[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]
THE SMALL BUSINESS TRADE SNAPSHOT: AGRICULTURE AND WORKERS
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON RURAL DEVELOPMENT, AGRICULTURE, TRADE, AND
ENTREPRENEURSHIP
OF THE
COMMITTEE ON SMALL BUSINESS
UNITED STATES
HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTEENTH CONGRESS
FIRST SESSION
__________
HEARING HELD
APRIL 2, 2019
__________
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Small Business Committee Document Number 116-014
Available via the GPO Website: www.govinfo.gov
___________
U.S. GOVERNMENT PUBLISHING OFFICE
35-735 WASHINGTON : 2019
HOUSE COMMITTEE ON SMALL BUSINESS
NYDIA VELAZQUEZ, New York, Chairwoman
ABBY FINKENAUER, Iowa
JARED GOLDEN, Maine
ANDY KIM, New Jersey
JASON CROW, Colorado
SHARICE DAVIDS, Kansas
JUDY CHU, California
MARC VEASEY, Texas
DWIGHT EVANS, Pennsylvania
BRAD SCHNEIDER, Illinois
ADRIANO ESPAILLAT, New York
ANTONIO DELGADO, New York
CHRISSY HOULAHAN, Pennsylvania
ANGIE CRAIG, Minnesota
STEVE CHABOT, Ohio, Ranking Member
AUMUA AMATA COLEMAN RADEWAGEN, American Samoa, Vice Ranking Member
TRENT KELLY, Mississippi
TROY BALDERSON, Ohio
KEVIN HERN, Oklahoma
JIM HAGEDORN, Minnesota
PETE STAUBER, Minnesota
TIM BURCHETT, Tennessee
ROSS SPANO, Florida
JOHN JOYCE, Pennsylvania
Adam Minehardt, Majority Staff Director
Melissa Jung, Majority Deputy Staff Director and Chief Counsel
Kevin Fitzpatrick, Staff Director
C O N T E N T S
OPENING STATEMENTS
Page
Hon. Abby Finkenauer............................................. 1
Hon. John Joyce.................................................. 3
WITNESSES
Mr. Mark Meirick, Board Member, Iowa Pork Producers Association,
Protivin, IA, testifying on behalf of the National Pork
Producers Council.............................................. 6
Ms. Rebecca Dostal, Producer, Iowa Farm Bureau Federation, Traer,
IA, testifying on behalf of the Iowa Farm Bureau Federation.... 7
Mr. Josh Nassar, Legislative Director, International Union,
United Automobile, Aerospace, and Agriculture Implement Workers
of America, Washington, DC..................................... 9
Mr. Glenn Stoltzfus, Co-owner, Pennwood Farms, District 11 State
Board Director and Dairy Committee Chairman, Pennsylvania Farm
Bureau, Berlin, PA............................................. 11
APPENDIX
Prepared Statements:
Mr. Mark Meirick, Board Member, Iowa Pork Producers
Association, Protivin, IA, testifying on behalf of the
National Pork Producers Council............................ 28
Ms. Rebecca Dostal, Producer, Iowa Farm Bureau Federation,
Traer, IA, testifying on behalf of the Iowa Farm Bureau
Federation................................................. 35
Mr. Josh Nassar, Legislative Director, International Union,
United Automobile, Aerospace, and Agricultural Implement
Workers of America, Washington, DC......................... 37
Mr. Glenn Stoltzfus, Co-owner, Pennwood Farms, District 11
State Board Director and Dairy Committee Chairman,
Pennsylvania Farm Bureau, Berlin, PA....................... 48
Question and Answer for the Record:
Question from Hon. Ross Spano to Ms. Rebecca Dostal and
Answer from Ms. Rebecca Dostal............................. 53
Additional Material for the Record:
None.
THE SMALL BUSINESS TRADE SNAPSHOT: AGRICULTURE AND WORKERS
----------
TUESDAY, APRIL 2, 2019
House of Representatives,
Committee on Small Business,
Subcommittee on Rural Development, Agriculture,
Trade and Entrepreneurship,
Washington, DC.
The Subcommittee met, pursuant to call, at 10:00 a.m., in
Room 2360, Rayburn House Office Building, Hon. Abby Finkenauer
[chairwoman of the Subcommittee] presiding.
Present: Representatives Finkenauer, Golden, Radewagen,
Hagedorn, and Joyce.
Chairwoman FINKENAUER. Good morning. The Subcommittee will
come to order.
I want to thank everyone for joining us here this morning,
and I want to especially thank our witnesses for being here
today and coming in from all the way from Pennsylvania and
Iowa. I also appreciate our friend from the UAW being here, as
well. I am very grateful you all made the time.
I grew up in a union family, and I also have a sister and
brother-in-law who are corn and soybean farmers. I have watched
firsthand the last few years as retaliation from the current
trade wars has caused unease, uncertainty, and economic losses
across the heartland.
Now trade issues are coming to the forefront of national
conversations with implications for nearly every sector of our
economy, and we see a number of escalating impacts from current
trade negotiations with our major trading partners.
Small businesses--which I like to remind folks are also our
farmers--make up 97 percent of U.S. exporters. I look forward
today to hearing about what you all think of the state of trade
for our farmers, and also working families, who are critical to
small and large businesses in numerous trade-impacted
industries.
We also want to understand what you want to see out of
future trade agreements as Congress learns more about the
President's renegotiation of the North American Free Trade
Agreement, NAFTA, or USMCA, as it is now called, and our trade
negotiations as they are ongoing with China, Japan, and the
European Union.
It is no secret that farmers and working families are the
backbone of our agriculture economy. In Iowa, agriculture and
manufacturing go hand in hand. If our farmers are doing well,
so are our working families--and large and small
manufacturers--like our UAW workers who work on farm equipment
at John Deere--and vice versa. Their sustained success is
critical for communities in Iowa and the rest of the country.
To promote success in rural America we must ensure we have
trade policy that helps us export goods, but also protects our
workers, communities, and production.
Trade issues are obviously very important to me and I know
they are to all of you here today as well. That is why our
first hearing in this Subcommittee on Rural Development,
Agriculture, Trade, and Entrepreneurship was also on trade and
the State Trade and Export Promotion Program and now our second
hearing is also on trade.
Whether it is purchasing the latest iPhone, selling pork or
soybeans abroad, or buying a car, every American is impacted by
trade policies. Our farmers and workers make the Hawkeye State
the country's second-largest agriculture-exporting State,
shipping $10.9 billion in agriculture exports abroad in 2016.
In my district alone, nearly 14,000 people make their
livelihoods in agriculture, including some of my own family. We
also have union members in my family, and it is not uncommon in
Iowa to have both.
Oftentimes in small family farm operations, under 500
acres, you will also have UAW and IBEW members who work hard
every day with pride on that family farm and also in their
union job that provides great healthcare and great retirement.
Our farmers and workers know some challenges can come with
trade. We need to understand how sectors of the economy are
often interlinked--agriculture and workers in manufacturing and
transportation, for example--so when we are renegotiating trade
deals we do so in a way that lifts up all Americans.
We should stand up to countries that are not playing by the
rules and lean on our allies for strength. We also must take
advantage of every opportunity we have to ensure that American
workers' jobs and their livelihoods are being considered.
Ill-conceived trade policy can produce trade wars that
create instability. In the simplest terms, trade wars can
easily become a tax paid by every American, decreasing exports
and slowing economic growth. Bad trade deals or lack of
accountability can hurt communities and American workers.
It is vital we retain access to new and expanding markets,
but also use our economic power to ensure that the American
worker and our farms and businesses are competing on a level
playing field.
In our global economy, 95 percent of the world's consumers
live outside of the U.S., and for our rural entrepreneurs and
farmers, the ability to do business overseas is key.
We know more work needs to be done, however, when only one
percent of our nation's 30 million small businesses are able to
access foreign markets. More needs to be done when other
nations undercut American workers and hurt our domestic
business.
In Congress, we need to think about trade as making it
easier for farmers and small employers to succeed in the
international marketplace while also protecting our workers. It
is my hope we can do both, and, quite frankly, we must, and we
need a thoughtful approach.
The farmers and small businesses in my district simply want
a level playing field on which to compete, and they want to be
heard. We need to start by doing more listening in Congress on
trade.
We want to hear more from the administration on trade, as
well. Congress is supposed to have a role in trade agreements,
it is important that this Subcommittee raises trade issues when
we can to get this dialogue going, uplift what is happening
with trade and tariffs, and highlight the real, on-the-ground
impact that our communities across our country are facing.
The USMCA agreement has not yet been delivered to Congress,
which is why this hearing is so important. In much of the
country there are agriculture interests and hardworking
Americans whose economic interests are linked. If our farmers
are not doing well, again, they are less likely to buy a new
tractor, which, again, are made in the heartland by our union
members. Iowa State University estimated that the trade wars
will cost Iowa alone $1 to $2 billion in losses.
Trade deals impact all of our congressional districts, and
that is why we are here today. I want to do some listening and
fact-finding on the state of trade right now and where our
witnesses think Congress and the President should be going to
have their back.
I hope we all take today's testimony to heart and
prioritize your concerns through our actions here in Congress,
and I hope we all take our fellow Committee members' comments
to heart, as well, even if we may disagree with different
positions.
With that, I want to thank, again, each of the witnesses
for joining us here today and coming all this way, and I look
forward to your testimony.
I now would like to yield to our Ranking Member, Dr. Joyce,
for his opening statement.
Mr. JOYCE. First of all, thank you, Madam Chairwoman
Finkenauer. This hearing is incredibly important.
And a special thanks to Mr. Glenn Stoltzfus from
Pennsylvania 13 in Somerset County for joining us here this
morning.
American farmers simply nourish our families, both here and
across the world. On average, 20 percent of total agricultural
production value is sold on international markets. Some
commodities, such as cotton, are almost entirely dependent on
overseas customers.
The benefits of agricultural trade expand well beyond the
cotton industry. In 2017, $138 billion in agricultural exports
generated an additional $179 billion in economic activity--I
will repeat that--generated $179 billion additional in economic
activity. This resulted in the total economic output of over
$300 billion.
The industry supported 1.1 million full-time civilian jobs,
which included almost 800,000 jobs off of the farm.
Farms and businesses along the export chain have evolved to
meet global demand. They must weather fluctuations in commodity
prices, the global economy, and also trade dynamics.
In 2018 the industry was hit with retaliatory tariffs on
nearly 1,000 food and agricultural products with an estimated
impact of $11 billion. To mitigate damage suffered by U.S.
producers, USDA Secretary Sonny Perdue initiated a $12 billion
assistance package that is being delivered through three
temporary programs.
Today we are here to examine how trade disruptions impact
agriculture and resonate impacts on the rural and the national
economy.
I thank each of our distinguished witnesses from Iowa and
Pennsylvania, and I yield back.
Chairwoman FINKENAUER. Thank you, Dr. Joyce. The gentleman
yields back.
And if Committee members have an opening statement, we
would ask they be submitted for the record.
I would now just like to take a few minutes to explain the
timing rules. Each witness gets 5 minutes to testify and
members get 5 minutes for questioning, although we may have a
second round of questions, as well, since we are so grateful
you are here and we want to make sure we use our time wisely.
There is a lighting system in front of you to assist you.
The green light comes on when you begin, and the yellow light
means there is 1 minute remaining. The red light comes on when
you are out of time. And we ask that you stay within that 5-
minute timeframe to the best of your ability.
And now I would like to introduce our witnesses. I am so
excited again to have two folks from my district here today
along with an expert actually on trade from the UAW or the
United Auto Workers Union. We also have a good amount of dairy
in northeast Iowa, so I look forward to hearing from Mr.
Stoltzfus as well.
Our first witness I am going to be introducing is Mr. Mark
Meirick. Mr. Meirick is a pork producer from Protivin, Iowa,
and is currently serving as the District 3 director for the
Iowa Pork Producers Association.
Mr. Meirick and his brothers, Joel and Dennis, own and
manage Farmers Mill, Inc., a grain, feed, and seed and
fertilizer center serving northeast Iowa. His father started
the business as a small feed bagging facility in 1964, and the
business has grown to a large commercial grain elevator serving
three counties.
Mark is active in the Iowa Pork Producers Board, among
other organizations in Howard County, which is one of our most
northern counties in Iowa One. Mr. Meirick is married to Wendy,
and they have three sons, one of which is involved in the
business.
I also have to say I found out yesterday that Mr. Meirick
is also the nephew of one of my late grandmother's dear
friends, who used to bring her communion when she was sick. So
Iowa is, yes, definitely like a small town no matter where you
are at.
So thank you again, Mr. Meirick, for being here.
And then our second witness is Rebecca Dostal. Ms. Dostal
is a farmer in Tama County, Iowa. Her operation is around 700
acres just outside Traer, Iowa. She raises corn, soybeans,
Berkshire hogs, and cattle.
Ms. Dostal is an active member and former president of the
Tama County Farm Bureau, a 4-H leader--which my brother and
sister were able to participate in, but I, unfortunately, got
sucked into softball and T-ball, I guess, I don't know, which I
wasn't good at either--and is actively involved in an ag
women's group called Women, Land and Legacy.
In addition to farming, Ms. Dostal is also a substitute
teacher for both the South Tama and North Tama School
Districts. She has an education degree from Iowa State
University. And she and her husband also raise three boys on
their Tama County farm.
Welcome, Ms. Dostal.
Our third witness is Mr. Josh Nassar. Mr. Nassar has served
as the legislative director for the UAW since December 2011.
The Legislative Department is responsible for implementing the
union's policy agenda and designing the legislative strategy on
labor, trade, budget, healthcare, defense, immigration, tax
policy, and other issues.
I don't know if there is anything you don't do, Mr. Nassar.
He works closely with members of Congress, the executive
branch, and stakeholders. Mr. Nassar and his wife Amy live in
the District of Columbia with their daughters Naomi, Justice,
and Janice.
Welcome, Mr. Nassar.
I would now like to yield to our Ranking Member, Dr. Joyce,
to introduce our final witness.
Mr. JOYCE. Thank you, Madam Chairwoman.
I am proud to introduce one of my constituents, one of the
hardworking dairy farmers from Pennsylvania 13, Mr. Glenn
Stoltzfus.
Glenn and his three brothers, Donald, Dwight, and Dwayne,
operate a 700-cow dairy in Berlin, Pennsylvania, which is in
Somerset County. The family also farms approximately 1,700
acres, growing corn, soybeans, alfalfa, and grass hay, in
addition to growing all their forages in high moisture corn.
Glenn serves on the Executive Committee of the Pennsylvania
Farm Bureau's Board of Directors. He also chairs Pennsylvania
Farm Bureau's Dairy Committee and serves on the U.S. House and
Senate legislative committees.
Now, this is a gentleman who gets up most mornings at 1 or
2 or 3 a.m. as confirmed by his wife who is present here today.
But don't ask him to do anything this coming Saturday because
he is going to be driving his daughter's championship
basketball team in the Maple Fest parade in Meyersdale.
The Maple Festival Parade is an annual tradition, and his
daughter Rayne was one of the participants in the Lady
Mountaineers. And I have to make special note, when a small
town team wins a state championship it is a big deal in our
world.
Again, congratulations to the parents, and especially to
Rayne.
Thank you for being here. Thank you for imparting what you
do in the dairy industry to this Committee. And I yield back to
the Chairwoman.
Chairwoman FINKENAUER. Thank you very much.
Mr. Meirick you are recognized for 5 minutes.
STATEMENTS OF MR. MARK MEIRICK, BOARD MEMBER, IOWA PORK
PRODUCERS ASSOCIATION, PROTIVIN, IA, TESTIFYING ON BEHALF OF
THE NATIONAL PORK PRODUCERS COUNCIL; MS. REBECCA DOSTAL,
PRODUCER, IOWA FARM BUREAU FEDERATION, TRAER, IA, TESTIFYING ON
BEHALF OF THE IOWA FARM BUREAU FEDERATION; MR. JOSH NASSAR,
LEGISLATIVE DIRECTOR, INTERNATIONAL UNION, UNITED AUTOMOBILE,
AEROSPACE, AND AGRICULTURAL IMPLEMENT WORKERS OF AMERICA,
WASHINGTON, DC; AND MR. GLENN STOLTZFUS, CO-OWNER, PENNWOOD
FARMS, DISTRICT 11 STATE BOARD DIRECTOR AND DAIRY COMMITTEE
CHAIRMAN, PENNSYLVANIA FARM BUREAU, BERLIN, PA
STATEMENT OF MARK MEIRICK
Mr. MEIRICK. Good morning, Chairwoman Finkenauer and
distinguished members of the Committee. Thank you for the
invitation to testify on behalf of more than 60,000 U.S. pork
producers.
My name is Mark Meirick, and I am a farmer from Protivin,
Iowa. My wife and I raise pigs and grow crops, including corn
and soybeans. I am a member of the Howard County Pork
Producers, the Iowa Corn Growers, the Iowa Soybean and Ag
Business of Iowa.
U.S. pork is a major contributor to the agricultural and
overall U.S. economy. Today, U.S. pork producers provide 26
billion pounds of safe, wholesome, and nutritious meat protein
to consumers worldwide. Exports of pork add to the bottom line
of each pork producer and support approximately 110,000 jobs in
the U.S. pork and allied industries.
In 2018, U.S. pork exports were valued at nearly $6.3
billion and represented over 25 percent of the U.S. production.
The biggest driver of increased exports over the past three
decades has been free trade agreements, which eliminate or
reduce tariff and nontariff barriers to U.S. exports. In fact,
we export more pork to the 20 nations with which the United
States has FTAs than to the rest of the world combined.
The U.S. pork industry has the dubious distinction of being
on three retaliation lists, two with China and one with Mexico.
China and Mexico are very important export markets for U.S.
pork.
In China we already had a 12 percent tariff on pork
imports. We now face a combined duty of 62 percent in response
to the United States imposing tariffs on imports of steel and
aluminum and China's theft of U.S. intellectual property and
its forced technology transfers.
On June 5, 2018, Mexico, where U.S. pork previously shipped
product at a zero tariff rate under NAFTA, imposed a 10 percent
duty on pork tariffs in response to the U.S. steel and aluminum
import tariff. That retaliatory tariff increased to 20 percent
1 month later.
According to Iowa State economist Dermot Hayes, the pork
industry stands to lose the entire Mexican market if we
continue to face the 20 percent punitive tariffs. Retaliatory
tariffs have cost U.S. pork producers $12 per animal,
translating into industrywide losses of $1.5 billion annually.
As the world's most competitive producer of pork, the
United States was anticipating increases in access to Japan and
Vietnam under the Trans-Pacific Partnership. These export
prospects are also what prompted construction of five new pork
packing plants across rural America. Unfortunately, restricted
market access from ongoing trade disputes is making it
increasingly difficult for U.S. pork producers to respond to
uncertain export conditions.
Producers are eager to see ratification of the U.S.-Mexico-
Canada trade agreement. We are very pleased that the USMCA
preserves zero tariff rate for pork in North America. Under the
terms of our previous agreement with North American trading
partners Mexico and Canada became our number one and number
four volume export markets, respectively. In fact, those two
countries account for 40 percent of all U.S. pork exports.
The U.S. metal tariffs have opened the door for some of our
largest competitors in Mexico to enjoy duty free access.
Professor Hayes of Iowa State looked at the possibility of U.S.
pork finding alternative markets and concluded that without the
Mexican market it would be left with a net loss of about
600,000 tons of pork, or 5 percent of the total U.S.
production. A loss in exports to Mexico of that magnitude would
be catastrophic for the U.S. pork industry and for all American
agriculture.
Keep in mind that Canadian retaliation against U.S. pork
remains a possibility as long as it faces the U.S. metal
tariffs.
In addition to calling for a swift resolution of the
current trade dispute with Mexico and Canada, pork producers
have been urging the Trump administration to begin negotiating
new free trade agreements, particularly with Japan. For now,
Japan is the number one export market based on value for U.S.
pork. Last year, it concluded two trade agreements that have
begun to erode U.S. market share in Japan.
A U.S. free trade agreement in Japan would restore U.S.
pork's competitive position in a critical market, and this
can't happen fast enough.
Trade is vital to the success of U.S. pork producers, but
tariffs on U.S. pork exports to two of our top three markets,
no clear timeline for new trade agreement negotiations with
Japan and other key markets, uncertainty surrounding the
ratification of the USMCA, and growing competition from other
pork producing nations have U.S. pig farmers like me more than
a little worried.
The bottom line is that U.S. pork is shouldering a
disproportionate share of trade retaliation against the United
States. My fellow producers and I need relief.
Thank you.
Chairwoman FINKENAUER. Thank you, Mr. Meirick.
And we now recognize Ms. Dostal for 5 minutes.
STATEMENT OF REBECCA DOSTAL
Ms. DOSTAL. Ms. Chairwoman, Ranking Member Joyce, and
members of the Subcommittee, thank you for the opportunity to
address you today.
My name is Rebecca Dostal. I am a farmer from Tama County,
Iowa. Our operation is around 700 acres just outside of Traer,
Iowa, where we raise three boys, corn, soybeans, Berkshire
hogs, and cattle. I am honored to have the opportunity to
submit comments regarding trade and how it impacts agriculture
in rural America.
Rural America and the rural way of life is something I am
deeply passionate about. I am active in our community as a
member and former president of the Tama County Farm Bureau, a
4-H leader, and I am actively involved in an ag women's group
called Women, Land and Legacy. In addition to farming, I am
also a substitute teacher for both South Tama and North Tama
School Districts.
Agriculture and rural communities provide a lifestyle and
value system that is very important to me and my family, and I
believe that without international trade that lifestyle is not
sustainable. Our way of life deeply depends on foreign
consumers and international markets. In order for us to operate
in Tama County, Iowa, we must be able to feed those living in
Hong Kong, Mexico, Mexico City, and Cairo, or our farm will not
survive.
As I am sure you are all aware, agriculture is tremendously
important to Iowa. We rank first in the Nation in corn and hog
production and second in soybean production. In our State,
agriculture directly employs 330,000 jobs. Last year, Iowa
produced over 2.5 billion bushels of corn and 698 million
bushels of soybeans. That is a lot of grain.
Ultimately we need to find somewhere for that grain to go.
On average, the U.S. has exported 42 percent of our soybeans
and 14 percent of our corn. Our top export countries have been
Mexico, Japan, and South Korea for corn, and China, Mexico, and
the Netherlands for our beans.
Historically, we have relied on foreign markets to export
our grain, and those foreign consumers have allowed
agriculture, including farms like mine, to grow.
However, this year that dynamic has not been as reliable.
Since the retaliatory tariffs have hit we have seen the price
of beans drop below the price of production, hog exports have
slowed, and any hopes of expanding our operation have
evaporated.
The tariffs have hit us back home in the heartland in a
very real way that has a ripple effect throughout our
community. Every year farmers go to their bankers to set up a
projected cash flow plan for the upcoming crop year. A typical
farmer will use an operating note to borrow cash to pay for
that year's expenses. With seed, fertilizer, and equipment
purchases often all coming at the same time, cash flow on a
farm is difficult without these operating loans.
When we sat down with our banker and did our budget in
January of 2018 we used the projected pricing models that
everyone uses to determine what level of financing we needed.
We are always cautious to make sure that we do not overborrow
and only borrow what we need. The problem is no level of
caution and no pricing models could predict a trade war.
When the tariffs hit, the price of beans crashed almost $2
a bushel and the price of corn dropped almost a dollar. An
average acre in Iowa produces around 200 bushels of corn and 57
bushels of soybeans. So on an average acre the farmer lost
almost $200 an acre on corn and $114 an acre on soybeans.
That deep of a drop often causes a farmer from having a
profit to losing money. Today the price of soybeans is below
the cost of production, and the price of corn is hovering
around an even cost.
Because of the loss of revenue at the end of the 2018 crop
year we did not have enough money to pay back our operating
loan. Ultimately we had to refinance our operating loan using
other equipment and possessions as collateral.
Luckily, we are diversified, so we can make up our crop
losses in other areas like cattle and hogs, but when it is that
dramatic it makes things difficult. It will stop us from
purchasing equipment upgrades, expanding our herds, or
acquiring more land.
The trade aid payments that were made from the USDA helped
cover some of our losses but not nearly all of it. Without the
trade aid we would not have been able to come close to covering
operating costs. While we appreciate the assistance, we would
much rather be paid a fair price by the market, rather than be
paid restitution by the government for the trade war.
Going forward with inputs staying high, prices staying low,
and no end to the trade war with China in sight, things do not
look great on my farm. This year I am subbing more than ever to
make up for losses on the farm, but substitute teaching doesn't
supplement my life ultimately. We are small farmers, and that
is what our livelihood depends on.
My ultimate worry is how this impacts Iowa, Tama County,
and our community of Traer. I see how it impacts our rural
schools and our rural community. We are losing rural
population, our towns are shrinking, and our community is
slowly dying. If you are a small farmer like me and you can't
make a living in agriculture, you have no option but to leave.
I strongly believe in the rural way of life, and with today's
economics, sadly, it may not exist for much longer. We need
trade to sustain our farmers, our towns, and our communities.
There is an easy solution to our trade woes. Trade deals
like TPP, the USMCA, a trade agreement with the EU that
includes agriculture, and a trade deal with China that is fair
and predictable would expand our markets, help American
farmers, and sustain our rural communities. Protectionist trade
policies do not help Americans, it only hurts us in the
heartland.
With that, I thank you for allowing me to speak today, and
I will happily take any questions that you have.
Chairwoman FINKENAUER. Thank you, Ms. Dostal.
And now I would like to recognize Mr. Nassar for 5 minutes.
STATEMENT OF JOSH NASSAR
Mr. NASSAR. Thank you for having me, Madam Chairwoman and
Ranking Member Joyce and members of the Committee. I want to
thank you on behalf of our one million members and our
president, Gary Jones, for this opportunity and for being able
to participate in this important conversation.
I think, first of all, when looking at trade I want to talk
about what we are trying to achieve. For United Auto Workers it
is pretty clear. We are trying to provide, make sure there are
opportunities for more good-paying jobs in the United States.
That is the bottom line when we look at trade agreements and
every other policy area.
And in order to achieve that, to really strengthen the
middle class and make manufacturing jobs the jobs they used to
be, we think it is important to look at all policy issues. You
have to look at labor enforcement, you have to look at tax
policy, investments in workforce and in many other things. We
think that a holistic view is needed, but trade is an important
part.
Now, for auto workers, we are proud of the fact that we
help make--our members help make auto jobs middle class jobs, a
bridge to the middle class. But that is less and less the case
today as wages in manufacturing has dropped, and dropped
significantly in manufacturing in general, but in auto it has
been actually 29 percent drop in 15 years in real dollars. So
that is pretty significant.
And one of the reasons why NAFTA has been such a problem is
because there has been a lot of manufacturing work, and the ag
sector is not immune from this, there has been more ag
production equipment in Mexico, as well. A lot of work has
actually gone from the U.S. to Mexico and then selling the
exact same cars and other products back in the United States.
That is one big reason.
But another thing is that NAFTA has been used as leverage
to undermine union contracts and organizing campaigns with a
constant threat of: If you push too hard, we are going Mexico.
And why is that such a problem? Well, in Mexico there are
very few independent unions and the labor rights are really
atrocious. Most of the unions there are company unions where
the workers have no say in the contract, the terms of the
contract are often signed to the contract without even voting
on it or seeing it. And wages there for auto workers and
manufacturing workers in general are often $2 to $3 an hour,
and they are totally insufficient to be able to buy the
products that they make.
So looking forward, when it comes to USMCA or NAFTA 2.0 we
think that there has been some progress, but work remains,
especially in regards to labor rights, because we are concerned
about while the labor chapter has some improvements from where
we stand today, where there is no enforceable labor chapter,
the enforcement mechanisms are not strong and they rely on this
dispute resolution mechanism, which has been completely
ineffective for protecting workers' rights. So it really hasn't
created a level playing field.
So there needs to be strengthening of the enforcement of
the USMCA, and we encourage the administration to get back to
the negotiating table and to make it a stronger deal than it is
right now.
As far as some other things to touch upon on trade, I am
going to have a minority opinion here on a trade deal with
Japan, because, while we certainly want the agricultural
industry to prosper, we have, as you said, many members who
work in building ag equipment and also suppliers for those main
companies.
We don't think auto should be part of a trade deal with
Japan, because Japan has the most closed auto market in the
developed world, and we already have about a 100-to-1 ratio of
imports to exports. In other words, 100 Japanese cars are
imported here for every 1 car we sell there.
They have the most closed market in the developed world. It
is not just U.S. companies, all companies have not penetrated
Japan's market, and they do it without tariffs. We are worried
that on the auto side we could actually make 100-to-1 could be
worse if we don't do this trade deal right with Japan. So we
would encourage cutting the auto sector out.
We also think that as far as the TPP is concerned the labor
chapter there is very weak, and that agreement, if it goes
forward as it is now, would be bad for workers and for our
economy as a whole.
So to summarize, there doesn't have to be this idea where
ag industry and manufacturing industry are seen as opponents in
trade deals. The truth is that we want the ag sector to do well
because it is important for our economy and country, but it is
also important for the jobs and manufacturing that are
important in Iowa, Illinois, and throughout the country.
Thank you for the opportunity. I look forward to answering
your questions.
Chairwoman FINKENAUER. Thank you, Mr. Nassar.
And now I recognize Mr. Stoltzfus for 5 minutes.
Thank you.
STATEMENT OF GLENN STOLTZFUS
Mr. STOLTZFUS. Thank you, Chairwoman Finkenauer, Ranking
Member Joyce, and members of the Subcommittee. Thank you for
inviting me to speak today on the state of the dairy industry
and the benefits of trade agreements such as the United States-
Mexico-Canada Agreement.
My name is Glenn Stoltzfus, and I operate a 700-cow dairy
in partnership with my three brothers in Berlin, Pennsylvania,
Somerset County. My brothers and I also farm approximately
1,700 acres, growing corn, soybeans, alfalfa, and grass hay. We
grow all of our forages and high-moisture corn and often sell
excess corn and hay.
In addition to helping operate and manage our farm
operation, I currently serve on the Pennsylvania Farm Bureau's
Board of Directors, along with chairing the Farm Bureau's State
Dairy Committee. I offer testimony today on behalf of the
Pennsylvania Farm Bureau, an organization representing more
than 62,000 farm and rural family members throughout
Pennsylvania.
Dairy farmers are the largest segment of producers within
the Pennsylvania Farm Bureau, and dairy is Pennsylvania's
largest agricultural sector. In other words, it is the largest
component of one of the State's largest industries.
However, across Pennsylvania and the Nation the dairy
industry is in dire straits. Just last month, USDA reported
approximately 2,700 dairy farms, a nearly 7 percent drop,
ceased operation nationwide in 2018. Nationally, Pennsylvania
suffered the second most closures, with 370 dairy farms lost, a
drop just under 6 percent.
One of my neighbors was one of those farms, and I fear the
downtrend will only continue. And unlike traditional
businesses, the prior business can't simply be replaced with a
new sign or fresh paint. Instead, many of these farms will
permanently be lost, and with it a way of life.
Delving further into the issue, a perfect storm of
decreased consumer milk consumption, increased milk production
nationwide, and a reversal of longstanding policies by
governments to allow more domestic milk production have caused
global oversupply of milk for a sustained period.
As to consumption, in 2016 USDA projected the per capital
consumption of beverage milk at an all-time low of 154 pounds
per person, with per capita consumption of milk products
falling by 25 percent over the last 20 years.
In practical terms, all these factors have meant that the
price American dairy farmers receive for milk has been lousy
for a long time. And while input costs have remained level or
even increased in some cases, in my case my price per hundred
weight of milk peaked at $26.80 in 2014 and went as low as
$13.90 last year. The price has since improved to $17.30, but
the future is uncertain and subject to numerous factors,
including trade barriers.
Compounding the problems, net farm income, a broad measure
of farm profitability, is down over 50 percent since 2013 and
presently at one of the lowest points in the last two decades.
Thus, even diversified dairy operations such as mine have not
been able to fully rely on other commodities to dampen the
dairy despairs. Further, unresolved aluminum and steel trade
tariffs threaten the health of the national farm economy.
Nevertheless, despite all these problems, one material way
that can help dairy farmers is to increase export market
access. Given its quality and efficiency and decades of
cultivating trade partners, the U.S. agriculture industry has
been incredibly successful in utilizing trade to benefit
farmers and our Nation as a whole, resulting in over 25 percent
of all agricultural products being exported.
Approximately 16 percent of all U.S. milk production was
exported last year. In fact, agriculture is one of the few
industries that exports more product than it imports,
accounting for a $21 billion trade surplus.
Much of the Nation's agriculture trade success has arisen
from relations with Mexico and Canada, where it has represented
the top two agriculture trade partners for nearly every State
in the Nation, including Pennsylvania.
Dairy is no different. Since 2015, Mexico and Canada have
ranked first and third, respectively, in export markets for
U.S. dairy products. As a result, trade agreements involving
Mexico and Canada are critical to our Nation's agricultural
industry, and the USMCA represents a chance to bring vital
benefits to the industry, particularly dairy farmers.
While not a cure-all for the industry woes, if approved,
USMCA will provide meaningful benefits for American dairy
farmers. The agreement will increase dairy market access to
Canada by 3.6 percent, a level even better than under the
Trans-Pacific Partnership.
Some specific examples include an export increase of 50,000
metric tons of fluid milk by year 6 of the agreement, along
with 12,500 metric tons of cheese, and 10,500 metric tons of
cream over the same time period. In total, the agreement is
expected to increase dairy exports by 100,000 metric tons
annually once fully implemented.
Additionally, within 6 months of the USMCA's implementation
Canada has agreed to end its protectionist Class 7 pricing
scheme that flooded the global market with subsidized skim milk
and milk powder and lowered Canadian demand for U.S. ultra-
filtered milk for cheese production.
In turn, many American dairy farmers will benefit from the
pricing scheme elimination by being able to compete globally on
equal terms.
USMCA also provides benefits beyond the dairy industry.
Canada has agreed to treat wheat imports in the same manner as
domestic wheat for grading and pricing purposes. Poultry
exports will increase by 10,000 metric tons over a 6-year
period. Turkey exports can potentially increase by a thousand
metric tons each year for 10 years. Eggs and egg-equivalent
product exports will increase by approximately 16 percent over
a 6-year period.
Finally, the USMCA includes provisions that enhance
science-based trading standards as the foundation for sanitary
and photosanitary measures for agricultural products. The
agreement is also the first of its kind to include provisions
that address corporation information sharing and other trade
rules related to biotechnology and gene editing.
As the administration was negotiating USMCA, many farm
groups issued a simple message of do no harm. Since its
passage, NAFTA has worked incredibly well and brought benefits
to agriculture, increasing U.S. agriculture exports to Canada
and Mexico by approximately $30 billion. In our view, the
administration has succeeded in doing no harm and done one
better. Nearly all agricultural exports remain subject to zero
tariffs, significant and historical strides for the dairy
industry have been made with Canada, and other commodities,
such as poultry and eggs, have gained increased Canadian market
access.
Given these advancements, we urge Congress to finalize
USMCA's passage. Beyond USMCA, the agreement provides a
positive paradigm for future trade agreements, including
potential noteworthy deals with Japan and the European Union,
particularly given its emphasis on science-based sanitary
standards and inclusion of biotechnology and gene editing.
On the other hand, if the USMCA's passage is substantially
stalled or falls short the administration is unlikely to
negotiate similar gains in future trade deals.
As mentioned, trade agreements in and of themselves are not
a magic potion to fix all difficulties in the farm economy, but
when meaningful long-term improvements are negotiated, such
agreements can provide significant benefits to a farmer's
livelihood and help keep farm operations afloat during
downturns.
We believe USMCA is such an agreement. We believe USMCA
will help American farmers, particularly dairy farmers. And we
respectfully request Congress move forward on its passage.
Thank you again for allowing me the opportunity to share my
story on behalf of Pennsylvania farmers.
Chairwoman FINKENAUER. Thank you, Mr. Stoltzfus. And we
will begin with questioning, and I will begin by recognizing
myself for 5 minutes.
I just again want to say thank you to every single person
who came here today to testify. This is, quite frankly,
heartbreaking right now with what is happening in the State of
Iowa and also across the country after the last few years. And
your testimony today is candid and brave, and I just truly
thank you for all of your honesty and for being here today with
us. So thank you, thank you.
Now, one of the questions I want to ask first is to Ms.
Dostal, and it has to do with the fact, I know you have
discussed a bit about financing, and I know this is something
that a lot of our farmers, particularly in Iowa one are dealing
with, whether, you know, it was last season and they are going
in wanting to update equipment before a harvest season and
finding issues with banks, and I know, you know, obviously that
then has an impact on John Deere as well and our workers.
So one thing I wanted to kind of chat about is, you know,
kind of highlighting some of these barriers you have been
talking about in regards to financing, but is there anything
that you think the USDA should be doing more of or that the
Small Business Administration could be doing to supplement the
USDA efforts to help ease the situation when it comes to
financing and loans.
Ms. DOSTAL. So I think the biggest problems with like
bankers or your private bankers is their hands are kind of tied
as far as how much they can give out based on how much debt you
already have. Going by what we had done, you know, we did
everything that we had done in the past 10 years, and you just
couldn't foresee that we were going to have prices drop that
fast.
So, you know, I was allowed to refinance my note using
things that I already own, which obviously means, yeah, you are
not going to be able to go and upgrade equipment or change
things that you maybe would have done. I am trying to increase
my cattle heard, and, you know, you are kind of maxed out on
the limit that you can get.
I don't know that the USDA probably can help, you know, as
far as because you are already in that debt, so what they did
with, you know, when they went ahead the USDA did give us, you
know, a stipend for the soybeans that we were to help kind of
get by, but, you know, you are still in the same boat this
year. You know, we have got prices so low right now there is so
many people now that are going to be planting corn just because
bean prices are solo for futures.
So I don't know, you know, unless this trade war can end so
that we can have the free trade and be able to be at an even
playing field with Brazil and other countries that can sell
that product to them, I don't know that it is going to make a
difference by--you know, we don't want a handout. That is not
what we are here for. We would just like the opportunity to
have that free trade.
Chairwoman FINKENAUER. Yes. And Mr. Meirick, I know or
Meirick we chatted a little bit about this yesterday, as well.
Do you have any thoughts on the financing portion or anything
that you would like to see in regards to some of the loans?
Mr. MEIRICK. Well, we are in a grain elevator business with
my brothers, and we run into it daily. A couple years ago when
prices are above breakevens everything goes pretty smooth, guys
prepay their expenses, and at the end if there is an operating
note they pay it off.
And the last 2 years especially since the tariff on
soybeans has been devastating, but we have been below breakeven
on almost all commodities, milk, corn, beans, hogs. So the
bankers are nervous, and I am not sure if the USDA or Small
Business Administration would have some type of a guaranteed
loan program so that when the bankers are loaning money they
would have a back stop so that just in case things don't
improve for unforeseen circumstances maybe there would be a
back stop through either small business or USDA.
So we have had guaranteed loans in the past, and I don't
know the statistics, but maybe 98 percent get repaid, I am not
sure, but a small portion maybe don't go the right way, but at
least it would have a back stop for the local banks, yes.
Chairwoman FINKENAUER. Thank you.
And, Mr. Nassar, thank you so much again for being here
today and bringing your very, very important perspective here
that impacts my district, as well, in a very large way.
So one of the things I am kind of curious, about a couple
things, but do you guys actually have numbers on how many of
your farmers are--so how many of your union members are also
farmers? And then, also, I am wondering if you can talk a
little bit about about what you would like to see to make sure
that American workers actually have a more prominent voice in
the trade process and what changes you would like to see in
regards to trade authority.
Mr. NASSAR. Sure. Thank you for the question. I don't have
any stats as far as how many of our members also work as
farmers. I know plenty of our members who do work as farmers,
as well, and come from agricultural communities, so I know
that, you know, it is very much part of their lives. Our union
wants a prosperous agricultural sector.
As far as, what kind of policies are needed to strengthen
middle class, I mean, there is a lot. We think one thing that
has been a problem for us has been outsourcing has been
companies going overseas and plants closing, and we think more
policies could be done to stop that, such as claw backs could
be done for corporations that, you know, take subsidies and
then don't fulfill their promise, move overseas.
We think there are provisions in the tax law which don't
make sense, which actually make it so it is easier to--you pay
lower U.S. taxes on your profits overseas than you do
domestically, and there are labor laws that are very weak as
far as being able to enforce. They are largely toothless.
There is a lot that needs to be done. First of all when it
comes to USMCA we have got to have a new labor chapters because
what we have seen in manufacturing is wages have dropped not
just for U.S. auto workers but for auto workers in all three
countries since then. So that part really needs some work.
Chairwoman FINKENAUER. Thank you so much, and,
unfortunately, I am out of time, but, again, we will do a
second round of questioning here. And with that I will yield to
Ranking Member, Dr. Joyce.
Mr. JOYCE. Thank you, Madam Chairwoman. My first question
is for Mr. Stoltzfus. You had mentioned in your testimony some
of the issues that plague the dairy farm and many other dairy
farmers whom I have been in contact with throughout Somerset
and actually through the entirety of Pennsylvania 13 have
talked to me how the dairy industry has been affected by the
decreased use of dairy products.
So some of the initiatives that I have been involved in is
first of all to make recommendations that whole milk is
returned to public schools. My concern, and what I hear from
the dairy farmers is that we have lost a generation of milk
drinkers by allowing skim milk to be substituted.
As a physician, as a parent I understand that the
nutritional values of milk can be carried in the small amount
of fat that is in milk that the vitamins A, D, E, and K are in
that very small amount of fat that is in whole milk. That is
needed for brain development, it is needed for muscle
development. It is needed in the children in the public
schools.
Can you address how initiatives like returning whole milk
into our public school can potentially increase dairy use and
actually dairy prices?
Mr. STOLTZFUS. Thank you. Yes, I have often said that I
think we have--as you stated we have lost a generation of
people who used to drink milk, whole milk. Fluid milk is the
Class 1 milk that we receive the highest premium for and in the
northeast part of this country we tend to sell a lot of our
milk in that Class 1 that goes for fluid milk, and as that
consumption drops we continue to lose that premium that is
there for that Class 1 milk.
It is unfortunate what has happened in the schools and in
cafeterias where we have tried to push this skim and 1 percent
milk, and to be honest with you, it is not good, it doesn't
taste good, and when you take away that flavor folks don't--you
know, you create habits when you are very young and, as you age
you tend not to change those habits, so in that way, yes, we
have lost a generation of folks that used to drink fluid milk.
I think it is nature's most perfect beverage. Actually, I
definitely agree with you, adding it--getting whole milk back
into schools would be a tremendous advantage to us as dairy
farmers.
Mr. JOYCE. I am going to follow up on that, Mr. Stoltzfus,
with an additional question. The dairy industry has been hard
hit with imitators in the dairy counter. So recently with a
Member I crossed the aisle and we wrote a letter to Gottlieb,
the FDA Secretary, addressing that in the dairy case that dairy
products should be present, that imitators of dairy products
that are sold under the label of being milk or dairy shouldn't
be allowed. Do you think this has had impact on your industry,
as well?
Mr. STOLTZFUS. Absolutely. Years ago you used to go to the
beverage case in supermarkets, and a very large percentage of
it was milk or milk products. Now we are in competition with
all kinds of juices and other things, including the nut juice
or whatever you want to call it that is being called milk that
does not come from a lactating animal.
I believe that there is actually a law or a rule that in
order to be labeled as ``milk'' it has to come from a lactating
animal, and it just is one that has not been enforced, and we
certainly would appreciate that being enforced, and I think it
would make a--it would distinguish a difference between milk
which comes from a lactating animal and those products or those
drinks that do not.
Mr. JOYCE. Thank you for that clarification and thank you
for reminding us what we were all taught in sixth grade science
class, I appreciate that.
This question is for Ms. Dostal. Thank you for your input.
Thank you for telling us how difficult it is on your farm. Do
you feel that the Iowa Farm Bureau, which you mentioned,
participates or encourages you to participate in promotion
programs that would allow you to export your product, is that
part of your background in agriculture?
Ms. DOSTAL. Yes, I have been on a market study tour where I
went to Brazil through Iowa Farm Bureau. I am very big in beef
industry, so it was very eye opening to see how Brazil raises
their cattle down there, and we actually got to go to a packing
plant and see everything, and they are a major competition in
our exports. So the reason the farm bureau does the market
State tours is to educate us as producers so that we know what
we are up against in the export market.
So I think they really, you know, a lot of different times
they go on trips throughout the year trying to educate
consumers and producers on what is happening in other parts of
the world, so that we know what we are up against when we are
trying to produce our products and get them exported to those
countries.
Mr. JOYCE. Thank you, and thank you for your hard work.
Madam Chairwoman, I yield.
Chairwoman FINKENAUER. Thank you very much.
And now I would like to recognize Congressman Jared Golden
for 5 minutes.
Mr. GOLDEN. Thank you, Madam Chair.
Mr. Stoltzfus.
Mr. STOLTZFUS. Yes.
Mr. GOLDEN. All right thank you. Sorry, I want to make sure
I got that right.
So I grew up in a town in Maine, Leeds, Maine where we had
a lot of small dairy farming families, and there are still a
few remaining, but a lot of them have moved on, sold their cows
and kind of a process of consolidation of sorts going on up
there, particularly starting in the nineties. And, you know, a
lot of smaller operations in Maine. There is not a whole lot of
surplus in the region, so we have, you know, essentially a
situation where dairy is sent to Massachusetts for processing
and returns to Maine for retail sale, and they do some value
added stuff like yogurt and artisanal cheeses and other things
mostly sold in the State or in the New England region.
Most of the farms are organic and a lot of them don't use
bovine growth hormone, and I am just curious from your
perspective it seems like under NAFTA we saw a more, you know,
an increase in export, but in some ways smaller family farms in
places like Maine are struggling to survive and compete, and do
you think, you know, there is a connection there or does that
have more to do with things going on domestically.
And is NAFTA, the renegotiated NAFTA, USMCA going to help
this scenario that I was just describing, and if not, what
kinds of domestic policies might help reverse the fortunes of
smaller dairy farmers in places like Maine?
Mr. STOLTZFUS. I am not sure that there is a relation like
between NAFTA and the loss of small dairy farms. Pennsylvania
has also seen that. It is unfortunate, I think, when you start
to lose those small dairies in communities, you start to lose
your infrastructure, you start to lose the equipment dealers
and that sort of thing. Unfortunately, there is the economics
of scale. I think there is a place for small farms and a lot of
times it is like you said it is that niche market where whether
it is organic or local grown or whatever it is.
In Pennsylvania we are seeing kind of a resurgence of those
niche markets, not necessarily just dairy, but other produce
stands and the resurgence of farm markets. You know, the
farming industry is changing, and I don't know that that is a
whole--a lot of that can be related to NAFTA or the USMCA deal
that has been proposed.
Mr. GOLDEN. Thank you. I had a conversation last October, I
think it was with a dairy farmer in Maine thinking that he
would be pleased with the new trade deal, but in his case he
didn't think that it would make much of a difference in the
local market anyway, although it may be good for others around
the country, but, you know, had he a deep skepticism.
I do want to agree with the Ranking Member Dr. Joyce
talking about consumption and some of these things that we can
do that might help out. I was talking to one of these former
dairy farmers back home in Maine just this morning and you know
what he said was there is some overproduction problems and not
enough consumption, and what we need is more consumption. And
they used to refer to skim milk when I was young as white
water, but, you know, he essentially was saying that he
educates his boys to put three liquids into their bodies,
water, milk, and when they are of an appropriate age beer.
But part of the problem is, of course, that we are not
consuming enough here locally, but a bit of a deep skepticism
in Maine that opening up Canada to, you know their market may
not be big enough in terms of their demand to really fix the
problem for us, but I do appreciate your testimony today and
your feedback.
You know, we were talking a little bit earlier about cotton
actually, and my community Lewiston, Maine used to have textile
mills, most of which are gone, in fact, almost all of them have
left and, you know, so it is not a surprise to hear that cotton
producers farmers are relying upon export and trade at this
point because most of the processing in the United States,
particularly in places up in New England seems to have left the
country.
And I was just curious, you know, Mr. Nassar, it seems like
that is a common problem and something that your organization
talks a lot about in regards to trade where what we see is
perhaps an increase in exports, but the fleeing of the
manufacturing and processing side of things, whether we be
talking about textiles, about food or, you know, things like
auto. I am just curious is there anything about the USMCA that
you think is going to stop the loss of those jobs leaving the
U.S. because I think we all agree that we would like to see,
you know, U.S. products being processed in America and sold to,
you know, American consumers. Keep the jobs here essentially.
Mr. NASSAR. Thank you for the question. You know, it is
really difficult to project what would come from it because we
haven't really seen any economic analysis, but I think what as
far as, retaining jobs, relying just on trade alone in a deal
just in USMCA is probably is insufficient. You also need to
have surrounding policies, you need to have good tax policies,
et cetera.
I think one thing though to point out is that when you lose
a manufacturing plant it devastates a whole community, and it
is not just the plant, it is all the suppliers. For example, in
a car about 75 percent of a car is made in the parts sector.
Also in the ag Imp sector there are a lot of parts. Plant
closures really has a devastating impact, but I would just say
we need more analysis we need more information to be able to
make an educated prediction, but it is really going to be hard
to happen without a stronger labor chapter.
Mr. GOLDEN. Thank you.
Chairwoman FINKENAUER. Thank you, Mr. Golden, and I will
now represent--I will now recognize Representative--you are not
too far away, just a little bit, a little bit north of Iowa
there. I will recognize Representative Jim Hagedorn for 5
minutes.
Mr. HAGEDORN. Madam Chair, thank you. I appreciate the
time. Ranking Member, it is good to be here. Thanks for the
testimony, the witnesses' time.
I am sorry to be late, I was over in an agriculture
subcommittee meeting talking with the Undersecretary of
Agriculture about trade, so kind of along the lines of what we
are getting at here.
You know, southern Minnesota, a lot of farmers, a lot of
agra business and highly dependent on making sure that they
have markets around the world for the products, and I tell
people that there are kind of three aspects of what we want to
do for our farmers. One is to knock down those barriers and
another is to make sure we sustain farmers when times are tough
like with the farm bill things like that, and then we also have
to make sure we have good government.
You know, when I grew up on a grain and livestock farm near
Truman, Minnesota, I used to go out and walk the beans. They
don't really do that much anymore, but we would pull the weeds
to make sure that the bean plant could get the proper
nutrients, sunlight, and water so it could thrive we get the
best yield possible. And we kind of have to do that here in
Washington because there is a lost bad government. We need to
pull the weeds of government, and I agree with what you said.
Tax policy is important, regulatory policy, ObamaCare, which
has been very tough on farmers, and energy policy, make sure we
have downward pressure on that.
But a big part of what we are talking about here is making
sure we knock down the barriers, we expand our trade so we have
the markets, and so I would ask Mr. Stoltzfus? I am sorry.
Mr. STOLTZFUS. Close enough.
Mr. HAGEDORN. I apologize for butchering that. The USMCA, I
support that. I hope the Speaker will bring that up at the
proper time. You do see that as a positive development, right,
especially in the areas of agriculture?
Mr. STOLTZFUS. Absolutely. I think it is stated in
testimony, that you know, that most farm organizations when
they went into the negotiations we said do no harm. In other
words NAFTA was very good to agriculture, but I think they have
done one better. I think if this gets ratified I think it will
open up markets, particularly in the dairy industry where
Canada has been extremely protective of their dairy industry up
there.
When you go to Canada or you talk to a dairy producer and
you start talking about dairy trade, the conversation ends
right there. And if we can make any kind of stride there I
think it will be a plus for dairy farmers.
Mr. HAGEDORN. Good deal. Mr. Meirick, I grew up on a hog
farm, as well, and as a matter of fact Martin County right next
to where I live they call it the bacon capital U.S.A., so a lot
of pork production, I think second largest pork producing
district in the whole country. And parts of, you know, what we
need to do as a government our role of the Federal Government
is to protect agriculture from imports that could disrupt our
markets.
One of the things that is happening in China right now it
is pretty devastating is this African swine flu, the virus, and
we want to make sure we protect our farmers here by not
allowing that in the country as best we can. What about the
concept of a vaccine bank, do you think that should be fully
funded? Do you think that would have a positive effect in the
future should we have a problem?
Mr. MEIRICK. Well, sure. African swine fever is a huge
issue. There is no vaccine, and there won't be any vaccine for
at least 10 years, so we are a long ways out on that. There was
some legislation on vaccine bank in this farm bill, and it will
relate to foreign animal diseases, but not specifically to
African swine fever, that is a long ways out.
But we will still need help from the government to protect
the borders to keep stuff from coming in, and you have the
African swine fever, and they do that at airports. They have
the beagle patrols. There is various ways that they are going
to help to try and keep that out because the only way we can
avoid African swine fever is to keep it out of our country.
Once it is here it is too late because, again, there is no
vaccine for it.
And it is going to take years, there is plenty of people
working on vaccines, and they might need some government help
for helping to fund some of that research, but it will be a
ways down the road, but if it does happen here our exports stop
immediately. So if we export 25 percent of our hogs, which we
do, the day we have African swine fever come here, our exports
are shot. So that would be huge. It would devastate the hog
industry in the United States. So we have to--number one, we
have to keep it out from coming across our borders.
Mr. HAGEDORN. I agree with that. And some people don't kind
of follow that if our hog production goes down our exports then
also the corn and other things that, you know, feed the hogs,
that is going to take a hit too, and our commodity prices along
the way--farmers are going to have a lot of bad repercussions.
Mr. MEIRICK. Absolutely. Just a string of dominos. Exactly
right. Yes.
Mr. HAGEDORN. A few years back we had something a little
similar in the pork industry, the hog community and they
thought that maybe a vaccine or something was far off, but it
is remarkable how when people put their mind to it and we get
the best scientists and others in the biotech communities
working that they can find something, so hopefully there will
be a breakthrough soon, but----
Mr. MEIRICK. I agree. They are putting a lot of resources
into it. This is a really tricky virus. They haven't worked on
anything quite like this. So some of the viruses in the past
they have fairly short-term gotten a solution, but this one is
a really tricky one, and--but you are right, they are putting
their smartest people at it, so we are hoping for the best.
Mr. HAGEDORN. I appreciate that. I yield back. Thank you.
Chairwoman FINKENAUER. Thank you.
And now I am going to recognize members who would like to
ask a second question for 5 minutes, as well, and I will start
by recognizing myself.
Again, what you all are bringing up here today is so
powerful and important that is heard in Washington. One of the
things that keeps me up at night, and I am sure many of you as
well, are the long-term effects of what has now become a very
long drawn out trade war process. I still will never forget
actually where I was when I saw President Trump's tweet about
the steel and aluminum tariffs 5 days before a special election
in Pennsylvania, Mr. Conor Lamb's, and then about a month and a
half after that was when we all of a sudden saw the retaliatory
tariffs come from China that directly hit my State and our
agriculture industry in a very big way.
After that obviously then the discussions about the
renegotiation of NAFTA. You have had again because of then the
steel tariffs going on Canada, as well and in Mexico you then
have the 20 percent tariff that Mexico throws on our pork
industry, and here we are about a year and a half later and I
am very concerned about the long-term impacts about what this
has cost us and wanting to make sure that the deals we are
getting are truly going to be worth everything that our State
has gone through.
And I am concerned about that. I don't know if we are going
to reach that, but I want to make sure again that we are doing
everything to address these long-term effects that have been
happening over the last again year and a half.
One of the things I want to touch on here is the impact of,
you know, our next generation of farmers who have been watching
this occur. Our workers who have been watching this occur, and
what especially when you are looking at again, you know, the
tariffs, the soybean tariffs from China, I mean, you have got
China and Brazil creating new contracts, Brazil is deforesting
as fast as they can to plant more soybeans, and that is just
not going to go away.
So these are the things I am concerned about and also
wondering if you guys could each speak a little bit, I know we
are a little limited on time here, but about a minute each of
what you are seeing as what will be the long-term effects here
or things we might not even know until, you know, 5, 10 years
down the road here.
Mr. Meirick, if you would like to start.
Mr. MEIRICK. Well, as farmers and producers we are used to
risk. I mean, every day there is plenty of risk. What we don't
need is extra unknown risk, unknown barriers that the tariffs
presented like Rebecca said when you go to your banker, you
make a plan, and all the sudden out of the blue here drops a
tariff on top of your head.
So there is the known unknowns and then the unknown
unknowns, so when something falls out of the sky like a tariff
we have a hard time being able to process that. So what will
happen is the smaller farmers, which we talked about before,
the back bones of the community, they will just give up. They
will get a job in town, they won't be able to get any more
funding, and they will dry up and they will just be two farmers
farm the whole county. Maybe in 100 years it is going to be
that way anyway, I am not sure.
But in the short term for our communities we like to keep
it a little closer to the way it is now. Does that make sense?
Chairwoman FINKENAUER. Absolutely. Thank you Mr. Meirick.
Ms. Dostal?
Ms. DOSTAL. Yes, I would like to agree with Mr. Meirick. As
a mother of three boys, I would not encourage my sons to come
back to the farm, and that is sad because that is our rural
communities. So I have a 16-year old boy that I said if you
want to stay in agriculture go into drones, you know, into the
agronomy side of it so that you can sell to the bigger
producers because he is right, probably in, you know, the next
20 years you are going to have the two biggest producers
farming in the whole county. And we are already seeing that
because we just can't compete with the rent prices and the
things that are going on with the prices the way they are.
So our biggest benefit is that we are diversified, and that
is what I was always told, you know, don't always keep all the
same eggs in one basket, so we can try to make up for it in
other things. Right now cattle prices are good, but, you know,
with Brazil producing more cattle, too, like you said, it is
going to start hurting somewhere else.
So probably as far as a future of, you know, our farming
community I think I was talking earlier, you know, our high
school graduate 35 kids. That is a small school, and we have a
lot of them in Iowa, but you see the urban sprawl, you see the
bigger towns just getting bigger, and that is because people
aren't farming, they are finding jobs in town. So I think this
is really hurting them.
Chairwoman FINKENAUER. Thank you, Ms. Dostal. Mr. Nassar.
Mr. NASSAR. Yes, thanks for the question. I do want to say
that I think there is a role for enforcement, and that at
times, enforcement policies are needed when there is flooding
of markets and such. I would say for that to be effective it
has to be with many other countries and that has been something
that is missing from the current policies.
It is a little different for manufacturing, but we have
seen a real loss in confidence in manufacturing, and it
continues to this day. For example, you know, in spite of
everything that is being done, General Motors announced that it
is planning on closing four factories despite record profits.
And we are seeing kind of a lack of confidence in
manufacturing.
So that is partly related to the trade policies, and it is
something that really has to get turned around quickly.
Chairwoman FINKENAUER. Thank you.
And Mr. Stoltzfus.
Mr. STOLTZFUS. Thank you for the question. I kind of think
that, you know, for years we have complained in the ag industry
that we haven't been able to play on a level playing field, and
the policies of past administrations, I am going back 20, 30
years, really haven't been a whole lot different from one to
the other when it comes to ag trade. This administration is
trying something different, and yes, it hurts, and we have yet
to see whether or not it is actually beneficial or not.
If in the end it comes out we can play on a more level
playing field with the rest of the world we will be far ahead.
I think here in America we have the ability to out produce
anybody because of the innovation, the technology we have, and
I tend to think right now although the prices are bad in just
about every commodity, the future of ag is tremendous. The
technology that is there and the things that kids can get
involved in, people coming out of school that--it is different.
It is not going to be the same way. It is changing, and we
can't stop change. So we need to adapt to it.
I think the future of ag is bright, and I think it will
continue to be that way.
Chairwoman FINKENAUER. Thank you, Mr. Stoltzfus.
And I now would like to--we just have Mr. Golden now,
recognize Mr. Golden for 5 minutes.
Mr. GOLDEN. Thank you. I like this discussion that we are
having about labeling and, you know, what we call our products,
and I agree again with the Ranking Member when it came to the
issue of, you know, what we call milk. I actually signed on
that that letter as well. You know almond milk, not milk, but
that is just my opinion, but anyway.
You know, Mr. Meirick I wanted to ask you a little bit
about this new NAFTA deal, and, you know, some of the concerns
that I have. I wasn't sure if you might agree, and, you know,
if you were in charge for a day if you might have pushed for
some additional changes that could be good for you, but back
home where I come from people take a lot of pride in Maine
made, American made, you know, products. They like to know what
they are purchasing.
And given a choice between buying something from away or
something that is here from the U.S. they will often side with
the U.S. even if prices are a little bit higher and within
reason of course, but I was surprised that the negotiators for
this deal didn't try to restore the country of origin labeling.
And I know that is something that Canada and Mexico
complained about to the World Trade Organization, but, you
know, I was hoping that this would be an opportunity to try in
this new negotiation put on to the table and try to get them to
drop their complaints. Would it be a benefit to the pork
industry to be able to label your products as made in the
U.S.A.?
Mr. MEIRICK. Well, just speaking for myself here I don't
know the official position of NPPC. I don't represent them
directly but, no, I would say I would say no. In our industry
wherever it comes from it is all Federally inspected. It has
gone through inspection process, so really where it comes from
as long as it passes our inspection for the most part is good.
In the packing plants, and as a producer, if I was getting
feeder pigs from Canada, which happens frequently, it creates a
bottleneck then of is that an American hog. It was born in
Canada, but it comes here at 20 days old, and I have them for
the next 100 days, so is that a product of Canada or a product
of the U.S.? So right away there is trouble.
You get to the packing plants where they are trying to be
the most efficient. One load comes from Canada, one load comes
from the U.S., one load is mixed. How do they handle that?
Because they have to separate that. And every time you have to
separate, that costs money. And then what the consumers want
they wanted it all labeled but they didn't want to pay any
extra.
Well, somebody has got to pay for that, so you know who
pays for that? The producer. We get less money for our product
because the plant has to go through the process of splitting up
these loads and then get them in the right chutes and get the
right label on it. That costs money. And the consumer is not
going to pay, so I pay.
So in my position I don't like that idea at all. Does it
make sense?
Mr. GOLDEN. It is thoughtful, and I appreciate your
feedback.
Mr. MEIRICK. Thank you.
Mr. GOLDEN. You know, I think it is a difficulty for a
smaller operations in places like Maine. I think about the
lobster community, you know, where I talk to lobster men and
women one of the top things they regret is that they don't have
control over processing locally, you know, they hate to see it
go to Canada, and at the end of the day they want, for
instance, Maine lobster be labeled as such. They hate to see it
go to Canada and then come back with that labeling that shows
that it is a U.S. Maine lobster and not a Canadian one.
Mr. MEIRICK. Well, anyone, any packing plant can put
whatever label they want. They could put if they want only
U.S., they can put U.S. on there, but I don't think there
should be a regulation. If you think that is an advantage, put
it on there, and if you don't think it is an advantage don't
put it on there. Just like organic or any other niche.
So that is the way I would like to put it.
Mr. GOLDEN. I appreciate the feedback, and, you know, I do
want to look further into some of the things around import and
export inspections in this trade deal and whether or not it is,
in fact, going to make sure that we have got a safe product
coming in. We talked about the bird flu aspect and how it could
really, you know, damage your industry significantly.
And the last piece is just a buy American preferences
continue to be waived under this new deal, which, you know, as
subcommittee Chair on contracting and infrastructure for this
Committee I think is regrettable. I would always prefer to see
an American business get the American Government contract
first.
Unfortunately, I think under this deal we were unable to
get that in, and so, unfortunately, I think we will continue to
see competition for buy American preferences and U.S.
Government taxpayer, you know, American taxpayer you know
contracts purchasing Mexican and Canadian goods for--from the
American Government or selling it to the American Government,
which is unfortunate. I wish we could have done something about
that, and I am interested if you would benefit from such a
policy.
Mr. MEIRICK. Well, it comes back to cost. At what--where do
you draw the line? I mean, if I can buy something from Japan at
$10 would I pay $20 for its American? Normally most of the--our
county when they are buying a truck for the county they buy it
the cheapest they can because that makes our county more--it is
more feasible, and it lowers the cost to the county if they buy
the cheapest one.
Now, that is talking about county. When you are talking
about the globe there is chances of buying stuff from wherever.
So I don't know the answer to it, and I would like to buy
American too, and if I have a chance I would too, but at what
cost? That is the question.
Mr. GOLDEN. I am out of time. I see that Mr. Nassar would
like an opportunity. I leave it up to the Chairwoman.
I mean, I understand what you are saying, sir. My concern,
of course, is at what cost is at the end of the day if we lose
the jobs here in the United States then we don't have people
with good work, but.
Mr. MEIRICK. But as a taxpayer in your county you want to
keep the costs as low as they can. And in some cases you might
be willing to pay a little bit more, but where do you draw the
line? That is just the question.
Mr. GOLDEN. Right. Delicate balance.
Mr. Nassar.
Mr. NASSAR. Yes, thank you for the opportunity. I just want
to say where we believe that U.S. workers are most productive
and actually shows that it is, but we don't want to compete on
an unlevel playing field, and what we are seeing it is not good
when the price is a lot lower because workers are exploited,
and that is what we see in Mexico, for example.
I just want to emphasize that workers there who want to
join a union often face violence. This is not hyperbole, it is
fact. In fact, the State Department just said as much in their
report which is in my testimony. So, yes, level playing field,
but at what point do we say that the price is more important
than everything else?
So I think there is a balance to be had, and exploiting
workers shouldn't be a competitive advantage.
Chairwoman FINKENAUER. Thank you, Mr. Golden.
And I also again want to take an opportunity to thank our
witnesses here today, and I am very grateful for the discussion
we were able to have. And, again, although we all, you know,
come from different backgrounds or different view points the
fact that it was a thoughtful, respectful discussion is
something that, you know I actually think happens more in D.C.
than we think, but it is nice to actually showcase this, as
well, that these are the types of discussions that should be
even had even though they are tough ones, but that makes them
all the more important. So thank you, thank you, thank you.
And I also have to say, you know, I am heartbroken hearing
some of the testimony today. Ms. Dostal, I will never be able
to forget you sitting here and having to tell me that you were,
you know, encouraging your sons not to go into the, you know,
to the farm, and that is tough to hear as I am, you know, I
have got a nephew who is about to--he is the one--he is the son
of my sister and the brother-in-law who are corn and soybean
farmers, they have got about 500 acres. And I often times think
about him, as well, and what does his future look like and what
will they be telling him? So it hit very close to home.
And I know, you know, Mr. Stoltzfus, I know you mentioned
economies of scale and how it is changing, but the reality is,
I mean, our small family farms, they are the backbone of our
not just our economy in Iowa but also our culture. It is our
values. It is who we are. And I am committed to fighting like
hell to make sure I am doing everything I can to preserve that
way of life, as well as the way of life for our working
families across the district, as well.
Mr. Nassar, speaking of our UAW workers and other folks in
manufacturing, you know, wages are--have basically been
stagnant in the State of Iowa for the last 10 years. It is
tough, and it is tougher every day for working families to make
it. And I truly believe for America to succeed, for Iowa to
succeed, this is why it is so important to come together on
these issues because we both do better when, you know, the
other one is doing better. And so, again, grateful to start
these real conversations that are tough.
And in regards to small businesses we know, you know, when
we are creating new markets and new producers we create new
jobs, and we also bolster our economy, which obviously, is just
incredibly important across the board here in congressional
districts all across our country, but if we are not taking the
trade negotiations thoughtfully and carefully and with a plan
that also can have negative impacts.
And so, again, I am just grateful we are having these
discussions and starting them before we even get the USMCA
delivered to Congress, which, you know, we should be expecting
I am assuming some time, and it is important we continue to
have these discussions, as I have said.
And so one of the things is while I just wanted to touch on
that you guys all did for me quite well was again these long-
term impacts. I am worried after just, you know, a week ago I
had a young guy, he was 16, sort of in the same boat I am sure
as your son who told me that he is not sure if he will be going
into the family farm. He is one of four. He is the youngest.
And he is going to school for engineering, which is also
important, but he was really worried. He looked at me and he
talked about his community, his--you know, the businesses in
the rural area where he grew up, you know, again, rural
communities changing all across America after the last few
years and worried about what that future looks like.
So just thank you for your perspective on all of this, and
I also want to make sure that we are uplifting these stories to
the administration and making sure that they are hearing what
has been going on on the ground and making sure that what they
are doing ends up worth it in the end, and I hope to God it is.
We have to take--we have to take this opportunity with
pending deals to make it worthwhile and make improvements where
they are needed. We need a strategy for trade that is fair to
our workers and our domestic industries, ensures labor
protections, and opens new markets for our farmers while
leaning on our close allies for strength in the global
marketplace.
I know this hearing helped inform many of my thoughts, as
well as the folks that were in and out here today as well, and
I am sure, you know, again, folks watching this and hopefully
our fellow colleagues we can have conversations with regarding
this testimony today will benefit.
I now again would just like to say thank you for the final
time. Grateful for all of you. Please have all safe journeys
back to Pennsylvania and Iowa, and I remain hopeful for the
future, but we sure have a lot of work to do, and I am excited
to have the opportunity to do it with all of you. Thank you.
And with that, I would ask unanimous consent that members
have 5 legislative days to submit statements and supporting
materials for the record.
Without objection, so ordered.
And if there is no further business to come before this
Committee, we are adjourned.
Thank you again to our wonderful witnesses for taking time
to be here.
[Whereupon, at 11:45 a.m., the Subcommittee was adjourned.]
A P P E N D I X
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
[all]