison, has much 
experience from state to state. What is the cost to administer 
this program? Does it vary much from state to state?
    Mr. Boswell. The cost for administering the EBT side, I 
can't really speak for the entire cost of administering the 
integrated eligibility system, et cetera. From an EBT 
perspective it is relative, and it is similar state to state. 
It is primarily driven by the participant size of the entire 
caseload by state, generally speaking, but for an EBT cost for 
administration it is relatively the same.
    Ms. Glisson. Okay. I would like to add that that has been a 
challenge for our state. There was this enhanced funding to get 
states to go ahead and implement these integrated systems. When 
it comes to the management and the operation of the system, 
this is to build and design the system, that Federal funding 
then goes away, there is a substantial reduction in that 
Federal funding. For states, that is another thing that states 
need to be aware of because states are not prepared to take on 
that additional management and operation funding that is going 
to be needed to manage and to operate these very expensive, 
high-level systems.
    Another reason that I would suggest that the states and the 
Federal Government work very closely together on these very 
expensive systems to get more economies of scale.
    Mr. Marshall. I yield back.
    The Chairman. The gentleman yields back.
    I now recognize the gentleman from Pennsylvania, Mr. Evans, 
for 5 minutes of questioning.
    Mr. Evans. Thank you, Mr. Chairman.
    Research shows that SNAP plays a critical role in improving 
dietary intake, particularly against obesity, removing food 
insecurity and improving other nutritional-related health 
outcomes. Therefore, as we head into consideration for the farm 
bill, expiring next year, what would you set forth as the top 
issues for our consideration for SNAP modernization as we move 
towards the farm bill? And I will start with Ms. Aaronson from 
New York, and then go down.
    Ms. Aaronson. Thank you, Congressman. One of the most 
important things to consider in the farm bill is allowing SNAP 
to have access to the same Federal data hub sources that 
Medicaid does. Increased third party data sources for 
eligibility determination both results in efficiencies for the 
agency, as well as for faster processing time for clients to 
get their benefits.
    Further investment in other innovations such as mobility 
and online tools improve access to the program for folks who 
are working and unable to get to centers during work hours.
    I also think that there is a lot of rigidity in the 
regulations that govern the program, and if we had more 
flexibility to innovate it would be a more iterative and faster 
approach that would benefit both efficiencies and clients.
    Mr. Evans. Yes.
    Ms. Glisson. Yes, sir. I also think that it would be 
helpful if there was better alignment of policies. It goes to 
some of my comments earlier. If we could have, since you have 
many, particularly with integrated systems, you have both CMS 
at this time and FNS that are involved. I must compliment the 
FNS people, they worked very nicely with us and tried to help. 
But, it would be helpful if we could have an alignment 
particularly for programs that are now moving toward work 
requirements. Medicaid may be looking toward a work 
requirement, SNAP has a work requirement. We need alignment 
around definitions, we need alignment around terms, whenever 
you have two different agencies, two different entities working 
together, it would allow us to be able to address these issues 
more seamlessly.
    If there are exceptions or if there are requirements that 
could be required across the board for all of these benefit 
programs, that then would allow us to be able to streamline 
them for an integrated system. For instance, I will just use 
the recertification issue as an example. For Medicaid, you go 
back for recertification once a year. It is a passive 
recertification every 6 months. But for SNAP you actually have 
a stronger recertification process.
    If we could have an alignment around the rules that are 
impacting all of these benefits that are now going to be 
offered on an integrated system, it would help tremendously. 
And actually setting up a more formal collaboration between the 
two agencies, both with FNS at the U.S. Department of 
Agriculture, and CMS or HHS, because states are at a loss. We 
work with Agriculture, we work with CMS, but we can't help 
bring alignment. If there could actually be a group that 
whenever you are looking at these integrated systems, and you 
are going to have benefits that are going to be offered on one 
system, a formal group that we could work with, that we could 
go to, and they can then run those traps of working with both 
of those systems and working out the issues that may affect 
both agencies. States are at a loss to be able to do that on 
their own.
    Mr. Evans. Yes.
    Mr. Mathison. Thanks for the question. I guess as we think 
about the future and what is going to be happening in the next 
farm bill, what comes to mind, I would just echo what I have 
touched on in my prior comments, which is focusing on the 
alignment of the performance and the system availability, is 
going to be key. Making sure that cardholders and benefit 
holders that need to redeem their SNAP benefits can redeem 
them, seems paramount.
    But also as you think about cybersecurity, and as the 
marketplace is changing, how do we protect and maintain the 
integrity of the program, how do we make sure that as these 
benefit holders try to use their benefits in these new places 
that they aren't disadvantaged and they can redeem their 
benefits when they need them, where they need them, and how 
they need them, and maintaining the security of that to prevent 
fraud, is paramount.
    Mr. Boswell. Thank you for the question. Re-emphasizing a 
point from my oral statement, reviewing the restriction on non-
merit employees, the allowing of non-merit employees to 
participate and assist the states in the end-to-end eligibility 
process for things they are restricted from performing today is 
a key item that should be considered in review of the next farm 
bill.
    I will give an example of some of those things where the 
vendor community could step in and assist the state with today, 
that they are not allowed to, but should be: basic telephone 
inquiries, document scanning and indexing, application 
submissions and registrations, et cetera. To give kind of a 
simple example, there are a number of integrated eligibility 
systems across the United States for Medicaid and SNAP. In many 
of those instances, we have the opportunity, Conduent does, and 
we are grateful for that, to be able to provide the customer 
service or customer care component for the integrated 
eligibility system. When a call is received by Conduent for 
purposes of Medicaid, we are able to self-service that call, 
help that individual, one call, one resolution in many cases. 
But when that same phone call from that same recipient comes in 
that is a Medicaid recipient, but also is a SNAP recipient, 
seeking assistance, we are unable to, as a non-merit employee, 
assist that individual to the fullest extent. We are often 
having to transfer that particular call to a merit employee or 
a state employee, or a state help desk, where they are, in many 
instances, attempting to manage a large call volume themselves, 
attempting to get to clients quickly. In those instances, the 
vendor community could step in, assist those individuals with a 
one-call resolution for starters, but also take off some of the 
burden of states to have to maintain those infrastructures, 
those capabilities to service large call centers, as just an 
example.
    Mr. Evans. Thank you, Mr. Chairman.
    Ms. Glisson. And I strongly agree with Mr. Boswell's 
comments. That was part of my testimony, part of our white 
paper. If you can make that change, that would be very helpful 
if we were able to use our contract entities that we are 
particularly using with Medicaid, to be able to address the FNS 
side of the equation. We would be very appreciative.
    The Chairman. Very good. Thank you.
    I now recognize the gentleman from New York, Mr. Faso, for 
5 minutes of questioning.
    Mr. Faso. Thank you, Mr. Chairman.
    I apologize for being late. We were at a Transportation and 
Infrastructure Committee hearing. And, Mr. Boswell, I noted 
though in your testimony you talked about use of advanced fraud 
analytics, and you say these are not commonly utilized in most 
states. What states are using them, and are there any statutory 
barriers to use of such fraud analytics with the SNAP program?
    Mr. Boswell. Thank you, Congressman, for the question. From 
Conduent's perspective and the states that we service, and we 
service 25 states today as the EBT processor, we deliver a data 
warehouse and business intelligence tool to approximately 12 of 
those. Of the 12, two have made an investment into, or either 
through their procurement process, required an advanced fraud 
business intelligence tool, which Conduent provides.
    To my knowledge, there are no restrictions or prohibitions 
that would disallow a state from participating in the use of 
that particular tool. But we find it extremely valuable, our 
clients have found it to be extremely valuable, and the use of, 
not necessarily suggesting that fraud is rampant or that there 
is a program integrity issue, but assisting them in 
investigation purposes, and assisting in providing weighted, 
scored factors against certain transactions, and how 
individuals are using and performing their card transactions to 
further their investigative purposes.
    Mr. Faso. Among the issues that you mentioned in your 
testimony are odd hours of transactions and large amounts, 
large percentage of a total availability of the benefit that is 
on the card, address changes across large ZIP Code 
differentials, et cetera. You mentioned there are two states 
that are using the advanced analytics, which states are those?
    Mr. Boswell. From Conduent's perspective, we have two that 
use the advanced analytics, and that is the State of Ohio and 
the Commonwealth of Massachusetts.
    Mr. Faso. Okay.
    Mr. Boswell. All of our participating states with our base 
business intelligence tool can utilize some of the components 
that you just spoke of.
    Mr. Faso. Okay. And, Secretary Glisson and Ms. Aaronson, do 
either of your agencies use such advanced analytics?
    Ms. Glisson. No, we don't have a formal use of data 
analytics. I can tell you that we do believe that because of 
the integrated system it does allow us to have at least some 
fraud control. In the old system, the way it was set up is that 
you would go into a county, a caseworker would work one-on-one, 
face-to-face, generally, with a SNAP recipient. A lot of the 
information that was taken in was done based upon just the 
information that they had. There was a lot of room for 
misunderstanding. Under this system, all fields have to be 
filled in by the caseworker, they will be dinging certain 
databases. There is, we believe, less subjectivity that the 
caseworker will have in this instance, and so hopefully, it 
will be able to detect some fraud and that is our hope.
    Mr. Faso. Okay. Ms. Aaronson, in terms of New York City, 
and I guess by corollary, New York State?
    Ms. Aaronson. Well, Congressman, I can speak to New York 
City, not as well to New York State, but HRA does use data 
analytics to identify eligibility and trafficking fraud. We 
have a dedicated large unit of fraud investigators who 
regularly receive tips from the USDA, from OTDA, from the 
public, and we rigorously investigate all of those allegations.
    Mr. Faso. Could you be so kind as also to provide for the 
record to the Committee information as to the City of New York 
and your ability to use these analytic systems to detect and 
weed-out fraud in the system? I would appreciate if you could 
send that.
    Ms. Aaronson. Sure.
    [The information referred to is located on p. 1237.]
    Mr. Faso. And last, do our data systems regularly make it 
available for merchants to restrict certain purchases? I know 
you are not allowed to buy alcohol or cigarettes, for instance, 
or paper products with EBT SNAP benefits. How easily would New 
York City, for instance, from your vantage point, you sought a 
few years ago to have a demonstration to restrict the use of 
soda purchases with food stamps, and the Obama Administration 
rejected that. How easily would you be able to implement such a 
thing with your merchants in New York City if we gave you the 
authority to do that?
    Ms. Aaronson. Well, again, I can speak from New York City's 
perspective. Of course, our state holds the contract for our 
EBT provider, and so it is likely that they would need to 
answer how easy it would be for them to implement that. I am 
happy to follow up with them as well.
    Mr. Faso. Very good. Thank you, Mr. Chairman.
    The Chairman. The gentleman yields back.
    I am pleased to recognize the gentlelady from North 
Carolina, Ms. Adams, for 5 minutes.
    Ms. Adams. Thank you, Mr. Chairman and Ranking Member 
McGovern. And thank you to the witnesses for your testimony 
today.
    Food insecurity and poverty are persistent challenges for 
many communities in North Carolina's 12th District that I 
represent. SNAP is a vital part of the solution to many of 
those issues. Last year, more than 142,000 people received SNAP 
benefits in my district. States across the board, including 
North Carolina, are implementing or considering new technology 
for their SNAP programs, and these modernizations have huge 
impacts on districts like the one I represent.
    Ms. Glisson and Ms. Aaronson, the President's budget would 
drastically limit funding for SNAP. I am very concerned about 
that. It would also result in a decrease in the funding 
available for technological improvements for SNAP. If these 
budget cuts are implemented, what do you think the outcomes 
will be for your programs and for other states like North 
Carolina that have modernized their eligibility systems, or are 
interested in doing so?
    Ms. Glisson. As I mentioned, we have done an integrated 
system. There will be maintenance and operation expenses tied 
to the system. We are continuing to look at the system to see 
if there are other options so that we can even use sort of off-
the-shelf options that could be used to be able to function in 
a way to keep the system functional. Obviously, we will be 
working within the constraints of whatever those parameters 
are, we will work within those parameters. We are very 
fortunate that our system is up and running. It is now 
functioning much better, and it gives us the option, now we can 
take a breather, and we can look at ways that we can make this 
a much more cost-effective system, going forward, whether it is 
looking at off-the-shelf options or something that is maybe not 
quite as customizable.
    Ms. Adams. Ms. Aaronson?
    Ms. Aaronson. From New York City's perspective, I would say 
that the cuts as proposed would be devastating to our ability 
to continue to modernize and deliver benefits like SNAP to the 
1.7 million New Yorkers that receive them.
    Ms. Adams. Thank you very much for your answers.
    Mr. Mathison, the protection of security and privacy for 
recipients of SNAP is crucially important. You touched on these 
subjects in your testimony, but would you address how are 
current SNAP technology issues being addressed and ensuring 
that recipients are protected? How do you think that is going 
to happen?
    Mr. Mathison. Yes, there are a couple of things there. As 
you think about the security that revolves around the 
transaction today, as I talked about in my testimony, there are 
multiple kinds of fraud, there are frauds where perhaps people 
are giving their cards to people inappropriately, there is 
other kind of fraud that happens in place, but the type of 
fraud that I am speaking about specifically that we can see and 
know to be prevented and protected fairly well is this 
counterfeit where people are taking cards and using them 
inappropriately with copies. And we believe that the fact that 
that card has a PIN is doing an outstanding job of doing that, 
and we would very strongly urge that anybody that wants to 
recommend or talk about eliminating, as that being not a very 
good idea.
    There are other technologies we talked about the things 
that the processors and the states can do about monitoring live 
transactions as they flow, whether it is velocity checks or 
anomalies in the transaction, those kinds of things, and as 
that technology continues to emerge, there will be some 
benefits available there as well.
    Ms. Adams. Thank you very much.
    Ms. Aaronson, can you outline some of the benefits that 
come from SNAP outreach, and why it should be recognized as an 
important piece of reaching people in need, especially our 
seniors?
    Ms. Aaronson. New York City has been a leader in terms of 
participating in SNAP outreach. We actively have built a 
campaign around specifically reaching out to seniors and 
limited English-speakers to try to identify those folks who are 
eligible but not enrolled in SNAP today. We also are really 
focused on making sure that folks who are receiving SNAP stay 
on SNAP when they continue to be eligible, and not miss 
benefits. A lot of our outreach is around making that very 
clear to people who are up for recertification.
    One of the most innovative things that we do for SNAP 
outreach is to send our employees out to many CBOs to actually 
enroll people in the SNAP program at those locations. In some 
cases, people feel more comfortable in their community 
locations than coming into a center, and we have been a leader 
in developing those types of programs.
    Ms. Adams. Thank you very much.
    I am out of time. Mr. Chairman, I yield back.
    The Chairman. The gentlelady yields back.
    I now recognize the gentleman from Florida, Mr. Yoho, for 5 
minutes.
    Mr. Yoho. Thank you, Mr. Chairman.
    I appreciate it. And I appreciate you guys being here, the 
information. And as Mr. McGovern talked about in the beginning, 
the cuts that the President has proposed are very drastic. And 
as our nation, we are at $20 trillion in debt, and it is 
growing.
    Austerity measures are coming, and we want to make sure 
that the programs that get cut that they are cut efficiently, 
and we want to make sure that the programs are there for the 
people that truly need the benefits from these nutritional 
programs. That is our ultimate goal here. But, this is a sign 
of some things coming, unfortunately. We saw what havoc the 
sequestered cuts had on our nation and on our military 
readiness. And so as we go forward, we want to get the most 
efficient use of these programs into the hands of the people 
that need them.
    And I want to do a backdrop here on a question I want to 
ask. A relatively new offering for SNAP benefit recipients is 
the mobile apps to view program balances, transactions, and 
enable cardholders alert. Mr. Boswell's company has a mobile 
app available for both the Android and the iPhones, and it is 
free to download in the respective app stores. Providing a 
mobile app also helps to empower recipients to monitor their 
account for potential fraudulent use by others that may have 
access to their SNAP benefit cards. Additional the mobile app 
can be a tool to convey important program information quickly 
to recipients, or could be used to influence spending behavior 
by offering incentives for healthy food products. That is your 
program, right?
    Mr. Boswell. Yes, sir.
    Mr. Yoho. The question is, and this is for the group, this 
question is for the group, what role do you think the mobile-
based technology will play in both reducing administrative 
costs and improving provisions for the SNAP and preventing 
fraudulent use? Do you want to take that first, Mr. Boswell?
    Mr. Boswell. Sure. Excuse me. Wrong one. Absolutely. We 
view the role of mobile and the SNAP, and especially the EBT 
marketplace, to be a significant one, as the testimony 
suggests. From a program delivery perspective, obviously, the 
first step which we are trying to accomplish is balance 
information, transactional data, helping the individual, the 
consumer, learn to be responsible for that account. From a 
delivery perspective ongoing, we see significant opportunity to 
drive the message of healthy eating, nutritional purchases 
through items such as offering coupons or incentives for making 
healthy purchases in retail marketplaces, et cetera.
    From a fraud perspective, if you look long-term, much of 
the suspected fraud, if you will, in the EBT space is what we 
would consider the hand-to-hand fraud; selling your card, 
handing your card to someone else in return for some kind of 
value. If we were able to, from the long-view perspective, move 
from a card-based technology to more of a mobile payments 
perspective where you are utilizing mobile wallets, things such 
as Apple Pay, Google Pay, and instead of having to hand a card 
and use your PIN, you have to be present with your mobile 
device and a biometric fingerprint, if you will, to authorize 
that transaction, you are in many ways helping to prevent that 
hand-to-hand activity that could take place. That is a unique 
view and opportunity from a technology perspective that could 
assist mobile and fraud.
    Mr. Yoho. One of the other questions I have, are there any 
apps that allow the SNAP recipient to see what they purchased 
on a nutritional content, and can they have running tabulation 
of that, and is there a way a caseworker can look at that and 
say, ``Well, you are buying these things and not these things, 
and we need to move into this category?'' Because we see the 
childhood obesity and we see them in the food deserts, and we 
need to educate and help us work through that process.
    Mr. Boswell. That is a great question. Currently, a 
transaction that is processed for SNAP, the information 
provided back to the processor, such as Conduent, and back to 
the states is not at the product level. The product information 
is not passed in that transaction. There are some advances, if 
you will, that aren't necessarily providing product 
information, but I will cite the Commonwealth of Massachusetts 
in a healthy-eating initiative that they have undertaken 
whereby they have engaged the retailer community and the 
processors, just as Mr. Mathison at First Data, to identify the 
amount of money that is spent, or amount of SNAP transaction 
that is spent on a healthy food option. The grocer identifies 
the amount that was spent on the healthy food----
    Mr. Yoho. But every product has a barcode on there, so I 
would think there should be a way to tabulate that eventually 
with an app.
    Mr. Boswell. There certainly is.
    Mr. Yoho. Mr. Mathison.
    Mr. Mathison. If you don't mind, what I would say is to 
echo what Mr. Boswell is saying, there are other programs that 
work similar to what you are suggesting. For example, the eWIC 
program absolutely works at what we call the SKU level or the 
barcode level.
    Mr. Yoho. Right.
    Mr. Mathison. The SNAP system doesn't currently work that 
way, but there are models out there if they were enabled inside 
the SNAP system could work similarly.
    Mr. Yoho. All right, thank you.
    Mr. Chairman, thank you.
    Mr. McGovern. Just before you yield back.
    Mr. Yoho. Yes.
    Mr. McGovern. Yes, all this is very, very interesting too, 
but not everybody has access to the technology that we are 
talking about here today. While we are talking about moving 
forward, everybody having a smart phone and all this, not 
everybody does. The SNAP population is a very diverse 
population. Again, it goes back to what I said before about not 
only moving forward with advancements in technology, but making 
sure that we don't have situations where the technology isn't 
working, where people are denied their food benefit. IT should 
not increase hunger, it should help alleviate it. We have to be 
very, very careful how we move forward here with 
generalizations.
    Mr. Yoho. Mr. Chairman, can I ask him something?
    The Chairman. Your time has expired, but go ahead.
    Mr. Yoho. I would be happy to talk to you, and maybe that 
is something we should look at incorporating to make sure 
people have that, because the whole goal is to get people to 
have the benefits there, and also to make sure they are eating 
properly. And that may be something that could be incorporated.
    Mr. McGovern. Okay, thank you.
    The Chairman. The gentleman's time has expired.
    I now recognize the other gentleman from Florida, Mr. 
Lawson, for 5 minutes.
    Mr. Lawson. Thank you, Mr. Chairman. Welcome to our 
Committee.
    Madam Secretary, the President's budget requires states to 
pay 25 percent of the SNAP benefit by 2023. The cost shift will 
be $9 billion to the State of Florida over the next decade. I 
sent a letter, along with some of my colleagues, to the 
Governor and asked him how would he handle the cost shift. As a 
state legislator for almost 3 decades myself, I saw what the 
state must do to make these programs work. Could you please 
speak to the burden that it would place on the states to update 
and maintain and implement the EBT technology if this kind of 
budget proposal was implemented?
    Ms. Glisson. Well, thank you for the question. And I will 
go back to a prior answer that I gave, which is that we do have 
our system up and going. I believe that we are now at a 
maintenance and operation level, and that we now have, as you 
said, some time to be able to look at options, particularly 
options that may not be as customized as this was, but options 
to be able to actually look for cost-effective ways to be able 
to implement that kind of technology in Kentucky.
    We are also looking for ways to align our benefits programs 
even more effectively, so we think that there will be cost 
savings from that, whether it is in Medicaid or otherwise. We 
are looking for any number of ways to align benefits, align 
workers to be able to implement these programs and implement 
benefits, and we believe that we will be able to then assume 
that responsibility.
    Mr. Lawson. Okay. And a little bit of a follow-up question. 
I have heard from many grocery store and farmers' markets and 
small business owners who have noticed the application process 
and equipment set up with the EBTs. It takes months and 
sometimes it can be very expensive. In your experience, how can 
the improvement increase the access of SNAP, because it takes 
so long sometimes in order for the application process to go 
through?
    Ms. Glisson. Is this directed to me, sir?
    Mr. Lawson. Yes.
    Ms. Glisson. What we have found with our integrated system 
is that it is very beneficial for the recipients because it 
allows them to have a one-stop shop, so they can come into our 
local offices in each county and they can then provide their 
data that they need. It is a system that allows us to serve our 
clients much more efficiently, and we can then work with them 
more closely. It is essentially a one-stop shop that allows us 
to deliver our services more efficiently.
    Mr. Lawson. Okay, thank you.
    And this question goes to Mr. Steve Mathison. In north 
Florida, we have four Fresh Access Bucks markets where SNAP 
families can earn extra money to buy fresh and healthy 
products. Since these markets evolved, SNAP recipients have 
been incentivized to purchase healthy and local products to the 
tune of $20,462 in my district. However, in Fiscal Year 2015, 
farmers' markets and direct farm only accounts were less than 
one percent of all the SNAP purchases. Can you explain how 
third-party processing fees prevent farmers' markets and 
smaller grocery stores from offering SNAP and SNAP incentive 
programs?
    Mr. Mathison. Yes. I guess the way to kind of think about 
that is as smaller and mid-sized businesses, as you are 
referring to, try to engage in this space, we touched briefly 
on the burden and the process to get enrolled and get up and 
running. The idea that now it is kind of a pay-to-play scenario 
where I have fees in order to become a SNAP recipient and 
provide these benefits that I want to provide, can be a 
barrier. There are plenty of other fees that they have, to tack 
on some other ones seems to be a way to slow the process down 
rather than speed it up, especially when they are trying to 
make investments in their point of sale and register systems. 
It is a new kind of program that they need to administer. There 
are certainly a bunch of rules and administrative functions 
that they need to implement. Whether they are the largest 
retailer in the world or they are a small bodega, the rules are 
basically the same. As the smaller businesses try to do that, 
it can become a burden.
    Mr. Lawson. Okay. And, Mr. Chairman, I yield back. My time 
ran out.
    The Chairman. I thank the gentleman. He yields back.
    I now recognize the gentlelady from New Mexico, Ms. Lujan 
Grisham, for 5 minutes.
    Ms. Lujan Grisham. Thank you, Mr. Chairman. And thank you 
to the panel.
    Secretary Glisson, my series of questions are for you. And 
I want to thank you for your service. I was a former Cabinet 
Secretary for three different Governors in New Mexico, and they 
are tough jobs.
    Ms. Glisson. It is a tough job.
    Ms. Lujan Grisham. It is. And it is a great job. And the 
reality is that what we are talking about today, information 
technology, and how to utilize it to streamline our application 
processes, states have been looking at ways to do universal 
applications given that the majority of these programs are all 
Federal-related in some way. Each of them, even in the same 
department, will have very separate unique applications. 
Although SNAP is sort of that, if you qualify for SNAP you are 
going to qualify for everything else. That has been the case 
for a long time, and yet most states in the country still do 
not have either universal or integrated application processes. 
And we have changed technology systems since technology was 
around for states in the 1990s, any number of times to try to 
get at that. I applaud your efforts, and agree that that is 
what we need to do, but I have some concerns. And as you are, I 
am sure, aware that in your state, in Kentucky, 25,000 
households wrongly received letters telling them they were no 
longer eligible for SNAP, when you rolled out benefind. Rhode 
Island had a similar problem when households were wrongly 
denied of food assistance, and so much so that the ACLU filed a 
law suit. And you may or may not know that as I highlighted 
your state and Rhode Island, let me tell you about how New 
Mexico is doing, and it is not something that is very positive.
    In fact, the former Under Secretary, Kevin Concannon, said 
that, ``New Mexico was the most fouled-up SNAP program in the 
country.'' Now, I would really like in the context of this 
hearing to disagree, but I cannot. Actually, he is very right 
about that. And given that we rolled out a new technology 
system called ASPEN that was really intended to help us process 
faster, but also in an effective way. But, we have a backlog, 
and in order to address the backlog the human services 
department was adding assets so that you didn't have to meet 
the enhanced timeline for folks who needed emergency 
assistance. Now we have a consent decree and a court order, a 
special master, it is going to be very expensive for New Mexico 
to get out of that mess. And they need to. We want folks who 
are clearly eligible not only for SNAP but for everything else, 
to be eligible and get the benefits that they need. I talked 
about, universal applications, that if the SNAP application 
doesn't work, then I have trouble with Medicaid and general 
assistance and LIHEAP and everything else.
    What I am worried about is that while we are moving 
forward, I am not sure that USDA or FNS really have the 
resources to do both technical assistance and oversight. Are 
you concerned that that may also be an issue as states should 
be investing in enhanced information technology to streamline 
and make more effective and make more reasonable our 
application processes in general?
    Ms. Glisson. Well, I want to make sure I understand your 
question. If your question is, do the states need to work and 
align more closely with the Federal Government before we roll 
out these systems, I would agree. Part of the issue has been 
that as states have been looking at if there was enhanced 
funding encouraging states to do this, and there was not a lot 
of collaboration, working together to get economies of scale, 
the states and even the Federal Government were probably not in 
a position to really think about how they were going to 
contractually deal with the contractors that were out there, 
and how that we could work together to get economies of scale, 
making sure that those contractual provisions were going to be 
protected.
    Ms. Lujan Grisham. What about the accountability aspect? 
Each of these rollouts, I have given you three, there are many 
others as you are aware, and I would love to tell you when we 
were rolling out new information technology, that it always 
worked. It didn't, and we would deal with the glitches. But I 
am worried about the accountability factor. And mostly in 
Federal Government, Mr. Chairman, and, Madam Secretary, as you 
know, the architecture platforms. The contractors, they don't 
really have the expertise to tell you what things to look for 
and when it goes wrong, or then to fix it, to help you both 
with resources and, as I said, guidance.
    Ms. Glisson. I would agree that there are times that they 
learn from the states, and they are there on the job learning 
from the states. I agree with the accountability piece. I put 
that actually in our white paper. What we have done at our 
Cabinet is that, maybe this is the health lawyer in me, we have 
gone in, we have looked at our contracts, we have beefed up our 
contracts. We now have very strict terms. What I would like to 
be able to do is even to work closely with the Federal 
Government so that we work together to come up with a template 
contract as we are, because it has both Federal funds and state 
funds into these integrated systems. But, we should be aligned 
in what we expect to be able to get from the vendors. I would 
like to work together to have template contracts. I think they 
should be strengthened. These are very high level, complicated 
contracts. For instance, I know that I was told that with our 
Release 5 on our benefind, there were about five million lines 
of code alone in that one release. States need to understand 
how important that is whenever we are contracting for these 
high-level services I would like to be able to work together.
    Ms. Lujan Grisham. Secretary, I am way out of time, and the 
Chairman is being very generous because it is just us guys 
here, and what can he do. And I appreciate that. And maybe it 
is an area, Mr. Chairman, now that I am completely out of 
order, to think about in the farm bill. We need to think about 
the resources and the tools to create effective partnerships so 
that we implement correctly and there is accountability of the 
states, like mine, who may not have intended to actually do it 
right.
    Ms. Glisson. I see these as partnerships. It is a 
partnership. I brought up the issue a little earlier about even 
trying to make sure that whenever this is a modular system, if 
we understand what the Federal Government has in mind when they 
are talking about what do you think is a certified modular 
system that we could then integrate. I would welcome the 
opportunity to work more closely together. I think that would 
be helpful.
    The Chairman. The gentlelady yields back.
    We are going to take, for Members who are here, additional 
time for questioning, if you have additional questions. And I 
take the liberty of the next 5 minutes.
    Ms. Aaronson, you had and Mr. Mathison talked about it, he 
made comments about small amounts of counterfeit fraud within 
his oral testimony. You had mentioned about having a large 
group of fraud investigators, so I wanted to follow up on that 
and just ask about, have you quantified with those processes 
that you have compelled to put in place, have you quantified 
the rate of fraud? Determinations, not the accusations, because 
I know you mentioned they come from different places; consumers 
and different places, but the rate of fraud determinations, and 
as a result, any changes that you made based on any systemic 
issues you have identified with fraud?
    Ms. Aaronson. As I said, we get various referrals for fraud 
and we investigate those referrals very vigorously. That said, 
it is so important to take proper steps to limit these types of 
improper payments, given that the volume of dollars that we are 
spending is high. The research has shown that the more 
automated the process, the harder it is for a mistake to be 
made or fraud to be committed. Electronic identification 
verification processes help make sure we know who the recipient 
is, and that they are properly found eligible for use of these 
benefits.
    One of the things that the City has done is to aggregate 
all the third-party data sources that we do have access to and 
present them to our eligibility workers in an easily consumable 
portal for them to refer to as they are doing their interviews, 
so they can see what other data we have based on these third-
party sources and what the applicant has indicated. And this 
helps in the eligibility determination process to make sure the 
worker is aware of everything that we do know.
    If we had access to sources that are in the Federal data 
hub that are used for Medicaid we could even do a better job of 
making sure that we are determining eligibility based on all 
the facts that are out there.
    The Chairman. Very good. And if there is something you 
could submit for the record, if you have an opportunity to look 
at what some of those incidental issues that your investigators 
find, I think that is helpful as we work, because we want to 
make this effective and efficient, and we certainly want to 
make sure that we are putting the food resources in the 
stomachs of the folks who need it, and to maximize that. 
Obviously, fraud is an issue, though our hearings have shown 
that the incidence of fraud has been relatively low, which is 
very affirming. That is not to say we don't have a fiduciary 
responsibility to always monitor and always being vigilant 
with, well, with the taxpayer resources.
    Ms. Aaronson. Absolutely. I would be happy to provide it.
    [The information referred to is located on p. 1237.]
    The Chairman. I appreciate that.
    I want to follow up because I don't think your testimony 
mentions behaviorally informed reminder notices. I love how 
that sounds. I am not quite sure what it is, but having worked 
in behavioral health, all things come to mind of what that 
could be. Can you speak more to the development of these 
notices, and more to what these notices include, and then also 
what other examples of behavioral patterns leading to churn, a 
word that I just recently learned, has HRA identified?
    Ms. Aaronson. Well, thank you, Mr. Chairman. We have worked 
really hard to identify what points of failure there are in the 
process that clients fall off of our caseload. Clients missing 
benefits because of failure to recertify is no good for them, 
but it also causes them to come back to us and have us to 
determine eligibility again. Specifically, we crafted a 
behaviorally informed notice to remind people that they need to 
call us for their On-Demand interview. And what we tried to do 
there was to sort of reframe this eligibility moment as one of 
loss; if you do not do this, you will lose your benefits. And 
that incentivizes folks to action, as it turns out, more than 
just your standard government notice saying it is time to 
recertify. We also articulate the steps more clearly, and use 
more clear iconography to sort of lay out the three easy steps 
to recertify. And we have found it to be effective in 
encouraging folks to take those actions.
    We also use behavioral economics principles on our online 
application instead of necessarily using the standard line, all 
information needs to be provided as accurate or else punishable 
by law, we randomly assign other types of statements to see if 
we can encourage full and honest submission of data. For 
instance, did you know that nine out of ten New Yorkers 
receiving benefits also have earned income, to sort of 
normalize the idea that you can have earned income and still 
get food stamps. Those are some examples.
    The Chairman. Very good.
    Mr. Boswell, the state integrated eligibility systems and 
EBT systems are closely linked, and both systems need to be 
working properly for SNAP households to receive the right 
amount of benefits at the right time each month. What happens 
if one of those components fails, and are there failsafes in 
place?
    Mr. Boswell. Yes, sir. Thank you for the question. 
Absolutely, is the answer if there are failsafes. I think on 
both sides I can speak to a couple of them and maybe give a few 
examples.
    I would like to first kind of defer to the earlier 
conversation about the availability of the system for the 
individual, the user that is shopping and trying to purchase 
foods and cannot. From Conduent's perspective as an EBT 
processor, obviously, 100 percent availability of our services 
is what we strive for on a daily basis. To measure that, 
however, to ensure there is some accountability and some 
oversight into that, each of our contracts are monitored 
against a service level of availability of over 99.95 percent 
availability, measured on a monthly basis. That being said, we 
obviously strive for 100 percent.
    From a systems unavailability perspective, as Mr. Mathison 
referred to earlier, that can happen at any point downstream in 
an EBT transaction. It does not necessarily indicate that the 
processor itself was unavailable. It could be a local issue, a 
phone line, if you will, if someone is still using a POP on a 
cell device, et cetera.
    But let me get to your question. I just wanted to clarify 
that and understand that Conduent's commitment is 100 percent.
    If there is a failed component, first I will give an 
example from a state's eligibility side, and this is a very 
simple one. States are very diligent in their contracts with 
EBT processors to ensure that these components exist. One of 
the requirements of many of our contracts with states and 
commonwealths is that in the event of a disaster, if you will, 
if benefits cannot be issued out of the eligibility system for 
the participants, Conduent has to have the ability to reissue 
the same amount of benefits to the same participants for the 
same amount that was issued in the prior month. We have to have 
that ability to go back and do that, in an emergency request, 
so our system has that capability. That is one example of a 
failed component.
    From Conduent's perspective, if there was a failed 
component, our infrastructure, if you will, is constructed as 
such to allow for a primary and a secondary system that is 
always replicating amongst itself, along with a tertiary or a 
disaster system that is always replicating amongst itself. At 
any given time we have three environments for every state EBT 
process that we manage. In the event one fails, it 
automatically fails to the second. If there is a major 
catastrophe, such as a disaster, we are automatically able to 
fail over to that disaster center.
    I will say from an investment perspective and in the EBT 
space, we have recently and are moving toward moving our data 
centers into two new consolidated tier 3 data centers. Tier 3, 
if you will, really puts a focus on system availability and 
security. That is a Conduent investment into the EBT space, 
along with modernizing our hardware that drives our EBT 
processing platforms.
    So there are components in place. They are tested annually, 
along with the states and USDA for disaster certification to 
ensure that in the event of a major failure, we are able to 
stand in and continue services.
    The Chairman. Very good, thank you.
    Just in closing, I want to thank all of our witnesses for 
bringing your extensive experience to this hearing today to 
help us as we prepare and move forward. The technological, the 
modernization aspects are incredibly important. It is the 
processes and structures by which we make sure that those who 
have needs that those needs are served.
    I also want to thank the staff for helping to put this 
great hearing together.
    We are going to continue our efforts that we have sustained 
over the past 30 months to prepare for reauthorization of the 
farm bill, to include a nutrition title that serves as the 
largest domestic hunger safety net, with effectiveness and 
efficiency, that is our goal. I personally believe that the 
values where food is largely grown and produced in rural 
America includes taking care of neighbors in need. And since 
farmers feed and nutrition matters, and hunger is not 
acceptable, the nutrition title is a very important part of the 
farm bill. We have an obligation to get the nutrition title 
right. And I really appreciate the commitment of all the 
Members of the Subcommittee to do this and to get this done.
    And so under the Rules of the Committee, the record of 
today's hearing will remain open for 10 calendar days to 
receive additional material and supplementary written responses 
from the witnesses to any questions posed by a Member.
    This hearing of the Subcommittee on Nutrition is adjourned.
    [Whereupon, at 11:36 a.m., the Subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]
 Supplementary Material Submitted by Lauren Aaronson, Assistant Deputy 
  Commissioner, Office of Business Process Innovation, New York City 
                     Human Resources Administration
Insert 1
          Mr. Marshall. Well, excuse me, do you measure just the cost 
        of administering this from year to year, since you introduced 
        all this technology?
          Ms. Aaronson. It is really hard to specify specific costs. We 
        have just recently implemented these modernizations, and we 
        haven't yet determined what the ideal staffing model is. Moving 
        a system this large over time is difficult to do.
          Mr. Marshall. You don't measure how much it costs from year 
        to year?
          Ms. Aaronson. We certainly do measure that, and I can get you 
        more specific data, but I don't have----

    Since the beginning of its efforts to modernize its service 
delivery model in 2014 the Human Resources Administration (HRA) has 
reduced SNAP administrative costs. For example:

   In City Fiscal 2013 there were 1,600 staff administering the 
        SNAP program. Today, technology and business process 
        improvements are saving nearly $10 million a year in government 
        funds compared to 2013, due to staff shifting reductions.

   The SNAP improvements have completely changed the way the 
        City of New York does business with clients--the program 
        requires less client facing space and we can optimize back 
        office operations since much of this work is no longer 
        location-specific. Technology also allows the City to 
        streamline aspects of other programs--for example public 
        assistance clients can use self-service options instead of 
        waiting in a center to drop off documents and Medicaid is 
        accessed on-line through the New York Health Exchange. This 
        combination of factors allows the City to reorganize space--
        consolidating some large client sites and adding smaller 
        ``express'' and self-service options in more locations. 
        Eliminating one large building in lower Manhattan alone and 
        consolidating core services into a nearby central location will 
        save 76,000\2\ and $8 million a year and realize another $18 
        million in cost avoidance annually.
Insert 2
          Mr. Faso. Okay. And, Secretary Glisson and Ms. Aaronson, do 
        either of your agencies use such advanced analytics?
          * * * * *
          Mr. Faso. Okay. Ms. Aaronson, in terms of New York City, and 
        I guess by corollary, New York State?
          Ms. Aaronson. Well, Congressman, I can speak to New York 
        City, not as well to New York State, but HRA does use data 
        analytics to identify eligibility and trafficking fraud. We 
        have a dedicated large unit of fraud investigators who 
        regularly receive tips from the USDA, from OTDA, from the 
        public, and we rigorously investigate all of those allegations.
          Mr. Faso. Could you be so kind as also to provide for the 
        record to the Committee information as to the City of New York 
        and your ability to use these analytic systems to detect and 
        weed-out fraud in the system? I would appreciate if you could 
        send that.
          Ms. Aaronson. Sure.

    HRA verifies SNAP eligibility information against external data 
sources as part of its application process. These automated data 
matches are built into the application systems and they match up 
against several third party sources including, bank account data, wage 
data, unemployment data, [S]ocial [S]ecurity data, city employment 
data, and child support information, as examples.
    New York City has a data analytics unit that uses data to identify 
fraud. There are a number of fraud indicators and fraud patterns that 
HRA proactively monitors on a regular basis. These include various 
matches and models to identify undisclosed income, concealed household 
members, and benefit usage outside of New York City. Once there is an 
indication of fraud/ineligibility, HRA's dedicated investigators 
investigate these allegations and are able to take steps to pursue 
Intentional Program Violations (IPVs), refer cases for closure, refer 
cases for prosecution, and recover SNAP dollars, as necessary and 
appropriate.
Insert 3
          The Chairman. . . .
          Ms. Aaronson, you had and Mr. Mathison talked about it, he 
        made comments about small amounts of counterfeit fraud within 
        his oral testimony. You had mentioned about having a large 
        group of fraud investigators, so I wanted to follow up on that 
        and just ask about, have you quantified with those processes 
        that you have compelled to put in place, have you quantified 
        the rate of fraud? Determinations, not the accusations, because 
        I know you mentioned they come from different places; consumers 
        and different places, but the rate of fraud determinations, and 
        as a result, any changes that you made based on any systemic 
        issues you have identified with fraud?
          * * * * *
          The Chairman. Very good. And if there is something you could 
        submit for the record, if you have an opportunity to look at 
        what some of those incidental issues that your investigators 
        find, I think that is helpful as we work, because we want to 
        make this effective and efficient, and we certainly want to 
        make sure that we are putting the food resources in the 
        stomachs of the folks who need it, and to maximize that. 
        Obviously, fraud is an issue, though our hearings have shown 
        that the incidence of fraud has been relatively low, which is 
        very affirming. That is not to say we don't have a fiduciary 
        responsibility to always monitor and always being vigilant 
        with, well, with the taxpayer resources.
          Ms. Aaronson. Absolutely. I would be happy to provide it.

    HRA has a professional fraud investigative unit, the Investigation, 
Revenue and Enforcement Administration (IREA) that works on SNAP 
ineligibility cases, as well as other public assistance fraud. This 
unit includes a dedicated investigative squad that works with the local 
district attorneys and other law enforcement on SNAP trafficking cases. 
In calendar year 2016, IREA investigated 2,448 allegations of fraud 
committed by SNAP participants. As a result of its investigations, IREA 
affirmed 142 Intentional Program Violations (IPV) with the average 
disqualification period of approximately 12 months. The IPVs we see 
most frequently include undisclosed income and undisclosed mandatory 
household member with income.
    NYC had on average 1.6 million individuals in around nearly 950,000 
SNAP households in CFY 2016 and the value of SNAP benefits issued was 
just over $3 billion. In 2016, as a result of IREA's fraud prevention 
and detection efforts, HRA recovered $1.6 million SNAP dollars and its 
efforts resulted in $28.5 million in cost avoidance for CFY 2016.


 
                           THE NEXT FARM BILL

                         (UNIVERSITY RESEARCH)

                              ----------                              


                        THURSDAY, JUNE 22, 2017

                  House of Representatives,
                                  Committee on Agriculture,
                                                   Washington, D.C.
    The Committee met, pursuant to call, at 10:00 a.m., in Room 
1300 of the Longworth House Office Building, Hon. K. Michael 
Conaway [Chairman of the Committee] presiding.
    Members present: Representatives Conaway, Thompson, Lucas, 
Gibbs, Austin Scott of Georgia, Crawford, DesJarlais, Hartzler, 
Davis, Yoho, Allen, Bost, Rouzer, Kelly, Comer, Marshall, 
Bacon, Dunn, Arrington, Peterson, David Scott of Georgia, 
Costa, Walz, McGovern, Vela, Kuster, Nolan, Bustos, Plaskett, 
Adams, Evans, Lawson, O'Halleran, Panetta, and Blunt Rochester.
    Staff present: Bart Fischer, Caleb Crosswhite, Matthew S. 
Schertz, Rachel Millard, Stacy Revels, Stephanie Addison, Anne 
Simmons, Keith Jones, Kellie Adesina, Troy Phillips, Nicole 
Scott, and Carly Reedholm.

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

    The Chairman. Good morning. This hearing will come to 
order.
    I have asked Bob Gibbs to open us with a prayer. Bob.
    Mr. Gibbs. Thank you. Our Heavenly Father, thank you for 
giving us the opportunity to serve here today. Also thank you 
for bringing our witnesses here today, and all the good work 
they do back at their universities to help agriculture and 
provide food and fiber for Americans. And also we want to thank 
you for helping us cope with the tragedy of last week and the 
recovery of our good friend, Steve Scalise, and the others that 
were injured, and just our prayers are with them and their 
families. And thank you for bringing them back to us to serve 
again. In Jesus' name we pray. Amen.
    The Chairman. Thank you, Bob.
    This hearing of the Committee on Agriculture entitled, The 
Next Farm Bill: University Research, will come to order.
    From the level of conversation before the hearing started, 
apparently it is home week back there. Most of the witnesses 
must know half the room.
    As we continue working to craft the next farm bill, we turn 
our attention to one of the primary drivers of innovation and 
productivity in our 21st century agricultural economy, and that 
is university research.
    For more than 100 years, our producers have relied on 
investments in agricultural research to drive efficiencies and 
gains in productivity that have helped farmers and ranchers 
soldier through the toughest of times. While our focus today is 
on university research, I would be remiss if I didn't 
acknowledge our world-class teaching and extension programs 
that are responsible for disseminating the results of that 
research throughout the countryside and around the globe. This 
sustained investment, in part, has allowed the United States to 
enjoy the safest, most affordable, and abundant food and fiber 
supply in the world.
    The U.S. has long been a leader in cutting-edge 
agricultural research, but our current budget problems have us 
scrutinizing every dollar, with public funding for agricultural 
research declining as a share of overall public research 
spending in the United States. While private-sector investments 
have picked up some of the slack, results of privately funded 
research are often not made publicly available. Importantly, 
private-sector research often builds upon fundamental research 
supported by our public investment.
    While I recognize that our budget problems cannot be 
ignored, it is important to note that the agriculture community 
has repeatedly answered the call for reform and has done more 
than its fair share to generate savings. The current farm bill 
was expected to save $23 billion over 10 years, but the most 
recent Congressional Budget Office projections show that the 
2014 Farm Bill is now on target to save, or not spend, $104 
billion; more than four times what was anticipated.
    If the U.S. is going to remain competitive, going forward, 
we cannot afford to rest on the success of our past and take a 
back seat to the rest of the world. We must continue making key 
investments in our agricultural research system in the most 
efficient manner possible.
    Finally, while I will do our witness introductions in a 
second because we have several Members who want to introduce 
their particular representative, I want to call attention to 
Robert Duncan, the Chancellor from Texas Tech. Robert and I go 
back a long way to his service in the Texas Senate, and I look 
forward to hearing from him today. Jodey will also formally 
introduce him here in a moment. We also look forward to hearing 
Mr. Duncan and all of our witnesses about ways to streamline 
and prioritize agricultural research in the next farm bill.
    [The prepared statement of Mr. Conaway follows:]

  Prepared Statement of Hon. K. Michael Conaway, a Representative in 
                          Congress from Texas
    Good morning and thank you all for joining us.
    As we continue working to craft the next farm bill, we turn our 
attention to one of the primary drivers of innovation and productivity 
in our 21st century agricultural economy--university research.
    For more than 100 years, our producers have relied on investments 
in agricultural research to drive efficiencies and gains in 
productivity that have helped farmers and ranchers soldier through the 
toughest of times. While our focus today is on university research, I 
would be remiss if I didn't acknowledge our world-class teaching and 
extension programs that are responsible for disseminating the results 
of that research throughout the countryside and around the globe. This 
sustained investment, in part, has allowed the U.S. to enjoy the 
safest, most affordable, and most abundant food and fiber supply in the 
world.
    The U.S. has long been a leader in cutting-edge agricultural 
research, but our current budget problems have us scrutinizing every 
dollar, with public funding for agricultural research declining as a 
share of overall public research spending in the United States. While 
private-sector investments have picked up some of the slack, results of 
privately-funded research are often not made publicly available. 
Importantly, private-sector research often builds upon fundamental 
research supported by public investment.
    While I recognize our budget problems can't be ignored, it is 
important to note that the agriculture community has repeatedly 
answered the call for reform and has done more than its fair share to 
help generate savings. The current farm bill was expected to save $23 
billion over 10 years, but the most recent Congressional Budget Office 
projections show that the 2014 Farm Bill is now on target to save $104 
billion--more than four times what was anticipated.
    If the U.S. is going to remain competitive, going forward, we 
cannot afford to rest on the success of our past and take a back seat 
to the rest of the world. We must continue making key investments in 
our agricultural research system in the most efficient manner possible.
    Finally, I'd like to welcome all of our witnesses today, but I want 
to specifically welcome and thank Mr. Robert Duncan, Chancellor of the 
Texas Tech University System based in Lubbock, for joining us today. I 
look forward to hearing from Mr. Duncan and all of our witnesses about 
ways to streamline and prioritize agricultural research programs in the 
next farm bill.
    With that, I yield to the Ranking Member, Mr. Peterson, for any 
opening remarks he may have.

    The Chairman. With that, I yield to the Ranking Member for 
any comments he has.

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

    Mr. Peterson. Well, thank you, Mr. Chairman. As you said, 
ag research is vital to our industry's future. The research 
done by our land-grant universities and other institutions 
invest in the next crop of agriculture scientists and 
producers, while ensuring that our farmers can be competitive 
and continue to meet the growing worldwide demands for our 
products.
    This can't be done, of course, without adequate funding for 
agriculture research programs. But, I am frankly not quite sure 
of the best way to go about that. What I do know is that we 
need to continue to support the mandatory research programs 
that were created in the 2008 Farm Bill. Overall, we still 
haven't fully realized our ag research goals, so I will be 
looking to hear our witnesses' thoughts today on how we can do 
that.
    I would like to see the next farm bill continue our 
commitment to ag research in a way that allows for continued 
advancement, but also recognizes our budget challenges, because 
ag research is the foundation of continued innovation in 
agriculture.
    Along with increased productivity, ag research has led to 
improvements in individual health and in the environment, along 
with other benefits.
    So with that, I welcome today's witnesses to the Committee, 
and look forward to their testimony.
    I thank the chair, and yield back.
    The Chairman. Well, I thank my colleague.
    The chair would request that other Members submit their 
opening statements for the record so that our witnesses may 
begin their testimony, and to ensure there is ample time for 
questions.
    With that, I would like to welcome the witnesses to the 
table. Mr. Arrington, if you would introduce Chancellor Duncan.
    Mr. Arrington. Thank you, Mr. Chairman. I just want to say 
a few things. One, I am just so delighted that my dear long-
time friend, Chancellor Duncan, is here. He is the Chancellor 
of the greatest agriculture school in the United States of 
America, and just happens to be my alma mater, and I am just so 
proud that he is here.
    He grew up in a rural west Texas community, and his parents 
were in the agriculture space. He was a legislator in Texas, a 
state Representative and a state Senator for over 20 years, and 
a tireless champion for rural America and agriculture. And I am 
just so happy he is here, and I am proud of all the work he is 
doing at my alma mater, and I look forward to hearing from him. 
Thanks for being here.
    The Chairman. With that, Mr. Yoho, would you introduce Dr. 
Jackie Burns?
    Mr. Yoho. Thank you, Mr. Chairman. I am thrilled to be able 
to introduce Dr. Jacqueline Burns, Dean for Research and 
Director of the University of Florida Institute of Food and 
Agricultural Science, referred to as IFAS worldwide, the 
Florida Ag Experiment Station in my hometown of Gainesville, 
Florida. UF-IFAS does such phenomenal work that it is not just 
important across Florida's Third Congressional District, but 
which has a statewide, a nationwide, and, indeed, a global 
impact. And it is my alma mater, I am a double-Gator, and it is 
the real agricultural school. And I am happy that you are here 
representing University of Florida.
    And I just end the remarks by saying Go Gators. And there 
is one other person that is a Gator that it will be self-
evident when he speaks. Thank you.
    The Chairman. Thank you, Mr. Yoho.
    We also have with us this morning Dr. Glenda Humiston, the 
Vice President of Agriculture and Natural Resources at the 
University of California, in Oakland, California.
    Mr. Costa. Would the gentleman yield?
    The Chairman. I would.
    Mr. Costa. I just want to welcome all of the panel. And I 
have worked for many years with Dr. Glenda Humiston, and she 
does a terrific job. She was formerly with the USDA, and now is 
with the University of California. We are very pleased that you 
are here to testify.
    The Chairman. Thank you, Mr. Costa.
    We also have Dr. Walter Hill who is the Dean of the College 
of Agriculture, Environment, and Nutrition Sciences and the 
Vice Provost for the Land-Grant Affairs, Tuskegee University, 
Tuskegee, Alabama. Dr. Hill, welcome.
    Dr. Steven Tallant, if Mr. Vela would introduce him.
    Mr. Vela. Thank you, Chairman Conaway and Ranking Member 
Peterson, for hosting this hearing on university research.
    Dr. Steve Tallant, who is a good friend of mine, is here 
from the Texas A&M University of Kingsville, and he is the 
President of that institution. Dr. Tallant has 20 years of 
military service, and previously served as Chief of the U.S. 
Air Force Family Research Program. Before being at the Texas 
A&M Kingsville, I believe he was in Wisconsin, if I am not 
mistaken. Thank you, Dr. Tallant, for being here, and feel free 
to reply to Mr. Arrington.
    The Chairman. And we also have Ms. Carrie Billy who is the 
President and CEO at the American Indian Higher Education 
Consortium in Alexandria, Virginia.
    With that, Chancellor Duncan, please begin when you are 
ready.

  STATEMENT OF HON. ROBERT L. DUNCAN, J.D., CHANCELLOR, TEXAS 
              TECH UNIVERSITY SYSTEM, LUBBOCK, TX

    Mr. Duncan. Thank you, Mr. Chairman, Ranking Member 
Peterson, and Members of the Committee, Mr. Arrington, for your 
kind introduction. It is a great honor to be here today. On 
behalf of all the panel, we appreciate this hearing and this 
ability for higher education to be heard as it relates to 
research and the contributions that we can make to furthering 
agriculture in this great country.
    My name is Robert Duncan, I am Chancellor of the Texas Tech 
University System. The Texas Tech University System has four 
components. I will begin first with the two Health Science 
Centers. Texas Tech Health Science Center that is headquartered 
in Lubbock, but has campuses throughout west Texas and 
Amarillo, Abilene, Midland-Odessa. While it only started in 
1969, it now graduates more healthcare professionals in the 
State of Texas than any other institution; nursing, pharmacy, 
and public health, and allied health positions. And the 
significance of that for agriculture is a lot of those people, 
a lot of those professionals end up in rural Texas and rural 
America, and there is a real emphasis there. And that is part 
of agriculture, is having the opportunity to have great health 
care.
    In addition, we have a Health Science Center on the Texas 
border in El Paso. The first and the only medical school, the 
Health Science Center on the border. Our President can 
literally hit, he says, the Mexican border with a three iron. I 
don't know if that is true, we haven't tested it, but he says 
he can do it.
    I am here today to talk a little bit about our other two 
institutions; our general academic institution, Texas Tech 
University, which was created in 1923, but has had a strong 
emphasis and core in agriculture, as well as our newest member 
of our system, Angelo State University, which is a 
comprehensive regional institution in San Angelo, Texas. Both 
of these institutions are a significant part of the agriculture 
production of this country, and neither one of them are land-
grant institutions.
    Where I want to leave you today, when I step away and you 
have listened to what I have had to say, is I want to talk a 
little bit about capacity. In Texas, a group of us back in the 
2000s saw that we needed more capacity in our non-land-grant 
institutions, as well as those that were not funded by the 
Permanent University Fund, which is a significant $18 billion 
endowment for higher education. And that is about 26 or 27 
institutions, including Texas Tech University, Angelo State, 
Texas A&M at Kingsville, our partner down there. And so we 
started looking at different ways and the importance of 
capacity. And so to that extent, the Texas Legislature created 
several different funds and opportunities for universities like 
Texas Tech, University of Houston, A&M Kingsville, and other 
institutions to start building capacity. And the importance of 
capacity is, what we learned, is if you don't have continuous 
predictable funding for faculty and for infrastructure, then 
you will not be able to be competitive for private-public 
research, as well research that is through the AFRI program and 
the Federal competitive grant program. It takes funding that is 
predictable so that you can support your faculty, and the 
infrastructure necessary for the faculty.
    I will give the example of Texas Tech University, in 1996 
we got zero funding for capacity. As we started building these 
programs, last year we are receiving about $20 million a year 
in capacity for research. That is why Texas Tech University is 
the number one research university, or non-land-grant 
university in agriculture. The National Science Foundation 
ranks us as 41 in the country, and number one in non-land-grant 
agriculture research. And I attribute that to capacity.
    The point that I am trying to get across here is that in 
the 2008; and, again in 2014, this Committee and Congress 
recognized the importance of non-land-grant institutions 
competing for agriculture funds, and needing more capacity. The 
appropriation was $5 million a year. Well, with 70 non-land-
grant institutions, you can see that $5 million a year doesn't 
go very far, and help for institutions that are non-land-grant 
would be significant. I will give you an example of the 
importance of non-land-grant institutions often is their 
regional location. You have a map in there of where your land-
grant institutions are located, in the Panhandle and South 
Plains of Texas, the epicenter of food animal production, 
dairy, beef, cotton, grain sorghum, there are no land-grant 
institutions in that region.* The closest from Amarillo is 
Texas A&M, which is 505 miles away. The regionalism is very 
important.
---------------------------------------------------------------------------
    *The map referred to follows Mr. Duncan's prepared statement.
---------------------------------------------------------------------------
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. Duncan follows:]

 Prepared Statement of Hon. Robert L. Duncan, J.D., Chancellor, Texas 
                  Tech University System, Lubbock, TX
Importance of Agricultural Research: Non-Land-Grant Colleges of 
        Agriculture
    Good morning, Chairman Conaway, Ranking Member Peterson, and the 
Members of the Committee. Thank you for convening this hearing 
addressing the continued importance and needs of agricultural research, 
education and infrastructure. It is an honor to address this Committee 
on this important subject matter. My name is Robert Duncan, and I am 
the fourth chancellor of the Texas Tech University System, which 
includes: Texas Tech University, Texas Tech University Health Sciences 
Center, Angelo State University and Texas Tech University Health 
Sciences Center El Paso. Our system includes two Non-Land-Grant 
Colleges of Agriculture: Texas Tech University and Angelo State 
University, both of which contribute valuable agricultural research to 
the industries in our region.
    Texas Tech University achieved Tier One designation and was listed 
in the Highest Research Activity category by the Carnegie 
Classification of Institutions of Higher Education in 2016. Texas Tech 
is one of only 81 public institutions listed in this top tier. In 2015, 
Texas Tech University was ranked No. 41 on the National Science 
Foundation's rankings for higher education agricultural research and 
development, which is the highest ranking of any Non-Land-Grant College 
of Agriculture. Texas Tech University has a total enrollment of nearly 
37,000 students and the College of Agricultural Sciences and Natural 
Resources has 1,754 and 420 undergraduate and graduate students, 
respectively. The college prides itself on having one of the highest 
student retention rates at the university. We believe this is due to a 
combination of factors, including faculty advising of students and 
student involvement in extracurricular activities.
    Every year since 2010, Angelo State University has been recognized 
by The Princeton Review as one of the nation's ``Best Colleges.'' The 
university is a Hispanic-Serving Institution and offers more than 100 
majors and concentrations, and provides opportunities for both 
undergraduate and graduate research. Angelo State University is able to 
provide students with an economical education due to strong financial 
aid programs, including the $130 million endowment for the Carr 
Scholarship Program. Specific to the Department of Agriculture at ASU, 
most of the labs are taught at the Management, Instruction and Research 
(MIR) Center, a facility that consists of 6,000 acres of range and farm 
land. The department's mission is to work directly with regional 
commercial producers through development of seed stock in Angus Cattle, 
Rambouillet Sheep, Suffolk Sheep, Meat Goats and Dorper Sheep through 
breeding programs on the University Ranch. In 2015, ASU's graduate 
agricultural education program was recognized as one of the top 25 in 
the United States and recently received the Mirabeau B. Lamar Award. 
Angelo State University's Department of Agriculture has a 100 percent 
pass rate on the Secondary Teacher Education Exam for Agricultural 
Education.
Executive Summary
    Agricultural research will be required to address the complex issue 
of producing more food with fewer resources while maintaining the 
stewardship of the land and natural resources. Further, food security, 
both under- and over-nutrition, will require a trans-disciplinary 
approach and agricultural sciences will be a nexus for addressing this 
complex subject. Unfortunately, research funds allocated for 
agricultural research are disproportionately less when compared with 
other Federal research programs and are not keeping pace with other 
emerging countries. Investing in both foundational and innovative 
research will be essential to keep the American farmer competitive in 
this global economy.
    The Non-Land-Grant Colleges of Agriculture educate approximately 50 
percent of the future workforce in states where they are located. 
Further, these public institutions provide excellent translational 
research and outreach programs through their graduate studies and 
associated research efforts. The funding model of the USDA allocates a 
large portion of its annual budget to capacity building for the Land-
Grant Universities. Though they also fund competitive programs, many of 
the Non-Land-Grant Colleges of Agriculture are less competitive because 
they do not have the same capacity as their Land-Grant counterparts. 
The 2008 Farm Bill authorized a competitive capacity-building program 
for Non-Land-Grant Colleges of Agriculture, and that program has funded 
projects since 2012 to purchase new research equipment, address 
relevant and emerging research areas, and educate students that will be 
the future workforce. The funding of this program at approximately $5 
million per year is small in comparison, but it has had significant 
impacts on improving research and education capacity in the 
agricultural sciences and natural resources management. Increasing 
capacity at the Non-Land-Grant Colleges of Agriculture will increase 
output of trained workforce and support new and innovative research. 
Increasing the funding of the competitive capacity-building program for 
Non-Land-Grant Colleges of Agriculture and creating new funding 
programs to incentivize the expansion of these institutions will be 
important strategies to expand our agricultural education and research 
efforts.
Importance of Agricultural Research and Education
Competitiveness and Sustainability of U.S. Agriculture
    Previous investments into agriculture research have paid off more 
than what was expected. Innovation increased agricultural outputs and 
efficiencies beyond any other country and has allowed the American 
farmer to be competitive in an ever more global economy. Population 
growth is expected to increase, and agricultural outputs are going to 
need to increase to keep pace. However, it is now well-accepted that 
the increased outputs cannot come at the expense of natural resources 
or the environment. Natural resources are limited, so the American 
farmer is going to have to do more with less. The American farmer and 
Agribusiness sector produces more food and fiber now with no more land 
than they did a century ago. Continued investments into innovation are 
required to meet and exceed the targeted needs for agricultural 
products.
    The importance of U.S. Agriculture is a nexus of our economic 
viability, national security and human health. Recent USDA Economic 
Research Service data indicate agriculture contributed $992 billion to 
the U.S. GDP or about a 5.5 percent share. Additionally, agriculture 
and its related industries provided 11 percent of the U.S. employment. 
Food security in the U.S. is unprecedented, and food only accounts for 
approximately 12 percent of household incomes. However, despite the 
overall access to food, there continues to be food insecurity in every 
county in the U.S. Further, one of the greatest security threats to the 
U.S. is availability of nutritious food. High food prices and 
restricted access to food are known to destabilize regions, which was 
apparent in the Arab Spring of 2011. Food security is a complex issue 
and associated with it is also the increasing amount of over-nutrition. 
Over-weight and obesity rates in North America are reaching epidemic 
proportions, and the estimated annual costs associated with this is 
between $1 and $2 trillion. It is well-accepted that one of the 
greatest risk factors for many non-communicable diseases is over-
nutrition. Food science, behavior economics, nutritional education 
programs and arguably every aspect of Agribusiness sector are going to 
be important in combating these complex issues.
Agriculture Is Under Funded Relative to Other Programs
    As you will undoubtedly hear today, the annual USDA research budget 
of $2.9 billion (2017 requested budget) is disproportionately less when 
compared with other Federal research programs. Figure 1 shows a 
comparison of the USDA's intramural and extramural research programs 
with other leading Federal research funding agencies. The importance of 
agricultural sciences is overlooked and often taken for granted. The 
contributions of agricultural sciences research to the advancements of 
the life sciences is meaningful and transects other disciplines like 
human health, energy, and basic science. Most agricultural research 
programs are trans-disciplinary in nature, and many of the most 
important issues facing humankind such as human health, food 
insecurity, environmental stewardship and economic viability arguably 
will be best addressed by trans-disciplinary approaches such as 
agricultural sciences research.
Figure 1 : Annual Research Budgets


Non-Land-Grant Colleges of Agriculture
Institutions, Education, Training and Research
    Seventy institutions in 27 states have Non-Land-Grant Colleges of 
Agriculture with long histories of successful programs educating and 
preparing professionals in agricultural sciences and natural resources. 
It was estimated in these 27 states that approximately \1/2\ the 
baccalaureate degrees awarded each year in agricultural sciences and 
natural resources are from one of these institutions. In fact, more 
than 50,000 students on an annual basis are educated through one of 
these Non-Land-Grant Colleges of Agriculture. Another important 
characteristic of a large number of these institutions is they 
accommodate many under-represented student groups including: first 
generation students, minorities and rural students. Further, these 
public institutions provide excellent translational research and 
outreach programs through their graduate studies and associated 
research efforts.
    A 2015 report from Purdue University indicated that from 2015 to 
2020 there will be a deficiency in the baccalaureate or higher degrees 
needed to fill new agricultural-related positions [http://purdue.edu/
usda/employment]. They reported an expected annual need of 57,900 
graduates and a growing workforce of only 35,400 new graduates with 
expertise in food, agriculture, renewable natural resources or the 
environment. Therefore, there is an expected 39 percent annual shortage 
of graduates to fill these positions, and the difference must be made 
up from other non-agricultural degree-based programs. Importantly, the 
report also notes employers prefer to hire students from agricultural-
based degree programs.
Capacity Funding
    The USDA has a unique but effective funding system with an annual 
budget of approximately $850 million that is allocated to the Land-
Grant Institutions as capacity-building funds and an annual budget for 
competitive grants of approximately $700 million. A recent report 
funded by USDA evaluated the effectiveness of these two primary funding 
streams and found that both were effective and offered distinct 
benefits [http://nifa.usda.gov]. Importantly, it was noted in the 
report that although Non-Land-Grant Universities can submit grants to 
the competitive funding programs, they are likely at a disadvantage 
because many of these institutions do not have the capacity to compete 
with the Land-Grant Institutions because they do not have access to 
those capacity-building funds.
    To help support such a capacity, the 2008 Farm Bill authorized a 
program to provide competitive grants to the Non-Land-Grant Colleges of 
Agriculture. The program was re-authorized in the 2014 Farm Bill. The 
first awards were allocated in FY12, and these grants have been 
instrumental in developing academic, research and outreach capabilities 
at the Non-Land-Grant institutions. Here are just a few examples to 
give you an idea of the types of projects that were funded through this 
program:

   Fresno State, CA--``Expanding the research capacity in 
        agricultural sciences through modernization of 
        instrumentation''.

   Chico State, CA--``Integrating agricultural education and 
        outreach to increase profitability through local food marketing 
        channels''.

   Missouri State, MO--``Agriculture and food literacy 
        initiative at Northwest Missouri State''.

   Montclair State College, NJ--``Bridging the gap between New 
        Jersey farmers and consumers through research, education, and 
        outreach''.

   Texas Tech University, TX--``Developing a generation of 
        agricultural change agents in the battle for food security''.

   University of Tennessee, Martin--``Building capacity for 
        climate change education & expanding research opportunities in 
        rural communities in TN & KY''.

   Fort Hays State, KS--``Unmanned aerial systems and precision 
        agriculture: building capacity in emerging technology''.

   University of Wisconsin, Platteville--``Incorporating dairy 
        livestock into agroecosystem research: grazing responsibly for 
        a sustainable tomorrow''.

    As you can see from this non-exhaustive list, these competitive 
funds for Non-Land-Grant Colleges of Agriculture are used to purchase 
new research equipment, address relevant and emerging research areas, 
and educate students that will be the future workforce. Another 
important point is the regional diversity of the institutions that 
received funds through this capacity-building program. As a result, 
these funds are supporting increased research and educational capacity 
in all regions of the U.S.
    This competitive program has received approximately $5 million in 
annual funding since 2012, which is comparatively small; but these 
funds are going a long way at improving research and education in 
agricultural sciences and natural resources management. Like the 
American farmer, we know that non-land-grant colleges of agriculture 
have to do more with less. These capacity-building funds do not require 
state or private matching, which given the infancy of this program is 
important. However, we also recognize the importance of leveraging 
Federal dollars with both state and private funding. An example from my 
time in the Texas State Legislature is a program our team of 
legislators developed and funded known as TRIP the Texas Research 
Incentive Program [http://thecb.state.tx.us]. It is a program where 
emerging research universities are awarded matching funds from the 
state based on how much an institution raises in private gifts and 
endowments to enhance research activities. Since 2010, Texas Tech 
University has received $103.4 million in matching funds through this 
program and the program has awarded a total $291.3 million. These funds 
were used to increase research capacity at Texas Tech University, like 
in the case of a research gift from Bayer Crop Science that was matched 
by the State of Texas. The gift was used in support of the construction 
of a $15 million state-of-the-art teaching and research Bayer Plant 
Science Building on the Texas Tech University campus. Undergraduate and 
graduate enrollment increased by approximately 25 percent in plant and 
soil sciences following construction. This is just one example of many 
of how this type of program is able to leverage resources to build 
research capacity at a non-land-grant college of agriculture. Further, 
this is an example of leveraging dollars to invest in much needed 
infrastructure in our Colleges of Agriculture at public universities.
    In closing, I appreciate the opportunity to share the Texas Tech 
University System's perspective of our two non-land-grant colleges of 
agriculture: Texas Tech University and Angelo State University. 
Investments in agricultural research and infrastructure build over time 
and are long-term investments in the future well-being of our nation. 
Research serves as the foundation of applied sciences to assist the 
industry in solving problems that have a direct impact on all aspects 
of our economy. As you continue your important work, we hope you will 
continue supporting and increasing the funding for the non-land-grant 
colleges of agriculture competitive capacity-building program. The 
Texas Tech University System would like to work with the Committee to 
explore additional research partnerships to increase agricultural 
research investment opportunities for non-land-grant institutions with 
a proven research track record. We appreciate the Committee's continued 
support of agricultural research and look forward to working with the 
Committee as you reauthorize the farm bill.
                              [Attachment]
NIFA Land-Grant Colleges and Universities
June 2014


          *Central State University (CSU), in Ohio, has been designated 
        as an 1890 LGU. Under the law, CSU will be eligible to receive 
        certain capacity funds in October 2014 and others in Fiscal 
        Year 2016.
          **College of the Muscogee Nation and Keweenaw Bay Ojibwa 
        Community College are designated as 1994 LGUs and will be 
        eligible to receive capacity funds in October 2014.

 
 
 
        Alabama                  Maryland         North Dakota State
                                                   University, Fargo
Alabama A&M University,  University of Maryland,  Sitting Bull College,
 Normal                   College Park             Fort Yates
Auburn University,       University of Maryland   Turtle Mountain
 Auburn                   Eastern Shore,           Community College,
                          Princess Anne            Belcourt
Tuskegee University,          Massachusetts       United Tribes
 Tuskegee                                          Technical College,
                                                   Bismarck
         Alaska          University of               Northern Marianas
                          Massachusetts, Amherst
Ilisagvik College,               Michigan         Northern Marianas
 Barrow                                            College, Saipan, CM
University of Alaska,    Bay Mills Community               Ohio
 Fairbanks                College, Brimely
     American Samoa      Keweenaw Bay Ojibwa      Central State
                          Community College,       University,
                          Baraga                   Wilberforce
American Samoa           Michigan State           Ohio State University,
 Community College,       University, East         Columbus
 Pago Pago                Lansing
        Arizona          Saginaw Chippewa Tribal         Oklahoma
                          College, Mount
                          Pleasant
Dine College, Tsaile            Micronesia        College of the
                                                   Muscogee Nation,
                                                   Okmulgee
Tohono O'Odham           College of Micronesia,   Langston University,
 Community College,       Kolonia, Pohnpei         Langston
 Sells
University of Arizona,          Minnesota         Oklahoma State
 Tucson                                            University,
                                                   Stillwater
        Arkansas         Fond du Lac Tribal &             Oregon
                          Community College,
                          Cloquet
University of Arkansas,  Leech Lake Tribal        Oregon State
 Fayetteville             College, Cass Lake       University, Corvallis
University of Arkansas   University of                 Pennsylvania
 at Pine Bluff, Pine      Minnesota, St. Paul
 Bluff
       California        White Earth Tribal and   Pennsylvania State
                          Community College,       University,
                                                   University Park
D-Q University, (Davis     Mahnomen                     Puerto Rico
 vicinity)
University of                  Mississippi        University of Puerto
 California System--     Alcorn State              Rico, Mayaguez
 Oakland as               University, Lorman           Rhode Island
 Headquarters, Oakland
        Colorado         Mississippi State        University of Rhode
                          University, Starkville   Island, Kingston
Colorado State                   Missouri             South Carolina
 University, Fort
 Collins
      Connecticut        Lincoln University,      Clemson University,
                          Jefferson City           Clemson
University of            University of Missouri,  South Carolina State
 Connecticut, Storrs      Columbia                 University,
                                                   Orangeburg
        Delaware                 Montana               South Dakota
Delaware State           Blackfeet Community      Oglala Lakota College,
 University, Dover        College, Browning        Kyle
University of Delaware,  Chief Dull Knife         Si Tanka/Huron
 Newark                   College, Lame Deer       University, Eagle
                                                   Butte
  District of Columbia   Aaniiih Nakoda College,  Sinte Gleska
                          Harlem                   University, Rosebud
University of the        Fort Peck Community      Sisseton Wahpeton
 District of Columbia,    College, Poplar          College, Sisseton
 Washington
        Florida          Little Big Horn          South Dakota State
                          College, Crow Agency     University, Brookings
Florida A&M University,  Montana State                   Tennessee
 Tallahassee              University, Bozeman
University of Florida,   Salish Kootenai          Tennessee State
 Gainesville              College, Pablo           University, Nashville
        Georgia          Stone Child College,     University of
                          Box Elder                Tennessee, Knoxville
Fort Valley State                Nebraska                  Texas
 University, Fort
 Valley
University of Georgia,   Little Priest Tribal     Prairie View A&M
 Athens                   College, Winnebago       University, Prairie
                                                   View
          Guam           Nebraska Indian          Texas A&M University,
                          Community College,       College Station
                          Winnebago
University of Guam,      University of Nebraska,           Utah
 Mangilao                 Lincoln
         Hawaii                   Nevada          Utah State University,
                                                   Logan
University of Hawaii,    University of Nevada,            Vermont
 Honolulu                 Reno
         Idaho                New Hampshire       University of Vermont,
                                                   Burlington
University of Idaho,     University of New            Virgin Islands
 Moscow                   Hampshire, Durham
        Illinois                New Jersey        University of the
                                                   Virgin Islands, St.
                                                   Croix
University of Illinois,  Rutgers University, New         Virginia
 Urbana                   Brunswick
        Indiana                 New Mexico        Virginia State
                                                   University,
                                                   Petersburg
Purdue University, West  Navajo Technical         Virginia Tech,
 Lafayette                College, Crownpoint      Blacksburg
          Iowa           Institute of American          Washington
                          Indian and Alaska
                          Native Cul-
Iowa State University,     ture and Arts          Northwest Indian
 Ames                     Development, Sante Fe    College, Bellingham
         Kansas          New Mexico State         Washington State
                          University, Las Cruces   University, Pullman
Haskell Indian Nations   Southwestern Indian           West Virginia
 University, Lawrence     Polytechnic Institute,  West Virginia State
Kansas State              Albuquerque              University, Institute
 University, Manhattan
        Kentucky                 New York         West Virginia
                                                   University,
                                                   Morgantown
Kentucky State           Cornell University,             Wisconsin
 University, Frankfort    Ithaca                  College of Menominee
University of Kentucky,       North Carolina       Nation, Keshena
 Lexington
       Louisiana         North Carolina A&T       Lac Courte Oreilles
                          State University,        Ojibwa Community
                          Greensboro               College, Hay-
Louisiana State          North Carolina State       ward
 University, Baton        University, Raleigh
 Rouge
Southern University and        North Dakota       University of
 A&M College, Baton                                Wisconsin, Madison
 Rouge
         Maine           Cankdeska Cikana                 Wyoming
                          Community College,
                          Fort Totten
University of Maine,     Fort Berthold Community  University of Wyoming,
 Orono                    College, New Town        Laramie, WY
 
USDA is an equal opportunity provider and employer D June 2014.


    The Chairman. Thank you, Chancellor.
    Dr. Burns, 5 minutes.

       STATEMENT OF JACQUELINE K. BURNS, Ph.D., DEAN FOR
          RESEARCH AND DIRECTOR, FLORIDA AGRICULTURAL
         EXPERIMENT STATION; PROFESSOR OF HORTICULTURE,
          INSTITUTE OF FOOD AND AGRICULTURAL SCIENCES,
             UNIVERSITY OF FLORIDA, GAINESVILLE, FL

    Dr. Burns. Chairman Conaway, and Members of this 
distinguished Committee on Agriculture, thank you for this 
opportunity to speak with you today.
    Agriculture is a major economic driver for the State of 
Florida. Agricultural research conducted at the University of 
Florida provides that knowledge, innovation, and tech transfer 
that supports 2.2 million agriculture-related jobs, and direct 
industry output of $148 billion in Florida.
    Although Florida produces traditional row crops, such as 
cotton, sugarcane, rice, and peanuts, Florida is primarily a 
specialty crop state. It is first in production of oranges and 
grapefruit, fresh market tomatoes, and many others. Livestock, 
forestry, fisheries are also significant production outputs of 
Florida's agricultural sector. Florida agriculture is diverse, 
as is the requirement for research in all of these important ag 
and natural resource systems.
    Competitive research awards authorized by the farm bill 
provide enormous opportunities for our faculty to support 
agricultural enterprises in the region, in the state, the 
nation, and the world. Programs such as NIFA, AFRI, Specialty 
Crop Research Initiative, and its provision for block grants to 
the states of agriculture that fund regional needs have been 
effective, timely, and impactful. The Citrus Disease Research 
and Extension program that was just recently authorized by the 
recent farm bill has been exceptionally helpful in our 
continued quest to solve the most devastating disease to citrus 
worldwide; citrus greening.
    Key issues we face include reduced funding that supports 
research infrastructure, and the increasing need for longer-
term research support that solves our modern agricultural 
challenges.
    I appreciate the opportunity to share ideas for 
streamlining farm bill competitive funding processes, expanding 
the use of the letter of intent process, delaying the entry of 
information at the submission stage that is not necessary for 
evaluating the merits of the proposal, and providing larger 
long-term awards, de-emphasizing smaller awards, when 
applicable, reduces the number of awards handled and provides 
sustaining opportunities for researchers.
    I also appreciate the opportunity to share ideas for 
prioritizing programs in the farm bill. First, invasive 
species: Florida's geography means that it is often ground zero 
for the introduction of costly, invasive species and diseases 
within the continental United States through its many ports of 
entry. Prioritizing expanding the scope of invasive species 
programs to accommodate all threats to commercial ag lands, 
production systems, and natural lands would greatly improve our 
response to threats, and prioritizing more proactive research 
to the extent possible would accelerate development of science-
based solutions before the full impact of invasive threat 
develops.
    Second, alternative crops: expanding and prioritizing 
alternative crop breeding and management programs that focus on 
sustainable production. This also gives our producers 
opportunities to remain in agriculture and even diversify their 
operations.
    Precision agriculture and automation such as mechanical 
harvesting, prioritizing these important programs would be 
important.
    Stakeholder engagement, finally, and prioritizing that 
opportunity would help the whole process to prioritize the 
program for national research investment.
    Finally, a few words about research infrastructure and 
deferred maintenance. High-quality research infrastructure is 
essential to build and maintain research capacity. At the 
University of Florida, with over $16 million in deferred 
maintenance costs and reduced funding to maintain its existing 
agricultural research infrastructure, the University of Florida 
IFAS has fallen below the critical investment level needed to 
prevent failures in building systems. The landscape of our 
universities and IFAS agricultural infrastructure is a 
patchwork of primarily decaying infrastructure, with an 
occasional new facility built with opportunistic public and 
private funds. What is needed is a principled approach to 
agricultural research infrastructure investments that prevents 
building systems failures, enhances our ability to conduct 
world-class research, and emphasizes our world stature as a 
premiere location for cutting-edge, fundamental, and applied 
research. One way to do this would be to include provisions in 
a new farm bill for university infrastructure investments that 
could provide an opportunity for solutions to this critical 
deferred maintenance problem. A principled approach that 
requires matching funds from the university or state sources 
would signal important contributions between Federal and state 
agencies.
    Thank you.
    [The prepared statement of Dr. Burns follows:]

Prepared Statement of Jacqueline K. Burns, Ph.D., Dean for Research and 
    Director, Florida Agricultural Experiment Station; Professor of
 Horticulture, Institute of Food and Agricultural Sciences, University 
                      of Florida, Gainesville, FL
    Chairman Conaway and Members of the U.S. House of Representatives 
Committee on Agriculture, thank you for the opportunity to speak with 
you today about (1) the importance of agricultural research programs to 
our institution in meeting key challenges, (2) ways to streamline and 
prioritize agricultural research programs through the next farm bill, 
and (3) the need for deferred maintenance upgrades for our agricultural 
research facilities.
    My name is Jackie Burns, and I am the Dean for Research at the 
University of Florida in the Institute of Food and Agricultural 
Sciences (UF/IFAS) and Director of the Florida Agricultural Experiment 
Station. The mission of UF/IFAS is ``to develop knowledge in 
agricultural, human and natural resources and to make that knowledge 
accessible to sustain and enhance the quality of life.'' Our scientists 
seek to solve the challenges facing agriculture, natural resources, and 
the interrelated life sciences with disciplinary and interdisciplinary 
collaborative research. Through our research, we acknowledge the 
inextricable link between agricultural production and the health and 
biodiversity of natural resources.
1. Importance of Agricultural Research Programs and Challenges
    Agriculture is a major economic driver for Florida. Agricultural 
research conducted at the University of Florida provides knowledge, 
innovation and technology transfer that supports 2.2 million 
agriculture-related jobs and direct industry output of $148 billion in 
Florida in 2014. Sponsored agricultural research awarded to UF/IFAS was 
$140 million in FY 2016. Of this amount, over 70% was awarded by 
Federal agencies. Research expenditures approached $168 million. These 
dollars are used to conduct research that provides new cultivars, 
diagnostic tools, disease management strategies, and other technologies 
and products. Intellectual property from our research activities 
significantly contributes to the value of University of Florida's 
agricultural research to the state of Florida, the nation, and the 
world. Technology is transferred, licensed, and royalties are 
reinvested into our research programs.
    Although Florida produces traditional row crops such as cotton, 
peanuts, sugarcane and rice, Florida is primarily a specialty crop 
state. Florida is first in production of orange, grapefruit, sweet 
corn, snap beans, squash, fresh market tomatoes, and tropical foliage 
plants. Livestock, forestry and fisheries are also significant 
production outputs of Florida's agricultural sector. Florida's 
agriculture is diverse, as are the requirements for research in plant, 
animal, food, environment, and natural resource systems. Competitive 
research awards authorized by the farm bill provide enormous 
opportunities for UF/IFAS to support agricultural enterprises.
    The financial support for agricultural research provided by these 
programs and conducted by UF/IFAS scientists is crucial for developing 
innovative solutions for the benefit of Florida's economy. Federal 
investments in competitive USDA programs through farm bill 
appropriations provide opportunities for UF/IFAS to conduct 
agricultural research. Programs such as the NIFA AFRI, Specialty Crop 
Research Initiative (SCRI), and its provision for block grants to 
States of Agriculture that fund regional needs have been effective, 
timely, and impactful. The NIFA SCRI Citrus Disease Research and 
Extension program authorized by the 2014 Farm Bill has been 
exceptionally helpful in our continued quest to solve the most 
devastating disease of citrus worldwide, citrus greening.
    Key issues we face include reduced funding that supports research 
infrastructure and the increasing need for longer-term research support 
to solve modern agricultural challenges that are fundamentally rooted 
in a sustainable agricultural production system.
2. Streamlining and Prioritizing Agricultural Research Programs
    I appreciate the opportunity to share ideas for streamlining farm 
bill competitive funding processes. Reducing administrative burden for 
sponsor and applicant organizations can improve efficiencies of 
research.

   Letters of Intent. Expand the use of letter of intent 
        processes to reduce the development of misguided proposals and 
        the number of fully developed grants that are handled.

   Information requirements. Delay entry of information at the 
        submission stage that is not necessary for determining merits 
        of the proposal. To the extent possible, move entry of this 
        information to the post-award stage to improve the efficiency 
        of the submissions process.

   Award periods. Provide larger, longer-term awards and de-
        emphasize small award programs to reduce the number of awards 
        handled and to provide sustaining opportunities for 
        researchers.

    I also appreciate the opportunity to share ideas for prioritizing 
programs in the next farm bill.

   Invasive species. Increasing global trade is affecting food 
        production and ecosystem service systems generated by 
        commercial and non-commercial working lands. Florida's 
        geography means it is often ``ground-zero'' for the 
        introduction of costly invasive species and diseases within the 
        continental U.S. through its many ports of entry. Prioritizing 
        and expanding the scope of invasive species programs to 
        accommodate all threats to commercial agricultural production 
        systems and natural lands would greatly improve our response to 
        threats. Prioritizing more proactive research, to the extent 
        possible, would accelerate the development of science-based 
        solutions before the full impact of the invasive threat 
        develops.

   Alternative crops. Keeping agricultural lands in agriculture 
        production will be paramount to meeting the food, fiber and 
        feed needs of a growing population. Expanding and prioritizing 
        alternative crop breeding and management programs that focus on 
        sustainable, efficient and economical production can provide 
        opportunities for producers who seek to remain in agriculture 
        or diversify their operations.

   Precision agriculture and automation. Prioritizing programs 
        in precision agriculture and automation technologies would 
        accelerate development of these and other technologies that 
        are, or will become, the future of agriculture. Every producer 
        will benefit from technologies that allow more efficient and 
        economical operations. Mechanical harvesting and other handling 
        automations, precision application of fertilizers and 
        pesticides, detection and surveillance of pests and diseases 
        through the use of unmanned aerial vehicles and sensing 
        technologies, and other techniques are critically needed to 
        advance and protect production systems.

   Stakeholder engagement. Identifying needed research through 
        continued interaction with the National Agricultural Research, 
        Extension, Education, and Economics Advisory Board, and 
        prioritizing stakeholder involvement in regional or commodity-
        based listening and planning sessions, are effective ways to 
        prioritize programs for national research investment.
3. Research Infrastructure and Deferred Maintenance
    High quality research infrastructure is essential to build and 
maintain research capacity. The UF/IFAS must hire and retain world-
class faculty to advance and support agriculture systems-related 
research activities. Today, the UF/IFAS suffers from decaying 
infrastructure that hampers our ability to attract and retain the best 
and most talented research faculty. With over $16 million in deferred 
maintenance costs and reduced funding to maintain existing 
infrastructure, the UF/IFAS has fallen below the critical investment 
level needed to prevent failures in building systems.
    The landscape of our University's infrastructure is a patchwork of 
primarily decaying infrastructure with an occasional new facility built 
with opportunistic public or private funds. What is needed is a 
principled approach to agriculture research infrastructure investments 
that prevents building systems failures, enhances our ability to 
conduct world-class research by world-class faculty, and emphasizes our 
world stature as the premier location for cutting-edge fundamental and 
applied research.
    One way to provide funding for this need would be to include 
provisions in a new farm bill for University infrastructure investments 
that could provide an opportunity for solutions to this critical 
deferred maintenance problem. A principled approach that requires 
matching funds from University and/or state sources would signal 
important partnerships between Federal and state agencies that 
agricultural stakeholders would value.
    Thank you for this opportunity to address the Committee and bring 
the perspective of the UF/IFAS to research and support programs 
appropriated in the next farm bill.
    This concludes my formal statement and I am happy to answer any 
questions.

    The Chairman. Thank you, Dr. Burns.
    Glenda, how do you pronounce your name? Mr. Costa and I 
said it differently.
    Dr. Humiston. It is Humiston. Thank you.
    The Chairman. Humiston. All right, Dr. Humiston, you are 
recognized for 5 minutes.

         STATEMENT OF HON. GLENDA HUMISTON, Ph.D., VICE
         PRESIDENT, AGRICULTURE AND NATURAL RESOURCES;
         DIRECTOR, AGRICULTURAL EXPERIMENT STATION AND
          COOPERATIVE EXTENSION SERVICE, UNIVERSITY OF
                    CALIFORNIA, OAKLAND, CA

    Dr. Humiston. Great. Thank you very much.
    Chairman Conaway, Ranking Member Peterson, and Members of 
the Committee, it is an honor to be here today. Thank you for 
the invitation to discuss research issues and opportunities in 
the next farm bill.
    As part of the University of California, we are quite 
thrilled to have been there at its very beginnings in 1868. It 
has grown into a ten campus system throughout the state. We 
predominantly work with three of those campus; Berkeley, the 
original one, Davis, and Riverside; however, we partner with 
all ten, as well as our California State university system and 
our community colleges increasingly on a variety of projects. 
We have over several hundred academics scattered around the 
state; many of them on those three campuses, a few on others, 
and a few located with another partner, the USDA Agricultural 
Research Service, at some of their facilities. We have over 200 
of those actually scattered throughout the state in every 
county, doing robust research programs along with delivering a 
wide array of programs; many of these from capacity funds, 
including our world-class 4-H Youth Development program, a 
highly touted integrated pest management program, a statewide 
nutrition policy institute, and a water research institute, as 
well as several others.
    We take great pride in the work we do, and the partnerships 
we have with folks out in the field. Frankly, if it weren't for 
the farmers and landowners out in the field we work with, as 
well as the rural communities, and increasingly, urban 
communities, we couldn't begin to do a fraction of the work we 
do. And not only those partners, but our volunteer base, over 
20,000 Californians volunteer for programs like 4-H, Master 
Gardeners, California Naturalists, et cetera. Their labor is 
valued at over $40 million a year, and they greatly help us 
extend our programs.
    You have heard from previous speakers here the importance 
of the investment in our land-grant university. One thing I 
would mention is recent studies that show that on average that 
investment is 20 to 1. In other words, every $1 of Federal 
expenditure has a payback of about $20 to the American public. 
The statistics my number-crunchers give me tell me that that is 
an annualized rate of return between nine and ten percent. I 
don't know about you, but, frankly, I wish my portfolio on Wall 
Street did nearly as well, consistently.
    But it is important to understand that that kind of 
consistent return and the great benefits it has provided to our 
public and our nation, and food security, relies upon a key 
bunch of infrastructure out there that we have to maintain and 
invest in. I refer to several things. First, capacity funds: 
without that long-term infrastructure and the people there, we 
cannot make good use of the competitive grants that we are 
constantly going after. Competitive grants are great and it is 
important that we fund those, and perhaps increase funding in 
those. That is a recommendation that several organizations have 
put forward now. But the reality is to really solve 
agricultural problems, we have to keep in mind the long-term 
nature of those problems.
    There was an article in The Washington Post this week about 
mechanization and pursuit of that, but a key thing to remember 
there is that tomato harvester developed at University of 
California would not have worked without the plant genetics 
program that made a tomato able to be machine-harvested. That 
kind of work takes anywhere from 1 to 2 or more decades, and we 
need to keep that in mind.
    Another big issue that folks are focusing on right now is 
our deferred maintenance. Our infrastructure is, frankly, a 
mess. The systems I oversee, we have identified over $45 
million in work just to get to functionally adequate. We have 
roofs that are leaking, and that doesn't even count the 
infrastructure on the three campuses we work with, that is just 
our research extension centers and other facilities out in the 
more rural parts of the state. We are stepping up to the plate 
to deal with that. I will get our facilities up to at least 
functionally adequate before I leave my tenure here, but it is 
going to take help from the Federal Government, the state 
government, and the private-sector to help us create the world-
class facilities that we all need.
    Having said that though, I do want to insert a note of 
caution because we know there is probably not much appetite for 
this in the Federal farm bill, people are looking at the 
potential of the infrastructure bill, but quite frankly, our 
experience at UCSF Medical Center, which is a large research 
facility, is that the kind of rates of return that the private-
sector wants in investing in these doesn't work well for 
research facilities. It is an issue that really needs further 
looking.
    There are many other issues to look at. I provided those in 
written testimony, and I look forward to your questions. Thank 
you.
    [The prepared statement of Dr. Humiston follows:]

   Prepared Statement of Hon. Glenda Humiston, Ph.D., Vice President,
 Agriculture and Natural Resources; Director, Agricultural Experiment 
  Station and Cooperative Extension Service, University of California,
                              Oakland, CA
    Good morning, Chairman Conaway, Ranking Member Peterson, and 
Members of the Committee. I am honored to have this opportunity to 
discuss the importance of agricultural research and innovation as you 
begin work on the next farm bill.
    With the University of California (UC) Agriculture and Natural 
Resources (ANR) serving as a vital partner, California continues to be 
the nation's top agricultural state. For more than a century, 
California's $47 billion agricultural sector has depended on UC ANR for 
the stream of new technologies and research breakthroughs needed to 
stay competitive and be responsible stewards of the land. We are proud 
to be part of the Land-Grant partnership that was developed between the 
states and the Federal Government with the 1862 Morrill Act, the 1887 
Hatch and the 1914 Smith-Lever Act. That enterprise has, for over 130 
years, advanced scientific knowledge in all aspects of food production, 
and together with Cooperative Extension, has advanced production 
capacity, profitability, and safety of the nation's food system.
    The UC ANR Land-Grant mission is delivered through several hundred 
academics conducting research on four campuses, nine Research and 
Extension Centers and over fifty county offices throughout the state. 
We work closely with a wide array of partners and volunteers to deliver 
programs ranging from 4-H Youth Development to Master Gardeners to 
Integrated Pest Management, and manage the Nutrition Policy Institute 
and the Water Resources Institute for California. In the past fiscal 
year, UC ANR has served over 1.4 million adults and youth directly, 
published about 1,800 peer-reviewed journal articles and filed over 20 
patents. Our 20,000 volunteers contributed the equivalent of over 700 
FTE in public service--the equivalent of $40 million in donated time. 
1,600 workshops and field days extended best practices and technologies 
resulting in increased yield, reduced inputs, increased efficiency, 
improved economic return, and/or conservation of important natural 
resources.
    A recent study examined the return on investment for Federal 
funding of the public land-grant system; it showed that while benefit-
cost ratios vary by state, they are always in double digits--averaging 
21:1 and corresponding to annual rates of return between 9-10%.\1\ 
However, returns from these investments is often realized only after 
considerable lag time--in some cases decades. It takes at least 7 to 15 
years of research and development to develop a new crop variety--longer 
for trees/vines. Deploying and/or adapting new agricultural 
technologies can be even longer. For example, when UC Davis engineer, 
Coby Lorenzen, designed a machine to automate the harvest of tomatoes 
in the 1960's, it also required agronomist, Jack Hanna, to develop a 
less-delicate variety of tomato that ripened uniformly and could be 
easily plucked from the plant, essential qualities that made machine 
harvesting feasible.\2\
---------------------------------------------------------------------------
    \1\Julian M. Alston, Matthew A. Andersen, Jennifer S. James, Philip 
G. Pardey; The Economic Returns to U.S. Public Agricultural Research. 
Am. J. Agric. Econ. 2011; 93 (5): 1257-1277. doi: 10.1093/ajae/aar044.
    \2\Haspel, Tamar, ``One big reason some foods cost so much more 
than others'', Perspective, Washington Post, June 19, 2017, https://
www.washingtonpost.com/lifestyle/food/the-biggest-reason-some-foods-
cost-so-much-more-than-others/2017/06/16/d3bda28e-5063-11e7-91eb-
9611861a988f_story.html?utm_term=.8fc5d6f5e6f6.
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    A vital component of Federal support for agricultural research has 
been capacity funding specifically dedicated to supporting research and 
Cooperative Extension programs at America's land-grant universities. 
These capacity funds are available annually on a non-competitive basis 
and require a match at the state and local levels; they include Hatch, 
Smith-Lever, Evans-Allen, McIntire-Stennis, Animal Health and Disease 
Research, Expanded Food and Nutrition Program, 4-H Youth Development, 
Renewable Resources Extension Act, 1890 and 1994 Extension. We strongly 
support ongoing funding of both capacity programs and competitive 
funds, and urge Congress to authorize an additional $200 million toward 
the suite of programs at the National Institute of Food and Agriculture 
(NIFA). Further, we recommend that formulas for allocations of capacity 
funds to each state be designed to ensure equitable distribution; in 
particular, the current definition of ``rural'' needs serious 
examination and re-engineering.
    The current mix of Federal and state capacity funds is generally 
leveraged many-fold by Federal competitive grants, grants from private 
industry, and other types of unrestricted gifts and awards to faculty 
conducting research at the nation's land-grant universities. 
Competitive funding processes can elicit new ideas and speed up certain 
research projects; however, they also encourage a shift from 
programmatic research towards shorter-term project research. Failure to 
invest in a well-balanced mix of capacity and competitive funds for 
food and agriculture research could have very negative consequences for 
decades to come--consequences that would take significant time to 
reverse. Although progress is being made to incrementally increase 
appropriations to the USDA AFRI program, it remains funded at 
considerably less than the $700 million authorized in the previous two 
farm bills--far less than funding levels at NIH or NSF. We support the 
goal of achieving appropriations in AFRI equal to that authorized in 
the last farm bill by 2020.
    While both food security and political stability can be linked 
directly to innovation driven by investment in agricultural research, 
resources (people, time, dollars) are limited--we cannot afford to be 
duplicative; nor can we afford limit our partnerships or methods. To 
make even greater strides, transformative innovation is needed--moving 
beyond just improving existing methods and processes to totally re-
thinking systems development. As part of our new strategic plan (http:/
/ucanr.edu/stratplan1.10.2017), UC ANR seeks to deliver research and 
extension programs that have direct impacts on the lives of more 
Californians by harnessing the power of the entire California system of 
higher education, finding new ways to work with existing partners, 
cultivating new partnerships, and engaging a much broader array of 
stakeholders throughout California.
    One new strategy is to expand collaborative efforts between experts 
in soil sciences, plant pathology, biochemistry, entomology, and other 
fields of sciences with technology experts in robotics, sensors, 
artificial intelligence, materials, supply chain logistics, and energy 
systems to solve the today's complex problems in agriculture. Much like 
the biomedical revolution, it is the integration of multiple 
disciplines into a single project that can lead to transformative 
innovation that improves productivity, food safety, and ecosystem 
services while also giving rise to new businesses. Examples of such 
multidisciplinary projects include:

   James Rogers studied flexible solar cells at UC Santa 
        Barbara and Lawrence Berkeley National Laboratory. A radio 
        program on world hunger gave the materials scientist his 
        ``aha!'' moment in 2012. His work on thin-film polymers from 
        solar cells, coupled with information from UC Cooperative 
        Extension, led to an invisible, edible and tasteless barrier 
        that can protect food crops and dramatically improve longevity 
        of produce freshness--using waste plant parts often left on the 
        farm. Apeel Sciences now supports 71 employees and hits shelves 
        this summer, when some of the world's largest avocado producers 
        start using it.\3\
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    \3\http://apeelsciences.com/.

   The European Grapevine Moth (EGVM) was first detected in a 
        Napa County in 2009, but quickly spread throughout the state, 
        leading to quarantine restrictions and a mass effort to 
        determine pest numbers through trapping. Quick collaboration 
        between University of California wine grape specialists, local 
        agricultural officials, state and Federal Government agencies, 
        and vineyard operators, helped identify the problem and 
        recommend a course of action leading to complete eradication. 
        Solutions included mating disruption techniques, vector 
        analysis and targeted insecticides to kill the insect. The last 
        EGVM detection in California was June 2014.\4\
---------------------------------------------------------------------------
    \4\ Fitchette, Todd, ``California eradicates the European grapevine 
moth'', Western Farm Press, August 18, 2016, http://
www.westernfarmpress.com/grapes/california-eradicates-european-
grapevine-moth.

   Central Valley AgPLUS Food and Beverage Manufacturing 
        Consortium\5\ focuses on expanding opportunities along the 
        farm-to-fork supply chain, including initiatives to minimize 
        waste, improve distribution of foods, and contribute 
        significantly to increased trade, jobs and economic growth. 
        Multidisciplinary research at UC Davis has resulted in new 
        ``smart'' technology for food-processing facilities. 90% of 
        water & chemicals from each cleaning cycle is captured and 
        processed for future use in the complex, eventually being used 
        as many as ten times.\6\
---------------------------------------------------------------------------
    \5\http://cvagplus.org/.
    \6\http://wineserver.ucdavis.edu/about/facilities/Jess-S-
Jackson.html.

   CropManage\7\ is an UC ANR online database-driven tool that 
        assists growers and farm managers in determining water and 
        nitrogen fertilizer applications on a field-by-field basis. The 
        software automates steps required to calculate irrigation and 
        Nitrogen fertilizer needs. The web application also helps 
        growers track irrigation schedules and nitrogen fertilizer 
        applications on multiple fields and allows users from the same 
        farming operations to view and share data.
---------------------------------------------------------------------------
    \7\http://ucanr.edu/blogs/cropmanage/
index.cfm?tagname=CropManage%203.0.

    While these types of good news research projects are always 
welcome, much of this accomplishment could not be achieved without the 
underlying research infrastructure, provided through capacity funds, 
being available to support projects funded by competitive grants. On a 
different, but related subject, one potential solution to deepening 
concerns over access to a trained workforce for the food and 
agriculture sectors is a much broader utilization of 4-H programs. This 
important youth development activity can serve as the beginning of a 
pipeline directing both rural and urban youth to pursue higher 
education with the potential for careers in food and agriculture--one 
example of how capacity funding through Extension supports ongoing 
programs that are interconnected to the workforce pipeline, as well as 
other needs for the entire food system.
    NIFA recently commissioned TEConomy Partners to conduct a national 
survey on ``. . . whether capacity funding remains a productive model 
for supporting academic institution-based research and Extension in the 
21st century?'' The findings are strong and unequivocal in their 
impact: financial leveraging through matching state and local funds of 
at least $1.86 per $1 Federal sustains the specialized personnel and 
scientific facilities and instruments, research station infrastructure, 
and Extension operations needed for complex agricultural and associated 
research programs; generates significantly higher volumes of 
publications; provides flexibility to fund rapid response to 
emergencies or emerging issues; allows long-term research, leading to 
improved crop and livestock management; and provides a base of support 
to successfully vie for competitive grants across all sizes of 
institutions and Federal, state, and local agencies.\8\ For example, 
about one in six patents in agriculture across the U.S. are based on 
innovations resulting from Federal capacity funds.
---------------------------------------------------------------------------
    \8\National Evaluation of Capacity of Programs. Quantitative and 
Qualitative Review of NIFA Capacity Funding. TEConomy Partners, LLC. 
https://nifa.usda.gov/sites/default/files/resource/
NIFA%20Capacity%20Funding%20Review%20-%20TEConomy%20Final%20Report.pdf 
 
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    The infrastructure in most land-grant universities is aging, 
inadequate, and, in many cases, obsolete. A national study of capital 
facilities and deferred maintenance recently documented the magnitude 
of the infrastructure problem that threatens to further erode the 
United States' preeminent role in global food and agriculture. The 
conclusions from this Sightlines LLC Study\9\ on the age of the 
buildings, the lack of capital investment over time, and the levels of 
deferred maintenance needs are sobering--the total deferred maintenance 
cost is at least $8.4 billion. For the United States to remain a world 
leader in food and agricultural research, this aging infrastructure 
problem must be addressed.
---------------------------------------------------------------------------
    \9\A National Study of Capital Infrastructure & Deferred 
Maintenance at Schools of Agriculture. Sightlines, LLC. http://
www.aplu.org/projects-and-initiatives/agriculture-human-sciences-and-
naturalresources/DeferredMaintenance_SchoolsofAg.pdf.
---------------------------------------------------------------------------
    Given the size of the need, coupled with current goals to reduce 
Federal domestic spending, many fear that there will be little appetite 
to fund this issue within the 2018 Farm Bill. Given that, there is a 
great deal of interest is seeing these research facilities included 
within any infrastructure bill that the current Administration may 
offer. However, it is difficult to anticipate what requirements might 
be added to accommodate the interest in attracting private investment 
to and federally-funded infrastructure projects. Typically, in these 
models, the private investor requires strong assurance such as a 
reliable revenue stream from tuition or bonds or some form of commerce 
to leverage their risk. This is unlikely to be a model that will work 
well for research facilities.
    It will be important for Members of Congress to hear from leaders 
in public agricultural colleges who request that research, teaching and 
Extension facilities at public universities be included in the public 
infrastructure projects eligible for any Federal program. Dealing with 
the deferred maintenance of these facilities is of paramount need and 
should be given strong consideration for new funding in the 2018 Farm 
Bill. To stretch such dollars, it would be reasonable to require that 
matching funds be required to receive Federal funds, similar to 
language in the Research Facilities Act.\10\
---------------------------------------------------------------------------
    \10\Research Facilities Act [Act of July 22, 1963, Public Law 88-
74, 77 Stat. 90] [As Amended in P.L. 113-79, Enacted February 7, 2014].
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    We are certainly willing to help carry a share of this load; as 
example, UC ANR is currently pursuing $35 million in bonds to couple 
with approximately $10 million from our reserves to deal with the 
greatest needs at our facilities. This amount will bring us to a 
functionally adequate level; it will not allow us to provide the 21st 
century, state-of-the-art research facilities that are needed to truly 
tackle the complex challenges we face today and in the future. To 
pursue that need we are also:

   Restructuring how our facilities are managed and ensuring 
        that recharge rates move closer to true cost accounting. This 
        allows reduced expenditure on updating and maintaining 
        equipment and can optimize use of the equipment.

   Enhancing administrative collaboration between the campus 
        Deans and UC system-wide leadership to coordinate institutional 
        matches in support of major extramural grants.

   Expanding the role of the Technology Management and 
        Corporate Relations division to provide additional support in a 
        variety of ways ranging from education and outreach programs to 
        commercialization through patenting, licensing and 
        entrepreneurship. These commercial partnerships can assist in 
        augmenting research funds and opportunities.

   Reinvesting indirect funds into the research enterprise to 
        update facilities and equipment as able and thereby improve 
        competitive advantage for research contract and grants and 
        exceptional research recruitments.

    In addition to these initiatives, we are also expanding and 
formalizing partnerships to better connect the state's farmers with 
each other and with science-based information sources to assure the 
sustainability of the state's agricultural systems. To leverage 
existing resources and better develop synergies among technical 
assistance providers, representatives of UC ANR, UC Davis, the 
California Department of Food and Agriculture, California Farm Bureau 
Federation, California Association of Resource Conservation Districts, 
and USDA Natural Resources Conservation Service (NRCS) recently signed 
a formal agreement to form the California Farm Demonstration Network. 
One early action from this partnership is that UC ANR and USDA NRCS are 
developing shared positions to ensure coverage on agronomic sciences in 
key crops. We are also exploring how to ensure that science developed 
by UC ANR can be quickly adopted into the USDA NRCS Field Office 
Technical guide, making it much more available for implementation by 
farmers and landowners. One way the 2018 Farm Bill can assist this 
partnership is to include provisions in the Conservation Title that 
encourage preference of Cooperative Extension to serve as Technical 
Service Providers.
    In closing, there are several specific recommendations on various 
farm bill provisions that we will offer as the legislative process 
unfolds. However, I would be remiss not to mention four programs 
especially important to California. Those include:
Specialty Crop Research Initiative (SCRI) 7 U.S.C. 7632
    Congress provided $55 million in mandatory funding each fiscal year 
for non-citrus research for FYs 2014-2018. SCRI is important to 
California's agricultural research enterprise as nearly all of 
California's crops are specialty crops and over 50 percent of the 
nation's fruits and vegetables are grown here. Additionally, the 2014 
Farm Bill created the SCRI Citrus Disease Research and Extension (CDRE) 
program to combat Huanglongbing (HLB), which is a bacterial disease 
spread by the Asian Citrus Psyllid (ACP). HLB is currently ravaging 
Florida's citrus industry and has the potential to devastate Texas's 
and California's citrus industries as well. Congress provided $25 
million per year for FYs 2014-2018, for a total of $125 million. Our 
recommendations are:

   Reauthorize CDRE and maintain mandatory funding level of $25 
        million per fiscal year.

   Reauthorize SCRI and maintain mandatory funding level for 
        SCRI at $55 million per fiscal year.

   Within 7 U.S.C. 7632(h), strike the preference for ``multi-
        state'' in how grants are prioritized. Many of the specialty 
        crops grown in California, such as tree nuts, dates, and 
        avocados, are not grown in any other state. Partnering with 
        institutions in other states is rarely feasible and often 
        impossible. This ``multi-state'' language can similarly harm 
        other states with similar circumstances and is fundamentally 
        unfair.
Education Grants for Hispanic-Serving Institutions 7 U.S.C. 3241
    These competitive grants support STEM education programs in the 
food and agricultural sciences at institutions with at least 25 percent 
Hispanic enrollment. The farm bill has authorized the program at $40 
million per fiscal year, but historically it has received 
appropriations of $9-$10 million each fiscal year. This rapidly growing 
segment of the U.S. population will be vital to efforts to fill 
workforce needs in every aspect of the food and agricultural sectors. 
Our recommendation:

   Reauthorize the program and at $40 million per fiscal year 
        and work with appropriators to increase annual appropriations.
Sec. 10007 & National Clean Plant Network (NCPN) 7 U.S.C. 7721
    The goal of the Sec. 10007 Farm Bill program is to ``prevent the 
introduction or spread of plant pests and disease that threaten U.S. 
agriculture and the environment [ . . . ] [the Animal and Plant Health 
Inspection Service] APHIS provides funding to strengthen the nation's 
infrastructure for pest detection and surveillance, identification, and 
threat mitigation, while working to safeguard the nursery production 
system.'' The 2014 Farm Bill significantly increased mandatory funding 
for Sec. 10007, providing $62.5 million in FYs 2014-2017 and $75 
million in FY 2018 for a total of $325 million. Our recommendations:

   Reauthorize NCPN and increase mandatory funding levels from 
        $5 million per fiscal year to $6.5 million. UCR is home to the 
        Citrus Clonal Protection Program (CCPP), which is part of NCPN. 
        Since 2010, CCPP received over $4.4 million in NCPN funding 
        from FY 2010-2016.

   Reauthorize Sec. 10007 and maintain mandatory funding level 
        of $75 million per fiscal year.
Specialty Crop Block Grants 7 U.S.C. 1621
    The Agricultural Marketing Service (AMS) Specialty Crop Block Grant 
Program (SCBGP) is designed to enhance the competitiveness of specialty 
crops. Each year, the state Departments of Food and Agriculture submit 
proposals to AMS to receive allocated pass-through funding ($22.4 
million in FY 2016) for which land-grant universities are eligible to 
apply. Our recommendation:

   Reauthorize SCBGP and maintain mandatory funding of $85 
        million per fiscal year.

    Faculty and staff at land-grant universities across the nation 
recognize that their work takes place on behalf of a greater good, a 
broader goal, and a common vision that is much bigger than their 
individual achievements. Members of this House Committee on Agriculture 
can be confident that every dollar of Federal investment authorized by 
the 2018 Farm Bill and expended at land-grant universities will be a 
wise investment. That investment is guaranteed to be leveraged further, 
and to spawn innovation and discovery that will be translated into 
solutions to improve the lives of U.S. citizens. I thank you for this 
opportunity to provide testimony.

    The Chairman. Thank you. Doctor.
    Dr. Hill, 5 minutes.

     STATEMENT OF WALTER H. HILL, Ph.D., DEAN, COLLEGE OF 
 AGRICULTURE, ENVIRONMENT AND NUTRITION SCIENCES; VICE PROVOST 
               FOR LAND-GRANT UNIVERSITY AFFAIRS;
  RESEARCH DIRECTOR, USDA EVANS-ALLEN RESEARCH AND DIRECTOR, 
                 GEORGE W. CARVER AGRICULTURAL
          EXPERIMENT STATION; ADMINISTRATOR, TUSKEGEE
           UNIVERSITY COOPERATIVE EXTENSION, TUSKEGEE
                    UNIVERSITY, TUSKEGEE, AL

    Dr. Hill. Yes, and good morning. Chairman Conaway, Ranking 
Member Peterson, and Members of the Committee, I come before 
you today on behalf of the entire land-grant university system, 
and we thank you for the opportunity to speak before you on 
food and agriculture at 1890 land-grant universities.
    August 30, 2015, Congress recognized the 125th anniversary 
of the signing of the second Morrill Act, which created the 
historically black land-grant universities. Today, these 
universities are an integral part of the Board on Agriculture 
Assembly of the Association of APLU, and we endorse the APLU 
farm bill recommendations and budget priorities.
    I want to say that we boldly assert that men and women of 
talent and ability, regardless of their socioeconomic 
condition, can contribute to the common good through hard work 
and the opportunity to develop and prosper. In this regard, we 
want to point to several budget items.
    First of all, the 1890 land-grant university capacity 
funding, and 1862 capacity funding, we fully support that, and 
we want you to take note of the fact that the legislation 
requires the 1890s have 30 percent of what the 1862s have for 
research, and 20 percent for extension. We have not made that, 
so please take a look at that in the coming year to get us to 
full partners based on what Congress has done and said before.
    The second one is the 1890 Capacity Building Grant Program. 
For 100 years, the 1890s received minimum or no funding after 
having been established for research or research facilities. 
The Capacity Building Grants Program is trying to make up for 
that. It actually was conceived in brilliance because it is 
competitive. It brings out the best of us, it addresses the 
nation's priorities, and critical is that it brings in the 
partners; so other universities, producers, private-sector are 
integral as we do that, get better in our competitiveness. We 
are finding ourselves becoming more competitive in the overall 
competitive grants program, not only with USDA but also NSF and 
NIH. So that is one we want to keep and actually strengthen.
    Then the 1890 Facilities Program, again, after 100 years, 
you are in a race with 100 laps, and you begin and the other 
partner is already 100 laps ahead. This is critical that we 
have this small investment. It is really a tiny amount of 
money, but it goes an extremely long way in refining our labs, 
and what does that do. When I go and partner with California or 
Texas, or Davis or Ohio, Illinois, Minnesota, those scientists 
now partner well with us because we have better facilities, it 
also attracts better scientists.
    In terms of the APLU Deferred Maintenance and 
Infrastructure program, we are 100 percent in support of that 
program. There is one issue around that. Not even all of the 
1890s have state matching funds, most 1862s have substantially 
more. When it comes to facilities, it looks like this 
initiative, as my colleagues have said, is going to require 
state matching, private matching. For the 1890s to be in that 
ball game, we are going to have to figure out a formula where 
we might partner and leverage so that we can all benefit and 
have cutting-edge facilities in that regard. And we can do it. 
We have done some great things in Alabama partnering, and we 
could even exemplify that across the nation if need be.
    The 1890 Centers of Excellence, just want to say after 125 
years we all came together. It has been a critical time as 
scientists, came up with three excellent concepts, received $2 
million to fund those for all 18 states, and we would just 
challenge you to look at the record of what we accomplished 
with that small amount of money. Had we received the $35 
million we requested, or have some section more than that, we 
would be magnificent. And the results are national in scope, 
not just regional.
    Congressman Scott has requested through H.R. 51, a $19 
million scholarships for these schools.
    Now, let me just say, in terms of farmers, aggressive, 
technology-savvy farmers coming out, African American, other 
minorities, in terms of all the career areas where the private 
industry is crying because they don't have the diversity, this 
would be some of your best-spent dollars, because you already 
have the dynamic going. Now that we have funds to attract the 
engineers, the students who have different capabilities and 
interests to focus in on agricultural problems.
    I just want to close by saying that Congressman Justin 
Morrill, one of the founders of the Republican Party, and the 
father of the land-grant institutions, established the second 
Morrill Act and included conditions that former slaves, African 
Americans, would not be discriminated against and be included 
in the U.S. land-grant university higher education system. 
Let's keep that going and improve on it.
    Thank you.
    [The prepared statement of Dr. Hill follows:]

     Prepared Statement of Walter H. Hill, Ph.D., Dean, College of 
Agriculture, Environment and Nutrition Sciences; Vice Provost for Land-
                                 Grant
 University Affairs; Research Director, USDA Evans-Allen Research and 
      Director, George W. Carver Agricultural Experiment Station;
   Administrator, Tuskegee University Cooperative Extension, Tuskegee
                        University, Tuskegee, AL
    Chairman Conaway, Ranking Member Peterson, and Members of the 
Committee, on behalf of Dr. Kent J. Smith, Jr., President, Langston 
University and chair of the 1890 Council of Presidents; Moses A. Kairo, 
Chairperson of the Association of 1890 Research Directors (ARD) and Dr. 
Carolyn Williams, Chairperson of the Association of 1890 Extension 
Administrators (AEA) and the entire 1890 Land-Grant Community, I would 
like to thank you for this opportunity to speak about research in food 
and agriculture at the 1890 land-grant universities.
    I am Dr. Walter A. Hill, the Vice Provost and Dean of the College 
of Agriculture, Environment and Nutrition Sciences at the historic 
Tuskegee University in Tuskegee, Alabama. Within the educational and 
race equity context of the Morrill Acts of 1862, 1890 and the 1994 
expansion; I serve local, regional, national and international 
communities; I have been committed to the mission of the 1890 land-
grant universities for 37 years. I have taught and continue to teach 
undergraduate and graduate students from the rural deep American South, 
Black Belt, urban centers and international students from South 
America, Africa, the Middle East and the Caribbean to engage in 
research, agricultural, nutrition and science projects. My passion for 
improving plant-environment relationships for sustainable agriculture 
and advanced life support systems and aiding small and historically 
disadvantaged farmers and rural communities also comprise collaborating 
with residents, farmers, students and building integrated academic 
research and consumer-community-building coalitions.
    In addition, my career in agriculture education includes working as 
the Director of the 1890 Land-Grant Research and Extension Programs, 
the George Washington Carver Agricultural Experiment Station, founder 
and director of the Carver Integrative Sustainability Center and 
project director of the Wal-Mart Foundation-sponsored Sustainable 
Agriculture Consortium for Historically Disadvantaged Farmers. I am 
also the former Principal Investigator for the 1890 Land-Grant 
University 125th Anniversary Center for Innovative and Sustainable 
Small Farms, Ranches and Forest Lands.
    There are three 1890 land-grant universities in the state of 
Alabama from whence I live and work; Alabama Agricultural and 
Mechanical University, Auburn University and Tuskegee University. It is 
important to note, August 30, 2015, the United States Senate recognized 
the 125th Anniversary of the signing of the Second Morrill Act which 
created 19 historically Black land-grant universities. These 
historically Black institutions are Lincoln University, Alabama 
Agricultural and Mechanical University, Alcorn State University, the 
University of Arkansas at Pine Bluff, Alabama Agricultural & Mechanical 
University, Prairie View Agricultural & Technical University, Southern 
University, Virginia State University, Kentucky State University, the 
University of Maryland-Eastern Shore, Florida Agricultural and 
Mechanical University, Delaware State University, North Carolina 
Agricultural and Technical University, Fort Valley State University, 
South Carolina State University, Langston University, Tennessee State 
University, Central State University, West Virginia State University 
and Tuskegee University.
    I have intentionally shared the list of historically Black land-
grant universities and my work experience with this distinguished 
Committee, only to emphasize the critical importance for U.S. 
universities to teach agriculture, engineering, science, and nutrition 
to its citizens. Within the context of the history of former slave 
states and equitable education for all citizens of the United States, 
it is an honor for me to represent the 1890 land-grant universities and 
in particular the 19 historically Black institutions because--today in 
the 21st century, there is a dire necessity for all U.S. institutions 
of higher learning, to work in unity for the purpose of achieving 
educational progress, agricultural assets and digital footprints for 
agribusinesses, especially in rural and small communities.
    Today, 1890 land-grant universities are proactive members of the 
Board on Agriculture Assembly of the Association of Public and Land[-
g]rant Universities (APLU) and we have consistent hands on role in the 
development of the APLU Board's proposed farm bill recommendations. We 
endorse APLU's budget priorities, concerning funding needs and the 
necessity to better integrate science and education programs into all 
action and policy activities of the United States Department of 
Agriculture (USDA). I will take this collegial occasion to emphasize 
research result oriented information and data provided by historically 
Black land-grant universities and introduce additional issues of 
concern specific to 1890 land-grant universities in the new 2018 Farm 
Bill rewrite legislation.
    The Second Morrill Act passed by the Fifty-First U. S. Congress 
served the educational needs of African American communities and 
established the 1890 Land-Grant Universities. Although the Second 
Morrill Act became law during times of great suffering and struggle for 
African Americans, the 1890 Land-Grant Universities survived and were 
productive; despite overwhelming odds, due to the commitment and vision 
of many African American leaders within higher education and some white 
visionary supporters. The same spirit of sacrifice and concern for 
students and communities, exhibited by African Americans leaders of the 
1890 Land-Grant Universities, embraces the faculty and administrators 
today in 2017. This spirit, derived from the demographic philosophy of 
these institutions and the conditions of their founding, is respected 
worldwide. The general philosophy of the 1890 land-grant universities' 
administrators boldly asserts, ``. . . men and women of talent and 
ability, regardless of their socioeconomic condition, can contribute to 
the common good through hard work and the opportunity to develop and 
prosper.''
    At the onset, I would like to thank you and the Committee for your 
dedication and support to America's farmers and ranchers. Your support 
of the 1890 land-grant universities promotes the equity, opportunity, 
productivity and profitability of our farmers and the health and safety 
of all Americans.
Key Issues for the 1890 Land-Grant Universities
    On behalf of my 1890 land-grant universities colleagues, I am 
honored to present the following key issues to you:

  1.  The critical need for increased investments; and

  2.  Appropriate funding mechanisms.
The Critical Need for Increased Investments
    I am deeply heartened by the recent calls to increase 
significantly, the investment in agricultural research, extension and 
education. It is remarkable that so many diverse interests are coming 
together with an understanding of an urgent need to reinvest in the 
science and education base serving our farmers and our communities. It 
is important to note, over the last several decades, according to USDA/
Economic Research Service, the U.S. agricultural sector has sustained 
impressive productivity growth. Our nation's agricultural research 
system, including Federal-state public research as well as, private-
sector research, has been the key driver of this growth. Economic 
analysis finds strong and consistent evidence that investment in 
agricultural research has yield high returns per dollar spent. These 
returns included benefits not only to the farm sector, but also to the 
food industry and consumers in the form of more abundant commodities at 
lower prices. There is consensus that the payoff from the government's 
investment in agricultural research is high. We know, the return on 
investment in agricultural research is $20 for every $1 spent.
    The 1890 land-grant universities look forward to working with all 
the farm and interest groups who are working to enhance our abilities 
to serve their needs. As we support critically needed investments in 
agricultural research, extension and teaching, it is essential that the 
specific funding needs facing the 1890 land-grant university community 
also be addressed. Now, I would like to convey some of our specific 
recommendations to meet the unique needs of the 1890 land-grant 
universities and the communities we serve.
    The 1890 Cooperative Extension programs are comprised of a broad 
range of science based educational efforts, which have been proven to:

  1.  Strengthen the food and agricultural industry, particularly small 
            and limited resource farmers, by developing agricultural 
            production systems that are efficient, sustainable and 
            highly competitive in the global economy.

  2.  Enhance the health of families through diet and nutrition and 
            food safety education and their economic well-being through 
            practical financial education.

  3.  Enhance youth skills in science, technology, math, citizenship 
            and leadership.

  4.  Foster strong, stable communities through leadership development 
            efforts and encouraging entrepreneurship.

    103 years ago the Smith Lever Act established the effective 
Cooperative Extension Service. For the more than a century, the 
Cooperative Extension has developed transformation programs that have 
improved the economic viability of small-scale agriculture and reduced 
the decline of small minority-owned farms from century to century, 
including today in the 21st century.
    Programs emphasizing agricultural diversification, marketing 
strategies and risk management have been of paramount importance to 
this client group. Many of the small farmers have diversified their 
operations to include vegetable production, fruits, specialty crops and 
animals to increase their cash flow. For example, the 1890 land-grant 
university, North Carolina Agricultural and Technical University (North 
Carolina A&T) developed the Natural Hog Growers Association and 
increased its association's membership hog-sale income by nearly a 
million dollars in North Carolina and signed a contract with the Whole 
Food Market. In addition, 1890 land-grant university, Florida 
Agricultural and Mechanical University's (Florida A&M) development of 
the Master Meat Goat Herdsman Program has saved producers over $16,250, 
annually, in the state of Florida's veterinarian and production costs.
    In Alabama, farmers participating in a comprehensive program in 
record keeping, fiscal management, production management and farm 
planning have become producers that are more efficient. It was reported 
that 13 farmers acquired USDA farm ownership loans in the amount of 
$2.6 million and ten acquired operating loans for nearly $1.0 million. 
Without this training, the farmers would not have qualified for the 
loans. Programs of this nature enabled the limited-resource farmers in 
Kentucky to increase their net farm income by $4,500.00.
Increase the Funding Base of 1890 Land-Grant University Capacity 
        Funding
    We fully support the reauthorization of capacity programs funding 
for both 1862 and 1890 land-grant institutions. The amount of capacity 
funds available to Second Morrill Act 1890 land-grant universities is 
lesser than the amount of funds made available to our colleagues 
categorized under the auspices of the First Morrill Act 1862 land-grant 
universities. Currently, the legislation requires that the funding base 
of the 1890 land-grant university formula research funding (Section 
1445) should be set at an amount equivalent to but not less than 30% of 
the 1862 land-grant university capacity funding (The Hatch Act of 
1887). The 1890 land-grant universities' research program (Evans-Allen) 
currently received 22% of the 1862 land-grant universities' capacity 
funding.
    Therefore, it is within the context of educational equity, that we 
are requesting the authorized amount of 30 percent. Similarly, the 1890 
Cooperative Extension formula funding (Section 1444) is currently set 
at an amount equivalent to but not less than 20% of the 1862 
Cooperative Extension formula funding (Smith Lever Act signed May 18, 
1914). Within the historical context of the purpose of Smith Lever 
which established the USDA Cooperative Extension Service; for us, the 
1890 Second Morrill Act land-grant institutions to be able to implement 
what was written in the 125th 1890 Land-Grant University Anniversary 
Resolution announced by U.S. Senator Sherrod Brown to ``disseminate 
information about agriculture and economics.'' We are requesting to 
receive the authorized amount of 20 percent because the funding will 
financially help the 1890 land-grant universities fulfil their duty to 
help the United States train agricultural leaders and enhance 
agricultural development for the nation.
    As an example of the importance of capacity funding, USDA/NIFA 
(National Institute of Food and Agriculture)-funded researchers at 
land-grant university Prairie View Agricultural & Mechanical University 
(Prairie View A&M) has created an agricultural robot capable of carry 
multiple sensors, including one that can detect crop height, a multi-
spectral camera, and hyperspectral radiometer for processing 
information from across the electromagnetic spectrum. Robots in 
agriculture including self-driving tractors, drones and other machines 
that perform tasks such as precision weeding and spraying, pruning 
vines in the wine industry, and herding cattle. Agricultural engineers, 
such as the ones at Prairie View A&M, with robotics knowledge are in 
high demand because of advanced robotics unmanned agricultural vehicles 
are becoming widely used in precision agriculture.
    NIFA-funded researchers at North Carolina A&T State University 
(N.C. A&T) have developed a safe, relatively simple technology for 
deactivating the allergenic proteins in whole roasted peanuts. The 
patented technology relies on treating whole roasted peanuts with 
various food-grade enzymes. Repeated laboratory trials using extracts 
from treated peanuts at N.C. A&T, as well as an initial clinical trial 
using skin-prick tests at the University of North Carolina at Chapel 
Hill, have shown promising results. Laboratory tests indicate 
allergenic proteins can be reduced by up to 98 percent. Researchers 
have also worked on applying the technology to wheat protein allergens. 
One of the greatest advantages of this technology is its potential to 
produce peanut products that can reduce the severity of allergic 
reaction in the case of accidental exposure.
    Estimates vary as to the numbers of people who suffer from peanut 
allergy, but health officials agree it is one of the most severe and 
prevalent food allergies. A report from the National Institute of 
Allergy and Infectious Diseases in 2010 reported that the numerous 
studies on the issue, some based on self-reports, estimate the 
prevalence of peanut allergy in the United States population ranges 
from 0.6 percent to 1.3 percent (2-4 million people). According to the 
American College of Allergy, Asthma and Immunology approximately 
400,000 children in the U.S. suffer from the allergy. Making matters 
worse for them, peanut allergy is rarely outgrown, unlike many other 
food allergies.
Reauthorize the 1890 Capacity Building Grant Program
    The 1890 Capacity Building Grants Program has played a critical 
role in helping us build our capacities in research, extension and 
teaching. This program has allowed us to attract new faculty, enhance 
our ability to conduct quality research, has enabled us to carry out 
needed curriculum development programs, and has permitted us to enhance 
the delivery of our extension and engagement programs. We also 
recommend that the authorized funding level for this program be 
continued.
    A $150,000 grant from NIFA's 1890 Capacity Building program helped 
Fort Valley State University create a bioinformatics curriculum where 
students learn to transform biological research into informational 
science. In this program, science, technology, engineering and 
mathematics (STEM) majors join with computer science majors to become 
competent bioinformatics programmers and gain hands-on experiences in 
writing algorithms and coding for biological problems. 
Bioinformaticians use computers to store, organize and analyze the vast 
amounts of data generated by scientific research.
Reauthorize the 1890 Facilities Grant Program
    We outstandingly recommend reauthorizing the 1890 Facilities Grant 
Program (Section 1447) at the authorized funding level. The 1890 land-
grant universities have a clear and immediate need to improve their 
academic, research and extension physical facilities. There is also an 
urgent need to adequately equip these facilities with 21st century 
state-of-the-art equipment. Years of limited resources have taken their 
toll on the institutions and needed improvements cannot be delayed. 
Meanwhile, modern technologies require updated and additional resources 
and modifications to existing facilities. Without the needed 
improvements and technology upgrades, it becomes more and more 
difficult to recruit and train the highest quality scientists and other 
educational professionals for the future. We therefore, urge your 
support of authorization for the 1890 Facilities Grant program.
APLU Deferred Maintenance and Infrastructure Program
    A recent Association of Public and Land-Grant Universities (APLU) 
audit (inclusive of 1862, 1890 and 1994 land-grant institutions and 
Hispanic-serving institutions) estimated $8.9 billion in deferred 
maintenance of mission-critical buildings, including classrooms and 
laboratories, animal and plant research houses/farms, greenhouses, and 
pilot facilities with a $29 million replacement value. Investments in 
academic research infrastructure would immediately create local jobs, 
conserve energy, and realize savings over time, in addition to 
improving research, education and extension outcomes. For the U.S. to 
remain the world leader in food and agricultural research, the aging 
infrastructure and deferred maintenance problem must be addressed. 
Requested is an infrastructure program that leverages, Federal, state 
and private-sector funds and benefits local, state, regional and 
national interests, as recommended by APLU.
Change the Carryover Provision for 1890 Extension Funding
    The 1890 land-grant universities can only carryover 20 percent of 
its Extension funding after 1 year while other capacity programs can 
carryover their funding at 100 percent for 1 or more years. The 20 
percent carry-over provision limits the flexibility needed for planning 
and expending the funding based on identified priorities. We are 
requesting that the carryover provision for 1890 Extension be changed 
from 20 percent to a carryover level that would be consistent with the 
carryover provision for other capacity programs such as Smith-Lever. 
This will provide the same carryover opportunity for Extension capacity 
funds for both 1890 and 1862 institutions.
Increase the Funding Base for McIntire-Stennis (Forestry) funding
    We recommend increased funding targeted to forestry issues 
(McIntire-Stennis) at the authorized level. Many of our institutions 
abide in states where forestry is a major agricultural industry and 
these institutions have forestry and natural resource programs that are 
germane to the forestry industry and applicable to the current program 
eligibility guidelines. For example, Tuskegee University offers the 
Pre-college Summer Program in Forestry, National Resources and Related 
STEM Areas for 7th and 8th graders and high school students. Each 
program creates an awareness of the educational and career 
opportunities that are available in Science, Technology, Engineering, 
Agriculture and Mathematics.
Nutrition Education Program (Expanded Food and Nutrition Education 
        Program)
    Nutrition education is important to the health and well-being of 
all families, but there is a tremendous need for this program for 
persons with limited income. EFNEP help individuals to improve their 
diets and change their food buying behavior. It is recommended that 
EFNEP be reauthorized at its current level of $90 million. 1890 land-
grant university, Southern University and Agricultural & Mechanical's 
(Southern University and A&M) Food Desert Project takes a critical look 
at the dual food issues of obesity and lack of access to nutritious 
food as issues being addressed through innovative programs at Southern 
University and A&M. Obesity and correlated health conditions have a 
$100 billion a year impact on the U.S. health care system, and Southern 
University and A&M is responding with an Extension-based initiative, 
``Eradicating Food Deserts in Neighborhoods through the Development of 
School Gardens.'' Three area schools and 500 students have been 
reached. The Nutrition Education Program is critical to all communities 
especially vulnerable people who live in the most economically 
impoverished rural, urban regions and neighborhoods which comprise the 
geographic locations of the 1890 land-grant universities.
Authorize the 1890 Centers of Excellence
    We recommend authorization of the 1890 Centers of Excellence at a 
funding level of $35 million per year. These Centers were developed and 
initiated in 2015 in recognition of the 125th Anniversary of the Second 
Morrill Act of 1890. They include: (1) Center for Innovative and 
Sustainable Small Farms, Ranches and Landowners (CISFRL), (2) Center of 
Excellence for International Engagement and Development (CEIIED), and 
(3) Virtual Center to Motivate and Educate for Achievement (MEA).
    In recognition of the 125th Anniversary of the Second Morrill Act 
of 1890, several USDA agencies committed $2 million to the 1890 land-
grant universities to support the former two centers. The goals of the 
Anniversary Centers are to substantially increase diversity in the STEM 
pipeline, increase profitability and jobs in under-served farming 
communities and enhance talent preparation related to global food 
security. The 1890 land-grant universities are working in an 
integrative fashion across multi-disciplines and in partnership with 
the private-sector, government and community-based organizations to 
make a difference and obtain measurable impacts on the lives of under-
served youth, farmers and developing communities who hold enormous 
potential. Although the funds from these USDA agencies were used 
prudently to support under-served small farmers and students at our 
institutions, these funds were woefully inadequate.
    Through the years, the 1890 land-grant universities have struggled 
with inadequate funding resources to meet the especially challenging 
needs of under-served communities. The proposed Centers of Excellence 
would be utilized to help address historical inequities of resources 
and to allow our institutions the opportunity to work collaboratively 
and synergistically to help our stakeholders while concurrently 
effectively competing for other funding resources. These Centers of 
Excellence would jump-start new initiatives on the 1890 land-grant 
campuses, particularly developing resources to provide practical 
solutions to improve job opportunities and the quality of life of 
citizens in the 1890 land-grant universities' regions and beyond.
    As I mentioned earlier, the Center for Innovative and Sustainable 
Small Farms, Ranches and Forest Lands (CISFRL) was initiated in 2015 as 
an outcome of the 125th Anniversary of the 1890 Land-Grant 
Universities. In its first year of operation, approximately 70 farmer 
clusters or cooperatives, including five or more owners, were created 
or operationalized in the seven states that initiated the CISFRL, based 
on competitive proposals. These clusters and cooperatives included 
hundreds of farmers, ranchers, and landowners. CISFRL has catalyzed 
farmers, ranchers and landowners working together with universities and 
the private-sector and state governments to leverage their strengths 
and resources by working with like-minded producers. Among their 
successes has been to obtain new markets (including large commercial 
retailers), who require larger quantities of produce delivered on a 
consistent basis than a small farmer can supply alone. The cluster 
approach (farmers working together) has enhanced GAP and food safety 
certifications, soil testing, pest management, irrigation, other 
sustainability practices and improved partnering with USDA agencies. 
Specific achievements after the first year of operation include:

   Increased marketing of vegetables to large commercial 
        retailers (Wal-Mart, Kroger);

   Increased irrigation capacity for vegetable production;

   Joint purchase of equipment for crop spraying and animal 
        pregnancy testing;

   Joint purchasing of coolers to increase the shelf life of 
        fresh produce and refrigerated trucks for transporting fresh 
        produce;

   Access to modern packing and shipping facilities;

   Conducted collectively over 80 workshops and conferences in 
        partnership with USDA agencies, community based organizations 
        for farmer training on FSA, NRCS, FS and APHIS programs and 
        modern technologies; and

   Trained and provided information to small and limited-
        resource land owners on forest health, pests, invasive species 
        and fire and disease control, and assisted in developing 
        management plans for 422 landowners.
Reauthorize the Outreach and Technical Assistance for Socially 
        Disadvantaged Farmers
    We recommend reauthorizing the Socially Disadvantaged Initiative 
(Section 2501) Program at a level not less than $20 million per year. 
This program allows the 1890 land-grant universities and other 
Community Based Organizations to work cooperatively directly in a 
sustained way with small farmers. We have had tremendous success 
providing training in risk management, record keeping, farm management 
environmental stewardship, and alternative enterprises and market 
development. We train small farmers to access new and alternative 
markets for their crops and animal commodities. This program has made a 
dramatic impact on increasing the economic viability and sustainability 
of these small and limited resource farmers. This critical program 
should be sustained and strengthened and other small farm programs 
should be established as a safety net for all such farmers in this 
category. Comparatively, this group of farming clientele has been 
vertically ignored in terms of specially targeted programs. We 
therefore, ask the Committee to rectify this oversight by providing 
sufficient funding for this program to provide sustained impact.
Authorize Student Scholarships for the 1890 Land-Grant Universities
    As introduced by Representative David Scott of Georgia, we request 
support for H.[R]. 51 to amend the National Agricultural Research, 
Extension, and Teaching Policy Act of 1977 to direct the Secretary of 
Agriculture to establish a grant program under which the Secretary will 
award $19 million per year ($1 million to each institution) for student 
scholarships. This scholarship program is needed to increase the number 
of young African American individuals seeking a career in the food and 
agricultural sciences and shall be provided with the caveat that such 
scholarship students shall commit to pursue a career in the food and 
agricultural sciences, including agribusiness, food production, 
distribution, and retailing, the clothing industries, energy and 
renewable fuels, and farming marketing, finance, and distribution. 
Agriculture critically needs a steady supply of diverse individuals 
with modern agricultural and scientific knowledge and training to 
support the agricultural industry and R&D enterprise. This requires an 
ability to translate complex technical knowledge to end-users, 
particularly farmers and livestock producers, while recognizing the 
local needs and constraints. According to a recent Purdue University 
study, the employment opportunities are tremendous for college 
graduates in food, agriculture, renewable natural resources and the 
environment; the demand for these graduates exceeds the supply by 39 
percent.
Appropriate Funding Mechanisms
    We would like to commend the leadership of USDA/NIFA and the Land-
Grant University community in the development of the new AFRI 
competitive grants program, America's flagship competitive grants 
program for the agricultural sciences. The Department staff and others 
went the extra mile to make sure that our institutions were fully aware 
of the new program and gave us the opportunity to compete as equal 
partners in the process. The 1890 Land-Grant Universities achieved some 
success, however, with enhanced support to increase our competitiveness 
we will do even better in the future.
    We recommend increased funding at a level of $418 million per year. 
While we support competitive grants, many of the programs that we 
provide need to be sustained over time. Short-term competitively 
awarded projects do not adequately serve the longer-term needs of the 
under-served populations that we serve. Long-term capacity funding 
funds provide the necessary sustained funding that is required to truly 
build capacity. Again, we support competitive grants, but it is not the 
only funding tool and it is not always the most effective mechanism to 
meet our needs and the needs of the people we serve in rural and urban 
communities.
Small Farms/Specialty Crops
    The researchers and extension specialists have focused their 
efforts of helping improve the quality of life and increasing the 
income/profitability levels of small and undeserved farm operators in 
the 1890 land-grant universities' regions and beyond, including an 
emphasis to increase the competitiveness of specialty crops and organic 
crops. Small farms make up 90 percent of the farm count and operate 
nearly half of the farmland, but only account for 24 percent of the 
production. The largest share of farm production, however, occurs on 
the large-scale family farms. According to the Economic Research 
Service and other researchers, specialty crops typically account for 30 
to 40 percent of the total value of U.S. crops, not an insignificant 
value.
    Even before the increased attention given to specialty crop issues 
in the 2008 Farm Bill, the 1890 land-grant universities have been 
assisting specialty crop producers to increase the quality of these 
products and to develop a market niche.
    Specialty crop issues often vary depending on the type of crop 
involved and the type of market in which they are sold. Among the crops 
important to producers that the 1890 land-grant universities' 
researchers and extension specialists have focused on include, but are 
not limited to, ethnic crops such as Brassica rapa cv. Bosai Chinensis 
(Bok choy), Amaranthus viridis Linn (Amaranth or Callaloo), and 
Hibiscus sabdariffa L. (Hibiscus or Jamaican Sorrel); energy beets; 
ginger; carrots; kale; specialty peanuts; grapes; watermelon; 
blueberries: vegetable soybeans (edamame); Indian, Chinese and Hispanic 
vegetable crops; sweet potatoes, southern peas, squash, and eggplant; 
mushrooms; and herbs.
    Among the issues important to producers that the 1890 land-grant 
universities' researchers and extension specialists have focused on 
include, but are not limited to, sustainable production practices, 
planting flexibility restrictions, irrigation programs, labor, food 
safety, marketing and trade patterns, integrative pest management, and 
risk management.
    With NIFA funding, researchers at Delaware State University have 
focused on the sweet potato as an alternative agriculture enterprise in 
Delaware. Sweet potato has become a popular crop for millions of people 
in Africa, Latin America and south-East Asia. It is a cheap source of 
carbohydrate and vitamins including vitamin A. In the USA, Louisiana 
and North Carolina are the largest producers of sweet potato. However, 
it is becoming popular in other parts of the country including 
Delaware. To develop suitable varieties in Delaware climate and soil, 
Delaware State University researchers started varietal trial during 
2012 and 2013 growing season at SORC. There were four varieties planted 
on sandy loam soil with pH 5-6.5 on the tilled bed of 3 width covered 
with black plastic. All varieties did well during 120 days of growing 
period in the state of Delaware. This research has demonstrated that 
sweet potato can be grown as alternative agriculture enterprises in 
Delaware. These four varieties are characteristically different for 
skin color, flesh color, taste and everyone can pick which they like.
    With NIFA funding, researchers at Florida A&M University have 
focused on ``biochar technology'' and its potential for sustainable 
agriculture and carbon sequestration, including small and specialty 
crop farms. Mitigating the anthropogenic increased atmospheric 
CO2 and environmental pollution are also major concerns of 
our society. Finding an economic and ecological feasible solution to 
those major problems is certainly not an easy task. However, the 
development of biochar technology may provide a promising means that 
contribute to the solutions of those global problems. Biochar 
technology turns portion of the plant materials produced every year 
into a ``charcoal'' form and a soil amendment. Biochar enhances soil 
water and nutrient holding capacity, reduces fertilizer use and its 
pollution to the environment. Biochar probably is the only viable 
technology so far that can significantly sequester atmospheric carbon 
and mitigates the anthropogenic effect on climate change. The findings 
revealed that showed that biochar as a soil amendment can increase soil 
productivity and sequester carbon to various degrees depending on the 
properties of the biochar and the soil receiving the treatment. 
Additional research is needed to fully realize the optimal use of the 
technology in various field conditions. The researchers at Florida A&M 
University have also initiated a design of a low-cost biochar 
production system that can facilitate the wide spread usage of the 
technology. Their research, education and outreach efforts revealed the 
benefits of biochar technology in enhancing agricultural productivity 
without increasing fertilizer use and in the meantime, sequestering 
carbon from the atmosphere.
    With NIFA funding, researchers at land-grant university, Tuskegee 
University are leading a consortium of universities that is addressing 
development of organic farming in southeastern states through 
education; conducting of research, and development of extension 
materials for farmers in the region; testing organic pesticides against 
major pests of southern peas, squash, sweet potato, and tomato; and 
providing site specific recommendations to organic growers through 
organized advanced multi-location, multi-state on-farm trials.
    Tuskegee University's Integrated Research and Extension programs 
with small farmer clusters and small farmer cooperatives have 
facilitated production and marketing vegetables to large commercial 
retailers to increase profitability and jobs. Successes have included 
adaptive irrigation and solar energy technologies to enhance production 
efficiencies, and partnering of small farmer clusters with medium sized 
farmers for consistency in produce quantity and quality delivered.
Conclusion: Investing in the Future
    In conclusion, I would like to thank the Committee for the 
opportunity to submit my testimony today on behalf of the Second 
Morrill Act and Smith Lever Act 1890 land-grant universities. The First 
Morrill Act was established in 1862, 1 year before President Abraham 
Lincoln issued the Executive Order of the Emancipation Proclamation 
(January 1, 1863) which changed the Federal legal status of enslaved 
Black people from slave to freed persons. Congressman Justin Morrill, 
one of the founders of the Republican Party and the Father of Land-
Grant Institutions established the First Morrill Act (1862) to create 
public colleges and universities and to provide quality education for 
all citizens of the United States. In fact, the Second Morrill Act 
(1890) included the condition that former slaves, African Americans 
would not be discriminated against and would be included in the U.S. 
Land-Grant University Higher Education System. Congressman Morrill 
said, quote:

          ``Having emancipated a whole race, shall it be said that 
        there our duty ends, leaving the race as cumberers of the 
        ground, to live or to wilt and perish? They are members of the 
        American family, and their advancement concerns us all. While 
        swiftly forgetting all they ever knew as slaves, shall they 
        have no opportunity to learn anything as freemen?''

    Within the historical context of Congressman Justin Morrill's 
concern, belief and vision for higher education in the United States, 
as well as, our collective institutions' contributions to educational 
development and leadership; we are looking forward to working with the 
U.S. House Committee on Agriculture and our colleagues in the 
university community, as we move through the reauthorizing of the 2018 
Farm Bill. Please, we urge you, to use this historic moment, this 
significant opportunity, to invest in the nation's 1890 land-grant 
universities and in the future of all farmers, communities and people 
we serve.

    The Chairman. Thank you, Dr. Hill.
    Dr. Tallant, 5 minutes.

  STATEMENT OF STEVEN H. TALLANT, Ph.D., PRESIDENT, TEXAS A&M 
             UNIVERSITY-KINGSVILLE, KINGSVILLE, TX

    Dr. Tallant. Good morning. I am Steven Tallant, President 
of Texas A&M University-Kingsville, and here today on behalf of 
the Hispanic Association of Colleges and Universities. Chairman 
Conaway, Ranking Member Peterson, my good friend and fellow 
south Texan, the Honorable Filemon Vela, and fellow Members of 
the House Agriculture Committee, thank you for the opportunity 
to speak with you today.
    The scarcity of Hispanic participation in agriculture-
related academic programs and professional ranks within the 
industry is made worse by the relatively low level of Federal 
agricultural investments in HSIs. This Committee recognized 
this disparity and included the Hispanic-serving agricultural 
colleges and universities authorizations in the previous farm 
bill. And I will refer to those as HSACUs from now on.
    A&M-Kingsville's enrollment has been over 60 percent 
Hispanic since the formation of the HSIs, and over 50 percent 
of our graduates in agriculture are Hispanic. A&M-Kingsville's 
agricultural students consistently win state and national 
awards. These awards reflect the commitment of our faculty, the 
excellence of our academic programs, and the diligence of our 
students to constantly strive for success. However, one area of 
concern is our aging agricultural research infrastructure. This 
problem has been highlighted at universities doing agricultural 
research across the United States.
    A&M-Kingsville has been working with the agricultural 
community since 1948. We have three agricultural centers of 
expertise; the Citrus Center, the Caesar Kleberg Wildlife 
Research Institute, and the King Range Institute for Ranch 
Management. Our Citrus Center has helped the industry recover 
from devastating freezes, and deal with multiple disease 
threats like greening and phytophthora. The other centers help 
our livestock and wildlife industries deal with cattle tick 
fever and other issues. These industries represent over $5 
billion in Texas. Our alumni have gone on to manage 
multimillion dollar agricultural enterprises and Federal 
agencies to help advance agriculture.
    Today, our faculty and students participate in over $12 
million in annual agricultural research expenditures. This 
includes over $5 million from USDA programs, and we leverage 
these funds to attract an additional $7 million annually. These 
research dollars have made dramatic improvement on our 
retention, graduation rates, and participation in graduate and 
other professional degrees. We have actively participated in 
competitive grant programs, including USDA grants, and ten 
percent of our student participants in these programs have gone 
on to complete graduate and professional degrees.
    I would like to include one example. Veronica Acuna was one 
of our master students, funded by you through an HSI grant. She 
went on to complete her Ph.D., and today, Dr. Acuna is a 
faculty member at our Citrus Center where she researches 
critical issues like Citrus Greening and water use. Last year, 
she was awarded the Rising Star Award by our alumni 
association. All of this is possible because of your 
investments in HSIs.
    This Committee has long supported the value of agricultural 
research through the development of the land-grant system and 
minority-serving agricultural research programs. They have also 
recognized the potential value that HSACUs can contribute to 
agricultural research. We need this cooperative approach, and 
we ask the Committee to maintain the authorizations and funding 
level for the six HSACU programs included in the 2014 Farm 
Bill. To truly achieve the objective of increasing Hispanics in 
agriculture, we also urge Members of this Committee to work 
with your colleagues, particularly those on the Appropriations 
Committees, to provide the funding needed to carry out these 
programs effectively. Given the low number of Hispanics in 
agriculture-related careers, the creation of a pipeline of 
researchers and research at HSACUs at all levels would 
strengthen the research capacity of these institutions and help 
meet employer demands. Hispanic-serving institutions are the 
most important pipeline for increasing Hispanic success in 
higher education and the involvement in agricultural research 
opportunities. HSACUs can better serve the nation if the 
necessary investments are made. This was the intent of this 
Committee when HSACUs were authorized in 2008, and I believe 
this should be a priority in the next reauthorization of the 
farm bill.
    Thank you.
    [The prepared statement of Dr. Tallant follows:]

 Prepared Statement of Steven H. Tallant, Ph.D., President, Texas A&M 
                 University-Kingsville, Kingsville, TX
Introduction
    Chairman Conaway, Ranking Member Peterson, our Representative, the 
Honorable Vela of Texas' 34th Congressional District, and fellow 
Members of the House Agriculture Committee thank you for the 
opportunity to speak with you today about Hispanic-Serving Institutions 
(HSIs), the unique opportunities offered by Hispanic-Serving 
Agricultural Colleges and Universities (HSACUs), and ways to streamline 
and prioritize agricultural research programs as part of the next 
reauthorization of the farm bill.
    My name is Steven H. Tallant and I serve as President Texas A&M 
University-Kingsville (A&M-Kingsville). Prior to joining A&M Kingsville 
in 2008, I served as provost and vice chancellor for academic affairs 
at the University of Wisconsin-Eau Claire. Before my academic career, I 
served twenty years in the military with a stint as the Chief of Air 
Force Family Research based at the Pentagon.
Texas A&M University-Kingsville
    A&M-Kingsville, chartered in 1917 but not opened until 1925 because 
of America's entry into World War I, the University is the oldest 
continuously operating public institution of higher learning in South 
Texas. After years of growth and expansion, the University became a 
member of the Texas A&M University System in 1989. Most of A&M-
Kingsville's approximately 9,200 students come from South Texas, but 
there is wide diversity in the population, with students from more than 
35 states and more than 43 countries. Seventy-four percent of students 
are undergraduates. Ethnically, the campus reflects the demographics of 
the area, with 62 percent of the students Hispanic, 27 percent white, 
and five percent African American.
    With a focus on teaching and research, A&M-Kingsville boasts 
several renowned research centers that evolved from the natural 
environment of the region. The Caesar Kleberg Wildlife Research 
Institute, Citrus Center, King Ranch Institute for Ranch Management and 
National Natural Toxins Research Center are well-known throughout the 
world. In the past 6 years, new centers such as the Eagle Ford Center 
for Research, Education and Outreach and the Institute of Architectural 
Engineering Heritage were created in response to regional needs and are 
well on their way to achieving widespread recognition.
    A&M-Kingsville is a member of The Texas A&M University System, 
although an independent campus and not part of Texas A&M University 
land-grant status. The A&M System is one of the largest systems of 
higher education in the nation, with a budget of $3.8 billion. Through 
a statewide network of 11 universities, seven state agencies. The A&M 
System educates more than 131,000 students and makes more than 22 
million additional educational contacts through service and outreach 
programs each year. Externally funded research expenditures exceed $820 
million and help drive the state's economy.
    As President of A&M-Kingsville and as a long-standing member of the 
USDA/Hispanic Association of Colleges and Universities (HACU) 
Leadership Group, I have had the opportunity to develop a working 
relationship with the Department of Agriculture (USDA). The Leadership 
Group is a national body of USDA and HSI leaders appointed by the U.S. 
Secretary of Agriculture and the President and CEO of HACU. Its purpose 
is to recommend policies and programs to strengthen USDA partnerships 
with HSIs and provide leadership and strategic direction to the USDA 
Hispanic-Serving Institutions National Program Office.
Hispanic-Serving Institutions
    HSIs are defined in Title V, Part A of the Higher Education Act, as 
amended, as accredited, degree-granting, public or private nonprofit 
institutions of higher education with 25% or more total undergraduate 
Hispanic full-time equivalent (FTE) student enrollment. In addition, 
over 50% of the students must qualify for Federal aid.
    A&M-Kingsville is one of 472 HSIs in 19 states and Puerto Rico as 
of the 2015-2016 academic year. HSIs are 13.8 percent of the total 
nonprofit colleges and universities, yet enroll 23.4 percent of all 
students and 62.3 percent of all Hispanic students in higher education. 
The number of HSIs is rapidly growing, from 137 institutions in 1990, 
to 229 in 2000, 311 in 2010 and 435 in 2014.
    The continued growth in the number of HSIs can be projected from 
the 323 ``emerging'' HSIs, institutions with enrollments that are 15-
24.9 percent Hispanic. This is up from 2014-2015 when 310 institutions 
met this criteria in 34 states, including Washington, D.C. Due to rapid 
Hispanic population growth and the increasing number of Hispanics in 
post-secondary education, most of these emerging HSIs are expected to 
become HSIs within the next decade.
Role of Research in Agriculture and HSIs
    For many decades, the United States has been the world leader in 
the sciences, but it is currently experiencing shortages of scientists, 
and this has allowed other countries to challenge its economic strength 
and leadership in science.\1\ Hispanic Americans and other minority 
groups represent an untapped pool of talent that could be used to fill 
this shortage in science, if adequate funds are applied to train these 
promising domestic undergraduate and graduate students.
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    \1\http://ehrweb.aaas.org/mge/Reports/Report1/AGEP/index.htm.
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    Agricultural research plays an incredibly important part of our 
food and agricultural economies. The need for research in this area is 
well documented. The complexity needed to be successful and competitive 
has also increased. Related socioeconomic research is also critical to 
the strategic advancement of U.S. agriculture and it plays a key role 
in the planning and development of new curricula and degree programs, 
as well as in the strengthening of current ones.
    While Hispanics represent more than 18 percent of the U.S. 
population or over 57 million individuals, Hispanic students make up 
less than eight percent of agriculture majors in institutions of higher 
education.\2\ By comparison, Hispanics make up 29 percent of those 
working in the agriculture industry, where overwhelmingly, those 2.5 
million Hispanics labor as farmworkers cultivating and harvesting 
crops, raising and tending livestock and doing other work that does not 
require a college degree.
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    \2\http://www.pewhispanic.org/2016/04/19/statistical-portrait-of-
hispanics-in-the-united-states-key-charts/.
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    In 2015, only 15.5 percent of Hispanic adults held a bachelor's 
degree compared to 26.2 of non-Hispanic whites. In 2014, the median 
household income of Hispanics was $42,491, whereas the median household 
income of non-Hispanic whites was $60,256. Bearing in mind these 
educational and income disparities facing the U.S. Hispanic population, 
and the low percentage of Hispanic agriculture majors, it's likely that 
very few are occupying executive, management, or research positions 
within the sector.\3\
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    \3\https://dl.sciencesocieties.org/publications/sh/articles/54/3/
sh2013-54-3-rc.
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    The scarcity of Hispanic participation in agriculture-related 
academic programs and professional ranks within the industry is made 
worse by the relatively low level of Federal investments and allocation 
of resources to HSIs. There are over 100 HSIs that awarded at least 15% 
of their degrees in agriculture-related fields over the 2 most recent 
academic years. However, they receive no dedicated funding to promote 
or sustain the enrollment of Hispanics in agriculture-related academic 
programs, as well as the development and maintenance of the required 
research infrastructure. These institutions can earn the designation of 
HSACUs.
Hispanic-Serving Agricultural Colleges and Universities (HSACUs)
    The HSACUs cohort was established as part of the 2008 Farm Bill in 
response to the low number of Hispanics in agriculture related fields. 
HSACUs are defined as:

  (1)  Colleges or universities that qualify as HSIs;

  (2)  Offer associate, bachelors, or other accredited degree programs 
            in agriculture-related fields; and

  (3)  Hispanic students must receive at least 15 percent of the 
            degrees awarded in agriculture-related programs over the 2 
            most recent completed academic years.

    A&M-Kingsville enrollment has been over 60% Hispanic since the 
formation of the HSIs and over 50% of our graduates in agriculture are 
Hispanic. We have had a long history working with our agricultural 
industries for over 60 years.
    To date, 116 HSACUs have been designated by USDA.
    The 2008 Farm Bill established five HSACU programs listed below 
along with their corresponding funding authorization levels:

  (1)  The HSACU Endowment Grant Program ($80 million)--This program is 
            designed to distribute 60 percent of the interest accrued 
            in the fund among HSACUs prorated based on their Hispanic 
            enrollment. The other 40 percent is equally distributed 
            among HSACUs.

  (2)  The HSACU Equity Grants Program ($20 million)--This formula-
            based grant program is designed to help HSACUs build 
            capacity for faculty training and infrastructure to compete 
            for grant open to 1862, 1890 and 1994 land-grant 
            institutions.

  (3)  The HSACU Institutional Capacity-Building Grants Program ($40 
            million)--The competitive grant program is designed for 
            institutional-capacity (not including alteration, repair, 
            renovation, or construction of buildings) allows HSACUs the 
            flexibility to best determine how to increase their 
            capacity.

  (4)  The HSACU Fundamental and Applied Research Grants Program [(]$40 
            million)--The grant program funds fundamental and applied 
            research in agriculture, human nutrition, food science, 
            bioenergy and environmental science.

  (5)  The HSACU Extension Grants Program ($40 million)--The program is 
            designed to ensure that HSACUs will have access to two 
            major extension grant programs (406 and AFRI). In addition, 
            HSA[CU]s without the research and outreach capacity of 1862 
            and 1994 institutions will have access to funding for 
            cooperative extension work through special competitive 
            grant program.

    The reauthorization of the farm bill in 2014 kept the HSACU 
programs mentioned above, and added a new competitive grants program in 
support of Hispanic agricultural workers and youth. However, as the 
Committee is aware, none of these HSACU programs originally authorized 
in 2008 have ever been funded by Congress. Consequently, I believe the 
Committee's intent has never been realized.
    A&M-Kingsville, along with several other HSIs raised the funding 
issue to USDA. As a result, USDA allowed HSACUs to submit a declaration 
of intent to not be considered an HSACU in order to be eligible for 
Non-Land-Grant College of Agriculture funding (NLGCA). HSACUs who did 
not make this declaration remain designated as HSACUs until September 
2018. The net effect is to have no funding as HSACUs and no eligibility 
for the NLGCA.
Agriculture Research at A&M-Kingsville
    A&M-Kingsville agricultural students consistently win state, 
regional and national awards in their respective agricultural fields. 
These awards reflect the commitment of our faculty, the excellence of 
our academic programs and the diligence of our students to constantly 
strive for success. We take great pride in providing all our students 
with the guidance, services and education they need to reach their 
goals. However, an area of concern to continue to provide this quality 
opportunity is the aging agricultural research infrastructure at A&M-
Kingsville. It has been highlighted as a problem at our universities 
across the United States doing agricultural research.
    A&M-Kingsville has been working with our agriculture community for 
many years. Our Citrus Research Center started with the support of our 
local industry in 1948. We have three agriculture centers of expertise: 
the Citrus Center, Caesar Kleberg Wildlife Research Institute and the 
King Ranch Institute for Ranch Management. Our students have gone on to 
manage multi-million dollar agricultural enterprises and direct Federal 
agencies to help advance agriculture. Today our faculty and students 
participate in over $12 million in agricultural research. This includes 
over $5 million from USDA programs. These USDA funds help us leverage 
our capabilities to attract the additional $7 million in non-Federal 
funding. These research funds have shown to dramatically improve our 
retention, graduation rates and participation in graduate and other 
professional degrees. This has helped us increase our student retention 
from 58 percent to 72 percent just this year. While we are proud of the 
increases we have made this is not enough. We can do better but it will 
take resources to do so.
    We have actively participated in competitive grant programs. This 
includes the USDA/NIFA/HSI grant program which resulted in ten percent 
of the students participants in these programs have completed their DVM 
or MS and/or Ph.D.'s in agricultural fields. One of our student 
successes has been Veronica Acuna. She completed her Ph.D. and did 
Postdoctoral research at University of Illinois. Today Dr. Acuna is a 
faculty member at our Citrus Center helping the citrus industry adjust 
to the new era of urban agriculture interface, citrus greening and 
increased competition for available water.
Recommendations for the Next Farm Bill Reauthorization
    This Committee has long supported the value of agricultural 
research through the development of the land-grant system and minority-
serving agricultural research programs. They have also recognized in 
past farm bills, the potential value that HSACUs can contribute to 
agricultural research.

   We need to continue this cooperative approach and ask the 
        Committee to maintain the authorizations and funding levels for 
        the six HSACU programs included in the 2014 Farm Bill. 
        Implementation of these program authorizations are critically 
        important to advancing Hispanic participation in the 
        agriculture sector. To actually achieve the objectives of the 
        Committee to increase Hispanics in agriculture, we also urge 
        Members of this Committee to work with your colleagues, 
        particularly those on the Appropriations Committee, to provide 
        the funding needed to carry out these programs effectively.

   Given the low numbers of Hispanics in agriculture-related 
        careers, the creation of a pipeline of researchers and research 
        at HSACUs at all levels would strengthen the research capacity 
        of these institutions and help meet employer demands.
Conclusion
    Hispanic-Serving Institutions are the most important educational 
pipeline for increasing Hispanic success in higher education and their 
involvement in research opportunities. HSIs and HSACUs can better serve 
the nation if the necessary investments are made in their 
infrastructure, faculty and students. This was the intent of this 
Committee when HSACUs were initially created in 2008, and I believe 
this should be a priority in the next reauthorization of the farm bill.
    Thank you.

    The Chairman. Thank you, Dr. Tallant.
    Ms. Billy, 5 minutes.

    STATEMENT OF CARRIE L. BILLY, J.D., PRESIDENT AND CHIEF 
           EXECUTIVE OFFICER, AMERICAN INDIAN HIGHER
              EDUCATION CONSORTIUM, ALEXANDRIA, VA

    Ms. Billy. Mr. Chairman, Ranking Member, and Members of the 
Committee, on behalf of the nation's 34 Tribal colleges and 
universities, the 1994 land-grants, thank you for this 
opportunity to testify.
    Indian Country includes some of the most isolated and 
economically challenged regions of the nation, but our lands 
are rich in natural resources, and our people are among the 
most resilient in the world. Within this context, Tribal 
colleges are planting seeds of hope. They are working to 
strengthen Tribal economies, revitalize our language, and 
protect, restore, and sustainably use our lands, waters, and 
traditional foods.
    In 1994, Tribal colleges received Federal land-grant 
status. Today, the 1994s epitomize the intent of the first 
Morrill Act. We truly are community-based institutions, and we 
are defined by place. Our stories, songs, and land come from 
the land, mountains, water, and wind. Most of our land, the 
remaining Tribal lands in this country, are forested or 
agriculture lands.
    Research conducted by the 1994s touches on big global 
challenges, but in a way that is related to our land and our 
place. Most of our research is conducted with scientists and 
researchers from other land-grant institutions and Federal 
research centers. First, because our legislation requires it, 
but second, because we benefit from it. We leverage their 
expertise, equipment, and connections to maximize our small 
grants.
    Dr. Kerry Hartman at Nueta Hidatsa Sahnish College in North 
Dakota and his students are working with the Tribal Game and 
Fish biologists and South Dakota State University to figure out 
how to develop and maintain an environment that will support 
native pollinators of juneberries and other traditional plants. 
Juneberries are an ancient plant. Their high levels of protein, 
calcium, and antioxidants sustained generations of Native 
people throughout the northern plains and woodlands until they 
fell victim to westward expansion. If we can restore the 
juneberry's native habitat, we could sustainably cultivate 
crops for local use and small farm commercial production, 
helping us to grow our reservation economies and improve the 
health status of our people. We will also be restoring the 
cultural identity of the Mandan, Hidatsa, and Arikara people. 
This project would not happen without USDA's support for 
specialty crop research. The need for research into emerging 
technologies for small farmers, invasive species management, 
sustainable growth, and food security is essential to Indian 
Country.
    Dr. Steve Dalberg at White Earth Tribal and Community 
College in Mahnomen, Minnesota, is conducting research on land 
use, water quality, and wild rice productivity. This research 
is important because wild rice is one of the key cultural, 
economic, and nutritional resources of the Anishinaabeg people, 
but they face challenges in protecting it. Some of the 
challenges are genetic, but many are connected to water quality 
and land use.
    Tribal resource departments face more challenges. They lack 
the personnel and resources to comprehensively monitor water 
quality and study its impact on wild rice. The colleges are 
working to determine whether satellite data can be a cost-
effective predictor of wildlife productivity. The key is to 
find satellite data that correlates with biochemical water 
quality parameters and rice stands productivity. The college 
can then share this data with the Tribe, who can then use it to 
identify areas for further monitoring, making data-driven 
decisions and targeting limited resources in the most effective 
way. At the same time, Tribal college students are building 
research skills that could sustain their Tribal identity and 
culture and economy. To do this, White Earth is leveraging 1994 
research funding with resources from NASA, the U.S. Geological 
Service EROS Data Center, and the local Agricultural Research 
Service Lab. According to Dr. Dalberg, the USDA funding is the 
grease that makes those relationships happen.
    As you work to reauthorize the farm bill, we have four 
quick recommendations. One, acknowledge the value of 
undergraduate place-based research and education. The farm bill 
research provision should acknowledge that diversity matters. 
Students and faculty at 1994s and other minority and small 
institutions can enhance cultural competency and research 
capacity for the next generation of scientists and agriculture 
practitioners. Two, resist efforts to consolidate Federal STEM 
programs. History demonstrates that small and poor 
institutions, even those with great ideas, have a difficult 
time competing against Research I institutions. Three, 
establish McIntire-Stennis eligibility for 1994s. This is a 
matter of equity. In 2008, the McIntire-Stennis Act was amended 
to include Tribal lands in the formula for state forestry 
programs, but Tribal land-grant institutions were excluded. 
Please amend the McIntire-Stennis formula to include 1994s with 
forestry programs. And fourth, let Tribal colleges compete in 
all the land-grant programs. The 2000 Farm Bill was opened up 
the Smith-Lever 3(d) Programs to all land-grants except the 
1994s: 1994s can't participate in the Children Youth and 
Families at Risk Program, or the federally recognized Tribal 
Extension Program, yet ironically, we are the only land-grants 
that are actually chartered by federally recognized Indian 
Tribes. Please open up the 3(d) programs so that we can compete 
with other land-grant institutions.
    Thank you.
    [The prepared statement of Ms. Billy follows:]

   Prepared Statement of Carrie L. Billy, J.D., President and Chief 
    Executive Officer, American Indian Higher Education Consortium, 
                             Alexandria, VA
    Chairman Conaway, Ranking Member Peterson, and Members of the 
Committee, on behalf of the nation's 37 Tribal Colleges and 
Universities (TCUs), which collectively are the American Indian Higher 
Education Consortium (AIHEC), thank you for the opportunity to testify 
today and share a few recommendations on the topic of agricultural 
research in preparation for the next reauthorization of the farm bill.
Background on Tribal Colleges
    American Indian Tribal Colleges are public institutions of higher 
education that are young and geographically isolated--primarily located 
on Federal trust land. Tribal Colleges are tribally or federally 
chartered and they have been established for two reasons: (1) the near 
complete failure of the U.S. higher education system to address the 
needs of--or even include--American Indians; and (2) the need to 
preserve our culture, our language, our lands, and our sovereignty.
    Collectively, Tribal Colleges have grown from one institution in 
1968 to 37 today, operating 75 sites in 16 states and serving 
approximately 160,000 American Indians, Alaska Natives, and other rural 
residents each year in academic and community-based programs. They are 
located in some of the most economically impoverished regions of the 
country, yet our homelands are rich in natural resources and our people 
are among the most resilient in the world. Within this context, Tribal 
Colleges are planting seeds of hope for the future; nurturing 
languages, cultures, and traditions; helping to strengthen Tribal 
economies and governments; and working to sustain and revitalize our 
lands, waters, environments, and traditional foods.
TCUS as Land-Grant Institutions
    In 1994, the Tribal Colleges took a significant step toward greater 
participation in the American higher education system when American 
Indian reservations became the last lands under the American flag to 
receive Federal land-grant status, and with that designation, to 
participate in vital agriculture and natural resource programs operated 
by the U.S. Department of Agriculture (USDA). This historic--and long 
overdue--recognition occurred with the passage of the Equity in 
Educational Land-Grant Status Act of 1994.
    As place-based institutions of higher education whose collective 
mission is to meet the needs of our Tribes and Tribal communities--and 
most important, to preserve, strengthen and sustain our Tribal lands, 
languages, and cultures--Tribal Colleges are proud to be part of this 
nation's land-grant family. It is important to remember that over 155 
years ago, the first Morrill Act was enacted specifically to bring 
education to the people. Today, the 1994 Institutions--more so than 
many other institutions of higher education--epitomize the original 
intent of the first land-grant legislation: we truly are place- and 
community-based institutions. All of the 1994 institutions offer place-
based agriculture and natural resource management programs and train a 
significant number of our Tribal natural resource research and 
management professionals and small farmers and ranchers. Of the 37 
Tribal Colleges, 34 currently are 1994 land-grant institutions, and 
another--Red Lake Nation College in Minnesota--is expected to join our 
ranks as a 1994 land-grant institution when the farm bill is next 
reauthorized.
    Being part of the land-grant system is important to us because, as 
I mentioned earlier, we are people of a place. Place defines who we 
are. Our stories, songs, and language come from the land, waters, 
mountains, and wind. Most of our land--the remaining Tribal land in 
North America--is forest or agricultural land. In fact, of the 55.7 
million acres that compose American Indians reservations, more than 75 
percent are agricultural and forestry holdings.
    The National Institute of Food and Nutrition (NIFA) administers 
four modest programs for the 1994 institutions: a $3.4 million 
(formula) agriculture education equity program, which has enabled the 
thirty-four 1994 institutions to develop and offer small foundational 
agriculture or natural resource education programs; an endowment 
program, from which the 1994 institutions share annual interest 
payments of approximately $5 million (total) each year; a $4.4 million 
competitive extension program, which supports 1994 outreach activities 
such as community gardening, youth summer science and nature camps, 
agriculture technical assistance, and financial literacy programs; and 
a competitive research program, authorized in 1998 and first funded in 
FY 2000 at $500,000. The current appropriation for this program, and 
its high watermark, is $1.8 million for all 34 institutions. As the 
NIFA website states, our institutions often serve as the primary 
institution of scientific inquiry, knowledge, and learning for our 
Tribal communities. This modest funding assists us in our efforts to 
protect our reservation forests, woodlands, grasslands, and crops, and 
monitor the quality of our soil, water, and other environmental 
factors. Projects range from studying bison herd productivity to 
efforts focused on the connection between traditional plants and their 
role in managing diabetes, controlling invasive species, and 
revitalizing Native species. Each of the 1994 programs, though small, 
is critically important to the 1994 institutions and the communities 
they serve.
    Under the NIFA-1994 research program, partnerships are required 
with other Federal land-grant institutions schools of agriculture, or 
Agriculture Research Service stations. These partnerships assist us in 
carrying out the grant's primary emphasis, which is training students 
in science.
    Three types of funding are available through the research program: 
``New Discovery'' supports basic and applied scientific inquiry that 
could be published in a peer-reviewed journal. ``Capacity level'' 
grants support local, applied research. ``Student Inquiry'' funding 
allows a Tribal College student to build a research project and present 
the results under the guidance of a 1994 Land-Grant faculty member. 
1994 faculty may also receive a grant to study optimal ways to teach 
Native American students in sciences as they relate to health, 
conservation and agriculture, and there is a special funding initiative 
that allows the 1994s to develop scientific capacity throughout the 
entire 1994 Land-Grant system.
    Key benefits of the USDA-NIFA Tribal College Research Grants 
Program are the collaboration and long-term relationships that the 
grants help us build with top faculty and scientists at state 
universities, agencies, Tribal organizations, and research centers. 
Through a 1994 research grant, scientists, researchers, professors, and 
career professionals from multiple institutions, agencies, and 
businesses become readily available sources of support for TCUs, able 
to respond to questions, suggest methodologies, and share equipment, 
resources, and facilities. Conversely, the 1994s are a unique resource 
to their partners. These communities of practice are similar to 
learning communities; through and within, the 1994s find camaraderie, 
communication networks, and resources that strengthen our individual 
research and education projects and serve as laboratories for 
innovation, technology transfer, and ongoing regional (and national) 
economic and community development.
1994 Research Examples
    Through the 1994 Tribal College research program, White Earth 
Tribal and Community College in Mahnomen, Minnesota is conducting 
research on land use and land cover on water quality and wild rice 
productivity. This research is important because wild rice is one of 
the key cultural, economic, and nutritional resources of the 
Anishinaabeg people. The White Earth Band and other Anishinaabeg people 
are facing many challenges in protecting this resource for future 
generations. Some of these are genetic, but many are connected to water 
quality and, in particular, how changes in land use such as 
agriculture, development, and mining may impact wild rice. Tribal 
natural resource departments face additional challenges: the lack of 
personnel and resources to comprehensively monitor water quality and 
adequately study its impacts on wild rice productivity. The WETCC wild 
rice research project includes in [situ] research in existing rice beds 
and waterways, comprehensive statistical analysis using remote data, 
and the construction of an online data portal--all three engaging 
undergraduate student researchers--as well as an innovative and 
longstanding partnership of institutions and organizations.
    Led by Dr. Steve Dalberg, WETCC is working to determine whether 
satellite data can be useful as a cost-effective predictor related to 
wild rice productivity. The key is to find satellite data that 
correlates strongly enough with important biochemical water quality 
parameters and the productivity of rice stands to be useful. Then, the 
college will make those data available to Tribal resource managers so 
they can use them to identify ``hot spots'' that need further 
monitoring. This will enable the managers to make informed, data-driven 
decisions, targeting their limited resources in the most effective way. 
At the same time, TCU students build important research skills, working 
with scientists and natural resources practitioners while they learn to 
manage large, complex datasets that ultimately, could help sustain 
their Tribal culture and economy for generations to come.
    The success of this project has been fundamentally tied to the 
strength of the WETCC team, which includes many of the principals from 
the college's long-standing collaboration with NASA, the U.S. Geologic 
Service EROS Data Center, and Dr. Abdullah Jaradat and his staff from 
the USDA Agricultural Research Service Lab in Morris, MN. These 
partners provide the range of expertise that Dr. Steve Dalberg, the 
sole scientist on the WETCC's staff cannot begin to duplicate. Without 
the committed and capable partnerships forged through opportunities 
from both the USDA-NIFA TCU research program and NASA, this project 
would not be possible. As with most things in Indian Country, the long-
standing relationships we develop are the key factors in our success. 
According to Dr. Dalberg, ``it goes without saying that Federal dollars 
are the grease that makes these relationships possible.''
    Since 2001, Dr. Kerry Hartman and his undergraduate students have 
been conducting culturally and economically relevant research at Nueta 
Hidatsa Sahnish College, on the Fort Belknap reservation in North 
Dakota, through the USDA-TCU research program. The goal of Dr. 
Hartman's current NIFA research project, conducted with Tribal Game and 
Fish biologists and South Dakota State University, is to figure out how 
to develop and maintain an environment that will support native 
pollinators of Amerlanchier cultivars, or juneberries, and other 
traditional plants. Juneberries are an ancient plant. Their high levels 
of protein, calcium, and antioxidants sustained generations of Native 
peoples throughout the northern plains and woodlands, until native 
pollinators and juneberry stands fell victim to westward expansion. If 
NHSC can restore the juneberries' native habitat, they could 
sustainably cultivate crops for local use and small farm commercial 
production, helping to grow the reservation economy and improve the 
health status of their people. They will also be restoring identity and 
cultural pride within the Mandan, Hidatsa, and Arikara people.
    It is important to note that research such as this would not be 
possible without a focus at USDA on specialty crop research. In rural 
America and Indian Country, specialty crop research is critically 
important to building and sustaining a local economy: locally grown, 
locally produced, locally packaged, and locally consumed. Whether 
through a separate specialty crop program or the NIFA-TCU research 
program, we believe this type of research is the most relevant and will 
yield the largest return in many of our communities. The need for more 
ongoing research into new and emerging technology uses and impacts; 
pest and invasive species management; sustainable growth; and food 
safety/security are essential in Indian Country, as NHSC's juneberry 
research attests.
    Other TCUs are also doing important research. Salish Kootenai 
College, in Pablo, Montana, conducts extensive research and offers an 
accredited bachelor's degree program in the Science of Hydrology to 
address a dearth of American Indian water management scientists. This 
is particularly relevant to people of the Flathead Indian Reservation 
because their primary body of water, Flathead Lake, is the nation's 
largest freshwater lake west of the Mississippi and it is fed by 
several rivers and streams flowing from the glaciers of northern 
Montana and Canada.
    Ilisagvik College in Barrow, Alaska, is located on the northern-
most point of the United States where ``the sea is the way of life.'' 
Ilisagvik offers a unique Marine Mammal Observer Stewardship degree 
that combines Inupiaq traditional knowledge, Western science research, 
and industry standards into a program that is recognized by the Alaska 
Federation of Natives as ``the training center for Alaska Natives on 
Marine Mammal Observation.''
    United Tribes Technical College, in Bismarck, North Dakota is 
currently conducting a wide variety of research related to the land, 
wildlife, and traditional plants of the grasslands and northern 
prairie. Under the USDA-NIFA TCU research program, UTTC is conducting a 
small study on new methods to control invasive Kentucky Bluegrass, in 
partnership with the local Agriculture Research Service station. In 
partnership with North Dakota State University, the college is engaged 
in its second student research project on bat ecology in the state of 
North Dakota. More specifically, this grant supports research on bat 
foraging ecology habitat structure and distribution across the state. 
UTTC is also integrating its research programs with extension and 
outreach activities, conducting significant research on nutrition, 
health, and native/traditional plants. Under an optimal gardening 
research effort aimed at boosting production of small farmers, they are 
studying management strategies and inputs to ascertain cost 
effectiveness for growers on reservations, given limited access to 
water and soil inputs. Faculty and students have also conducted 
important research on healthy eating habits, juneberries, corn 
varieties, and seed sovereignty among Tribal nations.
    These are just a few examples but they demonstrate our fundamental 
connection to the 1994 legislation: We are people of a Place. 
Tragically, due to misuse, exploitation, and lack of expertise and 
training, millions of Tribal acres are fallow, under-used, or are being 
developed through methods that could render resources non-renewable. 
For this reason, agriculture and forestry research, in particular, is 
critically important to the 1994 institutions and our Tribal 
communities.
The Need To Grow TCU (1994) Agriculture & Forestry Research Programs
The Production Challenge
    The agriculture challenges we face as a nation and world today are 
well established: constantly and rapidly changing technologies; 
population growth and predicted food shortages; environmental changes 
and competition over water and land access and use; obesity and health 
status; and more. A common thread adding another layer of complexity to 
each of these challenges is the aging agriculture workforce in the U.S. 
The average age of farmers and producers in the U.S. is 60 years of age 
and continues to rise each year. Among Native American farm operators, 
more than 30 percent are 65 years or older. But for American Indians 
and Alaska Natives (AI/AN), the issue goes far beyond age. The 2012 
Agricultural Census reports less than 38,000 Native American-operated 
farms, representing only 1.8 percent of the approximately 2.1 million 
farms in the U.S. Of these Native farms, only eight percent had a 
market value of $50,000 or more, in comparison 25 percent of all U.S. 
farms were worth $50,000 or more. The bottom line is that Native 
farmers and ranchers are already under-represented in the U.S., and 
their numbers will likely decline even further as today's farmers and 
ranchers retire.
    As a nation, we must do more to increase the number of young people 
seeking careers in the food and agricultural sciences, including 
agriculture research, agribusiness, food production, energy and 
renewable fuels, and farming marketing, innovation, and distribution. 
The need is particularly acute in Indian Country, as the numbers cited 
herein attest. For Native farmers and ranchers, access to land is not 
the primary issue, as it is for most potential farmers in the country. 
(As noted previously, 75 percent of the remaining lands in Indian 
Country are forested or agriculture lands.) Access to capital, 
agriculture education and research, and technical assistance are the 
major barriers for most Native farmers and ranchers. Outreach, 
technical assistance, and innovative research opportunities through 
traditional Cooperative Extension and education programs are limited in 
many Tribal communities, often due to the rural settings and funding 
limitations. Tribal Colleges often lack the funding they need, as well 
as critical support from the mainstream land-grant system, to develop 
and deliver appropriate agricultural programming and research 
opportunities. Yet, with adequate funding, TCUs can provide relevant, 
locally and place-based higher and technical/career education that is 
innovative and which includes important tribally driven experiential 
learning and community-based research opportunities to aspiring and 
beginning farmers, ranchers, and agriculture/forestry researchers and 
students throughout Indian Country.
The Research Challenge
    I would like to respectfully suggest that USDA's research portfolio 
has not benefited in any significant way from the unique value that 
1994 institutions can contribute in helping to meet the challenges we 
face as a nation. The USDA research portfolio is heavily oriented to 
large capacity and Research I institutions. In 2013, the Government 
[Accountability] Office issued a report on the participation by 
Minority Serving Institutions--including the 1994 institutions--in 
USDA's research programs. The report concluded that MSIs received about 
two percent of all research funding. (For a copy of the report, please 
see: http://www.gao.gov/products/GAO-03-541.) We believe that the 
disparity described in the report has probably expanded in recent 
years, as the program in question was a predecessor to the Agriculture 
and Food Research Initiative (AFRI). We know it is the case for the 
1994 institutions.
    Research and experiential learning are critical components of 
higher education in the classroom, the lab, and for students' careers. 
Without being able to participate in USDA's flagship research program, 
AFRI, 1994 institutions are losing out in ways that are almost 
immeasurable. We strongly urge this Committee to rectify this serious 
problem in the next reauthorization of the farm bill, and further, to 
take a look at USDA's overall commitment to research, including 
facilities at the 1994 institutions.
NIFA Research Programs


    In Fiscal Year 2016, the 1994 institutions competed against one 
another for $1.8 million in research funding. That same year, the 1862 
land-grant institutions (state) received $236 million in formula funds, 
even though ten states are smaller than some of the reservations with a 
1994. The 1890 institutions (17 historically black colleges and 
universities) received $51 million, with a guarantee of at least $1 
million each.
    We are told that nothing can be done--the Federal budget situation 
is too dire. We disagree. We believe that this Administration and 
Congress could begin to correct these inequities. We are not asking for 
handout. We are asking for an investment--a proven investment in Tribal 
Colleges, which would help our people become--once again--significant 
contributors to the agricultural base of the nation and the world.
Recommendations for Consideration During the Farm Bill Reauthorization
    The 1994 institutions are confident that they have the potential of 
becoming significant contributors to the agricultural base of the 
nation and the world once again. More and more AI/AN Tribes and 1994 
institutions are beginning to re-assert sovereignty over our food, 
agriculture, livestock, and fisheries systems. Working with key 
partners, we are defining policies that are ecologically, socially, and 
culturally appropriate to our unique circumstances.
    Due in large part to our land-grant activities, leveraged with 
other federally funded STEM programs, our students are involved to some 
degree in cutting-edge and community-relevant research, particularly 
research related to the preservation of our natural resources and the 
exploration of the linkages between nutritional patterns and disease. 
Much of this research is conducted with other land-gran[t] 
institutions, resulting in both good science and solid partnerships.
1. Acknowledge the Value of Place-Based, Traditional Research and 
        Education
    The 1994 Institutions, along with other Minority-Serving 
Institutions (MSIs), are uniquely positioned to provide the next 
generation of technically and culturally competent agricultural 
scientists and researchers. We believe that our Native American 
students represent a unique competitive advantage in an increasingly 
culturally diverse global agriculture science world. Tribal College and 
other MSI students can succeed in cross-cultural contexts better than 
anyone, and these types of people will be successful as agriculture 
scientists working in places that are culturally different from the 
U.S., such as the Middle East, South America, and Africa. American 
Indians and Alaska Natives are a unique and important component of any 
student pipeline that leads to a new generation of agriculture 
scientists.
    The research provision of the farm bill should specifically 
acknowledge that students and faculty of the 1994 institutions and 
other MSIs can enhance the cultural competency of the next generation 
of agricultural scientists, researchers, and practitioners. The 
cultural competency needed to meet global agricultural challenges will 
often be as important as scientific and technical competency. 
Agricultural scientists and researchers working in cross-cultural, 
international settings will need to be sensitive and respectful of 
cultural and social norms and values. In many countries, cultural 
competency facilitates the initial access to local populations before 
technical and scientific activities can proceed. Indigenous peoples are 
especially vulnerable to exploitation of cultural and natural assets, 
such as traditional ecological knowledge and natural resources.
    More broadly, research and education provisions of the farm bill 
must specifically include under-served students at the undergraduate 
level. The vast majority of the USDA current ``education'' and research 
funding supports graduate-level research. More resources need to be 
devoted to student success, faculty development, curriculum innovation, 
international development, facilities development, and critically 
needed infrastructure support at the community college and early 
undergraduate level.
2. Resist Efforts To Consolidate STEM Research Programs
    As you are aware, the President's Fiscal Year 2018 budget request 
proposes the consolidation of many Federal STEM higher education and 
research programs. We expect that other proposals along these lines 
will be put forth in the months ahead. We believe that the research 
programs supported by NIFA are important and unique. Consolidation of 
these programs with other Federal STEM research and education programs 
is simply a bad idea, particularly for Indian Country. Not only would 
the agriculture and natural resource focus become lost--which is so 
important to us for the reasons noted earlier--but also lost will be 
the multicultural, diversity of thought focus of America's education 
programs. Under proposals to consolidate and homogenize Federal 
programs, we stand to lose some important USDA programs, and history 
clearly demonstrates that small and under-resourced institutions, such 
as the 1994 land-grant institutions, would fair very poorly in 
competitions with well-resourced major Research I institutions and 
large land-grant universities.
3. McIntire-Stennis Amendment To Establish Participation Eligibility 
        for 1994 Institutions With Baccalaureate Degree Programs in 
        Forestry
    The McIntire-Stennis Act of 1962 (16 U.S.C. 582a, et seq., Public 
Law 87-788) should be amended to allow Tribal Colleges (1994 
institutions) that offer a bachelor's degree in forestry to receive a 
share of McIntire-Stennis Act formula funding that flows to a state in 
which a relevant 1994 institution is located.
    Justification: In 2008, the McIntire-Stennis Act was amended to 
include Tribal lands in the formula calculation for funding of state 
forestry programs, which are centered on forestry research and 
management. However, the 1994 institutions were not included in the 
funding formula, nor were states required to include them in funding 
distributions. This oversight is significant because, as noted earlier, 
75 percent of Tribal land in the U.S. is either forest or agriculture 
holding. In response to the severe under-representation of American 
Indian professionals in the forestry workforce to conduct research on 
the AI/AN forestry holdings in Montana and across the United States, 
Salish Kootenai College (SKC) launched a forestry baccalaureate degree 
program in 2005.
    In 2013, SKC became the first Tribal college land-grant to join the 
National Association of University Forest Resource Programs, a 
consortium of 85 forestry schools, the vast majority of which receive 
McIntire-Stennis funding. However, when SKC recently sought specialty 
accreditation for its program, the college was told that it was ``one 
forestry researcher short'' of the optimum number needed. Participation 
in the McIntire-Stennis program, even with the required 1:1 match, 
would help SKC secure the researcher it needs to gain accreditation. 
Yet, it cannot participate in the program. Once again, TCU land-grants 
are prohibited from participating as full partners in the land-grant 
system. And although currently, only SKC has a baccalaureate degree in 
forestry, considering the wealth of forested land on American Indian 
reservations, others such programs could arise at the nation's other 
Tribal land-grant institutions, to further the effort to grow Native 
researchers in this essential area.
Conclusion
    In closing, Mr. Chairman and Mr. Ranking Member, I want to 
reiterate that the 1994 Institutions have proven to be efficient and 
effective vehicles for bringing education and research opportunities to 
American Indians/Alaska Natives and the promise of self-sufficiency to 
some of this nation's poorest and most under-served regions. The 
extremely small Federal investment in the 1994 Institutions has already 
paid great dividends in terms of increased employment, access to higher 
education and research opportunities, and economic development. 
Continuation of and significant growth in this investment makes sound 
moral and fiscal sense. As stated earlier, no institutions better 
exemplify the original intent of Senator Morrill's land-grant concept 
than the 1994 Institutions. I am honored to have this opportunity to 
share our story and a few recommendations with the Committee today. 
Thank you.

    The Chairman. Well, I am not sure we have ever had our 
witnesses stick so religiously to their own 5 minutes. 
Congratulations. You are the best panel ever.
    The chair would remind Members they will be recognized for 
questioning in order of seniority for Members who were here at 
the start of the hearing. After that, Members will be 
recognized in order of arrival. I appreciate Members' 
understanding.
    I recognize myself for 5 minutes.
    First of all, I thank the witnesses for rescheduling. I had 
a conflict yesterday, and you were very accommodating to that, 
so thank you very much.
    It is rare an institution doesn't have an aggressive 
building program going, and yet most of you mentioned a lack of 
labs and greenhouses, and $8.4 billion in deferred maintenance. 
Can you help us understand the disconnect between how ag 
research competes within your own universities and within the 
state systems to get dollars to create the infrastructure that 
then can be used to compete for the grants? Can you walk us 
through some of that? And anyone who wants to start, I 
appreciate hearing from anybody who has an idea.
    Mr. Duncan. I will begin. I know that at Texas Tech 
University we have multiple disciplines on the campus, and so 
even though we do have significant infrastructure support from 
the State of Texas, that is a competing thing with engineering 
and other health-science issues that are on the campus. It is 
just like anything else, the infrastructure related to 
agriculture is going to be competing with all of the other 
disciplines on the campus for those different funds. There is 
not a specific state infrastructure fund for agriculture, it 
basically goes to the institutions and it is allocated in that 
way. The State of Texas has been good though.
    And going back to the capacity issue that I talked about, 
there has been some success in providing infrastructure for 
institutions through tuition revenue bonds as well as through 
HEAF funding. And that capacity has helped Texas Tech be able 
to compete in all of our disciplines, but there is still 
competition, obviously, and no specific allocation of funds for 
agricultural loan.
    Dr. Humiston. I would offer two thoughts. One is, that we 
as research institutions are equally guilty as the public at 
large, in that when we have to make choices, hard choices, we 
tend to go after the researchers because at the end of the day, 
it is our people that are really getting a lot of the research 
done.
    And we have all got some world-class academic researchers 
in both ag experiment stations and cooperative extension, and 
as we have dealt with cuts and increased costs over the past 
few decades, I believe I know for myself, and some of the 
others here too, it has been easy to say we could put off 
fixing that roof or put off buying that new piece of equipment 
a few more years if we can keep those researchers doing their 
work. That is one issue that has contributed to this. 
Unfortunately, that has been going on for decades rather than a 
few years, and that is why it has gotten so critical at this 
point.
    The other thing, the general public, and in particular 
large funders, tend to not view agriculture as a particularly 
sexy topic. We have done such a great job for over 150 years of 
providing a safe, secure, wonderful, bountiful food supply, 
people take it for granted. When we are out there trying to do 
capital campaigns and funds development for our facilities, we 
are competing against the moonshot on cancer and similar things 
like that, and quite frankly, it is a challenge to compete 
against curing cancer or finding new stem cell uses, or 
anything like that. I think that has been a factor for all of 
us.
    So those two things in particular.
    The Chairman. A couple of you mentioned the idea about 
return on investment. If you have thoughts, I don't expect you 
to necessarily have them this morning, on a way that we could 
from the Federal standpoint help augment what appears to be 
return on investment that would allow you to be more 
competitive. I would be interested in hearing those thoughts as 
we develop the farm bill. Anyone else have a thought on the 
challenge of competing against the other legitimate needs that 
are on every one of your campuses for facilities?
    Dr. Burns. I would just add that in our institution, it is 
a matter of prioritization; which is the highest priority with 
respect to our mission with our stakeholders, and so forth, and 
often agriculture is not high on the list. In general, we fund 
deferred maintenance with a cost to landline use in Florida, 
and as you can imagine that fund is decreasing exponentially.
    The Chairman. Dr. Hill?
    Dr. Hill. Yes. I am going to say take a lesson from when 
you required the states to one-to-one match for 1890s, I am 
going to get to infrastructure, what happened there was the 
three land-grants in Alabama got together, went to the 
legislature together, formed an alliance, the Alabama 
Agriculture Land-Grant Alliance, and we made a breakthrough 
that no one expected would happen, and we have been really 
moving in a good direction ever since. So that was 1999. What 
catalyzed that was what came out of from you all, because the 
legislatures see that, so if you put together an infrastructure 
dynamic that encourages, incentivizes the states, and you also 
incentivize them to work together, then we can do the creative 
side on our end. I think that would benefit the public. It sure 
has in Alabama.
    The Chairman. Yes, real quickly, Dr. Tallant. Real quick.
    Dr. Tallant. Yes, real quick. I just want to echo what 
everybody said. The Texas funds as well, but in my case, I have 
a university of 10,000 students, \1/3\ of my students major in 
engineering. I have 20 engineering degree programs, and it is a 
matter of priority, and as what was said before, agriculture, 
it doesn't always go there. As a result, my College of 
Agriculture today has deferred maintenance of $12 million. That 
is a lot of money from my campus. And what would help would be 
dedicated money, matching or how we did it, but dedicated for 
agriculture, because there are other competing needs.
    The Chairman. I appreciate that.
    Mr. Peterson, 5 minutes.
    Mr. Peterson. Well, thank you, Mr. Chairman.
    There was a recent editorial about the creation of the 
Foundation for Food and Agriculture Research. The article, 
mentioned that China has an advantage of 2:1 over us in ag 
research, which ought to make people nervous. From what I can 
tell this new initiative of the 2014 Farm Bill, FFAR has been 
successful, and it has been a quicker model and it has 
responded quicker, and brought some private resources to the 
table for agricultural research. But what I am concerned about, 
and my experience over the years of having to try to advocate 
for smaller crops in the whole research area, and back when we 
had earmarks we were able to do that. Now that we don't have 
earmarks, we really are falling short with some of these 
smaller crops that don't have the checkoffs, don't have the 
resources. It is a good idea to maybe bring private money in, 
but I kind of worry about this whole private-public thing 
because it is going to maybe allow people to jump the line in 
the case of some projects. In some rural areas, in Minnesota, 
we are not going to attract any private money of any kind, for 
any kind of project. I just wonder if any of you have 
experienced a situation where this is maybe an advantage to 
somebody over another because they have the money and somebody 
else doesn't have the money. Is that an issue that you think we 
need to worry about? Any of you that want to jump in.
    Dr. Burns. Thank you. Let me comment. Yes, we are losing 
our edge. We still have very good people, and our international 
colleagues seek to send others over here to learn what we have 
to offer. But the fact of the matter is that, because of our 
infrastructure, because of the decaying nature of it and our 
ability to invest in it, we simply cannot keep up with making 
those world-class investments for those facilities, and to keep 
our people from jumping ship and going to China and other 
places. It is really important to understand the value of 
sustained investments for those projects, that are regional in 
nature. Sometimes we thought that the capacity funds would have 
been very good for that, because it allows us to make those 
quick decisions about those needs right away, without the 
involvement of a longer competitive process. Capacity funds are 
very, very important in us meeting those kinds of needs and 
keeping us competitive.
    Dr. Humiston. Yes, if I could augment that for a second. We 
actually are working very closely with the Foundation for Food 
and Ag Research, FFAR, which you mentioned, and that was a 
particularly good article. I think the concept of FFAR is 
excellent. The idea of leveraging public dollars with private 
dollars, I am a big fan of that myself. And FFAR has done an 
amazing job in a short amount of time, standing up a lot of 
research, getting a lot of dollars out the door. But the very 
fact that they have been able to do such an excellent job so 
quickly is its own testimony to the need for capacity funds. 
They would have never been able to do such an outstanding job 
if we didn't already have infrastructure in place, researchers 
hired, researchers with labs able to step up and say, okay, I 
can make good use of that money and start solving agriculture's 
problems today, not a year or 2 from now.
    Mr. Peterson. Anybody else?
    Dr. Hill. Yes, I want to add a human dimension to that. I 
want to invoke the name of George Washington Carver. And where 
I am coming from is, when you have an outstanding scientist who 
loves people, who loves agriculture, and spends time with the 
farmers on the farm, in the lab, and with their students, you 
get a different product. You get the science changes and it 
becomes more usable, the results to the farmer in the shorter-
term. That is what we need. We need more scientists like that. 
We have our bench scientists doing all the fancy stuff that 
goes quickly, but that takes time to reach the people who we 
are trying to reach now. Capacity funds help, as a matter of 
fact, that may be the edge for why capacity funds may need to 
be strengthened, because now you are dealing with both research 
and the people at the same time, and the majority of the 
farmers, 80 to 95 percent, are the small and medium sized.
    Mr. Peterson. Thank you.
    Thank you, Mr. Chairman. I yield back.
    The Chairman. The gentleman yields back.
    Mr. Gibbs, 5 minutes.
    Mr. Gibbs. Thank you, Mr. Chairman.
    I will follow the Ranking Member's questions a little bit. 
In agriculture, when you are talking about the challenge of 
funding, competition, competitive grants, and all that, where 
the industry has gone, the science of agriculture, I guess can 
you relate to me how the interaction between the different 
disciplines are? For example, agriculture has a lot of 
interaction with engineering, obviously, department of 
engineering, medicine, so that interaction there are 
partnerships. Are there hurdles to do more partnerships or 
long-term contracts, even, with the private-sector to do basic 
research to help bring in additional funds and long-term 
arrangements, or is that happening? That was two things, how 
you interact with the different disciplines, and then how do 
you interact with the private-sector on long-term research 
projects? Anybody who wants to jump in can go first.
    Dr. Humiston. I am trying to make sure I am not hogging the 
microphone up here. I included a couple of examples in my 
written testimony, but one I might highlight specific to your 
question, I am a big fan of collaboration and partnerships. It 
gives all of us a chance to leverage each other's resources, 
and in particular, not reinvent the wheel, not duplicate. That 
is a strategy we are pursuing in California extremely 
aggressively right now. And one example that shows very high 
promise is efforts in our central coast. Congressman Panetta, 
who left already, it is in his region. But we are bringing 
together our University of California Santa Cruz with our CSU 
Monterey Bay with three community colleges, a USDA agricultural 
research facility, and Western Growers, an organization of 
private farmers. Two or three things happening there, Western 
Growers has an incubation center they are supporting in 
Salinas. Hartnell Community College has a couple hundred acres 
that they use to teach their community college kids various 
types of workforce issues related to ag and ag-related jobs. 
USDA is adjacent to that. We have about 300 acres there.
    We are actually pursuing a partnership right now to 
formalize a brand new research and extension center that will 
be jointly community college, University of California, USDA, 
in a way that really hasn't been done before, and have the 
private-sector deeply engaged. I am quite optimistic about our 
ability to do that. We are looking at similar partnerships 
throughout the state. Not to say that each of us individually 
don't need to have the ability to bring our own funding to the 
table, but that kind of partnership really can stretch, as well 
as the ability to get the multi-disciplinary----
    Mr. Gibbs. Do you see a willingness from in the private 
industry sector wanting to put resources in to----
    Dr. Humiston. Well, absolutely, Western Growers, which is a 
private industry, have put several million dollars in their 
incubation, ag tech-related----
    Mr. Gibbs. Anybody else, maybe Texas, want to comment?
    Ms. Billy. Well, I would like to comment on that. For the 
Tribal colleges, and other small rural institutions conducting 
research, getting the private-sector involved is very 
difficult. We actually have a challenge getting the private-
sector to even come onto Tribal land. With the American Indian 
institutions there is a challenge of not only having to deal 
with the state regulatory rules, but also the Federal rules on 
Tribal lands. We can't do bonding and things like that that 
make it more difficult for private-sector to come onto the 
reservations, which makes the partnerships with the Federal 
Government and other Federal entities even more important. And 
that is one thing that is under-resourced institutions, Tribal 
colleges do very well mixing using funding from USDA, National 
Science Foundation, NASA, and other agencies, in a way that is 
increasing STEM teaching and learning, but also research 
opportunities.
    Mr. Gibbs. Okay.
    Dr. Hill. I will give you two examples. One is, one day we 
looked around and saw biology, chemistry, veterinary medicine, 
all the ag science, and realized we had a powerhouse that 
created a Ph.D. in integrated bioscientists, and have never 
looked back. We didn't even know what we had. Now the private-
sector became interested. We have money to help with one 
laboratory where the future looks good. Another example is we 
recently had a scientist who had won a NIFA competitive grant 
in organic farming, and he has four 1862s as his partner. And I 
was there when they came to campus and kind of blown away. They 
are really going to do a master piece of work across the South 
together.
    So that is the future.
    Mr. Gibbs. Yes. Okay, thank you, Mr. Chairman. I yield 
back.
    The Chairman. Mr. David Scott from Georgia.
    Mr. David Scott of Georgia. Thank you very much, Mr. 
Chairman.
    Dr. Hill, let me start off by thanking you, and each of the 
19 African American land-grant universities, first, for 
mentioning our legislation, House Resolution 51. For folks who 
may not know, H.R. 51 is a very, very strong bipartisan effort 
to provide our 1890 universities with student scholarships in 
the amount of $1 million for each of the 5 years, $95 million 
for all of the 1890s over the 5 year period of the farm bill. 
This is so important.
    And, Dr. Hill, your testimony in touching upon the road. 
The road that the African American community has had to travel 
in this country has been a tough road, and it is our dear hope 
that the Chairman of our Committee will give a schedule to 
bring up this bill, a bipartisan bill, so we can get it out of 
this Committee onto the floor and over to the Senate where we 
have already got Senators lined up to get it on over to the 
White House for the President's signature. We are at that 
moment now, and I am sure that we will have an opportunity to 
get that bill called up and passed. It is the first step. It is 
bipartisan.
    The other thing is 1890s designation was started by 
Republicans. What a strong bipartisan effort it would be to 
lift up the 1890s with this bill and give a shining light out 
of the darkness. Dr. Hill, you mentioned the one-to-one match 
for the 1890s institutions' research funding, and that the 
institution must request a waiver to get the Federal funds 
without the state match. And while, to my knowledge, no waiver 
application has ever been denied, that leaves the African 
American 1890s institutions with \1/2\ as much money as 
Congress intended. That is like giving you something with one 
hand and slapping you in the face with the other, and that has 
to stop. Most states that have both 1862s and 1890 institutions 
submit a joint plan of agriculture research, so we know USDA 
has the information.
    Let me ask you, Dr. Hill, do states currently fund and 
match all land-grant colleges at the same level?
    Dr. Hill. No.
    Mr. David Scott of Georgia. All right. The final question 
is, what can we here in Congress do to encourage states to 
match each institution in the state at an equivalent amount up 
to 100 percent? Why not do that? That is what Merrill, the 
Republican Congressman, said, ``Separate but equal.'' We are 
separate all right, but we have never been equal. But this 
year's farm bill, with this money for scholarships, and with us 
getting some equality in this matching, what a powerful, 
powerful message that would send. Republicans and Democrats 
working together to lift up our 1890s African American 
institutions.
    Dr. Hill. I would just respond briefly. I might be the old-
timer here, having 40 years in as Dean at Tuskegee, and having 
worked the legislature in Alabama and worked with Auburn and 
A&M and all the system. I would just say this, and I recently 
talked with Sonny Ramaswamy, the new plan of work provides you 
with an opportunity because the first thing you see on that 
plan of work is how the funds are distributed for each state. 
And my recommendation to him was that we do a report card for 
each state, because they do a summary write-up of how the 
states do when they send in those reports. I challenge you all 
to look at your plan of work reports and results for your 
particular states, and look at those first few pages, that will 
tell the whole story. And then if we had a report card we can 
put on there points, and one of the points would be matching, 
and a state that did everything right but didn't do the 
matching would not get a good grade on that one. And it would 
stand out and we would share that with our legislatures, we 
would have a good conversation.
    Mr. David Scott of Georgia. Thank you very much, doctor.
    The Chairman. Thank you, Mr. Scott. The gentleman's time 
has expired.
    Mr. Crawford, 5 minutes.
    Mr. Crawford. Thank you, Mr. Chairman.
    Chancellor Duncan, you represent a non-land-grant 
university, but you are still very much engaged in agriculture. 
And I am a graduate of a very similar system; Arkansas State 
University is very similar to Texas Tech in that regard.
    As you mentioned in your testimony, the Competitive 
Capacity Building Program for non-land-grant institutions, 
first authorized in the 2008 Farm Bill, has made some 
significant impacts for a small, $5 million of the fund. How 
has Texas Tech used Federal funding such as this to advance ag 
research?
    Mr. Duncan. Well, it is obviously in infrastructure and 
improving our labs, and being able to maintain the faculty that 
we have, combined with a state investment in capacity. One of 
the points I am trying to make here today is that Texas has 
invested in the capacity, and since that initiative was started 
in 2007 we have had five institutions in the State of Texas 
advance to the highest research category in the Carnegie 
Classification. And so it is a combination of the funds that 
the Federal program provides us certainly allow us to augment 
that infrastructure, but it is still so small, while it moves 
the needle, it doesn't move the needle enough.
    Texas Tech has been in the agricultural research arena for 
a long, long time, obviously; where it is, where it is located 
in the epicenter of all these different agricultural 
activities, but at the same time the capacity has been growing 
slowly until the state infused that. The point I am trying to 
make is the Federal investment in capacity to the non-land-
grant institutions can make a significant difference in the 
regional types of research that occur for the better of 
agriculture. For example, one thing we have talked about is the 
combination, or the cross-disciplinary aspect of human health 
and animal health, those are the types of things that with the 
proper infrastructure, the proper investment in the health 
science centers, into veterinary medicine, into the colleges of 
ag sciences and their food nutrition programs, food safety 
programs, we can really move the needle on food safety, and on 
one health, which is the health of all of us as it relates to 
agriculture.
    Mr. Crawford. You mentioned the importance of leveraging 
Federal dollars with state and private dollars. Talk about 
that, about your plant science department's partnership with 
Bayer, and some of the examples of public-private partnerships 
related to your ag activity on campus.
    Mr. Duncan. Yes. Bayer has been a very significant player 
in, of course, the cotton world, which we now have one of their 
greenhouses on our campus, as well as they invested in one of 
our labs and plant soil science labs on the campus. We were 
able to get their investment in that by a program called TRIP. 
It is a state infrastructure program, it is a matching program. 
For example, for anything above $2 million up to $10 million, 
the state matches it 100 percent. You can imagine the return on 
that investment is significant, and is very attractive to 
private partnerships whenever you can leverage a gift such as 
that.
    Not too long ago, using the TRIP match, we also received a 
grant from Teys in Australia and Cargill of $2 million, which 
will be matched with $2 million in the state TRIP program.
    It is those types of infrastructure programs that really 
move the needle for the types of research that we need in 
agriculture to keep moving us forward, and the growth of our 
population and also the complexity of agriculture as it exists 
today.
    Mr. Crawford. You also mentioned the importance of non-
land-grant universities and the education of underrepresented 
groups. Does Texas Tech offer scholarships or special programs 
that seek to engage groups such as first-generation college 
students, first-generation farmers, minority and rural students 
in university research?
    Mr. Duncan. Yes, sir. We have significant programs along 
that line. Our border regions, and in particular, Angelo State 
University in our system has achieved Hispanic-serving 
institution status several years ago. Texas Tech University, 
which is about 37,000 now, we are on the very cusp of about 
24.3 percent Hispanic students, and we will be a Hispanic-
serving institution, at least according to our board's 
predictions as well as their priorities, probably in a year. 
And those programs really do help us to be able to be 
attractive to Hispanic students. We are in a great place in 
Texas as it relates to recruiting and retaining students of 
Hispanic culture, and it has been an exciting thing. But we do 
have programs, and that is a very strong priority of our border 
regions.
    Mr. Crawford. Excellent.
    I yield back.
    The Chairman. The gentleman yields back.
    Mr. Costa, 5 minutes.
    Mr. Costa. Thank you very much, Mr. Chairman, for holding 
this hearing. And I concur with my colleague from Texas who has 
talked about the non-land-grant universities, and the fact that 
in 2008 we did put money aside for research purposes, but it is 
not nearly enough. And I commit to work with you and work with 
Members of this Committee to figure out ways that we can expand 
those efforts, because you, as many of us do, represent a host 
of universities around this country. Fresno State is one of the 
premiere ag universities in the West, and clearly does a whole 
lot of good work, and they work in conjunction with other 
universities, but clearly they don't have the opportunities 
that the land-grant universities do. And not to say that we 
shouldn't be doing more there.
    Dr. Humiston, you made in your comments a statement about 
food security, and I want to tell all of you that are 
testifying here this morning, each and every one of you play a 
critical role in food security. And it is something that I 
continue to come back to, because Americans take our food 
security, generally speaking, I believe, for granted, period. 
The fact of the matter is that American farmers, ranchers, 
dairymen and women, none do it better in terms of our yield, 
our quality, and our nutritious values of the food products, at 
a more cost-effective way, so well, in fact, that less than 
three percent of the nation's population is directly involved, 
and yet we can also export those food products to people who 
are hungry around the world.
    One of the factors that is attributed to that is our 
research that all of you are part of in ensuring that food 
security, and clearly, that must continue.
    We use many words here, or we overuse words here, like 
unique, but truly, the relationship that has existed for over 
100 years with land-grant universities and others in terms of 
this partnership is unique. It is one of the reasons there is 
far more acceptance on biotechnology efforts as it relates to 
food safety here in the United States than in other parts of 
the world.
    Having said that, Dr. Humiston, you mentioned in your 
written testimony that the Specialty Crop Research Initiative 
requires research proposals be multi-state, and, of course, 
this is difficult in California because we have such a 
diversity of crops that aren't grown elsewhere. How do you 
think, with these existing requirements that it is impacting 
our agriculture, what changes would you recommend? And I have a 
couple of other questions, so be quick, please. And thank you 
again for your good work.
    Dr. Humiston. Thank you. The really quick answer is either 
get rid of the requirement or the preference for multi-state, 
or significantly reduce its weighting factor. I don't believe 
we are the only state with this problem.
    Mr. Costa. Other states have a lot of diversity as well. We 
worked very hard in the farm bill, in 2008, to address 
specialty crops through programs like SCRI and OREI. We wanted 
to ensure specialty crops were properly sized and prioritized 
within the NIFA research portfolio. What changes do you think 
we should make there?
    Dr. Humiston. Well, that is a great question, and the fact 
that Amazon just bought Whole Foods, for all of us means that 
the demand for organic is about to skyrocket. Over 82 percent 
of American households already buy organic. And the problem is 
our U.S. farmers are having a hard time dealing with that 
demand, and largely it is because of the lack of research that 
has been done on organics. We have to step up to the plate or 
our farmers are going to have a really hard time meeting market 
demands that are hitting them very soon.
    Mr. Costa. Well, this is something where it would be 
helpful for all of you to provide additional input to the 
Committee as we are try to reformulate the farm bill later this 
year or next year.
    I have some other questions but time is running out. Let me 
mention the citrus industry in California. You are very 
familiar with the disease research efforts and the extension of 
both SCRI and the CDRE has been. Can you talk about how the 
program is vital to not only California's multibillion dollar 
citrus industry, but Florida as well?
    Dr. Humiston. And Texas. In fact, I am sure----
    Mr. Costa. And Texas.
    Dr. Humiston. I am sure the other disease out there----
    Mr. Costa. I would not forget Texas, Mr. Chairman, ever.
    Dr. Humiston. I am sure the other diseases out there are 
quite jealous that you have the three states here that are 
actually dealing with citrus greening. It is a huge problem. 
And the good news is we are finding some resolutions to it. 
They are not a fix, there is a long way to go, but 
multidisciplinary efforts at vector control, quick assessment, 
being able to jump on it quick, proper pesticide use, et 
cetera, is getting us there.
    Mr. Costa. And those universities in the three states all 
collaborate?
    Dr. Humiston. We are sharing a great deal of information, 
and we have multi-state grants that we collaborate on.
    Mr. Costa. Thank you, Mr. Chairman.
    The Chairman. The gentleman's time has expired.
    Mr. Costa. Thanks.
    The Chairman. What appears to be soon Second Lieutenant 
Rodney Davis is recognized for 5 minutes.
    Mr. Davis. Thank you, Mr. Chairman. I am actually grateful 
that Chairman Conaway has given me the opportunity to once 
again chair the Subcommittee on Biotechnology, Horticulture, 
and Research, which is why I am so thankful that each and every 
one of you are here today to address this very important issue.
    As you are all aware, by 2050, the world's population is 
going to grow to nine billion people, and it is predicted that 
our farmers will need to double their production to meet the 
demands of this growth. Now more than ever it is imperative 
that we have to invest in ag research. I really, truly 
appreciate all of your testimony.
    Many of our country's universities, the greatest obviously 
being in the State of Illinois, Jodey has gone to witness that. 
I represent the University of Illinois, our land-grant 
institution, but also other ag research institutions like 
Illinois State University and Southern Illinois University at 
Edwardsville, and all of those institutions and others are at 
the forefront of ag research. But if we are to feed the world 
in 2050, we have to answer how do we keep on the cutting-edge 
of ag research and competition so that our producers will meet 
that demand?
    And with that, Dr. Burns, I would like to ask you a quick 
question. Can you touch on some of the research your 
university, the University of Florida, is doing to achieve this 
goal of feeding the world in 2050?
    Dr. Burns. Thank you. That is a very broad question, and 
let me attempt to provide at least some insight into what we 
are doing.
    First of all, in terms of biotechnology, we are using some 
of the most cutting-edge tools, like many of our colleagues 
here are, to try to advance solutions and provide alternatives. 
Some of our biggest problems are ones that can't be solved by 
conventional means, those that continue to be problematic and 
we continue to throw money and effort in, simply can't be 
solved by our conventional means and modes. Biotechnology plays 
a critical role, but it is the acceptance of these tools and 
techniques and the products that they deliver have been quite 
problematic.
    So in the future, it is hoped that, and I hate to bring 
this up, but citrus greening is a very important problem in our 
three states and worldwide, technology, gene-editing 
technology, CRISPR-9 technologies and so forth, are going to be 
so, so important in solving those problems. Will it take an 
existential threat, and a takedown of an industry, to see and 
prove that these are going to be viable technologies, and safe 
for the consumer.
    Mr. Davis. You believe biotechnology and some of the 
biotechnological advances we already have in this country are 
completely safe, right?
    Dr. Burns. Yes, I do.
    Mr. Davis. Yes. Thank you. And you believe biotechnology is 
the key to us being able to grow more food on less land for a 
much higher population in 2050?
    Dr. Burns. I do think that biotechnology is a tool that we 
can use to not only produce more food, but importantly, produce 
more nutritious food.
    Mr. Davis. And keep being able to produce the foods that we 
enjoy now, a la fighting citrus greening and others?
    Dr. Burns. And others, yes.
    Mr. Davis. Okay. Thank you very much for your comments.
    Dr. Burns. Thank you.
    Mr. Davis. It was 25 years ago, or a little longer than 
that, I have lost count, when I was in college, I listened to a 
gentleman named Paul Ehrlich tell me about the population 
explosion, and how by about this time in our world history we 
would be experiencing massive amounts of starvation. Now, there 
are areas of the globe that still are much hungrier than we are 
here in the United States, but obviously, through technological 
advances and through ag research that many of your institutions 
and other facilities have done over the years, we have stopped 
that from happening. It is up to each and every one of you to 
continue that trend.
    Chancellor Duncan, I have never been to Texas Tech, but 
Jodey says it is awesome. You are a non-land-grant institution. 
Illinois State University in my district is a non-land-grant 
institution that has an ag research facility too. From my 
visits there, it appears that the institutions in your non-
land-grant category offer some great opportunities for research 
in the future too. Do you feel that you need more resources? 
What resources are the USDA bringing to the table to help 
institutions like yours, and how can we move ahead in the 
future?
    Mr. Duncan. There are two things there that are involved. 
The capacity is really the significant issue, as we have talked 
about, but as well as additional money for competitive grants. 
Professors get disheartened when they produce grants that 
should be funded, but there is just not enough money. Texas 
Tech had 12 proposals at one point in time and won two. You 
have to keep your faculty interested.
    But the other thing is, if you look at the total amount of 
appropriations for the different programs, USDA gets $2.9 
billion for this, but if you look at NSF it is $8 billion, NASA 
gets $10 billion, DOE gets $12.6, and NIH gets $33.1. We eat 
food every day, and food safety, food security, and the ability 
to produce high-quality food at a low price, which we have been 
used to for all of our lives, is going to be significant, and 
the investment in research in that area would benefit this 
country greatly.
    Mr. Davis. Thank you.
    My time has expired.
    The Chairman. The gentleman's time has expired.
    Mr. Walz, 5 minutes.
    Mr. Walz. Well, thank you, Mr. Chairman. And thank you all 
for being here. This is a critically important discussion. I 
know we are preaching a little bit to the choir on this, and 
that might ring to the heart of some of my questions.
    And we certainly, in Minnesota, know the importance of this 
with the work of Norman Borlaug at the University of Minnesota, 
which many of us tie back to. But, we have all hit on this 
important piece of talking to the public; the interesting 
discussion on citrus greening, and we say it, GMOs and the 
labeling issue that came up, and talking to the public on the 
disconnect between where the research is and where the public 
is at. It is going to be critically important so that they 
understand.
    Dr. Tallant, I had the opportunity to watch and see some of 
your researchers working on deer research down at your 
Kingsville station. Fascinating things out there; young, 
enthusiastic researchers trying to make a difference. But, it 
is that trying to get the public and build these new coalitions 
that is important. Mr. Duncan, I align right with you. We need 
to be clear that we are not pitting our land-grant universities 
against our non-land-grant. There is critical importance there 
and both serve a purpose.
    I represent Minnesota State University, Mankato. They have 
come up with a really unique partnership with the greater 
Mankato growth, the Chamber of Commerce, and GreenSeam. They 
are branding themselves, because they are at the center of 
medical research with the Mayo Clinic, with the Hormel 
Institute, and what they are doing with ag research. They are 
tying those things together, and explaining to the public that 
they are one and the same.
    Dr. Humiston, you mentioned research may not be the hot 
topic in agriculture. We need to make it that. We need to show 
them where it intersects. If you want to talk healthcare costs, 
the Hormel Institute is working on omega 3 fatty acids and how 
our food supply impacts that. Now all of a sudden, healthcare 
costs, healthcare bills, insurance costs are ag issues, and we 
are seen as the people who can solve that.
    I ask all of you, how do you think we talk about this 
differently? What do you think you are seeing that makes a 
difference? Because in my part of the world, people now 
recognize the economy is doing well, ag is at the heart of 
that, and when ag struggles, we struggle, but the research 
piece has to remain constant.
    I will just throw it to you on that.
    Dr. Humiston. Well, that is an excellent question. We are 
doing two things right now in California, and other states are 
similarly doing the same. One is we are trying to engage more 
of our citizenry throughout the state in citizen science so 
they start understanding the role science and research plays in 
their everyday life, and that is crucial. We are tying in 4-H 
and other programs to that.
    But second, and perhaps more importantly, I am a firm 
believer that most people really care about their pocketbooks.
    Mr. Walz. Yes.
    Dr. Humiston. And all too often, what happens is that the 
agricultural sector gets credit for its raw farmgate, which in 
California is almost $50 billion. It is a significant number, 
but when you compare it to the overall economy of California, I 
can't tell you how many times I get angry every month; at least 
three or four, when somebody makes the incredibly stupid 
statement, ag is less than two percent of the GDP of 
California, why should we even care about it?
    Mr. Walz. Yes.
    Dr. Humiston. To combat that, we are updating a study that 
was done about 5 years ago looking at the value of our working 
landscapes, which includes agriculture, forestry, fisheries, 
mining, open space recreation, renewable energy, the whole 
gamut of it, and we are looking at the full gamut of direct 
sales and multiplier. That study 5 years ago showed that 
working landscapes in California were over $300 billion in 
direct sales alone, and they really didn't even look at 
recreation on rural landscapes. We are updating that, and quite 
frankly, it is going to show that our working landscapes in 
California are well over \1/3\, approaching \1/2\ the state's 
economy. People have to pay attention then.
    Mr. Walz. We have to do a better job of messaging it. I 
know it too. My time is running out, but I did want to mention 
in segue, I am trying to figure out this ratio between 
competitive grants, matching funds, and everything else, 
because I too, like Mr. Costa and others Mr. Peterson 
mentioned, worry about the organics because it is a huge growth 
industry. The market is starting to show, that is what people 
want. The research is going to have to keep pace with that, and 
I don't know if the system now disincentivizes that type of 
research as opposed to some of the mainstream research, and 
that is what we need to focus on. But you have our commitment. 
It is a critical role, more so than ever. You are hearing it 
from all the Members up here who understand it. Now we need to 
figure out how to engage the public, because that is really 
where the will to get this done comes from. So thank you all. 
It is incredible work you are doing, and we are very supportive 
of it.
    I yield back.
    The Chairman. The gentleman yields back.
    Mr. Yoho, 5 minutes.
    Mr. Yoho. Thank you, Mr. Chairman, I appreciate it. And I 
appreciate you all sitting here and going through this, and 
educating us and giving us good information.
    Dr. Humiston, you were talking about getting the facilities 
up-to-date, and it is going to take a combination of local, 
state, and Federal. We talk a lot about, and seeing the picture 
up here, we are heading into some tough times financially if we 
don't change some things up here. And, of course, that is our 
goal, but austerity measures are coming and we need to prepare 
for that. And we had the University of Florida up here 
yesterday, the researchers. Knowing that, and I know this 
question has been asked about the coordination of research, and 
if we can belabor citrus greening again, one of the cures is 
going to be a GMO, one is going to be using an antibacterial. 
Are you guys coordinating that or other types of research to 
where, if you are working on a transgenic type of tree, are you 
guys coordinating that, say, this university is doing that, we 
don't need to do that, we can stay in touch with them, we are 
working on, say, a transgenic vector for the psyllid that is 
spreading that, and somebody else is working on this. Do you 
guys coordinate to that degree so that we are not duplicating, 
so that we are getting more research done with less resources?
    Dr. Humiston. Absolutely.
    Mr. Yoho. Okay.
    Dr. Humiston. In fact, I included an example in my written 
testimony of how a researcher at UC Santa Barbara looking at 
thin cell solar technology has now adapted that to an entirely 
new way to deal with food safety issues.
    Mr. Yoho. Okay.
    Dr. Humiston. Down in the Los Angeles/San Diego area, which 
is one of the great aerospace sectors of the U.S., we are 
partnering up with them; NASA, Lawrence Livermore National Lab, 
to look at things like controlled environment agriculture. 
Increasingly, we are bringing together these very diverse, 
multidisciplinary entities and collaborating.
    Mr. Yoho. Okay. And, Dr. Burns, knowing one of the cures is 
going to be a GMO, and, Dr. Humiston, you were also talking 
about that you guys developed the machine-harvesting of 
tomatoes, but first you had to make a plant that was more 
adaptable. I assume that was some kind of transgenic type of 
modification, or just plant selection. Was it a GMO type?
    Dr. Humiston. There were both.
    Mr. Yoho. Okay. I want to ask the whole panel this. Knowing 
we are putting money into research and development into the GMO 
technology, knowing that the narrative on the Internet is they 
are bad, but we know the Nobel laureate scientists, over 100 of 
them, have done a retrospective study, talking about the safety 
of those. Are you guys doing any coordinated research or 
coordinating marketing efforts as you do the research to show 
the public that they are safe?
    Dr. Burns. Well, I know we have with the University of 
California, especially as it relates to the transgenic 
technologies for the Asian citrus psyllid, we have coordinated 
our marketing efforts in a proposed way to try to get the word 
out about the safety of this as well as the synergies that 
could develop in other areas with developing such a technology, 
highlighting the screwworm and some of the successes that we 
have had in those areas. I do think that there is a lot of 
coordination that goes on that is funded a lot by the USDA, 
NIFA, SCRI, and so forth.
    It is really, really important to emphasize that 
competitive funding helps make that happen, but in order for us 
to survive as an industry we must coordinate our efforts, and 
that is what we have done.
    Mr. Yoho. And we had a group of researchers come up 
yesterday from the University of Florida, and one of the things 
they were talking about is the cutbacks in this new budget, and 
they were talking about how much money, and I would like to ask 
all of you if you have time, how much money of your research 
dollar goes into research versus plant facilities, like the 
buildings, things like that, if you were to take a percentage 
of that $1 you get for a research project, how much goes into 
research itself? Any idea?
    Ms. Billy. Well, I can answer that for the Tribal colleges.
    Mr. Yoho. Yes, ma'am.
    Ms. Billy. Our entire research program at USDA is $1.8 
million for our 34 institutions. It is a competitive program. 
All of our money goes into research, and a lot of it by 
undergraduate students. We are growing that pipeline. And we 
are able to do that through really strong partnerships with the 
state land-grants, and the agriculture research centers. That 
is another area where the agriculture research centers are 
probably in older facilities that also need to be upgraded and 
sustained.
    Mr. Yoho. All right. I thank you for your answer.
    I am out of time. Thank you, Mr. Chairman.
    Mr. Thompson [presiding.] The gentleman's time has expired.
    I now recognize the gentleman from Massachusetts, Mr. 
McGovern, for 5 minutes.
    Mr. McGovern. Well, thank you very much. And thank you for 
being here, and thank you for all the incredible work that you 
do. It is nice to witness this bipartisan chorus in support of 
agricultural university research. I just hope the budget that 
we enact reflects our rhetoric; because, as you are pointing 
out, the research that goes on at your institutions is 
incredibly important, but we need to do more than talk the 
talk, I mean we need to make sure that the funds are there. I 
think that is a primary responsibility of government.
    I come from Massachusetts. I represent the University of 
Massachusetts-Amherst. There is incredible research that goes 
on at that campus. But I support agriculture university 
research at every level, including basic research.
    USDA ARS programs and facilities, for example, are 
critically important resources for the nation and local 
economies. They advance cutting-edge research that benefits the 
national population, while supporting thousands of jobs in 
their respective communities. A major key to ARS success has 
been collaborations with universities, and a prime example of 
one of those collaborations is the ARS Jean Mayer Human 
Nutrition Research Center on Aging at Tufts University in 
Boston, Massachusetts, which I am very familiar with. The HNRCA 
is advancing the country's scientific knowledge on nutrition, 
food safety and quality, and research that focuses on solving 
problems that affect everyday Americans. And the current 
research that goes on at this facility is investigating the 
role that nutrition plays in cancer and heart disease, 
infectious disease, and Alzheimer's. It is research to find 
ways to continue to improve health care and save lives, and 
generate economic growth for the nation. And one of the things 
that they have learned there is that diet-related disease has 
become America's largest single cause of premature death and 
disability. And as the baby boomer population continues to age, 
the research at this facility, for example, will become even 
more important to the nation's health.
    Now, USDA Economic Research Service estimated that for 
every $1 invested in agricultural research, there is an 
estimated $17 worth of economic impact. You may be reading 
about this horrible healthcare bill that is making its way 
forward, that is going to throw millions of people off of 
health care, I assume that the supporters are backing it 
because they think healthcare costs are out of control. Well, 
some of the research that we are talking about here will 
control healthcare costs. We can avoid healthcare costs if we 
get this right at the nutrition level. And every single 
Presidential Administration that I can find has appreciated the 
importance of HNRCA since the center's inception in 1979, and 
has always supported it with a robust funding level. However, 
we go back to this budget question, in the Fiscal Year 2018 
budget request, it is proposed that the total termination of 
this facility at Tufts, along with 16 other ARS laboratories, 
locations, and worksites. It would also cut ARS overall by 22 
percent, targeting human nutrition research for a 50 percent 
reduction compared to the current enacted levels.
    I just want to point out that last week before the Senate 
Agriculture, Forestry, and Nutrition Committee, ARS 
Administrator, Chavonda Jacobs-Young, testified that the key to 
ARS success is strong partnerships and collaborations with 
university researchers.
    My quick question to anybody here, because I am really 
concerned that we are going to eliminate important research 
facilities that are vital to so many of the causes that we all 
say we care about, and it is important that we have to raise 
our voices in defense of some of these research dollars. Can 
any of you talk a little bit more about the collaboration 
between ARS facilities and academic researchers, and why it is 
so important, and specifically, how do these collaborations 
support the USDA's capacity to conduct research on national and 
regional agricultural nutritional priorities?
    Dr. Burns. Thank you. Those programs are specifically 
important, very, very important to having us continue to 
provide the knowledge it is going to take to create the next 
solution that is going to be transferred through technology. It 
is going to come from who knows where. But these partnerships 
cannot be dissolved, they have to be funded, they have to be 
encouraged, they have to be continued, because from that you 
never know where the next solution is going to come from.
    In terms of the University of Florida and its partnership 
with its sister institutions, as well as with USDA, we have 
multiple, multiple projects that go on that, without this 
partnership, they would be half of what they are. The USDA 
depends on us to do that extension sort of outreach to our 
constituents, and we depend on them to help us with the 
cutting-edge research that is moving forward.
    So in all of those cases, and especially in the private-
sector, they are extremely important.
    Mr. McGovern. Yes. I have to tell you, I just want to say 
it is important that we not only talk the talk, but walk the 
walk. This research is incredibly important, and we need to 
make sure it is funded.
    Dr. Humiston. If I could add real quickly. We view the 
partnership so importantly. We have placed, and currently have 
cooperative extension specialists actually functioning in ARS 
facilities, and they are a key partner in our statewide 
innovation and entrepreneurship initiative as well.
    Mr. McGovern. Thank you.
    The Chairman [presiding.] The gentleman's time has expired.
    Mr. Comer, 5 minutes.
    Mr. Comer. Thank you, Mr. Chairman. It is great to see so 
many agriculture institutions represented here today. I have an 
agriculture degree, and I am proud of that, and it is great to 
hear the good work that you are doing with the agriculture 
research. I strongly support funding agriculture research. As a 
farmer, I understand how important it as we continue to grow 
and expand our industry.
    One question I have, with respect to land-grant funding for 
extension programs like 4-H and the agriculture extension 
agents, how has that been affected in your states, the ones 
that represent the land-grant universities? I know in Kentucky 
we have seen some cuts to those programs that are vitally 
important in the district that I represent. Have those over the 
last few years been affected much?
    Dr. Humiston. Clearly, it is a challenge. The Federal 
funding typically for us goes into the research aspects, and as 
you said, the county cooperative extension advisors, but we 
have been real fortunate in California to work closely with our 
county governments, who have frequently stepped up to the plate 
providing----
    Mr. Comer. Right. With taxing districts right?
    Dr. Humiston. Pardon?
    Mr. Comer. With taxing districts and things to fund that.
    Dr. Humiston. No, no, just via the county government 
funding itself.
    Mr. Comer. I see. All right.
    Dr. Humiston. We work in very close partnership with our 
actual county governments.
    Mr. Comer. Okay.
    Dr. Humiston. In fact, in some counties, it varies a great 
deal county by county, but in some of them we are a department, 
the 4-H and cooperative extension is considered a department 
within county government. In other ones it is more like a joint 
powers agreement.
    Mr. Comer. I see.
    Dr. Humiston. It really varies.
    Mr. Comer. Okay.
    Dr. Burns, I am curious, what are some of the types of 
research that you are doing through the Specialty Crop Research 
Initiative and the Agriculture and Food Research Initiative at 
Florida?
    Dr. Burns. With the SCRI we have done pest and disease 
research that is providing strategies, and importantly, tactics 
to help our farmers survive, especially not in Florida but also 
in the Southeast that have the same kind of pest pressures, 
things like the Strawberry Program that is really very 
impactful within the Southeast. Food initiative programs and 
food safety programs that not only do the research, but also 
provide the critical training across these regions that help 
train our growers and partners and help them be productive. So 
those are a couple of important projects.
    The other important project that I would like to highlight, 
on the AFRI side, is our work, again, with citrus, identifying 
the genetic makeup of citrus, but importantly, some of the 
genes that are responsible for inferring resistance in things 
like citrus canker and other important invasive diseases of 
citrus, that can be used later on downstream in genome editing 
type of approach to create citrus that is resistant to citrus 
canker. These are the kinds of things that we like to highlight 
because they are so very important, built on previous capacity 
funds and previous work, but also strengthened and accelerated 
with funds from SCRI and AFRI.
    Mr. Comer. Good deal. Good deal.
    I am curious, Dr. Tallant, what type of outreach does your 
university do to recruit top students for science-focused 
academic programs like agriculture research?
    Dr. Tallant. We have a number of outreach programs that we 
are doing. I will just name one very quickly. We have a NIFA 
grant where our citrus center brings in promising high school 
kids in the valley, they come work at our citrus center for a 
whole year, encouraging them to get interested in agriculture 
and hoping they come to our university, but we are glad if they 
go to any university.
    Mr. Comer. Right. Okay, good deal.
    Thank you, Mr. Chairman. I yield back.
    The Chairman. The gentleman yields back.
    Ms. Adams, 5 minutes.
    Ms. Adams. Thank you, Mr. Chairman. Thank you, Ranking 
Member Peterson. And to all of the witnesses, I want to thank 
you for your testimony today. It is good to have you back here 
to discuss this important topic. I am especially pleased to see 
an old friend, Dr. Alton Thompson, here, North Carolina A&T.
    And, Dr. Hill, we spent some time together in February 
during our bipartisan HBCU caucus with the 1890s roundtable, 
and you have been a great resource, and it is good to see you 
again. I am a proud graduate of the North Carolina A&T State 
University, and know not only it to be a fine school, but also 
our 1890s. In hopes of driving home the important issues that 
face our HBCUs, I am going to direct my questions to you, Dr. 
Hill.
    Our 1890 land-grants are HBCUs established by the Second 
Morrill Act, which has also been mentioned here. But, 
unfortunately, states have under-funded 1890s, and North 
Carolina is no exception. I served in the North Carolina House 
over 20 years, and we continued to talk about this issue, and 
so it has created a number of challenges for our schools. The 
current state funding for North Carolina A&T is approximately 
$1.11 million less than the school's Federal allocation. In 
other words, they do not receive a 1:1 match from the state. It 
is a disparity that not only prevents A&T, but many other HBCUs 
from being able to expand their research and agricultural 
projects at the same rate and the level of the 1862, which 
receive above-matching funding in some cases.
    You mentioned that, in your state, your schools work 
together with your legislature. I think that is a great thing. 
It is probably an example that we all need to follow. But let 
me ask you if you could describe some of the capacity 
challenges that Tuskegee has encountered in applying for 
competitive grants at USDA.
    Dr. Hill. Well, thank you for that perspective, and an 
opportunity to respond.
    First, I want to go back to what we did in Alabama just for 
a second here, because what really allowed the movement to 
occur were the three deans, and those three deans went to ALFA, 
the Agricultural Leadership, the forestry commodity, poultry 
commodity, and all of us got together and we decided we wanted 
to do something different. So that dean at Auburn was a 
critical person.
    Ms. Adams. Yes.
    Dr. Hill. And they have a new dean now at Auburn. And so it 
is a human-human thing, even research, it is the researcher 
working with the researcher. That is something we just kind of 
shoot at people, but if we get people in closed doors and work 
that piece.
    The other thing is incentive. Again, like when the 
legislature came through with the 1:1, Tuskegee went from zero 
match to some match. We have about 90 percent now. I mean that 
is awesome. It is a matter of working those pieces.
    The other thing we could do is among the land-grant 
leadership, because my colleagues here, we have our own places 
where we meet. If my colleagues, and I have some strong ones 
sitting here to my right in our group, decided they were going 
to speak up among their colleagues and push this, I believe we 
could do it, because we have done some other things here. 
Really, we need to look in the mirror, and we need to go ahead 
and do that.
    What difference does it make? A big difference. Like you 
say, the $1 million that North Carolina A&T would be able to 
utilize in terms of keeping those scientists, helping some 
students, and taking on challenges. And let me make this point: 
sometimes the 1890s will take on a problem that the big farmers 
in the state need help. That is what Carver used to do. What we 
shouldn't do is assume the 1890s are only going to be dealing 
with small and minority farmers, but what we have to do is 
leverage the best two scientists, because you have a Carver at 
North Carolina A&T and you have one at North Carolina State, 
and they put those two heads together, then you have that 
breakthrough. We can do that a lot better. I think you all need 
to incentivize us a little bit more.
    Ms. Adams. Okay. Well, thank you very much. I am interested 
also in what you are doing in terms of partnerships as it 
relates to STEM. I am just about out of time, but if you could 
give me a quick answer.
    Dr. Hill. Yes. Well, STEM, again, at our school, 
engineering, mathematics, chemistry, we all work together. We 
have kids there right now all summer long coming, learning, 
whatever, and then we pipeline them through. What we need to do 
at the 1890s is look beyond ag into our other science and 
engineering, get tight, like I know A&T is doing there, and 
really push the threshold. We should lead the nation in that. 
We are small enough, we are smart enough, it is time to do it. 
And California and Florida will come behind us if we did it the 
right way.
    Ms. Adams. All right. Thank you, sir.
    Thank you very much. I am out of time.
    The Chairman. The gentlelady's time has expired.
    Mr. Marshall, 5 minutes.
    Mr. Marshall. Yes. Thank you, Mr. Chairman. It truly is 
great to be here and talk about agriculture research. While Dr. 
Humiston stated that only two percent of the California income 
is agriculture, in my district agriculture represents 60 
percent of our economy. It certainly is very, very important. I 
am a proud alumnus of a land-grant institution, my alma mater, 
Kansas State University. I have invested time and energy in 
understanding what they are doing there for research, and I am 
very proud of their Wheat Innovation Center, as well as their 
Biosecurity Research Institute.
    As we go forward, one of the things that my professors back 
home talk about is facilities, and that we have been 
underfunding or deferring maintenance.
    I will go to Dr. Hill first. You guys have quite a bit of 
deferred maintenance issues going on? Can you just briefly 
speak to that? And how is it impacting current research?
    Dr. Hill. Briefly, yes, yes. I mean serious issues, we just 
did a master plan, and all the 1890s would have the same 
dynamics. We have to do selection, we have to figure out which 
buildings we are going to tear down, which new ones we need to 
do, which ones we are going to do renovation. All campuses are 
making those kinds of selections. This is a highly critical and 
important issue.
    Mr. Marshall. Chancellor Duncan, I will kind of follow up 
with you. The follow-up part of that, if there was 
infrastructure dollars available, how would you prioritize them 
at Texas Tech?
    Mr. Duncan. At Texas Tech, we would prioritize improving 
the labs. Labs are a continuous obsolescence issue, and as you 
go forward and research, you can buy a piece of equipment 5 
years ago and it is obsolete. And so that is the continuing 
challenge as it relates to expanding research, and that is 
across our campus but in particular with the agricultural 
research that we are doing. Cutting-edge things come across and 
are developed every week, and so keeping up with that is very 
significant, and you have to do that in order to be 
competitive.
    Mr. Marshall. Okay. I am going to go to Ms. Billy next. One 
of your facilities is Haskell College in my state, and I am 
just curious, are you familiar with any particular work, or are 
you working with Kansas State University or KU, how are those 
relationships going?
    Ms. Billy. Well, Haskell Indian Nations University has 
partnerships with both Kansas State and, of course, KU, because 
KU is right there in Lawrence, Kansas. They are actually doing 
a lot of research, a lot of STEM-related research, agriculture 
research, research into not just crops but also range 
management, climate-related research, and then agriculture-
related research related to cows, cattle production, and 
actually doing some international research in that area. Those 
partnerships are very, very strong. The larger universities 
sometimes share their faculty with Haskell and their students 
often transfer. And the faculty and researchers at the 
mainstream, the larger state institutions, are actually the 
mentors for the Haskell students, so it is a really strong, 
great partnership. And they share their lab facilities as well.
    Mr. Marshall. Good. I am glad to hear that there is a 
positive relationship.
    I am sure most of you know that NBAF, the National Bio and 
Agro Research Facility, will someday be in Manhattan, and for 
the past 2 years we have been pouring concrete there, and it 
looks like we are now coming out of the ground. I am certainly 
excited about that. Just curious if any of your facilities are 
currently working with Plum Island, the animal disease center 
there, any relationships with any of them, because I would 
anticipate that someday that will grow into a relationship with 
Kansas State University as well?
    Dr. Hill. Yes.
    Mr. Marshall. Yes, Dr. Hill?
    Dr. Hill. Yes, well, our vets go, and I even visited Plum 
Island some time ago, but our scientists, because of veterinary 
connection, have integral relationships with Plum Island.
    Mr. Marshall. Great. Dr. Humiston?
    Dr. Humiston. I was just going to say the same thing for 
our veterinary school, as well as some of our cooperative 
extension researchers are working very closely.
    Mr. Marshall. Good. Anybody else working with Plum Island? 
Okay.
    Mr. Chairman, I yield back the remainder of my time. Thank 
you.
    The Chairman. The gentleman yields back.
    Mr. O'Halleran, 5 minutes.
    Mr. O'Halleran. Thank you, Mr. Chairman.
    University of Arizona is our land-grant institution, and I 
have a number of their research facilities within my district. 
After having visited them, it is not only that their research 
is involving the importance of drought management and soil 
management, but also the insect issues that relate, in my area 
especially, to cotton. But over and above that, my wife, who is 
in the business area, tells me that if you start to pull back 
on research, you start to pull back on your ability to work 
well into the future. And I just can't imagine how we as an 
institution can start to look out into the future and say 
whether it is here in agriculture or National Institutes of 
Health, or other areas that we are going to pull back, and 
away, from what I believe is an important feature of public 
safety to the American people.
    As far as collaboration, in Arizona everybody knows about 
the extension services. They help us out so much in dealing 
with our water issues and erosion issues, and throughout the 
entire perspective of what the state natural resources process 
is, and farming process and ranching.
    But I also have a number of Native American Tribes in my 
district, and I look back at the Hopi, and one of the things 
that the U. of A. is working on and many institutions is how to 
deal with drought management and soil management. And you look 
back in their history and their heritage and talk about dry 
farming, they know all about dry farming. And I don't 
understand how we can only be looking at institutions, the 1994 
is at $1.8 million. We have to understand that this history and 
this ability to use that historical perspective is important to 
the entire process moving out into the future.
    And so my question is going to be for Ms. Billy. And what I 
would like to know is what is the role of the--I have another 
question that is better. What are the greatest barriers for the 
1994s in conducting agriculture research, because you had 
mentioned in your written testimony that they have a unique 
value that 1994 institutions can contribute. Could you please 
elaborate on that?
    Ms. Billy. Yes. Thank you very much. I think that Native 
world view, any different cultural world view, bringing that 
into research is really important. And as you said there is 
actually some really exciting research at Dine College in 
Arizona that the students are doing on testing different 
grasslands, some grasses that have grown in Africa and other 
arid environments, and possibly seeing how they can genetically 
modify them to work in the Southwest, that are very low-water-
requiring and very high protein, which could really change the 
shape of range management, for example, in the Southwest.
    But the biggest challenges are capacity, two parts of 
capacity. Not having the faculty, because they are small 
institutions, so those big partnerships with the University of 
Arizona and other institutions are very important. Not being 
able to attract the faculty. And then facilities, which 
everyone has talked about. Sort of ironically, I guess, we 
actually don't even have in many cases the facilities to be 
dilapidated because we don't have the funding to actually even 
build the facilities. We would like to get to that point where 
we have that, but facilities, even constructing new facilities 
and then rebuilding the labs that they have is a serious 
challenge.
    And another barrier is that in some instances, and 
researchers across the United States see this, it is easier to 
apply in some cases for funding from the National Science 
Foundation and NASA, and other science agencies, in a lot of 
cases than it is to apply and compete at USDA. The small 
programs that we have, a lot of times they are applying to 
other Federal agencies, which is hurting our agriculture 
research around the world.
    Mr. O'Halleran. Thank you. And I will be giving you a call 
soon.
    And I thank you, Mr. Chairman, and I yield back.
    The Chairman. The gentleman yields back.
    Mr. Arrington, 5 minutes.
    Mr. Arrington. Thank you, Mr. Chairman.
    I am very supportive of R&D and America's investment in 
R&D. It is incredibly important. I agree with Mr. McGovern. I 
might disagree with him on health care, but I will find common 
ground with him on R&D, and what it has meant to this economy. 
We are the envy of the world for a lot of reasons, but one of 
them is because we have led an innovation, and it is noteworthy 
to know that GDP growth, some people say upwards of 70 percent 
of GDP growth is innovation. What you guys do at your 
institutions is the seed corn for new technologies and startup 
companies and venture capital flowing to our country from all 
over the world. And so thank you for what you all do. We need 
to help you.
    And as a Member of the Budget Committee, the only 
Republican from Texas on the Budget Committee, I want to fight 
for R&D. I want to solve the budget crisis, the debt crisis, I 
just think that we can cut the discretionary domestic 
investment in infrastructure, R&D, and other things, to the 
point of diminishing returns. We have to get after some 
mandatory spending cuts. Nobody wants to talk about that, but 
that is what we have to do. And we have to stave off some of 
these deeper cuts that we have tried to balance the budget on 
the backs of some of these programs that I think have been very 
useful.
    As a former Vice Chancellor at Texas Tech for research and 
technology commercialization, I saw firsthand the value to the 
educational experience. We want to put the best and brightest 
in the marketplace. Discovery is a big part of that, right? I 
have seen the importance to our economy; startups, all the 
things we mentioned, but I have also seen, and let's take some 
language out of the Constitution in our mission, the general 
welfare of the public. The public benefits, CT scan, seatbelts, 
rocket fuel, on and on, Google, Stamford, and I have witnessed 
firsthand the practical application and the value of that in 
the marketplace solving problems for our producers, for our 
farmers and ranchers, et cetera.
    My question is, broadly, how do we maximize the impact of 
Federal R&D? Isn't that the question we should ask as stewards 
of taxpayer monies? How do we get the best return on 
investment? Here are three things that come to mind, I would 
love for you to comment on them. One is the importance of 
public-private partnerships, and leveraging private monies, and 
combining Federal dollars to enhance graduate student 
experience, but also focus on real problems that need to be 
solved. Dr. Hill, you mentioned, we have to get it out of the 
lab, into the field, to really make a difference. People 
understand that. The public gets it when you put it in those 
terms. I am not against fundamental research, but we have to do 
more translational research, in my opinion.
    Tech transfer, we haven't talked about that yet. How do we 
translate this into a marketable, patentable product? It is 
revenue stream back into evergreen some of these research 
projects, and it is public good, it is products and services 
that are enhancing the quality of life for Americans, right? 
What do we do to make that process easier for you guys, and how 
do we encourage you to do more of it? I will just stop there on 
that one. I will open it up to anybody. Would you start, Mr. 
Chancellor?
    Mr. Duncan. Sure, I will begin. This infrastructure funding 
is very necessary, as you know, your experience with transfer 
of technology and commercialization is important as well. You 
can start these projects, but you have to provide opportunities 
for your professors to be able, and for your institutions to be 
able to move these products into the market.
    At Tech, we have some demonstration projects on water 
conservation.
    We have scarce resources of water, and they are getting 
scarcer, and Texas Tech has worked with private industry as 
well to be able to demonstrate different sorts of technology 
that have been developed at our ARS Lab there at the Plant 
Stress and Soil Moisture Lab, and those sorts of 
demonstrations, getting those things out.
    But if you look at the endgame, the overall investment by 
this country in agriculture we are low compared to the other 
areas. And I went through that a while ago, but I do think that 
that is a significant issue that hopefully Congress can look at 
and investment more for the future, because food security, food 
safety is going to be a significant issue, going forward.
    Mr. Arrington. Absolutely.
    We changed our tenure and promotion policy. We put metrics 
for tech transfer in tenure and promotion. What are the other 
universities doing with tech transfer, and do you think it is 
important, and what can the Federal Government do to 
incentivize more of this? Dr. Hill, any comments, for anybody 
on the panel?
    And I yield back.
    Dr. Hill. I want to mention one thing. I hope it touches on 
your point. I am a state committee chair for FSA, and have 
worked with R&D for a long time. If there was a way we could 
get university research better connected with what they do with 
producers and R&D with communities and businesses, it would get 
at what you are trying to do, those entrepreneurs, the business 
partners, all that. We already have extension people working in 
those areas, but your question now just made me think about 
that and where there is a big gap. If anybody knows how FSA and 
the problem they are having getting those microloans and the 
big loans to the farmers, what happens afterward, our research 
could be there working through that, and extension people 
helping to minimize the gap and pain for both the government 
side and the farmer and community side. And the entrepreneur 
piece with R&D, since this is being restructured and 
reorganized, maybe somebody needs to say something at this 
point before it gets all structured, to get a university voice 
in there, and let's start trying some things.
    The Chairman. The gentleman's time has expired.
    The long-suffering and patient gentlelady from Delaware, 
who I skipped, Ms. Blunt Rochester, 5 minutes.
    Ms. Blunt Rochester. Thank you, Mr. Chairman. And I want to 
thank the panel. This is really interesting to me. I come from 
Delaware where we have two great land-grant institutions; 
University of Delaware, which I am a graduate, and also 
Delaware State University, which is a great HBCU. But I also 
wear the hat of having been a former senior research fellow at 
the University of Massachusetts, Boston, and worked on a grant 
that focused on building the capacity of minority-serving 
institutions, so I know many of the challenges that you face. 
But I am on the Subcommittee on Biotechnology, Horticulture, 
and Research, and so I want to focus my first question on that, 
and it is to the entire panel.
    The United States is currently being outpaced by China in 
regards to our investment in agricultural research, and Brazil 
and India are not too far behind. What are the potential 
implications on the United States food supply and availability 
of qualified agricultural scientists and researchers? For the 
whole panel.
    Dr. Humiston. Well, I will throw a very quick answer out 
there, because there is a slide available in a report that the 
Supporting Our Ag Research Group put out recently that very 
clearly shows as investment in our ag research has gone down, 
our productivity has. And as investment in Chinese ag research 
has gone up, their productivity in agriculture has. It is 
virtually a direct co-relationship.
    Ms. Blunt Rochester. Yes. Anyone else on the panel?
    Mr. Duncan. Well, as we discussed earlier, and I think that 
Federal and state investment in infrastructure and capacity 
that is how you do it.
    Ms. Blunt Rochester. Yes.
    Mr. Duncan. You have to have continuity, long-term 
commitment, and predictability of funding so that scientists 
can develop, programs can develop, and again, biosecurity, food 
safety, those sorts of issues are the types of things that we 
have to start really investing in, and the capacity to do that 
is going to be very important.
    Ms. Blunt Rochester. Dr. Humiston, you actually started 
talking about the fastest-growing agriculture sectors in 
farming being organics. For the panel, I am curious, and 
American farmers are struggling in this area to meet the 
consumer demand, how are your universities helping organic 
farmers address challenges and meet the booming demand for 
organic products?
    Dr. Humiston. Two things there: One is organics is booming, 
there is no doubt about it, but almost equally booming is 
local. There are some people that would prefer to buy a local 
food product than an organic food product. But both sectors are 
rapidly growing, and not just in the coastal areas, throughout 
the nation.
    We are doing a variety of things. We have taken the steps 
to create some of our research facilities having organically 
certified land so that we could conduct research there.
    Ms. Blunt Rochester. Yes.
    Dr. Humiston. Frankly, we have had a hard time attracting 
researchers because of the lack of funding for organic 
research. But, more importantly, we are trying to make sure 
that all of our programs, all of our research aims at a triple 
bottom line sort of sustainability; people, planet, and 
prosperity. And that ends up being things like integrated pest 
management, where hopefully if you do everything right, you are 
organic. But, there is still that once in a rare time you need 
to use a product, and you use it appropriately and very 
targeted in a way that is safe for the environment and people.
    We are very proud of our world-class integrated pest 
management program.
    Ms. Blunt Rochester. Yes.
    Dr. Humiston. Something that we actually manage for the 
western states too. I think more support for that, more open-
ended would be fine, but clearly, organics and specialty crops, 
which is related in some cases, and frankly, sustainable ag 
research extension, which helps with all these, they need more 
focus and we need to understand the needs of them more out in 
the public.
    Ms. Blunt Rochester. Great. Yes, Dr. Hill?
    Dr. Hill. Okay, yes. The project I alluded to earlier 
about, we have a scientist with a $2 million project with four 
of the universities, all 1862s. They are testing organic 
pesticides against major vegetable pests, they are doing on-
site, advanced, multi-location, multi-state, on-farm trials, 
and they have some really sharp people. North Carolina is 
involved, Alabama, and Pennsylvania. So that now, $2 million 
over a 3, 4 year period is nothing to actually deal with a 
regional project. Somebody should be looking at that and say, 
``Okay, let's reward that diversity and the scientists and 
quality, and let's give them a boost, tell them to bring four 
more schools in,'' Texas, and who do we have, Arizona, and 
Florida.
    Ms. Blunt Rochester. Thank you. My time has expired.
    Dr. Hill. Sorry.
    Ms. Blunt Rochester. But hopefully, if all of you could 
think of any adjustments that we need to also make to the grant 
criteria, related to Ms. Billy's comments also about the 
challenges of applying for agricultural grants.
    Thank you, Mr. Chairman.
    The Chairman. The gentlelady's time has expired.
    Mr. Dunn, 5 minutes.
    Mr. Dunn. Thank you, Mr. Chairman.
    I would like to direct my first question to Dr. Burns from 
the great State of Florida.
    In recent weeks, the proposals have resurfaced about 
imposing a cap, nominally ten percent suggested, on the amount 
of facilities and administrative reimbursement related to the 
competitive Federal grants. Could you speculate for us how the 
University of Florida would utilize, how does that impact your 
institution's capacity to perform research, going forward?
    Dr. Burns. Well, we depend on our indirect cost recovery to 
help us with all things related to research, especially as it 
relates to infrastructure improvements, building capacity and 
research, doing the administrative side of a research program 
is tremendous. This indirect cost recovery is very, very 
important. Cutting that would be detrimental to the research 
enterprise at the University of Florida.
    Mr. Dunn. Can you give, is there a program, is there 
something immediate that this research is going to go unfunded? 
Is there a program like that?
    Dr. Burns. Are you asking me if----
    Mr. Dunn. Because of the cap. Would you be----
    Dr. Burns. Because of the cap. We would have to strategize 
and prioritize research programs based on the amount of 
indirect costs that would come in. It is really important to 
once again emphasize the importance of full and direct cost 
recovery on our Federal grants because they are so important to 
maintain the capacity of research, the administrative side of 
research, that really is not visible to our stakeholders and to 
our funding agencies that we all know is really important to 
sustaining our research programs.
    Mr. Dunn. We are going to be down at the University of 
Florida this weekend, I believe. I hope you will be there and 
you will be able to make some specific points.
    Dr. Burns. Great.
    Mr. Dunn. Let me cast out to the panel also a question on 
GMOs. It is a recurring theme in the question is GMOs, and all 
of us with a science background know that GMOs are not 
inherently bad, and I wonder where the undercurrent comes in 
our nation at large and our culture that is so anti-GMO, and 
where can we start this educational process? Is it high school, 
is it middle school? I toss that out, because I am at a loss to 
understand it.
    Dr. Burns. Well, I will just throw out some thoughts here. 
I think that our children and our young adults know where food 
comes from because we started their education about where it 
actually comes from early. Educating the public, especially as 
early as possible, about the benefits and the risks involved in 
all the things that we do in agriculture is extremely 
important. Starting people early with education. It has to be 
balanced, it has to be fair, it has to be honest, and that is 
one of the main criteria for success is in keeping our 
population sort of in-the-know about the benefits and potential 
risks of any of our technologies, including GMOs.
    Mr. Dunn. Thank you very much for your comments.
    Dr. Humiston. I was just going to add, this is something I 
mentioned earlier, trying to get our citizens more engaged in 
citizen science. Part of that is a larger effort to just combat 
the general scientific illiteracy amongst our general 
population.
    And you bring up GMOs, but quite frankly, it leads to lack 
of understanding over the value of vaccination, over the lack 
of understanding about the effects of climate change, and a 
host of other issues. GMOs is just one topic among many that we 
have really got to start improving STEM education and getting 
our citizenry more involved in science so that they understand 
it and are participating in it, and can believe what is coming 
out of science.
    Mr. Dunn. Thank you very much.
    Mr. Chairman, I yield back.
    The Chairman. The gentleman yields back.
    Mr. Lawson, 5 minutes.
    Mr. Lawson. I was beginning to wonder whether I was still 
here, Mr. Chairman.
    And as a follow-up, I won't go into how much I wanted to 
talk about the 1890 institutions, because Congressman Scott 
from Georgia did a very good job, but I would like to ask Dr. 
Burns, last week Governor Scott signed a bill to allow the 
University of Florida and Florida A&M University to start an 
industrial hemp pilot program. What type of support do the two 
schools need from USDA to make the program work?
    Dr. Burns. As you know, the legislation does not allow for 
any funding to come to these programs, but it mandates that 
these programs should occur, and it also implores us to go out 
and get private investments for these. It does request that we 
go and we work with our state agencies to provide the rules and 
the regulations that are going to be important to maintain the 
Federal balance as well as the state balance in growing 
industrial hemp. I would say that there are enormous 
opportunities for researchers to get involved with the private 
enterprise to do that kind of research, but there are some 
restrictions on the research as there are in many of the states 
that are conducting industrial hemp programs.
    Mr. Lawson. Okay, thank you. And during your discussion you 
talked about alternative crops, which was interesting to me. 
What can we do in north Florida with alternative crops such as 
we have now in olives and peaches?
    Dr. Burns. Yes, so we have olives and peaches. Pomegranates 
are also alternative crops that we are looking at that would be 
beneficial and maybe adaptable to our conditions. Blackberries 
are another one. Crossing over into the row crops, we have 
Carinata, which is a new, for us anyway in Florida, an energy 
crop that can be directly converted into jet fuel. That is an 
enormous potential for us because it grows so well in Florida 
environments. Sesame is another alternative crop for us that 
has enormous potential. There are some issues and drawbacks 
with intellectual property and so forth with the companies; but 
overall, wow, is there a great potential for alternative crops 
in Florida. Even the Californians are coming with their crops 
because they want to take advantage of the resources available 
in Florida, the water, and the humid environment, which are so 
great for pests, by the way.
    Mr. Lawson. And I am interested in those. Congressman Dunn 
represents an area that I used to represent in the Senate, 
which is in Jackson County, and we are going to teach him a 
little bit more about farming, coming from the medical area. I 
represented him for 10 years, so I have to look out for him.
    But, Dr. Hill, I feel like I grew up on Tuskegee campus, 
for two or three reasons. My father-in-law finished from 
Tuskegee, E.T. Brooks, and Henry Brooks, who was very active, 
is my brother-in-law, and so I really have been on that campus 
a great deal and I see the kind of research and so forth that 
is going on there. But my question, if I don't run out of time 
is, your testimony, you talked about 1890 institutions centers 
of excellence. Can you talk about how these centers would help 
propel the 1890 institutions through the partnerships with the 
private-sector? We talked about the other universities, but how 
through the private-sector?
    Dr. Hill. Thank you for that. Real quick. You cluster the 
farmers. You cluster small farmers. You co-op or cluster five 
or six, you get a contract with a Wal-Mart or Kroger, whatever. 
The university comes in and leverages their expertise. They 
market. They make money. It is not like the big farmer. If you 
run into other problems, you get a middle-sized farmer who has 
the right mentality, wants to work with them, we get a larger 
farmer join. So the research is different. It is not just 
technology, irrigation, solar, et cetera, but it is social 
interaction among humans. And if you can work those pieces, 
then really the sky is the limit because the buyer wants that, 
the public wants that, all of the supporting commodity groups 
in the state want that, our state legislature likes that. All 
of a sudden you have friends all over the place because you 
brought people together and they are making a profit. Here, 
land-grant puts their eye on the profit in a supporting role, 
with all their economists, all their other people, and you get 
a different dynamic. It was new for us to do it that way, but 
it is great.
    Mr. Lawson. Well, thank you.
    Mr. Chairman, I yield back.
    The Chairman. The gentleman's time has expired.
    Mr. Thompson, 5 minutes.
    Mr. Thompson. Thank you, Mr. Chairman. Thank you to 
everyone on the panel that is here.
    I am going to just throw this out there. Can you elaborate 
on the impact of extension and the relationships that extension 
has with those that they serve in the field and urban areas 
across America? Is extension adequately funded, is it focused 
in the right direction? I know it has to with the different 
things that it addresses.
    Dr. Burns. I can make some general statements in extension, 
although I am not responsible for the extension programs. The 
urban sector is growing in Florida by leaps and bounds, as is 
the requirement and the need and the desire of our urban 
constituents to engage in some kind of agriculture. Our 
extension service has been very important at extending some of 
those agricultural knowledge bases to our urban society.
    Having said that, there is some friction between our rural 
and urban sectors, as I am sure there are in other locations, 
and some of our rural constituents think that we might be 
spending too much time in one area than the other, and vice 
versa.
    I think that extension continues to be important as we 
transfer knowledge from the research side into a more applied 
setting where it can be useful to our constituents.
    Dr. Humiston. I do oversee extension for the State of 
California, and I can say very clearly we have far, far more 
demand than we have resources to make available, both urban and 
rural.
    One thing we are trying to do, again, I have mentioned 
several times earlier leveraging collaboration, but to Dr. 
Hill's point, we are trying to help catalyze large regional 
efforts along the entire farm-to-fork food chain, and use that 
as economic development opportunities both in urban areas and 
tied to rural. I mean the reality is we don't want our food 
processing facilities on our ag land. They belong in cities and 
rural communities. And there is a partnership to be had there, 
and that is typical of some of the types of community and 
economic development cooperative extension can be very 
excellent at.
    Mr. Thompson. The National Institute of Food and 
Agriculture's Competitive Grant Program, which is the 
Agriculture and Food Research Initiative, provides funding to 
support research education extension activities in six farm 
bill priority areas; plant health and production and plant 
products; animal safety, production in animal products; food 
safety, nutrition, and health; bioenergy, natural resources, 
environment, agriculture systems and technologies; and 
agriculture economics and rural communities. It is my 
understanding that AFRI's funding rate for AFRI applications is 
13 percent in a 3 year rolling average. Should the next farm 
bill authorize AFRI at a higher level?
    Dr. Humiston. Actually, most of us would be thrilled if it 
was authorized at the same level, but appropriated up to the 
full level. It has rarely gotten more than \1/2\, if that, of 
what has been authorized. It really needs to be a partnership 
with the appropriators to get the funds in the field.
    Mr. Thompson. Okay. And my last question is, obviously, 
biosecurity has come up a number of times in this hearing, and 
it is crucial to protecting the almost $1 trillion agricultural 
industry that contributes to the U.S. GDP in 2015. How can NIFA 
programs at USDA continue to protect the integrity, 
reliability, sustainability, and profitability of U.S. food and 
agriculture systems against threats from pests, diseases, 
contaminants, and disasters?
    Dr. Humiston. I did offer at least a few points in my 
written testimony that I will share an example of, and that is, 
again, partnership. NIFA is a wonderful, wonderful 
organization, but it can't do everything. No one agency can. 
Within USDA for California, a very key agency is APHIS, our 
Animal and Plant Health Inspection Service. Given the wide 
array of specialty crops we have, as well as Florida, it often 
feels like we are getting a new pest of some sort every week, 
APHIS is crucial to us, as is Agricultural Marketing Service, 
which funds the specialty crop block grants. NRCS, Natural 
Resources Conservation Service: we just signed an MOU a few 
weeks ago to greatly improve how cooperative extension, NRCS, 
our State Department of Food and Ag, and our resource 
conservation districts can collaborate to deliver on a variety 
of programs.
    So this is where you see some of that crosscutting between 
titles.
    Mr. Thompson. Yes.
    Dr. Humiston. Even though we are the research title, we 
actually work with quite a few of the others.
    One thing I did recommend is that preference be given for 
cooperative extension to serve as technical service providers 
within the conservation title. And you could find several other 
examples like that.
    Mr. Thompson. Okay, thank you.
    The Chairman. The gentleman's time has expired.
    I want to thank our witnesses for being here today. Each of 
you has presented a compelling case as to why research is 
important and why it ought to be a high priority. All of you 
are really familiar with the struggle of setting priorities and 
making hard choices between the good stuff. It is rare that you 
have to make a choice between a good and a bad. We just all 
have to make choices between the good. And having your input in 
the public record as a part of the farm bill work that we will 
do late this winter and early next year, will really be 
terrific in laying that marker down as to why it is important. 
The research dollars you have already been getting you are 
using effectively. And you all presented good ideas on terms of 
cross-pollinization among institutions and/or the public- and 
private-sector. And I for one appreciate the time you spent 
this morning helping to educate not only Members, but also 
those millions and millions of folks watching on CSPAN this 
morning that also heard the testimony as well. Again, thank you 
very much. And this will be a good part of what we look at when 
we look at the hard decisions that the Committee and I will 
have to make when we do the 2018 Farm Bill.
    Under the Rules of the Committee, the record of today's 
hearing will remain open for 10 calendar days to receive 
additional material and supplementary written responses from 
the witnesses to any question posed by a Member.
    This hearing of the Committee of Agriculture is adjourned. 
Thank you.
    [Whereupon, at 12:21 p.m., the Committee was adjourned.]
    [Material submitted for inclusion in the record follows:]
   Submitted Statement by American Society for Horticultural Science
    The American Society for Horticultural Science (ASHS), consisting 
of 2,500 members in all 50 states and 60 countries, is the nation's 
premier professional society for horticulture research. Our mission 
promotes and encourages national and international interest for all 
forms of specialty crops through research, teaching, extension, and 
collaborative projects between states, regions, and other nations. 
Supporting capacity and competitive grants, as well as intramural 
research within the U.S. Department of Agriculture (USDA), we have been 
actively involved with both title VII (Research) and title X 
(Horticulture) in the 2008 and 2014 Farm Bills. With Specialty Crops 
comprising \1/2\ of all ``farm gate'' value in the U.S., plus its 
foundation for healthy diets and environmental stewardship for all 
Americans, ASHS looks forward to backing continued public-private 
investments for research programs in new farm bill legislation.
    Congressional funding for the research and horticulture titles have 
made great strides in the past 10 years. Measurable increases enshrined 
in law for programs under USDA's National Institute of Food & 
Agriculture (NIFA) range from formula and extension funding for Land-
Grant institutions, to the all-important Specialty Crop Research 
Initiative (SCRI), the Organic Agriculture Research & Education 
Initiative (OREI), the Agriculture & Food Research Initiative (AFRI), 
Sustainable Agriculture Research & Education (SARE), and Plant Pest & 
Disease Management mitigation, whose budget includes the successful 
National Clean Plant Network. The Agricultural Research Service (ARS), 
USDA's in-house research agency also conducts groundbreaking research, 
and in recent years, has increased its collaboration with competitive 
program initiatives. The 2008 and 2014 Farm Bills have also facilitated 
transition practices from conventional to organic farming, and 
increased decision making authority at the state level for research 
allotments via Specialty Crop Block Grants, a program administered by 
USDA's Agriculture Marketing Service.
    As the Senate Agriculture, Nutrition, & Forestry Committee reviews 
these and other farm bill provisions, we hope this hearing will 
highlight agriculture research's many contributions to America's 
economy, and its vital role for maintaining affordable, safe, and 
abundant food and fiber sources. For our domestic economy, horticulture 
(fruits, vegetables, and nursery/ornamentals) generates approximately 
$60 billion annually, while an additional $55 billion comes from 
landscape services and $20 billion from specialty crop exports. None of 
this could be sustained without wide-ranging scientific analysis and 
discovery. Yet these activities cannot be achieved in a vacuum. 
Accordingly, we hope Congress will accord increased focus in the next 
farm bill toward the urgent need of upgrading facilities at our 
historic land-grant colleges and universities. ASHS views knowledge and 
extension infrastructure on par with roads, bridges, railways, and 
airports to ensure that our nation remains competitive and productive 
for the 21st Century. Forged in the crucible of civil war, our land-
grant system rose to become a bedrock of American innovation and 
economic progress. We must not abandon this exemplary model for 
educating and training future generations of agriculture scientists.

          For more information on ASHS and its policy positions, please 
        contact Dr. Thomas Bjorkman, ASHS National Issues Committee 
        Chair, at [Redacted], or Dr. John Dole, ASHS President, at 
        [Redacted].
                                 ______
                                 
  Submitted Statement by National Coalition for Food and Agricultural 
                                Research
    Chairman Conaway, Ranking Member Peterson and Members of the 
Committee:

    The National Coalition for Food and Agricultural Research (NCFAR) 
is pleased to submit this testimony for the June 22 hearing record. 
NCFAR is a nonprofit, nonpartisan, consensus-based and customer-led 
coalition that brings food, agriculture, nutrition, conservation, and 
natural resource stakeholders together with the food and agriculture 
research and extension community. NCFAR serves as a forum and a unified 
voice in support of sustaining and increasing public investment at the 
national level in food and agricultural science as a top national 
priority. A membership list is attached as Exhibit 1. More information 
about NCFAR is available at http://www.ncfar.org.
    NCFAR's support encompasses the entire U.S. Department of 
Agriculture (USDA) research, extension and education (REE) mission 
area, including extramural programs in the National Institute of Food 
and Agriculture (NIFA)--such as the Agriculture and Food Research 
Initiative (AFRI), and capacity funds to support Experiment Stations 
and Cooperative Extension--and intramural programs in the Agricultural 
Research Service (ARS), Economic Research Service (ERS), and National 
Agricultural Statistics Service (NASS), as well as the U.S. Forest 
Service research program.
    NCFAR urges a balanced portfolio, as the various programs serve 
important and complementary roles. NCFAR supports mandatory programs in 
the farm bill that provide funding for research. It is important to 
include investments in both fundamental and applied research, as well 
as translational education. In addition, publicly funded research 
serves critically important objectives that private-sector research 
cannot fulfill in a number of areas. For example, the results of 
publicly funded research are available to the public, including policy 
makers.
    Companies are often unable to fund fundamental research that lays 
the foundation for much of our nation's applied research.
    NCFAR applauds the House Agriculture Committee for its bipartisan 
leadership in establishing the Foundation for Food and Agriculture 
Research (FFAR) in the 2014 Farm Bill and strongly encourages your 
continued support for FFAR in the next farm bill.
    A group letter to the Committee signed by over 60 organizations 
supporting FFAR is attached as Exhibit 2.
    The initial investment of $200 million in mandatory funding through 
the Commodity Credit Corporation has been instrumental in helping the 
U.S. agricultural research enterprise foster continued innovation. 
FFAR's emergence as a cutting-edge research institution, leveraging 
funds to contribute to the long-term competitiveness of our nation's 
food and agricultural system is well timed considering the many 
challenges confronting the U.S. food and agricultural system.
    FFAR matches every program dollar with outside funding, multiplying 
value for American taxpayers and growing the food and agriculture 
funding pool. NCFAR understands that every Federal dollar invested by 
FFAR has been more than doubled by its diverse funding partners, and 
the U.S. government's $200 million investment in FFAR is on track to 
deliver more than $400 million in vital food and agriculture research 
programming.
    Very much in line with NCFAR's unified and customer-led approach to 
research policy, FFAR takes advantage of the unique partnership model 
conceived by this Committee to convene diverse groups that might not 
otherwise collaborate around common challenges of national and 
international significance. NCFAR is pleased that FFAR has formed 
partnerships with farmer and commodity groups, retail and other 
companies, the public health sector, and leading foundations.
    With the farm bill reauthorization process in its early stages, 
NCFAR has several activities underway with the objective of better 
informing our leadership, other stakeholders, the Congress, and the 
Administration in laying the groundwork for a strong research title and 
supporting funding.
    One longstanding initiative is NCFAR's signature `LunchNLearn' 
seminar series in which our team works to inform hill staff and other 
stakeholders by featuring the publicly funded work of leading-edge 
scientists on a diverse array of disciplines and timely topics. Over 
the past decade, NCFAR has convened 130 seminars, connecting with over 
8,300 attendees. A document providing highlights of the seminar series 
is attached as Exhibit 3. More detail is available at http://
www.ncfar.org/Hill_Seminar_Series.asp. NCFAR thanks the Committee for 
providing a host location for many of these seminars on the House side.
    NCFAR is taking additional action on several fronts to inform the 
current farm bill reauthorization process and be a more effective voice 
for a strong research title.
    First, NCFAR's Research Outreach Committee has convened a farm bill 
task force, which is in the early stages of developing recommendations 
on the reauthorization of the farm bill research title for our Board to 
consider. NCFAR is also collaboratively engaging allied groups with the 
objective of providing timely recommendations to this Committee and the 
Congress.
    Second, NCFAR is involved in planning for a Summit on Integrated 
Research, Education, and Extension Priorities to Advance American 
Agriculture. The aim of the Summit is to engage stakeholders in 
developing a vision for what the food and agricultural research, 
extension and education enterprise should look like to best serve the 
needs of the food and agricultural system in the 21st century and 
capitalize on the robust potential of the agricultural, food, and 
resource sectors to fuel further growth in the United States economy. 
The summit will focus on four critical areas; fueling growth in the 
agricultural economy through rapid adoption of innovations; harnessing 
the power of big ag data in research and extension; advancing the 
health of U.S. consumers and environmental quality; and assuring the 
security of U.S. agriculture and food systems. Additional information 
will be provided in the near future.
    Third, NCFAR is actively involved in other collaborative efforts 
intended to inform and support the reauthorization of a strong farm 
bill research title, including (1) the unified messaging effort led by 
the Riley Memorial Foundation, and (2) the Breakthroughs 2030 study, 
initiated by the SoAR Foundation with major funding support from the 
Foundation for Food and Agriculture Research and being conducted by the 
National Academies of Science (NAS), to produce a 10 year agenda for 
food and agricultural research.
    NCFAR is ``customer-led''--meaning the diverse stakeholders who 
need and benefit from the scientific outcomes that are produced by our 
nation's publicly funded research, extension and education system in 
our own work.
    Research is an important means to critical ends--providing science-
based information and tools that help those in the food and 
agricultural system do their jobs for the ultimate benefit of 
consumers, the nation's economy, and the world.
    The same holds true for a myriad of other ``customers''--such as 
farmers and ranchers across the nation; the agricultural input 
industry; food processors; professionals in the fields of nutrition and 
health; natural resources and environment; rural communities; and 
ultimately all consumers of food and natural fiber around the world.
    Furthermore, this Committee and other Members of Congress and 
policy makers at all levels of government are important ``customers'' 
of research, extension and education made possible through the research 
title of the farm bill.
    The research title of the farm bill represents the nation's 
signature Federal investment in the future of the food and agricultural 
sector. In fact, the success of every other title in the farm bill and 
those who are charged with carrying out their respective missions is 
arguably dependent in significant part on scientific outcomes and tools 
generated by programs authorized through the research title, and then 
funded by Congress.
    Research is not an end in itself--rather it is a vital means to 
help achieve many national priorities. The research title is critical 
in providing advancements in food and agricultural research, extension 
and education that help provide the tools needed to sustain and 
strengthen America's food and agricultural sector, rural communities, 
and the national economy.
    Public investment in food and agricultural research, extension and 
education today and in the future must simultaneously satisfy a range 
of needs, including food quality and quantity, resource conservation, 
producer profitability, and food safety and security, and helping to 
improve health.
    At the risk of oversimplification, Federal funding is the fuel for 
USDA's REE engine and determines how effectively the important goals of 
the research title are realized. NCFAR respectfully submits that our 
nation is not investing enough in in publicly funded research to permit 
discovery necessary to regain and then maintain our nation's place as 
the leader in agricultural research.
    Investment in food and agricultural science is not only good 
business, it's good for business. By any measure, publicly funded food 
and agricultural science represents an outstanding investment. Public 
and private investments in U.S. agricultural research and practical 
application of results have paid huge dividends to the United States 
and the world, especially in the latter part of the 20th century. The 
CARD report entitled ``Measuring Public Agricultural Research and 
Extension and Estimating their Impacts on Agricultural Productivity: 
New Insights from U.S. Evidence'' (Jin & Huffman, 2016) presents a 
summary of the most recent returns on investment of agricultural 
research dollars to have a rate of return of approximately 67 percent.
    However, the unparalleled success story in the food and 
agricultural system is in large part the product of past investments in 
food and agricultural research and extension. Federal funding for food 
and agricultural research, extension and education has been essentially 
flat for over 20 years despite much greater demonstrated needs, and has 
reportedly declined by about 25 percent in real terms since 2003. At 
the same time support for other Federal research has increased 
substantially. Our nation's competitiveness in global markets is at 
risk, as investments in food and agricultural science by our global 
competitors have been growing rapidly.
    The 2008 and 2014 Farm Bills recommitted to an authorized level of 
$700 million annually for AFRI. Yet 8 years later, FY17 appropriations 
for AFRI are about $375 million. NCFAR is on record in support of 
funding AFRI at the fully authorized level as soon as practicable. 
Increases in AFRI should represent an addition to funding for REE 
programs and not come at the expense of other REE programs.
    Increased Federal investments in the USDA, REE mission area will 
lead to advances and breakthroughs in agricultural productivity, 
improved animal, plant and soil health, and nutrition and lead to 
healthier citizens, a healthier agricultural economy, and a stronger 
and more globally competitive America.
    Tools provided through publicly funded research, extension and 
education are needed to help achieve safer, more nutritious, convenient 
and affordable foods delivered to sustain a well-nourished, healthy 
population; more efficient and environmentally friendly food, fiber and 
forest production; improved water quality, land conservation, wildlife 
and other environmental conditions; less dependence on non-renewable 
sources of energy; expanded global markets and improved balance of 
trade; and more jobs and sustainable rural economic development.
    Societal demands and expectations placed upon the food and 
agricultural system are ever-changing and growing. Examples of current 
and future needs include addressing biosecurity; food-linked health 
costs; development of vaccines and diagnostics, antibiotics, de-
wormers, antifungals and parasiticides, antimicrobial use strategies, 
control and therapy for diseases and infections, transboundary disease 
and foreign animal disease; environment and conservation; water 
quality; farm income and rural revitalization; biofuels and climate 
change; the increasing world demand for food and fiber and improved 
diets; and needed advances in biotechnology and genetic resources 
research. A United Nations report projects that we will need to double 
food production to feed nine billion people by 2050, and that 70 
percent of the increase must come through research developing new 
technologies and increased productivity.
    NCFAR appreciates the longstanding support this Committee and its 
Members have demonstrated over the years to authorize and oversee 
implementation of a strong research title that can compete more 
effectively in the funding process, both within the Administration and 
in the Congress.
    NCFAR looks forward to working as a customer-led coalition with 
this Committee, Congress, the Administration, and other stakeholders to 
help ensure that the USDA REE mission moves forward as envisioned and 
receives the resources and funding needed to achieve scientific 
outcomes that are necessary for the food and agricultural system to 
address multiple demands, challenges and expectations.

    Attachments (3):

   Exhibit 1--NCFAR Member List.*
---------------------------------------------------------------------------
    Editor's note: the documents referred to entitled NCFAR Member 
List, and `LunchNLearn' Hill Seminar Series Highlights, (as updated) 
follow the prepared statement of Mr. Wilkins (located on p. 489), 
published in the March 16, 2017, The Next Farm Bill: Agricultural 
Research, Biotechnology, Horticulture, and Research Subcommittee 
hearing. For purposes of this publication they are not reprinted here.

   Exhibit 3--`LunchNLearn' Hill Seminar Series Highlights.*
                               exhibit 2

 
 
 
Hon. [K.] Michael Conway,            Hon. Collin C. Peterson,
Chairman,                            Ranking Minority Member,
House Committee on Agriculture,      House Committee on Agriculture,
Washington, D.C.;                    Washington, D.C.
 

RE: Support for Foundation for Food and Agriculture Research (FFAR)

    Dear Chairman Conaway and Ranking Member Peterson:

    The undersigned wish to thank the Members of the House Committee on 
Agriculture for their bipartisan support in establishing the Foundation 
for Food and Agriculture Research (FFAR) in the Agricultural Act of 
2014, also known as the 2014 Farm Bill. We strongly encourage your 
continued support for FFAR in the next farm bill. The initial 
investment of $200 million in mandatory funding through the Commodity 
Credit Corporation has been instrumental in helping the U.S. 
agricultural research enterprise foster continued innovation. FFAR's 
emergence as a cutting-edge research institution contributing to the 
long-term competitiveness of our nation's food and agriculture sector 
is well timed considering the many challenges confronting the U.S. food 
and agricultural system.
    The need for advanced solutions remains imperative if we are to 
continue to lead the world in food and agricultural innovation. Your 
work in 2014 to create a new institution for leveraged, public-private 
partnerships and investments through FFAR was as an inspiration. We 
urge your continued support of FFAR in the next farm bill.
    Thank you for your consideration and for your leadership on food 
and agricultural research, extension and education.
            Respectfully Submitted,

 
 
 
National Coalition for   FASS                     Rural Sociological
 Food and Agricultural   Global Harvest            Society
 Research (NCFAR)         Initiative              Society for Range
                                                   Management
Academy of Nutrition     International Alliance   Soil Health Institute
 and Dietetics            for Phytobiomes
                          Research
Agricultural Retailers   Iowa Corn Growers        Soil Science Society
 Association              Association              of America
American Farm Bureau     Irrigation Association   Southern Agricultural
 Federation                                        Economics Association
American Feed Industry   Marrone Bio Innovations  Southern Weed Science
 Association                                       Society
American Seed Trade      Michigan Tree Fruit      Supporters of
 Association              Commission               Agricultural Research
                                                   Foundation
American Society for     Mississippi State        Syngenta
 Horticultural Science    University
American Society for     National Association of  Taylor Shellfish Farms
 Nutrition                Plant Breeders
American Society of      National Association of  The American
 Agronomy                 State Departments of     Phytopathological
American Society of       Agriculture              Society
 Animal Science                                   The Fertilizer
                                                   Institute
American Society of      National Association of  United Egg Producers
 Plant Biologists         Wheat Growers
American Veterinary      National Corn Growers    Universities Council
 Medical Association      Association              on Water Resources
APLU Committee on        National Cotton Council  University of Delaware
 Legislation and Policy  National Pork Producers   College of
Aquatic Plant             Council                  Agriculture and
 Management Society                                Natural Resources
Association of American  North American Millers   University of Nebraska
 Veterinary Medical       Association
 Colleges
Cherry Marketing         North Central Regional   University of
 Institute Inc.           Association of           Tennessee Institute
CoBank                    Agricultural             of Agriculture
                          Experiment Station      Veterinary Regional
                          Directors                Referral Hospital, pc
Cornell University       North Central Weed       Wade Water LLC
 College of Agriculture   Science Society         Weed Science Society
 and Life Sciences       Northeastern              of America
Council for               Agricultural and        Western Association of
 Agricultural Science     Resource Economics       Agricultural
 and Technology (CAST)    Association              Experiment Stations
                         Northeastern Weed
                          Science Society
Crop Science Society of  PepsiCo                  Western Society of
 America                                           Weed Science
Experiment Station       Pollinator Partnership
 Committee on            Purdue University
 Organization and         College of Agriculture
 Policy
Farm Journal Foundation
 

                                 ______
                                 
          Submitted Statement by National Turfgrass Federation
    The National Turfgrass Federation (NTF), formed in 2007 to 
coordinate and support turfgrass research within the Federal 
Government, submits this statement to the Senate Committee on 
Agriculture, Nutrition, & Forestry to review past, current, and 
hopefully future successes of farm bill legislation. Dedicated to 
promoting the value and necessity of turfgrass for society, NTF 
believes this hearing will help assess successful activities of the 
2014 Farm Bill, and explore new and innovative possibilities for its 
successor in 2018.
    Comprising approximately 65 million acres nationwide, turfgrass is 
America's third largest crop behind corn and soybeans, and the largest, 
most visible, and diverse of the horticulture crops. Turfgrass forms 
the foundation for the greening of rural and urban America through 
parks, recreation and athletic fields, residential lawn care, natural 
grasslands, roadside and highway medians, commercial and historic 
properties, golf courses and ornamental gardens--just to name a few! 
Turfgrass provides excellent buffer zones that filter pollutant water 
runoff before entering surface and groundwater systems. The importance 
of turfgrass cannot be underestimated for the preservation and 
enhancement of a variety of ecosystems. In many arid regions of our 
nation, especially in the West, new drought-tolerant turfgrass 
varieties are being discovered, developed and tested which will use 
less water and fertilizer, thus providing energy and water savings to 
states, municipalities, and residential homeowners.
    Turf has covered a lot of ground in recent farm bills. Courtesy of 
the 2008 Food, Conservation, & Energy Act, turf and sod were designated 
as specialty crops. This expanded turf's opportunity for competitive 
research funding, as well as extension outreach initiatives. Turf 
furthered its research involvement in the Agricultural Act of 2014 with 
programs such as the Specialty Crop Research Initiative (SCRI), and 
Specialty Crop Block Grants. The latter program is especially popular 
with NTF members as it facilitates cooperative decision making among 
scientists and their respective State Departments of Agriculture.
    Imagine landscapes devoid of green grass, farms and waterways 
without protective grasslands, or no viable protection for soil 
erosion. As urban populations expand, maintaining an abundance of 
turfgrass varieties, that are adaptable to many climates while using 
sustainable, sensible management that provides environmental protection 
ultimately relies on quality and adequately funded research. This 
exploration, analysis, and applications for public use is predicated on 
continuing vital research programs embodied in title VII (Research) and 
title X (Horticulture) of this current farm bill. With research 
accounting for just two percent (2%) of USDA's annual budget, NTF hopes 
Congress will consider increased funding for these titles wherever 
feasible. This funding is notably important for land-grant colleges and 
universities--the foundation of education and training for future 
generations of agriculture scientists--as well as competitive grants, 
which build upon regional collaboration for innovative discoveries that 
provide dividends for American taxpayers and their respective 
communities.

          For more information on turf research's utilization of farm 
        bill programs, contact Kevin Morris, NTF Executive Director at 
        [Redacted], or Jonathan Moore, NTF Policy Consultant at 
        [Redacted].
                                 ______
                                 
                          Submitted Questions
Response from Hon. Robert L. Duncan, J.D., Chancellor, Texas Tech 
        University System*
---------------------------------------------------------------------------
    *There was no response from the witness by the time this hearing 
was published.
---------------------------------------------------------------------------
Questions Submitted by Hon. Ann M. Kuster, a Representative in Congress 
        from New Hampshire
    Question 1. My first question for the entire panel touches on the 
organic research being done at UNH. Organic farming is one of the 
fastest growing agriculture sectors in American, accounting for over 5% 
of total retail food sales.
    How are your Universities helping organic farmers address 
challenges, and meet the booming demand for organic products?
    Answer.

    Question 2. Because of the unique requirements for organic 
agriculture, how is your university ensuring that organic agriculture 
gets a fair share of dedicated research investment and support at your 
university?
    Answer.

    Question 3. If Congress were to devote more research funds toward 
organic research to help expand our domestic organic production to keep 
pace with demand, how would that affect the research activities of your 
institutions?
    Answer.

    Question 4. Eighty percent of seafood consumed in the United States 
is imported, resulting in a roughly $11 billion trade deficit for 
seafood industry. The U.S. has an opportunity to increase aquaculture 
production and become a world leader in providing safe, sustainable and 
environmentally friendly seafood through state-of-the-art approaches to 
farm the ocean.
    Beyond a huge economic incentive for the country, this is a food 
security issue. Agricultural research at the country's land-grant 
institutions plays a critical role in advancing local economics and the 
nation in burgeoning markets. Can you describe how increased 
authorization levels for NIFA Capacity Funds and extramural programs, 
including AFRI, would boost this type of agricultural research?
    Answer.

    Question 4a. How can increased authorization levels advance 
innovative aquaculture practices that will increase food production and 
security across the country?
    Answer.

    Question 5. Industrial-scale composting is growing rapidly as 
states and municipalities increase restrictions on disposal of organic 
wastes in landfills and work to achieve sustainable waste management 
systems. As business opportunities increase with the demand for 
composting, a number of innovations in this ancient technique of 
organic waste management have been developed and applied. This project 
demonstrates the significance of Federal agricultural research programs 
at NIFA as a means to achieve economically sustainable agriculture and 
food industries--directly impacting farm lands that remain in operation 
in New Hampshire--and serving as a model for communities across the 
country.
    As a university researcher, can you expand on how increased 
authorization levels for NIFA in the next farm bill will ensure 
research continues to advance innovative composting methods and 
resources for sustainable food systems?
    Answer.
Response from Jacqueline K. Burns, Ph.D., Dean for Research and 
        Director, Florida Agricultural Experiment Station; Professor of 
        Horticulture, Institute of Food and Agricultural Sciences, 
        University of Florida
Questions Submitted by Hon. Stacey E. Plaskett, a Delegate in Congress 
        from Virgin Islands
    Question 1. I understand that the University of Florida used to 
receive special research grants under the Tropical and Subtropical 
Agricultural Research program (or ``T-STAR'' program) until it was 
phased out several years ago when a lot of special research grants were 
done away with.
    How is the more general competitive grant program approach, like 
the flagship Agriculture and Food Research Initiative, meeting your 
needs and ability to continue the research that was started under T-
STAR?
    Answer. The loss of the T-STAR program was devastating to programs 
designed to meet the regional needs of tropical and subtropical 
agriculture systems. Many of these needs are not adequately covered 
through AFRI but are crucial to the Caribbean and related regions. This 
program allowed researchers to conduct more proactive programs that 
could and would impact regional agriculture systems in the future. Such 
programs included mitigation strategies for invasive pests and diseases 
that could negatively impact subtropical and tropical regions and/or 
travel into the U.S. heartland.

    Question 2. How do you see research in tropical agriculture 
developing since T-STAR was ended?
    Answer. There is a void that is difficult to cover with existing 
programs. In some cases, local industries have developed research 
priorities that are funded. But the programs have not been sustainable 
due to downturns or challenges to these industries that require a 
redirect of funding. A sustainable national program is needed.

    Question 3. What can replace the previous program, and how would 
that benefit agriculture in the Caribbean region?
    Answer. Reinstating a version of the T-STAR program for tropical 
and subtropical agriculture systems would benefit the Caribbean and 
related regions. It should be competitive, managed by the subtropical 
and tropical institutions and stakeholders, and directed at the 
challenges tropical and subtropical regions face.

    Thank You.
Response from Hon. Glenda Humiston, Ph.D., Vice President, Agriculture 
        and Natural Resources; Director, Agricultural Experiment 
        Station and Cooperative Extension Service, University of 
        California*
---------------------------------------------------------------------------
    *There was no response from the witness by the time this hearing 
was published.
---------------------------------------------------------------------------
Questions Submitted by Hon. Ann M. Kuster, a Representative in Congress 
        from New Hampshire
    Question 1. My first question for the entire panel touches on the 
organic research being done at UNH. Organic farming is one of the 
fastest growing agriculture sectors in American, accounting for over 5% 
of total retail food sales.
    How are your Universities helping organic farmers address 
challenges, and meet the booming demand for organic products?
    Answer.

    Question 2. Because of the unique requirements for organic 
agriculture, how is your university ensuring that organic agriculture 
gets a fair share of dedicated research investment and support at your 
university?
    Answer.

    Question 3. If Congress were to devote more research funds toward 
organic research to help expand our domestic organic production to keep 
pace with demand, how would that affect the research activities of your 
institutions?
    Answer.

    Question 4. Eighty percent of seafood consumed in the United States 
is imported, resulting in a roughly $11 billion trade deficit for 
seafood industry. The U.S. has an opportunity to increase aquaculture 
production and become a world leader in providing safe, sustainable and 
environmentally friendly seafood through state-of-the-art approaches to 
farm the ocean.
    Beyond a huge economic incentive for the country, this is a food 
security issue. Agricultural research at the country's land-grant 
institutions plays a critical role in advancing local economics and the 
nation in burgeoning markets. Can you describe how increased 
authorization levels for NIFA Capacity Funds and extramural programs, 
including AFRI, would boost this type of agricultural research?
    Answer.

    Question 4a. How can increased authorization levels advance 
innovative aquaculture practices that will increase food production and 
security across the country?
    Answer.

    Question 5. Industrial-scale composting is growing rapidly as 
states and municipalities increase restrictions on disposal of organic 
wastes in landfills and work to achieve sustainable waste management 
systems. As business opportunities increase with the demand for 
composting, a number of innovations in this ancient technique of 
organic waste management have been developed and applied. This project 
demonstrates the significance of Federal agricultural research programs 
at NIFA as a means to achieve economically sustainable agriculture and 
food industries--directly impacting farm lands that remain in operation 
in New Hampshire--and serving as a model for communities across the 
country.
    As a university researcher, can you expand on how increased 
authorization levels for NIFA in the next farm bill will ensure 
research continues to advance innovative composting methods and 
resources for sustainable food systems?
    Answer.
Response from Walter H. Hill, Ph.D., Dean, College of Agriculture, 
        Environment and Nutrition Sciences; Vice Provost for Land-Grant 
        University Affairs; Research Director, USDA Evans-Allen 
        Research and Director, George W. Carver Agricultural Experiment 
        Station; Administrator, Tuskegee University Cooperative 
        Extension, Tuskegee University*
---------------------------------------------------------------------------
    *There was no response from the witness by the time this hearing 
was published.
---------------------------------------------------------------------------
Questions Submitted by Hon. Ann M. Kuster, a Representative in Congress 
        from New Hampshire
    Question 1. My first question for the entire panel touches on the 
organic research being done at UNH. Organic farming is one of the 
fastest growing agriculture sectors in American, accounting for over 5% 
of total retail food sales.
    How are your Universities helping organic farmers address 
challenges, and meet the booming demand for organic products?
    Answer.

    Question 2. Because of the unique requirements for organic 
agriculture, how is your university ensuring that organic agriculture 
gets a fair share of dedicated research investment and support at your 
university?
    Answer.

    Question 3. If Congress were to devote more research funds toward 
organic research to help expand our domestic organic production to keep 
pace with demand, how would that affect the research activities of your 
institutions?
    Answer.

    Question 4. Eighty percent of seafood consumed in the United States 
is imported, resulting in a roughly $11 billion trade deficit for 
seafood industry. The U.S. has an opportunity to increase aquaculture 
production and become a world leader in providing safe, sustainable and 
environmentally friendly seafood through state-of-the-art approaches to 
farm the ocean.
    Beyond a huge economic incentive for the country, this is a food 
security issue. Agricultural research at the country's land-grant 
institutions plays a critical role in advancing local economics and the 
nation in burgeoning markets. Can you describe how increased 
authorization levels for NIFA Capacity Funds and extramural programs, 
including AFRI, would boost this type of agricultural research?
    Answer.

    Question 4a. How can increased authorization levels advance 
innovative aquaculture practices that will increase food production and 
security across the country?
    Answer.

    Question 5. Industrial-scale composting is growing rapidly as 
states and municipalities increase restrictions on disposal of organic 
wastes in landfills and work to achieve sustainable waste management 
systems. As business opportunities increase with the demand for 
composting, a number of innovations in this ancient technique of 
organic waste management have been developed and applied. This project 
demonstrates the significance of Federal agricultural research programs 
at NIFA as a means to achieve economically sustainable agriculture and 
food industries--directly impacting farm lands that remain in operation 
in New Hampshire--and serving as a model for communities across the 
country.
    As a university researcher, can you expand on how increased 
authorization levels for NIFA in the next farm bill will ensure 
research continues to advance innovative composting methods and 
resources for sustainable food systems?
    Answer.
Response from Steven H. Tallant, Ph.D., President, Texas A&M 
        University--Kingsville*
Questions Submitted by Hon. Ann M. Kuster, a Representative in Congress 
        from New Hampshire
    Question 1. My first question for the entire panel touches on the 
organic research being done at UNH. Organic farming is one of the 
fastest growing agriculture sectors in American, accounting for over 5% 
of total retail food sales.
    How are your Universities helping organic farmers address 
challenges, and meet the booming demand for organic products?
    Answer.

    Question 2. Because of the unique requirements for organic 
agriculture, how is your university ensuring that organic agriculture 
gets a fair share of dedicated research investment and support at your 
university?
    Answer.

    Question 3. If Congress were to devote more research funds toward 
organic research to help expand our domestic organic production to keep 
pace with demand, how would that affect the research activities of your 
institutions?
    Answer.

    Question 4. Eighty percent of seafood consumed in the United States 
is imported, resulting in a roughly $11 billion trade deficit for 
seafood industry. The U.S. has an opportunity to increase aquaculture 
production and become a world leader in providing safe, sustainable and 
environmentally friendly seafood through state-of-the-art approaches to 
farm the ocean.
    Beyond a huge economic incentive for the country, this is a food 
security issue. Agricultural research at the country's land-grant 
institutions plays a critical role in advancing local economics and the 
nation in burgeoning markets. Can you describe how increased 
authorization levels for NIFA Capacity Funds and extramural programs, 
including AFRI, would boost this type of agricultural research?
    Answer.

    Question 4a. How can increased authorization levels advance 
innovative aquaculture practices that will increase food production and 
security across the country?
    Answer.

    Question 5. Industrial-scale composting is growing rapidly as 
states and municipalities increase restrictions on disposal of organic 
wastes in landfills and work to achieve sustainable waste management 
systems. As business opportunities increase with the demand for 
composting, a number of innovations in this ancient technique of 
organic waste management have been developed and applied. This project 
demonstrates the significance of Federal agricultural research programs 
at NIFA as a means to achieve economically sustainable agriculture and 
food industries--directly impacting farm lands that remain in operation 
in New Hampshire--and serving as a model for communities across the 
country.
    As a university researcher, can you expand on how increased 
authorization levels for NIFA in the next farm bill will ensure 
research continues to advance innovative composting methods and 
resources for sustainable food systems?
    Answer.
Response from Carrie L. Billy, J.D., President and Chief Executive 
        Officer, American Indian Higher Education Consortium*
---------------------------------------------------------------------------
    *There was no response from the witness by the time this hearing 
was published.
---------------------------------------------------------------------------
Questions Submitted by Hon. Ann M. Kuster, a Representative in Congress 
        from New Hampshire
    Question 1. My first question for the entire panel touches on the 
organic research being done at UNH. Organic farming is one of the 
fastest growing agriculture sectors in American, accounting for over 5% 
of total retail food sales.
    How are your Universities helping organic farmers address 
challenges, and meet the booming demand for organic products?
    Answer.

    Question 2. Because of the unique requirements for organic 
agriculture, how is your university ensuring that organic agriculture 
gets a fair share of dedicated research investment and support at your 
university?
    Answer.

    Question 3. If Congress were to devote more research funds toward 
organic research to help expand our domestic organic production to keep 
pace with demand, how would that affect the research activities of your 
institutions?
    Answer.

    Question 4. Eighty percent of seafood consumed in the United States 
is imported, resulting in a roughly $11 billion trade deficit for 
seafood industry. The U.S. has an opportunity to increase aquaculture 
production and become a world leader in providing safe, sustainable and 
environmentally friendly seafood through state-of-the-art approaches to 
farm the ocean.
    Beyond a huge economic incentive for the country, this is a food 
security issue. Agricultural research at the country's land-grant 
institutions plays a critical role in advancing local economics and the 
nation in burgeoning markets. Can you describe how increased 
authorization levels for NIFA Capacity Funds and extramural programs, 
including AFRI, would boost this type of agricultural research?
    Answer.

    Question 4a. How can increased authorization levels advance 
innovative aquaculture practices that will increase food production and 
security across the country?
    Answer.

    Question 5. Industrial-scale composting is growing rapidly as 
states and municipalities increase restrictions on disposal of organic 
wastes in landfills and work to achieve sustainable waste management 
systems. As business opportunities increase with the demand for 
composting, a number of innovations in this ancient technique of 
organic waste management have been developed and applied. This project 
demonstrates the significance of Federal agricultural research programs 
at NIFA as a means to achieve economically sustainable agriculture and 
food industries--directly impacting farm lands that remain in operation 
in New Hampshire--and serving as a model for communities across the 
country.
    As a university researcher, can you expand on how increased 
authorization levels for NIFA in the next farm bill will ensure 
research continues to advance innovative composting methods and 
resources for sustainable food systems?
    Answer.


 
                           THE NEXT FARM BILL

             (TECHNOLOGY AND INNOVATION IN SPECIALTY CROPS)

                              ----------                              


                        WEDNESDAY, JULY 12, 2017

                  House of Representatives,
                                  Committee on Agriculture,
                                                   Washington, D.C.
    The Committee met, pursuant to call, at 10:00 a.m., in Room 
1300 of the Longworth House Office Building, Hon. K. Michael 
Conaway [Chairman of the Committee] presiding.
    Members present: Representatives Conaway, Thompson, Lucas, 
Rogers, Gibbs, Austin Scott of Georgia, Crawford, Hartzler, 
Denham, LaMalfa, Davis, Yoho, Allen, Rouzer, Kelly, Comer, 
Bacon, Faso, Dunn, Arrington, Peterson, David Scott of Georgia, 
Costa, Walz, McGovern, Vela, Lujan Grisham, Kuster, Nolan, 
Maloney, Plaskett, Adams, Evans, Lawson, O'Halleran, Panetta, 
Soto, and Blunt Rochester.
    Staff present: Mollie Wilken, Patricia Straughn, Rachel 
Millard, Stacy Revels, Keith Jones, Kellie Adesina, Troy 
Phillips, Nicole Scott, and Carly Reedholm.

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

    The Chairman. Good morning. This hearing of the Committee 
on Agriculture entitled, The Next Farm Bill: Technology and 
Innovation in Specialty Crops, will come to order.
    I have asked Trent Kelly to offer our prayer. Trent, over 
here.
    Mr. Kelly. Bow your heads. Dear Lord, we just thank you 
this day for each and everything that you have given all of us. 
Dear Lord, we just thank you for those that you have blessed 
with the farms and the land and the resources and the 
technology to create the greatness of this nation through our 
farmers who, first and foremost, feed and provide for not only 
this nation but for the entire world. And we just thank you and 
ask that all we do in this Committee honor you, and help those 
farmers to produce. In Jesus' name we pray. Amen.
    The Chairman. Thank you, Trent.
    Good morning, and again, thank you all for joining us.
    Specialty crops play an important role in the success of 
U.S. agriculture and are an essential component of our national 
food policy: the farm bill. Diversity among crops, ranging from 
fruits, vegetables, tree nuts, and nursery crops to 
floriculture, makes the task of developing the specialty crop 
safety net particularly challenging. Despite those challenges, 
significant investments, including those made in the 2014 Farm 
Bill to support the various sectors, have positively impacted 
our specialty crop producers. It baffles me when farm bill 
detractors question our commitment to specialty crops, implying 
that our country lacks a national food policy just because we 
treat specialty crops differently than traditional commodities.
    Over the years, those of us who work on farm policy have 
worked closely with producers to develop programs tailored to 
meet the needs of our specialty crop producers. We recognize 
that the challenges of a citrus producer in California look 
much different than those of a cotton farmer in west Texas, and 
we believe our agricultural policies should reflect those 
differences. The notion that we don't invest in specialty crops 
simply isn't based in fact. Let me give you a few examples.
    The Specialty Crop Block Grant Program helps enhance the 
competitiveness of specialty crops by facilitating partnerships 
between USDA and the State Departments of Agriculture to 
provide funding. The Plant Pest and Disease Prevention Program 
provides early plant pest detection and surveillance and funds 
a system of clean plant centers to safely distribute disease-
free plant material to producers of nursery stock. The 
Specialty Crop Research Initiative sets aside mandatory funding 
to ensure that specialty crops are not sidelined for research 
funding. And the Market Access Program aids the development, 
expansion, and maintenance of foreign markets for U.S. 
agricultural products. In fact, \1/2\ of the participating 
organizations in Fiscal Year 2017 were focused exclusively on 
specialty crops. The Food Insecurity Nutrition Incentive Grant 
Program aims to increase the purchase of fruits and vegetables 
among participants in the Supplemental Nutrition Assistance 
Program by providing incentives at the point of purchase. And 
finally, we have made significant strides over the past several 
years in expanding crop insurance coverage to a variety of 
specialty crops, including the Whole Farm Revenue Protection 
policy that was developed with specialty crops in mind.
    The United States has long had an interest in ensuring 
stable production of our staple commodities, which is one of 
the reasons we continue to enjoy the safest, most abundant and 
affordable food supply in the world. But when you pull all of 
the pieces of the farm bill together, it is clear we have made 
huge investments to aid specialty crop producers as well.
    Looking forward, our goal is to maintain these advancements 
and address improvements needed in the next farm bill. As we do 
that, I am particularly interested in the role that technology 
plays in those advancements.
    To that end, I would like to welcome all of our witnesses 
today, and I look forward to hearing from all of you about ways 
we can build our public-private partnerships and innovation to 
benefit specialty crop producers.
    [The prepared statement of Mr. Conaway follows:]

  Prepared Statement of Hon. K. Michael Conaway, a Representative in 
                          Congress from Texas
    Good morning and thank you all for joining us.
    Specialty crops play an important role in the success of U.S. 
agriculture and are an essential component of our national food 
policy--the farm bill. Diversity among the crops--ranging from fruits 
and vegetables, to tree nuts, to nursery crops and floriculture--makes 
the task of developing the specialty crop safety net particularly 
challenging. Despite those challenges, significant investments, 
including those made in the 2014 Farm Bill to support the various 
sectors, have positively impacted our specialty crop producers.
    So it baffles me when farm bill detractors question our commitment 
to specialty crops, implying our country lacks a national food policy 
because we treat specialty crops differently than traditional 
commodities.
    Over the years, those of us who work on farm policy have worked 
closely with producers to develop programs tailored to meet the needs 
of specialty crop producers. We recognize that the challenges of a 
citrus producer in California look much different than those of a 
cotton farmer in west Texas, and we believe our agricultural policies 
should reflect those differences. The notion that we don't invest in 
specialty crops simply isn't based in fact. Let me give you a few 
examples.

   The Specialty Crop Block Grant Program helps enhance the 
        competitiveness of specialty crops by facilitating partnerships 
        between USDA and the State Departments of Agriculture to 
        provide funding.

   The Plant Pest and Disease Prevention Program provides early 
        plant pest detection and surveillance and funds a system of 
        ``clean plant centers'' to safely distribute disease-free plant 
        material to producers of nursery stock.

   The Specialty Crop Research Initiative sets aside mandatory 
        funding to ensure specialty crops are not sidelined for 
        research funding.

   The Market Access Program aids the development, expansion 
        and maintenance of foreign markets for U.S. agricultural 
        products. In fact, \1/2\ of the participating organizations in 
        FY 2017 were focused exclusively on specialty crops.

   The Food Insecurity Nutrition Incentive (FINI) Grant Program 
        aims to increase the purchase of fruits and vegetables among 
        participants in the Supplemental Nutrition Assistance Program 
        by providing incentives at the point of purchase.

   And, finally, we have made significant strides over the past 
        several years in expanding crop insurance coverage to a variety 
        of specialty crops, including the Whole Farm Revenue Protection 
        policy that was developed with specialty crop producers in 
        mind.

    Yes, the United States has long had an interest in ensuring stable 
production of our staple commodities, which is one of the reasons we 
continue to enjoy the safest, most abundant, and most affordable food 
supply in the world. But when you pull all of the pieces of the farm 
bill together, it's clear we've made huge investments to aid specialty 
crop producers as well.
    Looking forward, our goal is to maintain these advancements and 
address improvements needed in the next farm bill. As we do that, I'm 
particularly interested in the role that technology plays.
    To that end, I'd like to welcome all of our witnesses today. I look 
forward to hearing from all of you about ways to build upon public-
private partnerships and innovation to benefit specialty crop 
producers.
    With that, I yield to the Ranking Member for any opening remarks he 
may have.

    The Chairman. With that, I yield to the Ranking Member for 
any comments he might have.

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

    Mr. Peterson. Thank you, Mr. Chairman. And thank you to our 
panel of witnesses for joining us today at this hearing on 
technology and innovation in specialty crop production. I am 
looking forward to hearing your testimony on the opportunities 
and challenges the specialty crop sector has and the impact of 
farm bill programs on your productivity and profitability.
    Since the 2008 Farm Bill, I have been particularly 
interested in the role specialty crop production has in the 
healthy ag economy and in providing healthy foods to consumers. 
It is really amazing to see the amount of money that you have 
invested just to produce your crops. And while hundreds of 
acres of corn may be worth several hundred thousand dollars, 
that same number of acres planted in strawberries may be worth 
several million dollars. Folks in my area, we don't understand 
how you guys do it, but hats off to you.
    We have tried to address some of these production 
differences through the farm bill, and I am proud that the 2008 
Farm Bill was the first to acknowledge the growing demand for 
fresh fruits and vegetables, local foods and organic 
production, and I am also proud that we were able to continue 
and build on these investments in the 2014 Farm Bill, and I 
hope this trend continues into the next farm bill.
    I believe the specialty crop area is in a very unique 
position. Consumer demand is increasing but natural resources 
remain fixed, and the labor supply is shrinking. It seems to me 
that the key to being successful will be through the wise use 
of technology and with the optimum regulatory structure that 
allows innovation to flourish.
    Again, I look forward to the hearing, to hearing from the 
witnesses, and I thank the chair and yield back.
    The Chairman. I thank the gentleman.
    The chair would request that other Members submit their 
opening statements for the record so our witnesses may begin 
their testimony, and to ensure there is ample time for 
questions.
    And I would like to welcome our witnesses to the table. 
First off, we have Mr. Paul Wenger, President of the California 
Farm Bureau Federation, Sacramento, California. We have Mr. 
Paul Heller, Vice President, Wonderful Citrus--Texas Division, 
Mission, Texas. We have Mr. Gary Wishnatzki. Is that close?
    Mr. Wishnatzki. Yes.
    The Chairman. All right. Owner of Wish Farms in Plant City, 
Florida. And I turn to Mr. Panetta to introduce our next 
witness.
    Mr. Panetta. Thank you, Mr. Chairman. I appreciate that. It 
is my absolute honor to introduce my friend and constituent, 
Kevin Murphy. Kevin is the CEO of Driscoll's, based in 
Watsonville, on the Central Coast of California. My district, 
the Central Coast of California, proudly produces over 100 
specialty crops, with companies like Driscoll's leading the 
industry. Operating for over a century, Driscoll's produces 
fresh strawberries, raspberries, blueberries, and blackberries 
for both domestic and international consumers. Kevin's company 
has proven adaptive with both conventional and organic 
production, and will continue to innovate as a way to address 
challenges with water, labor, and food safety, moving forward.
    I personally have witnessed Kevin's and the past CEO and 
Chairman, Miles Reiter's, ability to not only think outside the 
box, but to also contribute to our community. And I have no 
doubt that under Kevin's leadership Driscoll's will continue to 
build upon the company's history of success. And that is why, 
Kevin, it is an honor to have you here. I look forward to your 
testimony.
    The Chairman. And then we also have Mr. Andrew LaVigne, 
President and CEO, American Seed Trade Association in 
Alexandria, Virginia.
    Mr. Wenger, before you begin, Mr. Costa has asked to say 
something about you.
    Mr. Costa. Thank you, Mr. Chairman.
    President Paul Wenger of the California Farm Bureau 
Federation is no stranger to the halls here in Washington or 
Sacramento. More importantly, Paul and his family reflect what 
is so good about America and California agriculture. Paul and 
his family have been doing this for generations. We are honored 
to have him here given his expertise and his advocacy on the 
subject of this morning's hearing.
    Thank you, Mr. Chairman.
    The Chairman. Thank you.
    Mr. Wenger, you are recognized for 5 minutes.

STATEMENT OF PAUL J. WENGER, PRESIDENT, CALIFORNIA FARM BUREAU 
                   FEDERATION, SACRAMENTO, CA

    Mr. Wenger. Thank you, Mr. Chairman, and thank you, Mr. 
Costa, for those kind words, but thank you, Chairman Conaway 
and Ranking Member Peterson, for the opportunity to testify 
here today.
    I am a third-generation California farmer, we grown a 
variety of crops, with almonds and walnuts being our principle 
commodities. At the outset, Mr. Chairman, I would like to thank 
you for your efforts to bring the Committee to my home town of 
Modesto in August for a listening session. We really appreciate 
that.
    California is blessed with the unique geography, 
microclimates, and water resources, which allows us to be the 
nation's largest agricultural production and exporting state, 
growing more than \1/3\ of our nation's vegetables, and \2/3\ 
of our nation's fruits and nuts. Of those, we grow more than 99 
percent of the nation's almonds, artichokes, dates, dried 
plums, figs, garlic, kiwi fruit, olives and olive oil, 
pistachios, raisins, table grapes, and walnuts.
    Considering that specialty crop programs receive one 
percent of the total farm bill funding and four percent of the 
non-nutrition title funding, it is vital that increased 
consideration is given to the most critical needs of specialty 
crops. California specialty crop growers have long led the way 
in adopting and embracing new technologies and innovation in 
order to remain competitive and profitable. Until laws and 
regulations on labor, immigration, taxes, the environment, food 
safety, crop production, crop protection, and trade better 
reflect real-world realities of family farming, the best bet 
for future success growing specialty crops can be summed up in 
one word: innovation.
    The most significant innovation that can be achieved on the 
farm is increased mechanization. This need arises as the pool 
of available workers dramatically declines. Specialized 
equipment, robotics, and other tools can help offset the 
growing labor shortage. If we don't aggressively invest in 
development of new technologies, the consequence will be to 
lose a large share of our nation's specialty crop production. 
As such, there has never been a greater need for accelerated 
leaps of innovation for specialty crops.
    Of all farm bill research funds, about 15 percent are 
directed to specialty crops. Mechanization is already in place 
for a number of specialty crops, such as nuts, wine grapes, and 
processing tomatoes; however, the production of fresh fruits 
and vegetables is still predominantly done by people working in 
the field, and mostly done by hand.
    Our land-grant university system was integral to the 
development of labor-saving, mechanical technologies. When the 
University of California, Davis, developed the field harvester 
for processing tomatoes, just in time for the labor crisis of 
the 1960s, the process from the initial vision to complete 
commercial acceptance and utilization took over 2 decades in 
order to design and build the harvester, and the plant breeding 
involved to develop a tomato suitable to mechanical harvesting.
    We no longer have the luxury to wait decades for similar 
innovations. Significant investment in plant breeding, 
mechanical engineering, and broadband is required today. The 
University of California has estimated an investment of $10 to 
$20 million will be needed to research and develop critical 
technologies for each of the specialty crops.
    There are several examples of advanced mechanization 
already underway. Olive growers have been challenged by labor 
shortages for a crop that can only be handpicked. They have 
allocated hundreds of thousands of dollars over decades toward 
developing mechanical harvesting tools to assist the industry 
with labor-saving options. Grimmway Farms is exploring a 
concept of utilizing robots and planting in pots, moving the 
pots to the field, and then returning the pots to a central 
location to harvest, relieving the need for hand crews. Ongoing 
research and design of robotic strawberry and lettuce pickers 
are still years from being field-ready, which has resulted in 
the production of these and other labor-intensive crops being 
relocated to other countries.
    There are many reasons for optimism as we look to the 
future, but we must also be realistic. The challenges facing 
the agricultural production foundation of our country are real 
and standing pat is not an option. The specialty crops by 
virtue of their limited relative acres and scope, high-input 
costs and vulnerability to foreign competition are lacking the 
same safety net afforded to other growers.
    Ronald Reagan, Governor of California and past President, 
once said about government and business, if it moves, tax it. 
If it keeps moving, regulate it. When it stops moving, 
subsidize it.
    Mr. Chairman, as your Committee confronts the funding 
challenges as you develop a new and improved farm bill, I would 
ask that you would seek to include novel innovations that would 
leverage the investment of the American taxpayer. Public-
private partnerships and developing and installing critical 
infrastructure that allows rural America the same access to 
critical communication capabilities and regulatory reform, 
looking for opportunities to develop, implement, and realize 
benefits from creative new technologies and innovations, as we 
seek to provide food and agricultural products for a growing 
world population. Unfortunately, overly zealous regulations 
often limit, discourage, and prevent the American ingenuity 
that has helped us be the most productive farmers in the world.
    We look forward to working with you to protect, promote, 
and advance the critical foundation of the United States called 
agriculture.
    [The prepared statement of Mr. Wenger follows:]

Prepared Statement of Paul J. Wenger, President, California Farm Bureau 
                       Federation, Sacramento, CA
    Thank you, Mr. Chairman, for the opportunity to testify before the 
full House Committee on Agriculture to discuss the role of farm policy 
for specialty crop producers, with an emphasis on technology and 
innovation. I am Paul Wenger, a third-generation California farmer, 
where my farm includes ground my grandfather purchased in 1910. 
Originally a dairy operation, we raised cattle for beef for over forty 
years, before converting to predominantly orchards, planted to almonds 
and walnuts.
    For twenty years, I have served as an officer of the California 
Farm Bureau Federation (CFBF), the last 8 of which I have led the 
organization as its President. I am here representing more than 28,000 
agricultural members in 53 county Farm Bureaus with members who produce 
over 400 commodities in our incredibly diverse agricultural state.
    Due to California's unique geography, microclimates, and water 
resources, we are the nation's largest agricultural production and 
exporting state growing more than \1/3\ of our nation's vegetables and 
\2/3\ of our nation's fruits and nuts grow in California. Of those, our 
state grows more than 99% of the nation's almonds, artichokes, dates, 
dried plums, figs, garlic, kiwifruit, olives and olive oil, pistachios, 
raisins, table grapes, and walnuts.\1\
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    \1\https://www.cdfa.ca.gov/Statistics.
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    Considering that specialty crop programs currently receive 1% of 
total farm bill funding and 4% of non-nutrition title funding, it's 
vital that increased consideration is given to the most critical needs 
of specialty crops.\2\ In my testimony I will share some history of 
California's specialty crop industry and how the farm bill might 
address current labor challenges.
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    \2\CRS Report R43632, Renee Johnson, Specialty Crop Provisions in 
the 2014 Farm Bill, Table 2 shows specialty crop spending levels as 
$773 million in mandatory and $302 million discretionary funding in 
each year from FY14-FY18. The Congressional Budget Office projected the 
total cost of the new farm bill to be $489 billion over 5 years, or 
$97.8 billion per fiscal year. This puts mandatory specialty crop 
spending at 0.79% of total farm bill funding. Mandatory plus 
discretionary spending for specialty crops puts the total at 1.1% of 
total. Since nutrition spending is 80% of total farm bill outlays, the 
total spent on all non-nutrition title farm programs is $19.56 billion 
per year. Of that total, mandatory specialty crop is 3.95% and 
mandatory plus discretionary spending is 5.5%. Numbers cited use the 
mandatory specialty crop figures.
---------------------------------------------------------------------------
    I appreciate the opportunity to address this Committee. I commend 
Chairman Conaway and the Committee for taking time to review the 
interests of specialty crop growers in California.
Farm Bureau and the Farm Bill
    While this hearing's focus is on the Federal Government's role with 
respect to specialty crops and the need for continuous technology and 
innovation, it is important to reflect on how we got to where we are in 
the first place, and so I will begin by going back to the early days of 
farming in California and providing a brief history of the Farm Bureau 
organization.
    In the mid to late-19th century, a census of California agriculture 
would have shown that the state was much like the rest of the nation at 
the time, consisting mainly of wheat and livestock. By 1890, poor soil 
conditions prompted farmers of that era to join together to improve 
farming conditions and tackle the many obstacles that stood in their 
way.\3\
---------------------------------------------------------------------------
    \3\``The Evolution of California Agriculture: 1850-2000,'' Olmstead 
and Rhode. California Agriculture: Dimensions and Issues, Jerry 
Siebert, editor, 2003. https://s.giannini.ucop.edu/uploads/
giannini_public/4e/a8/4ea8b9cc-df88-4146-b1ae-e5467736e104/
escholarship_uc_
item_9145n8m1.pdf.
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    As farmers embraced new technologies for that era, California 
production began to diversify into grapes, citrus, and other specialty 
crops, creating the foundation for the cornucopia of crops grown in 
California today. By the early 20th century, those who lived in my 
grandfather's generation led the nation in steam and then gas-operated 
tractors and were among the first in the nation to utilize 
electrification both for tools and pumping water.\4\ They worked with 
academic institutions and the government to address and solve the 
problems they faced on the farm. This united coalition of farmers 
became known as the Farm Bureau, and CFBF is about to celebrate 99 
years as a state organization.
---------------------------------------------------------------------------
    \4\Olmstead and Rhode, p. 12-13.
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    Within 2 decades of the Farm Bureau's existence, the Great 
Depression hit and U.S. farm policy began taking shape as the 
government intervened in agricultural supply and price for that era's 
largest crops like corn, wheat, cotton, and rice, which eventually 
became known as ``program crops'' in what became known as the farm 
bill. Conservation efforts and crop insurance were also incorporated 
into the bill. In subsequent decades, each farm bill reauthorization 
would make tweaks to price and supply calculations for the program 
crops, while growers of other crops such as fruits and vegetables, were 
strictly subjected to the whims of the market with little to no 
government intervention, including access to adequate crop insurance 
products. These non-program crops came to be known as ``specialty 
crops,'' which are now officially defined as fruits, vegetables, tree 
nuts, dried fruits, horticulture and nursery crops (including 
floriculture).\5\
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    \5\``What is a Specialty Crop?'' USDA-AMS. https://
www.ams.usda.gov/services/grants/scbgp/specialty-crop.
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    As a statewide organization that represents both program and 
specialty crop producers, we have evolved with the changing needs of 
all farmers and ranchers. In the last few decades, there has been a 
marked shift in Farm Bureau's mission to identify solutions to the 
problems faced by farmers. Originally focused on a balance between 
research and policy, the primary concerns today, especially in 
California, are almost centrally squared on policy and regulation. At 
times, burdensome regulations overshadow the everyday problems of 
farming that can be overcome through technology and innovation.
    Despite the regulatory challenges, farmers are willing to embrace 
technology and implement new innovations to enhance and advance the 
profitability of their farms. Today's agriculture is built upon the 
many technological advances developed over the last 150 years.
    California farmers and consumers alike have benefitted from the 
unique system of canals moving water from Northern California into the 
Central Valley or lifting it over the Tehachapi mountains into Los 
Angeles and the growing region of Palmdale in Los Angeles County. 
Innovation in our universities and scientific laboratories have 
continued to develop new crop protection tools that are focused on 
treating specific problems, as well as reaching major strides in 
biotechnology. Farmers have been quick to adapt to the utilization of 
broadband, GPS guidance, lasers and drones, to become the most cutting 
edge farmers on [E]arth.
    With the many great technological innovations of our day, our 
success is fragile. Producing specialty crops requires great expense 
and risk with no real safety net. As a nation, it should be in our 
interest to protect the specialty crop industry and allow it to thrive 
so that we do not lose out to competitors.
    While specialty crop growers have been remarkably resilient when 
faced with inclement weather, hostile markets conditions, pests and 
diseases, labor shortages, or other obstacles to their success, access 
to effective risk management tools have gone largely unmet.
    As crop insurance has broad and generally predictable application 
among the major farm commodities, there are unique issues within 
specialty crops that deserve the attention of Congress. For most 
specialty crops, viable crop insurance programs are still lacking. To 
encourage maximum producer participation, Congress should pursue risk 
management programs that meet the needs of every commodity, small and 
large, in the most efficient and cost effective manner possible.
    We strongly support the Whole Farm Revenue Protection (WFRP) 
program, an insurance policy created as a pilot in the 2014 Farm Bill 
to build on the successes of the AGR and AGR-Lite policies, that has 
offered the first insurable product to growers of commodities that have 
never received support. As the WFRP remains as a pilot program, we will 
seek improvements to make it more accessible.
    Aside from conservation programs like the Environmental Quality 
Incentives Program (EQIP), which are available to all commodities, it 
is inequitable that Federal farm policy would focus on a narrow set of 
crops. The health and economic benefits of ensuring a vibrant domestic 
specialty crop sector became the impetus for the collective industry 
uniting to support a new program.
    Specialty crop growers were unsuccessful in their bid to be 
included in the 2002 Farm Bill for assistance in maintaining domestic 
production, as global competitors didn't face the same burden and cost 
of regulations as did our domestically produced specialty crop growers. 
The resulting passage of the Specialty Crops Competitiveness Act of 
2004 led to inclusion of a specialty crops title (known officially as 
the ``horticulture title'') in the 2008 Farm Bill, which became the 
first official acknowledgement of specialty crops in the farm bill.
    The centerpiece of this almost decade-old title is the Specialty 
Crop Block Grant, a state administered program that partners with 
organizations on a cost-share basis to enhance the competitiveness of 
these agricultural products. California has benefitted tremendously 
from this program, with hundreds of grants awarded to address a large 
variety of industry needs. It has also created new opportunities for 
specialty crop growers that didn't previously exist. These funds don't 
go directly to growers, but provide financial support to segments of 
the industry in need of solutions to perplexing problems.
    Overall, we support a farm bill that provides a safety net to 
growers, protects the specialty crops programs, prioritizes working 
lands programs, and ensures scientific progress in research. We also 
support a unified bill that combines the nutrition title with the other 
farm bill titles.
    We have been involved as a member of an American Farm Bureau 
Federation (AFBF) led committee of 16 states that developed vast 
resources on the farm bill for Farm Bureau members, policymakers, and 
the general public that are available at http://www.fb.org.
    With regard to specialty crops, AFBF policy supports the inclusion 
of a specialty crops title in future farm bills, additional research 
into harvest and cultural practices, expanded disease and pest research 
programs, improved pest exclusion programs, and funding to promote 
market expansion of U.S.-produced specialty crops. AFBF policy also 
adopts as a principle for the next farm bill, expansion of the Fresh 
Fruit and Vegetable Program and maintaining adequate funding for the 
specialty crop industry with emphasis on fundamental research, 
marketing and promotions, and pest management programs.
Barriers to Success & Solutions
    California specialty crop growers have long led the way in adopting 
and embracing new technologies and innovation in order to remain 
competitive and profitable. Until laws and regulations on labor, 
immigration, taxes, the environment, food safety, crop protection and 
trade better reflect real-world realities of family farming, the best 
bet for future success growing specialty crops can be summed up by one 
word: innovation.
    The most significant innovation that can be achieved on the farm is 
increased mechanization. The need arises as the pool of available 
workers dramatically declines. Equipment, robotics, and other tools can 
help offset the growing labor shortage. If we don't aggressively invest 
in the development of new technologies, the consequence will be to lose 
a large share of our nation's specialty crop production.
    While it is outside the jurisdiction of this Committee, we ask 
first and foremost that Congress move rapidly toward allowing a legal 
workforce in the United States to guarantee that future immigrants who 
desire to work in American agriculture be allowed entry. We strongly 
oppose a mandatory E-Verify on employers until a satisfactory 
immigration path for agriculture is realized. We also caution Members 
that fixes around the edges of H-2A won't alleviate the current labor 
shortage.
    There has never been greater need for accelerated leaps of 
innovation for specialty crop production. In the past 3 decades, of all 
farm bill research funds, only 15% have been directed to specialty 
crops.\6\ To get the most bang for the buck, public-private 
partnerships in the farm bill should be emphasized that address 
mechanization.
---------------------------------------------------------------------------
    \6\Helena Bottemiller Evich, Politico, ``The vegetable technology 
gap: Washington spends millions on crop research. Why doesn't more go 
toward the foods we're actually supposed to eat?'' March 8, 2017. 
http://www.politico.com/agenda/story/2017/03/fruits-and-vegtables-
technology-000337.
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    The development and adoption of on-farm mechanization has a storied 
history. From tillage to planting to harvest, most operations conducted 
on the farm today are done by machine. For less fragile or perishable 
crops, like grains, nuts, or fiber crops like cotton, their harvest is 
completely accomplished by machine. Mechanized machinery for the 
harvest of a small set of specialty crops such as nuts, wine grapes, 
and processing tomatoes have been commercialized and are in widespread 
use. However, the farm operations for fleshy specialty crops (e.g., 
fresh fruits and vegetables), beyond tillage and fertilization are 
mostly done by people working in the field. Many vegetable crops (e.g., 
tomato, or celery) are transplanted, where people manually feed 
individual seedlings into a mechanism for placement in the soil, while 
the weeding and thinning of vegetable crops and the thinning of fruit 
crops is mostly done by hand.
    Our land-grant university system was integral to the development of 
labor saving mechanical technologies. UC Davis' Department of 
Biological and Agricultural Engineering has a long history of 
innovation for the mechanization of various specialty crops, such as 
the development of the field harvester for processing tomatoes. It is 
important to note that the process from the initial vision to complete 
commercial acceptance and utilization took over 2 decades.
    The innovation traces back to the 1940s when a new type of tomato 
plant was developed. It produced fruit with a uniform ripening ability 
(so all fruit ripened at about the same time), the fruit detached 
easily from the plant, and it produced a flesh and skin that were 
resistant to the mechanical rigors of machine harvest. About a decade 
after the breeding work began, a new type of machine was developed that 
automatically harvested the new type of tomato.
    By the end of the Bracero farm labor program in 1964 the UC team 
had successfully created both the machine as well as the tomato it 
could harvest. With the ensuing farm labor shortage caused by the 
termination of the Bracero program, the processing tomato industry 
successfully made the transformation from an entirely manual harvest in 
1961 to 95% machine harvested fruit in 1968. The entire process 
required a dedicated effort spanning a period of 25 years. The initial 
labor savings due to the use of mechanized processing tomato harvest 
was about 50%. As technological enhancements were made to the machine, 
such as automatic color sorters to remove immature green tomatoes, and 
improved farming practices were made to better facilitate machine 
harvest, the labor savings increased to the point where we have 
achieved a 90% labor savings compared to hand harvest of processing 
tomatoes today.\7\
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    \7\http://ucanr.edu/sites/Postharvest_Technology_Center_/files/
231316.PDF.
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    To advance the progress for mechanization of specialty crops, a 
significant investment in plant breeding and mechanical engineering is 
required. According to the University of California, funding on the 
order of $10M to $20M per specialty crop is required to support the 
integrated multidisciplinary teams of biologists and engineers required 
to develop prototype smart machines and robotic systems needed to 
mechanize specialty crops and to simultaneously develop the next 
generation of machine harvestable specialty crop plants.
    We believe it is important to address the need for mechanization in 
the next farm bill through a dedicated allocation within the Specialty 
Crop Research Initiative (SCRI), as well as funding through the 
Agriculture and Food Research Initiative (AFRI) that has previously 
assisted mechanization research by promoting and enabling collaboration 
between land-grant universities and top robotic engineering 
departments.
    There are tremendous opportunities for public-private partnerships 
in advancing mechanization for additional specialty crops in the 
future. A great example to highlight is the olive industry's efforts. 
The California Olive Committee continues to be committed to developing 
a mechanical harvesting machine suitable for the olive industry, and 
has been dedicating resources to perform research, cost studies, and 
experimental testing of both new and existing technologies. Currently, 
olives are handpicked and due to this, cost as well as availability of 
adequate labor have been some of the greatest challenges for our olive 
growers.
    Over the past several decades, the olive industry has allocated 
hundreds of thousands of dollars toward developing mechanical 
harvesting tools to assist the industry with labor-saving options. 
Currently, the California olive industry provides over $400 million 
into the California economy, according to a report commissioned by the 
California Olive Committee and conducted by Dennis H. Tootelian, Ph.D., 
Tootelian & Associates.\8\ However, due to new California state laws 
creating further restrictions and mandates on labor, and an increase in 
California wages and workers' compensation rates, table olive growers 
are looking at all available tools to reduce costs. By lowering these 
costs, the California olive industry will be able to compete against 
other countries who are currently providing subsidies for their olive 
industries.
---------------------------------------------------------------------------
    \8\http://calolive.org.
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    The American Olive Oil Producer Association, an SCRI participant, 
recently wrote House Appropriations with concerns that SCRI funds would 
be cut. Olive oil has already achieved mechanized harvesting, but 
improvements can be made in orchard installation, management, 
harvesting and milling. The industry continues to seek for advancements 
that can result in the highest quality crop with the best yields and 
highest rate of extraction of extra virgin olive oil. Technological 
advances and innovation are imperative to a nascent domestic industry 
that is competing with traditional ``old world'' producers.\9\
---------------------------------------------------------------------------
    \9\http://aaopa.org.
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    Similarly, California-based Grimmway Farms, the largest carrot 
grower in the world, is exploring a concept of robots planting in pots, 
moving the pots to the field, and then returning the pots to harvest, 
relieving the need for a large crew.\10\
---------------------------------------------------------------------------
    \10\http://www.growingproduce.com/vegetables/robots-container-
production-and-the-future-of-vegetable-growing/ and http://
grimmway.com.
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    Ongoing research and design of robotic strawberry and lettuce 
pickers are still years from being field ready, which has resulted in 
the production of these and other labor intensive crops being relocated 
to other countries.
    The opportunity for increased mechanization of specialty crops will 
be driven largely by the availability of an adequate and affordable 
labor supply, as well as other cost-benefit considerations, including 
the international competitiveness of the U.S. industry. Ongoing 
research and design of robotic strawberry and lettuce pickers are still 
years from being field ready, which has resulted in the production of 
these and other labor intensive crops being relocated to other 
countries.
    Just as mechanization helped early California farmers to displace 
labor, more advances are needed to maintain existing production in 
light of a diminishing pool of available workers. These advances can 
only come through equipment, robotics, and other tools that will help 
offset the growing labor shortage. It will take time and additional 
funding to get to the point where robotics plant, thin, prune, pick and 
process every crop, but there are commodities raised in California that 
must achieve a greater reliance on mechanization or the consequence 
will be to lose our domestic production of those crops.
    Dedicated funding for advancements in technology and mechanization 
would be widely supported in the farm bill, though we reiterate that 
this is not an immediate substitute and remedy for the need to enact 
immigration reform laws that would protect and promote domestic 
agriculture and ensure the competitiveness of specialty crops.
Conclusion
    The bottom line for California agriculture is continual innovation 
in order to stay competitive. With an uncertain labor situation, 
additional production costs, and unpredictable weather, California 
agriculture continues to find ways to adapt to the challenges.
    Research and new technologies will be key to helping our specialty 
crop producers compete, whether it's in improved production which 
includes mechanization, or more effective and affordable pest and 
disease protection. CFBF encourages Congress to support research for 
new technologies in the next farm bill.
    I'm reminded by Ronald Reagan's famous quote about government's 
view of the economy: ``If it moves, tax it. If it keeps moving, 
regulate it. And if it stops moving, subsidize it.'' Specialty crop 
producers are already taxed and regulated. Let's all hope we never get 
to the point where our specialty crop production stops moving.

    The Chairman. Thank you, sir.
    Mr. Heller, 5 minutes.

  STATEMENT OF PAUL HELLER, VICE PRESIDENT, WONDERFUL CITRUS, 
                  TEXAS DIVISION, MISSION, TX

    Mr. Heller. Thank you, Chairman Conaway, Ranking Member 
Peterson, and other Members of the Committee. I thank everyone 
here today for the opportunity to come before you to discuss 
the critical role farm bill funding plays in the continued 
success of the specialty crop industry; citrus in particular.
    My name is Paul Heller, I am the Vice President of 
Wonderful Citrus' Texas Division. Wonderful Citrus is the 
largest vertically integrated grower, packer, and shipper of 
fresh citrus in the United States. In connection with our 
grower-partners, we farm and process near 60,000 acres of fresh 
citrus varietals throughout Texas, California, and Mexico, 
including Texas red grapefruit from the Rio Grande Valley. I am 
also here representing thousands of small growers who make up 
the backbone of our industry; myself proudly one of them.
    The farm bill has been instrumental in maintaining the 
health of the specialty crop industry. Among the most critical 
are crop insurance and the specialty crop provisions which 
include programs to respond to pest and disease issues. While I 
will only briefly touch on a few key points here today, I 
wanted to stress just how critical it is for these programs to 
continue under the 2018 Farm Bill. Farming is an inherently 
risky business, as you all know, and tree crops like citrus 
carry an even greater risk as they require multiple years of 
growth to reach fruit-bearing maturity. Unlike annual row 
crops, citrus trees cannot simply be removed from the ground in 
order to wait out a natural disaster. As such, the farm bill's 
crop insurance programs have become a vital risk-management 
tool for specialty crop producers. For example, south Texas was 
hit especially hard by tree-killing freezes in 1983, and again 
in 1989. The primary reason the industry was able to bounce 
back after these events is because of the protections provided 
by crop insurance, and the resilience and foresight of the 
growers that participate in these newly developed insurance 
programs. Today, growers still depend on the stability of crop 
insurance, and make serious business decisions based upon these 
programs. It is absolutely critical that these programs 
continue to receive the support they need from Congress.
    Having some protections against unforeseen disasters is 
extremely important to growers; however, learning how to 
mitigate these catastrophes is key. As such, pest and disease 
issues remain a key priority for Wonderful, and the citrus 
industry at large. This is especially true as we continue to 
fight the devastating disease known as citrus greening, or 
Huanglongbing, also known as HLB. With no known cure for HLB, 
it is absolutely necessary that the citrus industry take every 
possible precaution to prevent the spread of the disease, while 
continuing to search for a treatment protocol. The Federal 
Government has been a crucial partner in this fight. The citrus 
industry has been fortunate to have the support of the pest and 
disease research programs in the farm bill, like USDA Citrus 
Health Response Program, which has proven instrumental in the 
battle against not only HLB but fruit flies, canker, and other 
issues that have come up.
    One of the most important aspects of the farm bill overall 
is industry's ability to leverage public-private partnerships 
to bring innovation and technology into our businesses. For 
example, red grapefruit, the basis of our grapefruit industry 
in Texas, was discovered as a natural mutation on a pink 
grapefruit tree. It wasn't until the 1970s, through innovative 
work of researchers like Dr. Richard Hensz at Texas A&I 
Kingsville Citrus Center, where new varieties of red grapefruit 
were developed that are the basis of our industry today. This 
work was made possible in part through Federal funding for the 
research center, and a successful partnership between growers, 
industry, and other government institutions. Today, Dr. Eliezer 
Louzada is continuing this research using advanced 
biotechnology techniques and plant cell and tissue culture. The 
citrus center that we depend on today is a lasting example of 
these partnerships and the benefits they bring to specialty 
crop producers.
    While advances in technology have historically been made on 
the production side of the citrus business, such as fruit 
sizing and sorting, our Texas operation uses advanced 
technologies in many ways. For instance, we are currently 
piloting new technology that grades the amount of decay that is 
present on individual pieces of fruit. We also have started 
using high-resolution surveys of our orchards to count for 
missing trees, and are looking at ways to advance that 
technology to conduct surveys for pests and disease.
    There are numerous benefits to bolstering public-private 
partnerships, especially in research and development. The next 
farm bill should promote these types of relationships, and 
leverage the knowledge and inspiration of the private-sector to 
move the needle on innovative farming practices in the United 
States.
    Once again, I would like to thank the Committee for 
inviting me to testify before you today on the priorities for 
the citrus industry in the next farm bill. I am happy to answer 
any questions at a later time.
    [The prepared statement of Mr. Heller follows:]

 Prepared Statement of Paul Heller, Vice President, Wonderful Citrus, 
                      Texas Division, Mission, TX
    Chairman Conaway, Ranking Member Peterson, and other Members of the 
Committee, thank you for the opportunity to appear before you today to 
discuss the critical role farm bill funding plays in the continued 
success of the specialty crop industry, particularly citrus.
    My name is Paul Heller, and I am the Vice President of Wonderful 
Citrus' Texas Division. Wonderful Citrus is the largest vertically 
integrated grower, packer, and shipper of fresh citrus in the United 
States. In connection with our grower partners, we farm and process a 
number of citrus varietals across Texas, California and Mexico, 
including Texas Red Grapefruit, and Valencia and Navel Oranges in the 
southern Rio Grande Valley in Texas. Wonderful Citrus owns, cultivates 
and harvests nearly 60,000 acres of fresh citrus and ships around the 
world to ensure a year-round supply. With multiple packing facilities 
and state-of-the-art grading and packing equipment, Wonderful Citrus is 
able to ensure quality produce on a global scale. Our citrus can be 
found across all channels of distribution, with our products most 
visible in the produce department of grocery stores throughout America 
under the flagship consumer brands of Wonderful Halos mandarins and 
Wonderful Sweet Scarletts Texas Red grapefruit.
    The farm bill contains many programs that are important to the 
citrus industry, with the crop insurance program and specialty crop 
provisions--including programs to respond to pest and disease threats--
among the most critical.
Crop Insurance
    Farming is an inherently risky business, and tree crops--like 
citrus--carry an even greater risk as they require multiple years of 
growth to reach fruit-bearing maturity. Every year, growers face an 
increasingly long list of uncertainties, including pest and disease 
issues, devastating drought, floods, heat or frost that can destroy an 
entire crop. Unlike annual row crops, citrus trees cannot simply be 
removed from the ground to wait out a natural disaster. As such, the 
farm bill's crop insurance program has become a vital risk management 
tool for specialty crop producers to mitigate some of the risks that 
come with producing high quality fruit for market.
    For example, the south Texas citrus industry remains in existence 
today because of the support of crop insurance programs put into place 
in the 1980s. It was because of these programs that the industry was 
able to recover after two severe tree killing freezes in 1983 and again 
in 1989. Today, growers still depend on the stability of crop insurance 
and make serious business decisions based upon these programs. Over the 
years, industry has worked side by side with underwriters and 
developers to enhance the safety net provided by these programs, while 
also ensuring that they provide adequate coverage without incentivizing 
abuse.
Pest and Disease Funding
    Pest and disease issues remain a key priority area for Wonderful 
and the citrus industry at large. This is especially true as we 
continue to fight the devastating disease known as citrus greening or 
Huanglongbing (HLB). With no known cure for HLB, it is critical that 
the citrus industry take every possible action to prevent the spread of 
the disease while continuing to search for a treatment or other 
solution. The citrus industry has been fortunate to have the support of 
the pest and disease research programs in the farm bill to help advance 
our understanding of disease management and pest mitigation tools. For 
example, the USDA's Citrus Health Response Program (CHRP) has been an 
integral part of the battle against Mexican fruit flies and citrus 
canker while continuing to make strides in controlling the spread of 
HLB.
    Another example of an essential research program is the HLB Multi-
Agency Coordinating Committee (HLB-MAC). The HLB-MAC Fund has been 
integral in supporting ``shovel-ready'' short-term projects looking at 
early detection and treatment methods for HLB and the Asian Citrus 
Psyllid. While the HLB-MAC Fund is currently supported through the 
annual appropriations process, it would be preferable if the program 
were authorized in the farm bill. Regardless, it is essential that 
programs like CHRP and the HLB-MAC Fund remain intact and receive 
adequate funding to support the research necessary to advance the U.S. 
specialty crop industry into the future.
    While pest and disease research is critical to the success of our 
industry, specialty crop block grant funding--money that goes directly 
into state departments of agriculture--has become an integral part of 
our ability to combat immediate threats at the local and state level. 
In south Texas, this funding has been especially important. Recent 
citrus canker surveys, fruit fly programs, and HLB outreach programs 
have been critical in raising awareness within not only the farming 
community, but with the general public as well. The specialty crop 
block grant program has provided South Texas citrus producers with key 
programs and invaluable information on various pests and diseases.
Technical Assistance for Specialty Crops
    The future of U.S. specialty crops are also dependent on our 
ability to promote our products overseas. Programs designed to open new 
markets or further develop existing ones are important to specialty 
crop producers and keep U.S. commodities competitive in the global 
market. For instance, the Technical Assistance for Specialty Crops 
(TASC) program that provides funding to U.S. organizations for projects 
that address sanitary, phytosanitary, and technical barriers that 
prohibit or threaten the export of U.S. specialty crops, is integral in 
maintaining the presence of U.S. agriculture abroad. We fully support 
preserving the funding for these types of programs in the 2018 Farm 
Bill.
Importance of Private-Public Partnerships
    One of the most valuable aspects of the farm bill for Texas citrus 
producers, and specialty crop producers in general, is our ability to 
leverage public-private partnerships (and funding) that bring 
innovation and technology to the entire chain of operations.
    For example, red grapefruit, the basis of our grapefruit operation 
in South Texas, was discovered on a pink grapefruit tree. It wasn't 
until the 1960s, through the innovative work of Dr. Richard Hensz at 
the Texas A&M Kingsville Citrus Center, that we had the first true red 
grapefruit in South Texas. Dr. Hensz's work was made possible through 
Federal funding for the research center and the cooperation of 
industry, higher education, and state level support. Today, Dr. Eliezer 
Louzada continues to build upon Dr. Hensz' research using advanced 
biotechnology in plant cell and tissue culture.
    The Kingsville Citrus Center, which was founded in the late 1940s 
through the result of public-private partnerships, is also home to our 
Texas Budwood program. The Budwood program is primarily focused on 
ensuring the availability of clean plant material to the citrus 
industry, as well as homeowners and hobbyists across the state. This 
effort is funded by industry, budwood sales, Federal grants and state 
higher education funding through classes and degree programs. Our Texas 
Citrus Center is an example of how public-private partnerships can work 
to create lasting institutions that support specialty crop producers as 
well as the general public.
    While advances in technology have historically been made on the 
production side of the citrus business, such as fruit sorting and 
sizing, our Texas operations use technology to assist in new ways. For 
instance, we are currently piloting new technology that grades the 
amount of decay present on an individual piece of fruit. We have also 
started using high resolution surveys of our orchards to count missing 
trees and are looking at ways to advance that technology to conduct 
surveys of pests and disease.
    There are numerous benefits to bolstering private-public 
partnership when it comes to research and development. The next farm 
bill should promote these types of relationships and leverage the 
knowledge and inspiration of the private-sector to move the needle on 
innovative farming practices in the U.S.
Immigration and Stable Workforce
    While all of these programs enhance the competitiveness of 
specialty crops, their value is undermined if fresh produce providers 
cannot cultivate and harvest their crops. Simply put, much of the 
agriculture industry relies on foreign-born labor to get specialty 
crops from the fields to the marketplace. Should anyone still believe 
the myth that foreign workers who harvest specialty crops are taking 
jobs from Americans, I invite them to talk to growers across the 
country and learn the simple truth. Americans by and large will not do 
these jobs. But, fortunately for consumers and other workers in the 
production chain, there are individuals from other countries willing to 
come to the United States to do these crucial on-farm jobs. We should 
not punish them for providing an essential service, nor should we 
penalize the employers in our industry who are doing everything they 
can to make sure America has an adequate supply of healthy and fresh 
food.
    The only Federal program that provides a legal agriculture 
workforce, H-2A, is both overburdened and under-performing in providing 
workers in a timely manner. It's easy to say that the H-2A visa program 
is badly in need of reform. While specialty crop providers understand 
why Congress and the Administration have both chosen to focus on 
policies to strengthen immigration enforcement, we urge you to keep the 
needs of agriculture in mind when considering any immigration policy. 
Enforcement-first or enforcement-only policies will be devastating to 
our industry. It is critically important for the specialty crop 
industry that any enhanced enforcement is done in a way that supports a 
workable agriculture guestworker program.
    Once again, I would like to thank the Committee for inviting me to 
testify before you today on the priorities of the citrus industry for 
the next farm bill.

    The Chairman. Thank you, sir.
    Mr. Wishnatzki for 5 minutes.

  STATEMENT OF GARY E. WISHNATZKI, OWNER AND CHIEF EXECUTIVE 
              OFFICER, WISH FARMS, PLANT CITY, FL

    Mr. Wishnatzki. Thank you, Chairman Conaway, Ranking Member 
Peterson, Members of the Committee, and a special note of 
appreciation to our four distinguished Members from Florida. I 
thank all of you for your efforts to strengthen agriculture 
throughout our nation.
    I am Gary Wishnatzki, Owner of Wish Farms. My family has 
been marketing berries for family farms since 1922, and since 
1987, we have also been farming.
    As a fourth-generation family company, I am proud of our 
family's legacy of producing strawberries and blueberries. I am 
also Cofounder of Harvest CROO Robotics, a startup to develop 
harvest technology. It is a collaborative effort with eight 
other strawberry companies, both from Florida and California 
have invested. I serve on the Executive Board of the Florida 
Fruit and Vegetable Association, the Board of Produce Marketing 
Association, and I am a member of United Fresh Produce 
Association as well as the Florida Strawberry Growers 
Association.
    As the Chairman has acknowledged, specialty crop production 
is a pivotal and growing sector of the agricultural industry. 
Toward that end, innovation and technology are essential for 
farmers to continue producing more food for our nation.
    In recent years, the industry, as well as others in the 
specialty crop sector, have been facing serious challenges. 
Most growers will agree that the availability of labor is the 
greatest of these challenges. I believe an impending crisis is 
at hand. Innovation can play a key role in solving this. The 
primary reason for the shrinking labor supply is simple 
demographics. The majority of farmworkers come from other 
countries, particularly Mexico. In the 1960s the fertility rate 
in Mexico was 6.7. People were coming here because there were 
no opportunities for them at home. Twenty years ago it had 
dropped to 2.9. That shrinking birth rate mirrors the declining 
labor force. The current fertility rate in Mexico is near 2.1. 
There are more opportunities for workers to stay in Mexico. The 
Pew Research Center published a paper in 2015 that concluded 
there are more people going back to Mexico than are coming to 
the U.S. Our workforce is shrinking and aging.
    According to University of Florida economics study, the 
total cost of producing strawberries in Florida had risen 30 
percent over a 5 year period ending in 2015. Labor costs were 
estimated at $8,400 per acre, while the cost of labor 
production for Mexican growers was a mere $3,800 per acre. The 
study concluded: ``These challenges are not likely to narrow 
down in the foreseeable future without a major technological 
breakthrough, such as mechanization of strawberry harvesting.'' 
This study was based on industry costs from 2 seasons ago. Our 
farm's labor cost this past season was over $13,000 per acre.
    Many of the current farm bill programs provide the tools to 
enhance innovation and technology; however, there is a greater 
role for the private-sector to play, and I encourage the 
adoption of policies that recognize and enhance private 
industries' involvement in vital research in farm bill 
programs.
    Currently, in Florida, there is no private access to 
agricultural research funds. We will eventually harvest a 
significant portion of our nation's fruits and vegetables using 
automation, but depending on the crop, it may take between 5 
and 10 years for technology to be perfected to the point that 
they can be utilized on a large scale. Until that time, our 
industry has to rely on foreign labor. The current Federal 
Guest Worker Program, H-2A, has serious problems. The program 
is in need of a major overhaul, and I believe there is a very 
simple way to fix it. To be clear, employers in our industry 
support enforcement of our nation's immigration policies, but 
those policies must reflect the reality of how vital a foreign-
born workforce is to our nation's ability to ensure an abundant 
supply of fresh fruits and vegetables.
    Innovation will be the key to maintaining our nation's 
ability to feed itself, and this Committee should fight for 
investments in technology and research for the specialty crop 
sector. Please consider though that automation is a long-range 
solution, and we still depend on foreign workers to bridge the 
gap.
    Thank you for the opportunity to testify, and I look 
forward to answering your questions.
    [The prepared statement of Mr. Wishnatzki follows:]

  Prepared Statement of Gary E. Wishnatzki, Owner and Chief Executive 
                  Officer, Wish Farms, Plant City, FL
    Thank you, Chairman Conaway, Ranking Member Peterson, and Members 
of the Committee for the opportunity to share my perspective on the 
important topic of the impact and potential of technology and 
innovation in the specialty crop sector.
    I am the owner of Wish Farms. My family has been marketing berries 
for family farms since 1922 and since 1987 we have also been farming. 
As a 4th generation family company, I am proud of our family's legacy 
of producing strawberries and blueberries. I am also a co-founder of 
Harvest CROO Robotics, a start-up to develop harvesting technology. It 
is a collaborative effort with eight other strawberry companies from 
Florida and California invested. I serve on the Executive Board of 
Florida Fruit and Vegetable Association, the Board of the Produce 
Marketing Association, and I am a member of United Fresh Produce 
Association, as well as the Florida Strawberry Growers Association.
    I want to thank this Committee for the support you have shown the 
fresh fruit and vegetable industry through effective policies that 
address key policy priorities in the farm bill. As you know, United 
Fresh coordinates the work of the Specialty Crop Farm Bill Alliance, a 
coalition of nearly 130 specialty crop organizations across the 
country, who come together during each farm bill reauthorization cycle 
to provide recommendations to Congress about specialty crop policy 
needs. I, and many other fresh produce providers, are grateful that you 
and your colleagues incorporated the Alliance's recommendations for the 
2014 Farm Bill, including:

   $75 million annually for the Animal Plant Health Inspection 
        Service (APHIS) Section 10201 program to prevent the 
        introduction or spread of plant pests and diseases that 
        threaten U.S. agriculture and the environment, as well as 
        ensure the availability of a healthy supply of clean plant 
        stock;

   $9 million annually for the Technical Assistance for 
        Specialty Crops (TASC) program and $20 million for the Market 
        Access Program (MAP). Both of these programs are designed to 
        address various barriers to agriculture exports;

   $184 million for the Fresh Fruit and Vegetable Program, 
        which provides a fresh fruit or vegetable snack to four million 
        low-income elementary school students in all 50 states. As the 
        Members of the Subcommittee may be aware, FFVP has been 
        evaluated by outside experts and found to be highly effective 
        at increasing students' fresh fruit and vegetable consumption;

   $75 million annually for the Specialty Crop Block Grant 
        program to enhance the competitiveness of specialty crops; the 
        2014 Farm Bill also authorized funding for multi-state block 
        grants; [and]

   $80 million in annual funding for the Specialty Crop 
        Research Initiative to develop and disseminate science-based 
        tools to address the needs of specific crops and their regions.

    As the Chairman has acknowledged, specialty crop production is a 
pivotal and growing sector of our agriculture industry. Toward that 
end, and given the current state of the farm economy, innovation and 
technology are essential for farmers to continue producing more food 
for our nation and building upon public-private partnerships top 
priorities to remain competitive in the marketplace.
    Florida is the second largest producer of specialty crops in the 
nation growing a wide variety of produce as the nation's primary 
provider in the winter months. We are also the second largest 
strawberry producing state, with a farm gate value of approximately 
$300 million. However, in recent years, the industry as well as others 
in the specialty crop sector has been facing serious challenges. Most 
specialty crop growers will agree that the availability of labor is the 
greatest challenge that we are facing. The cost of rising labor is a 
secondary problem. I believe an impending crisis is at hand. Innovation 
can play a key role in solving this problem.
    Strawberries, unlike most other fruits, do not ripen after being 
picked. They also do not ripen all at one time. In Florida and 
California, strawberries normally require picking every 3 to 4 days. If 
they are not picked on time, fruit becomes overripe and unmarketable. 
In Florida the harvest season lasts about 5 months and we typically 
pick a field 40 times. In California the season lasts even longer, 
requiring more passes over a field. The importance of picking 
strawberries on a strict harvest schedule, makes having a dependable 
way to do so of prime concern to growers. In recent seasons, my farm 
has had to abandon acreage for lack of labor. Labor shortages have cost 
us millions of dollars in lost opportunities. Having to walk away from 
a crop, after it is made is very painful.
    Rising costs have been eroding the competitiveness of Florida 
strawberries and squeezing growers' profit margins over the years. 
According to a University of Florida economic study, the total cost of 
producing strawberries in Florida had risen 30% over a 5 year period, 
ending in 2015. Labor costs were estimated at $8,432 per acre while the 
cost of labor production for Mexican growers was a mere $3,842 per 
acre. The study concluded, ``These challenges are not likely to narrow 
down in the foreseeable future without a major technological 
breakthrough, such as mechanization of strawberry harvesting. Given the 
wage differences and the dwindling migrant labor supply, it is 
imperative for the U.S. (and Florida) industry to develop labor-saving 
technologies and production systems''. This study was based on industry 
costs from 2 seasons ago. Our farm's labor costs this past season were 
over $13,000 per acre. That is more than 50% higher than the costs 
illustrated in this UF study. Our farm's labor cost are not dissimilar 
to other producers in Florida.
    In California, labor availability and costs are rising at an even 
more alarming rate. Some of our affiliated farms are reporting paying 
workers piece rates that convert to over $35 per hour. Strawberries are 
primarily grown close to the coast because of the cooler microclimates. 
Housing costs in those coastal communities are expensive compared to 
housing further inland. Finding affordable H-2A housing is difficult.
    It should be noted that primary reason for the shrinking supply of 
farm labor is simple demographics. The majority of farmworkers come 
from other countries, particularly Mexico.
    Throughout the history of our country, the jobs that Americans do 
not want to do have been filled by newly arrived immigrants. It is only 
the newcomers that are willing to do the hard jobs. Understandably, 
most workers eventually move into other occupations that are not as 
tedious. Furthermore, most harvesting jobs are not conducive to older 
people. Workers certainly are looking for a better life for their 
children and it is rare that the second generation stays on the farm. 
For years, American farms have depended on the newly arrived 
immigrants. Today growers are turning to H-2A because the people are no 
longer coming in the numbers that they once did. Here is why; in the 
1960's the fertility rate in Mexico was 6.7. People were coming here 
because there were no opportunities at home. Twenty years ago it had 
dropped to 2.9. That shrinking birthrate mirrors the declining farm 
labor force we have seen over the last 10 years. Today, our 20 year old 
workers are represented by the 2.9% fertility rate of 1997. What should 
really scare growers is that the current fertility rate in Mexico is 
estimated to be at 2.1. That is a preview of what the next 20 years 
looks like. It is easy to extrapolate that the trend of a shrinking and 
aging labor force is going to continue, based on these demographics. 
The fact is there are many more opportunities for workers to stay in 
Mexico. They simply are not coming anymore. The Pew Research Center 
publish[ed] a paper in 2015 that concluded there are more people going 
back to Mexico than are coming to the U.S. The group of workers that we 
have is shrinking, aging, and becoming less productive.
    The other point to conclude from these demographics is that Mexico 
could soon be short on agricultural labor, as well. Their specialty 
crop industry is expanding at a rapid pace. Before long, Mexican 
growers will probably be short workers too. Mexico could eventually be 
one of the countries that is importing labor itself. When I first 
founded Harvest CROO Robotics, I did not believe that there was a need 
to prosecute patents in Mexico, because their labor costs were so low. 
Based on the current trend, I now believe that will change within the 
next 10 years. All of our patents have now been filed in Mexico.
    It is also important to note that the farm labor shortage is a 
global problem. Every developed country in the world that is growing 
strawberries is importing labor from another less-advantaged country. I 
have had inquiries about our robotic harvester from growers in Canada, 
Mexico, the United Kingdom, Australia, Hungary, and Switzerland.
    Currently our industry has no other option but to rely on foreign-
born labor to do the essential jobs needed to get our commodities to 
the marketplace. The current Federal program for agricultural 
guestworkers, known as H-2A, has serious problems; too often, the 
program does not provide work authorizations for the necessary number 
of workers in a timely manner. To be clear: employers in our industry 
support appropriate, necessary enforcement of our nation's immigration 
policies. But, those policies must reflect the reality of how vital a 
foreign-born workforce is to our nation's ability to produce crops in 
this country and ensure an abundant supply of nutritious fresh fruits 
and vegetables for all Americans. H-2A is viewed by most growers as a 
means of last resort and is badly in need of a major overhaul.
    In my opinion, I believe that there is a very simple way to fix H-
2A as outlined here.

   USDA establishes quotas for the total number of workers 
        needed monthly for all crops in the U.S.

   Agricultural work visas are issued to workers with 
        agricultural work experience.

   The visas stipulates agriculture as the industry that they 
        are allowed to work in and it stipulates the time they are 
        allowed to stay.

   Workers are not tied to a specific employer and can freely 
        move from farm to farm. This helps ensure fair treatment of 
        workers, because they are not tied to one grower.

   E-verify is implemented.

   USDA establishes a clearinghouse to point workers to areas 
        and farms where they are needed.

   H-2A workers would find their own housing, the same as 
        domestic workers do.

   Guest workers are paid the same wages as domestic workers, 
        with one catch. There is a heavy amount of withholding from 
        their wages that they only receive upon their return to their 
        home country. While in the U.S., they would only receive a 
        stipend to live on. This should ensure that workers do not 
        overstay their visas.

    This plan would eliminate costly and time consuming burdens growers 
are currently facing.
    Many of the current farm bill programs provide the tools to enhance 
innovation and technology.
    However, there is a greater role for the private-sector to play and 
I encourage the adoption of polices that recognize and enhance private 
industry involvement in vital research and farm bill programs. 
Currently in Florida there is no private access to research funds, 
without partnering with a university. This usually involves giving up 
intellectual property rights. This is problematic to our outside 
financial investors. We did apply for and receive a phase one grant 
from the National Science Foundation under SBIR. That program does not 
have strings attached. Collaborative private-sector technology startups 
could advance at a faster pace, if given direct access to agricultural 
research funds.
    I want to thank this Committee for the support shown to the fresh 
fruit and vegetable industry through effective policies that address 
key policy priorities in the farm bill. One common thread that runs 
through this set of priorities is the need to promote ingenuity and 
development. Innovation holds the promise of providing answers to our 
industry's most persistent and fundamental challenge: securing an 
adequate labor force to bring crops from the fields to consumers. 
Through innovation, we will eventually be able to harvest a significant 
portion of our nation's fruits and vegetables by automation, but such a 
time is not going to be reached for a number of years; depending on the 
commodity, it may take anywhere from 5 to 10 years for automation 
technologies to be perfected to the point they can be utilized 
effectively in the field on a large scale.
    The bottom line is this: Innovation will be the key to maintaining 
our nation's ability to feed itself and this Committee should fight for 
investments in technology and research for the specialty crop sector. 
Please consider that automation is a long range solution and we still 
depend on foreign workers to bridge the gap.
          * * * * *
References
    Comparison of Labor Costs between Florida and Mexican Strawberry 
Industries--Feng Wu, Zhengfei Guan, and Melvin Garcia-Nazariega.
    Fertility Rates--World Bank data via Google.
    More Mexicans Leaving Than Coming to the U.S.--Net Loss of 140,000 
from 2009 to 2014; Family Reunification Top Reason for Return, By Ana 
Gonzalez-Barrera--Pew Research Center.
    Florida Department of Agriculture and Consumer Services website, 
http://www.freshfromflorida.com/Business-Services/Grant-Opportunities/
2017-Florida-Specialty-Crop-Block-Grant-Program-Farm-Bill-SCBGP-FB.

    The Chairman. Thank you, sir.
    Mr. Murphy, 5 minutes.

STATEMENT OF KEVIN MURPHY, CHIEF EXECUTIVE OFFICER, DRISCOLL'S, 
                     INC., WATSONVILLE, CA

    Mr. Murphy. Thank you, Mr. Chairman, Ranking Member 
Peterson, and Members of the Committee, for this opportunity to 
appear before you.
    I am Kevin Murphy, the Chief Executive Officer of 
Driscoll's. Driscoll's is a family-owned company headquartered 
in California that markets fresh strawberries, raspberries, 
blueberries, and blackberries that independent family farmers 
have produced using Driscoll's patented berry varieties. In 
addition to California, we have growers in Washington, Oregon, 
Florida, New Jersey, and Georgia.
    With over 25 years in the produce industry, I am honored to 
address the topic of technology and innovation in specialty 
crops. I have been very fortunate that my career has spanned 
both the fruit and vegetable industries, and more importantly, 
given the companies that I have worked for, I have been at the 
heart of much of the innovation during this time period.
    This farm bill comes at a critical time for U.S. specialty 
crops. As we scan ahead, there are five very powerful forces at 
play that will have a profound impact on our existing methods 
of production. First, there is too much food waste in the 
system. Roughly 30 percent of all berries produced are not 
consumed. This waste throughout the supply chain is 
unacceptable, and we will need new thinking and innovation to 
resolve. Second, the effects of climate change coupled with 
diminishing availability of key resources. Lack of water and 
labor are the largest issues facing the industry today, and are 
the primary drivers of the need for technology and innovation. 
Sustained drought conditions make more efficient use of water 
an absolute necessity, while the lack of farm labor threatens 
the very future of our industry. Third, the push to eliminate 
fumigants and pesticides driven by societal and consumer 
concerns will require, if these tools are eliminated, different 
forms of production. Fourth, food safety issues related to food 
products grown close to the soil continues to impact consumer 
confidence. And finally, new technologies already in use in 
adjacent industries are migrating to agriculture and will 
impact future methods of production.
    The results of all these forces will be a move towards a 
more controlled, automated environment. This will require 
technology and innovation at a pace and scale unseen in our 
industry to date. The question, in my opinion, is not if this 
will happen, but when and how. I believe the next farm bill 
should prioritize research that addresses these issues with a 
special emphasis on water and labor. To this end, I applaud the 
formation of the Congressional Agricultural Research Caucus 
that Representatives Davis and Panetta, my home Congressmen, 
have formed and led.
    As a way of example, I offer some illustrations of the 
innovation we are working on at the company to resolve or 
lessen the impact of some of these key issues facing the 
industry. Increasingly we will grow our berries in containers 
rather than directly in the soil. These container techniques 
are common in Europe and are quickly coming here. Tabletops 
will allow harvesters to pick strawberries standing up; an 
innovation that is good both for the farmer and the farmworker. 
Our hope is this will attract a larger pool of available 
workers. We are also exploring, with the help of others such as 
Wish Farms, mechanized harvesting where visual systems identify 
when a berry is ready to be picked, and then a mechanized arm 
snips the fruit and gently moves it from the field to 
inspection and packaging. Advances in visual systems are making 
mechanized harvesting a reality in the berry industry.
    We are addressing water shortages. Nearly 10 years ago our 
community recognized that without significant change, saltwater 
intrusion into our aquifers along the Pacific Coast would 
worsen to the point that we would no longer grow in areas ideal 
for berry production. This intrusion was caused by over-
drafting of the aquifer. We worked with various stakeholders 
from different industries and backgrounds to develop a plan 
that would restore balance to the aquifer. The plan involves 
improved irrigation systems, recharge capabilities, well 
monitoring, and continued dialogue around further 
opportunities. Use of, and the learning from, organic farming 
techniques to reduce our dependency on pesticides and fumigants 
in both farming and plant nursery practices.
    And then finally, as a community-based business, we look to 
bring innovation to our communities. Innovation here takes 
different forms, but is no less important. As an example, 
Driscoll's, along with our local agricultural leadership 
council, funded translation services for farmworkers who speak 
indigenous languages. Others are creating innovative housing 
solutions, daycare, and health clinics.
    Driscoll's recognized that these challenges are larger than 
any one company. Simply put, the size of the issues we confront 
demand a different and more collaborative approach. We have 
invested in technology accelerators, and, within agriculture as 
a whole, ag-tech investment has doubled over the last 3 years. 
From new production techniques to packaging, to better 
connecting farmers and consumers, the future will be very 
different from the past.
    Driscoll's has been in business for over 100 years, and has 
been built on a foundation of innovation. We plan on continuing 
on this path as we believe it provides us with a competitive 
advantage. Not surprisingly, I believe this is also true for 
all U.S. agriculture as we try and maintain our leadership 
position on the world stage. The farm bill will play a critical 
role in making this happen.
    As this Committee drafts the next farm bill, it must 
carefully consider how to accelerate innovation in light of the 
existing efforts of the private-sector. We cannot afford to 
have our efforts slowed by well-intended but bureaucratic 
solutions that result in less investment and less innovation. 
The challenges are too great and the imperatives too near.
    Thank you for the opportunity to address you today.
    [The prepared statement of Mr. Murphy follows:]

     Prepared Statement of Kevin Murphy, Chief Executive Officer, 
                   Driscoll's, Inc., Watsonville, CA
    Thank you, Mr. Chairman, Ranking Member Peterson, and Members of 
the Committee for this opportunity to appear before you. I am Kevin 
Murphy, the Chief Executive Officer of Driscoll's.
    With over 25 years in the produce industry, I am honored to address 
the topic of technology and innovation in specialty crops. I have been 
very fortunate that my career has spanned both the fruit and vegetable 
industries, and more importantly, because of the companies that I have 
worked for, I have been at the heart of much of the innovation during 
this time period. Fresh Express, where I worked earlier in my career, 
pioneered the packaged salad category, and Driscoll's has led 
innovation in the berry industry for many decades. Beyond my personal 
career experience, I am also a member of the board of directors of 
Western Growers, and Driscoll's has leadership roles in Produce 
Marketing Association, United Fresh Fruit Association, and the 
California Strawberry Commission.
    Driscoll's is a family-owned company headquartered along the 
central coast of California, where the families that began and continue 
to own Driscoll's have farmed berries for over 100 years. Through 
traditional plant breeding techniques, the company develops and markets 
fresh strawberries, raspberries, blueberries, and blackberries that 
independent family farmers have produced with Driscoll's patented berry 
varieties. In addition to California, we have independent growers in 
Washington, Oregon, Florida, New Jersey, and Georgia. Today, Driscoll's 
represents roughly 30% of the total U.S. berry industry and 64% of the 
organic segment. By dollar value, berries are the number one selling 
all fruit or vegetable item in the retail segment.
    This hearing comes at a critical time for U.S. specialty crops. As 
we scan ahead, there are several powerful forces at play that will have 
a dramatic effect on fruit and vegetable production in the future:

   Too much food waste in the system. Roughly 30% of all 
        berries produced are not consumed. The cost of this waste is 
        ultimately being passed to consumers and will, if unchecked, 
        cause our products to become overpriced and less desirable. 
        Innovation around varieties, supply chain, better production 
        technologies, in conjunction with education, will reduce this 
        waste.

   The combined effects of climate change with limited 
        resources of land, labor, and water. Water and labor are the 
        largest issues facing the industry today and are the primary 
        drivers of the need for technology and innovation. Sustained 
        drought conditions make more efficient use of water an absolute 
        necessity while the lack of farm labor threatens the very 
        future of our industry.

   The push to eliminate fumigants and pesticides, driven by 
        societal and consumer concerns related to their perceived 
        impact on health and the environment. Part of the rise in 
        organic production (11% per annum) is consumers responding to 
        these issues.

   Continued food safety concerns with products exposed to the 
        elements. Specialty crop block grants, funded through the farm 
        bill, are particularly important for food safety research and 
        initiatives. The Center for Produce Safety (CPS) matches block 
        grant funds with industry money for the advancement of 
        vegetable and fruit food safety research. It has been a model 
        of partnership--over the past 10 years, CPS has invested $20 
        million into 120 projects at 37 institutions in four countries.

   Incorporation of new technologies already in use in adjacent 
        industries. In future years, we will see an increased migration 
        to automation, big data, and visioning systems, along with 
        other innovations within the agricultural sector.

    The result of all these forces will be a more pronounced movement 
toward more precise, controlled and automated environments. This will 
require technology and innovation at a pace and scale unseen in our 
industry to date. The question is not ``if'' this will happen but 
``when'' and ``how''.
    In my humble opinion, the next farm bill should prioritize research 
that addresses the issues described above with a special emphasis on 
water and labor. There is a great need to accelerate innovation through 
research programs, public-private partnerships, and aggregated efforts, 
and I applaud the formation of the Congressional Agricultural Research 
Caucus that Representatives Davis and Panetta--my home Congressman--
lead.
    At Driscoll's, by working with our growers and with industry 
partners, we are continuing on a path of innovation and technology. The 
following are examples of that effort:

   Increasingly, we will grow our berries in containers rather 
        than directly in the ground. Through substrate systems growers 
        will have better control over the root-zone conditions, save 
        water, and have greater flexibility to customize soil. These 
        container techniques are common in Europe and other parts of 
        the world and are quickly coming here. Another type of 
        container grower method is to raise the containers to ``table 
        tops'' so that harvesters can pick strawberries standing up. 
        Additionally, container growing is an example of an innovation 
        that is good for both the farmer and the farmworker.

   We are also exploring mechanized harvesting. With mechanized 
        harvesting, a robotic system uses visual systems to identify 
        when a berry is ready to be picked, and then a mechanized arm 
        snips the fruit and gently moves it from the field to 
        inspection and packaging. For the first time, advances in 
        visual systems that can quickly and accurately assess if a 
        berry is ripe are making mechanized harvesting a reality.

   We are addressing water shortages. Nearly 10 years ago, our 
        community recognized that without significant change, salt 
        water intrusion into our acquirers along the Pacific coast 
        would worsen to the point that we would no longer grow in areas 
        ideal for berry production. Once again, innovation and 
        technology play key roles. To better steward this resource, 
        stakeholders in the Pajaro Valley on California's central coast 
        have gathered to address the imbalance of water supply and 
        demand through individual and collaborative action. Through 
        this partnership, a wireless irrigation network was created to 
        make it more cost effective for growers to use soil sensors. 
        These sensors help growers to irrigate more efficiently and to 
        understand the actual amount of water their crops need in order 
        to grow.

   We worked with the Natural Resource[s] Conservation Service 
        and other stakeholders to create a privately managed aquifer 
        recharge basin in California's Santa Cruz County that provide 
        storage for collection of storm water runoff and replenishment 
        of groundwater.

   We are innovating with regard to organic farming practices. 
        After investing over 7 years in researching the viability of 
        providing organically grown strawberry starter plants that are 
        disease and pest free for our growers, we announced a broad 
        expansion of organic nursery plant production and are currently 
        the only brand with an organic strawberry nursery certified by 
        the California Certified Organic Farmers.

    While traditionally Driscoll's has funded its development of unique 
berry varieties and specialized production systems and will continue to 
do that in the future, we also recognize that these challenges are 
larger than one company. Simply put, the size of the challenges demand 
a different, more collaborative, and broader approach. We have invested 
in technology accelerators including the Thrive Accelerator, which is 
part of Western Growers' Center for Innovation and Technology. The 
Thrive Accelerator is a technology incubator focused on agricultural 
innovations in water quality, water use, labor savings, and a 
sustainable workforce. We have also invested in other accelerators in 
order to combine adjacent technologies with an agricultural focus. 
Within agriculture as a whole, ag-tech investments have doubled over 
the last 3 years with a particular focus on the use of the Internet, 
sensing technologies, robotics, and mechanization.
    Finally, as a community-based business, we look to bring innovation 
to our communities to address local needs. Innovation here takes 
different forms but is no less important. Driscoll's, along with our 
local Agricultural Leadership Council, worked with health providers to 
create Indigenous Interpreting + that provides translation services for 
farmworkers who speak only Mixtec or other indigenous languages. We are 
an active part of Hartnell College's Farmworker Education and 
Advancement Program, the Salinas school's groundbreaking effort to 
provide to farmworkers training in agricultural topics that will 
increase their upward mobility within the agricultural sector. And one 
of our growers, Reiter Affiliated Companies, created a program called 
Sembrando Salud to address wellness issues in the farmworker community. 
Within agriculture, more philanthropic dollars are being provided to 
solve for local issues such as housing, medical care, and child care 
services. Co-investment opportunities with growers, foundations, NGOs, 
customers, and other industries are being prioritized to help bring 
about collaborative innovation.
    All of these innovations require that we stay engaged; 
collaboration and investment are critical. From new production 
techniques, to packaging, to better connecting farmers and consumers, 
the future will be very different from the past. Like many in produce, 
we are committed to meeting the issues we face. As this Committee 
drafts the next farm bill, it must carefully consider how to encourage 
innovation in light of the existing efforts of the private-sector. We 
cannot afford to have our efforts slowed by well-intended but 
bureaucratic solutions that result in less investment and less 
innovation. The challenges are too great and the imperatives too near.
    Thank you for this opportunity to address you today. I welcome any 
questions you may have.

    The Chairman. Thank you, sir.
    Mr. LaVigne, 5 minutes.

 STATEMENT OF ANDREW W. ``ANDY'' LaVigne, PRESIDENT AND CHIEF 
             EXECUTIVE OFFICER, AMERICAN SEED TRADE
                  ASSOCIATION, ALEXANDRIA, VA

    Mr. LaVigne. Thank you, Chairman Conaway, Ranking Member 
Peterson, and Members of the House Agriculture Committee. It is 
my pleasure to provide this testimony today on behalf of the 
American Seed Trade Association, and our partners in America's 
land-grant institution in USDA's research community.
    ASTA's diverse membership consists of over 700 companies 
involved in seed production, distribution, plant breeding, 
research, and related industries in North America. As our 
knowledge of plant genetics and biology has grown, breeders 
have gained access to new tools, technologies, methods, and 
strategies to more efficiently address evolving farmer and 
environmental challenges, and to meet ever-changing consumer 
demand. Today, breeders use an array of tools such as whole 
genome sequencing, bioinformatics, molecular marker techniques, 
and digital imaging, which allow them to improve plants more 
efficiently than ever before. Through evolving and innovative 
plant breeding methods like gene editing we can develop new 
plant varieties without incorporating DNA from outside the 
plant's family, allowing us to reach the same endpoint as 
traditional breeding, but in a more precise and targeted 
manner. Breeders are able to maximize the unique, novel 
characteristics that are part of a plant's own family.
    While no gene-edited products are available in the 
marketplace today, this breeding method, as well as future 
innovations in plant breeding, represents exciting 
opportunities for agriculture. This is especially true in the 
specialty crops arena where scientists are currently 
researching gene-editing methods to address costly diseases in 
crops like citrus, potatoes, grapes, lettuce, and others.
    Federally funded agricultural research has played an 
important role in expanding our understanding plant genetics, 
leading to new crop varieties, and it is important that the 
next farm maintains robust funding for that continued research.
    USDA investments in gene sequencing of more than 25 
agriculturally significant crops, many of those specialty 
crops, are fundamental to this work. Typically, this research 
is done in cooperation with partnerships with USDA, 
universities and industry researchers. Some of the other 
examples of research that is ongoing now in the specialty crop 
arena is the work being performed by Dr. Richard Michelmore at 
the University of California, Davis, where he is focused on 
enhancing the efficiency of lettuce production. USDA's National 
Institute of Food and Agriculture contributed to his work 
through the Agriculture and Food Research Initiative, and it is 
further supported by the Lettuce Genome Sequencing Consortium. 
The investment by this private-sector group comprised of ten 
vegetable seed companies in California is allowing Michelmore 
and his team to expand the scope of the project. In 2016, AFRI 
funded a project at the Cold Spring Harbor Laboratories in New 
York, focused on improving growth and yield in tomatoes. Led by 
Dr. Zach Lipman, researchers isolated genes responsible for 
characteristics that can diminish yield in tomatoes. By using 
CRISPR/cas9 gene editing tools, the team was able to develop 
tomato plants without those negative characteristics, and 
maintaining the plant's desired characteristics. And at Cornell 
University, Dr. Thomas Bjorkman is using marker-assisted plant-
breeding techniques to develop new broccoli varieties that are 
better suited for production on the East Coast. This initiative 
is supported by several ASTA member companies and the farm 
bill's Specialty Crop Research Initiative. Several varieties 
have already been developed in this program and have been 
released to the marketplace.
    Finally, the Foundation for Food and Agriculture Research, 
which was authorized in the 2014 Farm Bill announced just 
recently the creation of the Crops of the Future Collaborative 
research initiative with eight partners. This project will 
leverage a $10 million Federal investment in pre-competitive 
research to hasten yield and nutrition gains in leafy greens, 
wheat, and corn.
    It is clear that research in modern plant breeding requires 
sustained and long-term funding, for ARS and for our academic 
community through the NIFA programs. However, the promise of 
these research investments will only be fully realized if 
Federal policies foster a climate of continued innovation. 
Overly burdensome policies around gene editing and other 
evolving plant-breeding methods would likely limit their use to 
large row crops, and preclude smaller companies and public-
sector researchers from benefitting from the use of these 
methods. We urge Congress to encourage USDA, FDA, and EPA to 
have consistent, science-based policies that promote innovation 
so that everyone can benefit from emerging innovations like 
gene editing in our future plant-breeding techniques.
    In addition to domestic efforts, it is important that the 
U.S. Government develops an international engagement strategy 
to communicate with our trading partners in order to prevent 
trade barriers due to non-harmonized regulations.
    Mr. Chairman, Members of the Committee, this is truly a 
monumental time for the plant sciences, and it is our hope that 
the Administration, Congress, the research community, and the 
public at large have the opportunity to benefit from the 
knowledge and breeding methods that have been evolving since 
before the time of Gregor Mendel.
    Thank you for the opportunity to testify today, and I look 
forward to answering any questions.
    [The prepared statement of Mr. LaVigne follows:]

 Prepared Statement of Andrew W. ``Andy'' LaVigne, President and Chief 
   Executive Officer, American Seed Trade Association, Alexandria, VA
    Chairman Conaway, Ranking Member Peterson, and Members of the House 
Agriculture Committee, it is my pleasure to provide this testimony 
today on behalf of the American Seed Trade Association. Innovative, 
science-based solutions are fundamental to meet the growing 
agricultural and food needs of the United States and the world. Since 
the creation of the American land grant institution system and USDA's 
agriculture research structure, innovation has been the bedrock of 
American agriculture production. Since 1948, total U.S. agricultural 
output has more than doubled. The ability of the farm sector to feed 
far more people today while using less farmland than 6 decades ago is 
attributed to the ongoing innovation in agriculture research; and 
continuing innovation will be critical as we look for ways to 
sustainably feed nine billion people in the coming years.
    Founded in 1883, ASTA works to enhance the development and movement 
of quality seed worldwide. ASTA's diverse membership consists of over 
700 companies involved in seed production, distribution, plant 
breeding, research and related industries in North America. ASTA 
represents all varieties of seeds, including grasses, forages, flowers, 
vegetables, row crops and cereals. Many ASTA members are research-
intensive companies engaged in the discovery, development and marketing 
of seed varieties with enhanced agronomic and end-use quality 
characteristics. With respect to the U.S. specialty crop sector, the 
U.S. vegetable seed market was $860 million in 2015, supporting a farm 
gate value for specialty crops of $11 billion.
    The plant world contains hundreds of thousands of species with an 
amazing array of biological diversity. This diversity has evolved over 
billions of years of natural and targeted selection, and continues 
today using the science of plant breeding. As our knowledge of plant 
genetics and biology has grown over time, plant breeders have gained 
access to new tools, technologies and strategies to more efficiently 
address evolving farmer and environmental challenges, and to meet ever-
changing consumer demands. Today breeders use an array of tools such as 
whole genome sequencing, bioinformatics, molecular marker techniques 
and digital imaging to assist in the breeding process. USDA research 
programs have played a key role in the development and deployment of 
these tools. Regardless of the plant breeding method used, the goal is 
still the same: to produce a safe, nutritious, food and feed supply and 
to improve fiber and biofuels through the creation of new plant 
varieties.
    The continued development of new plant varieties is vital to 
consumers and the agricultural industry because of the constant 
challenges to meet new market requirements, consumer demands, rapidly 
evolving diseases and pests, and to increase the productivity and 
durability of existing crops. To improve crops takes multiple 
generations of breeding and testing lasting some 5-10 years for each 
new variety. Today, with an increased understanding of genetics, the 
capability to sequence plant genomes and the ability to link a specific 
gene to a specific characteristic, breeders are able to improve plants 
more precisely and efficiently. Breeders can now make very specific 
changes in existing plant genes in a way that mimics the changes that 
occur in nature. New, innovative plant breeding methods, like gene 
editing, allow plant scientists and breeders to precisely make specific 
changes to a plant's DNA using a plant's own internal processes. The 
result can be the activation of a beneficial characteristic (such as 
drought tolerance or increased nutrition), deactivation of an 
unfavorable characteristic (such as disease sensitivity) or small 
changes to the DNA that reproduce a characteristic found within the 
plant's family (such as a disease resistant characteristic found in a 
wild relative).
    An underlying common denominator for new innovations in plant 
breeding is that they can achieve the same end-result that could be 
achieved through more traditional plant breeding methods, but in a more 
precise and targeted way. This allows the plant breeder to forgo 
multiple cycles of plant selection from a population of thousands of 
individual plants and move to testing elite lines sooner. By utilizing 
the plant's (or its wild relative's) own genetic makeup to create 
genetic variability, the resulting new plant variety does not contain 
any ``foreign'' DNA from outside the plant's gene pool. While no gene 
edited products are available on the market today, this breeding method 
represents an exciting opportunity for agriculture. It can be used 
across all crops to produce better seeds that can thrive despite new 
and emerging challenges such as changing weather, plant diseases, and 
pests, while reducing crop inputs. In addition to farmer and 
environmental benefits, plant breeding innovations can bring benefits 
to consumers--like produce that is better tasting and has higher 
nutritional content.
    It is important to note that these methods are being improved and 
are widely available to public and smaller private breeding programs. 
In the specialty crop arena, researchers are evaluating gene editing 
methods to address costly diseases in crops like citrus, potato, grape, 
and lettuce.
Farm Bill Investments
    Research programs authorized in the farm bill are critical to 
advancing agriculture and these programs have shown a high rate of 
return for the dollars invested. Federally funded U.S. agricultural 
research has played an important role in expanding our understanding of 
plant genetics leading to new crop varieties. USDA investments in 
genome sequencing of more than 25 agriculturally significant crops are 
fundamental to this work. Within the specialty crop arena, this 
includes genome mapping for tomato, potato, apple, strawberry, carrot, 
cranberry, lettuce, peach, papaya, cucumber, black raspberry, 
watermelon, and pineapple. Typically, this research is done by groups 
of USDA, university, grower and industry partners. The resulting 
discoveries can then be further developed for commercialization by 
large and small companies.
    In addition, USDA-Agricultural Research Service genebanks contain 
invaluable sources of resistance, tolerance, and adaptation to 
stresses, and genes to improve the quantity, quality, and production 
efficiency of crops. The GRIN-Global (Germplasm Resources Information 
Network) information system developed by USDA provides breeders and 
researchers with descriptions of plant materials which can then be 
accessed through the National Plant Germplasm System (NPGS) genebanks. 
In 2015-16 GRIN-Global had more than 1.5 million individual web page 
visits and the NPGS facilitated distribution of more than 240,000 plant 
germplasm samples domestically and internationally. New data-mining 
strategies are enabling researchers to better associate specific genes 
with agriculturally important characteristics, and build on genetic 
advances in one crop to improve other crops.
    Federal research dollars can be extended and multiplied through 
public-private partnerships.
    We have selected a handful of specialty crop examples to introduce 
today from a myriad of projects.
    Lettuce: is one of the top ten most valuable crops grown in the 
U.S. with an annual market value of over $2.3 billion. The vegetable 
seed industry relies on public plant breeders to provide basic genetic 
resources, new breeding methods, and robust genetic stocks for use in 
commercial lettuce breeding programs. At the University of California-
Davis, Dr. Richard Michelmore's lab has focused on enhancing the 
efficiency of lettuce production, allowing for more efficient use of 
agriculture inputs, and driving the development of consumer-desired 
characteristics. USDA's National Institute of Food and Agriculture 
(NIFA) contributed to Dr. Michelmore's work through the Agriculture and 
Food Research Initiative (AFRI) and it is further supported by the 
Lettuce Genome Sequencing Consortium. The investment by this private-
sector group, comprised of ten vegetable seed companies in California, 
is allowing Dr. Michelmore and his team to expand the scope of their 
project.
    Tomatoes: In 2016, AFRI funded a project at the Watson School of 
Biological Sciences at Cold Spring Harbor Laboratory (CSHL) in New York 
focused on improving growth and yield in tomatoes. Researchers isolated 
genes responsible for diminishing yield. By using CRISPR/cas9 gene 
editing tools, the team was able to develop tomato plants without those 
negative characteristics, while maintaining the plants' desirable 
qualities. In a separate project, CSHL scientists used gene editing to 
create tomato plants that flower and ripen more than 2 weeks faster 
than conventionally-bred varieties. This translates to more plantings 
per growing season and plants that are suitable for more northerly 
latitudes. The lab is collaborating with several seed companies to 
evaluate the agricultural potential of their findings.
    Broccoli: is worth nearly a billion dollars in annual sales per 
year; but due to temperature conditions, production is concentrated in 
California. At Cornell University in New York, Dr. Thomas Bjorkman is 
working to change that. Through funding from the farm bill's Specialty 
Crop Research Initiative, his laboratory is using marker-assisted plant 
breeding to develop new varieties that are better suited for production 
on the East Coast. This initiative is supported by several ASTA member 
companies who are engaged in an integrated broccoli breeding program 
with public-sector plant breeders. Several varieties developed through 
this program have already been released on the market.
    Leafy Greens: The Foundation for Food and Agricultural Research 
(FFAR), authorized in the 2014 Farm Bill, is utilizing public-private 
partnerships to benefit specialty crop research. FFAR recently 
announced the Crops of the Future Collaborative research initiative 
with eight partners. This project will leverage a $10 million Federal 
investment in pre-competitive research to hasten yield and nutrition 
gains in leafy greens, wheat and corn.
    Imported Seed: Last, The National Seed Health Accreditation Pilot 
Program (NSHAPP) was funded from dollars designated in the horticulture 
title for Plant Disease Management and Disaster Prevention Programs 
(10007)--an important funding mechanism for specialty crops. Under the 
goal of enhancing mitigation and rapid response, NSHAPP is developing a 
model for a voluntary system of testing imported seed for pathogens of 
phytosanitary concern that can be continuously adapted to emerging 
pathogens. The USDA-APHIS National Seed Health System has coordinated 
with the seed industry in a unique partnership to screen imported seed 
with diagnostic testing to prevent the introduction of previously 
undetectable and economically damaging seed-transmitted pathogens.
Conclusion
    Farm bill investments in a broad portfolio of long-term research 
are needed to sustain the global food supply. Collaboration between the 
public and private-sector in these programs can ensure that research 
dollars result in beneficial new products for farmers, consumers and 
the environment.
    It is important to note however, that the promise of U.S. research 
investments will not be fully realized if an overly burdensome 
regulatory structure impedes the broad adoption of new and evolving 
plant breeding methods. We urge the U.S. Government to make a clear, 
positive statement about the necessity of innovation in agriculture, 
including innovation in plant breeding. Congress should encourage USDA, 
FDA and EPA to have consistent, science-based policies that promote a 
climate of innovation, particularly for university researchers and 
small companies. The seed industry, and all of agriculture, is global. 
Therefore, in addition to domestic efforts, it's critical that the U.S. 
Government develop an international engagement strategy to prevent 
trade barriers due to non-harmonized regulations.
    In summary, Congress must ensure that Executive branch actions 
including directives, regulatory and trade policies, and budgets foster 
the growth of a strong 21st century farming economy through sufficient 
funding of research programs and science-based decision making.
    Chairman Conaway, Ranking Member Peterson, and Members of the House 
Agriculture Committee, the American Seed Trade Association and its 
member companies look forward to working with you to promote continued 
innovation to ensure a strong economy, healthy environment, and a safe 
and secure food supply to meet the needs of the growing population. 
Thank you for the opportunity to testify today.

    The Chairman. All right, gentlemen, thank you very much for 
your testimony this morning.
    The chair would remind Members that they will be recognized 
for questioning in order of seniority for Members who were here 
at the start of the hearing. After that, Members will be 
recognized in order of arrival. I appreciate Members' 
understanding.
    And with that, I am going to recognize one of the freshmen 
to go first. That rarely happens in this arena. Mr. Dunn, you 
are recognized for 5 minutes.
    Mr. Dunn. Thank you very much, Mr. Chairman, and thank you 
for your innovative order of questioning.
    Mr. LaVigne, your testimony discussed a number of 
commodities which have seen enormous benefits with the use of 
innovative agricultural techniques such as gene editing, and 
you cited benefits to crop yields, nutritional qualities, and 
all these things benefit the farmers, the consumers, the 
retailers, and the processors. What other ways can Congress 
help you get these innovative techniques and use them to the 
benefit of all of us?
    Mr. LaVigne. Thank you, Mr. Dunn. As we look at the 
evolving biology and understanding of plants' nature today, and 
the ability to take the characteristics that are favorable to 
growers' production practices, whether it is for flavor or 
taste or size, or whether it is for disease resistance or pest 
resistance, the ability to have a sound policy in the U.S. with 
respect to plant breeding today is absolutely critical for 
these tools to be able to be used down through the specialty 
crop arena. Today, unfortunately, transgenics are not used in 
the specialty crop arena, they are only used in large row 
crops. That ship has sailed with respect to technology being 
able to move into that arena.
    As we look at gene-editing tools or techniques, we look at 
these methods that will continue to evolve because we better 
understand plants and the nature of what they have within their 
plant family, we have to be able to use those capabilities 
within the specialty crop arena. As you heard today, the 
pressure from pests and diseases is huge, and the ability to 
create resistance within a plant's family is a great 
opportunity. That policy has to come from this Administration 
and help the USDA.
    Mr. Dunn. Can you help us target specific regulations that 
are burdensome to your association members?
    Mr. LaVigne. Yes, we can. We can. And we are working on 
that in a couple of arenas with respect to Part 340 reform as 
well as, as we look at plant-breeding methods.
    Mr. Dunn. We will be calling on you for some help in that 
area.
    Mr. LaVigne. Thank you.
    Mr. Dunn. One last question, Mr. LaVigne, GMOs have had a 
perception problem in the public in recent years. I would like 
to know what your association, your members, are doing and what 
could Congress do to help?
    Mr. LaVigne. Well, yes, unfortunately, the GMO transgenic--
--
    Mr. Dunn. Speaking of science-based things.
    Mr. LaVigne. Yes. The GMO transgenic industry we have 
received quite a black eye as that has evolved, and a lot of 
the misperception, there is overwhelming evidence and 
scientific proof that shows it is safe in everything, and good 
for production. We have seen that throughout the Midwest and in 
many other countries.
    As we look at it, our focus is going to be on education and 
working with the ag and food value chain; how do we talk about 
plant breeding. And unfortunately, hopefully no offense to 
anyone in the room, but as we have found out in talking to the 
public, a lot of people took one genetics class in college, and 
if they passed it and didn't drop it, they didn't take another 
genetics class; human, animal, or plant. And so we have an 
uphill road just to talk about the plant-breeding methods we 
use today, let alone that evolution of understanding of the 
plant physiology for tomorrow's plant-breeding methods. We have 
an extensive education program in place working with many of 
the people at this table, as well as all the way through the 
grocery chain, to try and educate the public and the food 
chain.
    Mr. Dunn. I hope we can join hands and accomplish that.
    With the minute or so remaining to us, Mr. Wishnatzki, you 
said that you think it is easy to fix the H-2A system. Please 
enlighten us.
    Mr. Wishnatzki. I am glad you asked me that question.
    Mr. Dunn. I am ready to take notes.
    Mr. Wishnatzki. Yes, please do, because I believe it could 
be a very simple fix if folks would get together and understand 
what growers need. We don't need indentured servants like H-2A 
is now, it is akin to that, we need transportable visas that 
workers could move from grower to grower as needed. I outlined 
it pretty clearly and very briefly in my written testimony, so 
you can read that, but the centerpiece to my idea of how simple 
it is, is if you tied a heavy withholding amount to these 
workers when they came here and did agricultural work, they 
would not receive that back to them until they returned to 
their home country, to me, it is very simple, it is just that 
they are going to go back because you have golden handcuffs on 
them.
    Mr. Dunn. When we go back to Florida you and I will speak 
some more. Thank you.
    I yield back, Mr. Chairman.
    The Chairman. The gentleman yields back.
    Mr. Peterson, 5 minutes.
    Mr. Peterson. Thank you, Mr. Chairman.
    This is either for Mr. Wenger or Mr. Murphy, or anybody 
else who wants to weigh-in. Mechanization can address some of 
the farm labor issues, but as I understand it, it is not a one-
size-fits-all solution. There are some crops that are better 
suited than others, and avocados, I am told, must be picked by 
hand. It is estimated that foreign-born labor is nearly \3/4\ 
of the hired labor force on America's farms, and some people 
argue that Americans should do these jobs. Others argue that 
foreign labor enables us to produce more specialty crops here, 
and that it in turn creates more jobs for Americans.
    So what is your take on this?
    Mr. Wenger. Well, I will start out, since we just went 
through last year a very vociferous debate on the minimum wage 
and the overtime in California, we had a 10 hour workday, 6 
days a week, overtime after 10 hours in a day, and on the 
seventh day we are going to be going now by 2022 to a 40 hour 
workweek, 5 days a week, eight 8-hours a day.
    Agriculture doesn't know weather, a time clock doesn't. It 
was very interesting, when we went through the debate, Mr. 
Peterson, some of the folks that ended up voting for the 
overtime bill were talking to field workers, they were asking 
what they were getting paid, they were getting paid $18 an 
hour, this one particular worker, and they said what would you 
get in Mexico, he said $18 a day.
    And so as you look to the larger buyers of our products, 
they are going to look to source it at the cheapest place they 
can, and that is going to be in Mexico. They don't have the 
labor standards, they don't have the wage standards, they don't 
have the worker protections. And I would also say a lot of our 
growers are in Mexico, and so I know that those abide by the 
food safety standards that we have here, but many other 
imported areas don't.
    But we raise our kids to go to college and get educated so 
they can get higher-paying jobs. And they all want fresh 
strawberries on their plate, they just don't want to pick them. 
And they are not going to pick them at any wage. They are not 
going to pick them at $40 an hour, and that is just the way it 
is. And so we know, as we have heard in the prior testimony, 
that there is an aging workforce in Mexico. Mostly we have 
looked for immigrant labor, for folks that are trying to climb 
that economic ladder, and they have done it quite successfully 
by coming here and utilizing agriculture in the United States, 
particularly in California. But that is going to be aging out, 
so we have to look to the robotics, we have to look to those 
other things. And you are right, all the peaches, apricots, 
avocados, strawberries, all the soft fruits, we have to look to 
ways that a robot can size, can pick that product at the peak 
point of ripeness where it is not overly ripe, but that it is 
good enough so that the consumer will have a flavorful product. 
But it is going to be technology.
    Mr. Peterson. Mr. Murphy.
    Mr. Murphy. To add to that, there are really four things we 
need to do, quite simply. First, we have to definitely go down 
the automated route; look for mechanization as best as we 
possibly can, but that is going to be a 5 to 10 year view.
    Second, we have to look to streamline the H-2A program in a 
way that makes it easier to execute upon and simpler. The 
numbers need to grow. About five percent of our workforce right 
now is through H-2A. Because of what Mr. Wishnatzki talked 
about, that could grow. We would need maybe 50 percent of that 
workforce to be through H-2A. So that is a big deal.
    Then the third element, this one is around the whole idea 
of creating legal status for the workers that are here. Many of 
them have been here a long time. In my opinion and from people 
I have spoken to, most of them do not want to become citizens, 
but they do want to have some legal status that allows them to 
work here.
    The last thing, is what we are talking about here today, is 
the collaboration between private industry and government 
working hand-in-hand to come up with creative solutions.
    Mr. Peterson. Thank you. As many of you know, while I am 
not an expert on H-2A, I have worked through it in some other 
instances, besides agriculture, and the bureaucracy is 
horrendous. I am skeptical that you are going to be able to get 
a program at the end of the day through the United States 
Government that is workable. By the time they get done with it, 
they are going to screw this up. My idea is to let you guys do 
this. If somebody is working for you, they have a job, and they 
are not causing any trouble, they are not in jail, then they 
can be here and they can work, but there is no citizenship, and 
when they are done working they go back home. It is just too 
simple, but that is what needs to be done.
    Mr. Murphy. Yes.
    We need you to advocate for us. I know that some of the 
decisions are not made here in this Committee, but in other 
committees, but we would respectfully ask that you help us in 
this endeavor.
    Mr. Peterson. I am there, and we will get some more.
    Thank you.
    The Chairman. Our colleague, Bob Goodlatte, is working to 
fix that, and we are in conversations with him.
    Mr. Austin Scott, 5 minutes.
    Mr. Austin Scott of Georgia. Thank you, Mr. Chairman.
    Mr. LaVigne, as you were talking about the perception, I 
was reminded of a few years ago that my wife and I were at a 
class before our little girl was born, and I listened to the 
nurse at the front of the room talk about how bad biotechnology 
was in agriculture and how good it was in health care. And 
certainly, the perception, the GMO, it sounds like you are 
going to become a zombie if you eat something, where, in the 
end, it is biotechnology. I am interested in your thoughts on 
how you intend to change the perception. Obviously, people 
would be paying a tremendous amount more for food today, not 
only in the U.S. but around the world, and quite honestly, I 
think that biotechnology is one of the ways that we are going 
to help eliminate starvation around the world.
    And so what ideas do you have about how you are going to 
change the perception of the use of biotechnology in 
agriculture?
    Mr. LaVigne. Well, Congressman Scott, you are exactly 
right, one of the things that we did early on with 
biotechnology, and what we are trying to learn from in that 
arena, is we based everything on science. Trust us, science 
says it is okay, it is good, all of those things. And it is 
something that we are dealing with. I would say it is not just 
in biotechnology, it is within agriculture in general.
    There is a perception of this bucolic lifestyle on the 
farm, and it still should be 40 acres and a mule, instead of 
how agriculture has evolved because of innovation, and 
biotechnology was the first one out there that really got the 
focus. And our efforts here as we talk about plant breeding is 
how are we as transparent as possible, let's talk about 
breeding, let's talk about the solution that that plant breeder 
is trying to find. Biotechnology will be a part of tools, or 
methods, like gene editing. You will be able to create new 
transgenics using those methods. But we will also be able to 
create new varieties using these methods that could be disease-
resistant or resistant to pests, or have a longer shelf life, 
or help even in the mechanization issues, as we did with 
tomatoes in the early 1970s, I believe.
    That is where we have to get the message out that this is 
nothing new. We know more and more about plant physiology today 
to be able to target those characteristics that are naturally 
occurring in that plant's family.
    Mr. Austin Scott of Georgia. Well, it is extremely 
important, especially the ability to grow crops in different 
areas as the seed becomes more drought resistant, and requires 
less water, less pesticide, less other things. It is extremely 
important to the environment. And the facts are, if you look at 
the science, there is no discussion to be had. This is an 
emotional argument that is not based on the facts in any way, 
shape, or form.
    Mr. Wenger, you mentioned in your testimony olives and 
olive oil. That is something that many Georgia farmers are 
using now to diversify their crop. I was surprised to find out 
that the grading standard on olive oils, it took 62 years to 
upgrade that standard, and yet approximately 50 percent of the 
olive oil sold in the United States does not meet the grading 
standard. Is that still the case today, any suggestions on how 
we make sure that the consumer knows that what they are buying 
on the label isn't necessarily what they are getting?
    Mr. Wenger. Yes, it has been a real issue, and I know the 
olive oil growers, they are now setting up standards that they 
can work with. But 96 percent of the olive oil consumed in the 
United States is imported, so there is a huge growth curve for 
domestically produced olive oil. But again, a lot of folks 
don't know what is in that bottle. Mislabeling has been a very 
real issue, and continues to be an issue, and so that is why, 
through the farm bill, really promoting domestically produced 
olive oil and that what is in that bottle is what you are 
getting, that is clearly the direction we need to go.
    Mr. Austin Scott of Georgia. Yes, we tried to address this 
in the last farm bill, and unfortunately, we lost, but it is 
not so much promoting U.S.-grown olives or olive oil from U.S.-
grown olives, it is that what is imported and put on the 
shelves is labeled at the same standard that the U.S. is 
labeled at. I would appreciate your input and your support as 
we go forward in the next farm bill to make sure that if 
somebody is selling what is labeled as extra virgin olive oil, 
it actually is extra virgin olive oil if it is purchased off 
the shelf in the United States.
    Mr. Wenger. We can definitely get you more information. I 
know Jamie Johansson, my First Vice President, is a first-
generation olive oil grower in California, and so we can get 
you some more information.
    Mr. Austin Scott of Georgia. Well, gentlemen, thank you for 
your testimony. And, Mr. Wishnatzki, I wish it was as simple as 
you put it. Unfortunately, there are 535 people up here that 
think they are the best chef in the kitchen.
    So, gentlemen, thank you for your time and your testimony.
    The Chairman. The gentleman's time has expired.
    Mr. David Scott.
    Mr. David Scott of Georgia. Thank you, Mr. Chairman.
    In my State of Georgia, specialty crops come up to about $2 
billion annually in terms of the farm gate value, so it is very 
important. We have peaches, watermelons, blueberries, pecans, 
peanuts, onions, you name it. I agree with you, Mr. Wishnatzki, 
did I do that okay? All right? All right.
    Mr. Wishnatzki. Yes. Thank you.
    Mr. David Scott of Georgia. This is a crisis. This is a 
serious crisis. And you mentioned those three things. You 
mentioned climate, water, and labor. Each of these up here, as 
we are dealing in Congress, sometimes get us into knots, the 
real answer is going to come from you all.
    Let me ask you if you could give the Committee some 
examples of how and what type of mechanization will be able to 
go in, pick blueberries, pick watermelons, be able to know when 
they are ripe, describe what you are talking about. Give us a 
look into the future and explain the differentiation, how we 
can make this happen.
    Mr. Wishnatzki. Sure.
    Mr. David Scott of Georgia. How do we get them to pick 
those peaches without squeezing them to death? Go ahead.
    Mr. Wishnatzki. Well, it is a great time in history right 
now. We are kind of at this crux here where there is this 
tremendous need for automation, and at the same time the 
technology is coming of age that we can do this.
    I want to qualify what I am saying by, I am not the 
engineer in this company, I tell people in Harvest CROO 
Robotics I am simply some of the funding and the inspiration 
behind it, but I do know enough to be dangerous. But, the one 
thing about the technology that has changed dramatically just 
in the last 5 years is the processing power of computer chips. 
We are doing things on little, small, Nvidia chips that would 
have taken massive computers not too long ago.
    Mr. David Scott of Georgia. Yes.
    Mr. Wishnatzki. The stereovision that we are using to 
identify and go down and pick the fruit at the exact point 
where it is on the ground, that technology just didn't exist 
until very recently. We are processing something like 30 
gigabytes of data a second, and we are processing these images 
in 10 milliseconds; 10/
1,000 of a second. We are able 
now to identify the fruit, we have a system with these soft 
claws that this picking wheel that my cofounder developed and 
we have patented. That is what is allowing us to get the 
commercial speed, and it is allowing us to travel around the 
plant, inspect it very quickly, and go down, dive down and pick 
the fruit. It is some groundbreaking stuff. On our website we 
have some information about it if you go to that, and some 
videos also that show how it actually works.
    Mr. David Scott of Georgia. And so if we just took one, 
like blueberries, give us a picture of how that would look in 
the blueberry field. What would that robot look like? And 
second, at some point the human quotient has to come in there. 
I mean you pick them, you have to get them up, you have to put 
them in something, you have to transport. Where does that 
start, where does it end, and where does the human quotient 
come in?
    Mr. Wishnatzki. Sure. Those are good questions. Well, we 
are focused on the harvesting of strawberries right now, but I 
know blueberries will be in our future.
    Mr. David Scott of Georgia. Yes. Well, let's use 
strawberries, yes.
    Mr. Wishnatzki. Okay. Strawberries as an example. Well, one 
of the things my cofounder, Bob Pitzer, has mentioned is that 
there are a couple of problems here. You have to be able to 
find them and pick them, but you have also got to be able to 
transport them out of the field so you need a vehicle that 
these robots are mounted underneath that is of enough size and 
mass that you can actually put the finished product on and 
stack it until you get out to the ends of the rows. And when we 
do have that, developing it and we have the autonomous system 
on it now, it is driving using GPS, and collision avoidance 
using LiDAR technology. This is just a big platform that has 16 
robotic picking heads mounted underneath it as this swarm of 
robots that will be traveling through the fields picking the 
berries, and then dropping them off at the end of the rows.
    Our plan is not to utilize human labor to pack it either. 
There would be a secondary inspection of the fruit that would 
actually, after the berries were picked, they would be 
inspected by another set of cameras, that would then actually 
have robotic fingers that would put it into clamshells, or 
probably maybe not clamshells, but a consumer unit that will be 
transported at the end of the field.
    Mr. David Scott of Georgia. Thank you.
    Mr. Wishnatzki. Yes.
    The Chairman. The gentleman's time has expired.
    Mr. Crawford, 5 minutes.
    Mr. Crawford. Thank you, Mr. Chairman.
    I want to kind of continue on with the topic that my 
colleague, Mr. Austin Scott, broached, and that is how we 
communicate the value of genetically modified crops. In the row 
crop industry, it has become a volatile issue, most notably, 
Roundup Ready technology, things like that that the consumer 
doesn't necessarily understand. But to all of you, what would 
you suggest in terms of communicating the value to the 
consumer, because we can get into all the technical, which you 
did, Mr. LaVigne, and I appreciate that, but the consumers 
without a science background are making a decision based on an 
emotional response on some information that is out there in the 
marketplace.
    Can you all weight-in on that? What can be done sort of 
collectively to soften the blow that has really been harmful to 
you?
    Mr. Murphy. Well, I will take a first stab at it.
    When some of these technologies, most of this technology is 
being used in research on humans and animals right now. When 
some of this technology really creates tremendous value around 
fighting disease and some of these other issues in humans, it 
will turn. I believe that once the public sees the great value 
in some of these tools, its perception will change, but it will 
take time and education. We, as an industry, need to do a 
better job of talking about it in the right terms, and sort of 
more consumer-friendly terms. But, the progress that some of 
these technologies like CRISPR/cas9 will have on human disease 
fighting, things like Alzheimer's and other stuff like that 
will get a lot of publicity, and ultimately that will start to 
lessen the blow. The problem is it takes many years and time. 
But this technology is here, it is not going away.
    Mr. Crawford. I think, and just my observation, having 
worked in the ag industry for a long time and been an ag 
communicator, that the ag industry tends to be reactive, and 
they wait for a consumer perception to occur and then respond. 
What I am looking for from the ag industry, and particularly, 
from you all from the specialty perspective, is how do we blunt 
that, how do we get out there and advance and paint this 
picture of what is coming, and prepare the consumers for the 
good that they can expect from this, as opposed to waiting for 
the attacks?
    Mr. Heller. No, I think that is a very good point. I will 
just add a thought to that. Part of it is education of what 
crop breeding is what has happened historically; these crops 
that we have today came about. They are through natural 
mutations. This is just another tool; a more precise tool, in 
order to improve crops, in order to feed the world. I think 
that part of it is educating people that this has occurred 
throughout history. This is why we are different than our 
forbearers. And that fundamental understanding should help 
provide a foundation so we can convince people or have people 
accept different methods of plant breeding that are necessary.
    Mr. Crawford. Go ahead.
    Mr. Wishnatzki. Yes. It is my understanding that CRISPR/
cas9 is not a requirement to be even labeled as a GMO 
currently, and the reason for that, they are taking genes, and 
Mr. LaVigne can correct me if I am wrong on this, but they are 
taking genes from within the same species; in other words, we 
are not taking a fish gene and putting it in a strawberry or 
tomato. They are developing varieties. And I would prefer to 
call it smart hybridization, because hybridization has been 
around for many years and that is how we cross everything, but 
it is all just trial and error. But with this smart 
hybridization, you are able to get a variety that is close but 
maybe it has one little defect of susceptibility to a disease. 
They can snip that bad gene out, put in a good gene from 
another, say, if we are talking about strawberries, so it is 
within the same species, you are not taking something else.
    Mr. Crawford. This conversation we are having right now, 
which I find fascinating, but you are scaring the consumer.
    Mr. Wishnatzki. I agree.
    Mr. Crawford. And that is my whole point is that we have to 
stop using the term genetically modified organism, it is scary, 
it sounds very sciencey. It instills sort of a fear in the 
consumer. I would say a mule is a good example of a GMO, 
somebody mentioned the bucolic picture of farming 40 acres and 
a mule. They have been around a long, long time, but how do we 
overcome that negative association? And the science sometimes 
doesn't help us in that regard.
    Mr. Wishnatzki. Yes.
    Mr. Wenger. I just had something real quick. I just spoke 
to the bioconference, and you are right, with CRISPR/cas9 we 
are doing it all over again because we are telling everybody 
what is good for them, and they think there is a profit 
motivation in that and they don't trust us, so we have to bring 
other people into the tent, we have to ask them what their 
concerns are, and we have to address those concerns early on.
    Mr. Crawford. My time has run out, but I want to help you 
in every way I can in that regard.
    I yield back.
    The Chairman. The gentleman's time has expired.
    Lisa Blunt Rochester, 5 minutes.
    Ms. Blunt Rochester. Thank you, Mr. Chairman. And I thank 
the panel.
    I want to shift gears a little and go back to the 
conversation about people. Mr. Murphy, you mentioned that 
automation is a long-range solution, but you still really are 
relying on workers. And, Mr. Wishnatzki, in your written 
testimony you said that the jobs that Americans do not want to 
do have been filled by newly arrived immigrants, since it is 
only the newcomers that are willing to do the hard jobs; but, 
you also mentioned that a lot of your workers are moving onto 
other occupations.
    My first question relates to demographic shifts, aging 
population as well as less people. I am curious about 
retention. What kind of strategies do any of you use for 
retention of your employees, if we can start there, and then 
also if you could talk about turnover rates; like what kind of 
turnover rates you actually see?
    Mr. Murphy. Obviously, keeping the diminishing workforce we 
have is really important. You are seeing a lot of farmers start 
to work closer with their workers around areas that are 
important to them. For example, childcare, providing clinics. 
At our company we provide clinics for some of the farmworkers. 
There are a lot of extended services that we are beginning to 
provide them that perhaps we didn't do in the past, and that is 
becoming increasingly more important. Wages, of course, are 
increasing.
    Another thing that we have begun to work on, but it will 
take a while, as I mentioned in my testimony, we are beginning 
to try and make it easier for people to pick strawberries, for 
example. Strawberries are on the ground, you have to bend over, 
it is one of the hardest jobs you could imagine, so by putting 
them on what we call tabletops and raising them, people 
wouldn't have to bend over, it might be easier under tunnels, 
and systems that will make it more attractive for those people 
that are there, and potentially attract new people to the 
industry.
    So as others have mentioned, a lot of people working in ag, 
even though it is backbreaking work, in California do make a 
good wage; way above minimum wage. They work very hard for it, 
but they do make that wage. It is not that the wage rate is 
wrong, it is just that the work is so tough.
    So the strategies, certainly in our company and others, is 
to make it as easy for them to pick as possible, provide 
alternative opportunities beyond just wage rate to keep them in 
play.
    Ms. Blunt Rochester. Thank you.
    Mr. Wishnatzki. Yes. Ms. Blunt Rochester, yes, I am sorry. 
Yes, I just want to add----
    Ms. Blunt Rochester. We are having trouble with each 
other's names.
    Mr. Wishnatzki. Yes, I am sorry. I just wanted to add, 
picking strawberries, and many other harvesting jobs in 
agriculture, it is not a young person's game.
    Ms. Blunt Rochester. Yes.
    Mr. Wishnatzki. And so we don't have the young people 
coming up in this country, we are not raising our children to 
become pickers. Quite frankly, we are educating them, we have 
set up scholarship funds for our folks, both in California and 
in Florida we have scholarship funds, so our workers have 
access to education, higher education, and our workers' kids, 
chances are they are not going to be strawberry pickers, so 
where are these people going to come from if we don't have some 
sort of means to have guestworkers as a viable system for the 
industry?
    Ms. Blunt Rochester. I was just curious, when you gave your 
testimony earlier you also mentioned the childcare, you 
mentioned the health care, you mentioned housing even. Is this 
the norm or is that unusual?
    Mr. Murphy. No, it is becoming, in California, it is 
becoming much more of an important factor in attracting that 
limited workforce.
    Ms. Blunt Rochester. Got you.
    Mr. Murphy. To the extent that you can provide them with 
housing, there is a vegetable grower in Salinas that has done a 
really interesting job with housing, and they have created a 
really sort of prototype for the rest of us to follow in some 
ways.
    You are going to see more and more of this as a way to not 
only attract workers within the existing community, but also 
bring people from the outside.
    Ms. Blunt Rochester. Got you. Great. Anyone else want to 
share on workers and just the recruitment and retention and 
keeping them?
    Mr. Wenger. Well, just one of the problems with the 
seasonal crops, and it is one thing when you have a larger 
operation where you keep year-round employment. And so you can 
have the housing, you can have those workers for the daycare, 
it is others where you have smaller farmers that have 20, 40 
acres of peaches and they need large numbers of people for 
thinning, they don't need anybody again for quite a while 
except their two or three people that work with them, then they 
need large numbers to pick that fruit. And so those are more 
migrant, and they need to have more portability going from farm 
to farm. Hard to provide the health care and those other 
amenities that you can do for a year-round workforce.
    Ms. Blunt Rochester. Great. Thank you.
    The Chairman. The gentlelady's time has expired.
    Mr. LaMalfa, 5 minutes.
    Mr. LaMalfa. Thank you, Mr. Chairman. Welcome to our 
panelists, especially our Californians who have to fly the 
farthest, and I hope you didn't get caught in that air traffic 
situation that was going on here a day or 2 ago. Thank you for 
that, and good working with you as well.
    The issue with California we have, obviously, as Mr. Wenger 
laid out, a very, very diverse set of crops for the leader in 
the vast majority of the, I will say maybe the non-commodity or 
non-high-volume ones in the state. You mentioned almonds and so 
many fresh crops and others. Yes, a lot of them are labor-
intensive, and when we talk about further mechanization and 
newer technology, I have lived that myself as a rice grower. We 
are not so labor-intensive, but even in the late 1970s and 
1980s I spent more hours than you want to know about on a laser 
leveling machine flattening those rice fields. And now we are 
up to GPS. We cannot only flatten the field within \1/8\", but 
we can do it taking into account the curvature of the Earth. It 
is pretty amazing. Monitor technology for the grain coming in, 
as well as the yield and the harvester, and later using that to 
apply fertilizer as is needed. We have some great stuff going, 
but we need to keep going because as the panel keeps talking 
about with labor, where is the labor supply going to come from. 
It isn't completely elimination of labor, but the mixture, the 
percentage of labor versus further mechanization. We have seen 
this in tomato picking where they can kick out the green ones. 
Even the green grains of rice.
    So when we are looking at the mechanization, if we had all 
the workforce we needed, Mr. Wenger, do you believe the demand 
for mechanized and upgraded machinery would still keep growing 
or still keep needing to evolve, needing our input on that?
    Mr. Wenger. I have a couple of comments. One, as somebody 
that is not a rice grower but has always enjoyed flying over 
into Sacramento and seeing those gorgeous rice fields, as you 
contour those fields to meet for your level, and today they are 
much squarer, I know for a producer it probably gives you more 
yield per acre, but it does make----
    Mr. LaMalfa. When you can get rid of 17 levies in an 80 
acre field, and come down with only three levies.
    Mr. Wenger. But there is something to flying over those 
fields in the past and seeing the uniqueness to them.
    Mr. LaMalfa. It is not as romantic anymore for the people 
flying into Sacramento.
    Mr. Wenger. Truly. But, yes, with the technology, number 
one, we know that folks aren't going to do the types of jobs in 
the field. That is really what we are looking at, even in the 
processing area, they are still going to be more of those jobs, 
higher-technology jobs, so a lot of those individuals that get 
an education, they are going to be still working on farms, 
running those machines, and doing the servicing of those 
machines, but we know we are going to have a declining labor 
force. In California with the 8 hour workday, 40 hour workweek, 
we are going in that direction. With a lot of the heat illness 
standards that we have that you have to provide shade after 
80, and all the things that we have to do there, we are being 
driven to go to mechanization. There is just no two ways about 
it.
    Even if we rub the crystal ball and we had an available 
labor supply, we are going to be moving towards mechanization. 
We have to.
    Mr. LaMalfa. Let me drill down on the olive oil a little 
bit Mr. Austin Scott was talking about a while ago. Again, 
several of us took a pretty good run at that in the last farm 
bill, in the imported oil, the quality, Americans don't know 
what good olive oil tastes like in a lot of cases. The quality, 
the mislabeling of extra virgin, they are getting away with 
basically fraud on that. And the crops that we can grow; our 
neighbor, Jamie, he is doing all right in that terrible fire in 
the Oroville area here, right around here, Johansson, they grow 
a beautiful olive oil there. And so the need to have truth in 
the labeling is important, but also to be competitive. The 
mechanization in the olive industry, now, you can grow olive 
trees or more like vines these days that can be mechanized, but 
you still have the ones you have to pick for table olives, so 
what do you see going in that direction?
    Mr. Wenger. Well, clearly, that is where we talk about 
mechanization and plant breeding, and trellising and the other 
things we do. One of the questions was about blueberries. 
Certainly, as we look to the way that we plant blueberries 
today, maybe they are going to do it differently in the future. 
There was a group from China--as a walnut grower, our trees are 
40, 50 tall, they are working on hedge growing where the 
trees are 9 tall. Now when you start talking about robotics 
and other things, and so we have to make sure we are ahead of 
that curve, because there are other countries that are making 
those investments to be able to do that. And currently, you are 
right, for the fresh olives or the processed olives that you 
would eat on your table or on your pizza, those are larger 
trees, they aren't mechanically harvested, so maybe we are 
going to have to look at ways that we can do that, and then 
utilize the soft touch of a robot to be able to pick those so 
that we can utilize them for eating and not just eviscerate 
them for olive oil.
    Mr. LaMalfa. Okay. Thank you, Mr. Chairman. I will yield 
back.
    The Chairman. The gentleman's time has expired.
    Mr. Panetta, 5 minutes.
    Mr. Panetta. Thank you, Mr. Chairman. Thank you for having 
this hearing on this topic. I truly appreciate it, representing 
the area that I do on the central coast of California. And also 
thank you to our witnesses for taking the time to provide your 
testimony and the information that you have provided this 
morning. You are speaking to me. I hear you loud and clear. It 
is something that I have been talking about ever since I got 
here in Congress, and because I have been hearing about it well 
before I got to Congress, about the issues that our people in 
agriculture face on the central coast of California.
    Obviously, in the past 5, 6 years California has faced, 
excluding this year, a serious drought. And when you would talk 
to people in agriculture, you would expect maybe that drought 
was the number one issue. No, not at all. Hands down, it was 
labor. It had always been labor, and the lack of labor there in 
our fields to help produce and harvest the products that you 
do.
    That is why it is important that you are here and that you 
are talking about it, and I appreciate that. As I see it, there 
are two avenues that we can go in dealing with this issue. The 
one avenue is, I believe, Congress' responsibility, via 
immigration reform. I believe Congress has failed to address 
that issue, unfortunately. The last time we had it was in 1986 
with Ronald Reagan. And I do know that there was a serious 
attempt at that in 2013 with S. 744, most recently. And there 
are certain efforts that are happening now in Congress, and we 
will continue to advocate for you and for those efforts.
    But, as we work on immigration reform, the other avenue is 
though mechanization in order to deal with labor shortages. It 
is a two-avenue approach, and your being here helps both those 
avenues; first, advocacy for immigration reform; but, also 
talking about mechanization.
    In the meantime, we have to keep our workers here. And, 
Kevin, I appreciate that you have started to implement some new 
processes. I was in the field a month ago with Miles Reiter, 
the Chairman of Driscoll's, and I saw some of these new 
tabletops that were in the field. Could you tell us about the 
tabletops? People need to hear about that.
    Mr. Murphy. Yes, so this is a technology that has been 
around for a long time, especially in Europe. Now, Europe is 
facing, and has faced in the past, many of the issues that are 
coming here. They have always had issues with labor; they have 
never had enough people to pick it. Pesticides, fumigants have 
been a problem there, methyl bromide has been banned for many 
years. Some of the issues we are facing they have already 
faced. What they did, it drove them into substrate type of 
controlled environment production. The tabletop is a system of 
tabletops, basically, that are about 4 off the ground. The 
product is grown in a substrate, which is a special type of 
material that is good for the berries, and then it makes it 
easier for people to pick standing up. As I said earlier, the 
idea is to attract people to the industry as well as make it 
easier for folks to do it.
    We also think that mechanization might be easier in that 
system because it is more precise. You are not dealing with the 
ground as much as you are, these solutions are all going to 
have to come together. The mechanization of harvesting and the 
more sophisticated growing techniques as well as the packing 
techniques all have to be an integrated system.
    Sometimes the solution is just not in the harvesting, but 
in the integration of all these efforts. But I will be honest 
with you, it is going to take a long time for that to get done. 
Now, we are going to work hard to try and make it faster than 
that, but it doesn't all come together easy, as Gary just said, 
and that is where the government can help, private industry, 
there are lots of these startup companies that are around. They 
have come, actually, from companies like Google and others in 
the Silicon Valley that have this technology. They are young, 
innovative groups that are coming together, very 
entrepreneurial, and they want to partner with ag to get some 
of these solutions going. And I would strongly encourage that 
this farm bill identifies that. It speaks to our best 
entrepreneurial spirit, and to the extent that money can be 
allocated to some of this automation, whether it be the 
harvesting or the growing, or whatever it is, but that is a 
spot where money could be allocated to private industry. I 
don't think the universities in this area are going to be able 
to do the work that is required. I think they are very valuable 
for other areas. And as the Chairman mentioned in his speech 
around pesticides and other things, I think that is very 
important, but in this fast-moving area of mechanization and 
robotics, private industry is the way to go. And I would like 
to see the farm bill in a creative way allocate resources in 
that manner that could speed it up rather than slow it down.
    Mr. Panetta. Agreed. Thank you.
    Thank you, Mr. Chairman.
    The Chairman. The gentleman's time has expired.
    Mr. Yoho, 5 minutes.
    Mr. Yoho. Thank you, Mr. Chairman. I appreciate you 
gentlemen being here. And it is very interesting this topic 
today. It is one that is dear to my heart. I have been in 
agriculture since I was about 15 years of age. And you guys 
have touched on everything that is important that we need to 
cover.
    And so let me start with you, Mr. Wenger. You mentioned 
your organization's strong support for the Whole Farm Revenue 
Protection program, created as a pilot in 2014. How does this 
program better serve many specialty products and producers, and 
are there specific improvements that you would suggest for 
this?
    Mr. Wenger. Yes, there are a number of them, and so we 
would look forward to working with you on it. One we think to 
provide flexibility, keep it a pilot program. It is very 
complicated, talking to those folks that have tried to utilize 
it; the paperwork and trying to track everything is very 
complicated. Also the $8.5 million level is very problematic 
for a lot of our folks. As Mr. Peterson said earlier, when you 
look at the value and the investment of some of the specialty 
crops, recently we had the American Farm Bureau Trade Advisory 
Committee was out and they were touring the ports, and they met 
with some of our folks in the Salinas Valley, and one of our 
growers they were going to lose a $4 million crop because they 
didn't have the labor to pick it.
    Mr. Yoho. Right.
    Mr. Wenger. And so, now, that wasn't profit, but that was 
just $4 million to bring that in. It is a step in the right 
direction, it just needs a lot more work, but it is something 
to be able to provide for specialty crops.
    Mr. Yoho. If all of you could submit recommendations on how 
to improve that program, it would be greatly appreciated.
    Mr. Heller, you were talking about the Texas Bud Program, 
how is that working in Texas on the citrus greening? As you 
know, in the State of Florida, 100 percent of our groves are 
affected, and this is something that we have to get ahead of, 
and the cures are going to be an antibacterial, a GMO, or the 
budding process or natural selection. What are your thoughts on 
that? How well is that working?
    Mr. Heller. Yes. Clean plant material is the foundation for 
any good agricultural system, it is absolutely necessary. To 
your point, the solution for HLB is probably a GMO or some of 
these gene-editing techniques that are going to have a plant 
that is either tolerant or resistant to this particular 
pathogen.
    But the program itself is working very well. Again, it is a 
partnership between industry through check-off programs, 
private donations, grants through the university systems. And 
it is really to provide clean plant material not only to the 
commercial industry, but to growers and hobbyists around the 
state, because our neighbors need to have clean material as 
well, otherwise those problems will come from those areas and 
potentially affect us.
    Mr. Yoho. Okay. And, Mr. Wishnatzki, it was great to hear 
you talk about the University of Florida and promoting IFAS.
    Let's see, my question for you, where did it go? You spoke 
a lot about the labor situation. I feel confident that we will 
fix this in this Congress.
    Mr. Wishnatzki. Good.
    Mr. Yoho. We have an ag guestworker program that we are 
working on, we are going to talk with Chairman Goodlatte, and 
Rick Crawford also has a bill. And in concert, I am sure we can 
orchestrate a solution for this soon, because it is something 
that we hear over and over again from all of our producers. But 
I am also very optimistic about you talking about the 
mechanization and the robotics. Do you feel that is something 
that should be industry-driven, the entrepreneur, the innovator 
out there, and not wait on a Federal Government program?
    Mr. Wishnatzki. Absolutely. I mean the effort I have 
undertaken has been highly collaborative. I went to a number of 
competitors that have invested money in this, so I mean that 
speaks to the need.
    University systems are doing a wonderful job for us, and 
research into pest issues, disease issues, but there needs to 
be some money set aside for the private-sector, especially in 
collaborative efforts like the one we undertook, but this 
mechanization is kind of the last frontier in agriculture 
because for years there have been ways to harvest crops, 
destructive ways where you pick them once and you are done. But 
many of these crops that we are trying to mechanize now are 
selective in nature, so you have to come back again and again.
    Mr. Yoho. We will get there, and you guys leading the 
charge in the industry is what is really going to be the 
catalyst for that.
    Mr. LaVigne, I just want to talk to you about gene editing. 
We have heard a lot about GMO, and we have talked, certainly, 
enough about that, but one of the things with citrus greening 
is one of the GMOs and we are seeing our processors putting on 
their bottles non-GMO. They are killing themselves, and they 
need to educate the public because, as you brought up, gene 
editing is different than some of the other techniques. Gene 
editing is facilitating Mother Nature and picking certain 
phenotypes that we want to express in the plant, and is a 
natural selection process that we have just kind of sped along. 
And so the media campaign needs to be behind that to really, 
really promote that.
    And I am out of time, and I can't really have you answer 
right now, but I look forward to working with you all. Thank 
you.
    The Chairman. The gentleman's time has expired.
    Mr. Costa, 5 minutes.
    Mr. Costa. Thank you very much, Mr. Chairman. This is an 
important subject as it relates to not just California 
agriculture, but the entire country.
    Mr. Wenger, you and I have worked together for many years. 
We had the drought that everybody knows about, and then this 
year we got a lot of rain, and water has not been an issue, but 
we have had labor as an issue because many folks, especially 
our annual crops that would have liked to have planted 
additional acreage, have been unable to do so or have hesitated 
because the labor force is not there.
    How would you describe the acuteness of the shortage of 
labor in California in the last several years?
    Mr. Wenger. Well, it is very severe. We are going out, 
about 4 or 5 years ago we went out with a labor survey to our 
folks, and we could see that there was huge competition for 
folks, and we are seeing that again this year, we are going out 
with another labor survey. But when cherries are being 
harvested, a lot of those folks that were in other jobs, doing 
other needed jobs for growers, and it was a huge cherry crop 
this year, so it went out, we are paying above market, we are 
paying a lot more, and so you saw all of a sudden that your 
labor force was maybe not in your field, but they went to pick 
cherries. And so it is a critical issue, and as we are now 
getting into really the thick of our harvest season, it is 
going to continue to be an issue.
    Mr. Costa. And the nuances that people don't understand in 
terms of the weather and the challenges as to you just don't 
leave the crop on the field, if you have the triple digit 
temperatures that we are having, it is ready, it has got to get 
out of the field.
    Mr. Wenger. Well, I might just add real quick, Congressman, 
we are getting really close to where we were in 2006, we saw 
the high temperatures. A lot of our peach growers, they saw 
fruit that was not ripe in the morning, was overripe by the 
afternoon. We saw--they had to go through and select----
    Mr. Costa. No, and it happens that quickly----
    Mr. Wenger. It happens that quickly, and so it takes a lot 
of labor. And so really a lot of the labor went out of----
    Mr. Costa. And what are the crops that mechanization is not 
able to handle? I don't know if you have a quick list you can 
go through, because there are a couple of other questions.
    Mr. Wenger. Any of the soft--like somebody said, all the 
ones that when they drop on the ground go plop probably are the 
ones that are going to be most difficult. We will get there. It 
is going to take time, it is going to take trellising, it is 
going to take different cultural practices, and it is going to 
take money.
    Mr. Costa. And the private-public partnerships between the 
land-grant universities have been significant over decades in 
terms of developing the mechanization. But even then, as we all 
know, labor and 70 percent of our workforce in California and 
elsewhere is undocumented, is a challenge. Now, the blue card 
legislation that Senator Feinstein and others of us are working 
on is a partial solution, would you say?
    Mr. Wenger. Yes, it's a part of the three-legged stool. We 
need to figure out a way to get those here that don't have good 
documentation, documentation, we need to improve H-2A, and we 
have to have some kind of a system that allows for portability.
    Mr. Costa. Yes. Mr. Wishnatzki, you stated in your 
testimony about the Pew Study, which I happen to have right 
here, that says a net loss of $140,000 from 2009 to 2014, 
family reunification is the top of the reason for the return. I 
will make an editorial note, maybe we don't need to build that 
wall that somebody else is supposed to pay for because, 
frankly, that is not the challenge, from my perspective. But 
even if we got that legislation through, and I believe you are 
all familiar with it, it comes short because, to your point, 
all of you made the comment that the people that are coming to 
work in the fields today, when you provide scholarships for 
their children, when you provide additional support, the next 
generation is not going to want to be working in the fields. 
And so if you don't provide for continued opportunities for 
people who do want to work in these fields, it is only a 
partial solution. Would you care to opine, any of you?
    Mr. Wishnatzki. Yes, sure. I mentioned before it is a young 
person's game. The industry is always dependent on the new 
people coming here.
    Mr. Costa. Mr. Murphy, would you agree?
    Mr. Murphy. Yes. Yes, I would agree.
    Mr. Costa. Okay. We need to address that in any legislation 
that may or may not have a chance of moving forward here this 
year or next year. I don't know that I share our colleague's 
optimism that we are going to get this done, we certainly need 
to get it done in some bipartisan fashion.
    Mr. Murphy. Yes. Congressman, one point we are not talking 
about the loss of product that is not grown because of labor. I 
know in the berry industry in California we have cut back on 
strawberries by as much as ten percent because most of the 
growers are nervous they can't pick it. The losses we are 
talking about are not the crops that were not grown. The demand 
is there for the product, it is just not getting grown because 
of fear of labor shortages. If you add that up, it becomes a 
pretty big number.
    Mr. Costa. Well, and then you have automation that is going 
to take some of these jobs away. I mean I saw a dairy machine, 
I have some familiarity with that industry that is totally 
automated. I mean you don't need a person to milk the cow.
    Mr. Murphy. Yes.
    Mr. Costa. This will continue, and we need to work together 
as we look at the farm bill, Mr. Chairman, to figure out ways 
in which we can combine the best of both worlds.
    Thank you.
    The Chairman. The gentleman's time has expired.
    Mr. Allen, 5 minutes.
    Mr. Allen. Thank you, Mr. Chairman. And as I sit and listen 
to our discussion today, there is grave concern about labor 
shortages in this country, particularly as we grow the economy. 
And, in fact, we have 6\1/2\ million job openings out there in 
high-tech and high-paying professional jobs right now. In my 
industry, construction, alone, we anticipate over one million 
job shortages, as the economy grows. This is a pressing 
problem, and I just wanted to kind of hear from the panel, what 
is the most critical need as far as the farm bill and this 
Congress in dealing with this? Would it be immigration reform, 
and I am not talking about just dealing with Mexico and maybe 
South America, but I am talking about dealing with the world, 
because we know there are people looking for work all over the 
world. There are refugees looking for work all over the world. 
Would you consider that the major initiative we need to tackle 
immediately to solve this problem?
    And, Mr. Wishnatzki, would you comment on that, and then 
the rest of the panel as you see fit?
    Mr. Wishnatzki. Yes. One of the issues is that we are 
getting, you alluded to, there are people around the world that 
need work, and I don't think Mexico is a long-term solution for 
our labor. It is short-term, because they are getting ready to 
be faced with the same issues we are having here in this 
country, as their population levels off and ages. The growers 
in Mexico have already contacted me, one in particular from 
Baja, California, sees the handwriting on the wall. It is going 
to be an ongoing issue there as well.
    Mr. Allen. Do you see us addressing this immigration 
reform, we have talked about welfare reform and getting folks 
off welfare and back to work. We have 45 million people on the 
SNAP program right now that are requiring help, and obviously 
if we reduce that number and those folks become taxpayers, we 
have an opportunity to balance our budget. We need that to 
happen, but also the immediate need is for this Congress to put 
this as a priority to address this labor problem, not only 
inside the country but also as far as what we are going to do 
as it would be, like a guestworker program, I guess. Any other 
comments?
    Mr. Wishnatzki. I would agree with Mr. Murphy that there 
are two prongs. I mean we have to first make sure we have 
workers for the short-term, but we have to address the longer-
term which is automation.
    Mr. Allen. Yes. Okay. Any other comments?
    Mr. Wenger. No, I was just going to mirror exactly what he 
said, we have to get the automation, but first and foremost, 
our growers are very susceptible, if we, for some reason, had 
an e-verify system that went into place without some way to 
make sure that our workforce has documentation that allows them 
to be here, and we are not talking about citizenship, we are 
just talking about legal documentation that allows them to be 
here, it would be devastating for our producers in the field. 
And so first and foremost, we need to figure out how to get 
those folks good identification, but we need to continue to 
work on because of the aging workforce. And it is interesting 
talking to some folks from Chile. They are moving to almonds 
and walnuts as well, and away from a lot of the fresh fruits. 
And as I asked them why they are doing that, it is because of 
perishability, seasonality, and labor supply. It is not just 
here in California or the United States.
    Mr. Murphy. I would agree with those comments. It is going 
to have to be a guestworker program, you have to get the 
immigration sorted out. The farm bill can really address the 
automation part by collaborating with private industry to get 
some of that working. There are different parts of government 
that need to come to play.
    Mr. Allen. How about our colleges and universities, are 
they in play on this automation?
    Mr. Murphy. They are, but the automation is really 
happening in the private-sector. And it is moving so fast, 
certainly, where we are from in the Central Valley, we are 
right next to Silicon Valley, and so a lot of the stuff that 
Google and any of these other folks that are innovating on are 
really close to us, and they are really interested in doing 
that. There is a really good collaboration going on. Western 
Growers, which I am a board member of, has an accelerator 
program where they bring entrepreneurs in to help get them 
going. That would be another area you could team up with. There 
are lots of opportunities to help move that along in an 
aggressive way.
    Mr. Allen. Good. Thank you.
    I am out of time. I yield back.
    The Chairman. The gentleman yields back.
    Mr. Lawson, 5 minutes.
    Mr. Lawson. Thank you very much, Mr. Chairman. And welcome, 
gentlemen, to the Committee.
    I live in north Florida, where we have specialty crops like 
tomatoes. When I talk to some of the tomato growers, they are 
very worried about immigration, being able to get those crops 
out, and some of the tomato growers who are right on the border 
with Georgia pretty much have the same problem. What I am going 
to do is to focus my question, because I have a million 
questions I would like to ask all of you, but I am going to ask 
this one. Since Florida is the second largest producer of 
specialty crops in the nation, and innovation and technology 
are essential to farmers remain competitive in the marketplace, 
can any of you talk about the farm bill program, such as the 
Specialty Crop Block Grant Program, does it play a role in 
producing innovation and technology?
    Mr. Wenger. Yes, I will speak real quickly. The uniqueness 
of the Specialty Crop Grant Program is it allows you to really 
focus on things as they are happening. And so you look to the 
farm bill, it is a bigger picture, longer-term, but as we went 
through the recent drought, 4 years of drought, we saw a lot of 
specialty crop grants that went to innovations to be able to 
squeeze the most crop per drop, and things like that. I believe 
the Specialty Crop Grant Program and the research dollars are 
very, very important to meet the needs as they are happening, 
that we can't foresee maybe a few years down the road. To have 
that block of money there, it is extremely important.
    Mr. Lawson. Okay, thank you. And I would like to ask 
another question since I have Mr. Wishnatzki, who is 
knowledgeable with the University of Florida. What is IFAS 
doing to solve the problem with the irrigation program for 
strawberries? Is it that serious, have they recommended some 
research to improve it?
    Mr. Wishnatzki. Yes. There have been some uses of the block 
grants. I know the University of Florida has been instrumental 
in a few different things. Improved irrigation, I think that is 
what you were referring to, to reduce water usage that has been 
very helpful. And we have several other programs that relate to 
blueberry sustainability, looking at mechanization there. There 
is also diversification on strawberries where they are looking 
at other crops that can be double-cropped, because in Florida 
we have the luxury of planting a secondary crop after the 
strawberry crop is on the way out. There has been a lot of 
research, and the University of Florida in particular has done 
really well. There is a research center in Balm, Florida, and 
Dr. Natalia Perez has done a lot of work with plant pathology, 
looking at different diseases, and there has been a lot of 
utilization of the block grant program for that.
    Mr. Lawson. Okay, thank you.
    Earlier, it was mentioned that 30 percent of the berries 
you can't get out of the field. What contributes to all this? 
Is that the labor force or what is it?
    Mr. Murphy. Yes, if I am correct, we aren't even growing 
the potential that we could grow out of California, for 
example, in strawberries because there are not enough people to 
pick them, so there is a loss of production. But in my 
testimony, I talked about the waste associated. Is that what 
you are referring to?
    Mr. Lawson. Right.
    Mr. Murphy. There is 30 percent, a lot of it occurs 
throughout the supply chain. In fact, a good chunk of it 
actually occurs in the consumer's refrigerator. When you think 
about it, farmers throw good berries away because they can't 
pick them or they go bad, and then we lose them throughout the 
supply chain, and ultimately the consumer throws them away. And 
we have done some studies, they don't always, there are other 
studies that are being done, but roughly \1/3\, 30 percent of 
berries that had the potential to be eaten are not actually 
eaten. If you think about the amount of resources and money 
wasted in that, that is an obvious opportunity. And there is an 
opportunity in the farm bill to continue to work on that 
throughout the supply chain.
    Mr. Lawson. Okay. And real quick, do the food banks and all 
of those other different agencies that work to get food to give 
to people in need, do you all have a great relationship with 
them?
    Mr. Murphy. Yes, we do. We are the largest supplier of 
produce to the food bank. We are happy to do that in 
California. Millions of dollars. We are happy to do that, but 
that shouldn't be our purpose.
    Mr. Lawson. Okay. Mr. Chairman, with that I am going to 
yield back, but I know I still have about 100 more questions to 
ask.
    The Chairman. I appreciate the gentleman's restraint.
    Mr. Denham, 5 minutes.
    Mr. Denham. Thank you, Mr. Chairman. This is a very 
important topic, especially in light of our challenges on 
immigration reform.
    The Chairman. Would you turn your microphone on please? We 
can't hear you.
    Mr. Denham. As we have discussed many times in this 
Committee, the need for labor is of huge importance. I am one 
that wants to continue to fight to make sure that we have full 
reform on immigration policy, making sure that we can guarantee 
to the American public not only do we have secure borders and 
internal security, but obviously that we have a guestworker or 
guest labor program that allows us to continue to have the 
safest, greatest agriculture in the world.
    But with that comes opportunities to mechanize. As we have 
in the Central Valley, what we grow, we are very mechanized, 
but in the Salinas Valley especially, lettuce, spring mix, 
especially strawberries, many crops have not gotten to that 
point yet, and there are some that may never get there. The 
question is will we outsource, as we currently are much of that 
produce, to Mexico and other countries because of their labor 
source, and possibly even sacrifice on the food safety side, or 
will we actually be able to address both labor and 
mechanization so that we can continue to have the best and most 
abundant agriculture anywhere.
    And I know this Committee especially, when it comes to the 
farm bill, we have done more not only on the specialty crops 
but also with ag research.
    I wondered specifically, Mr. Murphy, first if you could 
talk on some of the research that is being done by the UC 
system or even CSU in our community college level to help 
automate on the berries, which I believe is one of the most 
difficult crops to actually mechanize.
    Mr. Murphy. Yes. There is no question, most of the work on 
the mechanization of the harvesting of berries is being left up 
to private industry right now. Mr. Wishnatzki has a very 
interesting project which we are close to. We are involved in a 
project as well. We are all looking at these various projects. 
To the extent that we tap into the universities, that is 
happening. What we do see outside of mechanization is a lot of 
input and work with universities, especially around pesticide 
use we are seeing quite a lot of work. The funding that came 
out of the farm bill, around food safety was a really good 
example of how this should work, where industry, particularly 
in the Central Valley, came up with their own approach to food 
safety, and through some of the money through the farm bill and 
some of the thoughts that came out of that farm bill, we have 
been able to really kick it up a gear after that spinach food 
safety issue. So that is another area.
    Most of the university stuff in research is done on stuff 
not related to automation. But ultimately in this area, as I 
said earlier today, it is really going to be a public-private-
sector work in this regard. That is where most of the energy is 
right now. And as I said earlier with Google and others getting 
involved, that is where that energy is.
    Mr. Denham. Thank you.
    And, Mr. Wenger, glad to have you here once again. 
Incidentally, Mr. Wenger is a constituent of mine, so not only 
am I a member of the Farm Bureau, but glad to have you here as 
a constituent.
    If you could answer the same question, especially when it 
concerns both the industry as well as your member companies 
that are either expanding to other countries either due to 
mechanization unavailable to certain commodities, or by just 
the lack of labor. And maybe you can also touch on the H-2A 
program, and I know that there are a number of your members 
that have really, really tried to make that work, are still 
seeing a huge shortage.
    Mr. Wenger. Yes, time is short so we won't be able to spend 
much time on it. H-2A is certainly for a lot of those folks 
that have a longer-term and a set number, when they need a set 
number of workers for a set time, H-2A works for them. It is 
very difficult to get through the H-2A program though. We need 
to make it less cumbersome. But we still need a portability 
system that allows workers to go from field to field, crop to 
crop.
    I might just add real quickly, as we talk about all these 
issues and we talk about regulations, and we talk about 
innovation, in California, in our highly regulated area, 
especially when you think about the cap in trade that is now 
going on in Sacramento, when we talk about facilities limits on 
the amount of emissions that you can have for our processing 
plants and others, it is even bigger than what we want to talk 
about. When we think about innovation for mechanization and the 
striving for a Tier 4 final engine, that we have the uniqueness 
of so many different types of engines that we don't have 
companies making the engines for them to drive the machines for 
the mechanization.
    So there is a lot more we can talk about when we have time 
to talk about it, but certainly, regulation does drive 
innovation, but in California, unfortunately, we are seeing 
that regulation is stifling it.
    The Chairman. The gentleman's time has expired.
    By the way, Mr. Costa claimed him as a constituent as well, 
so are you saying that Mr. Wenger committed voter fraud? He 
votes for both of you guys?
    Mr. Denham. He farms in a lot of areas.
    The Chairman. Yes.
    Mr. Soto, 5 minutes.
    Mr. Soto. Thank you, Mr. Chairman. I have the honor of 
representing central Florida where we have a ton of citrus, a 
ton of cattle, and then also a very big blueberry and 
strawberry industry in our area.
    I wanted to first start off with Mr. Heller. We were really 
fortunate to get over $125 million in citrus greening research 
money, an additional $41 million, I believe, was added in there 
in this last omnibus. And it basically addresses the fact that 
we have had a 70 percent reduction in production of citrus in 
Florida.
    I was wondering, what is the reduction in Texas right now?
    Mr. Heller. Yes. Each region of the country is in a 
different state in the disease progression. In Texas right now 
there has not been a significant reduction in productivity 
within our groves. We are probably 5 to 7 years behind the 
disease curve or cycle as it is occurring in Florida. We are 
hoping and learning that things will be different, or learning 
from Florida's experience and hoping we can manage differently.
    But certainly, those funds that you mentioned and those 
dollars, while they haven't found a solution, they have been 
instrumental in building a foundation and understanding of the 
disease, or bringing us closer to hopefully what will be a 
solution for all the different regions across the United 
States.
    Mr. Soto. And so you believe that we will still need 
substantial resources to continue to address the citrus 
greening condition?
    Mr. Heller. Yes. This problem is not solved, Mr. Soto. I 
think that continued funding will be necessary. Again, there is 
a lot of work to be done, and there is probably not one answer. 
There are going to be many different types of science that will 
come into play, so funding does need to continue on this issue. 
And there will be other pest and disease issues, so this has 
been a very important tool for citrus producers. Again, the 
different regions; California, Texas, Florida, we want to see 
it stay in the farm bill. Thank you.
    Mr. Soto. Mr. Chairman, just a note, we can head this thing 
off at the pass still if we continue, both for your state and 
mine, if we continue to fund it.
    Mr. Wishnatzki, welcome to Washington. It is an honor to 
host you up here.
    Mr. Wishnatzki. Thank you.
    Mr. Soto. In Polk County, we have a ton of blueberries and 
strawberries. And I want to compliment our berry growers for 
hitting the mark this year. Last year blueberries did not meet 
that 3, 4 week window. We are the only berries in the United 
States, which is a very unique situation for us. Obviously, 
strawberries have been more consistent to hitting that mark.
    So my first question is: how are the crop insurance tools 
to help with these highs and lows of, if you miss that 3, 4 
week window?
    Mr. Wishnatzki. Yes. Quite frankly, we are not using crop 
insurance in strawberries because I don't believe there is 
anything specific to strawberries, to the best of my knowledge. 
The whole farm insurance is something that we are beginning to 
look at, but I don't believe any of our associated growers are 
utilizing that program right now either.
    Mr. Soto. What about for blueberries?
    Mr. Wishnatzki. And blueberries, the same thing. I don't--
--
    Mr. Soto. Do you think it would benefit, since we have such 
highs and lows, depending if you hit that window, if you all 
had better access to crop insurance?
    Mr. Wishnatzki. Absolutely. If there was a means to help 
level out some of those dips, because quite frankly, Florida 
strawberries over the last 5 years have been very challenged 
because of several issues related to competition and related to 
labor availability.
    Mr. Soto. And I wanted to go into labor. If we had a 
revised farmworker, guestworker program where it was a 3 year 
or 5 year term, rather than a 1 year, that would only be 
revoked if that individual committed a crime, and they would 
have to go back each season, would that be a benefit to the 
industry?
    Mr. Wishnatzki. Absolutely. If there was a means to keep 
folks here. In Florida, the work goes on into the summer. There 
are usually a few slower months, they would probably find other 
work in other neighboring states, but having the availability 
of labor and having them there would be a great benefit. And I 
am not sure that that is possible getting that through, but it 
would be a benefit if it was.
    Mr. Soto. Anything is possible with an Act of Congress, 
sir.
    I wanted to finish by talking about a lot of our specialty 
crops that have faced stiff competition by other countries that 
have far lower costs. How key is the Specialty Crop Block Grant 
and other programs in addressing trade inequities?
    Mr. Wishnatzki. Is that question for me?
    Mr. Soto. Yes.
    Mr. Wishnatzki. Yes. Yes, it is vital. We need to fund our 
land-grant universities with these funds because there are so 
many problems with pests, diseases that come about that we 
really depend on that resource. In no way, shape, or form would 
I advocate that funds be taken from that to go to something 
else. I mean automation is important as well, and there needs 
to be additional funds made available for that.
    The Chairman. The gentleman's time has expired.
    Mr. Thompson, 5 minutes.
    Mr. Thompson. Thank you, Mr. Chairman. Gentlemen, thank you 
for being here for this important hearing, important topic.
    In the House of Representatives, jurisdiction over the 
domestic nutrition and food assistance programs is split 
between this Committee and the Education and the Workforce 
Committee. I chair the Subcommittee on Nutrition in the 
Agriculture Committee, and am a senior Member of the Education 
and the Workforce Committee. I am curious about your experience 
with specialty crops and programs like Fresh Fruits and 
Vegetables Program and the SNAP program that allow recipients 
to make specialty crop purchases at farmers' markets, and how 
do you think these programs are working? And I throw that out 
to whoever would like to respond.
    Mr. Murphy. Well, I can't respond to the specifics of the 
programs, maybe you will ask some other folks here, but I have 
a real passion, we need to have the kids stop eating candy and 
start eating fruits and vegetables. And so anything, anything 
that can help our kids eat berries instead of candy is a good 
thing. So that would be my perspective. And I am actually 
encouraged to see in general consumers doing a lot more of 
that. Younger families, you see them eating a lot more berries, 
and that is great for our business, but it is also great for 
their health.
    That is my point, but how the programs work I would have to 
ask some of these other folks here.
    Mr. Wenger. Yes, having the SNAP program is very important, 
going to farmers' markets is great as long as it can be 
monitored, having the EBT cards and whatnot to allow folks to 
have specialty crops, and also having it to when the freshness 
and they are available, the canned, frozen, or dried, for those 
that would be out of season is still very, very important. But, 
as you said, having these nutrition programs access to crops 
grown here in the United States is extremely important. The 
SNAP program is extremely important for that.
    Mr. Thompson. Anyone else care to weigh-in? If not, let me 
go to my second question.
    Now, some of you mentioned both the Specialty Crop Research 
Initiative and the Agriculture and Food Research Initiative as 
ideal places for mechanization funding through the next farm 
bill. A significant effort was made in the last farm bill to 
ensure research projects supported under the Specialty Crop 
Research Initiative were based on both scientific merit and 
relevance to the industry. What are some of the specific 
examples of the ways your industry has benefitted from SCRI as 
a result of that?
    Mr. Heller. I can speak to the citrus perspective there. 
The Citrus Disease Subcommittee provides the relevancy 
guidance, I guess, to the scientific community with regards to 
HLB. As I mentioned earlier, the progression of the disease 
within each individual region of the United States is 
different, so growers' needs are different. Having that as part 
of the discussion and the focus has been very beneficial to 
guiding the research in the direction to address not just a 
particular part of the country's needs, but the whole country. 
That grower-stakeholder involvement is very important.
    Mr. Wishnatzki. Yes. Dr. Jack Rechcigl, who is the head of 
the Gulf Coast Research Center, he made me aware of a program 
that is a multi-state interdisciplinary project on tomatoes, 
which is not my area of specialty, but I had asked him prior to 
coming here about giving me some examples of just what you are 
asking, and that project actually brings together 13 
researchers from six different universities, representing five 
states working towards a common goal to improve the tomato 
health, Xanthomonas is actually what they are trying to solve. 
Yes, there are many more examples of that.
    Mr. Thompson. Sure. That was a great example.
    Mr. LaVigne. Yes, the Specialty Crop Block Grant Program 
too, as I mentioned in our presentation, Cornell University has 
used it to help develop varieties of broccoli that are much 
more acclimated to produce on the East Coast versus the dry 
weather of the West Coast and the Valley. And so Dr. Bjorkman 
there at Cornell has done great work in identifying those 
characteristics within broccoli that are more favorable for a 
moister, humid climate on the East Coast, enabling farmers to 
produce it out this way.
    Mr. Thompson. While I have your attention, Mr. LaVigne, I 
am interested in the lettuce public-private partnership that 
you discussed at the University of California, Davis. Can you 
talk about how NIFA and AFRI funds have been used in 
collaboration with private dollars?
    Mr. LaVigne. Yes. The Lettuce Consortium out there in the 
Salinas Valley came together with Davis and USDA, NIFA, to 
really look at the challenges of mildew and other production 
issues that are impacting lettuce production. There are a lot 
of issues of pest and disease that reside in the soil that you 
have to rotate the crop and you have a limited amount of time. 
You had seed companies come together for the private funding, 
brought germplasm to the table, their own private germplasm, 
working with the University and USDA and Federal dollars to 
develop varieties that are more acclimated to address those 
issues, resistance when they could induce resistance, and 
really move forward with varieties that meet that new packaging 
that the consumer wants, but also enable them to produce, as 
well as possible, with limiting the inputs, also if possible.
    Mr. Thompson. Thank you.
    The Chairman. The gentleman's time has expired.
    Ms. Kuster, 5 minutes.
    Ms. Kuster. Thank you, Mr. Chairman. And I just want to 
note how bipartisan the approach is today on terms of labor, 
immigration, comments of immigration reform, and also our 
agreement on eating fruits and vegetables. I talked to my 25 
year old son on the phone last night, he had been to the 
dentist, and it turns out I was right all those years that I 
was recommending fruits and vegetables instead of candy, and 
now he has come around to our approach. I would love to work 
with you to encourage that diet.
    In our home State of New Hampshire, specialty crops are 
particularly important, and we have berries, we have apples and 
leafy greens, and I just want to highlight a new startup 
operation, it is called Leaf Farms, a new branch of Pleasant 
View Garden, and it is a fully automated indoor greenhouse, 
able to produce up to a dozen varieties of lettuce and other 
greens, delivering their products within 24 hours of harvest 
locally, which you can imagine for us when it is 10 in the 
winter, the idea of fresh lettuce is very exciting.
    So it leads me to my question about moving on from the 
immigration issues for labor, we have talked about 
mechanization and automation, what resources are needed to 
support the development of mechanization, and stated a little 
bit differently, in our current education system, do we have 
the right mix of teaching and techniques and skills for staff 
to service robotics and various technology? And I guess this 
came up also in California, but just looking to the future of 
more automated agriculture, what should we be thinking about 
for education and skills training?
    Mr. Murphy. In my testimony I mentioned five very powerful 
factors that are coming together here around pesticide and 
fumigants and climate change and availability of resources. And 
my conclusion from this is that those are all driving us 
towards more automated, controlled environments. The example of 
Leaf is what you talked about is the sort of extreme edge of 
that work. Quite frankly, in the U.S. we are behind. In Asia 
this is something they have been doing. There are over 500 
factory farms alone in Japan. Theirs are being driven by the 
similar issues, plus they don't have a very good climate.
    It is still on the cutting edge, or maybe in some cases 
some people would say the bleeding edge, but there is no 
question that there will be some part of our production that 
moves in that regard. It just makes too much sense. In other 
words where you have your nursery producing plants in these 
growth chambers that ultimately go into what we would call 
these factory farms or growth chambers that you can grow the 
product, and you actually can distribute it right to the store 
within a few kilometers.
    Ms. Kuster. I am sorry, just to bring this up, because we 
had talked earlier about you said berry picking is for the 
young, are there opportunities in our current labor market for 
this approach, and what kind of skills would be needed to do 
these jobs of servicing the machinery and even the other STEM 
jobs that you have talked about, the kind of high-tech growing?
    Mr. Murphy. Yes, it would just require more education, 
because it becomes automation rather than manual labor. There 
is no question that that would be part of the equation.
    Ms. Kuster. Great.
    Mr. LaVigne. I think you are seeing some very creative co-
operations out there today. Universities, the land-grant side 
of a university, reaching across campus and talking to the 
engineering department.
    Ms. Kuster. Yes.
    Mr. LaVigne. And you now see them talking to community 
colleges so that they can work in curicula with respect to 
irrigation systems and the computer systems and GPS and drone 
technology. And so a lot of the land-grant institutions are 
reaching out to Lake City Community College in north Florida, 
from the University of Florida, or the community college in 
Salinas Valley and Davis working with them. That encouragement 
to work somewhat outside of the mold that we have in the 
current land-grant institution and those creative deans that 
are saying we can find additional labor here to help our 
customers, the growers out there.
    Ms. Kuster. My time is up, but one of the local farms that 
I visited, the roof of the building opens and closes based upon 
the time of day and the precipitation. Totally computerized. It 
is really quite extraordinary.
    So thank you. I yield back.
    The Chairman. The gentlelady's time has expired.
    I recognize myself for 5 minutes.
    Again, thank you, gentlemen, for being here. We have had a 
lot of complaints about the implementation of the Food Safety 
Modernization Act, and can I get your thoughts on its 
implementation? Are there things that are being done correctly 
or incorrectly that you would share with the Committee?
    Mr. Wenger. I might just start by saying we certainly know, 
and the folks dealing with the leafy greens in Salinas Valley 
and the Leafy Green Marketing Agreement, what we did under the 
Food Safety Modernization Act. Unfortunately, any well-
intentioned plan can sometimes run amuck, and certainly, as we 
have seen the implementation of the Food Safety Modernization 
Act, it has become its own cottage industry. And so what we see 
in California is a lot of folks doing what should have been the 
first point of processing is now going out into the field. And 
some of the water monitoring and everything that you have to do 
that really has no reflection on the safety of the food once it 
gets to the processor and to the consumer.
    So while it is well-intentioned, there needs to be a lot of 
work to make sure and bring it back to the focus of its 
original intent.
    The Chairman. Other comments?
    Mr. LaVigne. From the seed side, Mr. Chairman, we are 
experiencing some challenges that we are working with FDA as 
they look at the implementation. You can imagine when you have 
seed that is cracked or not able to be used for planting 
because the shell is damaged, it still has a nutritional value 
across the board, and it can be used in feed. And so it is now 
being considered in some cases an ingredient in feed when there 
is really no risk at all, given the way that we produce seed 
and the way that seed is handled.
    So we are working with them. It is one of those cases that 
just went a bit too far, and trying to get them to back off of 
that as we go forward.
    The Chairman. What has been your experience dealing with, 
we don't have jurisdiction over FDA, so I can criticize them in 
this room, but what is your experience with them in terms of 
cooperation and help? We all want safe food, but we also want 
regulations that make sense, that you can live with. From 
working with them directly, what has been your experience?
    Mr. Wishnatzki. Yes, my experience, I am on the Board of 
Florida Fruit and Vegetable Association, and they had a 
representative that came and spoke with the board, and I got 
the impression that they are doing a lot with outreach and 
trying to identify the pain points and what things are wrong. 
From my perspective, I believe they are doing a pretty good 
job. It is a big undertaking.
    Mr. LaVigne. Yes, they have been very receptive in 
listening to the issues, trying to find a way out of evaluating 
where the risk is and then determining: we don't see a risk 
here so how do we move you out of this process so there is not 
an issue, and all the seed plants across the country don't have 
to register as food facilities.
    The Chairman. Right. Anybody else? Go ahead.
    Mr. Wenger. Well, I was just going to say, as we start to 
maybe look for some retrenchment and going back, it is as if we 
are not for safe food. And so that puts you in a very 
paradoxical position that if you say let's take a look at it 
again, that somehow you are saying we are not wanting to 
deliver safe food, and that is just not true. We have to take a 
look at practical things that we can do to make sure that food 
is safe.
    The Chairman. Yes, I got you.
    A couple of you mentioned innovation. Are there regulatory 
barriers to the work you are trying to do with robotics, or 
whatever the innovations you have out there? Are there things 
that we need to consider removing from the regulatory scheme 
that slow innovation from actually getting done, and at a speed 
that you think you can make it happen?
    Mr. Wenger. Yes, it just seems like, especially in 
California, every time you want to come up with a new idea, you 
have to do it many times over. We could have a long discussion 
on that, Mr. Chairman, but yes, it is even, what I said 
earlier, coming down to engines. We have cleaner and cleaner 
engines, but they are just never clean enough.
    The Chairman. Absolutely. Right.
    Mr. Wenger. And so as we are asking people to invest in new 
mechanization that would be robotic, so it would be drones and 
other things, there will be some offsetting things with it, but 
let's not let the perfect be the enemy of good.
    The Chairman. Yes.
    Mr. Wishnatzki. I just want to add, at this point, my 
harvester robotics company is still in development, so you 
might ask me this question in a couple of years when we begin 
commercialization what kind of things we are running up against 
because I suspect that we are going to find some regulatory 
problems down the road, but at this point in time we are still 
just developing.
    Mr. Murphy. Our biggest issues are the crop right now. It 
is a very soft berry, and are trying to sort that out, but down 
the road there will probably be an issue at some point.
    The Chairman. Okay. Well, as you do come across those 
regulatory schemes or problems that are not working, we would 
be keen on understanding it and trying to figure out how we can 
work with that.
    My time has expired. I now recognize Ms. Plaskett for 5 
minutes.
    Ms. Plaskett. Thank you, Mr. Chairman. Good morning, 
gentlemen.
    Mr. LaVigne, I wanted to ask you, the 2014 Farm Bill 
provided for significant investment in agricultural research 
for specialty crops. There was an $80 million per year for 
Specialty Crop Research Initiative, and $85 million a year for 
Specialty Crop Block Grant Program. Could you give examples of 
cutting-edge research that has emerged from these programs?
    Mr. LaVigne. There are a number that have come through that 
the researchers are looking at with respect to the specialty 
crop arena in the disease pressure that growers are 
experiencing. I did mention one earlier that is key is the 
broccoli production. It was very, very difficult for growers to 
produce broccoli on the East Coast. Mildew and other issues 
were devastating crops. Through molecular marker techniques and 
working with the Specialty Crop Block Grant Program, they were 
able to develop varieties that are more favorable for the East 
Coast.
    Very similar to tomato production in California, in looking 
at how the process is done and what diseases were impacting 
them most, how do you improve the varieties enabling them to be 
less susceptible to those diseases.
    We have really tried to focus on those areas where you had 
a collaboration between the grower community, in our case, the 
seed companies and the breeders and the university, USDA, to 
address those localized programs, and those Specialty Crop 
Block Grants were invaluable to those processes.
    Ms. Plaskett. Do you feel as we are working through the 
farm bill coming up now that this is the right amount of money 
or that additional funding should be provided for this kind of 
research?
    Mr. LaVigne. Well, that is always the question. In this 
area, we can always use additional resources. As we see climate 
change issues, we see pest and disease moving, Mother Nature is 
a wonderful adaptor, and as we develop varieties that are 
resistant, as we develop other agrochemicals that will help us 
produce, she adapts. And so we have to be able to do that as 
well, and the Specialty Crop Block Grants enable our research 
and science community to be able to develop those varieties 
that can address those, so it is invaluable to have it. It is 
always good to have more available as we address the 
challenges.
    Ms. Plaskett. You talked about disease, at the University 
of the Virgin Islands, in our extension program, they deal a 
lot with supporting our local farmers in not so much disease as 
also water issues, irrigation, other kinds of crop safety, and 
I wanted to know if you could address some of that, some of 
these irrigation programs, or do you see that happening in 
other places as well? Do any of you?
    Mr. Wenger. Yes, recently, some of the SCRI funds were used 
by University of California and the Almond Board to come up to 
monitor the amount of water used by almond trees, and to have 
real-time water usage. As you probably heard, during the 
drought, a gallon an almond, and it seemed to be everywhere on 
the press. And so utilizing these funds that were available and 
other such funds to be able to look for that technology that 
leaves water in the system for other uses. So they have been 
used.
    Ms. Plaskett. One of the things that I am interested in 
hearing from you all, Mr. Wenger, others, if you could talk 
about is, you have talked quite a bit about specialty crops, in 
the Virgin Islands we have special specialty crops. Probably, 
very tropical, but also very small in terms of our ability to 
compete with foreign crops that come in, whether it be from 
Guatemala or others, there is no way on our islands we are 
going to be able to grow as much mango as Guatemala does or 
other places like that. What support can these programs give to 
the diversification of crops here in the United States to 
sustain farmers who are not operating on huge, enormous tracks 
of land?
    Mr. Wenger. Well, that is what really helps with the block 
grants. It does leverage the money from the taxpayer, and so 
you have others that join in for whether it is research or 
whether it is doing marketing. Some block grants have been used 
for, as we were saying before, with the olive oil industry to 
be able to help market locally, or domestically produced olive 
oils against imports that maybe aren't adequately marked. And 
so having those funds help the smaller grower, and it leveraged 
the taxpayer dollar at the same time.
    Ms. Plaskett. Do you find that most of these smaller 
growers end up being in what would be termed as the fancy foods 
area or things like that?
    Mr. Wenger. Some of them, and a lot of them come together 
in co-ops and whatnot, and so can work together to be able to 
apply for these grants, and to meet that very specialty 
designer food market.
    Ms. Plaskett. Yes, I know I am running out of time, but the 
cooperation and the co-ops are going to be really key. In the 
Virgin Islands we are really looking to creating cooperatives 
among the smaller farmers for food processing plants to be able 
to qualify for that and support it, and the block grants are 
really helpful.
    Thank you so much, Mr. Chairman.
    The Chairman. The gentlelady's time has expired.
    Mr. LaMalfa, did you have additional comments?
    Mr. LaMalfa. Yes, please, 3 minutes?
    The Chairman. Three minutes.
    Mr. LaMalfa. Okay, thank you, Mr. Chairman. I appreciate 
it.
    I want to talk to Mr. Murphy for just a bit. We are talking 
about new technology and innovation here, and sometimes it 
isn't available, and so what we see with the need for methyl 
bromide, we don't really have a good replacement for this in 
certain applications. I am working on a bill, H.R. 1891, to 
allow a little broader use, et cetera, but could you comment 
please on what the bill is seeking to do is that right now the 
power lies with the EPA to decide an emergency use. It still 
has an ability for emergency application under EPA guidance. 
What I am seeking to do is to keep it around as an emergency 
tool, but also switch that authority to the USDA, which has a 
much better idea of what is going on with crops, et cetera. You 
mentioned lack of access to any kind of fumigants, what would 
be your comment to me about this barrier we have to be able to 
do to utilize it, especially for our strawberry growers we have 
in northern California and around the country?
    Mr. Murphy. Certainly, methyl bromide was a fantastic tool 
for our industry for many, many years. Its most urgent use is 
actually not nurseries. What we need to have is clean plants so 
that we can send those to our farmers around the country and 
make sure that they have good plants that they can grow. If 
there was any area that needed particular attention, that would 
be the area that I would focus on; making sure that our 
nurseries have that capacity and that capability. So that is 
really important.
    Mr. LaMalfa. Clean nursery plants, yes.
    Mr. Murphy. Clean nursery plants, because one plant in the 
nursery generates maybe ten daughter plants that ultimately get 
sent out, so its use in that concentrated form is very, very 
valuable. And there is really no solution in the nurseries that 
we have come up with at this point that is viable. We are doing 
a lot of work on different forms of disinfestation of the soil 
using all sorts of anaerobic processes; there is chloropicrin, 
there are lots of things going on, but the net of it all is we 
haven't reached a stage where we have the same capacity that 
methyl bromide has.
    Mr. LaMalfa. Basically, on those seed ones it is very 
critical.
    Mr. Murphy. Well, it is more in berries we plant propagate, 
so it is for the propagation of the plants in the nurseries.
    Mr. LaMalfa. Yes, okay. Thank you.
    Mr. Wenger, please comment on that from a California 
perspective with methyl bromide and an emergency USDA usage. I 
will stop.
    Mr. Wenger. Well, I was here many, many years ago talking 
about that very issue about replacements for methyl bromide, 
and I can remember that even those that were in favor and being 
challenged by the Chairman at the time, what are the 
alternatives, and the response was there is no silver bullet. 
It will take multiple different technologies and chemicals to 
do what methyl bromide does in one fell swoop. It has been used 
very safely, and is an issue that there really is no 
replacement for methyl bromide, and it is going to create a lot 
of other undesirable alternatives that we are going to have to 
look at.
    Mr. LaMalfa. Okay. Well, Mr. Chairman, I appreciate the 
time. Thank you.
    The Chairman. The gentleman's time has expired. Ms. 
Plaskett, do you have anything else?
    Ms. Plaskett. Nothing else.
    The Chairman. All right, thank you.
    Well, gentlemen, thank you very much for being here today. 
We have covered a variety of subjects, and all of them 
important to the specialty crop industry. We have beat the 
labor issue to death. It is a fixable problem that Chairman 
Goodlatte, Chairman of the Judiciary Committee, has 
jurisdiction over. All of us are in conversation with him about 
his proposed plan that would work to expand the H-2A program, 
make it more workable, make it where folks could stay here and 
work; the dairymen, the processors who need folks every single 
day, and crop producers who need them from time to time. The 
idea of an immediate e-verify and the impact it would have on 
the workforce is not lost on Mr. Goodlatte or the rest of us in 
terms of how we implement that. The opportunity to create 
programs would be evergreen in the sense that as people do 
decide to do something else, that a worker is going to come in 
behind them and replace that aging workforce as it moves 
forward. And then the inextirpable drive and move toward 
mechanization and robotics will continue at a fast pace. 
Necessity is the mother of invention, so to speak. We will have 
to fix that. If you look at the big row commodity crops; corn, 
and cotton in particular, not a lot of sweat labor left in 
that.
    So thank you for sharing your ideas with us.
    Under the Rules of the Committee, the record for today's 
hearing will remain open for 10 calendar days to receive 
additional material and supplementary written responses from 
the witnesses to any question posed by a Member.
    This hearing of the Committee on Agriculture is adjourned. 
Thank you.
    [Whereupon, at 12:15 p.m., the Committee was adjourned.]
    [Material submitted for inclusion in the record follows:]
    Submitted Statement by Barbara P. Glenn, Ph.D., Chief Executive 
   Officer, National Association of State Departments of Agriculture
Statement of Interest
    Chairman Conaway, Ranking Member Peterson, and distinguished 
Members of the House Committee on Agriculture, the National Association 
of State Departments of Agriculture (NASDA) applauds the Committee's 
work to reauthorize the farm bill prior to its expiration in 2018, and 
NASDA appreciates the Committee holding a hearing on ``The Next Farm 
Bill: Technology & Innovation in Specialty Crops'' on July 12th. NASDA 
stands ready to assist Congress in developing a robust and 
comprehensive farm bill prior to the expiration of the Agricultural Act 
of 2014 to ensure our farmers, ranchers, and rural communities have the 
tools and infrastructure necessary.
About NASDA
    NASDA represents the Commissioners, Secretaries, and Directors of 
the state departments of agriculture in all fifty states and four 
territories. As elected and appointed officials, our members serve as 
strong advocates for American agriculture and are partners with a 
number of Federal agencies in regulating, marketing, and providing 
services to the agricultural community. As the chief agriculture 
officials in their states, NASDA members are keenly aware of the 
changing dynamics, increasing challenges, and new opportunities in 
agricultural production across the country and have a deep appreciation 
for the important contribution agriculture makes to our nation's 
security and economy.
NASDA Farm Bill Perspective & Specialty Crops
    Agricultural producers, the rural economy, and communities of every 
size rely upon a forward looking and fully funded farm bill. In the 
House Committee on Agriculture's Budget Views and Estimates letter 
earlier this year, you described the economic hardship facing rural 
America. NASDA is concerned with efforts to reduce spending on vital 
agricultural programs and instead calls for enhanced investment in 
American agriculture that provides producers the tools they need to 
succeed. The farm bill is also vital to providing consumers access to 
the safest, highest quality and affordable food supply, which is 
essential for our nation's economy and security.
    NASDA's priorities for the next farm bill focus on enhanced funding 
for invasive species programs, the Specialty Crop Block Grant Program, 
and the Market Access Program. The next farm bill should also provide 
investments in critical research, resources for farmers to comply with 
FSMA, new tools and resources for animal disease coordination, and 
investments in flexible, locally-driven conservation practices.
    Building on these, NASDA, has also worked in conjunction with our 
state partners at the National Governors Association and the National 
Conference of State Legislatures, to outline key areas of importance 
for states in the upcoming farm bill:

   Provide sufficient resources to implement critical farm, 
        conservation, forestry, pest and disease, and trade programs;

   Invest in the security of our farm economy by continuing to 
        provide producers tools to mitigate and manage risks;

   Support essential research, especially on the safety and 
        security of the food system and protection of our natural 
        resources;

   Invest in voluntary, incentive-based conservation programs 
        that are implemented in coordination with state and local 
        intergovernmental partners;

   Ensure sufficient investment and stable resources for rural 
        areas, including high speed Internet;

   Minimize burdens on food producers, processors, and 
        distributors so that they can continue to provide the safest, 
        highest quality, and affordable food supply for consumers; and

   Provide states, as partners with the Federal Government, 
        maximum flexibility and opportunity for innovation to create 
        efficiencies, coordinate funds and achieve program priorities.

    NASDA has likewise outlined specific priorities regarding upcoming 
appropriations affecting a host of programs and industries. Our letter 
to the House and Senate Appropriations Committee's is attached for your 
reference.
    Among NASDA's priorities in the specialty crop space for the 2018 
Farm Bill are to enhance funding and flexibility for the Specialty Crop 
Block Grant (SCBG) program to meet demands including Food Safety 
Modernization Act implementation; increase funding for the Plant Pest 
and Disease Management and Disaster Prevention Programs (known by its 
section number, 10007) to include a stable source of funding for the 
USDA Office of Pest Management Policy; and to sustain funding for the 
Specialty Crop Research Initiative.
    Among these programmatic funding priorities, NASDA wishes to 
highlight an area of policy that we request the Committee consider. 
Specifically, NASDA is concerned with efforts to restrict how the 
various State Departments of Agriculture may use funding from the SCBG 
program and notes that the statute directs the Secretary of Agriculture 
to make grants to states for each of the fiscal years to be used solely 
to enhance the competitiveness of specialty crops. Since the program 
was funded in 2006, NASDA Members have partnered with the U.S. 
Department of Agriculture's Agricultural Marketing Service (USDA AMS) 
to distribute over $537 million in grants to local commodity groups, 
colleges and universities, municipalities, tribal organizations, and 
nonprofits. These locally responsive projects are fulfilling the 
statutory mandate of increasing competitiveness, not just by increasing 
consumer access to safe and healthy food but also by expanding economic 
opportunities across the rural-urban spectrum.
    NASDA notes that while overall spending was reduced by $16.5 
billion in the 2014 Farm Bill, Congress saw the importance of the SCBGP 
and increased funding by $270 million over 10 years. The budget 
situation is even tougher for the 2018 Farm Bill. But NASDA encourages 
Congress to enhance investments in this vital program. More funding 
means a more competitive specialty crop industry in our rapidly 
expanding health-focused consumer base.
    While we highlight this program as a success, program funding 
recipients have growing concerns that the flexibility the SCBG program 
was built upon is eroding due to increased and unnecessary bureaucratic 
processes. This is especially evident in the establishment of certain 
performance measures for the program. While we all want to ensure the 
wise use of tax dollars, we are concerned these bureaucratic 
requirements--especially new sales reporting requirements for marketing 
projects--are simply not feasible for many of the kinds of projects 
that have made this program so successful, and we ask this Committee to 
take these concerns into consideration as we work towards a flexible, 
locally responsive program in the next farm bill.
Support for OPMP
    The U.S. Department of Agriculture's (USDA) Office of Pest 
Management Policy (OPMP) was created as part of the 1998 Agricultural 
Research, Extension, and Education Reform Act in order to provide 
leadership in coordinating interagency activities with the EPA, the 
U.S. Food and Drug Administration (FDA), and other Federal and state 
agencies to coordinate agricultural policies within the Department 
related to pesticides. The law further requires OPMP to consult with 
and provide services to producer groups and interested parties.
    The Congress believed creating OPMP was necessary to focus and 
coordinate the many pest management and pesticide-related activities 
carried out within the Department. From the legislative history, it is 
apparent Congress felt strongly this was a necessary step for USDA to 
effectively carryout its statutory responsibilities with respect to 
pesticide issues and pest management research.
    The law creating this office established that the Director of this 
office would work with EPA, State Departments of Agriculture producers, 
producers, and other appropriate groups to develop effective, efficient 
mechanisms for gathering data necessary for making regulatory 
decisions. To achieve the many objectives the law envisioned in 
creating this office, it was expected the office would be created 
within and staffed by an official within the Office of the Secretary.
    Congress was particularly concerned the Director of the OPMP be 
someone the Secretary had trust and confidence in to ensure that the 
department would be an effective and forceful advocate within the 
Administration on issues within the purview of this office. As such, 
the law requires the Director of the OPMP report directly to the 
Secretary or Deputy Secretary of Agriculture.
    We ask that Members of this Committee use your considerable 
influence to ensure OPMP is vested with the authority and political 
leverage intended by the statute under which it was created. OPMP is an 
essential resource and indispensable partner to State Departments of 
Agriculture in its delivery of expertise on pesticide regulatory 
programs.
Conclusion
    NASDA requests the Committee carefully consider the needs and 
challenges with making our specialty crop producers more competitive. 
The Committee will address a number of complex issues when crafting the 
next farm bill, but due to the tremendous support from NASDA and the 
specialty crop grower community--the SCBGP should not be one of those 
issues. The SCBGP represents a very modest investment of resources in 
the farm bill, but yields tremendous gains for a more competitive 
specialty crop industry and healthier communities. NASDA stands ready 
to work with the Committee to maintain flexibility for this critical 
program.
    Thank you for your consideration of this testimony, and please 
contact Amanda Culp ([Redacted]) if you have any questions.
                              attachment 1
We Need A Farm Bill.
    Good Food. More Jobs. Conservation. Thriving communities.

    These are all things we can get behind.

    As the chief agriculture officials in their states, members of the 
National Association of State Departments of Agriculture (NASDA) are 
keenly aware of the changing dynamics, increasing challenges, and new 
opportunities in agricultural production across the country and have a 
deep appreciation for the important contribution agriculture makes to 
our nation's security and economy.

    The farm bill impacts everyone.

    Agricultural producers, the rural economy, and communities of every 
size rely upon a forward looking, and fully funded farm bill. NASDA 
calls for enhanced investment in American agriculture that provides 
producers the tools they need to succeed. The farm bill is also vital 
to providing consumers access to the safest, highest quality and 
affordable food supply, which is essential for our nation's economy and 
security.
Priorities
   Conservation.

   Trade Promotion.

   Specialty Crops.

   Invasive Species.

   Animal Diseases.

   Research.

   Food Safety.
Our Priorities for the Next Farm Bill
Trade Promotion
    The Market Access Program (MAP) promotes American-grown and 
produced food and ag products that are in competition with heavily 
subsidized foreign products. For every $1 invested in export market 
development programs, $24 is returned in export revenue. This means 
significant positive effects for farmers & ranchers like increased 
income and more American jobs in the farm and food sector. Funding for 
the Market Access Program (MAP) should be increased from $200M to $400M 
to better promote America's food and ag products in demand across the 
globe.
Conservation
    Conservation programs provide financial and technical assistance 
needed to conserve our nation's natural resources and meet increasing 
regulatory demands. The next farm bill must make substantial 
investments in voluntary locally-driven, flexible, and efficient 
conservation programs. Additional investments are needed to continue 
targeted conservation, address water quality challenges and face 
regulatory pressures.
Specialty Crop Block Grants
    The Specialty Crop Block Grant (SCBG) Program provides important 
tools to enhance specialty crop production, while also advancing foods 
with critical health benefits to the American people. To the extent 
additional funding is available, funding for the SCBG Program should be 
increased and Congress should ensure a flexible, locally responsive, 
and state-led program.
Invasive Species
    Invasive plants and pests are an often catastrophic threat to 
farmers and ranchers. To address this increasing threat, bold action is 
required. Building on the successes of the invasive species programs 
created by the 2014 Farm Bill, Congress should bring additional tools 
to bear on this serious economic threat. Funding for the highly 
successful ``Plant Pest and Disease Management & Disaster Prevention'' 
and the ``National Clean Plant Network'' should be increased to in 
order to provide additional tools for domestic invasive species issues. 
Enhanced funding and coordination of invasive species under the 
direction of the USDA Office of Pest Management Policy and involving 
other departments and agencies of the Federal and state governments 
should be considered to strengthen programs and maximize the value of 
the Federal funding.
Animal Diseases
    A proactive, multi-faceted animal disease program is needed to 
safeguard animal agriculture, promote sustainable economic development 
and prevent catastrophic events that could threaten our nation's food 
supply. Expanding on the authorization for the National Animal Health 
Laboratory Network, and modeled after the aforementioned invasive 
species programs, this program will bring together the Federal 
Government with states, industry, universities, and other agricultural 
stakeholders to reduce the impact of high-consequence animal diseases, 
provide rapid detection and response capabilities, develop disease 
prevention and mitigation technologies, support a vaccine bank 
infrastructure, prevent the entrance and spread of foreign animal 
diseases into the U.S., and identify & support critical research needs.
Research, Education, and Economics
    Robust funding for agricultural research and extension programs, 
and infrastructure, particularly within our nation's many outstanding 
agricultural colleges and universities, is vital to ensuring producers 
remain competitive domestically and globally. The farm bill must also 
ensure adequate funding for research focusing on the safety and 
security of the food system and improving and protecting our natural 
resources.
Food Safety
    The Food Safety Modernization Act (FSMA) is a landmark bill which 
has overhauled American food safety regulation from response-driven to 
preventive and farm-focused. Congress should address the variety of 
implementation challenges with the final FSMA rules. The next farm bill 
should provide resources to assist producers in complying with FSMA, 
especially via low-cost loans for infrastructure upgrades.
                              attachment 2
March 29, 2017

 
 
 
Hon. Thad Cochran,                   Hon. Patrick Leahy,
Chairman,                            Ranking Minority Member,
Senate Committee on Appropriations,  Senate Committee on Appropriations,
Washington, D.C.;                    Washington, D.C.;
Hon. Rodney Frelinghuysen,           Hon. Nita Lowey,
Chairman,                            Ranking Minority Member,
House Committee on Appropriations,   House Committee on Appropriations,
Washington, D.C.;                    Washington, D.C.
 

    Dear Chairman Cochran, Chairman Frelinghuysen, Ranking Member Leahy 
and Ranking Member Lowey:

    As Congress prepares Fiscal Year 2018 (FY18) appropriations 
legislation for Federal agencies, the National Association of State 
Departments of Agriculture (NASDA) encourages you to support vital 
programs to ensure a safe, affordable, and abundant food supply. Ahead 
of the 2018 Farm Bill, support for discretionary programs under your 
Committee's jurisdiction is more important than ever. Amidst the farm 
economy downturn, investment in these programs demonstrates support for 
America's farmers and ranchers and commitment to agriculture programs. 
Many economic analyses predict record levels of farm foreclosures and 
ripple effects throughout rural communities.1-2 We 
respectfully request that you preserve and enhance the various rural 
programs under your jurisdiction for FY18.
---------------------------------------------------------------------------
    \1\Federal Reserve Bank of St. Louis. (2017, February 9). 
Agriculture Finance Monitor. Retrieved from https://
files.stlouisfed.org/files/htdocs/publications/ag-finance/2017-02-09/
2016-fourth-quarter.pdf.
    \2\ERS, USDA. (2017, February 24). 2017 Farm Sector Income 
Forecast. Retrieved from https://www.ers.usda.gov/topics/farm-economy/
farm-sector-income-finances/farm-sector-income-forecast/.
---------------------------------------------------------------------------
    NASDA represents the Commissioners, Secretaries, and Directors of 
agriculture in all fifty states and four territories. As elected and 
appointed officials, NASDA members are strong advocates for American 
agriculture and are partners with a number of Federal agencies in 
regulating, marketing, and providing services to the agricultural 
industry. One of NASDA's top priorities is the principle of cooperative 
federalism--a robust partnership and role for states in Federal 
policymaking. Effective Federal-state partnerships are critical to a 
host of federally-mandated regulatory programs, as well as key services 
the agriculture industry depends upon. Enhancing resources for states 
to deliver these programs and ensuring no unfunded mandates on the 
states are especially critical.
Food and Drug Administration
Integrated Food Safety System
   Fund Food Safety Modernization Act (FSMA) State 
        Implementation Programs at $100 million.

    NASDA urges the Committee to provide sufficient funding for Food 
Safety Modernization Act (FSMA) implementation. NASDA requests the 
Committee to continue to increase funding for the state implementation 
activities that are required by FSMA. While FDA is charged with writing 
the rules, significant implementation and enforcement activities under 
FSMA are the primary responsibilities of state agencies. It is crucial 
that Congress provide sufficient resources so as to avoid unfunded 
mandates on the states and to ensure farmers have the tools and 
education necessary to comply with these new Federal requirements. 
Moreover, NASDA continues to insist that FDA get the rules right. The 
combination of problematic elements of these regulations coupled with 
inadequate funding for their implementation will ultimately subject 
producers to inconsistent and arbitrary enforcement, putting their 
farms in economic jeopardy while doing little, if anything to enhance 
food safety. Funding to ensure parity between imported and domestic 
food is also necessary.
    NASDA continues to estimate state programs will need an investment 
of $100 million annually to ensure the systematic and timely 
implementation of the elements of FSMA for which states have primary 
responsibility. To date, funding for states has focused on implementing 
the Produce Safety rule, but funding is also necessary for the 
development and operation of programs associated with the Preventive 
Controls: Human Food and Preventive Controls: Animal Food rules. 
Specifically, NASDA estimates the following funding levels for state 
programs are necessary:

   Produce Safety: $40 million annually for state programs.

   Preventive Controls: Animal Food: $20 million annually for 
        state programs.

   Preventive Controls: Human Food: $40 million annually for 
        state programs.

    NASDA appreciates the initial investment in food safety and state 
programs Congress made beginning in the FY16 omnibus bill. It is hoped 
that the availability of additional funding, coupled with what has been 
provided, will ultimately allow states to fully implement effective 
programs.
Center for Veterinary Medicine (CVM)
   CVM program areas at least $196.7 million.

   National Antimicrobial Resistance Monitoring System (NARMS) 
        funding at $10.8 million.

   Combating Antibiotic Resistance Initiative at $35 million 
        for USDA.

    NASDA supports funding of at least $196.7 million for CVM, which 
oversees the safety of animal drugs, feeds and biotechnology-derived 
products. Though questions exist related to FDA's approach to 
regulating animal biotechnology, funding must be adequate to ensure 
efficient pre-market review. Further, we request that the new user fees 
established by the Animal Drug User Fee Act (ADUFA) of $22.977 million 
be included in the FY18 appropriations bill. ADUFA establishes a system 
of performance standards to improve the new animal drug review process 
at CVM. The review process has improved as CVM has met the performance 
standards. To maintain this success, we request the fees be integrated 
into this year's appropriation bill. The appropriation is entirely 
budget neutral as the money is provided by the animal health companies.
    NASDA strongly supports the continuation of the National 
Antimicrobial Resistance Monitoring System (NARMS) presently funded at 
$10.8 million. NASDA thanks Congress for increasing NARMS funding for 
meat testing by $3 million in previous years. Continued funding will 
help detect trends in antibiotic resistance. NASDA supports an 
additional $35 million for the USDA and $1 million for the Food Drug 
Administration--Center for Veterinary Medicine (CVM) for research, 
monitoring, and surveillance under the National Action Plan for 
Combating Antibiotic Resistant Bacteria (CARB). Finally, NASDA supports 
developing scientifically valid methods to better understand 
antimicrobial drug use practices in animals and the public health 
impacts of resistant bacteria.
U.S. Department of Agriculture
Agricultural Marketing Service (AMS)
   Protect the Specialty Crop Block Grant (SCBG) Program's 
        mandatory funding of $85 million.

    NASDA urges the Committee to protect the Specialty Crop Block Grant 
Program's mandatory funding of $85 million. The SCBG Program provides 
important research, education, and marketing tools to enhance specialty 
crop competitiveness, while also advancing foods with critical health 
benefits to the American people. NASDA also urges the Committee to 
protect these funds from arbitrary reprogramming efforts from within 
the Administration.
Agricultural Research Service (ARS)
   ARS at $1.3 billion.

   Office of Pest Management Policy (OPMP) at $5 million.

   Fully fund National Agricultural Law Center (NALC).

    NASDA supports funding of at least $1.3 billion for ARS. ARS' 
intramural research and their partnerships with universities and 
industry are uniquely suited for projects requiring a long-term 
investment while maintaining the capacity to respond to emerging 
problems.
    NASDA urges the Committee to fund the Office of Pest Management 
Policy (OPMP) at a minimum of $5 million, which includes a requested 
increase above the $3 million authorized by the Agricultural Act of 
2014. We further request assurances USDA-ARS executes this complete 
funding allocation to OPMP. OPMP plays a critical role in coordinating 
policies and activities at USDA related to pesticides. Furthermore, 
OPMP provides a crucial source of leadership in the coordination of 
interagency activities between USDA, the EPA, the FDA, and state 
agencies.
    NASDA encourages continued extramural funding for the National 
Agricultural Law Center (NALC), and its partners in the Agricultural & 
Food Law Consortium (Consortium) through the USDA-ARS National 
Agricultural Library. The Consortium supports development and 
dissemination of objective, scholarly, and relevant agricultural and 
food law research and information to producers, policy makers, 
extension, others and NASDA leadership and members as they are a formal 
NASDA partner. Led by the NALC, the Consortium includes the National 
Sea Grant Law Center at the University of Mississippi School of Law, 
the Agricultural & Resource Law Program at The Ohio State University, 
and the Center for Agricultural & Shale Law at Penn State Law. 
Requested report language: The Committee expects USDA-ARS National 
Agricultural Library extramural research and information consortium 
projects to be funded at no less than the Fiscal Year 2014 levels.
Animal and Plant Health Inspection Service (APHIS) discretionary 
        programs
   APHIS discretionary program areas at a minimum of $950 
        million.

   Fully fund Cooperative Agricultural Pest Survey (CAPS) 
        Program.

   Fund Wildlife Services at $120 million.

   Fund Feral Swine Control at $20 million.

   New research funding for National Animal Health Monitoring 
        System (NAHMS).

   Fully fund National Animal Health Laboratory Network (NAHLN) 
        at $15 million.

    NASDA members are key regulatory partners with USDA-APHIS in 
protecting American agriculture and rural economies from the threats 
posed by animal and plant diseases and pests. It is estimated that 
plant pests alone cost the U.S. economy over $100 billion a year. NASDA 
recommends a minimum of $950 million in discretionary funding for 
APHIS. Any reductions to APHIS' budget will result in deterioration of 
essential services and impair the Agency from carrying out its 
fundamental mission, which is ``to protect the health and value of 
American agriculture and natural resources.''
    We urge the Committee to fully fund the Cooperative Agricultural 
Pest Survey (CAPS) program, which is an important state-Federal 
cooperative program that conducts science-based national and state 
surveys targeted at specific exotic plant pests, diseases, and weeds 
identified as threats to U.S. agriculture and/or the environment. A 
strong agricultural pest detection system is essential to providing a 
continuum of checks from offshore programs, domestic port inspections, 
and countrywide surveys.
    NASDA encourages the Committee to adequately fund APHIS's critical 
Wildlife Services (WS) programs at $120 million. In cooperation with 
state departments of agriculture, industry and others, WS leadership 
and expertise is needed to resolve conflicts between humans and 
wildlife, protect public health and safety related to water quality and 
safety of air travelers, and protect agriculture from detrimental 
animal predators through identification, demonstration, and application 
of the appropriate methods of control. Periodic efforts to reduce or 
limit the use of funds for core WS missions should be rejected. NASDA 
also supports $20 million to the national control program for feral 
swine. These invasive species cause an estimated $1.5 billion annually 
in damages to pastures, crops, and natural areas.
    NASDA supports fully funding the National Animal Health Monitoring 
System (NAHMS) for antibiotic research. Further, funding of this system 
must be new money not redirected USDA funds. Antibiotic use data 
collection should be collected through the NAHMS, which conducts 
national studies on the health and management of U.S. livestock 
populations. NAHMS has defined protocols in place, is already on-farm 
collecting data, and provides confidentiality protections.
    NASDA was pleased the 2014 Farm Bill authorized $15 million 
annually for the National Animal Health Laboratory Network (NAHLN), but 
even if fully funded, NAHLN will need additional funding beyond what is 
authorized. NAHLN is a cooperative effort composed of USDA-APHIS, NIFA, 
university, and state veterinary diagnostic labs. NAHLN is an early 
warning system for emerging and foreign animal diseases, and we urge 
Congress to provide the full authorized funding in FY18. This funding 
will help expand surveillance and surge capacity of the NAHLN by: 
increasing the number of participating state labs; developing 
infrastructure for electronic data transmission; and, increasing 
efficiency and effectiveness of lab personnel training and employment.
Food Safety and Inspection Service (FSIS)
   Remove Prohibitions on USDA Horse Meat Inspections.

   Fund State Food Safety and Inspection at $63 million.

    We encourage the Committee to resist attempts to include language 
that would prohibit funding for USDA horse meat inspection for human 
consumption. A 2011 GAO study concluded that removing funding for USDA 
horse meat inspectors has resulted in widespread starvation, 
abandonment, unnecessary suffering of horses and unwanted horses being 
shipped farther to processing facilities in Canada or Mexico.
    NASDA urges the Committee to restore funding for State Food Safety 
and Inspection programs to $63 million and refrain from further cuts. 
This funding is critical for states that provide state meat inspections 
under a variety of programs regulated by FSIS.
Foreign Agricultural Service (FAS)
   Protect mandatory funding for the Market Access Program 
        (MAP).

   Protect mandatory funding for the Foreign Market Development 
        (FMD) program.

    Funding for the Foreign Agricultural Service (FAS) is a key NASDA 
priority, and is vital to ensuring American agricultural producers and 
related businesses are able access important export markets. NASDA 
recognizes industry requests to enhance this program and urges the 
Committee to protect mandatory funding invested in the Market Access 
Program (MAP). MAP encourages the development, maintenance, and 
expansion of commercial agricultural export markets. The program 
especially helps small businesses in urban, suburban, and rural areas 
access foreign markets and increase export opportunities. In addition, 
we encourage you to protect mandatory funding invested in the Foreign 
Market Development (FMD) Program, thereby helping to foster trade 
opportunities with American businesses in emerging markets.
National Agricultural Statistics Service (NASS)
   Funding for NASS of at least $176.6 million.

    NASDA urges the Committee to fund NASS at a minimum of $176.6 
million as NASS data is vital to keeping agricultural markets stable, 
efficient, and fair by making available objective data to commodity 
market buyers and sellers. NASS provides objective, timely, accurate, 
and essential statistics in service to U.S. agriculture. NASS 
statistics provide the information necessary for producers, 
agribusinesses, farm organizations, economists, and others for critical 
decision making in agricultural marketing and investing.
National Institute for Food and Agriculture (NIFA) Discretionary 
        Programs
   National Agriculture in the Classroom at $1 million.

   Agriculture and Food Research Initiative (AFRI) at $700 
        million.

   Veterinary Medical Loan Repayment Program (VMLRP) at $6.5 
        million.

   Veterinary Services Grant Program (VSGP) at $3 million.

   Food Animal Residue Avoidance Database (FARAD) at $2.5 
        million.

   Section 1433 at $10 million.

    NASDA encourages funding for Agriculture in the Classroom (AIC) 
Programs at $1 million. This funding supports state programs that 
provide tools to improve agriculture literacy among Pre K-12 teachers 
and students. NASDA recommends this programming remain under USDA's 
scope due to its closely aligned mission areas.
    NASDA strongly supports providing $700 million for the Agriculture 
and Food Research Initiative (AFRI). AFRI competitively funds new 
projects and addresses emerging issues in food, agriculture, and 
natural resources research. Studies show that every dollar invested in 
agricultural research returns over $20 to our economy. NASDA is 
supportive of language directing AFRI to address pollinators, 
antibiotic resistance and advancing drug approvals to treat minor 
species. Within NIFA, NASDA requests funds for the following, 
emphasizing impacts on animal agriculture:

   $6.5 million, or level funding, for the Veterinary Medical 
        Loan Repayment Program (VMLRP). Since 2010, 286 veterinarians 
        have participated in the VMLRP and nearly 860 have applied. 
        NASDA also urges Congress to exempt VMLRP awards from 
        withholding taxes.

   $3 million for the Veterinary Services Grant Program (VSGP) 
        in FY 2018 with future increases to the full authorized level 
        of $10 million. Congress needs to begin initial funding for the 
        newly authorized competitive grant program to address gaps in 
        rural areas.

   $2.5 million for the Food Animal Residue Avoidance Database 
        (FARAD). This program has received level-funding in the past at 
        $1.25 million. In 2013, there were more than 7.5 million 
        animals impacted in nearly 2,000 residue avoidance cases 
        handled by FARAD.

    The 2014 Farm Bill includes enhancements to Section 1433, 
Continuing Animal Health and Disease, Food Security, and Stewardship 
Research, Education and Extension Programs. The expanded Section 1433 
maintains the program for animal health and disease and adds a 
competitive grant program focusing on priorities in the areas of food 
security, one health and stewardship. NASDA recommends funding of $10 
million for fiscal 2018, less than half of its authorized level of $25 
million.
Natural Resources Conservation Service (NRCS)
   Protect mandatory Environmental Quality Incentives Program 
        (EQIP) funding at $1.75 billion.

   Ensure Conservation Stewardship Program (CSP) availability 
        at 10 million acres.

   Protect mandatory Regional Conservation Partnership Program 
        (RCPP) funding at $110 million plus eligible funds from EQIP, 
        CSP and ACEP.

   Protect mandatory Agriculture Conservation Easement Program 
        (ACEP) at $250 million.

    NASDA encourages Congress to protect the mandatory funding for the 
farm bill title II working lands conservation programs. Voluntary, 
incentive-based conservation programs are necessary to advance 
agriculture's efforts to improve water and air quality, soil health, 
and address water quantity concerns. These programs also help producers 
avoid overly burdensome regulatory pressures.
    Specifically, we urge Congress to maintain all mandatory 
conservation program funding for FY18. Additionally, NASDA encourages 
Congress to provide the maximum possible funding for Conservation 
Technical Assistance which provides the direct, on-the-ground 
assistance producers need to address specific concerns.
U.S. Forest Service
   Forest Inventory and Analysis program at $83 million.

    The Forest Inventory and Analysis (FIA) program provides critical 
information on the state of our nation's forests. We ask the Committee 
to reverse recent spending cuts and fund FIA at a level of at least $83 
million. The program inventories America's forests and provides 
unbiased information for monitoring trends in habitat, wildfire risk, 
insect and disease threats and other resource questions.
Environmental Protection Agency
Office of Pesticide Programs (OPP)
   Fund OPP at $128 million.

   Pesticide Program Implementation Grants at $15 million.

   Pesticide Enforcement Grants at $19 million.

   State Pollinator Protection Plans at $5 million.

    NASDA encourages the Committee to adequately fund EPA-OPP at $128 
million to ensure the agency has appropriate resources necessary to 
support FIFRA-related activities, training, resources to facilitate 
state meetings, and field training resources. NASDA urges the Committee 
to fund EPA State Pesticide Program Implementation & Enforcement Grants 
at $34 million ($15 million for Pesticide Program Implementation and 
$19 million for Pesticide Enforcement grants). NASDA supports funding 
of at least $5 million for OPP to support existing resources available 
to states and tribes to develop pollinator protection plans. This 
funding is critical for states in developing and implementing state 
managed pollinator plans. NASDA supports OPP's work to improve 
pollinator health through research and technical analysis on 
pollinators and improving understanding to promote pollinator health 
through the regulatory processes.
Office of Water
   Clean Water Action Section 319 Program at $164.9 million.

    NASDA requests a minimum of $164.9 million for the Clean Water Act 
Section 319 program but, the national need is much greater. These funds 
are critical for state non-point source water quality efforts.
Army Corps of Engineers
Army Corps of Engineers
   Fund costs of construction and expansion of the four 
        priority inland waterways projects at $363.8 million.

   Fund at least $800 million for inland waterways operations 
        and maintenance.

   Fund Operations & Maintenance (O&M) at $3.137 billion.

   Appropriations at levels called for in WRRDA 2014 for the 
        Harbor Maintenance Trust Fund.

    We support $363.8 million in funding for the Corps to ensure 
funding of the Inland Waterway Trust Fund (IWTF) for inland waterway 
modernization, replacement, rehabilitation, & expansion projects 
(including the Olmsted, Lower Mon, Kentucky Lock Expansion and 
Chickamauga projects) is maintained at the highest level supportable by 
the inland waterway diesel tax revenues expected for FY18 by Treasury 
for the IWTF. NASDA supports the Corps of Engineers' Operations & 
Maintenance (O&M) funding level of $3.137 billion for the operations 
and maintenance activities of the Corps including inland/coastal 
navigation.
    We request reaching the Harbor Maintenance Trust Fund (HMTF) Target 
levels outlined in the 2014 WRRDA bill, including 74% of HMT received 
the prior fiscal year for FY18.
Conclusion
    NASDA asks that you give our requests careful consideration as you 
work to fund the nation's agricultural policy priorities in Fiscal Year 
2018. NASDA is a partner and co-regulator with Federal agencies in the 
implementation of a host of food, agricultural and natural resources 
programs. NASDA Members have a unique wealth of information, 
experience, and expertise but require resources to implement and 
execute their responsibilities. We realize how difficult your task is 
but know that investing in the outlined programs will be beneficial now 
and in the future. NASDA stands ready to work with you and your staff 
to expeditiously pass the agriculture appropriations bill. Thank you 
for your consideration, and please let us know if you have any 
questions.
            Sincerely,
            
            
Barbara P. Glenn, Ph.D.,
Chief Executive Officer.

CC:

    Representative Robert Aderholt (R-AL), Chair, Agriculture 
    Appropriations Subcommittee
    Representative Sanford Bishop (D-GA), Ranking Member, Agriculture 
    Appropriations Subcommittee
    Representative Ken Calvert (R-CA), Chair, Interior Appropriations 
    Subcommittee
    Representative Betty McCollum (D-MN), Ranking Member, Interior 
    Appropriations Subcommittee
    Senator John Hoeven (R-ND), Chair, Agriculture Appropriations 
    Subcommittee
    Senator Jeff Merkley (D-OR), Ranking Member, Agriculture 
    Appropriations Subcommittee
    Senator Lisa Murkowski (R-AK), Chair, Interior Appropriations 
    Subcommittee
    Senator Tom Udall (D-NM), Ranking Member, Interior Appropriations 
    Subcommittee
Fiscal Year 2018 Appropriations Priorities
Food and Drug Administration
Food Safety System
   Increase for the Food Safety Modernization Act (FSMA) 
        implementation to $100 million.
Center for Veterinary Medicine (CVM)
   CVM program areas at $196.7 million.

   National Antimicrobial Resistance Monitoring System (NARMS) 
        funding at $10.8 million.

   Combating Antibiotic Resistance Initiative at $35 million 
        for USDA.
U.S. Department of Agriculture
Agricultural Marketing Service (AMS)
   Protect the Specialty Crop Block Grant Program's mandatory 
        funding of $85 million.
Agricultural Research Service (ARS)
   Fully fund ARS at $1.3 billion.

   Fully fund Office of Pest Management Policy (OPMP) at $5 
        million.

   Fully fund National Agricultural Law Center (NALC).
Animal and Plant Health Inspection Service (APHIS)
   Fund APHIS discretionary program areas at $950 million.

   Fully fund the Cooperative Agricultural Pest Survey (CAPS) 
        Program.

   Fund Wildlife Services at $120 million.

   Fund Feral Swine Control at $20 million0

   New research funding for National Animal Health Monitoring 
        System (NAHMS).

   Fully fund National Animal Health Laboratory Network (NAHLN) 
        at $15 million.
Food Safety and Inspection Service (FSIS)
   Remove Prohibitions on USDA Horse Meat Inspections.

   Fully fund State Food Safety and Inspection at $63 million.
Foreign Agricultural Service (FAS)
   Protect mandatory funding for the Market Access Program 
        (MAP).

   Protect mandatory funding for the Foreign Market Development 
        (FMD) program.
National Agricultural Statistics Service (NASS)
   Fund NASS at a minimum of $176.6 million.
National Institute for Food and Agriculture (NIFA)
   National Agriculture in the Classroom at $1 million.

   Fully fund Agriculture and Food Research Initiative (AFRI) 
        at $700 million.

   Level funding for Veterinary Medical Loan Repayment Program 
        (VMLRP) at $6.5 million.

   Fund Veterinary Services Grant Program (VSGP) at $3 million.

   Fund Food Animal Residue Avoidance Database (FARAD) at $2.5 
        million.

   Fund Section 1433 at $10 million.
Natural Resources Conservation Service (NRCS)
   Protect mandatory Environmental Quality Incentives Program 
        (EQIP) funding at $1.75 billion.

   Protect acre availability in the Conservation Stewardship 
        Program (CSP) at 10 million acres.

   Protect mandatory Regional Conservation Partnership Program 
        (RCPP) funding at $110 million plus eligible funds from EQIP, 
        CSP and ACEP.

   Protect mandatory Agriculture Conservation Easement Program 
        (ACEP) at $250 million.
U.S. Forest Service
   Forest Inventory and Analysis program at $83 million.
Environmental Protection Agency
Office of Pesticide Programs (OPP)
   OPP at $128 million.

   State Pesticide Program Implementation Grants at $15 
        million.

   State Pesticide Enforcement Grants at $19 million.

   State Pollinator Protection Plans at $5 million.
Office of Water
   Clean Water Action Section 319 Program at $164.9 million.
Army Corps of Engineers
Army Corps of Engineers
   Fund costs of construction and expansion of the four 
        priority inland waterways projects at $363.8 million.

   Fund at least $800 million for inland waterways operations 
        and maintenance.

   Fund Operations & Maintenance (O&M) at $3.137 billion.

   Appropriations at levels called for in WRRDA 2014 for the 
        Harbor Maintenance Trust Fund.
                              attachment 3
May 17, 2017

 
 
 
Hon. Mitch McConnell,                Hon. Charles Schumer,
Majority Leader,                     Minority Leader,
United States Senate,                United States Senate,
Washington, D.C.;                    Washington, D.C.;
Hon. Paul Ryan,                      Hon. Nancy Pelosi,
Speaker,                             Minority Leader,
United States House of               United States House of
 Representatives,                     Representatives,
Washington, D.C.;                    Washington, D.C.
 

    Dear Leader McConnell, Speaker Ryan, Leader Schumer and Leader 
Pelosi:

    On behalf of the nation's governors, legislators and chief state 
agricultural officials, we urge Congress to make enacting the next farm 
bill a priority prior to the current bill's expiration in 2018.
    As the chief executives, elected representatives and agriculture 
officials in our states, we have long advocated for certainty and 
stability for our farmers and ranchers as they make long-term decisions 
impacting their communities that are important for our nation's economy 
and national security. We recognize the value of a healthy agricultural 
economy and the important role Congress plays by investing in American 
agriculture to provide producers the tools necessary for success. 
Amidst the farm economy downturn, Federal investments in these programs 
remain especially crucial. As Congress considers legislation to define 
future agricultural, conservation, nutrition and forestry policy, we 
urge you to consider these principles:

   Provide sufficient resources to implement critical farm, 
        conservation, forestry, pest and disease, and trade programs;

   Invest in the security of our farm economy by continuing to 
        provide producers tools to mitigate and manage risks;

   Support essential research, especially on the safety and 
        security of the food system and protection of our natural 
        resources;

   Invest in voluntary, incentive-based conservation programs 
        that are implemented in coordination with state and local 
        intergovernmental partners;

   Ensure sufficient investment and stable resources for rural 
        areas, including high speed Internet;

   Minimize burdens on food producers, processors, and 
        distributors so that they can continue to provide the safest, 
        highest quality, and affordable food supply for consumers; and

   Provide states, as partners with the Federal Government, 
        maximum flexibility and opportunity for innovation to create 
        efficiencies, coordinate funds and achieve program priorities.

    Governors, state legislators and state agricultural directors 
remain committed to a robust state-Federal partnership, and look 
forward to working together on this critical legislation.
            Sincerely,
            
            

 
 
 
Scott D. Pattison,       William T. Pound,        Barbara P. Glenn,
                                                   Ph.D.,
Executive Director and   Executive Director,      Chief Executive
 CEO,                                              Officer,
National Governors       National Conference of   National Association
 Association;             State Legislatures;      of State Departments
                                                   of Agriculture.
 

CC:
    Chairman Roberts, Senate Committee on Agriculture, Nutrition, and 
    Forestry
    Ranking Member Stabenow, Senate Committee on Agriculture, 
    Nutrition, and Forestry
    Chairman Conaway, House Committee on Agriculture
    Ranking Member Peterson, House Committee on Agriculture
    Chairman Enzi, Senate Budget Committee
    Ranking Member Sanders, Senate Budget Committee
    Chairman Diane Black, House Committee on the Budget
    Ranking Member Yarmuth, House Committee on the Budget
                                 ______
                                 
     Submitted Statement by Jack Griffin, Chief Executive Officer, 
                            Metropolis Farms
    Chairman Conaway, Ranking Member Peterson, and Members of the 
Committee, thank you for this opportunity to submit my written 
testimony for the record of the Committee's hearing on Technology and 
Innovation in Specialty Crops. I commend the Committee for choosing 
this topic for hearing in preparation of the next farm bill.
    My name is Jack Griffin and I am the President of Metropolis Farms 
in Philadelphia. Metropolis' primary farm is in south Philly, in a 
warehouse, on the second floor. Our farm is in Rocky Balboa's 
neighborhood. It's not your typical farming community.
    We are not your typical farm, though, either. We are an urban, 
indoor farm. At our Philadelphia headquarters facility, we produce 
crops on hydroponic trays that are 36\2\--9 long, 4 wide--that stack 
up to 15 high in a modular tower with four levels. One tower, 
harvested three times per year, can grow the equivalent of up to an 
acre on an outdoor farm. We are currently supplying customers in the 
Philadelphia area with produce.
    Metropolis uses zero soil, and approximately 95 percent less water 
than conventional specialty crop farming, even though our production is 
hydroponic. Moreover, the way our towers are configured inside our 
warehouse, and with the use of the ambient temperature effects of the 
hydroponic systems, we use between 70 to 80 percent less energy than 
conventional greenhouses. Finally, our system is portable and light 
enough that we can locate in most existing underutilized building 
spaces.
    Mr. Chairman, innovation is at the core of Metropolis Farms. I have 
spent most of the past 4 years doing research and development to 
improve indoor farming, and we continue to learn and adapt new 
processes. Our systems are able to grow not only the leafy and micro-
greens that so many assume is the limit for indoor ag, but the 
Metropolis Farms system also produces flowering plants such as 
tomatoes, peppers, strawberries and other fruits and vegetables. Also, 
we successfully have produced trial crops of sunflowers and other minor 
oilseed crops. And our innovation continues. We are developing a system 
to grow stevia, the low-calorie sweetener, and because of our tight 
control of the growing environment we can repeatedly produce plants 
with the highest concentrations of the desired stevia glycosides.
    The most accurate description of our business is that we are a 
technology company which owns and operates farms, and sells farming 
systems to other farmers. Our focus on innovation is not only targeted 
to more efficient and cost effective crop production--although that is 
obviously of paramount importance--beyond that, we are focused on 
bringing down the financial barriers to entering into farming. One of 
the things I soon discovered upon entering the indoor farming space was 
that so much of the technology was,as the financial world might term 
it, over capitalized.
    Indeed, the pre-existing technology for farming was expensive. 
Ironically, I also found it not to be that efficient. To build an 
indoor farm with most of that technology, it would cost literally 
millions for such things as LED lighting, stainless steel water piping 
which allows for steam flushing to disinfect and remove the inevitable 
bacterial build-up of a hydroponic system, and state-of-the-art climate 
and pest control systems.
    Metropolis' innovations are based on a systems optimizations 
approach rather than being focused on a specific new technology. The 
result is a much more effective and efficient, not to mention less 
costly, farm system. We developed customized ceramic lighting which 
generates more light with less heat, and thus reduce cooling loads. 
We've developed a piping system with PVC piping which can be 
disassembled, cleaned, and re-assembled in less than an hour for 
regular maintenance after harvest and before planting. This is both a 
cost saving and phytosanitary improvement over current systems and 
practices. Our farms also integrate hybrid carnivorous plants that 
attract insects away from the crops, and then eat those insects as a 
means of natural pest control.
    These innovations represent just a few of the Company's more than 
20 patents and trade secrets which have been applied to more than a 
dozen development projects around the country. Future innovation is 
targeted for nursery applications. Indeed, our systems can develop 
rapidly propagating crops for transplanting to outdoor farming which 
can help improve farm infrastructure and productivity.
    Our latest innovation is in development. It will be a 100,000\2\, 
fourth floor space in South Philadelphia. This operation will grow the 
equivalent of more than 660 acres of produce per year. It will be the 
world's first solar powered indoor farm, with a 1,750 panel, 400 kW 
rooftop solar array that produces an average of 525 MWh of electricity 
per year; this represents the largest solar array for any purpose in 
the City of Philadelphia. In short, we removed many of the climate and 
environmental risks of outdoor production, and will be applying back 
the most beneficial input of traditional outdoor farming: solar energy.
    Let me re-emphasize a point made previously; the ability to put our 
modular systems on upper floors in a warehouse building is a major 
financial savings. The repurposed building where the solar farm will be 
located rents ground floor space for $25 per square foot per year; the 
4th-floor space rents for less than 1/
16 that rate. Indeed, at the heart of all this 
innovation has been a focus on keeping everything cheap and simple to 
operate. As stated earlier, Mr. Chairman, Metropolis Farms wants to 
break down the barriers to entry when it comes to farming--at least 
indoor farming.
    I believe that indoor farms, at a minimum, can:

   provide opportunities for current conventional farmers 
        looking to fill seasonal demand for certain produce and crops;

   assist with job training in high unemployment areas of our 
        major cities; and

   open new avenues for military veteran farmers, especially 
        wounded veterans.

    I know this Committee is committed to helping veterans and last 
year held a hearing on Veteran Contributions to National Food Security. 
Helping veterans is also a passion of mine as I come from a family that 
has produced a long line of U.S. Marines. In trying to develop sound 
occupational safety practices within our farm systems we've also been 
able to make Metropolis Farms systems adjustable to be handicap 
accessible; wheel chair bound farmers and employees can conduct a 
harvest in a Metropolis Farms operation. We'd like veteran farmers to 
be able to take advantage of this innovation.
    Therefore, one of the policy recommendations I have is that the 
next farm bill adequately ensure that indoor farming qualifies under 
the Beginning Farmer and Rancher Development Program, especially the 
five percent of funds set-aside to meet the needs of veteran farmers 
and ranchers, as well as the Agribility program, which provides 
assistance to farmers and ranchers, including veterans with 
disabilities.
    Beyond just veterans' programs, I urge the Committee and Congress 
in the next farm bill to ensure that indoor agriculture not be excluded 
from programs for which such similar ag operations would otherwise 
qualify. These would include Farm Service Agency operating loans, which 
heretofore, only micro-loans have been offered to indoor farms.
    Such programs would also include Farmers Market Promotion Program, 
Local Food Promotion Program, Specialty Crop Block Grants, Value-Added 
Producer Grants, Farm to School Grants, Local Utility Program and even 
Rural Development's Business and Industry Loans.
    Furthermore, as the report language from the House Agriculture 
Appropriations bill says, ``USDA should consider intramural and 
extramural research where the Department and its stakeholders can work 
towards advancing technologies'' in new types of agriculture, including 
urban, vertical, indoor and other production systems. Research is 
important to keep these new innovations matriculating towards 
commercialization.
    I commend the Committee for its 2 year, top to bottom review of the 
Supplemental Nutrition Assistance Program (SNAP) and the reform themes 
that emerged from that review. I believe that indoor farming has a 
place in addressing nutrition policy generally and SNAP specifically 
moving forward.
    There were three specific ``findings themes'' in the Committee's 
December 2016 report on the Past Present and Future of SNAP that 
specifically caught my eye as an indoor farmer and systems builder:

          Unemployment and underemployment are leading causes of 
        poverty, and promoting pathways to employment is the best way 
        to help individuals climb the economic ladder out of poverty 
        and into self-sufficiency.
          Better enforcement of work requirements is needed in some 
        states, and enforcement needs to be coupled with more effective 
        SNAP employment and training (E&T) programs.
          Americans in both urban and rural communities cannot improve 
        their diets without adequate access to healthy food.

    In many areas, especially urban and food desert areas, indoor 
farming can provide employment and training as well as access to food 
and nutrition. While much of conventional agriculture suffers from a 
shortage of available labor, indoor farming can bring ag production to 
areas with a shortage of jobs. I urge you to consider ways that urban 
indoor farming can provide solutions to SNAP and other nutrition policy 
issues.
    Finally, there is a simmering issue with regard to the USDA Organic 
certification and whether it should apply to hydroponics, aquaponics, 
aeroponics, or containerized systems. There is fierce opposition among 
some in the traditional commercial organic sector to even having this 
question on the National Organics Standards Board (NOSB) agenda. This 
so-called Keep the Soil Movement argues that new alternative, 
innovative systems are at odds with the spirit of organic 
certification. However, what is indisputably true is that demand for 
organic produce, or at least produce grown without certain synthetic 
pesticides, herbicides and fertilizers, vastly outpaces domestic 
production, and under the National Organic Program which requires 
producers to go through a 3 year transition before they can marketing 
products labelled organic, that gap is not going to close quickly.
    The response from the USDA Agricultural Marketing Service's 
National Organic Program was to travel to Mexico in June 2017 to train 
organic certifiers there to develop U.S. equivalency. While I 
understand we trade, especially in produce, with Mexico, I believe that 
domestic U.S. producers including indoor producers who otherwise 
qualify under the NOP production practices--except for the presence of 
soil biological activity--deserve the benefit of the doubt in gaining 
certification under some USDA administered label in order to satisfy 
U.S. consumer demand. This would benefit both U.S. consumers and U.S. 
agriculture.
    Mr. Chairman, indoor farming systems--whether urban or rural--are 
by definition an innovation that adds another building block to the 
future of American agriculture and helps to make our entire food and 
fiber production chain stronger. However, I believe this sector is 
often overlooked. I noted a while back that the Agricultural Act of 
2014 required USDA to report to Congress on local food production 
trends. Surprisingly, indoor farming is not mentioned in the report. In 
that regard, I hope that my testimony will provide some insight into 
indoor farming and its potential so that appropriate policies can be in 
place and barriers to growth can be removed.
    Thank you for this opportunity to provide my testimony.
                                 ______
                                 
                          Submitted Questions
Response from Paul J. Wenger, President, California Farm Bureau 
        Federation
Question Submitted by Hon. Alma S. Adams, a Representative in Congress 
        from North Carolina
    Question. As you know, we have to operate within certain budget 
constraints as we begin writing this farm bill. Our districts and 
states have multiple priorities that need to be funded in the farm 
bill.
    For example, District 12 which I represent in North Carolina is in 
desperate need of a strong nutrition title and the SNAP program 
remaining intact. Given this fiscal reality, what recommendations do 
you each have for the Committee as we begin to address specialty crop 
concerns in the reauthorization of the farm bill?
    Answer. Farm Bureau understands the importance of keeping the 
nutrition title in the farm bill. As an organization, we believe SNAP 
should remain an integral part of the USDA. In California, we produce 
most of the fruits and vegetables consumed by Americans, and we believe 
a strong horticulture title is important to ensure that these healthy 
products remain viable for all consumers. As we further develop farm 
bill priorities, we will send them to the Committee with specific ideas 
for improvement.
Response from Paul Heller, Vice President, Wonderful Citrus, Texas 
        Division
Question Submitted by Hon. Alma S. Adams, a Representative in Congress 
        from North Carolina
    Question. As you know, we have to operate within certain budget 
constraints as we begin writing this farm bill. Our districts and 
states have multiple priorities that need to be funded in the farm 
bill.
    For example, District 12 which I represent in North Carolina is in 
desperate need of a strong nutrition title and the SNAP program 
remaining intact. Given this fiscal reality, what recommendations do 
you each have for the Committee as we begin to address specialty crop 
concerns in the reauthorization of the farm bill?
    Answer. Wonderful Citrus acknowledges that the farm bill is an 
extremely important piece of legislation for a number of essential 
programs across the U.S. agricultural, nutrition, and food assistance 
sectors. While we understand that finding the right balance between 
these competing priorities can prove challenging, we cannot over stress 
the significance of these farm bill programs for the continued success 
of the specialty crop industry. The industry would not be where we are 
today without these key programs supported by the U.S. farm bill. This 
is especially true as it relates to our ability to leverage private-
public partnerships to bring additional innovation and technology into 
the farming sector. It is essential that the reauthorization of the 
farm bill continue to support these vital specialty crop programs.
    Specialty crops represent a unique sector of the agricultural 
industry. The production of fruits, vegetables, tree nuts, nursery and 
greenhouse commodities accounts for over 44% of farmgate value for 
crops, yet only 3% of U.S. cropland is actually dedicated to growing 
these unique commodities. The farm bill provides growers with the 
stability and confidence to continue foraging ahead in an inherently 
uncertain industry, especially when it comes to tree crops, which 
require many years of maturity before bearing harvestable fruit. As 
such, we respectfully request that the Committee keep the following in 
mind when addressing the future of the specialty crop related farm bill 
programs.
Crop Insurance
    Crop insurance must remain a bedrock program in the farm bill. 
Every year, growers face a series of unpredictable challenges, from 
weather related incidents to pest and disease issues. The stability the 
farm bill crop insurance programs provide give growers the confidence 
to plan for the future and make difficult business decisions in an 
uncertain environment. These crop insurance programs must be protected 
in the reauthorization of the farm bill in order to continue to 
encourage growth and innovation in the specialty crop sector.
    Industry has been working side-by-side with underwriters and 
developers to enhance the safety net provided by these programs, while 
also ensuring that they provide adequate coverage without incentivizing 
abuse. While we understand that the future of these programs are 
sometimes put into question, the truth is that without these 
assurances, many specialty crop producers--citrus especially--would be 
out of business with the first bad frost. Crop insurance has become a 
vital risk management tool for specialty crop producers to mitigate the 
risks that come with producing high quality fruit for market and must 
be protected.
Pest and Disease Funding
    It is absolutely imperative that we continue to support pest and 
disease research, effective mitigation measures and innovative response 
programs that help industry combat the ever expanding domestic pest and 
disease threats. While industry is extremely proactive with treatments 
and prevention, it would be impossible to stay ahead of the curve 
without the public-private partnerships that fuel these essential 
research programs. Section 10201 of the 2008 and 2014 Farm Bills has 
provided critical funding and direction for innovative initiatives to 
identify and mitigate offshore threats, and improve pest detection and 
rapid response. Policies established under both of these farm bills 
provide great opportunities for reduction in risk, establishment of a 
consistent and clear communication structure, and provide for problem 
resolution with built-in accountability. We believe Congress should 
continue these important programs and build on their successes over the 
last 10 years.
    These pest and disease programs have been especially vital to the 
domestic citrus industry in recent years. As you know, the citrus 
industry is currently grappling with an unparalleled pest and disease 
threat in the bacterial disease known as citrus greening or 
Huanglongbing (HLB). HLB has already caused a reduction in Florida 
citrus production by over 60 percent since 2007, and caused all citrus 
producing counties in Texas to be put under quarantine. While there is 
still no known cure for HLB, great strides have been made through 
Federal, state and industry collaborations funded in part by the farm 
bill.
    The future of domestic citrus production is contingent upon our 
ability to find a cure for HLB. As such, we encourage the Committee to 
continue supporting the USDA's Citrus Health Response Program (CHRP), 
the Huanglongbing Multi-Agency Coordination Group (HLB-MAC), and 
dedicate resources for the Tree Assistance Program (TAP), which has 
been instrumental in slowing the spread of HLB by encouraging growers 
to replace diseased trees.
    In addition to the aforementioned programs, we would be remiss if 
we did not also address the critically important specialty crop block 
grant (SCBG) and Specialty Crop Research Initiative (SCRI) programs in 
the farm bill. The 2008 and 2014 Farm Bills included key provisions 
which dedicated research funding to address industry priorities in 
specialty crop research and extension. Both of these programs are based 
on competitive processes, require stakeholder involvement, and have 
already had significant positive impact on industry.
    The SCRI, managed through the National Institute of Food and 
Agriculture (NIFA), has been instrumental in addressing critical needs 
in the areas of plant breeding, innovative technology development, and 
refining methods to prevent, detect, monitor and control for food 
safety hazards in the production of specialty crops. Similarly, the 
SCBG is a much needed effort to help specialty crop producers balance 
the uncertainties of agriculture production with improvements to their 
products and the access consumers have to those products. Additionally, 
this program has become an integral part of industry's ability to 
combat immediate pest and disease threats at the local and state level. 
When isolated pest and disease outbreaks occur, it is the state 
departments of agriculture that are best suited to eradicate the 
problem before it has the opportunity to permeate and spread. Without 
this funding, we are likely see otherwise manageable local pest and 
disease issues escalate to a multi-state and national level.
Market Access and Trade Programs
    The U.S. has some of world's best growing regions for specialty 
crops, especially in California. As such, we grow, process and market 
our produce not only to domestic consumers, but internationally as 
well. U.S. specialty crop growers face significant obstacles in the 
development of export markets for their commodities and unique 
challenges due to the perishable nature of our products. Our ability to 
bring nutritious food to people around the world would not be possible 
without the support of programs like the Technical Assistance for 
Specialty Crops (TASC), which provides funding to U.S. organizations 
for projects that address sanitary, phytosanitary, and technical 
barriers that prohibit or threaten the export of U.S. specialty crops. 
As such, we strongly support the continuation of these types of 
programs in the reauthorization of the farm bill.
Response from Gary E. Wishnatzki, Owner and Chief Executive Officer, 
        Wish Farms*
---------------------------------------------------------------------------
    *There was no response from the witness by the time this hearing 
was published.
---------------------------------------------------------------------------
Question Submitted by Hon. Alma S. Adams, a Representative in Congress 
        from North Carolina
    Question. As you know, we have to operate within certain budget 
constraints as we begin writing this farm bill. Our districts and 
states have multiple priorities that need to be funded in the farm 
bill.
    For example, District 12 which I represent in North Carolina is in 
desperate need of a strong nutrition title and the SNAP program 
remaining intact. Given this fiscal reality, what recommendations do 
you each have for the Committee as we begin to address specialty crop 
concerns in the reauthorization of the farm bill?
    Answer.
Response from Kevin Murphy, Chief Executive Officer, Driscoll's, Inc.
Questions Submitted by Hon. Alma S. Adams, a Representative in Congress 
        from North Carolina
    Question 1. The topic of food waste has become a growing concern. 
In your testimony, you stated that approximately 30% of all berries 
produced are not consumed. This is particularly concerning to me as I 
represent a district in which food deserts and lack of access to food 
is prevalent. What are some examples of innovation surrounding better 
production technologies of berries that have or can lead to reduced 
food waste?
    Answer. In order to reduce food waste we are looking at increasing 
the yield per plant, obtaining on-farm efficiencies, incorporating new 
technology applications and executing waste diversion plans. Examples 
of on-farm efficiencies include movement to production systems using 
substrate and trellising. Substrate is the soil-less growing of plants 
in a media that has biological activity, organic matter and can provide 
nutrition to the plant. Trellising is a technique that keeps plants off 
the ground, improves production and increases usable space. These types 
of systems make it easier for harvesters to find and pick the fruit in 
a timely fashion meaning more fruit is available for consumption. New 
technologies like visioning systems allow for more precision packaging 
and production capabilities. We are developing alternative product 
streams to provide fruit to consumers that meet their specific needs. 
Our long term vision is to influence the behavior of consumers and 
retailers to reduce waste at home and in-store. For highly perishable 
goods the majority of food waste takes place at this point in the value 
chain.

    Question 2. As you know, we have to operate within certain budget 
constraints as we begin writing this farm bill. Our districts and 
states have multiple priorities that need to be funded in the farm 
bill.
    For example, District 12 which I represent in North Carolina is in 
desperate need of a strong nutrition title and the SNAP program 
remaining intact. Given this fiscal reality, what recommendations do 
you each have for the Committee as we begin to address specialty crop 
concerns in the reauthorization of the farm bill?
    Answer. I appreciate the opportunity to provide insight into 
innovation within specialty crops--specifically within the berry 
industry. Congress has a momentous task of balancing the priorities of 
its constituents. Given that, we acknowledge the Specialty Crop Block 
Grants have been very important for food safety research and 
initiatives. These Federal research dollars can be extended through 
public-private partnerships as has been done over the last 10 years 
through the Center for Produce Safety.
Response from Andrew W. ``Andy'' LaVigne, President and Chief Executive 
        Officer, American Seed Trade Association
Question Submitted by Hon. Alma S. Adams, a Representative in Congress 
        from North Carolina
    Question. As you know, we have to operate within certain budget 
constraints as we begin writing this farm bill. Our districts and 
states have multiple priorities that need to be funded in the farm 
bill.
    For example, District 12 which I represent in North Carolina is in 
desperate need of a strong nutrition title and the SNAP program 
remaining intact. Given this fiscal reality, what recommendations do 
you each have for the Committee as we begin to address specialty crop 
concerns in the reauthorization of the farm bill?
    Answer. Agriculture is an industry that affects every district and 
every state in the country. The funding authorized through the farm 
bill affects all Americans directly or indirectly. Continued dedicated 
funding for research in specialty crops can lead to improved vegetable 
and fruit varieties that offer higher nutritional content for 
consumers. As highlighted in my testimony, there are multiple avenues 
through the farm bill that fund such research. The Foundation for Food 
and Agriculture Research recently announced the Crops of the Future 
Collaborative research initiative with eight private industry partners. 
This project will leverage a $10 million Federal investment in pre-
competitive research to hasten yield and nutrition gains in leafy 
greens, wheat and corn. This is just one example of how Federal 
research dollars can be extended and multiplied through public-private 
partnerships, which is a key tenant of the seed industry.
    Other federal grants such as the Specialty Crop Research Initiative 
and the Agriculture and Food Research Initiative are typically matched 
by funding from private industry partners. This is critical, because 
federally funded U.S. agricultural research has played an important 
role in expanding our understanding of plant genetics leading to new 
crop varieties. USDA investments in genome sequencing of more than 25 
agriculturally significant crops are fundamental to this work--without 
Federal investments, it is likely these advancements would have taken 
much longer to achieve. Within the specialty crop arena, this includes 
genome mapping for tomato, potato, apple, strawberry, carrot, 
cranberry, lettuce, peach, papaya, cucumber, black raspberry, 
watermelon, and pineapple.
    These projects ultimately benefit the American consumer. Through 
research authorized by the farm bill, consumers might one day be able 
to purchase lettuce with increased vitamin content due to federal 
investment in plant breeding research.
    The July 12 hearing also touched on the very real challenges facing 
the specialty crop industry. Diseases such as citrus greening and downy 
mildew are very real threats, and continued research is necessary to 
effectively combat these threats. As our world's population grows from 
today's seven billion people to an estimated nine billion by the middle 
of this century, agriculture is faced with the continued challenge of 
meeting the rapidly growing demand for food, feed, fiber and fuel.
    The seed industry is a research-driven industry that cannot 
innovate without investment from the public-sector. While the seed 
industry invests significant amounts into R&D, the Federal investments 
in long-term research like mapping genomes or operating gene banks 
can't be undertaken by private industry. The investment is so long-term 
and success is so uncertain, no company is able to shoulder the risk. 
Furthermore, these resources should be publically available. However, 
the resulting discoveries can be further developed for 
commercialization by companies of all sizes and the private-sector can 
collaborate on projects.
    While research may seem an innocuous area of funding that is ripe 
for cuts, we strongly urge the Committee to at a minimum keep funding 
research at current levels. It is our hope to see those authorized 
funds increased, even though we recognize the fiscal climate the 
Committee is operating under. Specialty crop research depends on 
Federal funding. Without this dedicated funding, innovation in 
specialty crops will lag, and American agriculture will suffer.


 
                           THE NEXT FARM BILL

               (PATHWAYS TO SUCCESS FOR SNAP HOUSEHOLDS)

                              ----------                              


                         TUESDAY, JULY 18, 2017

                  House of Representatives,
                                 Subcommittee on Nutrition,
                                  Committee on Agriculture,
                                                   Washington, D.C.
    The Subcommittee met, pursuant to call, at 10:01 a.m., in 
Room 1300 of the Longworth House Office Building, Hon. Glenn 
Thompson [Chairman of the Subcommittee] presiding.
    Members present: Representatives Thompson, Crawford, Davis, 
Yoho, Comer, Marshall, Faso, Arrington, McGovern, Adams, Evans, 
Lujan Grisham, Lawson, Panetta, Soto, and Maloney.
    Staff present: Caleb Crosswhite, Callie McAdams, Jennifer 
Tiller, Mary Rose Conroy, Rachel Millard, Stephanie Addison, 
Kellie Adesina, Lisa Shelton, Liz Friedlander, Troy Phillips, 
Nicole Scott, and Carly Reedholm.

 OPENING STATEMENT OF HON. GLENN THOMPSON, A REPRESENTATIVE IN 
                   CONGRESS FROM PENNSYLVANIA

    The Chairman. This hearing of the Subcommittee on Nutrition 
entitled, The Next Farm Bill: Pathways to Success for SNAP 
Households, will come to order.
    Good morning, everyone, and welcome to today's Nutrition 
Subcommittee hearing. Thank you to everyone for taking the time 
to be here, particularly our three witnesses.
    As you know, over the past 2\1/2\ years the Committee has 
undertaken a comprehensive review of SNAP. The review has 
helped provide Members with a better understanding of SNAP, the 
population it serves, how it is administered, and ways it can 
be improved. While witnesses in previous hearings have touched 
on education and employment pathways for SNAP households, 
today's discussion is dedicated to examining ways for eligible 
SNAP households to improve their education and labor force 
involvement as they aim for independence.
    Career pathways are not a new approach to helping 
individuals move up the economic ladder and out of poverty, but 
there are new avenues to preparing work-capable SNAP recipients 
for employment and education. Pathway approaches, which we will 
hear about today, reorient existing education and employment 
services from endless disconnected programs to a structure that 
syncs employer needs with individuals' education, training and 
employment needs. This cohesive approach brings together 
resources, funding, data, policies, partnerships, and perhaps 
most importantly, shared performance measures that continue to 
allow for the development, scaling, and sustainability of these 
pathway programs.
    And my work with the Career and Technical Education Caucus 
has enhanced my awareness of the importance of career and 
technical education, or skills-based education, as we work to 
advance policies that improve skilled labor education and 
support job growth. I share that same passion here and hope to 
discuss and explore ways to couple services with employment and 
training to ensure our work-capable SNAP recipients move to a 
sustainable point of self-reliance.
    Again, I want to thank all of our witnesses for sharing 
their time and expertise.
    [The prepared statement of Mr. Thompson follows:]

Prepared Statement of Hon. Glenn Thompson, a Representative in Congress 
                           from Pennsylvania
    Good morning, and welcome to today's Nutrition Subcommittee 
hearing. Thank you to everyone for taking the time to be here, 
particularly our three witnesses.
    As you know, over the past 2\1/2\ years the Committee has 
undertaken a comprehensive review of SNAP. The review has helped 
provide Members with a better understanding of SNAP, the population it 
serves, how it is administered and ways it can be improved. While 
witnesses in previous hearings have touched on education and employment 
pathways for SNAP households, today's discussion is dedicated to 
examining ways for eligible SNAP households to improve their education 
and labor force involvement as they aim for independence.
    Career pathways are not a new approach to helping individuals move 
up the economic ladder and out of poverty. But there are new avenues to 
preparing work-capable SNAP recipients for employment and education. 
Pathway approaches, which we will hear about today, reorient existing 
education and employment services from endless disconnected programs to 
a structure that syncs employer needs with individuals' education, 
training and employment needs. This cohesive approach brings together 
resources, funding, data, policies, partnerships, and perhaps most 
importantly, shared performance measures that continue to allow for the 
development, scaling and sustainability of these pathway programs.
    My work with the Career and Technical Education Caucus has enhanced 
my awareness of the importance of career and technical education as we 
work to advance policies that improve skilled labor education and 
support job growth. I share that same passion here and hope to discuss 
and explore ways to couple services with employment and training to 
ensure our work-capable SNAP recipients move to a sustainable point of 
self-reliance.
    Again, I want to thank all of our witnesses for sharing their time 
and expertise. I now recognize Mr. McGovern for any opening comments he 
would like to make.

    The Chairman. I now recognize my friend and colleague, Mr. 
McGovern, for any opening comments that he would like to make.

 OPENING STATEMENT OF HON. JAMES P. McGOVERN, A REPRESENTATIVE 
                 IN CONGRESS FROM MASSACHUSETTS

    Mr. McGovern. Thank you, Mr. Chairman. I want to thank the 
witnesses for being here. I want to applaud some of their 
innovation, and look forward to hearing their recommendations.
    I am not going to refer to my prepared text for a minute 
because I am a little concerned as we gather here. This is our 
twenty-third hearing on SNAP, and I just read the Republican 
budget where there is a proposal out there for a $10 billion 
cut in SNAP: $10 billion. In the last farm bill there were 
savings of $104 billion; $92 billion came from SNAP.
    I know it has become convenient for some to look at SNAP as 
an ATM machine to pay for other things, but SNAP is a vital, 
important program that millions of families rely on to put food 
on the table. And it is not a particularly generous benefit. 
The average benefit is about $1.40 per person, per meal. You 
can't even buy a cup of coffee for that. That is why many SNAP 
recipients end up at food banks at the end of the month.
    Yes, we need to figure out ways to help get people to be 
secure and have a job, and we are all for work, but understand 
one thing, 67 percent of the people on this program are not 
expected to work or cannot work; they are children, they are 
senior citizens, they are people who are disabled. Of those who 
can work, a majority work. Let's get that on the record. I am 
tired of the perception that somehow everybody on SNAP is lazy 
or doesn't want to work. The fact is the majority of them who 
are able to do work. The question is why do they earn such low 
wages? Why does work pay so little in this country? Of those 
who are not working, who we believe are able to work, we need 
to explore this population. These able-bodied adults without 
dependents face a policy where if you don't have a job within 3 
months, or you aren't in a work training program, you lose your 
benefit for 3 years. Well, that population is complicated, and 
I have come to learn that in that population you have people 
who are chronically homeless, you get people who can't read, we 
have people who foster kids who are aging out of foster care, 
we have people with undiagnosed mental illnesses, and now we 
are learning we have a lot of veterans that are falling into 
that category.
    I would like to ask unanimous consent to insert in the 
record an article that appeared in The Washington Post on May 
22 that talks about one Navy veteran in Maine who was thrown 
off of the benefit because he couldn't get work within the 
prescribed period of time, and who was living off of squirrels 
that he was skinning and eating, that was his only source of 
food because he lost his food benefit.
    The Chairman. Without objection.
    [The article referred to is located on p. 1435.]
    Mr. McGovern. I point this out because, if we are talking 
about how we help transition people who can work into the 
workforce, we need to understand that you don't do it by 
cutting the program by $10 billion. And we talk about things 
like the cliff, we have to understand that it is not just SNAP. 
It includes housing, it includes daycare, it includes a lot of 
things that are not part of what this Committee has 
jurisdiction over. I would urge my colleagues that the 
perception in Washington about SNAP, and about those who 
receive the benefit, does not reflect the reality. Yes, we can 
find people who abuse the program, I am sure, and we can find 
people that ought to be in a job and who are not, but the vast 
majority of people in this program would prefer not to be. 
Being poor in this country is hard work, and I would like to 
think that we would recognize that, and this budget that has 
been unveiled today does not.
    By the way, not only are there cuts in SNAP, we see cuts in 
things like Pell Grants. You want children of SNAP families to 
be able to have a future, then the one thing you don't do is 
cut their education benefits. I appreciate the chair's 
indulgence, but I am really angry at this budget.
    I will just say one final thing. If this is the budget and 
this is what we are going to see in the farm bill; a cut of $10 
billion, and I think that may be a floor, not even a ceiling, 
then I will predict right here and now we will not have a farm 
bill. I certainly will do everything I can to kill a farm bill 
that has a $10 billion cut in it.
    I yield back my time.
    The Chairman. Just to clarify, because we are probably 
seeing the same budget information, the $10 billion, there were 
no specifics that it was coming from SNAP. It was the 
agriculture budget.
    I would like to----
    Mr. McGovern. If I could just say to the Chairman, I am 
looking at the summary and all the references are to SNAP and 
more hurdles and work requirements. I don't see any 
relationship to any other programs in it. Again, in the past 
SNAP has accounted for $92 billion of the $104 billion in 
savings.
    Thank you.
    The Chairman. The chair would request that other Members 
submit their opening statements for the record so the witnesses 
may begin their testimony, and to ensure that there is ample 
time for questions.
    I would like to welcome our witnesses to the table. I very 
much appreciate their participation, and bringing their 
expertise here for this very important topic on nutrition. Dr. 
Harry Holzer the John Lafarge, Jr., SJ Professor of Public 
Policy, McCourt School of Public Policy, out of Georgetown. Mr. 
Eliyahu Lotzar, how did I do?
    Mr. Lotzar. Pretty good.
    The Chairman. We are off to a good start then. I have 
always learned that there is only one thing you come into this 
world with and you leave with, and it is your name, and so I 
hate to mess those up. Those are important. Student Success 
Coordinator, Onondaga Community College Economic and Workforce 
Development and Pathway to Careers, out of Syracuse, New York. 
Ms. Heather Reynolds, President and Chief Executive Officer, 
Catholic Charities Fort Worth, Fort Worth, Texas.
    Dr. Holzer, please being when you are ready, 5 minutes for 
your oral testimony. The written testimony for all three of you 
have been distributed ahead of time to all Members of the 
Subcommittee. And the light system is pretty simple, the first 
4 minutes will be a green light, the final fifth minute is a 
yellow. When it hits red we just ask that you wrap up whatever 
thought that you are on at that point.
    Dr. Holzer, please go ahead with your 5 minutes of 
testimony.

  STATEMENT OF HARRY J. HOLZER, Ph.D., JOHN LaFarge, Jr., SJ 
 PROFESSOR OF PUBLIC POLICY, McCOURT SCHOOL OF PUBLIC POLICY, 
            GEORGETOWN UNIVERSITY, WASHINGTON, D.C.

    Dr. Holzer. Thank you very much, Chairman Thompson, Ranking 
Member McGovern, Committee Members. Thank you for inviting me 
today to testify on the role of employment in the workforce 
policy for SNAP recipients.
    I can support an agenda to increase work and earnings among 
SNAP recipients, especially in the currently tight labor 
market, but such an agenda must recognize the great variation 
among recipients in their training potential, their basic 
skills, their job readiness, and their need for work supports. 
It must allow different rules and services for different 
categories of recipients. One size cannot fit all. Any major 
changes should be based on rigorous evidence of cost-
effectiveness, which is currently scant. And to implement such 
changes, every state agency should receive enough resources to 
assess each recipient's abilities and needs, to provide a range 
of work or training options to them, both within mandatory or 
voluntary SNAP E&T programs. Changes like these would take 
considerable time to implement and must be done carefully and 
appropriately.
    I would like to make three additional points this morning. 
First, the most effective forms of workforce training in terms 
of generating long-term improvements in worker employment are 
those that actively engage employers. The best models here are 
sector-based training and work-based learning, like 
apprenticeships, especially in high-demand occupations and 
industries for any state or region. And, of course, the high-
demand industries tend to be health care, construction, 
advanced manufacturing, IT, transportation logistics, and even 
the higher end of retail and hospitality. More SNAP recipients 
should have access to such models of education and training, 
which would benefit themselves but also benefit employers who 
are seeking more skilled workers. It would reduce SNAP 
expenditures over time and raise overall economic productivity. 
But only workers with fairly strong cognitive and employability 
skills will benefit from such training, and I believe we should 
use the roughly 3,000 local One-Stop offices, or American Job 
Centers, to more fully assess recipients and link them with 
appropriate training opportunities.
    Second, most workers can also benefit from steady work 
experience over time, though the earnings and productivity 
gains that that approach generates are smaller than we get out 
of training. Some workers, in order to work, will need more 
support such as active job search assistance and placement 
activity, transportation or childcare, if we want them 
consistently to work. And individuals who are deemed hard to 
employ, with a set of multiple work barriers such as very poor 
skills, very little work experience, physical/psychological 
disabilities, or substance abuse, that population will have 
difficulty accumulating positive work experience in the job 
market. We have also found that job search or workfare alone 
for these populations has very limited effects on their 
subsequent earnings.
    Third, any expansion of work requirements under SNAP should 
be imposed carefully, allowing for clear exemptions that are 
consistently applied for those with physical or psychological 
ailments, substance abuse problems, or those caring for small 
children, even if those children are above the age of 6. The 
Federal Government should provide additional administrative 
funding if we require work activities to a greater extent, as 
well as funding for the worker service opportunities and 
supports that many SNAP recipients will need if they are to 
work. Indeed, for those who cannot find employment, training or 
some positive work experience or activity this should be 
provided. I recently authored a paper with Robert Doar of the 
American Enterprise Institute, and Brent Orrell of ICF, two 
friends of mine who are conservatives, and we came up with a 
set of policies if we are going to implement stronger work 
requirements. One of the principles was if people cannot find a 
job on their own, they should be offered some positive 
activity, even for 5 or 10 hours a week, before they are 
sanctioned or kicked off the rolls. In our view, there was a 
package of supports and also subsidized jobs that would have to 
go along with the imposition of stronger work requirements. And 
since we have relatively little clear evidence right now on how 
such changes to work requirements would affect SNAP recipients, 
we believe we should pilot and evaluate any major changes 
before implementing them to see how they really work. And a set 
of rising work supports, like more generous EITC or child care 
and transportation should be provided along with this.
    The evidence right now, the rigorous evidence and research 
does not suggest strong negative effects on employment from 
current SNAP policies and, therefore, we shouldn't make that 
assumption; and, therefore, argue for much more stringent 
requirements when the current evidence does not support that 
point of view, even if, theoretically, we can find some cliffs.
    I am going to stop there. Thank you for inviting me today, 
and I look forward to a robust discussion afterwards.
    [The prepared statement of Dr. Holzer follows:]

  Prepared Statement of Harry J. Holzer, Ph.D., John LaFarge, Jr., SJ
      Professor of Public Policy, McCourt School of Public Policy,
                Georgetown University, Washington, D.C.
    Thank you for inviting me today to testify on the role of 
employment and workforce policy for SNAP recipients, as you consider 
The Next Farm Bill: Pathways to Success for SNAP Households.
    I can support an agenda to increase work and earnings among SNAP, 
especially in the currently tight labor (though it will not be tight 
indefinitely). But such an agenda must recognize the great variation 
among recipients in their training potential, basic skills, job 
readiness and need for support. It must allow different rules and 
services for different categories of recipients--one size cannot fit 
all. Any major changes should be based on rigorous evidence of cost-
effectiveness, which is currently scant. And, to implement such 
changes, every state agency should receive enough resources to assess 
each recipient's abilities and needs, and to provide a range of work or 
training options to them--both within mandatory or voluntary SNAP E&T 
programs. Changes like these would take considerable time to implement, 
and are very different from the current approach in the mandatory 
programs (which mostly provide just job search or ``workfare'' to 
participants).
    I'd like to make the following additional points this morning:

  1.  The most effective forms of worker training, in terms of 
            generating long-term improvements in worker employment and 
            earnings, are those that actively engage employers. The 
            best models are sector-based training and work-based 
            learning (like apprenticeship), especially for high-demand 
            occupations and industries in any state or region. More 
            SNAP recipients should have access to such models of 
            education and training, which would benefit themselves and 
            employers seeking skilled workers, reduce SNAP expenditures 
            over time, and raise economic productivity.\1\
---------------------------------------------------------------------------
    \1\See the National Skills Coalition (2014).

        Sector-based training involves a partnership between local or 
            regional employers, a training provider (often a community 
            college), and an intermediary. Rigorous evaluations 
            indicate strong impacts on the earnings of disadvantaged 
            workers, lasting for as long as 6 years. Apprenticeships 
            also generate strong impacts on earnings, with little 
            fadeout over time. When workers earn a post-secondary 
            credential from such training, like a certificate or an 
            associate's degree, the training is more likely to have 
            lasting impacts, and to be portable across firms and 
            sectors. Career pathways, in which workers can ``stack'' 
            certificates and combine them with appropriate work 
            experience, show promise as well. The high-demand sectors 
            now include health care, advanced manufacturing, 
            information technology, transportation/logistics, and the 
            high ends of retail and hospitality.\2\ But only workers 
            with fairly strong cognitive and employability skills will 
            benefit from such training. The roughly 3,000 local ``One-
            Stop'' offices in the U.S. (now called American Job 
            Centers) could help assess recipients and link them with 
            training opportunities, when appropriate.
---------------------------------------------------------------------------
    \2\See Conway and Giloth (2014) for an overview of sector-based 
training strategies, and Maguire, et al. (2010) and Elliott and Roder 
(2017) for evidence of their large and lasting impacts on the earnings 
of disadvantaged workers. For discussion and evidence on apprenticeship 
programs see Lerman (2014).

  2.  Most workers can also benefit from work experience over time, 
            though the earnings and productivity gains it generates are 
            smaller than those of the training approaches described 
            above. But some workers need more support--such as active 
            job search assistance and placement, transportation, or 
            child care--to consistently work. And individuals deemed 
            ``hard-to-employ,'' with multiple work barriers, will have 
            difficulty accumulating positive work experience in the job 
            market.\3\ Job search or workfare alone for these 
            populations have very limited effects on their earnings.
---------------------------------------------------------------------------
    \3\Evidence of lower work activity among those with multiple 
barriers can be found in Danziger and Seefeldt (2002).

        With additional resources, assessments of worker 
            characteristics could be provided through SNAP agencies or 
            local job centers. But the more ``barriers'' to work any 
            recipient has--such as very poor skills, limited work 
            experience, physical/mental disabilities or substance 
            abuse--the less likely they are to sustain work experience 
---------------------------------------------------------------------------
            leading to wage growth over time.

  3.  Any expansion of work requirements under SNAP should be imposed 
            carefully, allowing for clear exemptions that are 
            consistently applied for those with a range of physical/
            mental ailments or substance abuse problems, and for those 
            who care for small children. The Federal Government should 
            provide additional administrative funding if required work 
            activities are expanded, as well as funding for the work or 
            service opportunities and supports many SNAP recipients 
            will need.

        I recently embraced an agenda for strong work engagement among 
            SNAP recipients in my paper with Robert Doar and Brent 
            Orrell (published by the American Enterprise Institute in 
            2017), but with some caveats. SNAP recipients who care for 
            small children, or who have clear disabilities (physical or 
            psychological) or substance dependencies, should be 
            exempted from any newly required work activities. For those 
            who cannot find employment on their own, a public or 
            private work (or training) activity should be provided. 
            Indeed, an expansion of subsidized jobs in the private or 
            public sectors is a sensible complement to any expanded 
            work requirements.\4\ And no worker should be sanctioned 
            who has not at least been offered an appropriate work or 
            service activity by SNAP administrators--though that is 
            currently the practice for many ABAWDs operating under a 3 
            month time limit on their recipiency.
---------------------------------------------------------------------------
    \4\See the Center for Poverty and Inequality at Georgetown 
University (2016) for evidence on the positive impacts of subsidized 
jobs for the poor.
---------------------------------------------------------------------------
        New funding for expanded administrative activity and for work 
            opportunities would be critical, either through E&T program 
            grants or reimbursement grants. Since we have relatively 
            little clear evidence of how any changes to work 
            requirements would affect SNAP recipients, we should pilot 
            and evaluate any major changes before implementing them on 
            a wide scale (and also see what we learn from the pilots 
            from the 2014 Farm Bill). And they should be accompanied by 
            rising work supports, such as funding for child care and 
            transportation as well as a more generous Earned Income Tax 
            Credits for childless adults, from other parts of the 
            Federal budget.
References
    Center on Poverty and Inequality. 2016. Lessons Learned from 40 
Years of Subsidized Employment. Georgetown Law Center, Georgetown 
University, Washington, D.C.
    Conway, Maureen and Robert Giloth eds. 2014. Connecting People to 
Work: Workforce Intermediaries and Sector Strategies. Aspen Institute, 
Washington, D.C.
    Danziger, Sandra and Kristin Seefeldt. 2002. ``Barriers to 
employment and the `hard to serve': Implications for services, 
sanctions, and time limits.'' Focus, Vol. 22, No. 1.
    Doar, Robert; Harry Holzer and Brent Orrell. 2017. Getting Men Back 
to Work: Solutions from the Left and Right. American Enterprise 
Institute, Washington, D.C.
    Elliott, Mark and Anne Roder. 2017. Escalating Gains: Project 
Quest's Sectoral Strategy Pays Off. Economic Mobility Corporation, New 
York.
    Lerman, Robert. 2014. Expanding Apprenticeship Opportunities in the 
United States. Brookings Institution, Washington, D.C.
    Maguire, Sheila, et al. 2010. Tuning Into Local Labor Markets. PPV, 
Philadelphia PA.
    National Skills Coalition. 2014. SNAP Employment and Training 
Program. Washington, D.C.

    The Chairman. Thank you, Dr. Holzer, for your testimony. 
Appreciate it.
    Now recognize Mr. Lotzar for 5 minutes of testimony.

     STATEMENT OF ELIYAHU LOTZAR, M.S.W., STUDENT SUCCESS 
             COORDINATOR, DEPARTMENT OF ECONOMIC &
           WORKFORCE DEVELOPMENT, ONONDAGA COMMUNITY
                     COLLEGE, SYRACUSE, NY

    Mr. Lotzar. Mr. Chairman, Mr. McGovern, Members, thank you 
for inviting me here.
    This testimony will outline a method we use at Onondaga 
Community College that helps SNAP beneficiaries start on the 
path out of unemployment, and out of the ALICE category, asset 
limited income constrained employed.
    Our career training programs emphasize soft-skills training 
and relationships with employers and with students. Under the 
leadership of Michael Metzgar, our team has implemented this 
model at colleges in Arizona, New Jersey, and now in Syracuse, 
New York.
    Syracuse has the highest rate of extreme poverty for 
African Americans and Hispanics of any city in the country. In 
2010, there were 19 neighborhoods where over 40 percent, that 
is 4-0, of the residents lived below the poverty line. SNAP is 
necessary.
    Syracuse is also a refugee resettlement city. I believe 
that approximately \1/2\ the students in our workforce programs 
either receive or have received SNAP benefits. Many of our 
students are third-generation recipients of one or another 
benefit program, and this influences their mindset.
    Some have grown up with the expectation that because their 
parents or neighbors received benefits and lived in very poor 
conditions, they will too. We try to help our students overcome 
that mindset. The mindset of survival and extreme poverty is 
not a career success mindset, and any program to raise people 
out of extreme poverty needs to address that mindset change.
    We currently operate seven programs in health care, food 
service, and technical-mechanical studies. The programs all 
include ten elements. First, find out which industries are 
hiring locally, now and for the next 18 months. Second, choose 
entry-level jobs that provide a living wage and a path to a 
sustainable wage. Three, keep tuition costs within Pell 
eligibility levels that, I am sorry to hear, may be changing, 
so that students graduate with no debt. Four, let employers 
tell us what to teach. We use a Canadian process called DACUM, 
Developing a Curriculum. Five, teach employability skills, not 
just academic and technical skills. Soft skills training helps 
with mindset change. Six, provide proactive, in-program 
retention efforts to help people overcome barriers by 
connecting them with college and community resources. Seven, 
utilize competency-based education. Most employers are not 
interested in students' grades. They want to know can they do 
the job. Therefore, when a student demonstrates competency, 
they finish school. Eight, at the end of our in-house education 
we send students out to an employer for 100 hours of 
observation on-the-job. If the person obtains employer 
approval, they receive the certificate and move on to element 
nine, which is to help them get a job by connecting them with 
employers. If they haven't already been offered a job during 
our practicum, we help them connect with another employer. 
Number ten, maintain contact with students up to 2 years post-
graduation to gather data and reconnect them with employers, if 
necessary.
    Now, not everyone comes from extreme poverty. Some turn to 
us to avoid supplemental assistance. I will give you one 
example, some details have been changed for privacy, and then I 
will finish with recommendations. Anifa was born and raised as 
a Muslim in Yemen. I know it is a little different from what I 
wrote there, one of those details. At a certain point, she 
converted to Christianity. Death threats and attempts on her 
life ensued, including when an uncle tried to kill her. She 
married and they applied for refugee status in the U.S. 
Arriving with her husband and his family in Syracuse, she was 
soon working as a cashier, and he as a delivery driver, but 
then he was caught in a car accident and she sustained a work 
injury. Neither could work, but she pressed on. Anifa received 
a grant from our Chamber of Commerce to join OCC's Food Service 
Program. She wanted to nourish others. Unfortunately, her 
husband's family frowned upon her moving forward into an 
independent career while he was still unemployed. Domestic 
violence ensued. That is where relationships come in. Her 
instructor in the student success team helped her finish her 
studies and start a small business by guiding her through a 
Workmen's Compensation claim, the challenging law process, 
finding a women's shelter, improving her English, and dealing 
with a new culture, all in under a year. As we have nurtured 
her, she is starting to nurture others with her food business. 
Not easy. It demands a relationship, but it is worth it.
    The bigger picture is a serious challenge. As the wealth 
gap widens, it becomes more likely that currently poor and 
impending poor will need food assistance. A counterbalance to 
the extremes of wealth aggregation and wealth emptiness is 
human relationships. Not just touchy-feely, but as a strategy.
    We recommend that you support the programs with three 
essential elements: employer relationships, student 
relationships, and soft skills education. Training out of 
poverty is possible. We can vouch for that.
    Thank you.
    [The prepared statement of Mr. Lotzar follows:]

     Prepared Statement of Eliyahu Lotzar, M.S.W., Student Success
      Coordinator, Department of Economic & Workforce Development,
                Onondaga Community College, Syracuse, NY
Introduction
    This testimony will outline two steps necessary to support those 
SNAP beneficiaries who have a reasonable chance of utilizing community 
college education to access stable income sufficient to remove the need 
for receiving SNAP benefits. One step is traditional career training; 
the second step is mindset change. The two steps do not need be 
sequential. They are mutually supportive: traditional career training 
can help change mindset, and mindset change can help success in career 
training. These are not the only steps that could be taken, but they 
are options that community colleges can offer. In this testimony I will 
outline the methods we in the Department of Economic and Workforce 
Development at Onondaga Community College (OCC) employ to provide that 
training. Our recommendation is that the Committee do all it can to 
promote the structure we utilize for providing opportunities for some 
people to break their tethers to life in financial and health poverty.
Acknowledgements
    Much of how I see the paths for SNAP recipients is through the 
organizational framework developed by Michael Metzgar, currently 
Associate Vice President of Economic & Workforce Development at 
Onondaga Community College (OCC). In his three iterations of Workforce 
Development at community colleges--University of Advancing Technology 
in Arizona, Raritan Valley Community College in New Jersey, and OCC in 
New York--he repeated the model that is outlined in this document. I 
would know little about Workforce Development without having spent 
years working for him. The Committee would have benefitted had he been 
able to prepare and deliver testimony.
Local Context of Testimony: the Challenge
    The content of this testimony is limited to one person's opinion. 
It is based largely on personal experience of nearly 3 decades spent in 
social work, education, and business. It is not based on peer reviewed 
primary research. Part of that personal experience is all that I have 
gained from colleagues at two community colleges--one serving two 
counties in northwestern New Jersey, two of the wealthier counties in 
the country, and one serving five counties in Central New York, 
counties which are largely rural and are focused in some of the poorest 
urban [ZIP C]odes in the country. Last year, the city of Syracuse, NY, 
was listed in local newspaper and TV as the U.S. city with the highest 
rates of poverty for African Americans and Hispanics, the 28th overall 
poorest in the country.
Who Our Students Are
    In the last 2 years here in Syracuse we have served approximately 
450 students in our programs. From anecdotal knowledge, I would say 
that more than \1/2\ of them, or someone in their immediate family, 
receive SNAP benefits, and more than that are eligible. The South Side 
of Syracuse--one of the primary locations from which we recruit, and 
perhaps the most challenged part of the city--has been a complete food 
desert up until earlier this summer when our first supermarket opened, 
a Price Right Supermarket. Before that, people used their food benefits 
at small corner stores which did not have much fresh food.
    Syracuse is a refugee resettlement city. Refugees have been 
arriving for decades in Syracuse, and our North Side is home to 
populations from many different countries, including countries in Asia, 
the Middle East, Africa, and Latin America. Many of our program 
participants are refugees or immigrants.
    Our students--most of whom are first generation to attend college--
also include many in third generation poverty. Among these students is 
a mix of those whose families have always worked and never or almost 
never taken benefits, families that have survived from a combination of 
work and public assistance. Some have grown up with the expectation 
that because their parents received benefits and lived in very poor 
conditions, they will too. That's just how it is is a mental framework 
that surrounds some of our students. Even the question, ``What else can 
you do?'' is not a question that residents of the poorer neighborhoods 
in Syracuse can ask themselves for long, since the options available to 
them--minimum wage jobs and slightly higher--are the only opportunities 
that they can see.
How We Find Our Students
    Intentionally, we recruit for our programs primarily through the 
governmental workforce system of the Department of Labor. Our goal is 
specifically to provide employment opportunities for the long term 
unemployed, the serially unemployed, and the underemployed. We work 
with employment counselors at the One Stop (the operational arm of the 
Workforce Investment Board--WIB) and job coaches at ``JobsPlus!'' (the 
local organization that distributes Temporary Assistance from the DOL). 
Both organizations exist to channel the unemployed back into jobs. Our 
training programs are an option for their clients.
Our Program
    Our programs currently cover three fields: Healthcare (Medical 
Billing, Certified Nurse's Aide, Phlebotomy, soon to be Medical 
Assisting), Food Service (Restaurant entrepreneur, Line Cook), and 
Technician (Machine Operator, Warehouse Technician, and soon to be 
Natural Gas/ Utilities Techn[i]cian).
    Our programs include several elements:

  1.  Analysis of which industries are hiring in Syracuse, in Onondaga 
            County, and in the five surrounding counties within the 
            next 18 months. We will not train people for jobs that may 
            be the wave of the future but would still leave them out to 
            sea upon graduation. For this we use the expensive but very 
            good Burning Glass data.

  2.  Living wage to sustainable wage. We will not train for a job that 
            will not produce a living wage ($12.75/hr in Syracuse if 
            employers usually provide insurance; $15.25/hr if they do 
            not) within the first 6 months of graduation. The entry 
            level job must also lead to a path for obtaining better 
            jobs within industry such that a person has a path beyond 
            what United Way calls the ALICE level (Asset Limited Income 
            Constrained Employed).

  3.  Employer-driven curriculum. We gather employers to tell us what 
            they need from our students when they graduate in order for 
            them to want to hire our students upon graduation. 
            Everything they tell us is necessary then becomes a 
            necessary component of our education; what they do not 
            consider necessary we do not include. We have nice-to-have 
            elements too where possible. The owners and supervisors 
            create a name for the entry level job that we are 
            discussing, and they tell us which soft skills are needed 
            (more on soft skills in a section below). The expert 
            workers in a subsequent panel tell us what all the tasks 
            are that the employee must perform in order to accomplish 
            all their duties. We use a Canadian process called DACUM--
            Developing a Curriculum. It is necessary sometimes to 
            slightly modify the multi-day process to fit employer 
            availability. This is accomplished in half a day, then 
            another full day. We take the data from the employer and 
            expert worker panels and then utilize our own curriculum 
            developers together with an industry partner or an 
            instructor we have, and turn it into curriculum. The 
            curriculum contains three elements:

      a.  Academic Knowledge: creating a conceptual grasp of the 
            industry, the job,
                its processes and language

      b.  Technical Ability: a person has to demonstrate that she or he 
            can perform
                the tasks necessary. This differs from regular academic 
            learning, but is
                in line with traditional vocational learning.

      c.  Soft Skill Ability: we teach employability skills, including 
            both behavioral
                elements and also that which undergirds the behavior: 
            beliefs, attitudes,
                assumptions, in short: mindset. A graduate must not 
            only be able to un-
                derstand the job and to do the job, but must have the 
            transferable skills/
                soft skills/21st Century skills/non-cognitive 
            abilities/employability skills
                to get and keep a job in a middle-class work 
            environment.

  4.  In-Program Retention Services. Staff proactively engages students 
            to discover barriers to their successful completion of our 
            training programs. We are connected with 23 Community Based 
            Organizations, plus college resources, to help provide 
            resources such as bus passes, food, clothes, women's 
            shelter, educational tutoring, counseling, transportation, 
            and child care. We also act as cheerleaders, metaphorically 
            speaking.

  5.  Competency Based Education. Most of our programs do not give 
            letter grades. We believe that employers are not interested 
            in what grades so much as whether they are prepared to do a 
            good job. When a student learns the material, they finish. 
            Some programs allow students to finish and to start at 
            different times, and we continue to work in that direction.

  6.  Practicum. Our in-house teaching involves varying degrees of 
            classroom and hands-on education. At the end of our 
            program, when we believe we have trained them well, we send 
            them to an employer for 100 hours of observation in a 
            workplace situation. Sometimes the employer lets us know of 
            poor employability skills; sometimes the employer hires the 
            person on the spot; sometimes the employer approves but has 
            no availability. If the person passes the employer approval 
            in the practicum, they receive a certificate from OCC, and 
            are moved to the next stage.

  7.  Channel to Employment. The same employers with whom we 
            established relationships to gather the data for curriculum 
            are those we return to offer them good employees. Sometimes 
            the students find themselves jobs before we do. Sometimes 
            they ask us for work before they finish the program and we 
            help them secure part time work during the program. About 
            75% of our students reach the end of the in-house studies. 
            About 85% of those attend a practicum. About 25% of those 
            are offered jobs before the end or at the end of their 
            practicum. About another 25% of those who finish practicums 
            secure work, either through their own efforts or through 
            our assistance by connecting them with employers with whom 
            we are in contact, within the first 3 weeks of the end of 
            the program. The other 50% tend to accept non-related jobs 
            or do not find work, or we lose contact with them and we do 
            not know their situation. We are arranging to receive 
            Unemployment Insurance (UI) Wage Data which will tell us 
            everyone's status with a 6 month data delay.

  8.  Maintain Contact. We maintain contact with the students once they 
            graduate, especially if we are still helping them find 
            employment. Once they find employment, we try to check 
            their employment status at 3 months, 6 months, a year, and 
            2 years. We have found some difficulties with this segment 
            of the process due to time/resource constraints/
            prioritization, and changing rapidly contact information of 
            the graduates.
Recommendations
    The recommendations are simply to help reproduce our program in one 
form or another. Training out of poverty is possible. It takes 
dedication and resources. There are enough dedicated people, and 
resources are being devoted too. The key difference is to help create 
public awareness, and an education system to support it, which accepts 
starting a career after high school as an honorable path. There is good 
work being done in South Carolina, in Vermont, in various places around 
the country. The point is that skills now must include not just the 
academic and technical, but the employability skills. According to 
Gallup-Lumina Foundation, employers consistently report that students 
are under-prepared. Academic research also shows that the skills which 
employers value most highly tend to be soft skills such as 
communication, and characteristics such as integrity, honesty, and 
self-management.
    To teach these things, we need to realize that there is a great 
chasm that a student who grew up in poverty has to jump. It is deep and 
it is scary. If I go out of my house and expect to be accosted by a 
gang member, and this is becoming more and more common; if the only way 
that I know to gain power and respect is to sell drugs, then I'll need 
to drop my a veneer of bravado which covers my low self-efficacy. I'll 
need to be rather more reserved. I'll need to change my language, my 
gait, how I wear my clothes, how little or much I speak. I'll need to 
code-switch. And hardest of all, I'll need to believe that the system 
which failed my parents won't fail me. This takes time. The 
recommendation is that this type of employability education which is 
based on employer feedback, emphasizes soft skills, and connects people 
with employers, start in high schools. It's happening slowly; it just 
needs support in order that more people will be able to feed themselves 
and their families, and feed themselves well, and do it with a minimum 
of public assistance.
Here's Why: An Anecdote
    I was brought up with Talmudic expression: ``Save one life and 
you've saved the whole world.'' Policies need to support people of 
course, and they always intend to; the question is just how. If you can 
build personal relationship into your policies, that would be huge.
    I'll call her Samantha and I'll change just a few details for 
privacy sake. Samantha arrived to the U.S. about a year and a half ago, 
and to our Food Service Manager program about 6 months ago. She arrived 
from a small city in Afghanistan as a refugee. She was raised Muslim, 
but at a certain point she and her family, and what would become her 
husband's family converted to Christianity. Death threats ensued, even 
two attempts on her life, including when her uncle tried to kill her. 
She and her husband and her husband's family went through the 2 year 
process and were awarded refugee status by the U.S. Government. 
Arriving in Syracuse it was not long before he was working as a 
delivery driver and she was working as a cashier in a supermarket. But 
then he was caught in a car accident, and she sustained a work 
accident. She soon heard about our program and before she finished 
recovering she joined us in order to promote her cooking with her own 
restaurant. Unfortunately, life happened again and without her family 
here, her husband's family frowned upon her moving forward into an 
independent career. Domestic violence ensued. Her instructor and the 
two Student Success Coordinators were able to guide her through a 
workman's compensation claim, the challenging law process, helped find 
her a woman's shelter, helped her improve her English, help her start 
her own food business, deal with an emotional divorce that she never 
had dreamed of, get set up in a new life situation. Through all this 
Samantha remained grateful and worked hard to move forward with her 
dreams. As we have nurtured her, she continues to nurture others. Not 
easy. But worth it.

    The Chairman. Thank you, Mr. Lotzar, for your testimony.
    And now Ms. Reynolds, go ahead and proceed with your 5 
minutes of testimony whenever you are ready.

 STATEMENT OF HEATHER REYNOLDS, PRESIDENT AND CHIEF EXECUTIVE 
     OFFICER, CATHOLIC CHARITIES FORT WORTH, FORT WORTH, TX

    Ms. Reynolds. Okay. Chairman Thompson, Ranking Member 
McGovern, and Members of the Subcommittee on Nutrition, thank 
you for having me. My name is Heather Reynolds, and I am CEO of 
Catholic Charities Fort Worth.
    We have one goal; to end poverty one family at a time. Here 
is what I know. When our organization shifted from serving 
families to ending poverty with families, we quickly saw that 
we needed to invest our resources differently. My message to 
you today is simple; we need you to invest differently too.
    The farm bill, specifically as it relates to the 
Supplemental Nutrition Assistance Program, should be a pathway 
for success for Americans. Families in poverty face many 
challenges, from food to housing to toxic stress. These 
benefits address one of these critical needs; however, these 
alone do not propel an American family forward. Reform must 
focus on shifting to a comprehensive solution to moving people 
out of poverty.
    First, benefits should not have a sharp cutoff based on 
earnings at 130 percent of the Federal poverty line. 
Eligibility requirements need to provide a gradual decline in 
benefits until participants reach a living wage. Programs with 
sharp cutoffs have you, the Federal Government, working against 
those of us in the field. We are serving a single working 
mother with one child. She makes $25,000 a year, and utilizes 
$357 a month in food stamp benefits. We are walking with her as 
she pursues her dreams to become a nurse, and to support her 
son free of government assistance. Her first step is to become 
an x-ray technician; a certification that takes her 6 weeks of 
study to achieve. She finds a job earning $1 more an hour while 
she continues her education. The bad news, she now makes too 
much to qualify for these benefits. Even worse, with her 
increased wages, losing this benefit means a net decrease in 
her overall income.
    We have made the working poor our people at Catholic 
Charities, but you and I often aren't working toward the same 
goals because the minute a family starts moving forward with 
our help, they are pushed backwards because of the way benefits 
are structured. It makes more financial sense to stay on public 
assistance because earnings cannot increase fast enough to 
outpace lost benefits.
    My second point, without intensive case management, 
families will not move forward. And I do not mean the 
transactional model of case management, I am advocating for 
someone who can come alongside the families that we serve, 
understand their needs, and work with them for the long-haul 
until they reach a place of self-sufficiency.
    We run several randomized controlled trials with the 
University of Notre Dame's Lab for Economic Opportunity. One of 
those is called Stay the Course. We know that a credential is a 
game changer between minimum and living wage employment, but a 
major provider of those credentials; community college, have 
graduation rates under 20 percent nationwide. We know low-
income students often don't graduate because life happens, and 
education is often the first thing to go. We designed a study 
to fix this. Participants were divided into groups of students 
who received case management and financial assistance, those 
who received just financial assistance and those who received 
no help at all. After 1 year of study, we saw that students who 
received only financial assistance actually did worse than 
those who had no services at all. Yet, those with case 
management, with some assistance, were more likely to reach 
their goals. After 6 semesters, those in case management were 
twice as likely to persist in their education, and females were 
four times more likely to walk that graduation stage.
    A second example is Padua, another trial we are running. 
Our key intervention is case management to move families out of 
poverty. Of the families involved, 80 percent are women, 23 
percent are married, 50 percent have a high school diploma or 
less, the average family earns $18,000 a year, and 60 percent 
are on food stamps. But after just 1 year of intensive case 
management, we see some pretty incredible changes. Monthly 
labor earnings are up by 17 percent. There is a 21 percent 
increase in the hourly wage, a 30 percent rise in full-time 
employment, a 19 percent decrease in spending, and a 41 percent 
drop in credit card debt. This further emphasizes my point. It 
is not just my gut that tells me case management makes the 
difference, it is data and analytics that show me when we work 
with families in poverty through case management, amazing 
things happen.
    My message today is that we need to invest differently. 
More Americans will experience income stability if we get these 
Federal programs right. Farm bill reform must include fixing 
the welfare cliff problem, and doing more than giving away 
money. We must break this cycle of poverty for families and for 
their children.
    Thank you.
    [The prepared statement of Ms. Reynolds follows:]

 Prepared Statement of Heather Reynolds, President and Chief Executive 
         Officer, Catholic Charities Fort Worth, Fort Worth, TX
    Chairman Thompson, Ranking Member McGovern, and Members of the 
Subcommittee on Nutrition, thank you for having me. My name is Heather 
Reynolds and I am CEO of Catholic Charities Fort Worth. We have one 
goal--to end poverty, one family at a time.
    Here's what I know: When our organization shifted from serving 
families to ending poverty with families, we quickly saw that we needed 
to invest our resources differently. My message is simple. We need you 
to invest differently, too.
    The farm bill, specifically as it relates to the Supplemental 
Nutrition Assistance Program, should be a pathway to success for 
Americans. Families in poverty face many challenges, from food, to 
housing, to toxic stress. These benefits address one of these critical 
needs. However, these alone do not propel an American family forward.
    Reform must focus on shifting to a comprehensive solution for 
moving people out of poverty.
    First, benefits should not have a sharp cut-off based on earnings 
at 130% of the Federal poverty line. Eligibility requirements need to 
provide a gradual decline in benefits until participants reach a living 
wage.
    Programs with sharp cut-offs have you--the Federal Government--
working against those of us in this field. We are serving a single 
working mother with one child. She makes $25,000 a year and utilizes 
$357 in food stamp benefits a month. We are walking with her as she 
pursues her dream to be a nurse and to provide for her son.
    Her first step is to become an X-ray technician, a certification 
that takes her 6 weeks of study to achieve. She then finds a job 
earning $1 more an hour, while she continues her education. The bad 
news? She now makes too much to qualify for these benefits. Even worse, 
with her increased wages, losing this benefit means a net decrease in 
her overall income.
    We have made the working poor our people. But you and I are not 
working towards the same goals. Because the minute a family starts 
moving forward with our help, they are pushed backwards because of the 
way you structure benefits. It makes more financial sense to stay on 
public assistance, because earnings cannot increase fast enough to 
outpace lost benefits.
    Second, without intensive case management, families will not move 
forward. And I don't mean the transactional case management model of 
the past. I am advocating for someone to come alongside a person, 
understand all their needs, and work with them for the long haul until 
they are out of poverty.
    We run a randomized control trial with the University of Notre 
Dame's Lab for Economic Opportunities.
    We know that a credential is the game-changer between minimum- and 
living-wage, but a major provider of those credentials, community 
colleges, have graduation rates under 20%. We know low-income students 
don't graduate because ``life happens'' and education is often the 
first thing to go. We designed a study to fix this. Participants were 
divided into groups of students who received case management and 
financial assistance, those who only received financial assistance, and 
those with no assistance at all. After year one, we saw that the 
students who got only financial assistance actually did worse than the 
control group. Yet, those who received case management with some 
assistance were more likely to reach their goals. After 6 semesters, 
those in case management were twice as likely to persist in their 
education.
    A second example is Padua, another trial. Our key intervention is 
case management to move families out of poverty. Of the families 
involved, 80% are women, 23% are married, 50% have a high-school 
diploma or less, earns $18,000 a year, 60% receive food stamps.
    After just 1 year, we have seen notable changes. Monthly labor 
earnings are up by 17.4%, a 21% increase in the hourly wage, a 30% rise 
in full time employment, a 19.5% decrease in spending, a 41% drop in 
credit card debt. This further emphasizes my point--it is not just my 
``gut'' that tells me case management is critical. It is data and 
analytics that prove that Federal programs cannot just be financial 
assistance to people in need. We need comprehensive case management to 
move a family out of poverty.
    You will not hear from me to ``invest more.'' My message today is 
to invest differently. More Americans will experience income stability 
if we get these Federal programs right. Farm bill reform must include 
fixing the welfare cliff problem and doing more than giving money. We 
must break the cycle of poverty for parents and their children. Thank 
you.

    The Chairman. Ms. Reynolds, thank you for your testimony.
    The chair would like to remind Members that they will be 
recognized for questioning in order of seniority for Members 
who were here at the start of the hearing. After that, Members 
will be recognized in order of arrival. I appreciate Members' 
understanding.
    I will take the liberty of taking my 5 minutes first for 
questioning.
    On June 15, 2017, the President issued an Executive Order 
to expand apprenticeships in the United States. The Executive 
Order aims to expand apprenticeships by further enabling 
individuals to participate in paid and relevant workplace 
experiences and opportunities. Apprenticeships can potentially 
offer affordable pathways to secure positions with more 
sustainable wages.
    Can anyone speak to the value of apprenticeships, and what 
both the initial investment and long-term outcomes look like? 
Please, go ahead, Dr. Holzer.
    Dr. Holzer. Well, I am a very strong supporter of an effort 
to expand apprenticeships. They have strong impacts on the 
earnings of the workers who receive the training, long-term 
impacts, they also please employers who engage them because 
they know that they are training the workers for the skills 
that, in fact, they are looking for. These programs are best 
when they are also combined with some classroom training at a 
community college and some broader credential.
    Then the key question is why are there only \1/2\ million 
registered apprenticeships in the country, and what can we do 
to improve employer take-up? I applaud efforts by the Trump 
Administration, by the Obama Administration, to try to move 
that ball forward. It is a positive policy.
    The Chairman. Go ahead.
    Mr. Lotzar. Yes, I can add just a little from the recipient 
side.
    I know that when I talk to people to interest them in our 
programs, the one program that we have that leads to an 
apprenticeship, every time I say the word, people perk up their 
ears and it feels like a very safe path because there is, not 
to harp, a relationship in there where they feel like they are 
going to be taken care of and guided through it. And indeed, 
they are. Aside from it being really good economically, people 
are just very ready for it. And as a matter of fact, our 
manufacturing program, we have shortened it and worked with our 
local manufacturing association to where we have a guarantee 
that if somebody graduates our program and stays in a job for 6 
months, they will put them into an apprenticeship program. And 
it is just very appealing to people who want to go that path.
    The Chairman. Very good.
    Ms. Reynolds, you had touched on something that I have 
spent considerable time looking at, from different examples, 
all the 70+ welfare programs that we have, and I know today our 
focus is SNAP, but can you give any other examples, other 
situations that you observe where poverty cliffs really have 
worked against someone who started and they were in an 
eligibility level, and then they were successful, because you 
start out, but it is one step at a time, where the poverty 
cliffs have worked against the goal of moving individuals to 
self-reliance?
    Ms. Reynolds. I will never forget, about a year ago I was 
sitting in an appointment shadowing one of our case managers 
working with a woman, and the case manager was talking to this 
woman about starting savings behaviors, even if it was just 
going to be $1 a week, but just to get in that pattern. And the 
woman shared, I am a great saver, and the case manager said, 
``Well, tell me more,'' and she said, ``Oh, yes, yes, yes, I 
save, every time I go and use my debit card, I pull out cash 
back of $10 and I save it.'' And I thought, well, that is a 
good strategy. And he said, ``Well, how much do you have 
saved?'' And she goes, ``I don't know, about $8,000.'' And he 
goes, ``Great, okay, let's talk about that. Where do you have 
it?'' Dah, dah, dah. She had it in the back of her closet. And 
the reason she had it in the back of her closet, because she 
was about two steps, which would take about another 6 months, 
away from getting to a living wage, and she knew if she put 
that money in a bank she would lose all public benefits, it 
would cause her and her family to go into debt before she could 
actually make it.
    What we often find is people are having to make these 
financial decisions and financial choices that they shouldn't 
have to make. Oftentimes work doesn't pay in our country, and 
we need to make work pay in our country because the more we can 
pull people forward and invest in them for the long-haul, the 
more people who aren't going to need SNAP and TANF and housing 
in the future.
    The Chairman. Right. Right.
    Thank you. Dr. Holzer, your testimony speaks to the needs 
of workers with skills, experiences and needs across the 
spectrum ranging from those who need simpler supports, to those 
with multiple barriers to achieving sustainable employment. How 
can SNAP best engage and support workers from these various 
backgrounds so that they can all move toward self-sufficiency, 
and what are the different strategies, policies, and 
investments needed to engage those who are work-capable in the 
labor market?
    Dr. Holzer. It starts with careful assessment, and at least 
in many parts of the country, too little assessment goes on of 
worker skills and worker needs.
    When you have strong assessment, and I would look to some 
of the SNAP E&T pilots funded in the last farm bill, my 
impression is that some of them try to do more careful 
assessment. One group of folks are those who are trainable, who 
have strong, cognitive experience, have had some attachment to 
the workforce, have employability skills, and they could be 
referred maybe through the local workforce agency, through the 
local job center, to sector partnerships, career pathway 
programs, or even apprenticeships in the high-demand 
industries.
    A second group may not be quite ready for that, but might, 
with the appropriate supports, be able to work steadily if the 
supports include childcare assistance, transportation, et 
cetera.
    And then, of course, the third category I consider those 
who are harder to employ because they have multiple barriers.
    We start with the assessment, we refer people to existing 
services that are appropriate for what the assessment tells us. 
If there is insufficient funds, maybe we expect SNAP to provide 
some of those additional services or experiences, but, of 
course, that would take more money, not less, in the budget.
    The Chairman. Okay. Dr. Holzer, thank you.
    I now recognize the Ranking Member.
    Mr. McGovern. Well, thank you very much. Mr. Chairman.
    I just want to just go back to my opening statement when I 
sounded the alarm bells about the budget. The reason why I am 
so concerned, I am just looking at the summary of the budget 
that was released, when it comes to talking about cuts and 
savings and the farm bill part of it, there is no mention of 
any farm programs, no mention of crop insurance, no mention of 
anything other than SNAP and work requirements and more 
hurdles. I think that is the intention here, and I didn't hear 
anybody here say that the way we help people get out of poverty 
is to cut SNAP by $10 billion.
    Ms. Reynolds, I am a believer in comprehensive case 
management as well, but there is a cost to doing that. And if 
we believe in case management, we have to do more than say we 
believe in case management. We have to have the resources there 
to actually support the kind of comprehensive case management 
that you are talking about.
    On the cliff, states currently have the option to lift the 
income limit through broad-based categorical eligibility. 
Thirty states have used this option for flexibility. I remember 
during the last debate on the farm bill, we had some of my 
colleagues on the Republican side talking about eliminating 
categorical eligibility and taking away states' ability to be 
flexible. Even with the elimination of these waivers for the 
ABAWD population, that is taking away states' flexibility. What 
happens if a factory closes in a particular community, what 
happens if there is, all of a sudden a, real big dip in the 
economy? States need to have that flexibility to be able to 
provide people with basic food assistance.
    Dr. Holzer, I mentioned earlier there are lot of people who 
are working who are on SNAP, and part of the problem is that 
wages are low. You have people who could be working and still 
be so poor that they fall into this category where they have to 
receive benefits from the social safety net. Can you explain a 
little bit about the prevalence of low-wage jobs in the 
economy, and if the goal is to help SNAP participants no longer 
need nutrition assistance, what kind of investments do we need 
to make? And without access to skills training, how likely is 
it that lower-skilled workers can earn their way off of SNAP?
    Dr. Holzer. You are correct, there are tens of millions of 
low-wage jobs in America today, depending on how we define 
that. By all measures, there are many of them. They are 
concentrated in agriculture, retail trade, the lower end of the 
service sector. There are also jobs that pay better, but 
increasingly in America it is only possible to get one of those 
middle-paying jobs with some amount of post-secondary education 
or training, including on-the-job training. And that has been 
the big change from earlier decades in America. Historically, 
there were production jobs in manufacturing, clerical jobs, 
that pay well for high school graduates and even high school 
dropouts in some cases. Those have largely disappeared. The 
remaining work options available for people with only high 
school, as I said, are in those lower-wage sectors where the 
earnings, even working year-round, full-time, do not get a 
single earner above the poverty line.
    The way forward is to get people more post-secondary 
education or work experience, but of the type that employers 
value. What we do in America is we send many millions of 
students to college, including community colleges, but too many 
of them fail to complete any credential, or they get 
credentials, like an Associate's Degree in liberal studies, 
that employers don't value. I think we need both.
    There are a lot of employers right now, especially in the 
tight labor market, who need more skilled workers. There are 
lots of options in community colleges and in other contexts 
that provide that training, and we have to get more people who 
are capable of getting the training into those situations to 
create the skills that can lift people up.
    Mr. McGovern. And by the way, going back to something Ms. 
Reynolds said, we ought to be talking in general terms about 
how you end poverty. I believe we ought to be asking the 
question how do you end hunger in this country. I have proposed 
for several years that there should be a White House conference 
on food nutrition and hunger to try to get a comprehensive plan 
together.
    But we also need to know the people in the population we 
are dealing with, this able-bodied adults without dependents 
population, I would suggest we do a hearing on that population 
because it is complicated. They are eligible for SNAP only 3 
months out of every 3 years, unless they work. In your opinion, 
is that a realistic time, knowing that this is a complicated 
population, to expect them to be able to transition?
    Ms. Reynolds. What we see in Fort Worth really depends on 
the level of post-secondary education they have. That is our 
experience too; we need people to complete some sort of 
credentialing in order to do that. A journey out of poverty is 
not a 6 month journey, for most families it is not a 12 month 
journey. Usually it takes several years to move a family from a 
place of how the Federal Government defines poverty, to living 
wage income with a small amount of savings and no inappropriate 
debt.
    Mr. McGovern. Thank you.
    I yield back.
    The Chairman. The gentleman yields back.
    I now recognize the gentleman from Arkansas, Mr. Crawford, 
for 5 minutes.
    Mr. Crawford. Thank you, Mr. Chairman. I appreciate it.
    Mr. Lotzar, you had a couple of recurring themes in your 
testimony I would like to get you to expand on. One of those is 
changing the mindset. You mentioned that a couple of times. 
Changing it from what to what? Talk about that a little bit.
    Mr. Lotzar. The main thing is changing it from nothing is 
going to work, there isn't any hope, those people over there 
are using the language that I hear, they are going to have the 
good stuff and I am not. It is changing it to, no, actually, 
this whole business of prioritizing work, and if I can organize 
myself to, no, I am not going no matter what, I am not going to 
let my kids stop me from going to work, I will find some way to 
get them on the bus to go to school, whatever it is, 
prioritizing work. There are a whole set of assumptions in a 
middle class, which is where we are trying to get people to a 
middle class lifestyle, that many of us don't even notice 
because I don't know that we accept them.
    A mindset shows up in behavior, so you ask somebody, 
``Well, are you work-ready,'' and they will say, ``Yes, sure, 
of course,'' and then we say, ``Okay, do you have a photo ID?'' 
Well, no. What employer is going to hire you unless you can 
even prove that, for instance.
    It is, like Mr. McGovern said, it is complicated. Last week 
I was in somebody's apartment; one of our students, and as I 
walked in, it is a very friendly place around, okay, 
nevertheless, there are, I don't want to say things like that 
here, there is urine in the hallways, there are signs saying if 
you throw-up, clean it up. And I walk in, because he hadn't 
been showing up to class and I wanted to find out where he was, 
and he was just getting it together because the week before his 
cousin had been shot. Not everybody is like this, I understand 
I am going to the extreme. And a couple of days before, his 
best friend had been shot, and so his mind just could not 
handle continuing his training. He was 19 years old, he was so 
into it, really wanted to do it.
    Mr. Crawford. Yes.
    Mr. Lotzar. But what I am saying about where his mindset 
was, was just survival, let me survive.
    Mr. Crawford. Right. That dovetails with the other 
recurring theme that you brought up, soft skills.
    Mr. Lotzar. Yes.
    Mr. Crawford. Okay, so soft skills are not something that 
institutions of higher learning invest in typically because 
those soft skills are usually acquired through modeled 
behavior. How do you address that? I mean, okay, you have to 
change the mindset. To do that, you have to equip them with the 
kind of soft skills that are necessary to support a move into 
the economy.
    Mr. Lotzar. Yes.
    Mr. Crawford. How challenging is that for you as an 
educator?
    Mr. Lotzar. Super challenging, especially because we try to 
do very short-term programs. In our programs that last a year, 
much less challenging. We can see more changes. Six months, it 
is kind of hard. Three months, it is very, very, very hard. But 
what we do is we actually found an assessment from a company 
called Learning Resources, Inc., that does a very good job at 
assessing employability skill level, the kind of soft skills 
that you need just for work, which includes character, 
decision-making, stuff like that.
    Mr. Crawford. Yes.
    Mr. Lotzar. We test them on that, we work with them with 
the results, we use other tools, we use a feedback tool. A lot 
of feedback has to keep happening. up-front we let them know, 
listen, when you leave the program you are going to be a 
different person than when you start.
    Mr. Crawford. Yes.
    Mr. Lotzar. And this is just standard education for being a 
phlebotomist or something.
    Mr. Crawford. Let me move into the next question. Okay, so 
we go from changing the mindset, trying to acquire a skill set 
with regard to soft skills, preparing you for the workplace. 
Now, as an educator, you are actually going into a curriculum 
to get a credential or a certification or something that is 
attractive to an employer. What about entrepreneurship 
training? You had a story about the young lady who kind of 
lifted herself up, pulled herself up by her bootstraps. 
Entrepreneurship training, is that attractive to people that 
are in this socioeconomic strata?
    Is it difficult for them to comprehend or grasp that?
    Mr. Lotzar. Yes and no. Sorry. I think a lot of people 
think they can, but don't realize the amount of stuff you have 
to understand and really handle in running a business. I mean 
the idea of a P&L sheet is a little bit far away for a lot of 
people, but the desire and the motivation, yes, it is there.
    Mr. Crawford. Yes. Well, that is going to be the challenge. 
We talk about STEM education, manufacturing jobs, and so on, 
there is very little attention paid at that level to 
entrepreneurship potential, and I hope that that is something 
that we can expand on, going forward.
    My time has expired. Thank you, Mr. Chairman.
    The Chairman. The gentleman's time has expired.
    Now, I am pleased to recognize the gentleman from 
California, Mr. Panetta, for 5 minutes of questioning.
    Mr. Panetta. Thank you. I appreciate it. Thank you. I have 
to commend Chairman Conaway for advocating for a robust budget 
for the Agriculture Committee. I know over the last couple of 
weeks he has been fighting away in order to make sure that we 
are fully funded. But, clearly, as you heard from Mr. McGovern, 
there is a concern based on that $10 billion cut to the SNAP 
program, and how that would impede our ability to reach certain 
populations and basically raise them out of poverty through 
employment and training initiatives; the one you spoke about.
    I guess my question though is, right now, you have a 
certain amount of funding and you have SNAP that is addressing 
certain communities, but are there still needs that are not 
being met right now, and what are those, with the funding that 
you have?
    Ms. Reynolds. I can speak to that. One of the things we see 
that is not being addressed is the idea of serving families 
holistically. We have SNAP, we have TANF, we have housing, we 
have childcare, there are so many wonderful public benefits 
that our country offers, but families are whole families, their 
problems aren't just food, their problems aren't just housing, 
their problems are upward mobility, their problems are 
stability. Without holistic, comprehensive, long-term case 
management we don't really stand a chance as a country of 
moving families forward. Even investment in workforce and 
community colleges, which I am a big believer in, if we were 
investing there, yet folks aren't completing their post-
secondary education, it really doesn't allow families to move 
ahead.
    Dr. Holzer. If I could add to that, please. Within the SNAP 
population, and if we talk about the roughly \1/3\ of adults in 
the program, the vast majority of them do not get any 
involvement with an E&T program within SNAP, or with any other 
local workforce or community college effort. The population is 
not being touched at all. I am open to some mix of somewhat 
greater pressure to engage in these activities, but at the same 
time also funding for more services, more supports, more of the 
assessments we have talked about, maybe referrals to the local 
job centers, the one-stop-shops, for referral out. But right 
now, given the budgets of most of these agencies, there is no 
money there to engage any more than the roughly three million 
people right now. That is a very small fraction of adult SNAP 
recipients.
    Mr. Panetta. Got you.
    Dr. Holzer, how small a budget that we could be contending 
with, I mean how would that impact SNAP E&T implementation in 
your state?
    Dr. Holzer. I live in the State of Maryland. I am not 
enough familiar with that state. If there have to be cuts in 
the overall SNAP budget, we don't want that to come out of food 
allotments. The logical place for these cuts to occur would be 
in other activities that are regarded perhaps as less 
essential. I would fear that cuts in the budget, that they 
would first come out of the kinds of assessments and supports 
that really we have all talked about that I think are necessary 
to help people.
    Mr. Panetta. Great.
    Mr. Lotzar. Can I just add a teeny bit?
    Mr. Panetta. Please.
    Mr. Lotzar. When the SNAP budget was cut before, we saw a 
huge increase of our students needing food. And that is one of 
the reasons why a lot of people drop out, because who can think 
of these long-term things? What we have done is we have really 
put a lot of effort into our own food bank right at the college 
where, no questions asked, if you say you need food, you go in, 
and we have been gathering resources. However, Syracuse is a 
city, it is sitting in the middle of huge amounts of 
agriculture. We are lucky we can do that, we can pull a lot of 
food. Not everybody can.
    Mr. Panetta. Fair enough.
    Thank you. I yield back my time.
    The Chairman. The gentleman yields back.
    I now recognize the gentleman from Illinois, Mr. Davis, 5 
minutes.
    Mr. Davis. Thank you, Mr. Chairman.
    I may not have heard it, but did you mention that you 
represent the salad bowl of America yet today, Jimmy? It is 
coming later, okay. Second round of questions. I thought I 
might have missed that. I was a little concerned that we might 
have had some issues here. And I noticed you yielded some time 
back, so I was a little worried about you.
    With all seriousness, thanks, everyone, for being here. 
This is a problem that we recognize on a bipartisan basis, that 
we want to get the benefits and the food to those families and 
those individuals who need it the most.
    I have been very active working with our local food banks 
and food bank directors in central and southwestern Illinois, 
and had the chance to visit the Central Illinois Food bank, and 
their Executive Director, Pam Molitoris, a long-time friend of 
mine. And while with her, we talked about bringing to light 
some of the success stories of individuals and families who 
have gotten SNAP benefits, and how they have used them to work 
themselves and their families into a better situation to 
achieve their American Dream.
    And, Ms. Reynolds, I enjoyed hearing some of the stories 
that you relayed.
    And as a matter of fact, I want to also commend the 
Chairman of the Subcommittee, Mr. Thompson, for focusing this 
hearing on pathways to success for SNAP recipients.
    I want to relay one story from central Illinois that Pam 
gave me. She shared with me that at the age of 15, a woman 
named Kelly had a newborn baby and needed assistance in 
providing for her child. She applied for and received both food 
stamps and WIC to assist her and the child during their season 
of need. And 7 years later, when Kelly was 22, she graduated 
college and was fortunate to no longer need SNAP assistance. 
Kelly's child now has grown up and has a Master's Degree in 
education, and has made Kelly a grandmother. Kelly believes 
that were it not for her ability to receive these benefits 
during her season of need, both her and her child's lives would 
be drastically different.
    We hear these stories, we see these stories often, and this 
is the type of success story I hope we can all gather around as 
we move into the next farm bill and begin this debate, in a 
bipartisan way, so we can get to success to help families like 
Kelly's.
    I also represent a lot of rural areas, and that is my 
concern, my question is to whomever wants to answer it first. 
There are a lot of issues that aren't addressed in rural areas 
like they may be addressed in places like Syracuse, where there 
is easy access to transportation, easy access to good foods, 
that may be grown in Jimmy's district. We may not have access 
to those foods in rural areas, although we should. What are 
your ideas for addressing the problem of access to these 
benefits, and being able to use these benefits once they are 
given in rural areas, because there are a lot of communities I 
represent where the only store is a convenience store and a gas 
station. Where is that access to good food for those 
individuals who may not live in urban areas? And also what 
flexibility may they need to be able to get the sustenance to 
be able to be that success story like Kelly?
    Who wants to start? Tick-tock, tick-tock. Dr. Holzer?
    Dr. Holzer. A scholar at the University of Washington named 
Scott Allard has done some research in this area, and he has 
documented really exactly what you said, Congressman, that in 
the rural areas, the availability of the support services is a 
great deal lower. And so the perception is accurate. Again, it 
would probably take an injection of funds, but we need to 
improve people's transportation to available jobs, more robust 
placement services, maybe at the local American Job Center. I 
mean there are fewer employment opportunities in these areas as 
well, outside of agriculture.
    Mr. Davis. And agriculture is not a bad employment to be 
in.
    Dr. Holzer. It may not be. It tends to be, on average, 
quite low wage, but again, with the right work supports, it is 
fine to help move people in. But again, having them access the 
services is more challenging, and probably would require some 
extra resources to overcome that.
    Mr. Davis. Okay. Ms. Reynolds?
    Ms. Reynolds. I am a social worker by trade, not an 
economist, but I have grown very fond of economists over the 
years, specifically in our work with University of Notre Dame. 
And I would say rural poverty is a really serious thing. We 
serve a 28 county diocese. Catholic Charities, throughout the 
nation, serve a lot of rural areas. And all in all, I don't 
think that there is a lot of innovation that has occurred in 
rural communities like it needs to be. My encouragement would 
be investment in innovation pilots throughout America, 
specifically in rural areas, that are rigorously evaluated, so 
we can understand what really works and what makes the 
difference, and then double-down there.
    Mr. Davis. That may be a very good idea for the next farm 
bill.
    I am out of time. I yield back.
    The Chairman. The gentleman's time has expired.
    Now, I am pleased to recognize the gentlelady from North 
Carolina, Ms. Adams, for 5 minutes.
    Ms. Adams. Thank you, Chairman Thompson, Ranking Member 
McGovern, and thank you all to the witnesses for your 
testimony.
    Food insecurity and poverty are persistent challenges for 
many of the communities in the 12th District of North Carolina 
that I represent, and SNAP is a vital part of the solution to 
these problems. However, while education and training is a 
hugely valuable and vital service that SNAP can provide, SNAP 
is not a work program; it is a nutrition program meant to help 
those who are struggling to put food on the table. And while we 
should always look for ways to improve SNAP, we should not 
forget this ultimate mission.
    Dr. Holzer, SNAP E&T programs are required to provide 
supportive services such as transportation and childcare to the 
participants, but in many states it seems like they aren't 
providing these services, or they are providing them at a very 
low reimbursement level. Can you speak to how important these 
services are to supporting low-wage workers, and helping them 
find and maintain employment?
    Dr. Holzer. Very simply, they are extremely important. The 
first service that people need, and both my colleagues have 
addressed this, is getting a connection with employers that a 
lot of people simply can't generate on their own. If we don't 
want the SNAP E&T program to do that, then we would need to 
improve people's access to the local job centers where people 
are experienced, or to have a job developer reach out to 
employers. But once that connection is made, and once it seems 
like an employer is willing to hire a person based on their 
skill level, childcare for parents with small children, if they 
don't have childcare but they are already of school age, then 
the number of hours is quite restrictive, makes it hard to 
work. The childcare is really critical, and, of course, 
transportation matters as well for people. Especially, if you 
are talking about people living in an impoverished 
neighborhood, whether it is urban or rural, and the employment 
may be available, but it might be over some significant 
distance, to which public transportation is not available, 
providing the transportation could be a key factor.
    Ms. Adams. Okay. There is no approach now to provide 
training for long-term employment, because that is really what 
it is going to take.
    Dr. Holzer. As I indicated, if we are looking for the 
biggest increases in earnings capability, that does come from 
training, plus the kinds of services that we have all talked 
about, but again, often linked to employment in specific 
sectors. The sector-based training or work-based learning are 
the best models. And again, that involves linking with the 
right employers, and also making sure that the individuals in 
question are trainable in the sense of good basic skills and 
job-readiness.
    Ms. Adams. In view of what you have just said, do you think 
it is right to sanction SNAP participants?
    Dr. Holzer. Do I favor sanctions?
    Ms. Adams. Yes.
    Dr. Holzer. There are circumstances in which that might be 
reasonable. My own view is that everybody should be offered an 
appropriate activity; a work activity or a training activity, 
before they are sanctioned. If a reasonable and appropriate 
SNAP activity is presented to people not working, and if it is 
turned down, sanctions may be appropriate. I am very concerned 
about sanctions on families with small children where the cuts 
can actually do real damage, because it creates food 
insecurity, it creates stress on the children. That is why I am 
always reluctant to sanction those kinds of families. But 
again, I oppose it unless appropriate activities are provided 
for people who cannot provide them themselves.
    Ms. Adams. Okay. Thank you very much, Mr. Chairman. I yield 
back.
    The Chairman. The gentlelady yields back.
    I now recognize the gentleman from Florida, Mr. Yoho, for 5 
minutes.
    Mr. Yoho. Thank you, Mr. Chairman. I appreciate it. I 
appreciate you all being here.
    My background is that I am a veterinarian, and I grew up 
kind of poor, and my wife and I were on food stamps when we 
were 19, so I understand the importance of that. We were on 
that for about 6 weeks, and it was a benefit to have, for sure. 
Our goal was to get in it, get off of it as quick as we could, 
and we did. And so our goal, like today in this farm bill, is 
to make sure that the program is there for those that need it, 
and that we have the integrity of the program long-term, and 
our country is facing economic hardship if we don't change some 
things. And so reforms need to be made. Reforms, not cuts, 
because what we want to make sure is that the people that truly 
need this, have this.
    We have seen several states implement work requirements; 
Alabama, Maine, Kansas, Florida. We have seen a decrease of 
people on the assistance program. In your experience, have you 
seen any deleterious effects to the people that have been 
removed from those programs? Anybody?
    Mr. Lotzar. I am still stuck on the work requirements 
thing. I work with a large social service agency that 
distributes temporary assistance.
    Mr. Yoho. Yes.
    Mr. Lotzar. And one of the things about work requirements 
is that it turns into the speed with which a person can find a 
job, any job, I don't care, meaning the job coach needs to get 
their 150, 250 people into jobs. Those jobs almost inevitably 
are jobs that are undesirable to the person, and they will be 
right back where they started in a matter of weeks or maybe 
months.
    Taking a pause and allowing a person to; first, encourage 
training, and second, move into a really sustainable career is 
going to help.
    Mr. Yoho. Okay. Go ahead, Dr. Holzer.
    Dr. Holzer. I don't know of any specific studies in those 
four states that address that question.
    Mr. Yoho. Okay.
    Dr. Holzer. We do know that in the aftermath of welfare 
reform 20 years ago, you had mixed effects. Some people did 
better, they were able to move to more consistent formal work. 
Some people did worse. There has been a documented increase in 
struggling families. And we know that for a lot of those 
families the access to food stamps has often been what keeps 
them above water.
    Professor Kathryn Edin at Johns Hopkins University has 
documented very, very low-income families; families with very 
little access to cash, and the access to food stamps is really 
critical. We also know how deleterious the effects of toxic 
stress is on children in families where their food stamp 
benefits are cut.
    Even though I don't know specific studies of what you have 
talked about, there is broader evidence to suggest we move 
very, very carefully in that area.
    Mr. Yoho. Yes, I look forward to getting that information.
    Ms. Reynolds?
    Ms. Reynolds. Yes, thank you for your question. I would say 
three things. The first is that I commend the idea of this is a 
program for those who need it. What I would really encourage 
first is that there are a lot of people who need food stamps in 
our country and experience food insecurity that are working, 
but they are still having to make choices between food on the 
table for their children at night or medication that they or 
their children might need.
    We have to really look at benefits expanding to get to a 
place of self-sufficient wages.
    Mr. Yoho. Well, let me ask you something on that since you 
are with Catholic Charities.
    Ms. Reynolds. Yes.
    Mr. Yoho. How important is it with the faith-based 
communities, food banks, things like that, supplementing things 
like this in a community, because community is where it needs 
to be healed versus the Federal Government, and everybody 
looking for the Federal Government. What are your thoughts on 
that?
    Ms. Reynolds. Great question.
    It is a both-end-type model. I mean we need you and you 
need us. We need our friends at the community college to 
provide excellent education, and we need to partner with our 
community colleges to help ensure that students are graduating 
through----
    Mr. Yoho. Let me go to Mr. Lotzar right now, because you 
are at the community college level. And what I have heard and 
what I have seen is, we are teaching basic skills at a 
community college level. Where have we broken down so that 
people aren't prepared by the time they get there, because what 
we are doing is we are treating a symptom? How do we change 
that narrative? And I know it is beyond the scope of this 
hearing, but it seems like we are not as prepared as we should 
be at the community college level.
    Mr. Lotzar. No, it is important. Yes, it is true. The 
answer is we need to start working in the high schools already 
from tenth and eleventh grade, make sure that there are student 
retention efforts in the high schools, and basic skills 
training in the high schools.
    Mr. Yoho. I would propose we need to work earlier than 
that; like at the elementary and at the family level in the 
beginning so that by the time they get to the junior college, 
they are focused on a career. And I know not everybody is, 
but----
    Mr. Lotzar. Exactly. People have to change the model of 
college honestly, to get to the employment thing.
    Mr. Yoho. Thank you.
    I appreciate your input. I am out of time. Thank you, all.
    The Chairman. The gentleman's time has expired.
    Now, I am pleased to recognize my colleague from 
Pennsylvania, Mr. Evans, for 5 minutes.
    Mr. Evans. Thank you, Mr. Chairman.
    I would like to yield a few seconds to the Ranking Member.
    The Chairman. The Ranking Member is recognized.
    Mr. McGovern. Thank you. I just want to respond to my 
colleague from Florida when he asked whether there were any bad 
impacts from some of these increased, more stringent work 
requirements that some states have imposed, and the answer to 
that is yes. And there are lots of stories, but again, I will 
go back to this Washington Post story that I referenced in the 
beginning, which begins, ``for a period last year after he lost 
his food stamps,'' as a result of Maine's increased, more 
stringent work requirements. ``Tim Keefe, an out-of-work and 
homeless Navy veteran, used his military training to catch, 
skin, and eat squirrels, roasting the animals over an open fire 
outside the tent he pitched in frigid Augusta, Maine.'' It goes 
on to explain his plight. But this is not unusual, and that is 
why we need to understand the population of people that we are 
dealing with. It doesn't all fit into a nice neat category. 
This is a very complicated population. And if we want to end 
poverty we need to understand the people we are dealing with.
    And I thank the gentleman for yielding.
    Mr. Evans. Thank you.
    In listening to all of testimony this morning and obviously 
going through it, I just want to ask a real succinct question 
and go down the line.
    Does kicking people off of SNAP encourage work?
    Dr. Holzer. I would argue that if the only thing you do is 
kick people off SNAP, the answer is very little, because the 
rigorous evidence----
    Mr. Evans. Does that mean yes or no? I am trying to 
understand.
    Dr. Holzer. If that is the only thing we do, the answer is 
probably no.
    Mr. Evans. Okay. Can we go to the next person?
    Dr. Holzer. Sure.
    Mr. Lotzar. If you take away their SNAP benefits, they are 
not going to be thinking about work, they are going to be 
thinking about quick cash.
    Mr. Evans. So that means what, yes or no?
    Mr. Lotzar. What that means is not sustainable work, but 
bringing in income by any means, usually means it is not 
reported, and certainly, they are not paying any income tax on 
it, and it is something that can often land people in jail.
    Mr. Evans. Okay. Yes, Ms. Reynolds?
    Ms. Reynolds. No.
    Mr. Evans. Okay. I would like to go to Ms. Reynolds a 
little bit. In your testimony you said at the end of it about 
how we must invest differently. Be very specific here, what do 
you mean when you say we must invest differently? If you had 
your chance, how would you suggest we invest differently?
    Ms. Reynolds. Many of our Federal safety net programs are 
judged by the number of people who are receiving them or 
rolling off the rolls. And at the end of the day, what we need 
to be concerned about is the number of Americans who are living 
a life of stability. For me, I feel like we need to invest 
differently up-front so long-term we don't have to invest as 
much, because we are moving more families out of poverty, 
allowing them to provide for themselves.
    Mr. Evans. Yes. We know that many SNAP participants are 
actually working while receiving benefits, and many more work 
immediately before participating in programs. It seems this is 
just that for those in the program there isn't an unwillingness 
to work, but rather the growing role of low-wage work in the 
economy. Can you explain a little bit about the issue around 
low-wage jobs? And I will go down the panel on this one. Give 
some explanation about this.
    Dr. Holzer. We have had a large growth in the low-wage 
sector in America. As I indicated earlier, there used to be 
good-paying jobs available to people without post-secondary 
education or training. Those have largely disappeared. Now, you 
have extremely large bodies of employment for folks with very 
little education, often in the low-end of the service sector or 
in retail trade or in agriculture, which means that more 
working people need supports. Food stamps are just one kind of 
support. I am also a big fan of things like the Earned Income 
Tax Credit which incentivizes people to work more to get the 
aid. The economic changes have simply created a situation where 
if we want people working and surviving and being able to raise 
families, we need to raise the number of supports, along with 
the right incentives, to make that happen.
    Mr. Evans. Yes.
    Mr. Lotzar. Yes, exactly. There are a lot of low-wage jobs 
which people do have, which will leave them in ALICE, but more 
than that it is a generalized structure of how a lot of our 
very large corporations work, which aren't based locally, in 
that people will have jobs and they don't know next week how 
many hours or which hours they are going to work, and they are 
tethered to 3 hours here and 6 hours there. If there is any 
pressure that can be put on corporations to have an 
understanding that you need to have a long-term employment and 
stable employment, and it is not just about their bottom line, 
that would help.
    Mr. Evans. Yes.
    Ms. Reynolds. We see the working poor every day not able to 
receive benefits because of the benefit income cutoff. Like I 
said in my testimony, I couldn't encourage more for us to 
consider benefits not cutting off at the Federal level or the 
state levels until we get families to self-sufficient wages.
    Mr. Evans. I yield back the balance of my time. Thank you, 
Mr. Chairman.
    The Chairman. The gentleman's time has expired.
    I now recognize Mr. Marshall, from Kansas, for 5 minutes.
    Mr. Marshall. Well, thank you, Mr. Chairman.
    My first question is going to be for Mr. Lotzar. Mr. 
Lotzar, I am a community college graduate. My wife, a community 
college graduate, got her nursing degree. We have ten, eleven 
community colleges, technical colleges in my state, and they do 
the best job of quickly pivoting to the needs of what that 
community needs for good-paying jobs. Specifically, I am going 
to mention Cloud County Community College wind energy, it is a 
2 year program. The kids can't finish even 1 year before they 
get grabbed and they are making $50,000-$60,000 a year, which 
is a very livable amount of wage in my area.
    How do you measure success? What are you doing to gather 
data to measure success?
    Mr. Lotzar. Success in community colleges is usually 
measured by completion rates, which, as Ms. Reynolds said, are 
pretty abysmally low. I know at our college 47 percent of the 
people who start don't finish. 15.4 percent of people who 
intend to do a 2 year degree do it in 2 years, everybody else, 
3, 4, 5, 6, or they don't. But there is another measure of 
success that we do in our workforce development department, 
which is how many people have jobs in the field that they went 
and trained for, at least 2 years out after school. How do we 
measure for that? We keep calling.
    Mr. Marshall. Yes.
    Mr. Lotzar. Yes.
    Mr. Marshall. Yes, one of my technical colleges in the 
aircraft industry, which has a 99 percent success rate of 
getting a good job when you are done, I think that is a great 
way of measuring success.
    Ms. Reynolds, I will come to you. Catholic Charities is 
alive and well in my district and does such a great job. I am 
an obstetrician working with my pregnant moms, as well as our 
immigration issues.
    Talk about case management a little bit. What is the secret 
to successful case management? Be more specific.
    Ms. Reynolds. Great. A case manager is one who spends about 
half their time connecting a client, and helping problem-solve 
what a family is facing. That is childcare, that is 
transportation, that is housing, all of those sorts of things. 
That is enrollment in community college. And then the other 
half of their time they are functioning as a coach, a 
therapist, that sort of thing. The toxic stress people in 
poverty face is very real. The lack of belief in oneself is 
very real. The hopelessness that we find them in is very real. 
And if we don't have someone walking alongside of them, when 
they fail a class at a community college, saying we know you 
failed, but you can do this, let's move forward. Oftentimes 
they don't succeed. For us good case management is somebody who 
is meeting very regularly with a client, face-to-face with a 
client, seeing a client make progress toward their goals, we 
measure success every 21 days, progress on their action step. 
And a case manager is really playing that role of 
accountability partner, cheerleader, coach, therapist, whatever 
hat that that client needs at that time.
    Mr. Marshall. Thanks. Yes. One of my colleagues asked me 
why do I do so many town halls and roundtables, and part of my 
job is to encourage the encouragers, to encourage your people 
who are out there doing these jobs, and just to tell them that 
they are doing a great job.
    I am going to come back to my friend from the community 
college. In your testimony, let me get it right here, the power 
of case management and helping move--back to you, okay, train 
people in jobs that may not exist in your region. My community 
colleges do a great job of pivoting very quickly to the needs. 
I mentioned the wind energy, Garden City has a diesel engine 
program, we have lots of tractors in Kansas, so they train them 
how to work on diesel engines. K State Salina has a maintenance 
program for UAVs, which is growing tremendously in my district. 
How does your community college try to deal with the 
anticipated needs of the future of jobs rather than yesterday's 
jobs?
    Mr. Lotzar. Yes. What we have tried to do, as a matter of 
fact, is look for the future jobs that are happening right 
around the corner. That is why I said we look 18 months out 
when we talk to employers, and we use a database called Burning 
Glass, it is a private thing, kind of expensive, but really 
good, done by a bunch of geeks from Boston. Sorry.
    Mr. Marshall. Technical term?
    Mr. Lotzar. I think so, yes. When we find only 18 months 
out which jobs are hiring, then we can start training. When we 
looked for programs, such as Green Jobs, we run a risk in our 
area because they may show up, they may not. Curriculum 
development takes at least 2 years and then some. It is going 
to be another half a year at least before somebody signs up for 
college, and then they start, and the 2 years to learn is 
really 4 years. You are looking at 7 years from the time you 
had the idea about what is going to happen, so you need to 
focus on very short-term job opportunities.
    Mr. Marshall. Yes. Before I yield back, do you realize that 
there is a reception night for rural community colleges in 
D.C.? Talk to my staff.
    I yield back.
    The Chairman. The gentleman yields back.
    I now recognize the gentleman from Florida, Mr. Lawson, for 
5 minutes.
    Mr. Lawson. Thank you very much, Mr. Chairman. I really 
enjoyed the testimony that you all are giving this morning.
    In my district one out of every four Floridians are food-
insecure, and I have six of eight counties with the highest 
food insecurity in the state. This issue strongly influences 
how I look at agriculture and the farm bill. Today, with this 
discussion of SNAP and E&T, I want to remind the Committee that 
in 2016 only five states ensured that all SNAP beneficiaries in 
their state that were subject to 3 month time limit were 
provided E&T training, which is critical. That is unacceptable 
and we need to address the problem in the 2018 Farm Bill.
    Dr. Holzer, in my district, we have the second highest 
poverty rate in the State of Florida. I represent many folks 
who are looking for work and are trying their hardest to 
provide for their families. When the mandatory ABAWD work 
requirement went into effect in 2016, the Florida Department of 
Children and Family estimated that 591,000 were removed from 
SNAP in the first year. How can we amend current law so that 
the vulnerable in communities are not excluded from the 
nourishment that they deserve?
    Dr. Holzer. Well, Congressman, I would change policy and 
practice with regard to the ABAWD population. As I indicated 
earlier, I would more carefully assess their employability and 
provide both what some people in the field call accommodation 
of help and hassle; pressure to engage in services and 
activities, but also assistance and help in doing so. And, 
frankly, one thing that could be considered is, in return for 
that engagement, to suspending the time limit more easily.
    Right now the time limit is suspended for people who engage 
in work or a prescribed number of activities for 20 hours a 
week. I would probably increase the assistance, maybe drop the 
work hours, just to make it easier for more people to do 
something productive but still have access to the food stamps 
that they often need, as a work support.
    Mr. Lawson. Okay. And, Ms. Reynolds, this question is 
directed to you. I grew up in the country where people, to a 
large extent when I was growing up, were not on SNAP or any 
other program. They provided for themselves and helped each 
other. How do you deal with the situation where some people who 
are on this program that shouldn't be there? And people are 
very smart, so every time the Federal Government implements 
some requirements, a lot of people are very smart how to get 
around those requirements. When I am working on this, I am 
trying to see, I know people who need it the most really need 
it, but there are a lot of people who are gaming the system. 
How do you go and deal with that? What do you do in order to 
stop that?
    Ms. Reynolds. That responsibility in our community falls to 
the State of Texas. What we see a lot in our organization is, 
we work with a lot of families, most of the time our families 
aren't on a lot of benefits that they do qualify for. One of 
our goals or measures of success is families being off of 
public assistance, however, what we often see is we enroll them 
in public assistance until we can move them further along the 
spectrum to eventually get them off of public assistance.
    We have seen the anecdotal story of somebody who is taking 
advantage of the system, but generally speaking, what we see at 
Catholic Charities Fort Worth is people who want more for their 
children than what their life looks like today.
    Mr. Lawson. Okay. I will yield back in a minute. In Duval 
County, there are about 200,000 people that go without food 
every day, and you won't be able to answer this question, but I 
would like to know, and I have gone to food banks, helped with 
meal deliveries who get nonperishable items, and so forth, how 
do we get nourishment to these people, especially kids, and 
that is an issue.
    But, Mr. Chairman, I will just yield back. That is just 
something on my mind.
    The Chairman. The gentleman yields back.
    Now, I am pleased to recognize the gentleman from New York, 
Mr. Faso, 5 minutes for questioning.
    Mr. Faso. Thank you, Mr. Chairman, and thank you for 
holding this important hearing today. And thanks to the 
witnesses for coming.
    I also am on the Budget Committee, and I would just note 
that we have heard a lot about the budget. The budget does 
presume $10 billion in reduced spending over 10 years, and it 
is important to note that this program will spend somewhere 
between $600 and $700 billion over that 10 year period. The 
presumption is that if there were more stringent work 
requirements, that there would be certain reductions in levels.
    Now, I don't know how this will manifest itself, but I can 
tell you that I don't think I have heard virtually anything 
here today that one would disagree with. I mean you hear the 
needs, the problem with the income cliff. I hear this all the 
time from employers, small-business employers in particular, 
who tell me people will come to them looking for work and they 
will decline a job because of the prospect of losing benefits 
because of the dramatic income cliff. And there is no doubt 
that I hear from food pantries and others that the need and the 
demand for their services are more significant now than they 
have been in recent years. There is something going on. Then I 
hear from employers constantly who tell me they have jobs, they 
just can't find qualified people.
    What percentage of those people, Ms. Reynolds, do you 
think, on food stamps generally throughout the country, are 
getting the kind of coaching that you are talking about would 
be so important to getting people into jobs and helping them 
move in a direction so they have less dependency on these 
programs?
    Ms. Reynolds. I would say a very slim margin. And if I 
could encourage one thing and one thing alone today, I love how 
your colleague talked about one of his roles was to be an 
encourager of encouragers, because we have a team just at our 
Catholic Charities of over 400 people who dedicate their life 
to trying to move families out of poverty. Make it easier on 
us, make it easier on our team at Catholic Charities and 
Catholic Charities throughout the country, and allowing these 
benefits where it makes sense for families to move ahead.
    Mr. Faso. What if we were to presume some savings in EBT in 
SNAP benefits, and plowed those savings into the kind of 
coaching and educational opportunities for people that Dr. 
Holzer was referring to and that Mr. Lotzar is conducting at 
the community college level?
    Ms. Reynolds. Yes. I am probably not familiar enough about 
where savings could be realized, but I do think it is really 
important that we invest differently, that we invest up-front, 
and we invest in intensive case management.
    Mr. Faso. Yes, Dr. Holzer.
    Dr. Holzer. If I could just address that. The vast majority 
of adults on SNAP never set foot in an American Job Center. 
There are over 3,000, what we used to call One-Stop Shops, 
around the country that are there to help connect people to 
jobs. They never get those services. They never get the 
counseling available in those centers that would help them 
identify appropriate education and training activities to 
improve their employability. Anything we could do within SNAP 
to better connect people to the labor market services that are 
already there, would be a big step forward.
    Mr. Faso. Maybe a means by which we could perhaps bridge 
some of the Republican-Democrat philosophical divide would be 
to actually take savings, if they accrue, and plow them into 
those kind of efforts.
    Here is the crux of the matter, it seems to me, that the 
public is oftentimes very frustrated by what they perceive to 
be the abuse of the system. An under sheriff in my district 
related to me not a month ago, every single drug dealer he 
arrests has an EBT card for food stamps on them, and yet we 
know, and I have met with the mental health associations in my 
counties, the important need for people, they may not be single 
adults, but they may, because of mental health difficulties or 
other difficulties, what was related about the veteran in 
Maine, these people simply don't have the capacity to work for 
a variety of reasons, whether it is mental health, whether it 
is drug addiction, whatever. There has to be some means by 
which we can move many more of the people who are in SNAP now 
and move them into productive employment by getting at this 
income cliff that Ms. Reynolds; any comment that Dr. Holzer or 
Mr. Lotzar have about the income cliff from your experience?
    Dr. Holzer. It is one thing to find an income cliff 
theoretically for someone who finds themselves at a certain 
point in the earnings and hours distribution. It is another 
thing to find a lot of people at that cliff and for it to 
affect their behavior.
    The rigorous evidence to date does not show large negative 
effects on employment because of the SNAP program. It is not 
like 20 years ago before welfare reform where the old welfare 
system really did disincentivize a lot of people. In SNAP right 
now, the rigorous evidence, and I would refer you to work by 
Diane Schanzenbach of Northwestern.
    Mr. Faso. Yes.
    Dr. Holzer. There is almost no evidence of negative effects 
on work by men, and modest effects on women. It is not zero, 
but this notion that massive amounts of work are being deterred 
is probably not accurate, based on the current research.
    Mr. Faso. Thank you, Mr. Chairman. I yield back.
    The Chairman. The gentleman yields back.
    I now recognize the gentleman from Florida, Mr. Soto, for 5 
minutes.
    Mr. Soto. With the Chairman's indulgence, I would like to 
yield 30 seconds to Mr. McGovern.
    Mr. McGovern. Thank you. And I appreciate what the 
gentleman just said, but I just want to point out one thing. 
The SNAP program is one of the most efficiently, effectively 
run programs in the Federal Government, and as Mr. Evans 
pointed out, the primary focus of this particular program is to 
make sure people have food and nutrition.
    Now, we can talk about better case management, which 
involves coordination with a whole bunch of different programs, 
which is a good idea, but let's understand about this 
particular program. And when you cut this program, what you are 
doing is you are taking food away from people.
    The benefit right now is about $1.40 per person, per meal. 
That is it. That is why so many people on SNAP end up at food 
banks. And in 2016, we threw a million people off of the 
program because the waivers disappeared. Those people aren't 
working, by and large, many of them. Those people have just 
been cut off of their food benefit because waivers haven't been 
extended. They are going without food. They are ending up in 
food banks.
    If we want to talk about a holistic approach, that is a 
good conversation to have, and within the context of this farm 
bill, finding $10 billion worth of cuts in SNAP is a terrible 
thing to do, and it is going to make people's lives more 
difficult, and make it more difficult to do the kinds of things 
that the panelists here have suggested.
    I thank the gentleman for yielding.
    Mr. Soto. Thank you, Mr. McGovern.
    As we know, \2/3\ of the folks on the program are children, 
seniors, the disabled. Seventy-five percent of households where 
someone is able to work, is working. And we already passed a 
major reform for able-bodied adults where they get 3 months 
every 3 years. We are talking about a really narrow section of 
SNAP. Now, it is important for Americans to understand that 
because people get the sense there are all these folks who are 
able to work, and they are just getting SNAP the whole time.
    I want to start briefly with, let's say we have seniors or 
those with disabilities who want to work maybe a part-time job. 
We are not forcing anybody to do that, but I know some folks 
want to still get out of the house and make a little money. 
What can we do to help out seniors and those with disabilities 
who choose to want to work a part-time job or something of that 
nature? That is for the whole panel.
    Dr. Holzer. I would start with assessing their needs and 
capabilities, and taking advantage of existing labor services 
in our American Job Centers and try to connect them with 
employers.
    Frankly, and it is out of the domain of this Committee, I 
would also like to see some reforms in SSDI, in the Social 
Security Disability Insurance program, which right now is not 
optimally set up to encourage people with disabilities to work. 
Because a lot of the disabled folks are not only on food 
stamps, but on SSDI. Instead of kicking them off food stamps, 
we can think about changes in that program that would 
incentivize greater work and then get them those services.
    Mr. Soto. Sure. Since my time is limited, I am going to go 
to my second question, which is dealing with able-bodied 
adults.
    How are we identifying these folks who come off of this 3 
months, every 3 years, and what do you think we could be doing 
better to make sure they have appropriate work and education? 
And I give that question to both Mr. Lotzar and Ms. Reynolds.
    Ms. Reynolds. It is my belief that the biggest thing we can 
do for these families is walk with them. And that doesn't occur 
over a few months, that occurs with somebody providing good 
case management services to them. That really is about a 
transformational relationship over several years.
    Mr. Soto. Now, are these folks identified and then relayed 
to your organizations efficiently right now?
    Ms. Reynolds. Say it again.
    Mr. Soto. Are these folks, able-bodied working adults, who 
are off of this 3 months, do we efficiently right now identify 
these individuals for your groups to help out with?
    Ms. Reynolds. In some communities. It depends on local 
collaboration relationships that occur. We tend to be a larger 
provider of case management and assistance in our local 
communities, so we get a large number of referrals coming 
through our doors.
    Mr. Soto. And, Mr. Lotzar, if we identify these folks 
properly and efficiently, what could we be doing better to 
assure they have appropriate work and education?
    Mr. Lotzar. Yes. Short-term work training programs, because 
you can't take a long time. You can't do an Associate Degree. 
It is the very short part that helps, first. Second, like I 
said, you have to work on the desire for a different kind of 
lifestyle, which people say is there, and it is there, but a 
demonstration of, I don't want to say regular, a working 
lifestyle that is full-time work, that is meaningful work.
    It takes a lot, and the way to do that is really with the 
case management, with relationships. And case management 
doesn't have to happen in any particular organization, but 
short-term programs that deal with the person. There we go.
    The Chairman. The gentleman yields back.
    I now recognize the gentleman from Texas, Mr. Arrington, 
for 5 minutes.
    Mr. Arrington. Thank you, Mr. Chairman. And I apologize for 
coming in late, but we have things that are scheduled at the 
same time, unfortunately. And so being from west Texas, I 
always find that being rude to walk in a conversation and then 
act like you have been there for the whole time.
    I am just curious, have there been studies about SNAP 
recipients engaging in community college, education, skills 
training, and how many SNAP recipients avail themselves of 
those opportunities? And I mean is there any study like that? I 
didn't see anything cited, yes, sir?
    Dr. Holzer. There isn't a lot on SNAP recipients because we 
know that very few of them are engaged in meaningful employment 
and training activities, and I think we all share the goal of 
seeing more of that for this population, we do have studies on 
similar low-income individuals participating in community 
college programs, and we have some sense of the different 
programs that work for those folks. Some of them are Associate 
Degree programs, some of them are certificates, but again, if 
they have connections to employers in high-demand fields, we 
have evidence of success there. And we would like to see more 
SNAP recipients engaged in those efforts.
    Mr. Arrington. If very few are engaged in that, how do you 
incentivize this community to engage and avail themselves? I am 
a believer in the education and skills training to empower 
people, improve their lives.
    Dr. Holzer. Well, there are incentives for the individuals, 
and there are also incentives for the states that implement a 
lot of these programs. One can imagine, for instance, bonuses 
to states that engage more of these individuals in meaningful 
activities or that improve their outcomes. At a minimum, 
reporting requirements can matter, and bonus for states that 
manage to raise the number of people engaged, again, in 
meaningful activities. Performance measures, although those can 
have a downside because they can encourage the agencies to 
cream and do things like that. The incentives for the states 
and the local agencies matter. And for the individuals 
themselves, there is often an incentive already; that is higher 
earnings, as long as that money is there for the assessments 
and the support services needed to get them there.
    Mr. Arrington. Okay. Mr. Lotzar, do you have a comment on 
that? And then I just want to ask you about how you align 
market opportunities with your educational programs. Community 
colleges are the best at that, by the way, speaking as a former 
Vice Chancellor at a major research university. Kudos to the 
community colleges out there doing great work for our country.
    Mr. Lotzar. Thank you.
    Mr. Arrington. Any comments on the previous question, and 
then that latter comment that I made?
    Mr. Lotzar. Yes. On the previous question, I just wanted to 
say that there is incentive for individuals, and that is 
earning more income, but there has to also be modeling, there 
has to also be demonstration on the parts of people who grow up 
knowing SNAP and relying on SNAP, and not just SNAP but SSI or 
SSDI, that connecting through short-term programs at community 
colleges, I am just one of these flag-wavers, that leads to a 
successful, stable income that is reliable. There has to be 
modeling. And how you incentivize it, I don't know. He had some 
good points with the state there.
    The second question you asked was how do we find out which 
jobs are the right ones?
    Mr. Arrington. Yes, but let me skip over that one. I am on 
the VA Committee, again, at my university back home, the one I 
served at in the administration, we received a lot of funding 
from the VA to provide great education for our veterans, and 
were proud to do so, and won awards by having a veteran-
friendly campus, et cetera. But there are some that are really 
critical about the for-profit guys. Some have gone out of 
business, and they worry about veterans going to schools or 
institutions of higher ed that may not be performing and 
delivering quality education. My thought is, rather than us 
picking and choosing at the Federal Government, why don't we 
have some outcome-based funding? Why don't we give some of the 
money up-front, and then if the population that we are 
interested in is persisting, is graduating, and is getting 
employment, then we put a little bit more money as a reward to 
those institutions. Why not do something like that with this 
population, quite frankly, with every population that the 
Federal Government is spending taxpayer dollars on?
    And I yield back, Mr. Chairman.
    The Chairman. The gentleman yields back.
    Before we adjourn, I invite the Ranking Member to make any 
closing remarks that he has.
    Mr. McGovern. Let me thank the panel for your excellent 
testimony and your presentations. You have made a challenge to 
all of us to be thinking more holistically about how we deal 
with the issue of poverty and hunger in this country.
    And I am going to close the way I began, by just expressing 
my deep concern over our funding priorities here in this 
Congress. The notion that we would even entertain cutting SNAP 
by $10 billion, to me, goes against everything that I heard 
today in terms of how we ought to be approaching this issue. 
People on SNAP are a very diverse population, and as I 
mentioned at the beginning of the hearing, 67 percent of those 
on the program are not expected to work; they are kids, they 
are senior citizens, they are people who are disabled. Of those 
who can work, the majority are working. Yet wages are so low 
that so many of them still need to rely on this program.
    Of those who are not working, the population is very 
complicated, and it includes returning veterans, it includes 
people who are chronically homeless, people who have 
undiagnosed mental illnesses. It is a complicated population 
and we need to treat it as such. But, we need to reassess what 
our priorities here are in this Congress. I appreciate very 
much your presentations and look forward to working with you in 
the future.
    I yield back. Thank you.
    The Chairman. The gentleman yields back. And I thank the 
Ranking Member.
    First of all, I want to thank the witnesses for, once 
again, bringing your perspectives, your experience, and I can 
tell your passion on the topics and the issues that were 
discussed today. I greatly appreciate it.
    I want to thank my colleagues. The Ranking Member does 
better math than I, I can't keep track of how many hearings we 
have done, but it was quite a few.
    Mr. McGovern. Twenty-three.
    The Chairman. Twenty-three, thank you, 23 hearings, and it 
is a passion of all the Members of the Subcommittee. We have 
great participation, and I think that is reflected on how 
important that this topic is. And we have done this with 
transparency. And I would agree, we found very few instances of 
fraud and abuse, and we are looking to see how we can make this 
program more effective to help American families.
    I want to thank the staff who do all the really heavy 
lifting on both sides of the aisle, that help prepare us for 
this.
    My principles are pretty clear, and I talk about them a 
lot. The fact is nutrition matters, and farmers feed, that is 
why I can't think of a better place for a nutrition title than 
as a part of the farm bill. And we have one other, would the 
gentlelady like to ask questions for 5 minutes? If so, I will 
yield to the gentlelady from New Mexico.
    Ms. Lujan Grisham. How about if I do a hybrid in respect to 
the chair and the Ranking Member, because I am so late. And I 
really appreciate the conversation, so I want to certainly 
associate myself with those closing remarks.
    And the one point is that I would just love to make to the 
group, that in the testimony where work requirements and 
getting folks out of poverty is certainly an issue that is 
bipartisan, a one-size-fits-all model, I agree, never works. 
And recognizing that there are states like mine with such 
extreme poverty, have some of the hungriest families still in 
the country, the highest unemployment or nearly so, we shift 
positions where we are worst and then second worst. And there 
is not a job market in any community that is having any impact 
on our overall economy. No job training, no investments, no 
state policy that works currently. We have to be very careful 
about a Federal mandate that would create, whether perverse 
incentives or not, the right opportunities for states like New 
Mexico to make productive decisions that support families who 
are really in need.
    Mr. Chairman, that was very kind of you. I thank the panel, 
and I thank my colleagues for this hearing today. Thank you.
    The Chairman. The gentlelady yields back.
    The focus of today's hearing was improving pathways to 
success for SNAP households. SNAP households, a great Illinois 
philosopher, Representative Rodney Davis, used a term that I 
love, used in today's hearing about serving those folks who are 
in the season of need. And that is certainly what our focus is 
on. The good news is we are building on a record of bipartisan 
work and accomplishments. The Workforce Innovation and 
Opportunity Act that was passed and signed by President Obama, 
and which really was focused on restoring greater access to 
more effective job training. That is the One-Stops, the Career 
Links were made reference to. And we have some great reforms 
that, in a bipartisan way, we have accomplished those. And that 
was just a few years ago. And then most recently we passed 
unanimously the Strengthening Career and Technical Education of 
the 21st Century, which again is about restoring rungs on the 
ladder of opportunity, greater access to more effective skills-
based training. Coupled with our Nutrition Subcommittee work 
that we have been doing and preparing for, we are providing and 
looking for greater access to more effective skills-based 
training and coordination with, obviously, meeting nutrition 
needs. Our success--when we will be successful we are going to 
see, I believe, more unemployed become employed, more 
underemployed to have sustainable employment, and lower wages 
to better wages.
    It has been noted throughout the hearing this morning that 
the budget resolution released this morning calls for $10 
billion in reconciliation reductions from the Agriculture 
Committee. Several folks have offered suggestions in the press 
over the past few weeks for ways to cut SNAP to achieve those 
savings. I want to remind everyone it is up to the Agriculture 
Committee, how any required savings would be achieved. Not the 
Budget Committee and not folks who are freelancing in the 
press. And I would also note that we are only required to 
respond to reconciliation instructions that make it through the 
Senate and into a conference joint budget resolution.
    For the time being, we are going to keep our eye on the 
ball, and that means staying focused on the next farm bill.
    Under the Rules of the Committee, the record of today's 
hearing will remain open for 10 calendar days to receive 
additional materials and supplementary written responses from 
the witnesses to any question posed by a Member.
    This hearing of the Subcommittee on Nutrition is adjourned.
    [Whereupon, at 11:42 a.m., the Subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]
   Submitted Article by Hon. James P. McGovern, a Representative in 
                      Congress from Massachusetts
Trump to poor Americans: Get to work or lose your benefits
The Washington Post
Wonkblog/Analysis
By Caitlin Dewey and Tracy Jan
May 22 


          A group of homeless men and women receive meals from 
        volunteers on May 18 in Morgantown, West Virginia. West 
        Virginia is one of the nation's poorest states where nearly one 
        in five struggled to afford basic necessities in 2015. (Spencer 
        Platt/Getty Images)

    For a period last year after he lost his food stamps, Tim Keefe, an 
out-of-work and homeless Navy veteran, used his military training to 
catch, skin and eat squirrels, roasting the animals over an open fire 
outside the tent he pitched in frigid Augusta, Maine.
    The new additions to Keefe's diet resulted from a decision by state 
authorities to tighten work requirements for recipients of the social 
safety net--forcing the 49 year old, who lost his job at a farm 
equipment factory because of an injury, off the food stamp rolls.
    ``I was eating what I could find, and borrowed from friends and 
strangers,'' Keefe said in testimony to the Maine legislature. ``There 
were many times . . . when I would go 2 or even 3 days without food. If 
one was inclined to lose a lot of weight, I could recommend this diet 
wholeheartedly.''
    Now the Trump Administration in its first major budget proposal has 
proposed more stringent work requirements--similar to those in effect 
in Maine and other states--to limit eligibility for food stamps and a 
host of other benefits as part of sweeping cuts to anti-poverty 
programs.
    The White House budget proposal, due to be unveiled on Tuesday, 
would reduce spending on anti-poverty programs from food stamps to tax 
credits and welfare payments by $274 billion over a decade, largely by 
tightening eligibility for these programs, according to Administration 
officials. With additional reforms on Medicaid and disability 
insurance, total safety net cuts would top $1 trillion over 10 years.
    Making low-income Americans work to qualify for so-called welfare 
programs is a key theme of the budget. ``If you are on food stamps and 
you are able bodied, we need you to go to work,'' said budget director 
Mick Mulvaney during a White House briefing on Monday.
    He said the strengthened requirements in the budget focuses on 
putting the 6.8 million unemployed or underemployed Americans back to 
work. ``There is a dignity to work,'' he said, ``and there's a 
necessity to work to help the country succeed.''
    The White House did not offer details Monday on how the work 
requirements would be implemented, other than saying it would be 
``phased in'' for able-bodied adults without dependent children.
    The White House estimated the combined reforms to the Supplemental 
Nutrition Assistance Program, better known as food stamps, would 
generate nearly $193 billion in savings over a decade.
    In addition to SNAP reforms, Trump will propose taking the earned 
income and child tax credits away from undocumented immigrants working 
in the United States, many of whom pay taxes or have American born-
children. That reform alone would save $40 billion over a decade, 
according to the White House.
    Anti-poverty advocates say the White House could implement its 
desired reforms to SNAP in two ways: require recipients to work more 
than the current minimum of 20 hours a week, or cut the unemployment 
waivers in areas with high joblessness rates.
    The influential Heritage Foundation, as well as a number of House 
conservatives have championed a crackdown on waivers, leading many 
anti-poverty advocates to conclude that is the most likely way the 
White House would implement its proposed reforms.
    Robert Rector, a senior research fellow at the Heritage Foundation 
who has asked the White House to prioritize work requirements, said the 
Trump Administration needs to ``go after'' the four million able-bodied 
adults without dependents in the food stamp program.
    ``You say to them, `We will give you assistance, but come to the 
office 1 day a week to do job search or community service,''' Rector 
said. ``When Maine did that, they found almost immediately that their 
caseload dropped 85 percent.''
    Critics say such a change could endanger people like Keefe, a 
veteran who has been unable to find a job after injuring his wrist on 
the job at a plow factory in Rockland, Maine. As a result, Keefe now is 
medically unable to lift more than 25 pounds--which disqualifies him 
from other work in manufacturing.
    The Navy veteran was one of several thousand former food stamp 
recipients who lost benefits when Maine, in 2015, declined to renew its 
waiver and reinstated statewide work requirements. He has spent much of 
the last year living in a tent.
    ``I don't wanna worry no one,'' said Keefe, who recently testified 
to Maine's Committee on Health and Human Services about the impact the 
work requirement had on him. But, he added: ``I hope they understand 
that people fall through the cracks.''
    The Trump Administration is considering other changes to SNAP. 
While details remain sparse, Mulvaney said the Federal Government would 
be asking states to share in the costs for the food stamps program, 
through a phased-in ``state match'' so they have a ``little more skin 
in the game.''
    ``We believe in the social safety net. We absolutely do,'' Mulvaney 
said. ``What we've done is not to try and remove the safety net for 
folks who need it, but to try and figure out if there's folks who don't 
need it that need to be back in the workforce.''
    Suspending employment waivers would hit hard in areas with high 
unemployment such as southern and central California, where the 
unemployment rate can spike as high as 19 percent, as well as cities 
such as Detroit and Scranton, Pa., where joblessness remains rampant. 
The change would also hit hard in large portions of New Mexico, Oregon, 
Washington, Georgia, Kentucky, Tennessee, West Virginia, Idaho and 
Michigan.
    ``It's unconscionable, cruel and ineffective,'' said Josh Protas, 
the Vice President of Public Policy at MAZON, a national anti-hunger 
organization. ``I'm honestly not sure what their goal is.''
    Critics say the changes in unemployment waivers would be 
devastating for Native American families living on reservations in 
North and South Dakota, Arizona and Montana where there is chronic 
poverty and high unemployment.
    ``The President's budget proposal will force kids in rural America 
to go hungry while wasting billions of taxpayer dollars on misplaced 
priorities like a wall that won't keep us safe,'' said Senator Jon 
Tester (D-MT), in a statement to the Post. ``Parents in Montana and 
across Indian Country should not have to choose between food for their 
tables, gas for their cars, and shoes for their kids.''
    The number of Americans on SNAP remains high, however. In 2016, 44 
million Americans receive the benefits, compared to just 28 million 
people in 2008.
    ``They have not come down like we would expect them to do,'' 
Mulvaney said. ``That raises a very valid question: Are there folks on 
SNAP who shouldn't be?''
    Anti-hunger advocates argue that, generally speaking, there are 
not. Because SNAP benefits decrease gradually with increased income, 
there is no incentive for people to avoid work to get benefits--a 
phenomenon economists call the ``welfare cliff.'' And benefits are too 
small for people to subsist on them without working: The average food 
stamp benefit was $465 a month for a family of four in 2015. Most 
people are on the program for between 7 and 9 months on average.
    ``The notion that people would prefer not to work to get that 
benefit, give me a break,'' said U.S. Representative Jim McGovern, (D-
Mass.) a longtime anti-hunger advocate. ``This is a lousy and rotten 
thing to do to poor people. They look at SNAP as an ATM to pay for 
their other priorities.''
    Additionally, \3/4\ of households using SNAP contain children, 
seniors, or people with disabilities, said Elaine Waxman, a senior 
fellow in the Income and Benefits Policy Center at the Urban Institute. 
Without SNAP, the country would have had three to 4.5 million more 
people in poverty during the recession, she said.
    More than \1/4\ of able-bodied adults without dependents on SNAP do 
not have a high school diploma, Waxman said; another 57 percent don't 
have college degrees--putting them at a disadvantage when it comes to 
finding work.
    A number are also veterans, young adults aging out of the foster 
care system, and felons recently released from jail. SNAP recipients 
who cannot find work, for these or other reasons, are supposed to 
attend job training programs--but they're not widely available because 
of lack of funding.
    ``This is the trick. On the one hand, you want people to do 
something, when in fact a lot of folks may not realistically be able to 
find a job,'' Waxman said. ``Most states don't want to put the money 
in. This is a dilemma that we're in.''
    The evidence that stricter work requirements actually cause people 
to get jobs is mixed, at best. In Kansas, which reinstated the 
requirements in October 2014, 40 percent of unemployed adults were 
still unemployed a year after being kicked off SNAP. Among former SNAP 
participants who lost benefits, the average annual income was only 
$5,562, according to the Foundation for Government Accountability, a 
right-wing think tank based in Florida.
    Progress has also been hotly debated in Maine, a state that 
conservatives regularly hold up as evidence that stricter work-
requirements are effective. When the state dropped its waiver in 2015, 
the number of unemployed adults in the program immediately fell by 
nearly 80 percent.
    But a May 2016 report by the state found that nearly 60 percent of 
those affected individuals did not report any income in the year after 
they left the program--suggesting they were still unemployed or 
underemployed a year later.
    On the national level, Michael Tanner, a senior fellow who focuses 
on social welfare issues at the Cato Institute, a libertarian think 
tank, said he doesn't think similar mandates will have a huge impact on 
moving large numbers of recipients into employment or result in 
significant budget savings. Most SNAP recipients who can work are 
already working, and many of those who are not meet one of the various 
exemptions such as being disabled.
    ``It's making a statement that Republicans think people who are on 
public assistance should be doing all they can to get off,'' Tanner 
said, ``and that means working whenever possible.''
    McGovern, who sits on the House Agriculture Committee, said he was 
surprised to learn about the White House proposal given Agriculture 
Secretary Sonny Perdue's testimony before the Committee last week 
saying he did not favor any major changes to the food stamps program.
    ``It's been a very important, effective program,'' Perdue said, 
according to a recording of the hearing. ``As far as I'm concerned we 
have no proposed changes. You don't try to fix things that aren't 
broken.''
    The Trump Administration is advocating other ``fixes'' to the 
safety net, as well. The budget will also propose requiring people to 
have a Social Security [N]umber to collect tax credits. Mulvaney said 
it is unfair that taxpayers support immigrants working illegally in 
this country.
    ``How do I go to somebody who pays their taxes and say, `Look, I 
want you to give this earned income tax credit to somebody who is 
working here illegally? That's not defensible,'' Mulvaney said.
    Rector, of the Heritage Foundation, said he also hopes Trump will 
prioritize work requirements for those receiving housing subsidies. 
Mulvaney did not address that on Monday.
    Diane Yentel, President of the National Low Income Housing 
Coalition, said the majority of Americans receiving housing subsidies 
are elderly, disabled or already include someone who works. Of the 
remaining households, nearly half include a preschool child or an older 
child or adult with a disability who needs the supervision of a 
caregiver.
    Establishing work requirements for the remaining six percent of 
households who are `work able' but not employed would require state and 
local housing agencies already facing funding shortfalls to establish 
cumbersome monitoring and enforcement systems for a very narrow segment 
of rental assistance recipients, she said.
    ``This is neither cost effective nor a solution to the very real 
issue of poverty impacting millions of families living in subsidized 
housing or in need,'' Yentel said in a statement to the Post.

          Correction: This story incorrectly stated the average annual 
        income for SNAP participants in Kansas who had lost and then 
        found jobs was $5,562. That figure applied to all SNAP 
        participants who had lost the benefit.

          Caitlin Dewey is the food policy writer for Wonkblog. 
        Subscribe to her daily newsletter: tinyletter.com/cdewey, 
        @caitlindewey.
          Tracy Jan covers the intersection of race and the economy for 
        The Post. She previously was a national political reporter at 
        The Boston Globe, @TracyJan.