    [House Hearing, 116 Congress]
    [From the U.S. Government Publishing Office]

     THE STATE OF THE RURAL ECONOMY WITH AGRICULTURE SECRETARY SONNY PERDUE

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

                                    HEARING

                                   BEFORE THE

                            COMMITTEE ON AGRICULTURE
                            HOUSE OF REPRESENTATIVES

                         ONE HUNDRED SIXTEENTH CONGRESS

                                 SECOND SESSION
                                   __________

                                 MARCH 4, 2020
                                   __________

                               Serial No. 116-32

                      [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

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

                                  ___________

                        U.S. GOVERNMENT PUBLISHING OFFICE

    42-600 PDF                 WASHINGTON : 2020

                            COMMITTEE ON AGRICULTURE

                    COLLIN C. PETERSON, Minnesota, Chairman

    DAVID SCOTT, Georgia                 K. MICHAEL CONAWAY, Texas, Ranking
    JIM COSTA, California                Minority Member
    MARCIA L. FUDGE, Ohio                GLENN THOMPSON, Pennsylvania
    JAMES P. McGOVERN, Massachusetts     AUSTIN SCOTT, Georgia
    FILEMON VELA, Texas                  ERIC A. ``RICK'' CRAWFORD,
    STACEY E. PLASKETT, Virgin Islands   Arkansas
    ALMA S. ADAMS, North Carolina        SCOTT DesJARLAIS, Tennessee
        Vice Chair                       VICKY HARTZLER, Missouri
    ABIGAIL DAVIS SPANBERGER, Virginia   DOUG LaMALFA, California
    JAHANA HAYES, Connecticut            RODNEY DAVIS, Illinois
    ANTONIO DELGADO, New York            TED S. YOHO, Florida
    TJ COX, California                   RICK W. ALLEN, Georgia
    ANGIE CRAIG, Minnesota               MIKE BOST, Illinois
    ANTHONY BRINDISI, New York           DAVID ROUZER, North Carolina
    JOSH HARDER, California              RALPH LEE ABRAHAM, Louisiana
    KIM SCHRIER, Washington              TRENT KELLY, Mississippi
    CHELLIE PINGREE, Maine               JAMES COMER, Kentucky
    CHERI BUSTOS, Illinois               ROGER W. MARSHALL, Kansas
    SEAN PATRICK MALONEY, New York       DON BACON, Nebraska
    SALUD O. CARBAJAL, California        NEAL P. DUNN, Florida
    AL LAWSON, Jr., Florida              DUSTY JOHNSON, South Dakota
    TOM O'HALLERAN, Arizona              JAMES R. BAIRD, Indiana
    JIMMY PANETTA, California            JIM HAGEDORN, Minnesota
    ANN KIRKPATRICK, Arizona
    CYNTHIA AXNE, Iowa
    XOCHITL TORRES SMALL, New Mexico

                                     ______

                          Anne Simmons, Staff Director

                  Matthew S. Schertz, Minority Staff Director

                                      (ii)

                                 C O N T E N T S

                                  ----------
                                                                       Page
    Conaway, Hon. K. Michael, a Representative in Congress from
      Texas, opening statement.......................................     3
        Submitted report.............................................    69
    Craig, Hon. Angie, a Representative in Congress from Minnesota,
      supplementary material,........................................    83
    Peterson, Hon. Collin C., a Representative in Congress from
      Minnesota, opening statement...................................     1
        Prepared statement...........................................     2
    Schrier, Hon. Kim, a Representative in Congress from Washington,
      submitted letter...............................................    84

                                    Witness

    Perdue, Hon. Sonny, Secretary, U.S. Department of Agriculture,
      Washington, D.C................................................     4
        Prepared statement...........................................     7
        Supplementary material.......................................    86
        Submitted questions..........................................    92

     THE STATE OF THE RURAL ECONOMY WITH AGRICULTURE SECRETARY SONNY PERDUE

                                  ----------

                            WEDNESDAY, MARCH 4, 2020

                              House of Representatives,
                                      Committee on Agriculture,
                                                       Washington, D.C.
        The Committee met, pursuant to call, at 10:04 a.m., in Room
    1300 of the Longworth House Office Building, Hon. Collin C.
    Peterson [Chairman of the Committee] presiding.
        Members present: Representatives Peterson, Costa, Fudge,
    McGovern, Vela, Plaskett, Adams, Spanberger, Hayes, Delgado,
    Cox, Craig, Brindisi, Schrier, Pingree, Bustos, Maloney,
    Carbajal, Lawson, O'Halleran, Panetta, Kirkpatrick, Axne,
    Torres Small, Conaway, Thompson, Austin Scott of Georgia,
    Crawford, Hartzler, LaMalfa, Davis, Yoho, Allen, Bost, Rouzer,
    Abraham, Kelly, Comer, Marshall, Bacon, Dunn, Johnson, Baird,
    and Hagedorn.
        Staff present: Lyron Blum-Evitts, Carlton Bridgeforth,
    Melinda Cep, Jacob Chisholm, Patrick Delaney, Jasmine
    Dickerson, Brandon Honeycutt, Chu-Yuan Hwang, Prescott Martin
    III, Chief Counsel; Felix Muniz, Jr., Michael Panetta, Troy
    Phillips, Lisa Shelton, Anne Simmons, Ashley Smith, Luke
    Theriot, Katie Zenk, Paul Balzano, Callie McAdams, Matthew S.
    Schertz, Ricki Schroeder, Patricia Straughn, Jennifer Tiller,
    Trevor White, Dana Sandman, and Justina Graff.

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

        The Chairman. Members take their seats, and we will get
    started here. We are a couple minutes late, but we obviously
    have a quorum, and we appreciate everybody being here, and very
    much appreciate the Secretary being willing to come up and
    spend some time with us.
        First of all, Mr. Secretary, on behalf of my sugarbeet
    guys, I want to thank you and the President for what you did to
    help our industry. It was a huge hit that we took, and you are
    going to help us survive. I hope you tell the President as well
    that we very much appreciate what you guys did.
        We welcome you here to the Agriculture Committee today to
    review the state of the farm economy. The Secretary has, of
    course, been at his job for what, 2 or 3 years now, 3 years?
    You still have a little bit of hair left. He is going to tell
    us where he sees the farm economy going in the coming year, as
    well as what is going on over at the Department.
        Today, we are also welcoming our newest Member of the
    Committee from New Mexico, Xochitl Torres Small, who is from
    New Mexico's 2nd Congressional district, which has a lot of
    agriculture. It is a rural district, has a border area, and she
    is going to be a great new Member and it is going to be a great
    thing for her district to have her on the Committee. We very
    much welcome you and look forward to working with you.
        We have seen farm income numbers come out for 2019, and
    really, if it weren't for the payments to farmers through the
    Market Facilitation Program and disaster payments, farm income
    would have been in the tank last year. A farm economy that is
    propped up by payments, I think we all agree, is not what we
    want and that is not a healthy farm economy. I really hope that
    these markets can return to normal, but I am concerned about
    the President's comments that we are going to have a third
    payment potentially. I don't know, maybe you can give us some
    insight into that. But that makes me wonder if we are talking
    about third payments as to what is going on with these trade
    deals and whether things are going to turn around there. I hope
    they do. A promise has been made to these farmers, and they
    don't want these payments. They want trade. They want these
    markets reestablished, and I think you understand that. We all
    understand that, and we all want to work together to try to
    make that happen.
        I told you last year that I appreciated you always shooting
    straight with us. You have done that, and so, I would like to
    hear today from you some of your straight talk, how you view
    things in the farm economy, over at the Department, and how you
    see us recovering and thriving, getting back to where we were
    some years ago.
        [The prepared statement of Mr. Peterson follows:]

      Prepared Statement of Hon. Collin C. Peterson, a Representative in
                            Congress from Minnesota
        Good morning, and welcome to today's hearing to review the state of
    the farm economy. Welcome also to our witness, Agriculture Secretary
    Sonny Perdue, who will talk about where he sees the farm economy going
    in the coming year, as well as what's going on over at the Department.
        Today we are also welcoming the newest Member of the Committee.
    Congresswoman Xochitl Torres Small from New Mexico's second
    Congressional District has joined us. Coming from a rural, border
    district with a significant agricultural presence, we are lucky to have
    her perspective and experience.
        We've seen the farm income numbers come out for 2019. If it weren't
    for payments to farmers through the Market Facilitation Program and
    disaster payments, farm income would have been in the tank last year. A
    farm economy propped up by payments from the government isn't a healthy
    farm economy.
        I really hope the markets return to normal. But the President's
    comments about a third payment also don't give me a lot of hope that
    we'll see tangible benefits from these new trade deals anytime soon.
    That's a promise that the Administration made to farmers, and without
    it, the farm economy isn't going to recover.
        I told you last year that I appreciated you always shooting
    straight with us, Secretary Perdue, so I'd like to hear from you today
    on how you view the state of things and how to make sure the farm
    economy recovers and thrives like we all want it to.

        The Chairman. I appreciate you being here, and I recognize
    the Ranking Member for a statement.

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

        Mr. Conaway. Thank you, Mr. Chairman. Secretary, thank you
    for being here. I also would like to welcome our new Member.
    She represents my three grandsons who live is Los Cruces, and
    so I am glad to have her on the Committee. She will do a great
    job.
        Mr. Secretary, we recognize your hands are full. Your hard
    work in implementing that 2018 Farm Bill, WHIP+, disaster
    assistance, Market Facilitation Program, has been and continues
    to be absolutely vital in helping our farmers and ranchers
    weather the seventh straight year of recession and a brutal
    string of natural disasters. I know that you and the President
    have taken some heat for providing Market Facilitation Program
    payments to farmers, but I would hate to see what the situation
    in farm and ranch country would be right now if you had not
    taken those steps. We would be having a very different
    conversation today, akin to the kind of discussions that were
    taking place through the 1980s farm financial crisis.
        Our farmers and ranchers were targeted by China because the
    President put his foot down against nearly 30 years of
    predatory trade practices that hurt American workers, as well
    as our producers. The first and second MFP payments were as
    justified as they were critical to our farmers and ranchers,
    and I strongly believe that unless something gives here very
    soon, an announcement of an MFP 3 will be absolutely vital to
    the survival of our producers.
        I am also grateful that the President communicated directly
    with farmers and ranchers in rural America last week to assure
    them that he and his Administration are going to continue to
    stand by them through these difficult times.
        For those who have ideas on how to improve MFP so it works
    better for their producers, they should talk with the Secretary
    about those ideas rather than simply criticize this vital
    assistance that literally means the difference between farming
    another year, or losing the farm. To the critics, I would say
    they ought to be a part of the solution, rather than always
    being a part of the problem.
        Mr. Secretary, I greatly appreciate all that you and the
    President are doing to open up new markets for our farmers and
    ranchers. Passage of USMCA, completion of the Phase 1 agreement
    with China, the U.S.-Japan agreement, the U.S.-Korean
    agreement, all hold great promise for our farmers and ranchers,
    and I know that you and the Administration will be vigilant in
    ensuring that the promises become reality.
        The real potential for bilateral agreements with the UK and
    the EU and with India are also very encouraging, and I
    especially appreciate your leadership, Mr. Secretary, in
    pressing the EU to at last adopt Norman Borlaug's Green
    Revolution, which has saved billions of lives while conserving
    natural resources worldwide. If we are going to feed nine
    billion people in the next 30+ years, the path Borlaug charted
    decades ago remains the only acceptable path forward. That is
    why I am pleased to work with you and what you are doing, Mr.
    Secretary, in your recently announced Agriculture Innovation
    Agenda. Reducing food waste, enhancing water quality,
    conserving resources, and strengthening U.S. energy
    independence are all goals that we can and should be able to
    agree on. Thank you for leading the way on this effort and for
    making our nation's farmers and ranchers an integral part of
    your plan.
        There is one issue I want to visit with you about, and that
    is making sure that for the WHIP+ Disaster Program, that it
    complies with the law and your strong belief that the program
    should incentivize higher levels of crop insurance, not hinder
    them. Unfortunately, an unintentional glitch in the WHIP+
    formula means that farmers who bought higher levels of coverage
    are penalized more than those who bought lower coverage in the
    case of unharvested acres. I know that this is not your intent,
    and I believe that the USDA did not desire this result. But it
    is a serious problem and I think it ought to be fixed so we
    honor the intent of the law and your conviction that disaster
    aid should never undermine crop insurance. I look forward to
    our continued work on this issue to minimize these disparities.
        For now, I want to reiterate my thanks to you and the
    President for all you are doing to stand by our farmers and
    ranchers through these very difficult times.
        With that, Mr. Chairman, I yield back.
        The Chairman. I thank the gentleman, and I ask that other
    Members submit their opening statements for the record to
    ensure that there is ample time for questions during this
    hearing.
        I, again, welcome our witness, Mr. Perdue, Secretary of the
    Department of Agriculture. The floor is yours and you may take
    as much time as you consume. I am not going to run the clock on
    you, and we very much appreciate you being here.

     STATEMENT OF HON. SONNY PERDUE, SECRETARY, U.S. DEPARTMENT OF
                     AGRICULTURE, WASHINGTON, D.C.

        Secretary Perdue. Well, thank you very much, Chairman
    Peterson and Ranking Member Conaway. First of all, I appreciate
    the opportunity to be here. I appreciate, really, the
    attendance of the Committee today, for all the distinguished
    Members here. I look forward to hearing their questions and
    responding the best I can.
        You are absolutely right, Mr. Chairman. It was a tough
    year. Spring of 2019 was tough, and the payments that you all
    have authorized and facilitated, both indemnity as well as the
    Market Facilitation Program, made a difference in lives across
    rural America this last year. It was spring flooding in the
    Midwest, continuation of cold, wet conditions, and then as you
    well know and experienced, an early blizzard in Minnesota and
    the Dakotas. A lot of the crops got frozen on the ground, and
    some are still yet to be harvested in that way.
        But despite a tough weather year and tough trade
    environment, it is interesting the facts show that net farm
    income increased 11.7 percent from $83\1/2\ billion to $93
    billion, and frankly, we have already talked about some of the
    reasons for that. That was the indemnity payments. The safety
    net of crop insurance spent $9.46 billion in indemnity benefits
    distributed to producers, along with the $600 million in
    prevented plant top off payments that way. The standing
    disaster program administered by the Farm Service Agency, that
    is the safety net that you all vote for in the farm bill,
    provided nearly $690 million for assistance in 2019, and as you
    well know, you all participated and supported and voted for an
    additional $4.5 in ad hoc disaster payments as well for 2018
    and 2019 losses for those caused by hurricanes, tornadoes,
    floods, snow storms, excessive moisture, wildfires, drought,
    and most anything else that can happen on the farm.
        Thank you for y'all's thoughtfulness and concern about the
    American farmer and rancher, and we appreciate the ability to
    be able to do this. We appreciate--farmers are optimistic and
    we hope--we are glad 2019 is in the books, and we look forward
    to better times in 2020.
        As you indicated, Mr. Chairman, we heard the mantra loud
    and clear over trade not aid, and I think that is where we are
    headed. This is not my prepared remarks, but I want to go ahead
    and address the issue that you mentioned about a third Market
    Facilitation Program payment. I am telling farmers to do what
    they have always done and part plant for the market. The
    President did make a tweet, but many people, and farmers in
    particular, we always read what we want to see in that. It was
    preceded by a major two-letter word there in the beginning, if.
    If the trade does not materialize as we anticipate it will,
    then he is willing to support another one. But I am telling
    farmers not to anticipate one. Don't expect one. We know there
    will be some weaning pressure here as people have come to be
    comfortable with that. Our goal is not to continue a Market
    Facilitation Program payment in the ongoing future. The safety
    net that you all designed under the crop insurance program and
    the other programs for USDA, we believe, is adequate for the
    future in that regard.
        I am telling farmers that if we get the export, we get the
    trade, and we don't see prices increase, then the Market
    Facilitation Program was not a price support program. It was a
    trade disruption program, not price support. If we see trade
    increase and prices don't go up, that is a market signal to
    farmers who are producing too much, and that is the way the
    markets have always worked. We have more supply and less
    demand, prices go down. Less supply, more demand, prices go up.
    So, don't look for us to support a Market Facilitation Program
    as a price support program. Look at it for a trade disruption
    program. That was the principle in the foundation of the
    original Market Facilitation Program regarding trade
    disruption. I want to be clear about that. We can talk more
    about that in the questions, but I really wanted to get that
    out, since you mentioned it earlier, about that.
        But we do, at USDA, remain committed to delivering those
    programs of support that you all have authorized for those that
    need it most. The new trade deals and the strong consumer
    demand in the United States and abroad are a signal that bright
    days are ahead. None of us obviously know what the impact is
    going to be with the coronavirus, and that is yet to be
    determined. We are going to do what we have always done, and do
    what needs to be done in that regard, nationally and
    internationally in that way.
        The good news is we serve a group of people who are
    ultimate optimists. It takes that spirit and optimism every
    year to take their equity and put it in the ground and hope a
    good crop and weather makes it productive. And that is why it
    is fun to serve these folks, and they have made it perfectly
    clear to me that they would rather have trade, not aid, and it
    is certainly more fulfilling when we grow and produce things,
    rather than getting a check in the mailbox.
        The Phase 1 deal with China, I am encouraged by USMCA,
    Japan, the renewal of the KORUS arrangement, and again, to all
    the smaller countries, the singles that Ambassador Lighthizer
    talks about, will set us up for a great future. I am not a
    market prognosticator, and I don't want to pretend to be one,
    but we have seen, based on the future of the trade deals, We
    have seen the lows put in for the recent area. It is not going
    to just climb up. We were disappointed that we didn't see
    prices respond more in the Phase 1 deal, but obviously, the
    market and all farmers kind of act like they are from Missouri.
    They want to see it rather than hear about it, and I think that
    is what we are seeing that way. I think that is what we will
    see.
        The good news about that is, from a technical level at USDA
    and working with the technicians in China, they are doing the
    kind of things that it is going to take to facilitate that
    trade. A lot of those non-trade barriers, they are working on
    those types of things on an ongoing basis. We see a sincerity
    in them living up to the agreement, those hardline numbers that
    Ambassador Lighthizer negotiated. We see a commitment to doing
    that. We are going to be tracking that. Right now, we are in a
    trusting but verifying environment, and that is what we will
    continue to report to you all and the President as we go
    forward. The unilateral ability to enforce that is a very
    powerful tool in that regard. We appreciate these trade
    agreements. That is what farmers want to see is trade, not aid.
        Last week, as you may have heard, we also tried to support
    the ethanol market by declaring that we will promote another
    infrastructure program in helping to move to E15 year-round.
    The President, as you know, created the year-round market for
    E15 or authorized that, and we will be doing a Higher Blends
    Infrastructure Incentive Program of $100 million in helping the
    retailers to move to infrastructure that can support ethanol,
    E15, and B20 and higher as we go forward. We are taking
    applications. It will be done on a competitive basis as people,
    and scored, and really to make sure we get skin in the game
    from the retailers, as well as just accepting a grant.
        Our goal at USDA is to work all across the environment of
    the economy to increase rural prosperity. This week, we are
    announcing more rules on employment and training programs to
    help promote long-term success and self-sufficiency as we try
    to move people into employment. And I do want to tell you, I
    think we have gotten great results and great acclaim out here
    in putting the money to work that you all did with the
    ReConnect Program. You know how important broadband is to our
    whole country. It has the potential to be transformative, and
    where we are able to go in these communities, and a lot of
    times run fiber to the home, it is going to be life-changing
    for many of your citizens out there. We have had good results
    and good feelings where that happens. We just need to continue.
    We have opened up the second round of applications. It will
    close the 16th of March, and more of your communities will be
    served based on the second and third round that you gave, $1.1
    billion in that way for reconnecting broadband across the
    country.
        Ranking Member Conaway talked about the Agricultural
    Innovation Agenda to best allow our programs and research and
    provide farmers the tools they need to continue to be
    innovative and successful. We are talking about the miracle of
    American agriculture for the last 75 years has just been
    phenomenal in its productivity, reducing its environmental
    footprint, doing more with less, and actually less arable
    acres, ten percent less acres, and 400 percent increase. That
    is a real miracle that we don't talk about a lot, but I am
    going to be talking more about it.
        I don't see my friend Congressman Scott here, but I know Al
    and others--excuse me, Mr. Lawson, I know you all are
    interested in the program you all did on the future of 1890s
    universities. We have gotten that--those, because of you,
    those--we are going to be welcoming those students holding
    those scholarships here for this fall, and I visited several of
    them, and they are excited about that aspect as well.
        All in all, we have working to implement the 2018 Farm
    Bill, and stood up the key new programs that you all did, like
    Dairy Margin Coverage Program and rules for industrial hemp,
    and obviously, we have had a busy year. Certainly with the farm
    bill implementation, another Market Facilitation Program
    payment, ad hoc disaster program, and there is still a lot of
    work to be done.
        As you well know, one of the other issues that we have to
    deal with is a stable, reliable ag labor workforce in order to
    maintain the best and most competitive agricultural sector in
    the world. We look forward to working with Congress to do that.
        I just want you to know, I love this job. It is an honor to
    serve as the 31st Secretary of Agriculture of the United States
    of America, and I am proud of the great strides. We have a
    great team over there. We have 100,000+ good folks that just
    want to do good for America, and I am proud of them. We will
    continue to try to work every day in making USDA the most
    effective, the most efficient, and most customer-focused
    Department in the Federal Government.
        Thank you for the opportunity to be here to make that
    statement uninhibited. I look forward to your questions, Mr.
    Chairman.
        [The prepared statement of Secretary Perdue follows:]

    Prepared Statement of Hon. Sonny Perdue, Secretary, U.S. Department of
                         Agriculture, Washington, D.C.
        Chairman Peterson, Ranking Member Conaway, and distinguished
    Members of the Committee, it is a privilege to once again appear before
    this Committee as the 31st Secretary of Agriculture and testify on the
    state of the rural economy.
    Sowing Prosperity in Rural America
        Since we last met, USDA has worked diligently to implement the 2018
    Farm Bill. Among our milestones, I committed to you in February last
    year we would offer the Dairy Margin Coverage (DMC) Program, a
    significant new risk management tool, in June of 2019, and we followed
    through. Implementation of conservation programs by the Farm Service
    Agency (FSA) and the Natural Resources Conservation Service (NRCS) is
    on track as well, including FSA's 54th Conservation Reserve Program
    general sign-up, which opened in December--another commitment kept. We
    established the U.S. Domestic Hemp Production Program in advance of the
    2020 planting season and adapted several existing programs to this
    promising commodity not widely cultivated since 1937.
        USDA made strides to reduce trade barriers and ensure farmers,
    ranchers, and food manufacturers and workers can fairly compete against
    anyone in overseas markets. Examples of our accomplishments include
    securing full access for beef to Argentina and Japan, restoring market
    access for poultry and poultry products to China, improving access for
    wheat to Brazil, and guaranteeing rice access to the Korean market. In
    our effort to promote U.S. products around the world, USDA led six
    trade missions that enabled more than 170 U.S. companies and
    organizations to engage in 3,200 one-on-one meetings with foreign
    buyers. Our trade missions and 22 endorsed trade shows generated nearly
    $3 billion in projected export sales, while our export financing
    programs supported another $2 billion in exports in 2019. President
    Donald Trump, meanwhile, laid the foundation for a stronger farm
    economy through trade accomplishments like the Phase 1 Deal with China,
    USMCA, and trade agreement with Japan, which USDA will look to build
    upon in 2020.
        Not only is the United States producing food efficiently and
    sustainably, but most importantly we have one of the safest food
    supplies on the planet. Over the last decade, USDA has modernized
    inspection systems to align with 21st century technology and to prevent
    the hazards that we cannot see--the invisible pathogens and microbes
    that cause foodborne illness. USDA is committed to using the best
    science and technology available to protect the American food supply
    and ensure the safety of meat, poultry, and processed egg products.
        As we served out our motto to ``Do Right and Feed Everyone,'' USDA
    finalized a rule that will encourage more American to enter, re-enter,
    and remain in the workforce, helping individuals and families start on
    a path to a better life, The Trump Administration has produced the
    longest economic expansion in U.S. history, with an unemployment rate
    of 3.6% and 6.8 million job openings. All individuals deserve the
    dignity of work and the lasting transformation it provides to achieve
    their own American dream. Congress asked us in the 2018 Farm Bill to
    focus on case management and promote the long-term success and self-
    sufficiency of SNAP recipients and later this week, we will be issuing
    a proposed rule that will strengthen the way states serve our customers
    through Employment and Training programs. We believe that human
    connection, not just a monthly SNAP benefit, has the power to change
    people's lives.
        USDA plowed ahead with IT modernization initiatives to improve
    customer experience. Customers can now discover our national treasures
    on Recreation.gov or save time and paperwork associated with disaster
    assistance, farm programs, and H-2A applications on Farmers.gov, all
    using our interactive tools in the palm of their hand. USDA also
    developed dashboards across eight Mission Areas and seven
    administrative functions, which provide employees with sophisticated
    data analytics to improve internal decision-making and maximize the
    impact of customer-facing programs. USDA will continue innovating
    across the enterprise to achieve faster, easier, and friendlier
    programs, with a special focus on areas of greatest potential impact on
    customer service, like expanded payment options for farm programs,
    automated AGI threshold compliance, and digital acreage reporting.
        The Forest Service used the new farm bill and 2018 Omnibus
    authorities to do work in the right place at the right scale. We sought
    to improve forest conditions across all forests by setting aggressive
    targets for treating acres and producing timber volume. At the same
    time, we maintained our commitment to reducing hazardous fuels and
    restoring forest health. In 2019, USDA signed shared stewardship
    agreements with twelve states and the Western Governors Association to
    better coordinate our forest and grassland management resources and
    priorities. In the coming year, USDA will seek to more than double our
    shared stewardship partnerships.
        USDA worked closely with the Environmental Protection Agency (EPA)
    to strengthen America's energy production, energy security, and
    supported our nation's farmers by promoting domestic ethanol and
    biodiesel renewable fuel use through the approval of year-round E15. We
    provided greater transparency and certainty in the Renewable Fuel
    Standard by making the commitment to ensure that 15 billion gallons of
    conventional ethanol be blended into the nation's fuel supply beginning
    in 2020, and that the volume obligation for biomass-based diesel are
    met.
        Last week, as part of President Trump's key promise to promote
    biofuels I announced USDA's Higher Blends Infrastructure Incentive
    Program (HBIP) which will open for application early this summer and
    will provide for $100 million in grants to better enable market
    adaptation for higher blends of ethanol and biodiesel by investing in
    infrastructure. More than that USDA is putting our money where our
    mouth is. Last week I directed the USDA to increase the number of
    biofuel-capable vehicles, and the use of biofuels, in our fleet
    operation which is one of the largest fleet operations in the Federal
    Government. This Administration will continue to support renewable
    fuels, including ethanol, biodiesel, and biomass to achieve market-
    driven demand.
        President Donald J. Trump is also sowing prosperity in rural
    America through broadband deployment. USDA's initial round of the
    ReConnect Pilot Program provided $751 million in grants and financing
    for 83 projects to extend broadband access to 431,000 rural Americans.
    USDA is helping reconnect rural communities to each other and the rest
    of the world, giving patients access to telehealth, students access to
    digital learning, and farms and businesses access to new technology and
    innovation. In December, USDA launched Re-Connect Program Round 2. The
    Rural Utilities Service is now accepting applications, grants, low-
    interest loans, and 50/50 grant/loan combinations. In Fiscal Year 2019,
    Congress appropriated $550 million and an additional $555 million was
    made available in the FY 2020 Appropriations Act. In total, USDA now
    has $1.1 billion waiting for rural broadband deployment. I often say we
    need a moonshot approach to bring high-speed internet access to
    everyone in rural America. I extend my appreciation for Congress'
    continued commitment and investment in our ReConnect efforts.
        Despite our accomplishments in 2019, USDA recognizes these are
    challenging times and current state of the rural economy compels us to
    do more.
    The State of the U.S. Rural Economy
        For 2020, net farm income is forecast at $96.7 billion, a three
    percent increase compared to 2019. While 2020 net farm income is still
    forecast far below the inflation-adjusted peak of $139.1 billion in
    2013, 2020 net farm income is anticipated to be five percent above its
    inflation-adjusted average (2000-2018) of $91.7 billion. This
    forecasted increase is in spite of a decrease in government payments
    and the trade deal with China not yet fully realized in market prices.
        Net cash farm income is forecast to decrease by nine percent from
    $120.4 billion in 2019 to $109.6 billion in 2020. However, the 2020 net
    cash farm income forecast is line with its inflation-adjusted average
    (2000-2018) of $110.2 billion. The difference between the increase in
    net farm income and the decrease in net cash farm income is due to
    changes in crop inventory. Net farm income accounts for the value of an
    increase in crop inventory, reflecting the increased value of
    production for the year. Net cash farm income accounts for the value of
    sales from inventory, so when inventory is held, that value does not
    add to net cash farm income. Given the poor weather in 2019, producers
    had to draw down crop inventories in 2019, adding to 2019 net cash farm
    income, whereas net farm income for 2020 reflects the forecast for
    better crop production that will allow for holding larger crop
    inventories.
        Spring flooding in 2019 pummeled the Midwest, leading to the
    slowest planting progress on record for corn. For 2019, roughly 20
    million acres were recorded as ``prevent plant,'' which is nearly
    double the previous record set of 11 million acres in 2011. The
    continuation of cold and wet conditions, and an early blizzard in
    October located in the Dakotas and Minnesota, led to hardship during
    harvest. This led to many acres of corn, soybeans, and sugar beets
    being left unharvested at the end of 2019. However, for 2020, cash
    receipts are anticipated to increase by one percent for crops overall,
    generally due to higher production, and 4.6 percent for livestock due
    to both higher prices and production.
        For 2020 we anticipate that producers will spend more on production
    with most expenses, including feed, labor, and fuel forecast to rise
    relative to 2019. This year will be the first since 2014 that total
    inflation-adjusted production expenses at the sector level are forecast
    to increase. Producers have less cash on hand as working capital is
    forecast to fall 15 percent from 2019 and 57 percent from the most
    recent peak in 2014. The decrease is the result of current assets--the
    value of items such as crop inventory, non-breeding animal inventory,
    and purchased input inventory--decreasing by four percent, while
    current debt--debt in which payments are due in the next 12 months--
    increases by two percent.
        Farm sector debt continues to grow and is forecast at $425 billion
    with $265 billion in real estate debt--including loans using real
    estate as collateral--and $161 billion in non-real estate debt.
    Accounting for inflation, equity is forecast to decrease 0.7% in 2020
    compared to the previous year, while debt is anticipated to increase
    0.5%. This puts the debt-to-asset ratio for the farm sector at 13.59
    for 2020, the highest level since 2003 and passing the levels seen
    during the Great Recession. These overall values can mask areas of even
    greater vulnerability. The strength of land values varies
    geographically, with some states, like New Mexico, Minnesota and
    Georgia, seeing greater weakness even as others--such as California,
    Utah, and Idaho--hold steady or see modest increases. Debt-to-asset
    ratios also vary among farm businesses, with some commodity
    specializations showing a much larger share of highly leveraged
    operations. Overall, the number of crop farms in highly leveraged
    financial situations is approximately 1-in-12 and the number of
    livestock and dairy farms in highly leveraged financial situations is
    approximately 1-in-16.
        As farms become more financially vulnerable, the risks of loan
    delinquency and bankruptcy increase. For Farm Service Agency (FSA)
    direct loans, the rate of delinquency was similar at the end of 2019
    compared to the rate of delinquency at the end of 2018. However, the
    rate of Chapter 12 bankruptcy--bankruptcy specific to family farmers
    and family fishermen--is nearing three bankruptcies per every 10,000
    farms, a rate we are monitoring, but is still low compared to the
    1980s. The bankruptcy rate varies substantially by state. For example,
    in Wisconsin the rate is around seven bankruptcies per every 10,000
    farms, while in Illinois the bankruptcy rate is roughly two
    bankruptcies for every 10,000 farms.
        Our farmers work hard, are the most productive in the world, and we
    aim to match their enthusiasm and patriotism as we support them. When
    conditions test the resilience of the men and women who feed, fuel, and
    clothe the nation, President Trump has called on USDA to respond, and
    2019 was no different.
    Standing Up for America's Farmers and Ranchers
        When I appeared before this Committee a year ago, the fallout of
    monumental storms and wildfires was testing the resilience of producers
    in the southeastern and western U.S. In 2019, farmers faced exceptional
    new challenges. Natural disasters, floods, drought, blizzards, and
    severe freezes dealt a hefty blow to some of the most productive
    regions in the heartland. USDA responded with all the tools available,
    making timely payments for loss claims on crop insurance policies and
    utilizing FSA's suite of disaster assistance programs for non-insurable
    crops, livestock, trees, vines, and bushes. USDA aided producers to
    install conservation practices on land damaged by severe weather and
    continues to provide help to communities to restore and enhance damaged
    watersheds and floodplains. In addition to these tools, USDA
    implemented the Wildfires and Hurricanes Indemnity Program Plus (WHIP+)
    using the funding provided by Congress under the Additional
    Supplemental Appropriations for Disaster Relief Act of 2019 and the
    Further Consolidated Appropriations Act. WHIP+ enabled $242 million in
    relief to-date for losses in 2018 and 2019, representing 10,433
    applications, and our diligent FSA staff continue to process new loss
    claims. This supplemental funding also provided roughly $592 million in
    additional assistance to producers who experienced unprecedented
    prevented planting in 2019. USDA is steadfastly implementing the new
    funding and authorities Congress provided in December. Although
    disaster assistance will not make producers whole, we hope the
    assistance will relieve some of the financial strain farmers are
    experiencing.
        While President Trump worked to address long-standing market access
    barriers across the U.S. economy, China, EU, Turkey, and India honed
    their pressure on the American farmer, for whom the success of
    producing abundance and selling to the world made especially vulnerable
    to trade disruptions. The President stood with rural America. After
    unjustified retaliatory tariffs from foreign nations targeted billions
    of dollars of agricultural trade and disrupted markets for commodities
    ranging from soybeans to almonds to pork, President Trump directed USDA
    to support our U.S. farmers and ranchers. While President Trump worked
    to address long-standing market access barriers, USDA continued its
    three-pronged approach developed in 2018 with modifications to make the
    Support Package for Farmers stronger and more effective for producers,
    authorizing up to $16 billion in support to respond to trade
    disruptions and unjustified retaliation.
        The Market Facilitation Program (MFP) provides funds to help
    producers implement alternative marketing strategies for their
    products. MFP was designed to help all farmers hurt by tariffs, but
    payment rates reflect the severity of the impact of trade disruptions,
    as some export-dependent commodities, such as soybeans, suffered larger
    trade damage than others that are less dependent on the markets
    affected by retaliation Although the commodities most affected by the
    tariffs are generally produced on larger farms simply by the nature of
    the commodities themselves, USDA applied payment limitations and
    income-based eligibility criteria to limit large payments to single
    farms consistent with what Congress established for traditional farm
    programs and recent supplemental disaster assistance programs. In
    addition, recipients were required to be actively engaged in farming
    with respect to ``covered commodities,'' which is assessed based on
    their contribution of inputs or management services to the operation.
    While limiting mechanisms effectively lowered payments to large
    producers, USDA also established a minimum per acre payment at $15 to
    increase assistance for farmers who produce on a smaller scale or grow
    commodities less affected by retaliatory tariffs. Although there has
    been much discussion about the size of farms and regional distribution
    of the MFP assistance, by design, the assistance flowed to states that
    produce or export the commodities most affected by retaliatory tariffs
    and the farms growing those commodities received more in assistance,
    subject to the guardrails highlighted above. The top commodities
    affected by the unjustified retaliatory tariffs were row crops, hogs,
    dairy, cherries, and almonds and those commodities--especially row
    crops--are generally produced on larger farms simply by the nature of
    the commodities themselves. The top states that received the assistance
    include Iowa ($1.6 billion), Illinois ($1.4 billion), Texas ($1.1
    billion), Minnesota ($1.1 billion), and Kansas ($1 billion) among the
    top five for 2019 MFP payments. Between July 25, 2019, when MFP was
    first announced and through the third and final tranche announced on
    February 3rd, 2020, FSA processed 1.8 million MFP transactions,
    providing more than $14 billion to 658,356 farmers.
        The Food Purchase and Distribution Program (FPDP), the second prong
    of our Support Package for Farmers, acquires surplus fruits,
    vegetables, milk and meats affected by trade retaliation. All products
    purchased were grown and raised on American farms by American farmers.
    FPDP represents a collaboration between the Agricultural Marketing
    Service and the Food and Nutrition Service to do right and feed
    everyone, acquiring the abundance of America's harvests for delivery to
    food pantries, school meals and other outlets serving low-income
    Americans. Examples of products delivered to those in need include
    pork, poultry, citrus, apples, and blueberries, to list a few. Through
    the first quarter of Fiscal Year 2020, USDA purchased nearly $350
    million, or more than 7,000 truckloads, worth of nutritious American-
    raised food, including pork, poultry, citrus, apples, and blueberries,
    to list a few. In the months ahead, USDA is working to reach its target
    of $1.4 billion in total purchases.
        Agricultural Trade Promotion (ATP) Program, or the third prong of
    our Support Package for Farmers, awarded $100 million to 48 cooperator
    organizations to support trade missions and promotional activity for
    U.S. agriculture, food, fish and forestry products abroad. By providing
    foothold in new export markets, ATP funding will continue to generate
    sales and business for U.S. producers and exporters many times over for
    years to come.
        Our trying times in rural America call upon our immediate
    assistance but also focus USDA on establishing a vision for sustaining
    U.S. agriculture's leadership in the world.
    Envisioning the Future of U.S. Agriculture
        We know ahead of us lies a dual challenge to produce enough food
    and agricultural products to meet the needs of a growing population and
    protect the natural resource base on which agriculture depends--both
    for current and future production. This challenge demands bold goals
    and bold actions. The Agriculture Innovation Agenda I announced on
    February 20, 2020, at our Agricultural Outlook Forum is USDA's
    commitment to the continued success of American farmers, ranchers,
    producers, and foresters in the face of these future challenges. Our
    commitment is bold: to increase U.S. agricultural production by 40
    percent while cutting the environmental footprint of U.S. agriculture
    in half by 2050. This is a Department-wide effort to align USDA's
    resources, programs, and research to provide farmers with the tools
    they need and to position American Agriculture as a leader in the
    effort to meet the food, fiber, fuel, feed, and climate demands of the
    future. I welcome your partnership as USDA supports farms of all sizes
    by setting goals and prioritizing innovation through research and
    program delivery through our Agriculture Innovation Agenda.
        Advances in biotechnology have great promise to enhance rural
    prosperity and improve the quality of American lives. Gene editing has
    emerged as a formidable agricultural tool to help the world meet its
    food production needs and increase the productivity of the American
    farmer and rancher by improving crop quality, increasing the
    nutritional value of crops and animal products, combating pests and
    disease, and enhancing food safety.
        USDA is actively working to ensure our domestic producers have
    access to these technologies by implementing President Trump's
    Executive Order 13874 (Modernizing the Regulatory Framework for
    Agricultural Biotechnology Products), which directs USDA and other
    Federal agencies to streamline our regulatory processes and facilitate
    the innovation of agricultural biotechnology to the marketplace through
    a predictable, consistent, transparent, science-based and risk-
    proportionate regulatory system.
        Farmers need access to a stable and legal workforce to help
    cultivate, harvest, and deliver to market America's agricultural
    abundance. Many farmers experience trouble recruiting workers during
    peak seasons of need in rural parts of America, and our record-long
    economic expansion and low unemployment have compounded this problem.
    Estimates show currently over half of the experienced agricultural
    labor force is working without proper documentation on our farms, and
    the H-2A program needs improvement and modernization. Despite being a
    program used as a last resort, we have seen exponential growth in the
    H-2A program, suggesting that local workers are not available to do
    farm work. Farmers need long-term solutions that guarantee access to a
    legal and stable workforce. USDA has worked closely with the
    Departments of Labor, Homeland Security, and State to modernize the
    burdensome H-2A application process, making it easier for farmers and
    ranchers to follow the law and hire farm workers through the H-2A
    program. However, there are dimensions of this challenge only Congress
    can address, so we hope to see Senate and Conference actions to yield a
    bill President Trump can sign.
        I know Members who serve on this Committee and beyond share my goal
    to ensure USDA is adequately staffed to deliver efficient and effective
    service for our farmers, ranchers and rural communities. Even as USDA
    strives for innovation, automation, and business process
    reengineering--customers will always count most on our people. For the
    fifth consecutive year, attrition at USDA outpaced hiring in Fiscal
    Year 2019. Our agencies hired 5,002 permanent employees, while 6,954
    employees left USDA, most of whom were field based. Already in Fiscal
    Year 2020, USDA faces a deficit of hiring to attrition of nearly 600
    employees. The pace of attrition places an extraordinary demand on a
    Federal hiring process that is encumbered with hundreds of pages of
    requirements that frustrate qualified candidates and hiring managers
    alike. To help overcome this mounting challenge, USDA requested and
    received limited, temporary direct hire authority from the Office of
    Personnel Management for field and front-line positions in FSA, NRCS,
    Forest Service, Rural Development, and other agencies with significant
    field operations. Nonetheless, our administrative direct hire authority
    is limited by position, location, and duration and retains many
    restrictive features of the traditional Federal hiring process, so I am
    asking for your help in authorizing expanded direct hire flexibility at
    USDA to fill our field and front-line positions.
    Conclusion
        Before I conclude, I want to thank our dedicated employees, without
    whom our service to rural America would not be possible. In 2019, we
    asked more of our people than perhaps at any other point:
    implementation of a new farm bill, execution of two Support Packages
    for Farmers, implementation of a supplemental disaster assistance
    program and its subsequent revisions, all in addition to their normal
    operations. It is a privilege to lead OneUSDA, while we strive to ``Do
    Right and Feed Everyone''.
        Thank you for the opportunity to testify this morning. I would be
    happy to answer any questions at this time.

        The Chairman. Thank you very much, Mr. Chairman. Mr.
    Secretary. Maybe I will give you this job. It might not be all
    that bad.
        I want to remind Members that they will be recognized for
    questioning in order of seniority, including Members that were
    here at the start of the hearing. And after that, you are going
    to be recognized in the order of arrival.
        With that, I would recognize myself for a couple of
    questions. First, as I said, we really appreciate you getting
    the announcement on the disaster for what happened to us in the
    sugarbeet area last week. The other questions I am getting from
    my constituents is about the quality loss issue that is part of
    the WHIP+. You are working on that, as I understand it. Can you
    kind of give us an update on where you are at with that, and
    when we might be able to see some kind of announcement about
    where that is?
        Secretary Perdue. The quality loss provisions, as you know,
    many of the crops that are standing in the fields, some yet to
    be harvested, many of them suffered weight loss issues and
    other quality loss issues that depress their prices when they
    are sold. They may have volume, but the quality is a huge
    disadvantage, and you all authorize us to look into the
    disaster provision over quality loss. It is a more complex
    thing. It is much more subjective and not as data-driven as
    others, but we are currently working on devising those rules,
    and it will have to be rules-based so it is never as fast as I
    would like to do it right away. But it will be rules-based. We
    will open that rule as soon as possible so farmers can take
    advantage of the quality loss provisions that you all
    authorize.
        The Chairman. You don't want to hazard any kind of a guess
    on how long this is going to take?
        Secretary Perdue. I would say probably in the April-May
    time period.
        The Chairman. Okay. Thank you.
        The other thing we have heard from back home and around the
    country is that folks went into their local FSA office to sign
    up for the general CRP signup that just closed. I guess it
    closed on the 28th. We are told that in some cases that the
    software wasn't working and that the handbook wasn't available
    apparently in those county offices. This meant that landowners
    weren't able to see what their county rental rate might have
    been so that they could take that into consideration when they
    were deciding whether to make an offer or not.
        Are you able to tell us, in light of all of that, how many
    offers were actually received during this signup, and how many
    acres were offered? Do you have any information on that?
        Secretary Perdue. Mr. Chairman, because of the software
    glitch and other types of things of people coming in at the end
    to sign up, we let everyone; well, we didn't extend. We put
    everybody's name who was interested even in inquiring on a
    register, and they will be eligible to work through this if
    they came in and the software was not available, which allowed
    them to look at all their potential outcomes of their farms,
    and we didn't have that or information they needed. Then they
    will be able to finish that up and be included in the signup.
    That is the reason we don't have good numbers today of that. We
    had some preliminary numbers, but we don't have good, sound
    numbers. We will get those numbers to you all and Members of
    the Committee as soon as we can process all those, and I think
    that will be soon. I am not talking about weeks; I am talking
    about really days in that area of processing those.
        The Chairman. You don't have a list of these people that
    got in there and how many people are involved in that?
        Secretary Perdue. We have a register of those who were not
    able to get there, whether it was a software glitch or they
    just got there and there was a line there.
        The Chairman. But you don't have any idea how many people
    that is nationwide that are on that registry?
        Secretary Perdue. I am sure FSA does. I don't have those
    numbers with me here today.
        The Chairman. If you could find out, if you know, I would
    like to have that information.
        Secretary Perdue. I feel like we can get that to you by the
    end of the day.
        The Chairman. However many people that is, they are going
    to be able to be processed before this issue.
        Secretary Perdue. Absolutely. That is the commitment, and
    we told them that when they came in. If there was a glitch and
    we couldn't have the software where they could see all their
    options, we put them on a register. But if they came in and we
    just didn't--they came in a group of people and we didn't have
    time to get to them, we put them on a register with a
    commitment that they would absolutely be eligible.
        The Chairman. Have these technical issues been fixed now at
    this time?
        Secretary Perdue. I am sorry?
        The Chairman. Are these technical issues that were----
        Secretary Perdue. They are resolved, and I am frankly
    embarrassed that we had them at all. I got a little peeved
    about that, actually.
        The Chairman. And the handbooks are out? The handbooks are
    out to the counties?
        Secretary Perdue. Yes, sir. The information should be all
    there. I don't know how many places there were limitations of
    not having a handbook of all the provisions of the program. We
    try to do a good job at that. We had these rules out in
    December. I would have thought everyone would have known all
    the provisions there, but yes.
        The Chairman. I assume that you are not entertaining any
    requests to have the CRP reopened?
        Secretary Perdue. No, I think we are amenable to that.
    Obviously, I want to see what the numbers look like. Our target
    goal for this year is 24\1/2\ million acres of variety, whether
    it is grasslands or other types of working lands and those sort
    of things, but my goal is to reach that target. I think that is
    your goal. Those are the targets you all set, and I am not
    saying that--your rules call for at least one general signup a
    year, but I am not saying that we can't have more than one.
        The Chairman. I appreciate that, and some of the folks who
    have been calling me would be pleased to hear that there is
    some flexibility there if you find you that we didn't have that
    good of a signup.
        Secretary Perdue. What we want to do is look at the numbers
    and be wise about how we look at those numbers. As you all
    know, you all changed some of the provisions that way, and we
    want to see what the response is from the farm community to
    know how to go forward.
        The Chairman. I am running over a little bit, but on the
    GRP, the Grassland Reserve Program, that signup doesn't start
    until you are done with CRP.
        Secretary Perdue. That is right.
        The Chairman. So, that means it will be put off for what, a
    month or 2 before it starts?
        Secretary Perdue. I think that is going to be in March as
    well.
        The Chairman. Okay. I am still getting feedback from around
    the country that people don't know about this program. Even in
    your FSA offices, they don't seem to know about this, and the
    farmers don't seem to know about it. The cattlemen don't know
    about it. Whatever you can do to try to do a better job of
    getting the information out about the Grassland Reserve
    Program; and hopefully, get the good signup out of that
    situation, would be appreciated, at least from this Member.
        Secretary Perdue. We will do our best, again, to
    communicate the program. If farmers don't know about it, that
    is bad. If we don't know about it, that is horrible, and we
    will make sure our people at our FSA offices certainly know the
    program, can talk about to farmers as they come in to do that.
    You know that you all created this and expanded the acres
    because of wildlife and other water quality issues, and really
    giving people an opportunity to take fragile land out of
    production and maybe improve their overall profitability.
        It is an important program that we want to do well. If we
    are not doing our job and helping people understand what it is,
    I will have to figure out what it is, how we have communicated
    that, and whether we are just doing a website or whether we are
    actually evangelizing that program.
        The Chairman. Thank you. Thank you, Mr. Secretary.
        Mr. Conaway, 5 minutes.
        Mr. Conaway. Thank you, Mr. Chairman.
        Mr. Chairman, I have a report here on the Market
    Facilitation Program payment that was published by the Ag and
    Food Policy Center at Texas A&M. I would like to submit that
    for the record.
        The Chairman. Without objection.
        [The report referred to is located on p. 69.]
        Mr. Conaway. This report determines that a significantly
    higher number of farms would be in poor financial condition and
    less likely to cash-flow without the assistance provided by the
    Administration. The report also found there is no regional bias
    built in to how county payment rates were calculated, and
    observes that 70 percent of the aid went to midwestern states.
    Given the competing narrative that MFP is allegedly biased
    toward southern producers, Mr. Secretary, would you explain to
    us the methodology about how the USDA determined those county
    payment rates for the second round?
        Secretary Perdue. I will do my best, Congressman. First of
    all, my instructions to our economists were kind of Sergeant
    Webb, just the facts, sir. In this area there was no
    predetermined regional demographic or sector bias in any of
    this.
        In fact, I would like to show you, you mentioned something.
    I have a chart here for your Committee that shows you the
    states that here that have--we will provide an electronic copy
    of all of that, but the darker states are where the highest
    payments were. This is $700 to $1 billion there per state.
    These lighter colors, it goes up lighter that way. I think you
    can see, Mr. Conaway, your state did okay along with Illinois
    and Kansas and Iowa and Minnesota in that way in those states.
    So, that is kind of where the money came down. I know there
    have been some press reports about trying to favor one region
    than another. That was not the case. We let the chips fall
    where they may. It was a trade disruption program, and if you
    remember the first year, we hadn't traded a lot of corn to
    China, so there was a big problem with how corn really
    responded to soybeans in that area. We took a different
    approach based on the feedback we got from you all and
    constituents across the country, and went to a per acre concept
    here that I thought was better received. It is, again, probably
    not perfect. Anyone can have a different, if you ask ten
    economists there, you are probably going to get 12 opinions
    about how this could be done in that way.
        [The information referred to is located on p. 86.]
        I thought we did a pretty good job in trying to respond to
    the marketplace, but the complaints about it being regional
    biased are just unfounded.
        Mr. Conaway. Well, I agree with you. I think the cherry-
    picking a couple counties in two different states and trying to
    compare those is disingenuous by our Senate colleagues that
    have posited this issue.
        Secretary Perdue. I was sort of proud of the fact that the
    Chairman's Congressional district got more money than all the
    State of Georgia did.
        Mr. Conaway. Facts are a pesky thing. Facts are a pesky
    thing.
        The Chairman. Just doing my job.
        Mr. Conaway. Mr. Secretary, the gene editing and
    biotechnology advances that have the potential to transform our
    agriculture industry are facing some issues. With FDA saying
    that gene editing available traits is an FDA issue. In your
    discussions with producers, what challenges has the livestock
    community identified with the FDA's regulatory process, and how
    can we help you and the Administration resolve these issues?
        Secretary Perdue. Well, thank you for the question. This is
    an issue we have been involved in for a couple of years and
    interagency developments. We are actually making progress in
    interagency developments and conversation, moving to principles
    level between FDA and USDA in this regard, as well as moving it
    to NEC level and further if need be in trying to do that.
        These techniques, these biological techniques were not even
    thought about, contemplated in the 1980s when it was parsed out
    about how did it happen. We have done, at USDA, a good job on
    new plant technology and the part 340, the secure rule will be
    coming out about plants on non-transgenic type of gene editing
    will not be determined to be eligible for registration if they
    were the same types of things that could be done through
    natural breeding techniques.
        The same thing can happen with animals, and you know that
    we have already have some discoveries out here that could have
    animal diseases there. In plants, we can do things like peanut
    allergies and those kinds of editing. Non-transgenic: we are
    not taking other genes from other parts, animals, or plants in
    order to do that. But, we are making progress. FDA--honestly,
    if you want to know the truth, it almost comes down to more of
    a Committee jurisdictional issue than anything else, and that
    may be one way where you all can help in that regard with your
    colleagues over that. We do believe that the lost opportunity--
    if these types of new techniques go to Argentina, Brazil, who
    already opened doors, Canada, China, other types, and we lose
    our edge in innovation, this is kind of the beginning of a long
    haul for American agriculture. There are things out there that
    are amazing, that are safe, that are healthy, and FDA intends
    to continue to develop these as drugs, and you know how long it
    takes to get drugs approved, and that is the challenge that we
    have. These are real-world opportunities that we have, and we
    will have a lost opportunity if we don't keep regulatory
    agencies up with the world.
        Mr. Conaway. Mr. Secretary, thank you for that, and thank
    you for the great work your team is doing. I know your FSA guys
    are overworked throughout this entire process, and I am just
    acknowledging from our side of the room that we certainly
    appreciate all their hard work on behalf of producers
    throughout the nation with all the work we put on them in these
    past 2 years.
        Thank you for that, and I yield back.
        The Chairman. I thank the gentleman.
        The gentleman from California, Mr. Costa.
        Mr. Costa. Thank you very much, Mr. Chairman, and Mr.
    Secretary, we are always pleased to see you here and as you get
    around the country, and you do a good job, and we like you to
    continue to come to California. I know you were there last
    month, and we appreciate that.
        I have a couple questions here I want to go quickly on. Is
    there going to be a Phase 2 trade agreement with Japan, and
    will that include more agriculture commodities and SPS
    protections, and if so, when you and Ambassador Lighthizer are
    looking at that?
        Secretary Perdue. I think labeling this initial agreement
    with Japan as Phase 1, it means that there will be a Phase 2.
    Honestly, we got a pretty good deal in the Phase 1, about $7
    billion work in ag products in that area. Leveling these
    tariffs that would have been essentially where we were in some
    of the earlier agreements in that way, but making a significant
    difference in leveling the playing field for our producers.
        Mr. Costa. Do you think there is going to be a Phase 2 that
    is going to come?
        Secretary Perdue. I do believe there will, yes.
        Mr. Costa. And within the next year?
        Secretary Perdue. I can't tell you the timeframe on that.
        Mr. Costa. Okay. You also talked, since we are in Asia
    right now, and you talked about the Phase 1 of the China
    agreement, the President mentioned a number last month after
    the conclusion of the signing that seemed much higher than
    previous purchases by China in the past of agriculture
    commodities throughout the country. What is your realistic
    expectation now with the coronavirus? We have other issues. We
    have products that have been sent from California that are
    sitting in the ports. Their ability to get those products off
    the ports and maintain refrigeration and other factors are of
    concern. We have people going over there these days. You want
    to give us a quick summary?
        Secretary Perdue. Sure. The hardline numbers were $40 to
    $50 billion, which----
        Mr. Costa. Yes, I thought the President had $200 billion.
    That seemed a little----
        Secretary Perdue. That was a total deal; $40 to $50 billion
    was agricultural portion of that, $200 billion was the overall
    deal on Phase 1; $40 to $50 billion was the agricultural
    portion, which essentially doubles ag exports to China.
        We are encouraged. As I indicated, I think that the signals
    are they want to comply. We don't yet know what the effect of
    coronavirus will be on China or really the globe or
    economically here. But we see signals that they want to fulfill
    that commitment.
        Mr. Costa. Do we have USDA people over there trying to deal
    with the initial issues involving quarantine and the ability to
    ship product?
        Secretary Perdue. We do. We have----
        Mr. Costa. Do you want to keep the Committee informed of
    that effort?
        Secretary Perdue. We will.
        Mr. Costa. All right. I want to switch over to look at the
    MFP, the Market Facilitation Program and the data there, and I
    don't think California is in the top ten, and I want to know
    why more specialty crops haven't been included like citrus,
    stone fruit, berries, cashews, olives, tomatoes, that have had
    substantial losses to China and yet have not been a part of the
    Market Facilitation Program?
        Secretary Perdue. I think, again, the types of crops
    produced in California, it is a large export. I believe----
        Mr. Costa. Forty-four percent of our product.
        Secretary Perdue. If you check with your almond people, the
    last Market Facilitation Program payment included those
    specialty crops. The first one we did not, and those types of
    areas, as well as a purchasing program, they participated in
    that.
        Mr. Costa. Is the Department looking for expansion of
    additional specialty crops?
        Secretary Perdue. In which way?
        Mr. Costa. Well, there are ten right now, and there is a
    whole host of other, I mean, we grow a lot, as you noted.
        Secretary Perdue. Is it the Market Facilitation Program?
        Mr. Costa. Yes.
        Secretary Perdue. We don't have any plans to expand that. I
    think that that is over with.
        Mr. Chairman, could I get a little more volume on the
    hearing? I am having a little bit difficulty hearing the----
        Mr. Costa. I will try to speak a little louder, if that is
    helpful Mr. Secretary
        Secretary Perdue. Okay, thank you.
        Mr. Costa. Also, the efforts on the payments with Farm
    Service Agency continue to be problematic, it seems. We have
    people that have applied in 2019, and in some cases, 2018. We
    have continued to ask you folks and then locally with the FSA
    offices why they haven't processed in a more timely manner. Are
    we looking at bringing more personnel to expedite that?
        Secretary Perdue. We are always trying to hire, but I would
    love to know specifically if people have not gotten those kinds
    of payments in that kind of period of time.
        Mr. Costa. I would be happy to provide you a list.
        Secretary Perdue. Surely. Absolutely, and we will look into
    that.
        [The information referred to is located on p. 87.]
        Mr. Costa. In the areas that I am aware of.
        Secretary Perdue. Usually it is a matter of a lack of data
    information that we have to validate and verify.
        Mr. Costa. All right. I will yield back the balance of my
    time. Thank you very much. Keep up the good work.
        The Chairman. I thank the gentleman.
        The gentleman from Pennsylvania, Mr. Thompson, 5 minutes.
        Mr. Thompson. Mr. Chairman, thank you. Mr. Secretary, it is
    good to see you. Thank you for your leadership.
        Mr. Secretary, in your testimony it references the
    exceptional new challenges that farmers across the U.S. faced
    recently with unprecedented widespread natural disasters,
    floods, droughts, blizzards, and freezes. These disasters
    expose gaps in coverage and led to additional ad hoc
    assistance. What improvements do you think that we can make to
    crop insurance to make it even more effective in these disaster
    situations?
        Secretary Perdue. Well, I think I am going to have to tread
    very carefully. I think crop insurance does a great job as a
    general safety net. It does not contemplate catastrophic
    disasters like hurricanes and floods, frankly, and it can be
    used for droughts and those sorts of things. But, I don't know
    that we would want to develop a program as broadly as one that
    contemplated huge disaster programs.
        Mr. Thompson. This year, we hope to reauthorize the U.S.
    Grain Standards Act. Can you share with us the importance of
    the Federal grain inspection enterprise on our ability to
    market grain, both here and abroad?
        Secretary Perdue. I would love to. This is one of the
    issues where we are really having discussions with China right
    now, and frankly, our colleagues in the western hemisphere, the
    major producers of beans, China--this is one of the ways China
    has sort of harassed our shipments there, making sure we put
    weed seeds on the sanitary/phytosanitary list. That is a grain
    standard, not a sanitary/phytosanitary issue, and one which we
    are discussing with China as we speak about that. They put out
    an edict, they wanted to clear that.
        Grain standards are very important, just like any kind of
    food safety standards internationally, and we take great pains
    to try to agree internationally on those standards, and where
    everyone can be assured of what they are being judged by when
    they ship grain back and forth.
        Mr. Thompson. I want to thank you and your team for all
    your work and support for USMCA. This agreement holds,
    obviously, tremendous potential for U.S. agriculture, and for
    the dairy sector in particular, as we were kind of locked out
    of the Canadian market.
        To get the full benefit, though, it is going to be
    essential we know exactly how Canada and Mexico plan to
    implement their commitments. And with Canada, important details
    need to be finalized on dairy market access. In the case of
    Mexico, we need more clarity on how they will allow common
    cheese names.
        Since USDA plays an incredibly important role in working
    with the U.S. Trade Representative on all the fine print of our
    trade agreements, what is the Department doing to ensure proper
    USMCA implementation by our trading partners?
        Secretary Perdue. Well, 2 weeks ago I met with my Canadian
    peer, Minister Bibeau, and asked her were there any issues
    regarding the Canadian ratification of that. She expects that
    to be concluded very quickly with no changes. We are anxious to
    get all those moving.
        Geographical indicators, as you mentioned for cheese is
    something that we continually fight against internationally in
    that way. That is an EU plan over some of those names. They are
    trying to patent names that have been in the marketplace for
    many years, and we have had fairly good success with Mexico in
    accepting that.
        Mr. Thompson. Just changing one last gear here. The U.S.
    Forest Service maintenance backlog is more than $5.2 billion.
    It is the second largest backlog between the four Federal land
    management agencies. What steps is the Forest Service taking to
    minimize maintenance backlog for the Forest Service, and what
    is the Service doing to increase access to public lands and
    generate more revenue for our rural communities?
        Secretary Perdue. Right. What you all did already with the
    forest fire fix is the funding fix on that is one of the best
    things. We got in the backlog because we were having to take
    operational maintenance money there to suppress fire. What you
    did there beginning this fiscal year enables us to have a plan
    of maintenance there. When you look at the budget for this year
    too and the proposal you will also see backlog maintenance
    money attributed to that.
        We want to do that. Many of those are roads and bridges
    that address really the issue that you ask about, and that is
    public access. We want to make sure the public can get into
    these places. I don't want to see gates shut, because this
    closed because of maintenance and those sort of things. We also
    encourage a huge volunteer network and we have a lot of NGOs
    across the country that work with us on helping to improve the
    access through roads and bridges.
        Mr. Thompson. Thank you, Mr. Secretary. Thank you, Mr.
    Chairman.
        The Chairman. I thank the gentleman.
        The gentlelady from Ohio, Ms. Fudge.
        Ms. Fudge. Thank you, Mr. Chairman, and thank you, Mr.
    Secretary, for being here today.
        Mr. Secretary, I represent one of the poorest districts in
    the United States. More than one in six Cuyahoga County
    residents lack access to nutritious food every day. SNAP
    provides critical nutrition assistance to nearly 200,000 people
    in Cuyahoga County, including 82,000 children.
        Unfortunately for poor Americans in my district and across
    the country, you and the Administration are actively working to
    finalize and implement three SNAP rules that will increase food
    insecurity and gut state flexibility--which I thought was
    something very important to you--to provide people in need with
    critical lifesaving food assistance. Altogether, roughly four
    million people would be kicked off SNAP, and nearly one million
    children will lose their automatic access to free school meals.
        The rules amount to about $19 billion in cuts to SNAP over
    5 years. This comes very close to the $22 billion handed out to
    ailing farmers impacted by a trade war that was started by this
    Administration.
        We can all agree affected farmers should be compensated.
    However, giving farmers billions in Federal assistance
    shouldn't mean taking those same billions from food-insecure
    people.
        It sounds to me like you are using administrative PAYGO to
    pick winners and losers, and pit food producers and consumers
    against each other. If the Administration can understand
    farmers are hurting, and we can, surely you can empathize with
    our nation's hungry.
        I ask where is your commitment to feed everyone?
        Just as concerning are reports that more than \1/2\ of the
    initial farm bailout funds were paid to the top ten percent of
    U.S. farmers. There are recent reports of payments going to
    farmers previously convicted or accused of fraudulently
    obtaining Federal agricultural subsidies. Now, if that is true,
    it is certainly concerning and irresponsible, but it as well
    may be illegal. Because as you know, as I do, Federal law
    requires farmers convicted of felony fraud to be temporarily
    barred from USDA programs. I would like to follow up with that
    with your staff, if you would have someone contact my office.
        Now to my questions. We are all monitoring the spread of
    coronavirus in the United States, which you, quite rightly,
    called a pandemic some time ago.
        On April 1, USDA is planning to implement a final rule to
    strip SNAP away from 700,000 people in need. Given the timing
    and the anticipated strain on our nation's food banks, are you
    willing to delay the implementation of this final rule?
        Secretary Perdue. No, ma'am, we have no plans to eliminate.
    We do have flexibility, though, if there is an outbreak here,
    to relieve those issues. But until we see that here, we are
    willing to move just as flexibly as we do in natural disasters.
    If there is a health emergency and a disaster, we will do that
    here as well.
        Ms. Fudge. Thank you. Last, certainly, I have made no
    secret of my concerns with your civil rights enforcement. The
    resignation of Naomi Earp presents an opportunity to you, to
    USDA, to show its employees and the people it serves that the
    Department is committed to overcoming its long history of
    discrimination.
        I understand that you have appointed Mr. Westil to head the
    civil rights office. As Chair of the Subcommittee responsible
    for oversight of the Department, I just want to be clear that I
    am going to hold him as responsible as we did Ms. Earp, and I
    certainly hope that your staffing will find itself in a
    position that raises morale, which the morale is at the bottom
    right now; that we will finally staff up the offices that are
    saying that they are thousands of people short; that we will do
    what the USDA is intended to do, and take care of the people it
    is intended to serve.
        Mr. Chairman, I yield back.
        The Chairman. I thank the gentlelady.
        The gentleman from Georgia, Mr. Scott.
        Mr. Austin Scott of Georgia. Thank you, Mr. Chairman. Mr.
    Secretary, I was in the old governor's office the other day
    with Secretary Kemp, and when you said you got upset, I had a
    little bit of a flashback there to budget meetings. You were a
    great governor and you have been a great asset for the State of
    Georgia, and I am glad that you are the Secretary of
    Agriculture, and I appreciate your support of our producers.
        You mentioned the E15. I have just one thing I want to
    mention there. If E15 is going to become more prevalent in the
    marketplace, then the labeling standard needs to be put on the
    pumps that cautions people that if you put E15 in a marine
    engine or a chainsaw engine or a high performance engine, that
    you are absolutely going to destroy that engine. I have no
    problem with E15 being expanded. I do have a problem without a
    labeling standard that cautions the consumer that if put in
    certain engines, it will destroy that engine. And so, any help
    with that, I certainly would appreciate it as we work on the
    labeling.
        Secretary Perdue. That falls under the EPA, of course, but
    we are working with them. They have a fairly good strong skulls
    and crossbones on there but it causes a lot of things, and that
    is certainly one of those that needs to be included.
        Mr. Austin Scott of Georgia. While we are on labeling, it
    does concern me from our farmers' standpoint that we have non-
    dairy products that are being marketed as milk. We have non-
    meat products being marketed as meat, and we have non-rice
    products being marketed as rice. My wife tricked me into eating
    cauliflower the other night, and it was actually the best
    cauliflower I have ever had, although I don't intend to have it
    again.
        But, I do think that this is an area that we need to be
    very careful of as we push forward, and I do think that it has
    the potential to create some disruptions for the producers.
    With that said, as you know, I represent your hometown and you
    mentioned that farm income was actually up. I would be
    interested if you have any studies on that, and which regions
    and which commodities that it is actually up in. Certainly in
    our area where we have been hit by natural disasters and other
    things, we would be on the low end of the totem pole in that.
        But after watching the crop insurance and disaster
    payments, I have two suggestions. One is if there is any way
    for this year that we can find a way to include the value of
    the MFP in the price loss coverage, I think it would be helpful
    to our farmers and the lending institutions. I don't know that
    you can legally do it, but as you know as the commodity prices
    have come down, the value of the crop insurance is not there to
    cover the loans that the farmers have to obtain. And then in
    disasters, can we find a way to better integrate the actual
    loss data from the land-grant institutions into the disaster
    payment calculations? I know we can't just take a farmer that
    says, ``Hey, I had 3 bales to the acre,'' but we did have
    actual data from the land-grant institutions this year, and
    unfortunately we were not able to incorporate that into the
    loss data on the disaster payments.
        Any comments?
        Secretary Perdue. Well, we have to be very careful,
    obviously, in both the loss data, based on what many of your
    constituents wanted to have happen when they had the hurricane
    come in, they knew they were harvesting 3 bales of cotton to
    the acre. But insurance may not have covered that amount, and
    that is really, they did lose that because when they got back
    in, there was nothing left to harvest in that way. So, there
    were losses that way. It is very difficult, that is where the
    ad hoc disaster program comes in. That is what we are trying to
    address with that. One of the other challenges is, is that we
    don't think the taxpayer should support over 100 percent of
    loss, and that is----
        Mr. Austin Scott of Georgia. I agree 100 percent with that.
        Secretary Perdue.--where some of the other things come in
    that many farmers, they wanted to pay for that huge crop, and
    plus. And that is the challenge.
        Mr. Austin Scott of Georgia. We can never, never make
    somebody more than whole. That would destroy this support for
    the ag community throughout the country. I agree with you 100
    percent on that.
        I do have a suggestion as we move to write the next farm
    bill over the next couple of years is that if there is a way in
    working with the Risk Management people in your office that we
    are able to create a harvest-type contract where if that 3 bale
    per acre crop is on the ground and the farmer was only able to
    insure 1 bale per acre because of historical averages. That if
    we have the data from the land-grant institutions, and it has
    to be appraised before they can insure it. That we allow them
    to have some type of step-up coverage prior to harvest once the
    crop has been produced.
        Secretary Perdue. I am asking our RMA leader, Martin
    Barbre, right now on disaster losses, how do we adjust that for
    pricing and yields. That way we are looking at--I don't know
    how much legal flexibility we have in that way in looking, but
    I understand what you are saying. I understand the challenges
    from the producer's perspective. We want to be as flexible as
    we can.
        Mr. Austin Scott of Georgia. One quick suggestion on that
    would be to allow them to cut out more of the bad years, might
    allow them to insure more of the yield.
        With that, Mr. Secretary, I appreciate you and I appreciate
    our friendship, and what you do for the country and the State
    of Georgia, and I have to get to an Armed Services meeting.
        The Chairman. I thank the gentleman.
        The gentlelady from Connecticut, Mrs. Hayes.
        Mrs. Hayes. Thank you, Mr. Chairman.
        Thank you, Mr. Secretary, for being here. I know there is a
    lot we are talking about on the Committee, but when I have the
    Secretary in front of me, I have to talk about what is
    important to me and my constituents.
        I looked, and you mentioned several of your Department's
    proposals to gut SNAP benefits in your written testimony that
    was submitted to the Committee, yet there is no mention that
    the President's budget request for Fiscal Year 2021 revived
    your previous proposal to take away benefits from households
    and replace them with what you are calling Harvest Boxes of
    pre-selected nonperishable food items.
        My question to you is, do you think that SNAP recipients
    are incapable of choosing groceries for themselves or their
    families?
        Secretary Perdue. No, we do not, in answer to your
    question. This is a proposal we have suggested. We think we
    would still like to have an opportunity for a pilot. As you
    know, many of your constituents and others are getting their
    food delivered at home, which would be essentially the choices
    that we would hope to provide in a Harvest Box.
        Mrs. Hayes. Yes, I saw that this was being compared to
    programs like Blue Apron. I doubt that that is what it would be
    like, but there is little or no evidence that this proposal
    would lower costs for the USDA or the American taxpayer. In
    reality, the proposal is likely more expensive, when you
    consider cost burdens on states, and it will cost $2.3 billion
    in grocery sales and $368,000 in grocer jobs.
        What I can't find is how this plan would be implemented, so
    I guess I am going to ask you if you can expand on how this
    program would be delivered? Have you thought about who would
    deliver the boxes, or what would we do in the event that a box
    got lost or stolen, or are there plans for delivery in the wake
    of a disaster, or a storm? In my area, we have many winter
    storms. How would we deliver benefits to people who don't have
    an address? Has the Department investigated any of those
    avenues in what you call a pilot?
        Secretary Perdue. Yes, we spent a good bit of time on many
    of that. You know that in many ways, obviously when food is
    delivered at home, the statistics over that, the delivery
    mechanism, the logistics being developed in that way----
        Mrs. Hayes. No, I don't know, that is why I am asking you;
    can you explain how this program would be implemented, or just
    if you thought about how that would take place?
        Secretary Perdue. We have thought about that, and I would
    love to have an extended conversation with you about that. I am
    not sure this is the way to do that, but this is the place to
    do that. But, there was a lot of study put into that about the
    home delivery there, giving people a choice, maybe an app on
    their phone of the groceries they wanted delivered there, and
    using commercial distributions. We are working with both Amazon
    and Wal-Mart and others who expressed great interest in
    utilizing these services.
        Mrs. Hayes. Is this information anywhere where I can access
    it, because I spent a lot of time trying to look up the details
    of it and I can't find it.
        Secretary Perdue. I would be happy to have our FNS people
    deliver to you what we discovered, yes.
        [The information referred to is located on p. 88.]
        Mrs. Hayes. Is it available anywhere, or do you have to
    individually request it, because I am sure other people would
    like to see the same information?
        Secretary Perdue. I don't know if it is, we want to be
    responsive to you, Members of Congress. I am not sure of the
    kind of depth of questions you ask, whether that information
    and extensiveness is out there or not, but we can provide it
    and if you want to make it public, then that would be fine.
        Mrs. Hayes. Well yes, I guess I am asking then can you
    provide it, because this is a plan that has been introduced
    multiple times in multiple budgets. I would imagine that the
    way it will be implemented should be well thought out and
    thoroughly investigated at this point. This isn't the first
    time this came up in a budget.
        Secretary Perdue. The first time? I think it has been in
    three budgets.
        Mrs. Hayes. Exactly. That is what I am saying. This has
    been in multiple budgets.
        Secretary Perdue. We appreciate the opportunity to
    implement it, and will give you all the details you need.
        Mrs. Hayes. Our role is to look at the plan for
    implementation before it happens, not after. Again, if you
    could just--I would love that. I will have my office follow up,
    but if you have it, I would imagine you have it planned out to
    the letter now, since it has been introduced or proposed in
    three separate budgets, so it is something that has been going
    on in an ongoing conversation for many years, so I would like
    to see it so that I can share it out.
        Secretary Perdue. Sure.
        Mrs. Hayes. And just as part of that, I would ask you for
    specifically how you would address people with food allergies
    or medical needs if these are generic, pre-selected boxes that
    would be going out?
        That is all I have, Mr. Chairman. I yield back. Thank you.
        The Chairman. I thank the gentlelady.
        The gentleman from Arkansas, Mr. Crawford.
        Mr. Crawford. Thank you, Mr. Chairman, and thank you, Mr.
    Secretary, for being here.
        You touched on something earlier. I think my friend from
    Pennsylvania brought this up, the Grain Standards Act and how
    that impacts trade and so on, and you mentioned sort of the
    overlap between our grain standards and phytosanitary/sanitary
    considerations.
        That brings me to the question: I kind of got asked this on
    behalf of my rice farmers. We have been talking about importing
    or exporting, rather, to China for 20+ years, and we have yet
    to export any rice to China. All of it tends to come back to
    this sort of moving standard that they have there. I wonder if
    you could maybe provide a little more insight into where we
    stand today, what the potential is for us to actually move some
    rice into China at some point in the near future.
        Secretary Perdue. Based on the Phase 1 agreement,
    Congressman, I am pretty optimistic we will get rice in to
    China. Those non-tariff trade barriers were some of the things
    I was referencing earlier that we are dealing with from a
    technical level. That is the kind of harassment that we have
    had in that regard, and rice would be included in that. It was
    obviously one of the commodities that was anticipated, and it
    would be a great market that hadn't been available in rice. We
    are looking forward to that.
        Mr. Crawford. Excellent. Let me change gears a little bit.
    I have some concerns about the aging population of our farm
    producers. We talk about the aging workforce, but I really want
    to focus on the actual producers where we see the trajectory is
    not going in the right direction with regard to the age of our
    actual farmers. A few weeks ago at the USDA outlook conference,
    you highlighted innovation in the future of ag producers and so
    on. That has to be a consideration. I am wondering what we can
    do here in this body to assist you in helping us to change the
    trajectory and getting more young people engaged in the
    production side of agriculture?
        Secretary Perdue. Honestly, the real answer to your
    question is young people are smart. They do what is in their
    economic best interest. I think the profitability of
    agriculture needs to show them a bright, promising future,
    where if they put their efforts into farming, they can have a
    lifestyle like their colleagues that choose to go to town and
    work. So, that is the ultimate answer there.
        You have put programs in for beginning and new farmers, but
    ultimately, we talk about sustainability a lot. We are talking
    about environmental sustainability, social sustainability of
    available and affordable food, but there is also an economic
    sustainability. We can't expect farmers to come into the
    business and not being able to make a livelihood like they
    could. We know that the average income of farmers is not
    comparable to many other jobs in that way.
        Mr. Crawford. Well, given the cost of doing business and
    what the return on that investment is, it doesn't make for a
    very attractive opportunity for young people, and so we have
    talked about policy and what the Federal Government can do to
    incentivize young people for years. It is nothing new. We have
    talked about this for a long time, and I don't see that we are
    doing anything right here in regard to that. We are still
    seeing that struggle take place. I haven't seen any measurable
    improvement in that. Are there things that we can identify
    that, from your perspective that you could say, ``Stop doing
    that. Don't do that anymore, because it is not helping.''
    Because, I know it is a market-based, market-driven largely. I
    just kind of want to get your insight on that. Lessons learned,
    what we can we do differently?
        Secretary Perdue. Let me tell you one of the things I think
    you all did positively that helped. You readjusted the CRP
    payment limits or per acre this year. That was really keeping a
    lot of young farmers out of the business. Senior farmers are
    using that kind of as a retirement program and rather than
    letting their farm be utilized for productive agriculture for
    the next generation. So, that is one of the things you all did
    that will help in that regard. We had complaints about that and
    we addressed that together.
        Mr. Crawford. Ironically, that wasn't geared toward trying
    to address the young farmer. It is just a byproduct of having
    done that, correct?
        Secretary Perdue. That is right.
        Mr. Crawford. Again, I know that we kind of struggle with
    this because we are trying to do the right thing by the next
    generation, but sometimes it doesn't manifest that way in
    reality. And so, I agree with you. We just need to take more of
    a market-based approach to help drive young people into the
    business. But, the market needs to catch up with us on that at
    some point, but there are limits, obviously, in what we are
    dealing with now with regard to trade is probably as much of a
    factor as anything, wouldn't you say?
        Secretary Perdue. We did see a lot of bright young people
    come back into agriculture that might have been born there,
    went off to town in those periods of years from 2008 to 2014.
    They came back. Their fathers and mothers said, ``We feel like
    we can support another family member here, another family
    group.'' We saw them come in. Honestly, sadly, those are the
    ones that are hurting the most from the downturn since that
    period of time.
        I kind of go back to the original thing. It is a
    macroeconomic issue. Farming is tough. It is risky and it is
    tough. It is a tough life. You almost got to be committed to it
    in a different way, but productivity is the key. Ag innovation
    is the key. Those are the things that we are doing----
        Ms. Adams [presiding.] The gentleman's time is up.
        Mr. Crawford. I guess I am done. Thanks.
        Ms. Adams. Thank you very much.
        Mr. Delgado, the gentleman from New York, you are
    recognized for 5 minutes.
        Mr. Delgado. Thank you, Madam Chair. Secretary Perdue, it
    is good to see you.
        During our last Committee hearing in February of last year,
    you may recall that I asked you what could be done to improve
    the plight of small family farms, especially dairy farmers
    whose numbers have been in decline for many years? And in your
    answer, and I want to quote, you said: ``These are economy-of-
    scale issues that impact the entire economy, not just
    agriculture. And the economy-of-scale for a small dairy is
    going to be extremely difficult going forward, even with the
    new farm bill. I don't think any of us would submit that we are
    compelled to keep anyone in business if it is not profitable.''
    Since that conversation, the situation has become very dire,
    more dire, as evidenced by the trade aid. In 2019, we saw the
    largest decline in dairy operations in more than 15 years. I
    believe that priorities dictate policies, and when it comes to
    your agency's priorities, I am concerned that we are not seeing
    the kind of recalibrating needed to prioritize and assist our
    small farms.
        My question is what, if any, plans is the USDA considering
    to provide assistance to, and create new market opportunities
    for, our small family farms?
        Secretary Perdue. What we see most effective is value-added
    grants, that we see the dairies that are surviving,
    particularly the smaller dairies are more successful when they
    add processing there and creameries. We have been losing dairy
    farms for a number of years. Sadly, the cows or number of cows
    and number of dairies are down, but the milk production is up.
    That is really the challenge. That is why we see the continued
    price pressure that makes it very difficult for smaller
    dairies.
        I was visiting with the organic dairy providers the other
    day, and many of them have small producers. There is a large
    organic dairy co-op that has a lot of smaller producers, a lot
    of cows, herd number under 75, which is a very small dairy
    today. They are taking those kinds of actions to do that. The
    fact remains that the economy-of-scale with equipment, land,
    cows, and others, it is a very difficult economic challenge to
    do that. I thought you all did a good job in the Dairy Market
    Coverage Program, in the farm bill by skewing that to smaller
    dairies and giving them up to 5 million pounds of milk, and
    aside from that, it is that other types of programs were open
    to those, and we are trying to fulfill that. But it is a
    difficult life.
        Mr. Delgado. Thank you.
        You mentioned your visit to an organic dairy farm, and I
    just want to flag for you, and I am interested to get your
    thoughts on this. The proposed budget by the Administration
    reduces funding for the National Organic Program. It also cuts
    more than $25 billion from crop insurance over the next 10
    years, and reduces funding of the Agricultural Conservation
    Easement Program as well. Do you believe this is consistent
    with supporting small farms and dairy farms?
        Secretary Perdue. Well, again, overall budget is work. It
    is proposed to you all. You know that you all, the
    appropriators, the President makes and presents his budget that
    way, and you all have been kind in the past to do that. We
    think certainly some of those programs that I mentioned, the
    organic program has been the lifesaver for many small dairy
    farms. Obviously, not everyone can participate in that. We are
    taking----
        Mr. Delgado. It wouldn't be helpful, though, it sounds
    like. If you are saying it can be a lifesaver, then it probably
    wouldn't be helpful to reduce the funding around it?
        Secretary Perdue. I think it would be helpful to have those
    programs.
        Mr. Delgado. Right. The other piece that I want to just
    clarify is the trade aid. The reports, while they might not be
    regionally biased, from what I understand, and I appreciate the
    map that you provided. There does seem to be a bias for large-
    scale operations and some of the more wealthier farms, and I am
    curious to what extent anything is being done to offset that
    imbalance?
        Secretary Perdue. What you all did in the farm bill as well
    as continuing that we did, the price gaps. The facts of the
    matter is, is that the larger farmers farm the probably 50 to
    60 percent of the land and produce about 75 to 80 percent of
    the products in the United States.
        Mr. Delgado. Would those farmers be profitable but for the
    trade aid in 2019?
        Secretary Perdue. Many of them would not.
        Mr. Delgado. Right, but then you said----
        Secretary Perdue. It is like the bigger you are, the harder
    you fall.
        Mr. Delgado. Understood.
        Secretary Perdue. The losses would be----
        Mr. Delgado. But to be clear, you are on record saying that
    keeping farms in business that aren't profitable is not really
    the focus, right?
        Secretary Perdue. Say again? I am sorry.
        Mr. Delgado. You are on record, I believe you said you are
    not compelled to keep anyone in business if it is not
    profitable.
        Secretary Perdue. Again, we have to recognize that farming
    is a business, and you have to make a profit. That is what my
    answer to the question was. The profitability of agriculture--
    --
        Mr. Delgado. I totally understand. I am saying that as you
    make that decision, it appears that you are prioritizing the
    big farmers over the small farmers who aren't making a profit.
        Secretary Perdue. I would disagree with that. We are at no
    bias toward large or small. It is a matter of fact that the
    larger you are, the more you are eligible for those payments.
        Mr. Delgado. That is my time. Thank you.
        Ms. Adams. The gentlelady from Missouri, Mrs. Hartzler.
        Mrs. Hartzler. Thank you, Madam Chair, and thank you so
    much for mentioning the ``Show Me State,'' Missouri. I couldn't
    agree more that it is really important that we trust but verify
    these trade agreements, and I am really excited, though, about
    the potential there, and appreciate all the work of the
    Administration and you and your support for helping expand
    that.
        One of my colleagues, Ranking Member Conaway, asked a
    question already that I was going to touch on about gene
    editing, and I wanted to just, I guess, foot stomp what you
    both have said about how important this is that we get this
    right, and make sure that the United States keeps this
    innovation capability.
        I represent the University of Missouri, and you have
    probably heard of Dr. Randy Prathers' research where he has
    developed a PRRS resistant pig and how important that is that
    we get that through the process where we are able to replicate
    that and to take advantage of this innovation and this hold up
    between the FDA and the USDA is just really critical that we
    get this moving forward.
        Do you have any more you want to add on that before I go to
    another topic?
        Secretary Perdue. Well you mentioned one. I didn't use that
    example earlier, but just think, we have seen the devastation
    of African Swine Fever. What if we genetically edit a swine
    that was resistant to African Swine Fever? We think there is a
    huge, once the regulation catches up with the biotechnology
    here, we think there is a lot of potential out here for making
    actually food therapeutic, actually medicinal type of food,
    healthy, safe, nutritious food for our populations.
        Mrs. Hartzler. That is exciting, especially with the
    challenges we have the high costs of prescription drugs and the
    old way of addressing things. If we can prevent it just by the
    food we eat, that is just revolutionary.
        In the 2018 Farm Bill, I passed the Community Facilities
    Lending Provision to increase the threshold for the community
    facilities and the water waste programs to population of 50,000
    people to allow more of our small communities to be able to
    access these funds. Can you tell me if the Department has yet
    made any loan guarantees to the newly eligible communities
    under this program?
        Secretary Perdue. I cannot tell you definitively. I believe
    that we have. We were anxiously awaiting that expansion there.
    We had a lot of demand----
        Mrs. Hartzler. Right.
        Secretary Perdue.--in communities that exceeded the 10 and
    $20,000, 20 person population limit, and I would assume that we
    have. I can't definitively tell you that, but we can get you
    the number of people and the populations that we served.
        Mrs. Hartzler. That would be great, and if you could also
    get me more information about when they can apply, those new
    communities. That is exciting. That would be great.
        [The information referred to is located on p. 89.]
        Mrs. Hartzler. We had a discussion a little bit with
    another colleague, G.T. Thompson, about crop insurance and
    flooding and disasters. Of course, being from Missouri, we had
    a lot of flooding of the Missouri River. We have a lot of
    levees that had breaches, and we are not going to be able to
    get all of those levees repaired by spring planting season.
    Farmers are making efforts to try to repair them on their own,
    and making some temporary filling of the gaps. But are you
    aware, is there going to be any flexibility in the crop
    insurance to allow for partial repair of a levee or something
    to help give a range of crop insurance products so that perhaps
    they could afford something, and incentivize them at least to
    plant something in the next couple of weeks?
        Secretary Perdue. I am not aware of anything within the
    crop insurance realm. I know that through NRCS and the EQIP
    Program and those types of damage programs there that we are
    trying to address what farmers' needs are when they are facing
    those levee breaches.
        Mrs. Hartzler. Okay. That is something we need to work on,
    for sure.
        Renewable fuels are very much a win-win for our country,
    win for our farmers, win for our consumers, win for America,
    and win for the environment. And I applaud your goals regarding
    sustainability where you talk about the economic
    sustainability, environmental sustainability as well. I like
    also what you have done regarding the ethanol grants, $100
    million for the new infrastructure program to help with the
    E15, B20.
        I was wondering, can you provide additional information on
    how you think the biofuel sector can contribute to reducing
    environmental footprint that we have in this country?
        Secretary Perdue. Well, I know there has been some data
    that is out that we believe is inaccurate. But our latest
    information and research shows that the contribution of ethanol
    and biofuels, obviously lower greenhouse gas emissions and is
    good for the environment. That was one of the original purposes
    as far as American-grown fuel as well.
        Mrs. Hartzler. Absolutely. Well, I appreciate all your
    work, and I yield back.
        Secretary Perdue. Thank you.
        Ms. Adams. Thank you very much.
        I now recognize the gentlelady from Virginia, Ms.
    Spanberger.
        Ms. Spanberger. Thank you very much, Madam Chair.
        Secretary Perdue, ahead of these hearings, I reached out to
    producers in my district in central Virginia, and I asked them
    how they felt that the rural economy is working for them. And
    resoundingly, the answer that we heard was it is not. Our
    farmers are continuing to struggle with the loss of market
    access abroad as a result of our trade war with China.
        One of my constituents who I see fairly regularly, a
    soybean farmer, large family farm, conveyed to me that despite
    the recent U.S.-China Phase 1 agreement, he had little
    confidence that the agreement would provide meaningful relief
    to him and his family. He literally said it was too little, too
    late. And he felt that all the decades of time and money spent
    by farmers like him in his community, building business
    relationships and partnerships in China had been thrown away
    and as he called it, ``irreparably harmed.'' Today, he is
    finding that the buyers who used to buy his product have
    developed new relationships in Brazil and Argentina, and they
    don't seem ready to abandon those. He is afraid that he won't
    be able to get his business back.
        My question is, I understand that USDA may be unable to
    repair the damage done by this trade war, but as we think about
    the purchase commitments agreed to in the U.S.-China Phase 1
    agreement, what role do you see USDA playing in monitoring
    China's compliance to ensure that farmers at last have the
    chance to receive some relief as they work hard to try and
    rebuild relationships and gain back some market share?
        Secretary Perdue. Well, first of all, I am much more
    optimistic than your producer there. Again, we will regain
    those markets and USDA's role is to monitor that. As I said
    earlier while you weren't here, we are going to trust but
    verify. We think these agreements that were signed were hard
    numbers that are enforceable, unilaterally enforceable, and our
    role is to provide the Administration, USTR, Commerce, and the
    President with how we are coming on that. What is that data? We
    have the ability to track the shipping data, the export data.
    Some of it lags sometimes a month, but that is what we will be
    doing. And also, I mentioned prior to your coming in was that
    we see good, encouraging signs of China doing things underneath
    from a technical resolution of some of the non-tariff trade
    barriers that are encouraging.
        We are hopeful. We are optimistic. We believe that China is
    a shrewd consumer. They are going to buy where the best deal
    is. This time of year, they buy soybeans from Brazil. We think
    they will come into this market in late spring and summer and
    fulfill the commitments, but we will be looking.
        Ms. Spanberger. And here, this particular producer that I
    am talking about is a family farmer who has been farming in one
    of our counties for decades. His family continues to farm, and
    he himself is in his late 70s. I would make the position that
    my answer to him as his Representative in Congress can't be
    that he needs to be more optimistic, because he is seeing the
    day-to-day results of this trade war, as are other farmers and
    producers across our district. And he was talking about this
    year as he was filing his taxes. He was troubled by the fact
    that on his schedule F, the government payouts he received
    exceeded the profits that he made. He doesn't want payouts. He
    said his friends don't want payouts. He wants a fair shot. He
    wants open markets. He has worked for decades to build up
    relationships and have the ability to compete internationally.
    But he has a growing sense of insecurity and uncertainty, and
    so, I would ask when we are moving forward that we please
    ensure that we have a level of strategy recognizing that we
    need a lot more than optimism to help our farmers and
    producers, particularly our small family farmers.
        Secretary Perdue. Ma'am, I think the trade as it develops
    will create optimism. I didn't indicate that, you can suggest
    your producer become more optimistic. I said I am more
    optimistic about that, based on what I know. I would really
    seriously doubt that if he has developed personal relationships
    of people buying soybeans in China--we have done a great job as
    an industry. We think that market is going to come back based
    on what we are seeing already, and I am more optimistic about
    that.
        Ms. Spanberger. And sir, I am a former CIA officer. I
    worked in national security. One of the tenets of everything we
    ever did was contingency plan for the absolute worst case. And
    so, is USDA planning for the absolute worst case if these
    markets don't come back?
        Secretary Perdue. I think that was the essence of the
    President's tweet where he said if the trade does not develop
    as we expect and hope that it will, then I am willing to
    support the farmers with another round of MFP payments. That
    was a big if. I am telling farmers, let's plant for the market,
    hope for the trade and pray for the trade to come back as we
    think it will. But if it doesn't, the President is willing to
    support any kind of trade disruption.
        I also said that these Market Facilitation Program payments
    are not price support programs. They are market trade
    disruption programs, and the farmers need to plant for the
    marketplace.
        Ms. Spanberger. In planning with the if and the tweet that
    you mentioned, that is, from my perspective, kicking the can
    down the road. That is not planning for what happens when they
    don't come back. That is delaying what might be the worst-case
    scenario.
        I thank you for being here today, and I yield back.
        Ms. Adams. Thank you very much.
        The gentleman from Georgia, Mr. Allen, you are recognized.
        Mr. Allen. Thank you.
        Mr. Secretary, good to see you today, and thank you for
    coming down to the district and announcing that a grant for $5
    million, USDA grant for our broadband in Evans and McIntosh
    Counties. That was a great event. I wish I had brought a big,
    heavy coat, maybe two or three. I could have shared them. The
    temperature at this event, it dropped from like 48 to 28
    during the hour.
        But anyway, that was a big deal. Thank you for doing that.
        I am going to start off with pecans. Obviously, we are the
    top state in pecan production, and that industry is vital to
    Georgia and our economy. The pecan farmers have been unfairly
    targeted by the tariffs in India, and currently there is a 36
    percent Indian tariff on U.S. pecan imports. India does not
    produce pecans, and we have written the U.S. Trade
    Representative on the pecan tariff and discussed with the USTR
    team, but it would be helpful if you could help assure us that
    it is on the U.S. list of tariffs to be removed during our
    trade negotiations with India. And would you consider doing
    that for us?
        Secretary Perdue. I can verify that it was on the list. In
    fact, Ambassador Lighthizer had presented a list of options to
    the President, who determined that it was not a big enough kind
    of deal, and he believes that as he has been successful in the
    past, using the leverage of his office there will be a better
    opportunity for India. You know that India has been a very
    tough export market for the United States with very unfair non-
    reciprocal trade barriers there. We hope to have some better
    news in that market.
        Mr. Allen. Well, obviously one time I had the President's
    ear on the whole China thing, and because the Chinese were
    being so unfair with how they were dealing with us that I
    recommended that he go to these other countries and let's see
    if we can work with countries that will promote fair trade.
        The other big issue in the district is labor, the H-2A
    program, and I constantly hear from producers about the
    inability to find labor on their farms. Many use the H-2A visa
    program, but it is frustrating. It is complex. It costs a lot
    to participate in the program. I know that you have worked
    diligently with the Department of Labor on regulatory reforms
    of the H-2A program. Where are we with those reforms, and what
    are some of the other problems with the H-2A program that you
    have identified where Congress needs to get involved and do
    some type of legislative fix?
        Secretary Perdue. Well, labor obviously is really the
    number one and number two issue with trade all over the
    country, and it is time we separated the immigration issue
    where people want to come to a country and become citizens with
    an economic labor issue of where they want to come for economic
    opportunity to help grow our economy. I think those two have
    been conflated for too long, and that the challenge has been
    the people fear that people who want to come on a temporary
    basis, such as H-2A workers, are looking for immigration, and
    that is not the case at all. Again, the Labor rules are at OMB
    waiting to be certified there to be able to put out. It will
    help to modernize that, but Congressman, there is still the
    issue of really this adverse wage rate has become a perverse
    wage rate in agriculture. We essentially have--in agriculture,
    a $15 minimum wage there where we don't anywhere else in the
    economy.
        Mr. Allen. Yes, sir.
        Last, and I have about 54 seconds, so we have to make this
    quick, but you recently traveled to Europe. As far as trading
    relationships with Europe, European Union, and UK, and there
    are real concerns here in the U.S. on which they say a blatant
    disregard for science. The EU has said in setting their
    policies, from your perspective on your trip, what are the
    biggest sticking points to U.S. trying to negotiate deals with
    Europe on particularly peanuts and things like that?
        Secretary Perdue. Well, the European culture has sort of
    denigrated American food as unsafe. We are giving them the
    facts based on sound science about that. They talk about
    chlorinated chicken. We really don't do that at all. We use
    other products there, and our food safety record is better. How
    do you change the mind of people who have an opinion? It is
    almost like an ideology of religion, but we are continuing to
    use sound science. And I think the future is better for the UK.
    We are looking forward to going and having a free reciprocal
    trade with the UK once they are out of the EU, which then will
    facilitate better relationships with the EU.
        Mr. Allen. Thank you for your service, sir. I yield back.
        Ms. Adams. Thank you very much.
        I want to recognize now the gentleman from California, Mr.
    Cox, you are recognized.
        Mr. Cox. Secretary Perdue, thank you so much for being here
    today, and certainly thank you so much for making it out to the
    Central Valley of California. You are always welcome there.
        On a particular note, I really want to say thank you and I
    appreciated your willingness to work with me to implement the
    needed changes to the Pima Cotton Competitiveness Program,
    which is providing much needed relief and support to the pima
    cotton producers, certainly in my district.
        But in the last couple of days, we have been hearing about
    staffing shortages at the county FSA offices across the
    country, and certainly in my district it is no exception. My
    staff has been working with local farmers unable to access the
    critical farm programs, and certainly the lack of staff at
    these offices is consistently being brought up as the reason
    for the delay in service and payments. I have, frankly, grown
    very concerned since my time here in Congress with the decline
    of staff morale at the USDA, the relocation of core offices,
    and reports of understaffing at the core USDA mission areas.
        And so, given the expressed commitment to excellent
    customer service, I mean, I would like to hear what you plan to
    do to ensure that USDA is filling these crucial positions and
    is seen as a desirable place to work.
        Secretary Perdue. Very good question, and I want to commit
    to you, we want to hear from you when you have service level
    problems within any district here from any Member. This has
    been a very frustrating situation for us. With an unemployment
    rate of 3.5 percent, I never thought we would have as much
    difficulty hiring people to the Federal Government as we have.
    And it is not because of a lack of effort. It is a very onerous
    onboarding process. We have been given some direct hiring
    authority, which enables us to do a quicker onboarding job, and
    we hope to fulfill that.
        But I can tell you, this has been a very--we talk about it
    almost every week. It has been a very frustrating problem
    trying to find through the Federal system workers to come into
    there. We find that when they apply nationally, they don't want
    to move to a particular area. When they apply from California,
    they don't want to go to the East or vice versa. So, the local
    hiring authority will enable us to help fulfill these sooner.
        Mr. Cox. All right, and more in a global sense, we have an
    Administration, certainly when they first came to office, one
    of the first things they did was implement a hiring freeze. And
    then they issued a directive about reducing the size of the
    government workforce, the Federal workforce through attrition.
    And so, that seems to be at odds with the intent to hire more
    people at the FSA or the USDA. And so, how does that reconcile?
        Secretary Perdue. I have had no such directions at USDA. We
    have hiring levels. We have had some funding issues, frankly,
    on the FSA issue, so some of the budget issues that were
    addressed last year and in this budget recommended will help.
    But we had some limitations. NRCS has been more of a difficulty
    finding people, but there were some budget cap issues on the
    hiring process that slowed us down on the FSA people.
        Mr. Cox. Well, sir, just to be clear, the agency reform
    plan, which was supposed to detail workforce reductions through
    attrition, that is not something that USDA is looking at or
    implementing?
        Secretary Perdue. No, we have a hiring plan that continues
    to move, and as I said, one of our principles is customer
    service. You have to have the people to do that.
        Mr. Cox. All right, and so I guess just in a general sense,
    USDA, we want more employees? We would like to grow that
    workforce?
        Secretary Perdue. We want enough people to get the job
    done. I don't want more or less. I want enough people to get
    the job done. That is what our----
        Mr. Cox. And right now we don't have enough though?
        Secretary Perdue. We are not having enough in some places.
    We have an optimum office production that tells where the
    workload is, and who needs to be there.
        Mr. Cox. And do we have metrics from that optimum office
    yet to detail how well that is working?
        Secretary Perdue. We do.
        Mr. Cox. That would be great to see. Thanks so much.
        [The information referred to is located on p. 89.]
        Mr. Cox. I want to reiterate what Congressman Costa was
    saying, which is trade is so vitally important to my district,
    and the Phase 2 trade deal with Japan is just such a promising
    market, especially for the specialty crop sector. And so, can
    you just expand once again on what the USDA is doing to help
    open and expand those markets?
        Secretary Perdue. Well certainly.
        Mr. Cox. My last 20 seconds.
        Secretary Perdue. Japan, obviously, which is a good
    destination from your State of California there, and $7 billion
    more in agriculture, many of the products, almonds and other
    products of the variety of products you all grow there is going
    to be beneficial. Also, the Korea market, Korea agreement on
    rice for your California premium rice is also a big benefit in
    the Korea agreement.
        Mr. Cox. Great. Thanks so much, Secretary. Always great to
    see you.
        Secretary Perdue. Thank you.
        Ms. Adams. Thank you.
        The gentleman from Illinois, Mr. Bost, you are recognized.
        Mr. Bost. Thank you, Madam Chair.
        Secretary Perdue, first off, thank you for what you have
    done with the agency, and also for being in our own district
    and mine and Rodney Davis's over the times you have been there.
    I also want thank the Administrator of the RMA, Marty Barbre,
    for his work with FAC and NFAC issues that affect double-
    cropped soybean growers. It was an issue last year. We were
    able to work through it, and the insurance agents now can move
    with more clarity on how to better serve their clients with
    that double crop.
        Last year, crop reports sent the markets tumbling, because
    of the inflated claims of acres planted for corn and soybeans.
    Can you explain NASS's process behind the reports, and
    additionally, why would that report exist if the FSA already
    has the reported number of acres for each crop?
        Secretary Perdue. Well, they are two different reporting
    schemes. One lags another. The FSA reports acres by what
    farmers come into it. NASS has a consistent protocol of
    assessment over acres, going forward.
        One of the issues with the farm complaints last year is
    that one of the reports in the middle of the summer last year,
    the market expectations were far off from what NASS had
    developed, and it caused the prices to go down because of the
    expectation with the wet weather, wet spring, and prevented
    plants. At the end of the day, Congressman, NASS got it better
    than the market did, and that is the end of the story there is
    that we can't control what the market expects there, and what
    they trade on. And when the market goes down because when they
    see the NASS numbers, they realize they may have been too
    optimistic, and that is what happens.
        Mr. Bost. Well, thank you for that.
        I want to go back to where there was a statement made
    earlier, and I want to let you know what somebody brought up to
    me about how their farmers were feeling in their district. Let
    me tell you how my farmers are feeling in my district.
        As this trade thing started with China, here is what they
    told me early on. And you and I had this conversation. They
    told me that they believe it had been a long time coming with
    China, and that trade negotiation had to occur. They didn't
    want it to last too long. They wanted to get through it as fast
    as possible. I believe one of the problems, and they do, too,
    was the fact that the trade negotiations on the USMCA was
    actually because it took so long for it to move through this
    House being held up by leadership that it actually gave the
    President and the Administration trouble in negotiating the
    China deal, and that is what slowed that deal down and that is
    what caused a lot of the problems in the market at that time.
    It is kind of amazing we sit in these rooms and we watch and
    how somebody--if you just say something long enough that isn't
    true, it automatically becomes true. I want to thank you for
    what you do in your office and what we have been doing.
        The concerns we have every day with the markets is because
    we know that farmers work off of each other. Each year, they
    are worried about too much rain, not enough rain, what are the
    markets going to do, and the concerns they have. It is natural,
    being in agriculture, that you have a fear. That is life. That
    is what it is in ag. But I am going to tell you this. I don't
    know about the other Members here that were asking questions,
    but I can tell you this. Our farmers know that we are trying to
    do everything we can for them, and the Administration is doing
    that, and they are very happy with that. And the trade deals
    are going to help tremendously with the farmers, and it is
    looking very, very positive from here on out.
        I thank you for being here today, and I yield back.
        The Chairman [presiding.] I thank the gentleman.
        The gentlelady from Minnesota, Ms. Craig.
        Ms. Craig. Thank you, Mr. Chairman, and thank you,
    Secretary Perdue, for appearing before the Committee this
    morning.
        As we have heard from a few of my colleagues, and
    especially in districts like mine where we have just a ton of
    family farmers, it is no secret that the trade policies of the
    last few years have put Minnesota farmers in a little bit of
    turmoil here.
        The Market Facilitation Program certainly kept farmers
    afloat, but I am concerned that we have set a terrible
    precedent for U.S. farm policy. This Committee has spent
    decades working toward a farm safety net that is predictable
    and reliable. At the agency's Ag Outlook Forum, you said
    regarding another round of MFP, I would not anticipate it.
    Farmers have to farm for the market and what it is telling
    them, and what their capabilities are from a production
    perspective. The next day, the President tweeted that
    additional MFP payments are possible until the new trade deals
    kick in.
        I spent 25 years working in business before I came here
    last year, and this kind of policymaking, it is not
    predictable. It is not reliable. It is no way to make farmers
    run their businesses; and, given that farm debt is increasing
    twice as fast as farm equity, how can their lenders ignore such
    a statement from the President? Should I take your comments
    here and this morning to mean that you are advising the
    President against the release of another round of MFP, which by
    the way, I strongly supported the previous rounds? And can you
    comment on why the President tweeted about the possibility of
    more ad hoc MFP payments in the same month that he proposed a
    budget that would gut Federal crop insurance, which is, of
    course, one of the most predictable and market-based risk
    management options available to farmers?
        Secretary Perdue. Certainly. I would stand by my statement
    that if the President asked me today, and we communicate on a
    regular basis, is that I would not recommend another Market
    Facilitation Program payment. His tweet, as I understand it and
    I read it, was preceded by the preposition if, which means a
    contingency there. If this trade we expect does not
    materialize, he is prepared again to help people, farmers, move
    through this. We already heard today that it has been critical
    for their bottom lines to be able to continue. Lenders, have to
    look at the market, look at the production plans of their
    producers coming in. It is tough out there, but it is going to
    be challenging. Again, I have expressed optimism that the trade
    will develop, but if it does not, I believe that the President
    will do what he said he will do.
        Ms. Craig. Well, I would just like to respond to that, and
    then I will move on to my next question. Good farm policy
    should be focused on good economics, not political expediency.
    And this is exactly the problem, Mr. Secretary, is what about
    that is a predictable farm safety net and how are small and
    beginning farmers supposed to plan with comments like that?
        With that, I will leave it to you to figure out how we
    decrease his use of Twitter.
        I would like to now shift to beginning farmers. For more
    than a decade, the Main Street Project outside of Northfield,
    Minnesota, where I represent, has trained rural Latino
    immigrants on regenerative ag practices in poultry as a means
    out of poverty. This is Janet. She is just one of the beginning
    farmers who has taken part in training through the Main Street
    Project. In August, the project was informed that they had been
    awarded a U.S. NIFA Beginning Farmer and Rancher Grant. Those
    grant funds were publicly announced in October, but as of
    today, the organization still does not have the funds they were
    promised by USDA. You said the move of ERS, NIFA to Kansas City
    was to better serve farmers and ranchers where they are, but
    that just hasn't proven to be the case for farmers like Janet.
        [The information referred to is located on p. 83.]
        Ms. Craig. Following relocation, the Office of Grants and
    Financial Management only has 26 positions filled out of the 95
    total permanent positions. What impact has this had on the
    agency's ability to get money out the door?
        Secretary Perdue. I can tell you what I have been told by
    NIFA is that the money is getting out of the door. I would love
    to hear about the specific one. I will absolutely respond back
    about where that grant is. But I am being told that
    deliverables are on schedule in that way. We continue to hire
    there while we extended some people here in order to deliver
    the services we were committed to, that services would not
    suffer, and that this is a broad-based issue. I will be back,
    but we will specifically talk about this one.
        Ms. Craig. Thank you. We have been in touch with USDA, but
    it shouldn't take a Member of Congress to get those dollars to
    the folks they have been awarded to.
        Secretary Perdue. Absolutely not. I agree.
        Ms. Craig. Thank you again, Mr. Secretary, and I yield
    back.
        The Chairman. I thank the gentlelady.
        The gentleman from North Carolina, Mr. Rouzer.
        Mr. Rouzer. Thank you, Mr. Chairman.
        I noted the conversation a little earlier about big
    operators versus small operators, and so forth, and it is
    important for the record to point out the bigger you are, the
    bigger your note at the bank. A lot of people forget that. It
    is not like your margins get so much greater the bigger you
    get. The margins are small, so you have to get big in order to
    make it all work.
        Mr. Secretary, thank you for being here. You are doing a
    great job, and I really appreciate all the work that you and
    your team are putting in.
        I have a constituent back home that has a unique situation.
    He is not eligible for WHIP, not eligible for NAP. We had
    Hurricane Florence come through in 2018, totally wiped him out,
    about a $1 million loss for him. He produces native warm season
    grass seed and wildflower seed, and a lot of those. A lot of
    that is used in our conservation, CRP, et cetera. And I know
    you and Commissioner Troxler have been in consultation about
    the block grant to the states and trying to work out some
    agreement there. This is a very unique situation. I am sure
    this gentleman is not the only one who finds himself ineligible
    for NAP and not eligible for WHIP. I would like for you guys
    to, in your Department, to take a good look at his situation,
    if you don't mind, and if it is possible to get something
    worked out with Commissioner Troxler on that front.
        I know the Commissioner's team are very much aware of this
    individual and his particular situation, and it is important to
    me that we exhaust all angles to see if we can help him out.
        Secretary Perdue. Sure. We would rather be in negotiation
    rather than a confrontation.
        Mr. Rouzer. Absolutely, absolutely. I know you all are
    going back and forth, so I would categorize it as a
    negotiation. Like I said, I know the Commissioner's folks are
    well aware of this particular situation as well.
        Second point, the vaccine bank for FMD, there are a number
    of us on this Committee that have an interest in that and the
    implementation of that. I am just curious where that stands?
        Secretary Perdue. Yes, Under Secretary Ibach, he issued a
    request for information over people interested in proposals and
    doing that. That was the third leg of the stool, along with the
    overall early detection through, we have already put money out
    into the labs across the country, and then an early detection
    and biosecurity network of awareness and training. The foot-
    and-mouth vaccine is where we are getting information and how
    that can be done. There are some limitations here on the
    mainland of handling that virus, so we have to take those in
    consideration and if our NBAF facility were up in Kansas, we
    could do it there, but we have to be extremely careful in how
    that is handled. We are in the midst of taking requests for
    information now about proposals of what they think they could
    do in that regard.
        Mr. Rouzer. Moving on to trade. We have a great opportunity
    with the UK to put together a really, really good trade deal
    that I think if we can do, it will substantially help us in
    negotiation with the EU later on. Do you have any comments on
    where we are with the UK and the possibility there, and what
    that would mean for American agriculture?
        Secretary Perdue. I think the relationship, both heritage
    and otherwise, I believe it will be a good opportunity for the
    United States to do a trade deal with the UK. We know that they
    are constrained until the end of the year, but we are
    preparing. I will be visiting there in a couple of weeks and
    making our case over our products from a reciprocal basis in
    that way, and we are hopeful that we can get something done
    with the UK, which we think will lead to better relationships
    with the EU. But we see an anxiousness of a willingness for the
    UK to trade in an area and a method that is not constrained by
    some of the EU rules.
        Mr. Rouzer. Yes, it is going to be a great opportunity for
    us, and I think to the degree we are successful with that, it
    will really help us with the EU. That is my read on it, and let
    us know how we can be helpful in that process.
        Mr. Chairman, I yield back.
        The Chairman. I thank the gentleman.
        The gentlelady from North Carolina, Ms. Adams.
        Ms. Adams. Thank you very much, Chairman Peterson, Ranking
    Member for hosting the hearing. Mr. Secretary, it is good to
    see you again.
        Secretary Perdue. Yes, ma'am.
        Ms. Adams. I would like to ask a couple of questions about
    the impacts of the ERS and NIFA relocation, and the impact that
    it is having on 1890 land-grant universities. All 19 schools
    turned in their applications last November for the 1890
    scholarships, which received $40 million in mandatory funding
    in the 2018 Farm Bill, but it has been 3 months. They still
    haven't received the funding. They are concerned that the money
    which is somewhere in the neighborhood of $750,000 per school
    may not be available until late this spring for students
    entering school in the fall.
        Having been a professor for 40 years, I know that schools
    need to be able to notify students earlier than late spring
    about their scholarships so that their recruiting can make an
    informed decision.
        Given that about 68 percent of NIFA's positions are vacant,
    what is USDA doing to ensure this delayed funding doesn't
    prevent students from studying agriculture at one of our 1890s?
        Secretary Perdue. First of all, Ms. Adams, I am very
    disappointed to hear that report because it conflicts with what
    my people at NIFA have told me regarding that, particularly
    with the HBCUs regarding the student scholarships there. As I
    indicated in my earlier comments, it is my understanding that
    these are being disseminated, and I will specifically find out.
    If your facts are accurate, then I am extremely disappointed in
    the information I am being given about that. Our commitment in
    this move was that the services would not be inhibited, and
    that is my expectation in that way. We allowed some extensions
    in order to make sure that services were continued.
        Ms. Adams. Okay, great. Well, I hope you do look into that.
    That is the information that I have. You do have a timeline
    already for dispersing the funding?
        Secretary Perdue. Yes, ma'am. We actually prioritize those
    HBCU scholarships, because they were new and we know that the
    students were looking forward to them. As I said, I will check
    on that and if your facts are accurate, then I am very
    disappointed in the information I have been given.
        Ms. Adams. Okay. If you would get back to me, I would
    appreciate it.
        [The information referred to is located on p. 89.]
        Ms. Adams. Let me also ask about an update on how the
    implementation is going on the Centers of Excellence, which I
    did fight for along with some of my colleagues in the 2018 Farm
    Bill. I have heard that the Department is moving slowly on
    getting the money out for Fiscal Year 2019, an appropriation of
    about $5 million of the centers. Another $6 million was
    appropriated for these centers, and we really need to get this
    money out. I am concerned, again, about the lack of staff for
    the 1890s program and NIFA due to the move to Kansas, and which
    has contributed to this delay, we think. How is USDA working to
    fill the gaps, first of all, during the transition to ensure
    that the work to support the 1890s is taking place?
        Secretary Perdue. It is my understanding that these
    consortiums of these Centers of Excellence are being processed
    in that way over their applications of what they want to do. In
    fact, I don't know how many I have visited, but I don't hear
    these things when I am on campus there from the Presidents, and
    I have been to several HBCUs and we try to be very open about
    any kind of issues they are facing, and I don't hear those. If
    they are contacting you, there must be an issue, but I wish
    they would contact me as well.
        Ms. Adams. Okay. Well, I strongly supported the inclusion
    of the Office of Urban Agriculture and Innovative Production in
    the farm bill, pushed for the funding. One of the provisions in
    the bill provided $10 million in mandatory money through the
    Commodity Credit Corporation. I would expect that with funding
    already available for use, that those grants would be
    implemented expeditiously, so I am glad that you are going to
    look into it.
        Do you have any updates on the implementation of the
    competitive grants, and of the office itself?
        Secretary Perdue. Yes, ma'am. I can't give you the
    definitive definition. I remember our staff mentioning that to
    me about where we were on it, but I would rather, since I can't
    be sure about it, I would rather tell you in a response in a
    QFR over where we are on those competitive grants.
        [The information referred to is located on p. 90.]
        Ms. Adams. Okay. Just one comment. I just have a few
    seconds; but, we are still concerned about the SNAP funding. It
    is really having an impact in my district. It certainly will be
    in terms of some of the rules, and I mentioned those to you
    last time we had breakfast.
        Secretary Perdue. Yes, ma'am.
        Ms. Adams. If you could give me a little update on it or
    send the information to me, I would appreciate it.
        Secretary Perdue. Yes, ma'am. If I can respond to some of
    the SNAP concerns here. We are issuing waivers as we speak
    here, in 18 states, again, on the waivers that do qualify based
    under the new rules, 186 labor market areas and 18 states. We
    would have to look if yours are eligible in there and qualify
    for that, but people are applying for waivers and we are
    continuing to do that under the new rules that we have put out.
        Ms. Adams. Thank you, sir. I am out of time. Mr. Chairman,
    I yield back.
        The Chairman. I thank the gentlelady.
        The gentleman from Louisiana, Mr. Abraham.
        Mr. Abraham. Thank you, Mr. Chairman.
        Mr. Secretary, I know we don't have a language barrier
    between the great people of Georgia and the great people of
    Louisiana, and I might argue the rest of the state, but my
    good, good friend, Rick Allen, called them pecons. We call them
    pecans in Louisiana, so just to get that straight on the
    record.
        Mr. Secretary, thank you for being here. As you know, you
    are a rock star in the agriculture community. We appreciate all
    you have done. If I could add to your comments about farming,
    if we take out our soldiers, our men and women in uniform that
    defend our country most admirably, that farming probably is the
    toughest and most volatile profession that we have in this
    country. It is one bad weather storm, and they are in a very
    precarious position.
        Your verbal statement alluded to the high-speed broadband.
    We all know here how critical that is for just everything, just
    life now in America and in the global world, the global
    economy, and thank you for your work. Thanks to your work, we
    got $15 million in Louisiana for deployment of high-speed
    broadband.
        My question is, moving forward, what can we as Congress do
    to help with more deployment of high-speed broadband, and how
    can we get more companies to buy in to the Federal program?
    They are already set up to deploy. They have the technology. We
    just need them to get in the game. So, what can we do?
        Secretary Perdue. One of the things you all already did was
    to loosen up some of the definition of unserved, under-served
    whereby recently, we know there is a real issue with the maps
    where you see that. Helping us with more definition, I know the
    FCC is working on that, but if one house in a Census track had
    service it was declared as served and the most of it was not.
    So, that has been cured.
        Again, I would ask you and your colleagues to look at how
    we are deploying this money that you have given us, this first
    $600 million, the other $1.1 billion, and if you like that
    methodology of what we are doing, let's continue in broadening
    that out from Rural Development. It has been well-received, and
    we would love to continue to do more of it. It is needed, as
    you know. The problem is it is a long way from being
    everywhere.
        Mr. Abraham. And about the companies, these big, global,
    national companies that have the technology in place, they have
    already got high-speed broadband. They have that infrastructure
    in place. How can we get them more involved in some of these
    projects?
        Secretary Perdue. As you know, the concern about
    duplication or overbuilt, that is probably going to take some
    Congressional action with the major carriers there. We have a
    lot of dark fiber out there that we don't know where it is and
    not being utilized, and they used Federal money before to put
    that dark fiber in there but it hadn't been turned on. Some
    investigation through appropriate agencies and with
    Congressional impetus there could help that coordination.
        Mr. Abraham. Thank you, and just a quick add-on. My farmers
    certainly in my district and all over Louisiana that I have
    talked to, and there have been many, they are very optimistic
    with the trade, the deals that are going on with China, so
    there are good times ahead.
        Mr. Chairman, I yield back. Thank you.
        The Chairman. I thank the gentleman.
        The gentlelady from Washington, Ms. Schrier.
        Ms. Schrier. Thank you, Mr. Chairman, and thank you, Mr.
    Secretary for being here.
        I, first of all, wanted to echo Mr. Allen's comments about
    the struggles of H-2A visas and what an economic challenge that
    poses to our farmers in the Northwest. I also wanted to make
    you aware, if you are not already aware, that there is an
    excellent bipartisan bill with several Members of this
    Committee called H.R. 5038, the Farm Workforce Modernization
    Act that does several really good things for our farmers that
    people on both sides of the aisle agree on. It streamlines the
    H-2A visa process; it puts controls on the inflation of wages;
    and it also has a path to citizenship for people who are
    working in ag and commit to continuing to work in ag. And so,
    if you could whisper in the President's ear about that bill, I
    would love to see, and a lot of people in this room would love
    to see that move forward.
        Secretary Perdue. We are very aware.
        Ms. Schrier. That didn't sound reassuring.
        My second comment was about something called Little Cherry
    Disease. In Washington State, apples and cherries are among the
    state's top 15 exports, so protecting and strengthening the
    tree fruit industry is critical for our economy. This past
    cherry season, it became apparent that the Pacific Northwest
    cherry growers are facing a substantial threat from Little
    Cherry Disease. It is caused by viruses that are either
    transmitted by insects or that are transmitted through root
    systems, and so, the only treatment for this, once it is
    detected, is to pull the trees out. And that is a significant
    economic threat. This has reached epidemic proportions in
    Washington State, and growers are scrambling to obtain new
    tools to detect and treat this and stop the spread.
        I am aware of a tree fruit entomologist position at the
    Wapato ARS laboratory that remains vacant after the retirement
    of the scientist in July of 2019, and it is my understanding
    that ARS has not been able to fill this position due to
    insufficient funding. In addition to this, I am aware of at
    least two other positions at the same laboratory that remain
    vacant, and I know you talked when Mr. Cox asked about staffing
    and whether we had sufficient staffing, and clearly in this
    part of my district and in my state, we do not have sufficient
    staffing for the excellent work between Washington State
    University and ARS.
        This is not a question. It is really more to just bring to
    your attention how important it is that the ARS labs,
    specifically the one in Wapato, be fully staffed in order to
    manage this sector and protect our economy.
        The second issue that I wanted to talk about, if I do have
    a moment, is herbicide resistance. This is becoming an
    increasing problem across the country, and because herbicides
    are not working, tillage will now probably increase as the most
    economical alternative control measure. The problem is that
    this goes against all the modern science of soil health. It
    increases wind and water erosion. It also releases more carbon
    dioxide into the atmosphere and compromises soil health, and
    will probably also compromise water quality in the Snake River
    and Columbia River.
        Washington farmers all want to do the right thing. They
    want to conserve soil. They want to have healthy soil. They
    want to pass this on to the next generation, and they need
    help. And I wondered how is the USDA addressing regionally-
    specific problems associated with herbicide resistance and soil
    conservation, and what do you need from us to help that happen?
        Secretary Perdue. We need, obviously, less tillage--rather,
    more tillage, as you said. The USDA certainly works closely
    with our registration partner EPA in making sure these new
    developments about technology are available as plants and weeds
    become resistant to other types of things. It is mostly an
    interagency regulatory issue.
        Moving forward, we are working with the Department of the
    Interior Fish and Wildlife as to issue a Biological Opinion.
    National Marine Fisheries has to issue a Biological Opinion on
    new products. We are encouraging them to use the same set of
    facts and data over this in order to move these along more
    expeditiously. As things become resistant, we don't want the
    answer to be more tillage and more plowing. We want it to be
    more no-till and using these safe products through--to control
    the problem.
        Ms. Schrier. Thank you for your comments. I am running out
    of time, but this calls into question, just like there is an
    understaffing at the USDA, the issue of losing scientists at
    the EPA who could really help us solve these problems as well.
        Thank you. I yield back.
        The Chairman. I thank the gentlelady.
        The gentleman from Kentucky, Mr. Comer.
        Mr. Comer. Thank you, Mr. Chairman, and Mr. Secretary, it
    is great to have you back to the Agriculture Committee. I am
    big fan, and you are doing a great job, and you are very
    popular with everyone in the agriculture community. I want to
    thank you also for your commitment to broadband. That is one of
    the biggest issues in my rural district in Kentucky is lack of
    access to broadband. I know that we had three communities in my
    Congressional district that were rewarded with the first round
    of ReConnect money, and I was wondering if you could kind of
    give us an update on how round 2 is going to take place, and
    what can we do to get more participation in that program?
        Secretary Perdue. Well, the three areas of the $600 million
    you gave us initially, we had $200 in grants, $200 in loan
    grants, and $200 in loans. They all three were oversubscribed.
    We began our second round of applications this January. It
    closes on the 16th of March, and we expect oversubscription in
    those as well, based on the popularity there. As long as that
    continues to take place, we will probably perpetuate the
    program the way it goes on, and as I indicated earlier, I hope
    you all will give us feedback about whether there could be
    improvements or better, and Congressman Abraham did to some
    degree. We look forward to hearing from you.
        Mr. Comer. Well, I appreciate that, and I am sure you will
    get more applications from Kentucky and you will be hearing
    from our office. But again, thank you for that first round.
        Next, I wanted to talk about hemp. We have had
    conversations with hemp and I have had numerous conversations
    with your great Under Secretaries that I have worked with in
    the past on this issue. I want to thank you, first of all, for
    the recent USDA announcement to delay the enforcement of the
    requirements for labs to be registered by the DEA. That was
    something I put in my letter request to you, and I appreciate
    you doing that. That was a big issue in Kentucky.
        But, I have always been a huge proponent of hemp and I will
    continue to be. I believe in hemp. I believe there is a
    tremendous future for hemp. When I was advocating for hemp when
    I was Commissioner of Agriculture, I was thinking about fiber.
        Secretary Perdue. Right.
        Mr. Comer. And what has happened, especially in Kentucky
    and many other states, is the CBD oil market has kind of taken
    over. And I am a farmer, I can say this. In agriculture, we are
    very good at overproducing things sometimes. Hemp was grossly
    overproduced in Kentucky and many other states this year. I
    know that language was put in the farm bill for hemp crop
    insurance. I am not a fan of that. I fear that that will lead
    to more overproduction and potential fraud, and I just wanted
    to publicly say I had some concerns about that, and hopefully
    that the final end-product will be one that will not encourage
    overproduction. I know one of the requirements for crop
    insurance that I had mentioned in a previous Committee hearing
    to Bill Northey was I hoped that it said you had to have a
    contractor with a processor before you could get crop insurance
    to prevent fraud. And that is in the language, the way I
    understand it. But hopefully there is some awareness of the
    fact that there are credible hemp companies in America, and
    there are some that aren't credible. We have had several in
    Kentucky file bankruptcy that have left the farmers hanging
    with a surplus crop of hemp.
        These are concerns that I have moving forward. I have
    shared that with many people in USDA. I appreciate the good
    work that you are doing. I know this is a very challenging
    thing for the USDA to have to administer, but I appreciate the
    work that you have done thus far, and I look forward to working
    with you on that issue in the future.
        Now, with respect to trade, I was just wondering if you
    could kind of give me a brief update of how things are going? I
    know that we had the Phase 1 agreement with China. Are they
    fulfilling their agreement thus far in purchasing the
    commodities that they pledged to procure?
        Secretary Perdue. The coronavirus has clouded this
    somewhat. Obviously, this is from a physical perspective of
    things backing up at the port. The countercyclical part of
    their buying typically when South America is harvesting, that
    is when they go there. So, those are some of the
    considerations.
        The bright spot that I mentioned a couple times before this
    morning is that we see the technical things that need to happen
    in order to facilitate the kind of trade is happening. The
    technicians there, and that is where a lot of those little non-
    trade tariff barriers that China has used to push back are
    being torn down. I take a lot of optimism from that that they
    are trying to fulfill their obligation they agreed to on those
    numbers.
        Mr. Comer. Well, my time has run out, Mr. Secretary. On
    behalf of Kentucky farmers, I want to thank you for your
    commitment to helping make sure that farmers are a priority in
    this trade agreement with China. Our agriculture community in
    Kentucky appreciates you and appreciates the President. Thank
    you.
        Secretary Perdue. Hemp is tricky. We need your help.
        The Chairman. I thank the gentleman.
        The gentleman from California, Mr. Carbajal.
        Mr. Carbajal. Thank you very much, Mr. Chairman, and
    welcome, Secretary Perdue. I have always appreciated your
    candor and your straightforwardness of dealing with the issues
    at hand.
        I want to start out by just expressing my great
    disappointment with this Administration with the proposed $182
    billion cut from the SNAP Program over the next decade, and the
    implications that that has for so many food-insecure families,
    vulnerable families throughout our country and in my district.
        In my district alone, I have 111,000 individuals that rely
    on these important programs, and quite frankly, it is not only
    callous, but it is extremely misguided. I would be remiss if I
    didn't share with you my outrage with the direction this
    Administration is going in regards to the SNAP Program,
    violating the spirit of compromise that we reached in the 2018
    Farm Bill, which dealt with a lot of these issues already. But
    here we are again. The President didn't get his way, and he is
    just continuing to just go after the most vulnerable. Please
    know that I am extremely disappointed, as many people are.
        But with that, let me move on to other issues. Earlier, one
    of my colleagues mentioned H.R. 5038, the Farm Workforce
    Modernization Act, which is a bipartisan product that lends
    itself to a lot of potential. I know you mentioned you were
    aware of it, but I am just wondering, what is the
    Administration, what are we doing to move that forward if it is
    such a reasonably decent piece of legislation, and bipartisan?
        Secretary Perdue. Can you mention the program again? Which
    program?
        Mr. Carbajal. Oh, no, that was the legislation is the
    second one I am speaking about. The first one was SNAP.
        Secretary Perdue. Yes.
        Mr. Carbajal. But the bill that passed the House in a
    bipartisan fashion, the Farm Workforce Modernization Act.
        Secretary Perdue. Certainly. Labor is a big issue and we
    have been visiting with the other House here and the Senate to
    talk about the provisions there that could be included in that,
    as the way any legislation passes in that regard. It is very
    needed. We need a legal, reliable workforce, as I indicated
    earlier. We need in this country to differentiate between
    immigration, which is one thing, and a legal, reliable,
    temporary workforce in agriculture.
        Mr. Carbajal. Absolutely, and that is what that legislation
    would do. I would hope that the Administration is working with
    our friends in the Senate and trying to get them to really try
    to find that compromise so we can move forward with this
    legislation.
        Second, specialty crops grown on the Central Coast, which
    is in California in my district, are important to our local
    economy. These high value crops such as wine grapes and citrus
    are vulnerable to pests and diseases, and USDA and the State of
    California have historically been strong partners in protecting
    these crops. That is why, again, I was disappointed to see the
    proposed cuts to the critical APHIS Program in the Fiscal Year
    2021 President's budget request, including an $8.9 million in
    reduction in spending to combat specialty crop pests.
        Just last month, APHIS and CDFA expanded the quarantine
    zone for citrus greening in my state. We have seen the impact
    this disease can have on states like Florida, yet the President
    did not ask for additional resources to fight this disease in
    his budget. Additionally, the President's budget requests
    propose reducing spending on pests, such as the glassy wing
    sharpshooter, European grapevine moth, and the light brown
    apple moth, all of which threaten Santa Barbara County and San
    Luis Obispo County agriculture production, which are the
    largest economic drivers in my district.
        How would these proposed reductions in spending impact
    USDA's ability to protect California's crop farmers from
    devastating pests and diseases?
        Secretary Perdue. Well, USDA and APHIS particularly
    understand the potential for pest destruction of industries.
    You mentioned the citrus industry and others, and I can assure
    you that they are using any money that is appropriated to them
    in order to protect the crops in your area, because across the
    country we have other issues in Pennsylvania with the lantern
    fly and all those issues that are continued pests coming in,
    and we will do the very best we can.
        Mr. Carbajal. Thank you, and looping back to my initial
    question on SNAP, is California listed on the waiver list that
    you mentioned earlier?
        Secretary Perdue. Let me see, there are several waivers in
    California. Yes, sir, there are 17 labor market areas waived in
    California.
        Mr. Carbajal. Are any of those San Luis Obispo and Santa
    Barbara County?
        Secretary Perdue. I think so.
        Mr. Carbajal. Is that a think so or a yes?
        Secretary Perdue. I can't say for sure. I believe that you
    are listed on part of the area. I don't know what those 17
    areas are specifically, but we have 17 labor market areas in
    California that waivers are issued.
        Mr. Carbajal. Great. If we could loop back later on, can I
    get that? That would be great.
        Secretary Perdue. We will get that for you.
        [The information referred to is located on p. 91.]
        Mr. Carbajal. Thank you, Secretary Perdue.
        Mr. Chair, I yield back.
        The Chairman. I thank the gentleman.
        The gentleman from Kansas, Mr. Marshall.
        Mr. Marshall. Thank you, Mr. Chairman, and let me also add
    my welcome, Mr. Secretary, for being here.
        I can start by spending my 5 minutes saying thanks for so
    many things for my producers back home. Maybe just start off
    with the speed and efficiency your Department carried out the
    MFP payments. You asked your workers to do more with less over
    the past several years, so thank you for your help there. A
    special thanks for your continued leadership to support the
    ethanol and biodiesel industry as well. This is important not
    only to agriculture, but also the rural communities. In so many
    of these communities, the same folks that are working in that
    ethanol, biofuels industry are the same folks that are leading
    the Rotary clubs, leading United Way fundraising, so that it
    means so much more than just the jobs there at those plants.
    So, thank you.
        In your comments, you mentioned the higher blends
    infrastructure, a city program that provides over $100 million
    in grants to better enable market adaptation for high blends of
    ethanol and biodiesel by investing in infrastructure, and we
    look forward to just what your vision looks like with that, and
    maybe you could briefly just share what your vision is, going
    forward, with some of those plans?
        Secretary Perdue. I think our effort would be to make E15
    kind of the law of the land regarding that. That is a 50
    percent increase in demand of a sound environmentally healthy
    and safe fuel that would be utilized, and that is why the
    infrastructure program is there, to help build out the
    consumers' opportunity to purchase this. We think with a better
    environmental footprint and less cost, then consumers will
    rapidly adopt that if they have access to it.
        Mr. Marshall. Sounds great. So, thanks for your efforts,
    and we look forward to working with you on that.
        Next, if I could talk a little bit about one of my favorite
    subjects, NBAF, the National Bio Agro Defense Facility located
    in beautiful Manhattan, Kansas, home of Kansas State
    University, and just thanks so much for your personal interest
    in touring that facility with me. As you know, that I am
    working with our senior Senator, the tight end coach also for
    the Kansas State Fighting Wildcats, Chairman Pat Roberts. And
    he and I are working on legislation that would codify the
    mission and transfer the facility to USDA. How would you
    envision future partnerships on research with other Federal
    agencies shaping up at the facility?
        Secretary Perdue. Congressman, I hope you feel as I do. I
    believe that transition is going very well from DHS. While that
    facility was initially put under Department of Homeland
    Security, it really fits more with our scientists and
    protections there that we are working at Plum Island to do many
    of these very dangerous types of things with dangerous
    diseases. We think the interagency process is going well, the
    relationship that was described and outlined to you and your
    Kansas colleagues over the transition of who does what. We
    think it is going very well. I hope you found that to be the
    case.
        Mr. Marshall. Absolutely, and I was just there recently in
    the past month meeting more and more of the professors, the
    researchers, people moving from Plum Island, finding how
    welcoming Manhattan, Kansas is. I agree it is going well.
        Given your response, I would also like to get your thoughts
    on codifying those relationships through legislation here in
    Congress.
        Secretary Perdue. Again, while we will implement that, I
    think I will just leave that up to the determination of
    Congress. If you think those relationships and responsibilities
    need to be codified, then I certainly would have no objection
    to that.
        Mr. Marshall. Okay, thank you, and I have time for one more
    question here.
        I would like to talk about beef for a second. I am getting
    a few phone calls and concerns back home. Under the Federal
    Meat Inspection Act and corresponding FSIS regulation, no meat
    product label may bear any false or misleading statement of
    origin or quality. However, it is my understanding that current
    FSIS policy allows imported beef products to be generically
    labeled as products of the USA, as long as these products
    undergo minimal processing or repackaging in the USDA FSIS
    inspected facilities.
        Mr. Secretary, do you agree that current policy has the
    potential to mislead consumers, and if so, how do you intend to
    address this issue in a way that does not violate current
    agreements with our North American trading partners?
        Secretary Perdue. I would agree with that, and certainly,
    you are aware of the overall COOL dispute that was negotiated
    and litigated at WTO. We have to be very careful. We are under
    consideration right now of how we can give transparency and
    information to the consumer that doesn't violate that, and we
    think there is a middle ground that we think is an appropriate
    label that looks like slaughtered and processed in the United
    States. I don't think meat that just comes in and maybe just
    cut up and packaged from somewhere else ought to be product of
    the U.S. I think that is another definition. We do feel like we
    would probably be treading on very difficult ground if we, as
    some people in the cattle industry want born, slaughtered, and
    processed. We think we would be, again, taken back to WTO
    court. And the problem is, they have that billion-dollar
    judgment hanging over us that has not been suspended, and if we
    did that, we would be vulnerable to that.
        Mr. Marshall. Mr. Chairman, could I have 30 more seconds?
        Mr. Secretary, at the end of the day, this issue is about
    truth in labeling, and I am pleased to hear that this is
    something USDA is working to address. However, I am concerned
    against any reforms that would ultimately preserve this or any
    other minimally informative origin labeling claim. There is a
    growing desire from consumers for more accurate information
    about the foods they purchase, and I can assure there is broad
    bipartisan support here on Capitol Hill for USDA to update
    these regulations in a meaningful way.
        Secretary Perdue. Thank you.
        Mr. Marshall. Thank you, Mr. Secretary. Thank you, Mr.
    Chairman. I yield back.
        The Chairman. I thank the gentleman.
        The gentleman from Florida, Mr. Lawson.
        Mr. Lawson. Thank you, Mr. Secretary, one of the things I
    wanted to respond to: there was some question about the
    scholarship program for HBCUs, and my dean is here from Florida
    A&M University. Dr. Taylor, will you stand up there and let him
    see you? And we discussed this yesterday, they are very, very
    pleased with the way things are going, in order to provide a
    scholarship, and also stated that they are recruiting high
    quality students for this program, which is going to be a very,
    very successful university. The next time you are in
    Tallahassee, I am going to make sure you get some of the best
    peach cobbler that we have there.
        Secretary Perdue. Again.
        Mr. Lawson. Okay. One of the things I wanted to comment on
    is USDA hemp total testing, the requirement to test for three
    percent THC, making it difficult for new hemp crops to pass the
    test. States have to follow up with USDA rules. It is a big
    problem nationally, and I am sure that you all are aware of it.
    Are they going to try to fix some of this? Florida growers will
    be able to submit an application for the cultivation permit
    within 20 days. The Florida Department of Agriculture is
    expecting 3,000 applications. There could be a big business in
    Florida, but testing requirement is making it a little
    challenging.
        Secretary Perdue. Well, it is no doubt that, while there
    has been some relaxation recently, I am not sure if your
    comments reflect what we have done on the lab testing in the
    last few days. This interim final rule, we didn't get it nailed
    right in the bulls-eye, and we have tried to make some
    corrections there, and OMB has allowed us to do that. Frankly,
    the testing, and the limitations, had a lot of impact from DEA
    and interagency, and they were not excited about the crop as a
    whole anyway, and we had some pretty serious constraints, so we
    are trying to address the lab issue, which was a real
    limitation.
        Mr. Lawson. Okay. Thank you. In 2019, the Disaster
    Supplemental package, there was established a historic timber
    block grant program that was advocated here in a bipartisan
    manner by $380.9 million set aside for Florida. The U.S.
    currently is at a standstill with states, agencies about
    acreage payment to timber producers. Mr. Secretary, my first
    question is simply does USDA have an issue with state agencies
    using the full amount of block grants funds to advocate for
    them so that they can provide adequate acreage payment to the
    timber producers?
        Secretary Perdue. This was, again, the balance, Mr. Lawson,
    in where we are trying to limit the larger landowners. We did
    that in citrus, as you know. It worked very well there. I think
    we are really close to a negotiation agreement with Florida
    over that. They wanted, initially 10,000 acres, then 5,000
    acres, which would be very large payments that we didn't feel
    like would represent the will of Congress in that disaster
    block grant.
        Mr. Lawson. Right. And last, what benefit does returning
    useful block grant funds serve for struggling farmers because
    of the acreage cap, as you talked about? Where would the rest
    of the money go if they return that money?
        Secretary Perdue. Comes back to the Treasury.
        Mr. Lawson. Okay. All right. I look forward to working with
    Department and the state officials to make sure that the
    farmers are receiving their critical disaster assistant funds
    stemming from Michael.
        Secretary Perdue. If I may, in this time allowed, give the
    difficulty there. These are estimates. These damages are
    estimates there. They are not registrated, they are estimates
    there, and the challenge is we estimate, and give that amount
    that is estimated. And if it doesn't live up to that, based on
    other things, there has been the desire to think of the money
    being granted to be able to do whatever they want to with. Our
    position, USDA, is to meet the need of the disaster, but then
    if the estimate doesn't reach what was estimated, the need
    doesn't reach what was estimated, then the money should be
    returned. That is where the real challenge comes in.
        Mr. Lawson. Okay, thank you. At the conclusion of my time,
    about to run out, I am sure my dean would like to say hello to
    you, and let him know how things are going.
        Secretary Perdue. I will do that, I want to hear how his
    students are doing.
        Mr. Lawson. All right. That is great. Thank you. I yield
    back, Mr. Chairman.
        The Chairman. I thank the gentleman from Florida. I now
    yield 5 minutes to my good friend, Mr. Dunn from Florida.
        Mr. Dunn. Thank you very much, Mr. Chairman. Secretary
    Perdue, I want to thank you for providing the agriculture
    community with the certainty of your updated regulatory
    approach to the gene edited crops. Under your leadership, USDA
    was the very first to implement President Trump's Executive
    Order on a regulatory framework for agricultural biotech
    products. You have set the bar for the way we ought to regulate
    these innovative tools, and I hope that the FDA and EPA will
    follow your lead. Given what is at stake, can you comment on
    the regulatory burdens that still hurt farmers, foresters, and
    ranchers, and where can we help you, especially as it regards
    biotech?
        Secretary Perdue. The good news is, and what I have seen
    is, Secretary Bernhardt at Interior has Fish and Wildlife
    basing their Biological Opinions on sound science. We still
    have some challenges at NMFS that we would love to see the same
    set of data being adopted there, where we would make a similar
    type of assessment, rather than using different facts in that
    way, and EPA has been very helpful in that way. So those
    interagency agreements are working well, if we can continue
    that. The animal gene editing is an issue we still have to
    resolve.
        Mr. Dunn. The FDA, you mentioned earlier you are still
    having negotiations with them about what constitutes----
        Secretary Perdue. We are still in the process of
    determining how. We have no reason to want to regulate gene
    editing in all animals, but we think the food animals, where
    the USDA has control over the protein source of America, makes
    sense.
        Mr. Dunn. I agree with you entirely, thank you, Mr.
    Secretary. I know you hear a lot about Hurricane Michael, you
    can hear one more thing? Our FSA office has struggled to meet
    the demand after the hurricane, and I wonder what we can do to
    improve the staffing shortages caused by disaster-related
    claims. And you and I actually had a discussion a while back
    about a rapid response disaster team. Have you gotten any
    closer to that?
        Secretary Perdue. Once again, I answered a question earlier
    about the frustrating nature, in a 3\1/2\ percent unemployment
    rate, of onboarding people into a Federal job. I never would
    have thought we would have that kind of difficulty. Some of the
    permissions we have been given over local hiring authority, or
    really direct hiring authority, is helpful because we haven't
    found people who want to relocate. They can apply from other
    states, and not want to relocate when you offer them a job.
        Mr. Dunn. Well, hopefully we can get them a team that comes
    in for a few months and shores up the----
        Secretary Perdue. Yes, on the jump teams that way,
    certainly, from hurricanes and disasters.
        Mr. Dunn. Yes.
        Secretary Perdue. We try to deploy those kind of teams on a
    temporary basis.
        Mr. Dunn. Yes, that would be outstanding, and it would
    really help us a lot. USDA is still in discussion with the
    State of Florida about the block grant program. My good friend
    Representative Lawson mentioned that as well, and you did a
    pretty good job answering that, where that is, so keep the
    pressure up on them. We really want to help out, nobody has
    ever seen this much timber on the ground, and it is a threat to
    us now in terms of fires and disease.
        Secretary Perdue. We are doing that, and we are just trying
    to be reasonable, as far as the balance of the acreage cap, and
    how we did that. We had a very successful time in citrus. I
    thought that worked well. Florida did a good job, and we are
    going to get there soon. I think talks are developing very
    well.
        Mr. Dunn. I want to take the opportunity to thank you, and
    thank your staff, by the way, who has been very helpful, very
    easy to work with. I want to put it on the record that your
    help in making these programs occur, make them a reality. It is
    just been critical to the recovery in my district, and I am
    sure also Representative Lawson's. We want to continue to work
    with you on these projects, and we want to get a long-term fix
    for those, and we can't say thank you enough for all your
    efforts on our behalf. Mr. Secretary, thank you. I yield back.
        Mr. Panetta [presiding.] Thank you, Mr. Dunn. I now yield
    myself 5 minutes, not because I am in the chair, but because it
    is actually the order, Mr. Secretary, thank you for being here,
    as always. You never cease to amaze me how you continue to
    continually provide thorough answers to anything that you are
    asked, so I always appreciate that. And thank you for your
    visit to the Central Coast as well, coming out to my district
    and holding a town hall in my very blue district, so I
    appreciate that, your willingness to stand up there and give
    straightforward answers, and so I hope you do that today too
    with my question.
        I am going to start off also with something that I don't
    normally do, and that is quoting our President, President
    Trump. Last year, at the Farm Bureau, he was talking about the
    current labor crisis, and he said, ``You need people to help
    you with farms, and I am not going to rule that out. I am going
    to make that easier for them to come in and to work the farms.
    You have had some people for 20, 25 years, they are incredible.
    Then they go home, and they can't get back in. That is not
    going to happen.'' This is what he said, and he got one of the
    biggest ovations at that Farm Bureau meeting, just because of
    that quote.
        Now, obviously, you know where I am at on the legislation
    that we put forward and passed out of the House on a bipartisan
    basis, H.R. 5038, the Farm Workforce Modernization Act, a bill
    that protects our existing farm workforce, and promotes an
    existing agricultural workforce. And earlier today you
    mentioned the AEWR, the Adverse Effect Wage Rate. Now, this
    bill, as you know, basically freezes that. Now, you were
    saying, I think you know that it would go up six percent in
    2020. I have another list here, in Georgia it is going to go up
    5.2 percent. In Illinois it is going to up 9.5 percent.
    Kentucky it is 6.6 percent. Minnesota, 6.4, Ohio, 9.5 percent
    the AEWR's going up. This bill would freeze it for the first
    year, and then in years 2 through 9 it would put a cap on it at
    3.25 percent, and also put a floor at 1.5 percent. Mr.
    Secretary, don't you think that having a cap on the AEWR will
    benefit people who deal with the H-2A process?
        Secretary Perdue. A cap would help, but we need to look at
    the adverse wage rate in a different kind of way. What people
    are telling me, even with availability now, by the all-in cost
    of transportation and other things, which don't have to happen
    in H-2B, the affordability issue is outside. We are seeing
    producers cut back on production all across the country. We
    have examples in South Carolina, we have examples in Colorado,
    and sweet corn, and others, or in California as well.
        Mr. Panetta Mr. Secretary, how would you feel about getting
    rid of the AEWR?
        Secretary Perdue. We could do a more flexible AEWR that
    looked toward the economy, generally, in that way. The original
    intent, as I understand, was not to exploit the foreign
    workers. We don't want to do that.
        Mr. Panetta. Correct.
        Secretary Perdue. That is not happening now. And also, we
    don't want to displace domestic workers. That is not happening,
    because we don't have them out there.
        Mr. Panetta. Understood.
        Secretary Perdue. We need to re-look at that in that way,
    and I would be very supportive.
        Mr. Panetta. And you know that basically, in year 10, under
    the proposed legislation, legislation that passed the House, we
    would have a study, and the potential to get rid of it, or re-
    look at the AEWR? You understand that?
        Secretary Perdue. That would be a good thing.
        Mr. Panetta. Understood. Now, also, you talked about
    conflating the people who are here, as well as the H-2A
    process. Well, as President Trump said, there are people in my
    community, especially on the Central Coast of California, the
    salad bowl of the world, that have been here for 20 to 25
    years, that have contributed so much. Not just to our economy,
    not just to our agriculture, but to our community. I mean, they
    really are the culture of who we are on the Central Coast. And
    so I do believe that there needs to be a way to make sure that
    there is some way to protect those people. Doesn't mean you
    give them citizenship, but there has a way for them to earn it,
    and I believe that this bill provides that. Are you familiar
    with this way for those types of people, who have contributed
    so much to our agriculture, to earn the opportunity to stay
    here?
        Secretary Perdue. I am familiar with those provisions, yes.
        Mr. Panetta. Okay. And you said something recently, that
    members of the White House leadership team would oppose the
    Farm Workforce Modernization Act. Is that correct?
        Secretary Perdue. I think yes.
        Mr. Panetta. And who would be those people?
        Secretary Perdue. I think the Administration, the White
    House in general.
        Mr. Panetta. Anybody in specific? I know you have had Ms.
    Boswell, who I appreciated, who's sitting behind you. She's
    done a very good job communicating with our office. I know she
    was sent to the White House. Would she have an idea of who
    would these people--who these people would be?
        Secretary Perdue. I think maybe it would be better for you
    to ask them. I am sure they would be willing to submit the--to
    your questions.
        Mr. Panetta. As always, Mr. Secretary, I look forward to
    working with anybody, anybody, who will help our ag labor
    situation.
        Secretary Perdue. And I appreciate it. It is really our
    number one and number two issue.
        Mr. Panetta. Agreed. Thank you, Mr. Secretary, I appreciate
    that.
        Secretary Perdue. Thank you.
        Mr. Panetta. I yield back my time, and I would give 5
    minutes to Mr. Johnson, from South Dakota.
        Mr. Johnson. Thank you, Mr. Chairman. Mr. Secretary, thanks
    for being here today. We have had some discussion today about
    labeling, with regard to protein beef specifically, and I want
    to continue on that line of discussion, if that is all right.
    Of course, you get it. Folks in cattle country have some
    discomfort with the FSIS label of Product of the USA. And there
    is some comfort level on a lot of the AMS quality claims, and
    of some of these verified programs, like Certified Angus Beef.
    I am not sure there has that same sense of accuracy and
    validity with regard to the Product of the USA.
        Now, you have told us that you have an idea about how to
    proceed. I want to make sure I heard that right. And then if
    you have any idea about a timeline, or what the way forward
    might look like, I would be interested in that.
        Secretary Perdue. Yes, I think we are in a serious
    discussion. This is something we have been talking about for a
    number, as we hear the concerns, obviously, as you know, from
    cattle country. They don't quite understand why we can't just
    go back to COOL, and you all do, but it is a very politically
    populist type of thing that is not going to happen unless we
    want to do a billion-dollar litigation damage with Mexico and
    Canada. We are trying to thread the needle, honestly, with
    transparency so the consumer can know what they get, while also
    helping the producers to feel like they are getting value for
    cattle that have been grown and processed here.
        Mr. Johnson. If you have something that wasn't fully a
    product of the USA, as you look to thread that needle, what
    would be the new label that----
        Secretary Perdue. The choice--the choices--excuse me for
    interrupting. I think the choices the industry would love to
    have born, slaughtered, and processed in the United States.
    That, we believe, would violate the WTO suspension agreement.
    We think there has to be a middle ground of slaughtered and
    processed here, which is a different distinction than just
    processed in the United States. As it currently is, imported
    meat could come in, and you could cut it up and package it.
    That means processed in the United States. But slaughtered and
    processed means that live animal is here, and it was
    slaughtered and processed here in the United States. I think
    that is a better deal.
        Mr. Johnson. And I agree that the consumer deserves some of
    this additional information, and what you are talking about
    really does provide the consumer with a better insight into
    what is going on with that particular beef product.
        Secretary Perdue. And those would be voluntary labels,
    also.
        Mr. Johnson. Okay. Moving to the Brazil issue, there has
    been a fair amount of, in shoregrass country, I am not sure
    people understand exactly what is happening with allowing
    Brazil to import beef into the United States. Can you talk to
    me a little bit about what processes are we putting into place
    to make sure that the American consumer can have confidence
    that Brazil has it right? Because, as you know, Mr. Secretary,
    there have been a number of times in the past when Brazil has
    not had it right.
        Secretary Perdue. And that really should give comfort,
    Congressman, that we have suspended them because they didn't
    get it right. They have had difficulty in fraud in their
    inspection system, and when we detected that on inbound
    inspections, we suspended them. Suspended them for over 2
    years. But in countries where we have trade agreements there,
    aside from just outright protectionism, we have to have
    equivalent safety standards.
        That is what FSIS does. They go down and do audits of their
    food safety inspection system to make sure that they believe it
    is equivalent to U.S. systems, and then, as a safeguard beyond
    that, we also have a stepped up inspection. Not an audit, but
    an inspection of the product coming in to make sure they are
    continuing to comply.
        Mr. Johnson. And do we have a sense of how long that
    heightened inspection regime will be in place?
        Secretary Perdue. Not necessarily. It will be dynamic, as
    we see continued compliance over a period of months or years.
    You probably could see some relaxation to see that they are
    continuing to comply.
        Mr. Johnson. I would close with just a couple of thank
    yous. I mean, you did work with a number of us to move the
    cover crop prevent plant harvest date last year during a true
    emergency situation. Of course, we don't know exactly what the
    weather in 2020 is going to look like, but if we get another
    terrible situation, hopefully there will be an open mind at
    USDA about similar flexibility for producers.
        Finally, I am hearing increasingly from school nutrition
    experts that they really feel like they have a partner at USDA
    to try to get it right. I know you have an open rulemaking. I
    don't expect you to comment at length, but thank you for your
    work, sir.
        Secretary Perdue. We hear the same thing, where the trash
    can's not quite as fat as it once was.
        Mr. Panetta. Thank you, Mr. Johnson. I now yield 5 minutes
    to Mr. McGovern from Massachusetts.
        Mr. McGovern. Thank you very much, and thank you, Mr.
    Secretary, for being here. I have some questions on SNAP. I
    remember a time when you came before this Committee when you
    first became Secretary that I thought we were in sync on the
    SNAP Program. I asked you, when you became Secretary, I wanted
    some assurances that you were a strong defender of the program,
    and I asked your views of the program because I was concerned
    about some of the rhetoric coming out of the Administration.
    And you responded to me, and I quote, ``But as far as I am
    concerned, we have no proposed changes. You don't try to fix
    things that aren't broken.'' That is your quote.
        And then the Congress passed a farm bill that rejected
    proposals that would throw millions of people off the benefit.
    And then the Administration, in defiance of Congress, goes
    forward with some proposals that would adversely impact very
    vulnerable people. And the first proposal dealt with able-
    bodied adults without dependents, ABAWDs, the proposal that you
    proposed last year. You appeared before this Committee, and I
    asked you if USDA had any detailed data on this population,
    because I told you that we were hearing from people that this
    is a very complicated population. It included returning
    veterans, it included young kids just graduating out of foster
    care. And you said you did, and you would get back to us, and
    USDA did get back to us.
        And what I received from USDA was that USDA only knows
    three things about this population, their age, their race, and
    their citizenship status. That is it. I asked if the group
    included veterans, they didn't know. I asked if the group
    included young people who had recently aged out of the foster
    care system, they didn't know. I asked if this group included
    people who were recently released from prison, they had no
    idea. I heard your assurances to Ms. Adams that you are
    granting waivers, but the criteria is much more strict, and by
    USDA's own estimation, over 700,000 people will lose their
    benefit. Now, you add that to your proposed change with regard
    to categorical eligibility, essentially getting rid of it, and
    the other changes you have, there are another 3.1 or 2 million
    people, by USDA's own numbers, that will lose their benefit.
        Now, in your testimony here today you said that the USDA
    serves out our motto, ``Do right, feed everyone''. Well, when I
    add all this up, by USDA's own numbers, close to four million
    people are going to be thrown off this benefit. Four million
    poor people who get a SNAP benefit that is on average of about
    $1.40 per person per meal. Where are they going to get their
    food? How are they going to deal with this? And this ABAWD
    population in particular, again, is a very complicated
    population. Talk to faith-based groups, talk to food banks,
    talk to social service agencies. They will tell you how
    complicated this is, and yet you are making proposed rules
    changes, and USDA has no data on who is actually going to be
    impacted. I guess the question is how can you do this?
        Secretary Perdue. Mr. McGovern, we are not allowed to
    collect that information that you talked about, the various
    segments there. The state implements these rules, and we have
    no way to collect that information.
        Mr. McGovern. Well, with respect to not knowing who this
    population is, and then to cut them off when we have a lot of
    data from states, and from other organizations that deal with
    these people, who they are, returning veterans who are having
    trouble re-integrating into our workforce, people who live in
    rural areas who have no access to transportation, the closest
    workforce training center may be 20 miles away, who don't have
    access to a job, I mean, when those people lose their benefit,
    they lose their food benefit. How making somebody hungry is
    going to make them more likely to get a job is beyond me, and
    that is before we get into the other rules changes.
        Again, four million people, by USDA's own estimation, are
    going to lose their food benefit. I think that is shameful. I
    don't know how that is consistent with the motto: ``Do right,
    feed everyone.'' And I am going to tell you, we are fighting
    you in court, and we are going to do everything we can to block
    the implementation of this. I hope that we will get through
    this year, and then come next year we have a new set of people
    running our agencies who actually would be offended by throwing
    four million people off their benefit. I yield back.
        Mr. Panetta. Thank----
        Secretary Perdue. I would love the opportunity to have to
    respond, but it looks like time is up.
        Mr. McGovern. I am happy to sit here and listen to the
    response, if the chair wants to let you.
        Mr. Panetta. Please, Mr. Secretary.
        Secretary Perdue. Mr. McGovern, in 2000 we had 17 million
    people on food stamps. I don't know where all those poor people
    were you are talking about there. That is just a few short
    years ago. And during the recession, when our unemployment went
    up, we had 44 million people on food stamps. Unemployment, in
    the longest economic boom we have seen here, unemployment at
    3.5 percent, all I am doing is implementing the law that was
    passed into this year that says the Secretary may waive the
    application of the work requirement to any group of individuals
    in a state if the Secretary makes the determination that the
    area in which the individual resides. You know the law says----
        Mr. McGovern. I do.
        Secretary Perdue.--120 days if you are an able-bodied adult
    without dependents.
        Mr. McGovern. Right. And, Mr. Secretary, you are hurting
    people.
        Mr. Panetta. Thank you, Mr. Secretary. Thank you, Mr.
    McGovern. I yield 5 minutes to the co-chair of the Ag Research
    Caucus, Mr. Davis from Illinois.
        Mr. Davis. Thank you, Mr. Chairman, and, Mr. Secretary,
    thank you again for being here. Ag research ultimately plays a
    major role in our nation's economic prosperity, national
    security, and public health. With the current crisis that we
    are facing right now with the coronavirus, and the potential
    link to an animal source, how can we help the Department be
    better equipped to combat not only this strain, but future
    strains and diseases that can be transmitted from animals to
    humans, either through agricultural research, or other USDA
    programs that might help prevent future public health threats?
        Secretary Perdue. The budget has been mentioned several
    times here today. I will do an Appropriations hearing later,
    but if you look at the proposed budget this year, from a
    research perspective, you are going to see quite a bit of bump
    in that just to address the very issues that you mentioned.
        Mr. Davis. Well, thank you, Mr. Secretary. One of my
    biggest priorities since coming to Congress is in bolstering
    funding for ag research. I really appreciate working with you
    and your team on these ag research issues. I worked alongside
    my good friend, the acting Chair, Mr. Panetta, to co-chair the
    Ag Research Caucus, and we want to ensure that we are
    continuously increasing funding for AFRI programs. We hope to
    see appropriators, and I hope you can mention this during your
    testimony when you go see the ag appropriators, I hope we can
    also raise the money that is in AFRI, and I appreciate the
    President's request for increased funding for AFRI, but it is
    essential for us to move to the next level of research to fund
    the AGARDA Program, Agriculture Advanced Research and
    Development Authority. And I certainly hope that is something
    that we can work with your Department on to provide solutions
    in a high risk type of reward.
        Secretary Perdue. I think that fits right in, Congressman,
    with our new Ag Innovation Agenda that we have announced at the
    Ag Outlook Forum, and we would be happy to support that.
        Mr. Davis. Well, thank you. You actually got into my next
    statement was about the Ag Innovation Agenda. I appreciate it,
    we appreciate the work that you are doing. Thank you for
    sitting here, and thank you for letting me come back to get in
    front of Yoho to ask questions.
        Secretary Perdue. Thank you.
        Mr. Davis. I yield back, sir.
        Mr. Panetta. Thank you, Mr. Davis. I now yield 5 minutes to
    Ms. Torres Small from New Mexico.
        Ms. Torres Small. Thank you, Mr. Chairman, and thank you to
    the entire Agriculture Committee. It is an honor to get to join
    you on this Committee. And I am grateful to get to advocate and
    represent the 10,000 farms in New Mexico's 2nd Congressional
    District, famous for our dairy, our pecans, our pistachios, and
    certainly our chile peppers. Thank you so much, Secretary
    Perdue, for knowing that, and for all that you do for rural
    America.
        When I talk with farmers, one of the first things I hear
    about are labor shortages. And, Secretary Perdue, thank you for
    your commitment to this issue as well. The last time you
    testified before this Committee, you spoke about the access to
    legal and stable workforce so American-grown products will
    continue to feed our nation and the world. And just this
    morning, I appreciate your comments about working with Congress
    to help find a solution.
        The House passed H.R. 5038, the Farm Workforce
    Modernization Act with overwhelming bipartisan support, and I
    look forward to seeing our Senate colleagues engage on the
    subject. I strongly support a workable year-round visa system
    for our dairy farmers. And on that note, on the specialty crop
    side last year, you mentioned that you were working with
    Departments of Labor, Homeland Security, and State to make the
    application process for your training programs. When will the
    USDA application portal be ready?
        Secretary Perdue. The Department of Labor regulations are
    at OMB now. Hopefully they will be released very soon for
    comment, and we are looking forward to that, because a portal
    will be there. We have to have the rules there for the portal
    to be effective.
        Ms. Torres Small. Have they given you a ballpark date?
        Secretary Perdue. OMB?
        Ms. Torres Small. That is something you are eagerly
    awaiting?
        Secretary Perdue. We are waiting, right.
        Ms. Torres Small. Okay. That is very good to know, if we
    can help, so that would be the next near-term milestone for
    that. Do you have a----
        Secretary Perdue. We would hope this year.
        Ms. Torres Small. Okay. Thank you. What other specific
    steps is USDA taking to make it easier for farmers and ranchers
    to access the labor they need?
        Secretary Perdue. Again, on the website we try to give
    almost all the documents and the things that you will need in
    order to comply, so education is one thing. Kristi Boswell, as
    I mentioned, we deal one on one with producers coming in that
    have issues over visas and other things.
        I think the other exciting possibility is, both for Mexico
    and Central America, but Guatemala and other Central American
    countries, developing a pool of workers, almost like they do
    for Canada, a pre-certified group of people. And I know that
    the Secretary of Agriculture in Mexico is concerned about their
    poor peasant population in southeastern Mexico, so we would
    love to work with those states, and there has been a--Guatemala
    is already--we have already signed an agreement, and to help
    that we will facilitate the State Department visa moving
    forward.
        Ms. Torres Small. Thank you, Mr. Secretary. I also really
    appreciate your comments about trade, not aid, and I am pleased
    that we are making some strong advancements in that. I
    appreciate the discussion when it comes to the USMCA about
    Mexico, and how do we make sure they are not restricting the
    cheeses. I wanted to go into another piece of the dairy, which
    of course is Canada's agreement. What steps will USDA take to
    ensure Canada complies with the terms of the agreement and
    eliminates their Class VII pricing system?
        Secretary Perdue. Sure. We will keep an eye on this Class
    VII and make sure there has not a circumvention or violation of
    that. These agreements that Ambassador Lighthizer's writing,
    and USTR, are pretty legally contract enforceable type
    provisions, and I am encouraged by that.
        Ms. Torres Small. And one thing about those provisions is
    making sure not only they are eliminating this Class VII
    system, but they are not reconstituting a similar one. Anything
    to add there?
        Secretary Perdue. Yes. That is what I was mentioning with
    the circumvention of creating a loophole in that area. I think
    they are tight enough not to do that, and we will be watching
    to call their hand on it if they do.
        Ms. Torres Small. And please let us know if you see any
    challenges. Last, just briefly, I appreciate that you brought
    that map, the MFP 2 map, and I was wondering if you'd show it
    again? I do deeply appreciate making sure that we are providing
    support as we are affected by trade. I know that there are a
    lot of different crops that were covered in that. Other
    important products, one of which is dairy, supporting the dairy
    industry. New Mexico is top ten in the dairy industry, and it
    is a bright white there, so I look forward to working with you
    to make sure New Mexico gets the support it needs.
        Secretary Perdue. Get your share.
        Ms. Torres Small. Thank you.
        Secretary Perdue. Burn me up with that green chili.
        Ms. Torres Small. I yield the remainder of my time.
        Mr. Panetta. Thank you, Ms. Torres Small. I now yield 5
    minutes to the gentleman from Minnesota, Mr. Hagedorn.
        Mr. Hagedorn. Thank you, Mr. Chairman. Mr. Secretary, it is
    great to see you again. I want to thank you for traveling to
    our district in Minnesota to have a roundtable discussion in
    Mankato, and also to attend Farm Fest. We enjoyed you holding
    up our USMCA Now sign, and also for the other folks in the
    Administration who have helped at USDA and been on the ground
    in our district under Secretary Northey, was at the Albert's
    dairy farm in Dodge County, and then this weekend, Under
    Secretary Ibach will be at a hog farm, the Compart hog farm in
    Nicollet County, so we appreciate you being on the ground, and
    meeting the farmers, and getting to know what is on their minds
    continuously.
        Lots of politics today. You heard from people talking about
    trade, and had some criticisms, but I will tell you what I hear
    a lot, and that is it shouldn't have been left to this
    President to deal with China on trade. That should've happened
    a long time ago, where we had Presidents of both parties that
    kind of let things get to a point, and we appreciate the fact
    that he's taking it on. A lot of our farmers do. And the fact
    that we were able to pass the USMCA trade agreement to help
    build momentum for other deals, and we are seeing that now with
    phase 1 with China, hopefully we get to phase 2.
        But, there is something going on in China, as you know,
    this coronavirus, and it seems to be hampering perhaps our
    exports of pork, and turkey, and beef, and there seems to be a
    little backup there now, maybe as much as 11 percent, it says,
    for pork storage, and then 12 percent for poultry. Are you in
    any way dealing with what is going on, as far as the backup and
    the storage issue?
        Secretary Perdue. Well, dealing, we are trying to be aware
    with our eyes on the ground there. We see some easing of that.
    More people are getting back to work at the ports, and we see
    some of that backlog continue to be unloading now. Hopefully,
    we are over the worst of that, and can move forward.
        Mr. Hagedorn. Well, that is very good. Moving on to African
    Swine Fever, we have been talking about that quite a bit, and
    everybody wants to talk about coronavirus, and rightly so, but
    this African Swine Fever, as you know, presents quite a
    challenge to us, to make sure we keep that out of the country,
    and that we can even export more pork products. Recently we
    passed a bill that the Senate sent over. It was along the lines
    of one that I put in, to increase the number of inspectors at
    our points-of-entry, and have more of the beagle brigades,
    which are very effective in sniffing out that pork.
        Secretary Perdue. Right.
        Mr. Hagedorn. I always joke that they are so good we should
    take them down to the Appropriations Committee, try to drive
    down the deficit with those beagle brigades. But, when you look
    at what is going on, we appreciate the increase in the line
    item for swine health. That was very good. But you talked a
    little bit recently with our colleague from Kansas about the
    NBAF, I guess we would call it, the acronym. How does that fit
    in with what we are doing on African Swine Fever, and are you
    making some plans along those areas?
        Secretary Perdue. Well, obviously it is not operational yet
    completely, but it will be a huge part in all the dangerous
    global diseases that we face, African Swine Fever, and some we
    don't even know the names of yet that will happen. Research
    will be done, that'll be tested over the effects, and also
    research from how we can prevent that, regarding vaccines, and
    what the genome makeup is of that disease, and the viruses or
    whatever organism carries that disease. It will be a really
    great tool over some very serious types: foot-in-mouth, African
    Swine Fever, Ebola, those kind of things that have zoonotic
    potentials there at NBAF.
        Mr. Hagedorn. Do you expect that will go online 2022?
        Secretary Perdue. Probably 2022 to 2023.
        Mr. Hagedorn. Okay. Thank you. Last, just an observation, I
    appreciate what you are doing on the regulations with SNAP.
    That is an issue I have been working on since I served
    Congressman Strangeland, who was a Member of this Committee
    many, many years ago, and the concept of work for welfare for
    able-bodied people has always worked. And in this environment,
    where we have very low unemployment, we want everybody in the
    workforce. It is a compassionate thing, and if people are able-
    bodied, I think it is the right thing to do. I appreciate you
    tightening up the rules, and pushing that forward. It is going
    to help a lot of people.
        Mr. Panetta. Thank you, Mr. Hagedorn. I now recognize the
    gentleman from Florida--excuse me, the lady--Ms. Pingree.
        Secretary Perdue. The Chairman----
        Mr. Panetta. Recognize Ms. Pingree.
        Secretary Perdue. The Chairman would never forget about
    you.
        Mr. Panetta. No.
        Ms. Pingree. Almost. Well, Mr. Secretary, thank you so much
    for being with us today, and for putting in 3 long hours. The
    good news is we are about to vote, so eventually we are going
    to have to let you go. But I am really grateful I have had a
    chance to listen to a lot of the hearing, and I know you have
    tackled a whole range of questions, and given us a lot of
    thoughtful answers.
        I want to just talk a little bit about your sustainability
    initiative, part of the Agriculture Innovation Agenda. You set
    a goal of reducing greenhouse gas emissions from U.S.
    agriculture by 50 percent by 2050, so thank you for recognizing
    the importance of this, and the integral role farmers can play
    in climate conversations. I think that is critically important.
    I introduced a bill last week called H.R. 5861, the Agriculture
    Resilience Act, which I sort of see as a roadmap for a lot of
    the things that we need to do around sequestering carbon in
    soil, and we have a lot of overlap in your innovation agenda
    and my bill around improving data collection, identifying
    research gaps, enhancing carbon sequestration, so I am looking
    forward to working with you on that. I am interested in knowing
    what some of your next steps for moving forward on the
    innovation agenda is, and how we can be more helpful in
    Congress.
        Secretary Perdue. You mentioned one of those. I look
    forward to looking at your legislation as to how we can sync up
    there. A baseline measurement is one of those things. There was
    some effort made in 2010, and we did something initially there,
    and it just kind of got off the radar screen, so we would love
    to have a baseline of how we are moving. That scoreboard that
    we did at Ag Innovation Summit, if you are not keeping score,
    you are just practicing, you are not really serious about it.
    We wanted to develop metrics of sensor technology, and metrics
    over what percentage of carbon are we capturing through these
    practices, how can we do that, and that is where we plan to go.
        Ms. Pingree. That is great. That is critically important. I
    will just tell you I look forward to you guys looking through
    the bill and having a longer conversation with you about it.
    Some of the things in that bill you can do with existing
    authority, things like making composting a practice within EQIP
    or CSP. I hope we can find ways to work together as you are
    doing this, and if some of those things are favorable to you,
    and we don't have to go through legislation, that would be
    great.
        The one last thing I wanted to talk to you about, there has
    been so much interest in modernization of environmental
    services that farmers provide. I know we have talked about this
    before, but how are you working towards the USDA helping to
    foster some of those private-sector efforts? And I know,
    honestly, what you just said is sort of starting with a
    baseline is critically important, but I see a really serious
    role for USDA here in understanding how to monetize some of
    that.
        Secretary Perdue. I think what the Ag Outlook Forum talked
    about, a public-private partnership of synchronizing our public
    dollars and our private dollars, and USDA is an appropriate
    convener of where we are. We ought to be about asking the
    questions, and what we are doing is convening stakeholder
    groups and saying, what are the limitations? Let's imagine what
    can happen if this were solved, and put our researchers to
    work, but public and private, in doing that. That is kind of
    where we would like to head.
        Ms. Pingree. Yes, and I think that, again, there has to be
    a potential role for farmers to participate in carbon markets,
    and some of that has to do with, as you said, understanding
    what the baseline is, but also having a common set of
    measurements, because there is a lot of research going on at
    the university level and the private-sector. I know you are
    looking at it at the USDA; but, again, that is an important
    convening role for you to play.
        I am just really appreciative that in a time when it is
    hard to get everybody on the same page around what is going on
    with the climate, or what the appropriate role for farmers is
    in carbon sequestration, that you have come out and started
    talking about it, engaging farmers. One of the things I tried
    really hard to do in my bill was to look at how we treat
    farmers as our partners. It is all too often in this debate
    where people try to point the finger and say, ``It is all your
    fault,'' but the role that agriculture can play in sequestering
    carbon in the soil isn't very well understood. Even with the
    environmental sector people don't often understand how
    important that is, and how so many of the practices that we can
    continue to encourage at the USDA, like no-till, and cover
    crops, and increasing the organic matter in the soil.
        I am looking for a way to move forward on that to help
    people to understand the role, to engage farmers, and sort of
    what works best for them. I have written 180 pages in a bill on
    that, so it is very thorough and detailed about what we could
    do.
        Secretary Perdue. Good, we look forward to looking at that.
    You are exactly right, though. In the possibility of, really, a
    win-win situation, where you sequester carbon in the soil, and
    taking it out of the air, but also that is increasing soil
    health and productivity, so it is really a win-win situation.
        Ms. Pingree. Absolutely. Every farmer we have ever met with
    that we talked to who has taken some of these steps have seen
    better water retention, increased yields, all kinds of good
    things. I yield back, but thank you for putting in your time
    here. Thanks so much.
        Mr. Panetta. I thank the gentlelady from Maine. I now
    recognize the gentleman from Florida, Mr. Yoho.
        Mr. Yoho. Thank you, Mr. Chairman. Mr. Secretary, always
    great to see you, and I appreciate the job you are doing, the
    leadership that you and the Administration are doing. I stand
    100 percent behind you. A lot of talk about COVID-19, the
    coronavirus. As you know, we have dealt with that in veterinary
    medicine for decades, cattle, horses, dogs, and cats, and we
    have very effective vaccines for it. We have introduced a bill,
    it is a bipartisan bill with Kurt Schrader, the other
    veterinarian in Congress, H.R. 3771, the one health bill that
    coordinates the cooperation between USDA and HHS. As you well
    know, six out of ten human diseases show up first in animals,
    and so this is a way that we can study that, be prepared, and
    it is a perfect example of that is, number one, coronavirus.
    Lyme Disease, we saw that in veterinary medicine for a long
    time; and eventually, the human side picked up on that, and mad
    cow disease, BSE. We know these things are here in the animal
    world, and so the idea behind one health is to coordinate that
    effort so that we can identify these things before they become
    a pandemic. I just want people to know that is coming out.
        I was happy to hear your conversation about labor. As we
    know, our farmers face many uncertainties, whether it is
    commodity prices, weather factors, trade policies, and the
    availability of labor. I agree 100 percent with you that we
    should remove the labor issue for agriculture from immigration
    and concentrate on a guestworker program that doesn't prevent
    anybody from becoming a citizen, but it doesn't give them the
    pathway. We are introducing our bill today that I have talked
    to you about, I have talked to the Administration, and we have
    shared it with 70 Members of the House and the Senate. It is
    called H.R. 6083, the Labor Certainty for Food Security Act.
    The goal is to create a predictable, reliable, certain
    workforce for our producers, but give opportunity to our
    workers, and this is both H-2A, for the temporary, and it
    creates a year-round program. We get rid of AEWR, and we put in
    safeguards for that. We allow the flexibility of the workers to
    move around the country, and I sure hope you consider this,
    because this is a solution for our ag producers that it is so
    needed in that.
        It is been brought up about ASF, African Swine Fever. You
    are certainly aware of the outbreak, where it is estimate over
    500 million pigs have been lost in China. The virus is very
    hardy, surviving high and low temperatures, and it can survive
    the transport from China to here, and it can last in the
    fomite. Feed products, cardboard, things like that, haven't
    been thoroughly studied, and most of that stuff comes into our
    ports here in the United States. The beagles are a good tool,
    but I don't think they are scientifically as accurate as we
    need. I mean, I will take them now, every day, what I would
    like to ask you is do you feel that the USDA has enough funding
    for resources and technology to bolster increased inspection?
    Because we know how little the containers are inspected.
        Secretary Perdue. Yes, it is a needle in a haystack issue,
    and it is very anxious in that regard.
        Mr. Yoho. It is.
        Secretary Perdue. We do have a good working relationship
    with Customs and Border Protection. I have gone into borders
    and witnessed that. Obviously you all have authorized recently
    some more inspectors at the border. The problem is, is there
    ever enough, what is safe in that regard, and how do you
    determine that? That is a real challenge, but we are trying to
    do our best to determine what the risk is versus what the need
    is.
        Mr. Yoho. We know what the percentage is being inspected,
    and what the percentage is not. I don't want to bring that out
    right now, but I think that is something we all need to look at
    bolstering. And last, the USMCA was passed. All nations need
    trade, but it needs to be fair trade. As you know, my State of
    Florida, our vegetable producers have been crushed by the
    competition, primarily from Mexico, seasonality, or the
    seasonally competitive crops. My ask is, as we move forward,
    that close monitoring of the labor standards, environmental
    standards, subsidies coming from the Mexican Government, and a
    rapid and quick response from this Administration, USDA, USTR,
    that they respond rapidly. We have just seen an inverse of the
    production of blueberries, squash, green peppers, any row crop.
    It is a complete reversal from 5 to 10 years ago. And we are
    not playing on a level playing field, and I sure hope that we
    can have some fixes for our producers.
        And, just one last comment on the labor. We are either
    going to import our labor, or we are going to import our food,
    and we need to make sure that our policies are in place so that
    we can protect our farmers. And I yield back, and thank you for
    what you do.
        Mr. Panetta. Thank you, Mr. Yoho. Just to let you know, Mr.
    Secretary, votes have been called, but it looks like we have
    two more Members, we are just going to get through those two
    real quick, if that is okay. Thank you. I recognize the
    gentlewoman from Iowa, Mrs. Axne.
        Mrs. Axne. Well, thank you, Mr. Chairman, good to see you.
        Secretary Perdue. Thank you, ma'am. Yes.
        Mrs. Axne. As you know, I represent the southwest corner of
    the State of Iowa, and our rural counties are the backbone of
    agriculture in our state. A lot of our rural economy depends,
    of course, on how corn and soybean farmers are doing, and these
    folks have had a tough time over the last few years due to
    devastating weather, demand destruction caused by the abuse of
    small refinery exemptions and the EPA, and, of course, the
    Administration allowed this to happen, and the uncertainty of a
    long trade war. These issues have absolutely hurt Iowa very
    hard. Iowa farmers hold the highest level of debt in the
    nation. Forty-four percent say they are struggling to cover
    bills, and farm bankruptcy in the state is at a 10 year high.
    With all these issues, and the fact that a majority of Iowans
    are small or mid-sized farms, I was particularly disturbed when
    you suggested last fall that smaller farms aren't going to
    survive. As a matter of fact, you put it in America, the big
    get bigger, and the small go out.
        It is your job to keep that from happening, and we are here
    today to discuss the state of the rural economy, and with
    things as grim as they are, it is really discouraging for my
    constituents to hear from the Secretary of Agriculture that
    their best option may just be to sell their family farm. The
    last thing our folks need is additional stress and uncertainty,
    so I am hoping that your testimony today will provide some
    reassurance to my constituents. And I am very glad that we got
    USMCA signed into law, and I am thankful for your announcement
    of the Higher Blends Infrastructure Incentive Program, as well
    as the Department's work on the China phase 1 agreement.
    However, a lot of my folks have questions about whether the
    Chinese commitment for ag purchases is realistic.
        Iowa farmers are on the front line of this trade war, and
    have taken a lot of the hit for this. It is imperative that the
    agreement results in gains for Iowans. Last month USDA's own
    Chief Economist estimated that exports to China would only be
    $14 billion at the end of the third quarter, which is a heck of
    a long way from the $36\1/2\ billion goal for 2020 that was
    agreed to. My question, Mr. Secretary, is do you expect that
    China will be able to meet its commitments, and what
    commodities do you expect to benefit the most under the phase 1
    agreement?
        Secretary Perdue. We are expecting China to live up to
    their agreement. The underlying, under the radar, technical
    issues are being worked on fairly expeditiously. I think that
    leads to their ability to accomplish those hardline goals, but
    we are going to trust, but verify as we go along. And, looking
    on a week by week, month by month basis of where they are in
    that regard, there are unilaterally enforcement mechanisms to
    enforce that commitment, and money--and things they have agreed
    to, so we do. We think the WASDE report that you mentioned, it
    was stated in the preamble that it did not include the phase 1
    agreement in that effort. So the export numbers that you talked
    about we expect will grow.
        Mrs. Axne. Okay, great. And which commodities do you expect
    should receive the most benefit?
        Secretary Perdue. Well, I think all commodities, when the
    non-public part of the agreement, and the $40 to $50 billion of
    U.S. ag exports were not identified by sector purposely because
    the Chinese wanted the ability to come into the marketplace as
    fair buyers in that regard, so we think all sectors, or really
    a huge majority of that, of the agricultural sector, will
    benefit. Certainly your farmers in Iowa, from a corn, even
    ethanol perspective, DDGs, those kind of things we think will
    have a great potential of helping China achieve those numbers.
    Things that we have not sent over there recently, such as
    ethanol byproducts.
        Mrs. Axne. Okay. I am glad to hear you say DDGs, so I
    appreciate that. I would like--if you can give us any follow up
    on, as we move down the road, what we can expect to see for
    ethanol and DDG, I would be really----
        Secretary Perdue. Yes, these tracking documents will be
    public for--to be seen as how we are doing on those issues.
        Mrs. Axne. Okay. Moving on, I just wanted to ask you real
    quick here as well, how is the USDA estimating potential
    purchases in the commodity market forecast reports, and how are
    you making sure you aren't adding to the volatility in the
    commodity market?
        Secretary Perdue. Our NASS reports, you are referring to?
        Mrs. Axne. Yes.
        Secretary Perdue. That's consistent protocol, we mentioned
    earlier, when you were out, that the disturbing Crop Acreage
    Data Report that came about in the summer was because it was
    out of line. The NASS report was out of line with market
    expectations because of the wet spring that prevented
    plantings. As it turned out, Mrs. Axne, the NASS was right, and
    the market was wrong. It created a huge drop in price because
    the markets, and all the traders and estimators thought there
    was going to be less corn than there was. WASDE had much more.
    Farmers thought it was a conspiracy to drop down prices, but at
    the end of the year, the NASS report was much more consistent
    with where the production was than the other people in the
    private-sector.
        Mrs. Axne. Okay. Thank you so much.
        Secretary Perdue. Okay. And I wish you knew me better.
    Maybe we can get to know better, you will know that nobody
    fights harder for the American farmers, and the quote you took
    out of context. I would love the opportunity to talk to you
    about that.
        Mrs. Axne. Well, I would appreciate that. It is what you
    have said. If you want to set up a time so we can get to know
    each other better, I would----
        Secretary Perdue. It is what was quoted, but we can all be
    clipped in a way that is not accurate.
        Mr. Panetta. Thank you, Mr. Secretary.
        Mrs. Axne. Thank you.
        Mr. Panetta. I now recognize the gentlelady from Arizona
    for 5 minutes.
        Mrs. Kirkpatrick. Thank you, Mr. Chairman. Thank you, Mr.
    Secretary for being here.
        Secretary Perdue. Thank you for your patience.
        Mrs. Kirkpatrick. Yes. Contrary to the popular belief that
    Arizona is all desert, we have some beautiful forests, and we
    are coming up on our wildfire season. And so I want to just ask
    you quickly, we have seen an increase in temperatures, a
    decrease in moisture, and this has caused a rise in wildfires.
    And I am sure you are well aware of that, so I am going to get
    briefly to my question, which has to do with the wildfire
    funding fix. How will that fix help you better manage
    suppression efforts, and how do you expect the funds will help
    impact other aspects of Forest Service work?
        Secretary Perdue. Okay. Two ways. The fire funding fix
    allows us to take the appropriations that you give from forest
    management and do active forest management. That is the
    prevention phase of that. Then the other part of is that we can
    treat forest fires like we do other disasters, and spend the
    money expecting that to be replenished in that way, at that
    level, so it is really about bifurcation. But the most
    important thing is, due to the active forest management, to
    prevent the forest fires. We would much rather prevent them
    than suppress them.
        Mrs. Kirkpatrick. Yes, absolutely. We have seen some money
    going into thinning the forests, picking up the shrub----
        Secretary Perdue. Yes.
        Mrs. Kirkpatrick.--that certainly helps us manage better.
    Because they called votes, I am going to yield back the balance
    of my time, but again, thank you very much for being here.
        Secretary Perdue. Thank you.
        Mr. Panetta. Thank you, Mr. Secretary. Before we adjourn, I
    invite the Ranking Member to make any closing remarks he may
    have.
        Mr. Conaway. Well, a couple things. First off, Mr.
    Secretary, thank you again for the great job your team does.
    Great leadership from you, but executed by an awful lot of good
    folks over there. I also want to thank Bill Northey, and
    Richard Fordyce, and Kevin Norton for coming over yesterday and
    spending a long time with the full Committee, going over all
    these staffing issues, hirings, challenges, all the things that
    you have been harassed about this morning. They are doing a
    terrific job, professional job of addressing that. They
    understand the problems associated with the moves to Kansas
    City, and all the things going on, so thank you for their good
    work.
        I also want to quickly comment on the SNAP changes you are
    making. Throughout the farm bill negotiation with my colleagues
    in the Senate, they assured me over and over and over again, ad
    nauseum, that you had all the authority that you needed to do
    what you are doing with respect to the ABAWD rule, and broad-
    based categorical eligibility, and that the House-passed
    version did not need to be included in the conference report.
    My colleagues on this, Mr. McGovern is particularly passionate
    about this issue, but passion doesn't necessary create good
    policy, and good policy is that the rules in place from the
    1995 Act have said able-bodied adults under the age of 50 with
    no dependents should work, or train to work, 20 hours a week in
    order to stay on food stamps on an extended basis, and you have
    the authority to waive that particular rule in places where it
    makes sense, in the rural areas, or where there are no jobs.
    All of the folks that Mr. McGovern talked about have an ability
    to be waived.
        The rule also applies a 12 percent exemption, for every
    state to exempt 12 percent of their ABAWD population all the
    time, and so there is plenty of flexibility to address all
    those folks. And, again, passion doesn't make good policy. Your
    changes to the rules does make good policy. I wish we could
    have gotten them into the law that you are now operating under.
    Again, thank you, and your team especially, for all the hard
    work they do, and I yield back.
        Mr. Panetta. Thank you, Mr. Conaway. Mr. Secretary, once
    again, I really, truly appreciate every time you come to this
    Committee and demonstrate your thoughtful, and your
    knowledgeable answers to all of us here. It really means a lot
    to all of us on this Committee. On behalf of Chairman Peterson,
    thank you very much. I also want to say thank you for the
    accessibility not just of you, but your staff, and that we have
    been able to work with them, and how often they come up here
    and talk to us, so thank you very much.
        And also, just to let you know, and as you can tell, this
    is the first time I have ever chaired a committee meeting, but
    let you know what an honor it is that you were the witness for
    the first time that I have ever been in this position, and let
    you know that I will never forget this opportunity, but also
    let you know that the people of this country, and the people in
    agriculture, will not forget your service to them, and to this
    nation, so thank you very much.
        And at this time, 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 Committee on Agriculture is adjourned.
        [Whereupon, at 1:20 p.m., the Committee was adjourned.]
        [Material submitted for inclusion in the record follows:]
       Submitted Report by Hon. K. Michael Conaway, a Representative in
                              Congress from Texas

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

      Department of Agricultural          College Station, Texas 77843-2124
       Economics........................
      Texas AgriLife Research...........  Telephone: (979) 845-5913
      Texas AgriLife Extension Service..    Fax: (979) 845-3140
      Texas A&M University..............  http://www.afpc.tamu.edu D
                                                      @AFPCTAMU

    Agricultural and Food Policy Center, Texas A&M University
    March 2020
    Overview of Trade Aid and Its Impact on AFPC's Representative Farms

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

              Cover photo courtesy USDA.
               2020 by the Agricultural and Food
            Policy Center

    Briefing Paper 20-2

      Bart L. Fischer
      Joe L. Outlaw
      J. Marc Raulston
      Brian K. Herbst
    Executive Summary
        Shortly after taking office, President Trump launched
    investigations into the national security ramifications of steel and
    aluminum imports from a variety of countries and into the handling of
    intellectual property rights protection and enforcement by China. Both
    of these investigations resulted in tariffs being placed on imports
    from the implicated countries, including China. In response, these
    countries imposed their own retaliatory tariffs, with China ultimately
    imposing tariffs on more than 1,000 U.S. agricultural tariff lines.
        The U.S. farm economy was already going into the fifth year of
    recession when retaliatory tariffs were imposed by China and others.
    The Administration responded by authorizing trade aid packages for both
    the 2018 and 2019 crop years that included commodity purchases, trade
    promotion, and direct assistance to producers to help defray the costs
    of disrupted marketing. There is no denying that the aid package--
    particularly the Market Facilitation Program (MFP)--has had a
    significant impact on farm income in the United States. Across all of
    the Agricultural & Food Policy Center's (AFPC) 63 representative crop
    farms, MFP 1.0 (2018) and 2.0 (2019) protected $16.4 million in net
    worth over the 2018-2020 study period. Furthermore, under baseline
    conditions (i.e., no MFP), 35 of the 63 farms had a greater than 50%
    probability of negative ending cash at the end of 2020 (i.e., needing
    to borrow on operating notes to finance shortfalls). With MFP in place,
    that number was cut by 34.3% (23 farms facing significant threat of
    shortfall).
        Some have argued that MFP 2.0 was biased toward southern states.
    While there was significant variability in county payment rates for MFP
    2.0, most of that variability is easily explained by the underlying
    damage assessments and the distribution of planted acres in the
    respective counties. And, despite the fact that the highest county
    payment rates were predominantly in counties with cotton production,
    almost 70 percent of the assistance under MFP 2.0 went to midwestern
    states. While we find little validity to the argument of regional
    inequity, there certainly were disparities between neighboring
    counties. These dif[f]erences were particularly disruptive for
    producers of crops relatively more impacted by retaliatory tariffs who
    happened to produce in counties with lower payment rates.
        Finally, we find that MFP 1.0 and 2.0 have also had a greater than
    $41 billion impact on the broader rural economy.
    Introduction
        In April 2017, the U.S. Department of Commerce initiated
    investigations into steel and aluminum imports under Section 232 of the
    Trade Expansion Act of 1962. The Commerce Department found that steel
    and aluminum imports threatened to impair national security, and on
    March 23, 2018, President Trump announced that he concurred with the
    findings from the investigation and imposed tariffs on certain steel
    and aluminum imports from a number of different countries.
        In August 2017, the Office of the U.S. Trade Representative (USTR)
    launched an investigation into China's handling of intellectual
    property rights protection and enforcement. USTR found that China's
    practices were unreasonable and burdened U.S. commerce. In response, on
    July 6, 2018, President Trump imposed an initial series of 25% tariffs
    on $34 billion in imports from China. Since then, the United States has
    gone through four implemented/proposed tariff hikes under Section 301.
        In response to these actions, several countries imposed retaliatory
    tariffs--in many cases targeting agricultural products. While the
    retaliatory tariffs imposed by Canada and Mexico in response to the
    Section 232 investigation were lifted effective May 20, 2019, by the
    fall of 2019, China had retaliatory tariffs in place on over 1,000 U.S.
    agricultural tariff lines.
        With the retaliatory tariffs adding to an already precarious farm
    economy, on two separate occasions--for both the 2018 and 2019 crop
    years--President Trump stepped in to provide assistance for
    agricultural producers who were being negatively impacted by the trade
    dispute. While assistance also came in the form of commodity purchases
    and trade promotion, the vast majority was provided as direct
    assistance to producers via the Market Facilitation Program (MFP).
        This report provides an overview of the history of MFP, examines
    the regional distribution of support, analyzes the impact of MFP on
    AFPC's representative farms, and estimates the economic impact on the
    broader rural economy. The analysis is focused primarily on the non-
    specialty crops that were eligible for MFP, but select specialty crops
    and animal products were also eligible.
    Market Facilitation Program (MFP) Background
    MFP 1.0 (2018)
        On July 24, 2018, the U.S. Department of Agriculture (USDA)
    announced that up to $12 billion in aid would be made available to
    producers, with almost $10 billion being provided through MFP for the
    2018 crop year. According to USDA (2018a), the assistance was ``in
    response to trade damage from unjustified retaliation by foreign
    nations.''
        To determine the assistance levels provided to producers, USDA
    estimated gross trade damages caused by the retaliatory tariffs imposed
    by several countries in response to the Section 232 and 301
    investigations. While we now have the luxury of hindsight, those damage
    levels were determined before trade data was available (or before lower
    trade levels could be observed). USDA utilized standard estimation
    methods to determine damage rates; this paper takes those rates as
    given. USDA (2018b) published a detailed account of its method for
    estimating gross trade damages on September 13, 2018.

        Table 1. Comparing 2018 and 2019 Gross Trade Damage Rates by Crop
    ------------------------------------------------------------------------
      Non-specialty
          crops             MFP 1.0           MFP 2.0            Units
    ------------------------------------------------------------------------
               Hay                                $2.81              Tons
         Chickpeas                                $1.48               cwt
              Corn              $0.01             $0.14                bu
            Cotton              $0.06             $0.26                lb
       Dried Beans                                $8.22               cwt
                  Lentils                         $3.99               cwt
           Peanuts                                $0.01                lb
              Peas                                $0.85               cwt
              Rice                                $0.63               cwt
           Sorghum              $0.86             $1.69                bu
          Soybeans              $1.65             $2.05                bu
             Wheat              $0.14             $0.41                bu
    ------------------------------------------------------------------------

        Ultimately, MFP 1.0 paid on 2018 actual production of the MFP-
    eligible crops at the associated rates listed in Table 1. Payments were
    limited to $125,000 per person or legal entity, with separate limits
    for three different categories--non-specialty crops, specialty crops,
    and animal products--and an overall limit of $375,000 per applicant.
    MFP 1.0 was provided in two different tranches: the first half was
    announced on August 27, 2018, and the second half was announced on
    December 17, 2018.
    MFP 2.0 (2019)
        On May 23, 2019, President Trump announced that an additional $16
    billion in aid would be made available to producers, with up to $14.5
    billion being provided through MFP for the 2019 crop year. In
    implementing MFP 2.0, USDA largely followed the same methodology--
    estimating gross trade damages--but they updated the reference point
    from a single year to using data over a 10 year period (2009-2018). As
    noted in Table 1, the list of impacted commodities and the associated
    rates was expanded significantly with MFP 2.0. This particular change
    is discussed in greater detail in the section on Regional Analysis.
        While the framework for estimating damages was largely unchanged
    with MFP 2.0, the application of the rates changed significantly.
    Perhaps most notably, the payment rates in Table 1 were not paid by
    crop on actual production, as was the case in 2018. Instead, USDA
    applied the rates to average production of all MFP-eligible crops in a
    county and then divided by the average acres planted in the county over
    the past 4 years. The resulting county payment rates were then paid on
    all acres planted to MFP-eligible crops on a farm in 2019 (not to
    exceed the acres planted on the farm in 2018). Payments were limited to
    $250,000 per person or legal entity, with separate limits for the three
    different categories--non-specialty crops, specialty crops, and animal
    products--and an overall limit of $500,000 per applicant.
        In hopes that the impasse with China would be resolved and the full
    amount of aid would not be needed, MFP 2.0 was provided in three
    tranches: (1) the first 50% was announced on July 25, 2019, (2) an
    additional 25% was announced on November 15, 2019, and (3) the
    remaining 25% was announced on February 3, 2020. In counties where the
    $15/acre rate applied, the full amount was paid in the first tranche.
    Distribution of MFP Assistance
        Not surprisingly, the bulk of support from MFP 1.0 was provided to
    soybean, cotton, and sorghum producers, as reflected in the state-level
    payment totals in Figure 1.
        For MFP 2.0, with a significantly expanded list of commodities,
    several other areas received additional support. As noted in Figure 2,
    the soybean- and cotton-producing areas of the country still received
    the bulk of the support. While this is discussed in greater detail
    below, nine of the top ten recipient states were in the Midwest, and
    that region received almost 70% of the assistance under MFP 2.0.
        Because the purpose of MFP is to help producers adjust to disrupted
    markets due to retaliatory tariffs (and largely the tariffs imposed by
    China), it stands to reason that the aid would be concentrated in areas
    with significant production of the commodities most directly impacted.
    As noted by USDA and reflected in Figure 3, MFP payments overlap areas
    where estimated damages are the highest (when compared to Figures 1 and
    2).
    Figure 1. MFP 1.0 (2018) Payments by State (as of March 2, 2020)

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Figure 2. MFP 2.0 (2019) Payments by State (as of March 2, 2020)

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Figure 3. Exports of Major Tariff Affected Commodities (2017)

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

      Commodities include: Soybeans, Pork, Cotton, Dairy.
      Total Exports for these commodities: 78,326 Mil.
      Source: ERS.
    Regional Analysis
        While MFP has undeniably been vital to the financial health of U.S.
    farms over the past 2 years, there have been recent complaints about
    regional bias in the Administration of MFP 2.0. Despite those
    arguments, it appears that the biggest determinant of the regional
    distribution of MFP is the underlying estimates of gross trade damage
    and the point of reference on which the estimates are based.
    Importantly, MFP provides financial assistance that gives producers the
    ability to absorb some of the additional costs from having to delay or
    reorient marketing due to retaliatory tariffs, which is perhaps the
    most misunderstood part of the program. As noted in Figure 4, three
    crops--soybeans, cotton, and sorghum--made up the bulk of agricultural
    trade with China over the past several years.\1\ These products were
    the ones most directly impacted by the tariffs--because they were the
    products being exported to China when the retaliatory tariffs were
    imposed. That is little consolation for corn producers, for example,
    that had exported up to $1.3 billion to China in 2012 but by 2017 was
    exporting just $142 million, owing in large part to actions on the part
    of the Chinese government that the World Trade Organization (WTO) has
    since found were inconsistent with China's obligations under the WTO's
    Agreement on Agriculture.\2\ For other products like beef, American
    producers have been largely locked out of the Chinese market for the
    last 20 years. But, addressing those long-term inequities was the very
    purpose of the negotiations themselves. Moreover, as previously
    discussed, the trade damage estimates for MFP 2.0 were based on a
    survey of trends in U.S. bilateral trade over a 10 year period, in
    recognition that 2017 may not have been the most representative year on
    which to base the analysis.
    ---------------------------------------------------------------------------
        \1\ Importantly, USDA's analysis included retaliatory tariffs from
    several countries involved, but we focus on China here for
    illustration.
        \2\ For more on these cases, see DS511 on China's domestic support
    for agricultural producers and DS517 on China's Tariff Rate Quota (TRQ)
    administration for certain agricultural products in the WTO.
    ---------------------------------------------------------------------------
    Figure 4. Major U.S. Agricultural Crop Exports to China

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        For MFP 1.0 in 2018, USDA estimated gross trade damages relative to
    2017 trade. When looking specifically at China, soybeans, cotton, and
    sorghum made up 72% of the $19.5 billion in agricultural trade with
    China in 2017 as reflected in Figure 5. As highlighted in Table 1
    earlier, this resulted in relatively lower payment rates for some crops
    (e.g., corn at $0.01/bu).
        In response to stakeholder feedback that 2017 was not a
    representative base year for certain commodities, USDA estimated gross
    trade damages relative to 2009-2018 trade for MFP 2.0. According to
    USDA (2019), the purpose of using the longer-run trend was ``to account
    for other contributing variables, such as longstanding trade barriers
    imposed by China and other countries that have affected U.S. exports,
    as well as the longer-term impact of prolonged retaliatory tariffs.''
    As noted in Figure 5, U.S. corn exports to China were $142 million in
    2017, compared to $393 million in 2009-2018. By contrast, U.S. cotton
    exports to China were $978 million in 2017, compared to $1.575 billion
    in 2009-2018.
    Equity Between Regions
        Much has been made of the resulting county payment rates in MFP
    2.0. To make the case for southern bias in MFP 2.0, critics point out
    that McLean County, IL, received a payment rate of just $82/acre while
    Lubbock County, TX, received $145/acre. There are a lot of factors that
    drive the county payment rates, but perhaps none are as relevant or
    important as the distribution of planted acres within the county. For
    example, the $145/acre payment rate in Lubbock County is merely
    reflective of the fact that cotton (with a $0.26/lb rate) accounted for
    84% of the payment rate in Lubbock County--as noted in Figure 6--while
    corn (with a $0.14/ bu rate) accounted for 51% of the rate in McLean
    County. Had soybeans been the only crop planted in McLean County, the
    county payment rate would have been approximately $135/ac.
    Figure 5. U.S. Exports to China of Select Crops in 2017 and 2009-2018

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Figure 6. Distribution of Acres Planted by Crop (Average 2015-2019)

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Figure 7. MFP 2.0 Payments by Census Region (as of March 2, 2020)

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Put simply, counties with a significant presence of crops directly
    impacted by retaliatory tariffs had the highest payment rates. The only
    ``bias'' we find in the program was the decision to impose a maximum
    county payment rate of $150/acre, which most negatively impacted cotton
    producers. As noted in Figure 7, if one looks at where the latest
    assistance has gone, almost 70%--or just under $10 billion--has gone to
    the Midwest. In other words, the amount of support provided to the
    Midwest is more than double the rest of the country combined.
    Equity Between Counties
        While we find little validity to the complaints of regional
    inequity, there are certainly disparities between counties. A producer
    of a crop that was highly impacted by retaliatory tariffs (e.g.,
    soybeans or cotton) that happens to produce in a county that
    predominantly grows a crop that was relatively less affected by
    retaliation (e.g., wheat) is certainly negatively impacted. The same
    logic applies to producers of irrigated crops that farm in counties
    with predominantly dryland production. To USDA's credit, the disparity
    was somewhat mitigated by the fact that Secretary Perdue imposed a
    minimum $15/acre payment on the first tranche of MFP 2.0. However,
    that's little consolation to a cotton or soybean producer receiving
    $15/acre given that those commodities were more severely impacted by
    retaliation.
    Impact of MFP on Representative Farms
        AFPC currently maintains 63 representative crop farms across major
    production regions of the United States. This paper focuses on MFP for
    non-specialty crops in part because very little specialty crop
    production occurs on the representative farms. The representative farms
    have been used for over 30 years to provide feedback as to the likely
    consequences of policy changes on real farm operations across the
    United States. Locations, descriptions, and financial characteristics
    of the representative farms and dairies along with more information on
    the representative farm process can be found in AFPC Working Paper 19-
    1. Representative farm nomenclature follows a standard format where the
    first two letters indicate the abbreviation for the state in which a
    farm is located, the next letter (or two letters) generally give(s)
    regional and/or farm-type descriptors, and the numbers in the name
    reflect the total acres of cropland on a given farm.
        To evaluate the farm-level impact of MFP on the financial condition
    of AFPC representative farms, two scenarios were analyzed:

       No MFP--this base scenario examines the financial outlook of
            r the farms if no MFP was received by producers.

       MFP--assumes MFP 1.0 for crop farms paid on eligible
            production in 2018 and on planted acres of eligible commodities
            on the farm in 2019 for MFP 2.0 (at the respective county
            rates). The third tranche of MFP 2.0 appears in the 2020
            calendar year financial statements for the representative
            farms.

        For the farm-level MFP analysis, a study period of 2018-2020 was
    utilized with the results focusing on projected ending cash reserves
    and the probabilities of farms having negative ending cash reserves at
    the end of 2020 (i.e., the probability of a having to refinance a
    carryover debt). Commodity prices and rates of change for input prices,
    interest rates, and land inflation rates published in the FAPRI 2019
    August Baseline Update for U.S. Agricultural Markets were utilized.
    Table 2 displays ending cash reserves and the probability of negative
    ending cash in 2020 for each representative farm under the No MFP and
    MFP alternatives. Changes in these numbers are also reported for each
    farm.

    Table 2. Ending Cash Reserves and Probabilities of Negative Ending Cash for AFPC Representative Farms under Base
                                            (No MFP) and MFP Scenarios, 2020
    ----------------------------------------------------------------------------------------------------------------
                                2020 Ending Cash Reserves                2020 Probability of Negative Ending Cash
                    ------------------------------------------------------------------------------------------------
                                                        Difference
                      No MFP  1,000    MFP  1,000         1,000          No MFP  %        MFP  %       Difference %
    ----------------------------------------------------------------------------------------------------------------
          IAG1350             ^768            ^641             127            100.0           100.0             0.0
          IAG3400             ^380            ^121             259             84.6            61.6           ^23.0
          NEG2400             ^139              39             178             64.4            47.0           ^17.4
          NEG4500           ^1,756          ^1,423             333             99.4            97.6            ^1.8
          NDG3000             ^183              19             202             78.8            48.4           ^30.4
          NDG9000              868           1,438             570             12.0             0.4           ^11.6
          ING1000              ^25              54              79             60.4            28.8           ^31.6
          ING3250              ^61             209             270             55.4            27.8           ^27.6
         MOCG2300               39             201             162             49.2            29.0           ^20.2
         MOCG4200              677             938             261             11.4             3.4            ^8.0
         MONG2300             ^322            ^155             166             91.0            76.4           ^14.6
                 LANG2500     ^452            ^156             296             93.2            69.6           ^23.6
          TNG2500             ^362             ^82             281             90.2            63.4           ^26.8
          TNG5000              228             669             441             34.4             9.8           ^24.6
         NCSP2000           ^1,004            ^887             118             99.8            99.4            ^0.4
          NCC2030              407             517             109              0.0             0.0             0.0
          SCC2000              424             556             131              2.4             0.0            ^2.4
          SCG3500              837           1,029             192              1.6             0.0            ^1.6
         TXNP3450              212             443             231             31.0            11.2           ^19.8
        TXNP10880            1,820           2,614             794             10.4             3.0            ^7.4
         TXPG2500               43             175             132             42.0            27.0           ^15.0
         TXHG2700             ^232            ^115             117             85.6            72.0           ^13.6
         TXWG1600             ^171             ^97              74             85.8            74.6           ^11.2
          WAW2800              288             354              66              8.0             4.0            ^4.0
         WAW10000            1,039           1,272             233              8.4             5.6            ^2.8
         WAAW5500             ^318            ^253              65             96.0            92.2            ^3.8
          ORW4500              ^91             ^58              33             78.2            70.4            ^7.8
          MTW8000              989           1,047              58              0.0             0.0             0.0
         KSCW2000              173             266              93              5.8             0.6            ^5.2
         KSCW5300              482             778             296             13.2             2.8           ^10.4
         KSNW4000             ^124             ^24             100             72.8            52.6           ^20.2
         KSNW7000             ^109             107             217             59.6            41.6           ^18.0
          COW3000             ^106             ^85              21             92.4            89.0            ^3.4
          COW6000             ^851            ^788              64            100.0           100.0             0.0
         TXSP2500             ^216              53             270             87.2            36.2           ^51.0
         TXSP4500             ^411             114             526             81.2            37.2           ^44.0
         TXEC5000               21             659             638             48.4             8.6           ^39.8
         TXRP3000             ^464            ^333             131             99.2            98.0            ^1.2
         TXMC2500             ^190              92             282             68.2            40.2           ^28.0
         TXCB3750             ^738             ^78             661             96.6            58.4           ^38.2
        TXCB10000             ^236             889           1,126             59.6            18.0           ^41.6
         TXVC5500              725           1,412             688              8.4             0.0            ^8.4
         ARNC5000            1,300           1,843             543              5.2             2.4            ^2.8
          TNC3000              510             805             294              2.0             0.0            ^2.0
          TNC4050              122             630             509             38.8             6.0           ^32.8
                ALC3500        990           1,310             320              0.2             0.0            ^0.2
          GAC2500              773           1,019             246              1.2             0.0            ^1.2
         NCNP1600             ^733            ^556             177            100.0            99.2            ^0.8
          CAR1200              439             471              31              1.2             1.0            ^0.2
          CAR3000             ^477            ^371             107             62.0            55.6            ^6.4
         CABR1000              189             227              38             16.8            14.2            ^2.6
          CACR800             ^264            ^237              27             98.8            97.0            ^1.8
          TXR1500             ^226            ^194              32             91.4            89.6            ^1.8
          TXR3000              ^36              31              67             52.8            44.8            ^8.0
         TXBR1800               68             119              51             30.8            24.6            ^6.2
         TXER3200           ^1,010            ^821             190            100.0           100.0             0.0
                 LASR2000      166             228              61             18.8            11.8            ^7.0
         ARMR6500             ^392             437             829             61.0            27.8           ^33.2
         ARSR3240              101             375             273             37.0            20.2           ^16.8
         ARWR2500             ^546            ^319             227             97.0            83.6           ^13.4
         ARHR4000             ^249               2             251             68.8            47.8           ^21.0
         MSDR5000               74             647             573             38.4            16.4           ^22.0
         MOBR4000             ^677            ^211             466             92.4            68.8           ^23.6
    ----------------------------------------------------------------------------------------------------------------

    Figures 8-11 group the representative farms by farm type based on
    primary source of receipts. These figures provide a side-by-side
    comparison of the probabilities of negative ending cash under the two
    scenarios. AFPC has adopted a color-coded scoring method for financial
    measures based on probabilities of outcomes. As this report focuses on
    ending cash reserves, farms are classified as:

       Good--good liquidity position (green in charts) if
            probability of negative ending cash in 2020 is less than 25
            percent.

       Marginal--marginal liquidity position (yellow in charts) if
            probability of negative ending cash in 2020 is between 25 and
            50 percent.

       Poor--poor liquidity position (red in charts) if probability
            of negative ending cash in 2020 is greater than 50 percent.

        The following is a description by farm classification of the
    financial impact of MFP on ending cash reserves and associated
    probabilities of refinancing. A summary of how many farms facing the
    most severe cashflow stress improve their ranking is also provided. A
    common theme across all of the farms is that--for the farms in counties
    with higher county payment rates--MFP was a significant help but in no
    case covered all impacts caused by the retaliatory tariffs.
    Feedgrain and Oilseed Farms
        AFPC maintains 23 representative feedgrain and oilseed farms in ten
    states. The MFP scenario resulted in an average increase in ending cash
    reserves in 2020 of $240,000. Furthermore, the average likelihood of
    refinancing in 2020 dropped from 55.8% to 41.3% across all 23 farms as
    a result of MFP as compared to the Base (No MFP) scenario. Further
    examination of individual farms reveals that payments received under
    MFP resulted in four farms moving out of the most severe cashflow
    (liquidity) situation as described by AFPC (>50% probability of
    negative ending cash reserves in 2020). The No MFP scenario has 57% of
    the feedgrain and oilseed farms in poor liquidity position; only 39% of
    these farms are facing the most extreme cashflow position under the MFP
    scenario.
    Wheat Farms
        AFPC currently works with 11 representative wheat farms in five
    different states. Despite the relatively low payment rate for wheat, a
    $113,000 average increase in ending cash reserves in 2020 resulted from
    payments received under MFP 1.0 and MFP 2.0. The average probability of
    negative ending cash across all farms in 2020 dropped from 48.6% to
    41.7%, a 6.9% improvement resulting from payments in MFP. The MFP
    scenario also resulted in a shift of one representative wheat farm out
    of the most serious threat of cashflow problems at the end of 2020.
    Cotton Farms
        AFPC currently has 14 representative farms in six states with
    cotton as the primary commodity. On average, the representative cotton
    farms experienced a $458,000 increase in 2020 ending cash reserves
    under the MFP scenario as compared to the No MFP base scenario. The
    average likelihood of refinancing carryover debt in 2020 dropped from
    49.7% across all farms under the No MFP scenario to 28.9% when
    receiving MFP, a 20.9% decline. Similarly, payments received through
    MFP resulted in four farms improving their cashflow position
    significantly enough to no longer be considered in poor liquidity
    position at the end of 2020. The No MFP scenario had 50% of the
    representative cotton farms classified in poor liquidity position,
    while the MFP alternative resulted in only 21% of cotton farms in this
    unfavorable cashflow situation.
    Figure 8.1. Probabilities of Negative Ending Cash for Select AFPC
            Representative Feedgrain and Oilseed Farms under No MFP and MFP
            Alternatives, 2020

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Figure 8.2. Probabilities of Negative Ending Cash for Select AFPC
            Representative Feedgrain and Oilseed Farms under No MFP and MFP
            Alternatives, 2020

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Figure 9. Probabilities of Negative Ending Cash for AFPC Representative
            Wheat Farms under No MFP and MFP Alternatives, 2020

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Figure 10. Probabilities of Negative Ending Cash for AFPC
            Representative Cotton Farms under No MFP and MFP Alternatives,
            2020

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Notably, two farms did not see marked improvements in their cash
    flow projections. TXRP3000 is in Jones County, TX, which had a
    relatively low MFP 2.0 payment rate of $46/ac, largely reflecting a
    significant presence of wheat production in the county. Similarly,
    NCNP1600 is in Edgecombe County, NC, which had a payment rate of $70/
    ac, which was affected by the relatively large share of corn and peanut
    production in the county.
    Rice Farms
        AFPC maintains 15 representative rice farms in six rice-producing
    states across the nation. Across all AFPC rice farms, an average
    increase of $215,000 in ending cash reserves in 2020 resulted from
    payments received under the MFP alternative. The average probability of
    farms having to refinance carryover debt dropped from 57.8% to 46.9%
    under the MFP alternative, an improvement of 10.9%. Three farms were
    able to significantly improve their liquidity position. Under the No
    MFP scenario, 60% of AFPC rice farms were in the worst AFPC cashflow
    classification; conversely, 40% were under the highest threat of
    experiencing cashflow problems under the MFP alternative.
    Figure 11. Probabilities of Negative Ending Cash for AFPC
            Representative Rice Farms under No MFP and MFP Alternatives,
            2020

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Impact of MFP on the Rural Economy
        Beyond examining the impact of MFP on the representative farms and
    examining equity within the program, we also examined the impact of MFP
    on the broader economy, recognizing that producers turn over income
    within the local economies in which they operate. Our analysis used
    IMPLAN 2018 data to examine the impacts of the 2018 and 2019 Market
    Facilitation Program payments (Tables 3 and 4). We analyzed the
    payments at the state level and combined the data for the national
    effect of the 2018 and 2019 MFP payments.
    Figure 12. Percentage of AFPC Representative Farms in Good, Marginal,
            and Poor Cashflow Position by Farm Type Under No MFP and MFP
            Alternatives, 2020

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        The direct effect of the MFP payments includes the expenditures by
    the producers. The indirect and induced effect reflects the multiplied
    effect as businesses purchase along their supply chains, as well as the
    household expenditures of employees of both commodity-related
    businesses and all indirectly affected businesses. The total effect is
    a sum of the direct, indirect and induced effects. Output measures the
    overall economic activity and includes Value Added, which measures the
    return to local resources or the contributions to GDP, and Labor
    Income, which reflects the effects of wages and profits on the incomes
    of households in the state. Employment reflects the job count and does
    not distinguish between full-time and part-time workers.

                           Table 3. 2018 MFP Payments
                                 (2018 Dollars)
    ------------------------------------------------------------------------
    USA Employment      Labor          Income      Value-Added     Output
    ------------------------------------------------------------------------
       1  Direct          23,189   $1,791,629,28  $3,562,085,8  $8,503,082,5
                                              7             19            86
     2  Indirect          25,320   $1,196,428,95  $1,970,387,3  $4,118,940,6
                                              0             70            04
      3  Induced          16,381   $766,925,738   $1,376,242,7  $2,414,364,7
                                                            56            77
                   ---------------------------------------------------------
      Total.......        64,889   $3,754,983,97  $6,908,715,9  $15,036,387,
                                              5             45           967
    ------------------------------------------------------------------------

                           Table 4. 2019 MFP Payments
                                 (2019 Dollars)
    ------------------------------------------------------------------------
    USA Employment      Labor          Income      Value-Added     Output
    ------------------------------------------------------------------------
       1  Direct          75,441   $2,878,518,92  $5,213,947,2  $14,192,829,
                                              4             33           490
     2  Indirect          48,545   $2,285,933,44  $3,682,596,6  $7,638,769,4
                                              1             09            37
      3  Induced          27,932   $1,333,912,70  $2,392,833,7  $4,195,747,3
                                              8             27            84
                   ---------------------------------------------------------
      Total.......       151,918   $6,498,365,07  $11,289,377,  $26,027,346,
                                              3            569           310
    ------------------------------------------------------------------------

        For 2018, the initial MFP 1.0 payments of $8.6 billion led to a
    total economic output of $15 billion, with $6.9 billion contributing to
    the national GDP and $3.75 billion in labor income. For 2019, the
    initial MFP 2.0 payments of $14.2 billion led to a total economic
    output of $26 billion, with $11.3 billion contributing to the national
    GDP and $6.5 billion in labor income. In total, MFP has had a $41
    billion impact on the rural economy over the past 2 years.
    Conclusion
        On January 15, 2020, the U.S. and China signed a Phase One
    agreement that aims to increase exports from the U.S. to China to $80
    billion over the next 2 years, and the deal entered into force on
    February 14, 2020. Initial market response to the Phase One deal has
    been tepid, and the spread of the coronavirus is dampening the Chinese
    economy. While no aid has been provided for 2020, President Trump
    recently tweeted that ``until such time as the trade deals with China,
    Mexico, Canada, and others fully kick in, that aid will be provided by
    the Federal Government.''
        In the meantime, 2 consecutive years of trade aid have been
    incredibly important to the economic viability of farms, in some cases
    preventing more farmers from having to sell and leave the business.
    References
        FAPRI. ``2019 August Baseline Update for U.S. Agricultural Markets:
    FAPRI-MU Report #03-19.'' August 28, 2019. Available online at https://
    www.fapri.missouri.edu/wp-content/uploads/2019/08/2019-August-
    Update.pdf.
        Outlaw, Joe L., George M. Knapek, J. Marc Raulston, Henry L.
    Bryant, Brian K. Herbst, David P. Anderson, Steven L. Klose, and Peter
    Zimmel. ``Representative Farms Economic Outlook for the January 2019
    FAPRI/AFPC Baseline.'' Texas A&M AgriLife Research, Texas A&M AgriLife
    Extension Service, Texas A&M University, Department of Agricultural
    Economics, AFPC Working Paper 19-1. April 2019.
        U.S. Department of Agriculture. 2018a. ``USDA Announces Details of
    Assistance for Farmers Impacted by Unjustified Retaliation,'' press
    release August 27, 2018. Available online at https://www.usda.gov/
    media/pressreleases/2018/08/27/usda-announces-details-assistance-
    farmers-impacted-unjustified [accessed March 1, 2020].
        U.S. Department of Agriculture. 2018b. ``Trade Damage Estimation
    for the Market Facilitation Program and Food Purchase and Distribution
    Program,'' September 13, 2018.
        U.S. Department of Agriculture, Office of the Chief Economist.
    2019. ``Trade Damage Estimation for the 2019 Market Facilitation
    Program and Food Purchases and Distribution Program,'' August 22, 2019.

              Mention of a trademark or a proprietary product does not
            constitute a guarantee or a warranty of the product by Texas
            AgriLife Research or Texas AgriLife Extension Service and does
            not imply its approval to the exclusion of other products that
            also may be suitable.
              All programs and information of Texas A&M AgriLife Research
            or Texas A&M AgriLife Extension Service are available to
            everyone without regard to race, color, religion, sex, age,
            handicap, or national origin.
                                     ______

    Supplementary Material Submitted by Hon. Angie Craig, a Representative
                           in Congress from Minnesota
    [https://www.propelnonprofits.org/studies/main-street-project/]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Case Study (https://www.propelnonprofits.org/studies/)

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Lending (https://www.propelnonprofits.org/service-types/lending/)
        Main Street Project

        Main Street Project is a Northfield, Minnesota-based nonprofit,
    working to change the conventional food system by deploying an
    alternative, small-scale system that is accessible and economically
    viable. Main Street has three primary areas of focus: to build a new
    model for regenerative agriculture, to train the next generation of
    farmers, and to develop a regional food system that delivers on the
    triple bottom line of social, economic and ecological benefits.
        The organization was founded in 2005 by Niel Ritchie, a veteran
    nonprofit leader with over 25 years of rural policy and organizing
    experience. Main Street Project's current work on agriculture systems
    grew out of a Northwest Area Foundation funded collaboration on an
    ambitious four-state, multi-year community-building initiative called
    Raices (roots)--organizing primarily with Latino youth and adults in
    diverse rural communities.
        In 2007, Niel was joined by Reginaldo (Regi) Haslett-Marroquin, a
    colleague at the Institute for Agriculture and Trade Policy who helped
    found the U.S. Fair Trade Federation, and launched Peace Coffee as a
    social enterprise and model of fair trade with coffee growers. You can
    read more about their history and accomplishments here (http://
    mainstreetproject.org/who-we-are/board-staff/).
        Using insights they gleaned during the Raices Project--among other
    professional and personal experiences--Main Street Project launched a
    pilot program to begin to address questions around food security and
    agricultural opportunities that might better serve the Latino
    population. Their focus was on poultry farming (for a number of reasons
    (http://mainstreetproject.org/blog/)), and in 2013, Main Street
    Project's Board and leadership decided to focus entirely on developing
    the poultry-centered regenerative agriculture model.
        The complexity of the model and need for infrastructure investment
    required more sophisticated management and capacity than the team had
    in-house. They had cash flow challenges, and needed help to stay
    afloat. ``I had to be convinced that talking to a lender was not an
    admission of failure--but rather, it was an opportunity,'' Niel
    admitted. ``I got up the courage--and sure enough, I found out that was
    true.''
        Niel reached out to Propel Nonprofits (formerly Nonprofits
    Assistance Fund), and began working with Portfolio Manager Allison
    Wagstrom. ``Allison was able to understand our situation, demonstrate
    that the challenges were solvable, and take a chance on us so that we
    could get our feet under us and move to the next level,'' he said. The
    line of credit Propel Nonprofits provided helped Main Street even out
    their operations while they continued to expand. As Niel said, Propel
    Nonprofits ``took the stress out of the equation.''
        ``They're social entrepreneurs who are trying to make farming a
    livable employment in a way that's respectful to the environment and to
    the workers,'' Allison said. ``The work they do is amazing.''
        In addition to the line of credit, Allison and the Main Street team
    began meeting regularly to flesh out the organization's 10 year balance
    sheet projection and business plan. ``Allison and the Propel
    Nonprofits' team continue to be enormously helpful,'' Niel said,
    ``giving us feedback and advice about planning. They've become
    partners, coaching and mentoring us so that we can navigate the
    complexities of lending, program-related investments, and other
    strategies we're going to need to employ to get our work done.''
        As Main Street's leadership considers what the future holds, a
    resounding theme is the need for--quite simply--more space. They've
    simply run out of operating room, and the model demands testing the
    system at a farm-scale level. ``When we bring it all together,'' Niel
    explained, ``we'll get more efficiencies and be able to better
    demonstrate the impact of our system. We're tying economic and
    ecological success to this model--and we need to do it at scale.'' Main
    Street is in the midst of a plan to acquire new land, which will allow
    them to significantly scale up their training program to reach the
    aforementioned goals.
        Propel Nonprofits is honored to partner with Main Street in this
    important work, and Allison and the team look forward to continued
    synergies as they grow. ``Propel Nonprofits is one of the strongest
    partners and most important assets the nonprofit community has here,''
    Niel reflects. ``They are a partner for us now, and will continue to be
    the agency that helps us navigate the complexities of growing and
    sustaining our work.''
        To learn more about the Main Street Project, visit them online
    (http://mainstreetproject.org/).
                                     ______

    Submitted Letter by Hon. Kim Schrier, a Representative in Congress from
                                   Washington
    January 31, 2020

      Hon. Kim Schrier,
      United States House of Representatives,
      Washington D.C.

        Dear Congresswoman Schrier:

        Thank you for being a strong voice for Washington State's natural
    resources and agriculture in Congress. In particular, I'd like to thank
    you for your comments and questions posed to the leadership of the Farm
    Services Administration (FSA) at the recent hearing of the Subcommittee
    on Conservation and Forestry, and for sharing the letter of support
    from the Washington State Conservation Commission (SCC) and Washington
    State Department of Fish and Wildlife for the State Acres for Wildlife
    Enhancement (SAFE) program. We appreciate your leadership, and we also
    appreciate this opportunity to share our concerns about two vital
    programs for Washington State--the Conservation Reserve Program (CRP)
    and Conservation Reserve Enhancement Program (CREP).
        The following examples demonstrate what makes CREP and CRP so
    important for Washington. I've included a list of our concerns with the
    implementation of these programs in an attachment to this letter.
    Importance of CREP
        CREP is the largest riparian restoration program in our state. The
    program goal is to enhance salmon habitat in areas where farmland and
    salmon streams intersect. In the 20 years since its inception, farmers
    have voluntarily enhanced over 925 miles of stream for salmon--for
    perspective, that's the distance from Seattle to Fresno. They've
    planted nearly six million trees. In addition to shading streams,
    filtering pollutants, and providing habitat, these trees also sequester
    carbon. Conditions have improved in stream reaches with high levels of
    participation in CREP. For example, in the Tucannon River in southeast
    Washington, water temperatures cooled by
    10 F and Chinook salmon runs increased after several landowners along
    the river participated in CREP. The results CREP can deliver aren't
    just good news for salmon; it's good for area recovery. Nearly all CREP
    projects are within priority Chinook stock basins for our Southern
    Resident Killer Whales.
    Importance of CRP
        After hearing your comments during the Conservation and Forestry
    Subcommittee hearing, I know you understand the importance of CRP in
    Washington, especially as it relates to sage-grouse. CRP also has been
    important for producers in the Palouse. Whitman County has some of the
    highest CRP acreage in the state. Local producers rely on CRP as an
    alternative to farming highly erodible soil, which can choke rivers
    with sediment. Unfortunately, several CRP contracts in the County are
    about to expire at the same time that Palouse Conservation District and
    several other partners and landowners are making progress improving
    water quality through an extremely successful Regional Conservation
    Partnership Program (RCPP) project in the Palouse Watershed. These RCPP
    partners have prevented enough sediment from entering the watershed to
    fill dump trucks lined back-to-back from the Olympia Capitol to the
    Space Needle. This progress could be negatively impacted as several
    sensitive CRP sites are at-risk of being put back into production, not
    because farmers want to, but because they feel they have no other
    choice. Restrictions on CRP open enrollment and cutoffs have prevented
    many farmers from re-enrolling. This is detrimental to the water
    quality goals that so many partners in the area are trying to achieve.
        I hope this glimpse into some of Washington's CREP and CRP
    accomplishments illustrates why we're so concerned about issues that
    threaten the future of these programs. I've outlined our concerns In
    the attached document along with our recommended solutions to ensure
    these programs deliver natural resource results and engage farmers as
    partners in conservation. Farmer engagement is key. With the number of
    places in Washington where ecological and agricultural assets
    intersect, we cannot expect to make progress on urgent conservation
    issues without the willing partnership of our farmers.
        Again, thank you for your leadership on these issues. I look
    forward to having the opportunity to discuss them with you in greater
    depth. I will be in Washington, D.C. the week of March 23. Hopefully we
    can meet at that time.
        If you have other questions on these topics, please contact me at
    [Redacted] or [Redacted].
                Sincerely,

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Carol Smith,
    Executive Director,
    Washington State Conservation Commission.
                                   attachment
    SCC Concerns and Recommendations for CREP/CRP in Washington State
    (1) Rental Rates
       Background: When farmers voluntarily sign up to replace some
            of their cropland with native vegetation, they're paid rent for
            the acreage they plant. Without this, the decision to take land
            out of production is a prohibitive financial risk.

       Concern: CRP/CREP rental rates have been reduced in many
            areas of Washington State. Prior to 2018, the FSA calculated
            rental rates by multiplying the county rate by a soil
            productivity factor that ranged from .5 (least productive) to
            1.5 (most productive). In 2018, the top two soil productivity
            factors (1.25 and 1.5) were eliminated. For many farmers, that
            means that CRP/CREP rental rates are far below the true crop
            value of their property.

       Recommendation: Restore the productivity factors of 1.25 and
            1.5 into the soil rental rate calculation for CREP. This would
            be done at the Secretary and Under Secretary level of USDA, and
            the Deputy Administrator of FSA's Farm Programs.
    (2) Incentive Payments
       Background: There are two incentive payments in CREP and
            CRP, (1) the Practice Incentive Payment (PIP), and (2) the
            Signing Incentive Payment (SIP). Currently farmers rely on PIP
            to cover 40 percent of practice installation costs. They also
            have relied on SIP to pay $100/acre to help offset the cost of
            converting cropland to habitat.

       Concern: In the future, PIP likely will drop to just five
            percent of practice costs for both programs, imposing a heavy
            financial burden on farmers to pay the difference. For CRP, SIP
            will drop significantly in many areas of Washington. For
            example, in eastern Washington, the SIP will drop from $100/
            acre to just $16.50/acre.

       Recommendation: We're asking Congress to pursue
            appropriation amendments to restore the PIP to 40 percent and
            the SIP to $100/acre. We also request that language in the next
            farm bill reflect these incentive levels.
    (3) Mid-Contract Management
       Background: Farmers rely on FSA to pay 50 percent of the
            costs of maintenance activities on CREP projects mid-way
            through the contract period. This may include things like
            removing invasive weeds and replanting trees.

       Concern: FSA no longer pays for Mid-Contract Management.
            Without this, plantings have a higher risk of failure, which
            reflects poorly on the program and prevents us from achieving
            goals.

       Recommendation: We're asking Congress to restore funding of
            Mid-Contract Management through appropriations and in the
            language of the next farm bill.
    (4) Acreage Caps
       Background: There are caps set at the Federal level for how
            many acres can be enrolled in CRP. This includes acres enrolled
            in CREP.

       Concern: Some counties in Washington have reached or
            exceeded their acreage caps. This is preventing farmers from
            voluntarily participating in efforts that would benefit
            threatened species, such as ESA-listed salmon species, sage and
            sharp-tailed grouse, the pygmy rabbit, and the Washington
            ground squirrel.

       Recommendation: We're asking Congress to ensure that the
            next farm bill include an administrative process for approval
            of waivers that provides a pathway for Washington State to
            enroll CRP acreage above the cap.
                                     ______

    Supplementary Material Submitted by Hon. Sonny Perdue, Secretary, U.S.
                           Department of Agriculture
    Insert 1
              Mr. Conaway. This report determines that a significantly
            higher number of farms would be in poor financial condition and
            less likely to cash-flow without the assistance provided by the
            Administration. The report also found there is no regional bias
            built in to how county payment rates were calculated, and
            observes that 70 percent of the aid went to midwestern states.
            Given the competing narrative that MFP is allegedly biased
            toward southern producers, Mr. Secretary, would you explain to
            us the methodology about how the USDA determined those county
            payment rates for the second round?
              Secretary Perdue. I will do my best, Congressman. First of
            all, my instructions to our economists were kind of Sergeant
            Webb, just the facts, sir. In this area there was no
            predetermined regional demographic or sector bias in any of
            this.
              In fact, I would like to show you, you mentioned something. I
            have a chart here for your Committee that shows you the states
            that here that have--we will provide an electronic copy of all
            of that, but the darker states are where the highest payments
            were . . . .

        Given the timing of the 2019 MFP during the crop year, USDA
    developed a single rate per acre in each county for MFP-eligible non-
    specialty crops, which include select non-specialty commodities both
    directly and indirectly affected by the trade dispute, in order to
    minimize potential distortions. The specific commodity rates that
    formed the basis of the country rate were derived from the gross trade
    damage estimates. Commodity rates were calculated by dividing the gross
    trade damage by the average volume of production in 2015-17 as reported
    by NASS. The county payment rates were based on historical fixed
    average area and fixed average yields for all eligible crops.
        More details on these calculations may be found in the 2019 USDA
    Trade Methodology report: https://www.usda.gov/sites/default/files/
    documents/USDA_Trade_
    Methodology_Report_2019.pdf. [See Attachment 1].
    Insert 2
              Mr. Costa. Also, the efforts on the payments with Farm
            Service Agency continue to be problematic, it seems. We have
            people that have applied in 2019, and in some cases, 2018. We
            have continued to ask you folks and then locally with the FSA
            offices why they haven't processed in a more timely manner. Are
            we looking at bringing more personnel to expedite that?
              Secretary Perdue. We are always trying to hire, but I would
            love to know specifically if people have not gotten those kinds
            of payments in that kind of period of time.
              Mr. Costa. I would be happy to provide you a list.
              Secretary Perdue. Surely. Absolutely, and we will look into
            that.

        Note: FPAC awaits list from Mr. Costa. At this time, FSA has not
    seen the list referenced.
    Insert 3
              Ms. Craig. . . .
              I would like to now shift to beginning farmers. For more than
            a decade, the Main Street Project outside of Northfield,
            Minnesota, where I represent, has trained rural Latino
            immigrants on regenerative ag practices in poultry as a means
            out of poverty. This is Janet. She is just one of the beginning
            farmers who has taken part in training through the Main Street
            Project. In August, the project was informed that they had been
            awarded a U.S. NIFA Beginning Farmer and Rancher Grant. Those
            grant funds were publicly announced in October, but as of
            today, the organization still does not have the funds they were
            promised by USDA. You said the move of ERS, NIFA to Kansas City
            was to better serve farmers and ranchers where they are, but
            that just hasn't proven to be the case for farmers like Janet.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        USDA/NIFA appreciates the Committee's recognition of the importance
    of the Beginning Farmer and Rancher Development Program (BFRDP),
    funding a total of 32 projects in FY 2019, for beginning farmers like
    Janet, and the Main Street Project outside of Northfield, Minnesota.
    Funds were released to the grantee on 2 April 2020. As of 11 September
    2020, the grantee has made use of approximately 76% of the funding
    originally awarded.
        USDA/NIFA remains committed to ensuring there will be a ``new
    generation'' of beginning farmers and ranchers. Approximately 400
    projects have been funded since the inception of the BFRDP in 2009,
    providing almost $200 million in grants to organizations for education,
    mentoring, and technical assistance initiatives for beginning farmers
    or ranchers. In FY 2020, all grants for BFRDP program have been awarded
    and funds have been made available to the grantees.
    Insert 4
              Mrs. Hayes. . . .

        I looked, and you mentioned several of your Department's proposals
    to gut SNAP benefits in your written testimony that was submitted to
    the Committee, yet there is no mention that the President's budget
    request for Fiscal Year 2021 revived your previous proposal to take
    away benefits from households and replace them with what you are
    calling Harvest Boxes of pre-selected nonperishable food items.
              * * * * *
              Mrs. Hayes. No, I don't know, that is why I am asking you;
            can you explain how this program would be implemented, or just
            if you thought about how that would take place?
              Secretary Perdue. We have thought about that, and I would
            love to have an extended conversation with you about that. I am
            not sure this is the way to do that, but this is the place to
            do that. But, there was a lot of study put into that about the
            home delivery there, giving people a choice, maybe an app on
            their phone of the groceries they wanted delivered there, and
            using commercial distributions. We are working with both Amazon
            and Wal-Mart and others who expressed great interest in
            utilizing these services.
              Mrs. Hayes. Is this information anywhere where I can access
            it, because I spent a lot of time trying to look up the details
            of it and I can't find it.
              Secretary Perdue. I would be happy to have our FNS people
            deliver to you what we discovered, yes.

        Under the Harvest Box proposal, SNAP participants would receive
    domestically sourced and produced food, known as USDA Foods, in lieu of
    a portion of their SNAP benefits. USDA would utilize a model similar to
    that currently used to distribute USDA Foods to other nutrition
    assistance programs to provide shelf-stable staple foods to SNAP
    households at approximately half the retail cost, resulting in
    significant savings to taxpayers with no loss in food for recipients.
    This model would also ensure that recipients receive this portion of
    their benefit as healthy, nutritious foods for home consumption. States
    would maintain the ability to provide choice to their recipients,
    including innovative approaches for the inclusion of fresh products.
    Insert 5
              Mrs. Hartzler. . . .
              In the 2018 Farm Bill, I passed the Community Facilities
            Lending Provision to increase the threshold for the community
            facilities and the water waste programs to population of 50,000
            people to allow more of our small communities to be able to
            access these funds. Can you tell me if the Department has yet
            made any loan guarantees to the newly eligible communities
            under this program?
              Secretary Perdue. I cannot tell you definitively. I believe
            that we have. We were anxiously awaiting that expansion there.
            We had a lot of demand----
              Mrs. Hartzler. Right.
              Secretary Perdue.--in communities that exceeded the 10 and
            $20,000, 20 person population limit, and I would assume that we
            have. I can't definitively tell you that, but we can get you
            the number of people and the populations that we served.
              Mrs. Hartzler. That would be great, and if you could also get
            me more information about when they can apply, those new
            communities. That is exciting. That would be great.

        Effective October 1, 2020, the 50,000 population limit will be
    administered under the OneRD Guaranteed Rule. This Rule implements a
    standard set of requirements, processes, and forms for four Rural
    Development guarantee loan programs including Community Facilities,
    Water and Waste Disposal, Business and Industry, and Rural Energy for
    America.
        As of September 10, 2020, the Community Facilities Guaranteed Loan
    Program had yet to receive an application for projects located in
    communities exceeding the previous population limit of 20,000. However,
    our Community Facilities program has had several inquiries from
    commercial lenders and constituents expressing a strong interest in the
    Guaranteed Loan Program for populations exceeding 20,000 and we
    anticipate an increase in applications during FY 2021.
    Insert 6
              Mr. Cox. All right, and so I guess just in a general sense,
            USDA, we want more employees? We would like to grow that
            workforce?
              Secretary Perdue. We want enough people to get the job done.
            I don't want more or less. I want enough people to get the job
            done. That is what our----
              Mr. Cox. And right now we don't have enough though?
              Secretary Perdue. We are not having enough in some places. We
            have an optimum office production that tells where the workload
            is, and who needs to be there.
              Mr. Cox. And do we have metrics from that optimum office yet
            to detail how well that is working?
              Secretary Perdue. We do.
              Mr. Cox. That would be great to see. Thanks so much.

        Optimally Productive Office (OPO) is a suite of tools allowing FSA
    to make informed, data-driven staffing decisions and identifies offices
    to target for staffing placements. FSA began using this tool to make
    informed hiring decisions in FY 2018.
        While the Productivity dashboards are primarily centered around
    staffing offices for expected core workload, the tool also informs FSA
    leaders on workload surrounding ad hoc and disaster programs by
    generating benchmarks around metric production for these programs.
    Those benchmarks can then be applied to projected workload around
    upcoming programs and streamlining processes and systems.
        As of March 2020, FSA leaders, using the OPO tool, identified 268
    Farm Program Offices and 151 Farm Loan Program Offices to target for
    hiring in FY 2020. As of the end of September 2020, our successful FY
    2020 hiring efforts have resulted in 190 Farm Program offices and 130
    FLP offices still requiring additional staff.
    Insert 7
              Ms. Adams. I would like to ask a couple of questions about
            the impacts of the ERS and NIFA relocation, and the impact that
            it is having on 1890 land-grant universities. All 19 schools
            turned in their applications last November for the 1890
            scholarships, which received $40 million in mandatory funding
            in the 2018 Farm Bill, but it has been 3 months. They still
            haven't received the funding. They are concerned that the money
            which is somewhere in the neighborhood of $750,000 per school
            may not be available until late this spring for students
            entering school in the fall.
              Having been a professor for 40 years, I know that schools
            need to be able to notify students earlier than late spring
            about their scholarships so that their recruiting can make an
            informed decision.
              Given that about 68 percent of NIFA's positions are vacant,
            what is USDA doing to ensure this delayed funding doesn't
            prevent students from studying agriculture at one of our 1890s?
              Secretary Perdue. First of all, Ms. Adams, I am very
            disappointed to hear that report because it conflicts with what
            my people at NIFA have told me regarding that, particularly
            with the HBCUs regarding the student scholarships there. As I
            indicated in my earlier comments, it is my understanding that
            these are being disseminated, and I will specifically find out.
            If your facts are accurate, then I am extremely disappointed in
            the information I am being given about that. Our commitment in
            this move was that the services would not be inhibited, and
            that is my expectation in that way. We allowed some extensions
            in order to make sure that services were continued.
              Ms. Adams. Okay, great. Well, I hope you do look into that.
            That is the information that I have. You do have a timeline
            already for dispersing the funding?
              Secretary Perdue. Yes, ma'am. We actually prioritize those
            HBCU scholarships, because they were new and we know that the
            students were looking forward to them. As I said, I will check
            on that and if your facts are accurate, then I am very
            disappointed in the information I have been given.
              Ms. Adams. Okay. If you would get back to me, I would
            appreciate it.

        The peer-review panels completed their reviews in January 2020. In
    February 2020, all the 1890 land-grant universities were notified of
    grant award recommendations and that pre-award costs can be incurred up
    to 90 days before the start date of the award. The awards were
    officially announced by the agency on 23 April 2020. NIFA has been in
    contact with the administration of the 1890s, providing the required
    guidance and orientation for successful program implementation.
        During relocation, NIFA retained essential staff in Washington,
    D.C., associated with the 1890 programs, to assist with the
    implementation of the 1890 Scholarships Program and to help train the
    new staff that the agency was recruiting in Kansas City, MO.
        In October 2020, NIFA will begin requesting progress reports from
    the 1890 land-grant universities and processing continuation awards
    using the mandatory funding for the program in FY 2021. NIFA expects
    the 1890s to receive notification regarding FY 2021 funding in Spring
    of 2021.
    Insert 8
              Ms. Adams. Okay. Well, I strongly supported the inclusion of
            the Office of Urban Agriculture and Innovative Production in
            the farm bill, pushed for the funding. One of the provisions in
            the bill provided $10 million in mandatory money through the
            Commodity Credit Corporation. I would expect that with funding
            already available for use, that those grants would be
            implemented expeditiously, so I am glad that you are going to
            look into it.
              Do you have any updates on the implementation of the
            competitive grants, and of the office itself?
              Secretary Perdue. Yes, ma'am. I can't give you the definitive
            definition. I remember our staff mentioning that to me about
            where we were on it, but I would rather, since I can't be sure
            about it, I would rather tell you in a response in a QFR over
            where we are on those competitive grants.

        To institutionalize support for urban farming, the 2018 Farm Bill
    directed USDA to stand up a new Office of Urban Agriculture and
    Innovative Production. It is led by NRCS and works in partnership with
    numerous USDA agencies that support urban agriculture.
        The office is in the process of setting up a Federal Advisory
    Committee for the Secretary of Agriculture, as well as 10 new Urban and
    Suburban FSA County Committees. It recently provided grants and
    cooperative agreements through a competitive process.
        On August 12, the Farm Service Agency announced the first five
    Urban and Suburban FSA County Committee locations and requested
    nominees as part of the election process. The first five are located
    in: Richmond, VA; Philadelphia, PA; Cleveland, OH; Portland, OR; and
    Albuquerque, NM. The remaining five locations will be announced later
    this fall.
        The new committees will be fully stood-up in Fiscal Year 2021.
    Members will be local urban/suburban farmers who will help ensure fair
    and equitable administration of FSA farm programs in their county or
    multi-county jurisdiction.
        FSA began accepting nominations for urban county committee members
    on September 8. Urban farmers who participate or cooperate in an FSA
    program in the county selected may either be nominated or nominate
    themselves or others as a candidate. Organizations also may nominate
    candidates. All nomination forms must be postmarked or received in the
    local FSA office by October 2. Election ballots will be mailed to
    eligible voters beginning October 23.
        On August 25, the office announced the first-ever recipients of
    Urban Agriculture and Innovative Production Competitive Grants and
    Cooperative Agreements for Community Compost and Food Waste Reduction.
    These grants and projects were highly competitive. We received
    approximately 600 applications across both categories.

        Title: Grants for Urban Agriculture and Innovative Production
    (Planning Projects)

        Announced Availability: $1 million
        Date of Announcement: 5/6/2020
        Application Close Date: 7/6/2020
        Ceiling: $500,000
        Floor: $100,000
        Cost-Share: None
        Grant Announcement Date: 8/25/2020
        Amount Awarded: Approximately $1.14 million
        Number of Awards: 3

        Title: Grants for Urban Agriculture and Innovative Production
    (Implementation Projects)

        Announced Availability: $2 million
        Date of Announcement: 5/6/2020
        Application Close Date: 7/6/2020
        Ceiling: $500,000
        Floor: $100,000
        Cost-Share: None
        Grant Announcement Date: 8/25/2020
        Amount Awarded: Approximately $1.88 million
        Number of Awards: 7

        Title: Cooperative Agreements for Community Compost and Food Waste
    Reduction

        Announced Availability: $900,000
        Date of Announcement: 5/11/2020
        Application Close Date: 6/26/2020
        Ceiling: $90,000
        Floor: $45,000
        Cost-Share: 25% non-Federal
        Grant Announcement Date: 8/25/2020
        Amount Awarded: Approximately $1.09
        Number of Awards:13
    Insert 9
              Mr. Carbajal. Thank you, and looping back to my initial
            question on SNAP, is California listed on the waiver list that
            you mentioned earlier?
              Secretary Perdue. Let me see, there are several waivers in
            California. Yes, sir, there are 17 labor market areas waived in
            California.
              Mr. Carbajal. Are any of those San Luis Obispo and Santa
            Barbara County?
              Secretary Perdue. I think so.
              Mr. Carbajal. Is that a think so or a yes?
              Secretary Perdue. I can't say for sure. I believe that you
            are listed on part of the area. I don't know what those 17
            areas are specifically, but we have 17 labor market areas in
            California that waivers are issued.
              Mr. Carbajal. Great. If we could loop back later on, can I
            get that? That would be great.
              Secretary Perdue. We will get that for you.

        On February 28, 2020, the Food and Nutrition Service (FNS) approved
    California's request to waive the time limit for able-bodied adults
    without dependents (ABAWDs) in 17 Labor Market Areas (LMAs), not
    including San Luis Obispo or Santa Barbara County. This request was
    approved under the waiver standards set to begin April 1, 2020, under
    the final rule, Supplemental Nutrition Assistance Program: Requirements
    for Able-Bodied Adults Without Dependents (84 FR 66782) published
    December 5, 2019.
        On March 13, 2020, the United States District Court for the
    District of Columbia issued a stay pending judicial review of the
    December 5, 2019, final rule's provisions related to waivers. This
    preliminary injunction prevented California's waiver (the one approved
    on February 28, 2020) from taking effect. Therefore, California
    reverted to operating under the waiver in place since September 1,
    2019, which relied on the waiver criteria used before the December 5,
    2019, rule was published. This waiver included both San Luis Obispo
    County and Santa Barbara County and expired August 31, 2020.
        Next, FNS approved California's request for a statewide waiver of
    the time limit, effective July 1, 2020. The approval replaced the
    approval effective since September 1, 2019. This approval was also
    based on the previous waiver authority (published in the January 17,
    2001, final rule, Food Stamp Program: Personal Responsibility
    Provisions of the Personal Responsibility and Work Opportunity
    Reconciliation Act of 1996 (66 FR 4438) because it was approved while
    the preliminary injunction was in effect. This statewide waiver remains
    in place.
        Please note, on October 18, 2020, the United States District Court
    for the District of Columbia vacated the final rule. This did not
    impact the waiver currently in place in California since that waiver
    was already approved under the 2001 standards and not the standards of
    the vacated rule.
                                     ______

                              Submitted Questions
    Response from Hon. Sonny Perdue, Secretary, U.S. Department of
            Agriculture
    Questions Submitted by Hon. Collin C. Peterson, a Representative in
            Congress from Minnesota
        Question 1. There are several ag commodities, like wool and
    sheepskins, that have been hit hard by retaliatory tariffs but were not
    part of the USDA's Market Facilitation Program. Since the
    implementation of these tariffs, we've seen an 85% drop in wool exports
    by value and an even worse picture for sheepskin exports. As we head
    into this year's shearing season, wool warehouses across the country
    already sitting on 1 year's production and will soon have two marketing
    seasons of backlog. Tools like the Wool Loan Deficiency Program aren't
    working, without wool sales there is nothing to report. What is USDA
    doing to help bridge this gap and protect sheep producers from market
    conditions like we're currently seeing?
        Answer. Marketing Assistance Loans (MALs) are available for shorn
    wool and Loan Deficiency Payments (LDPs) are available for both shorn
    wool and wool pelts, and neither program requires the commodity to be
    sold in order to participate in the programs. In the crop year of 2020,
    there were over $2 million in LDP payments made to wool producers
    across 36 States. This represents the highest levels of LDP payments
    since 2011 and a substantial increase relative to last year's payments
    of $6,159.88.
        U.S wool producers also expressed an interest in adding wool as an
    eligible commodity to the Farm Storage Facility Loan (FSFL) program as
    a means of low-cost financing for producers to store, handle, and
    transport wool. The addition of wool as an eligible commodity for the
    FSFL program has been approved and will benefit wool producers
    nationwide.

        Question 2. African Swine Fever continues to be a major concern for
    the domestic pork industry. Most industry leaders estimate that China
    has lost at least half of their hogs, though that number could be much
    higher.
        How is USDA coordinating with counterparts in Asia and Europe to
    better prevent and respond to this disease?
        Answer. The United States is a member of the World Organization for
    Animal Health (OIE), a global body dedicated to improving animal health
    worldwide through communication, collaboration, and setting standards
    for the international trade in animals and animal products among its
    182 member states. In concert with OIE, the U.S. participates in
    international forums focused on animal diseases, and African Swine
    Fever (ASF) in particular, to discuss strategies to limit their spread.
        USDA's Animal and Plant Health Inspection Service (APHIS) officials
    work with foreign governments directly to learn more about the spread
    of agricultural diseases and effective methods to reduce their
    transmission. The Agency has assisted foreign governments in
    controlling these diseases within their own boundaries, which reduces
    the threat of introduction to the U.S. As one example, APHIS is
    coordinating activities with Vietnamese animal health officials to
    improve their response activities to domestic ASF outbreaks. This year
    the Agency, in collaboration with the National Pork Board, the
    University of Maine Cooperative Extension, the Virginia Department of
    Environmental Quality, and the Swine Health Information Center, began a
    project in Vietnam to track ASF virus survival in carcasses undergoing
    composting and study ASF virus survival in swine slurry under field
    conditions. APHIS has also spent considerable time negotiating with
    Japan about mutual acceptance of zoning for various swine diseases.
        The U.S. also works closely with the European Union and its Member
    States to track the prevalence of ASF and to assess the continent's
    capacity to limit its spread. APHIS regularly monitors the E.U.'s ASF
    zones and their level of restrictions. In a 2019 project, U.S.
    officials reviewed the swine health status of 13 E.U. Member States
    that were deemed to be representative of the trade union. APHIS
    concluded that the Member States have sufficient animal health programs
    that allows them to quickly detect ASF in wild boar and domestic swine
    populations, enabling a swift emergency response, as we saw recently in
    Germany. We also determined that they have traceability systems capable
    of differentiating the origin of live swine from ASF affected areas,
    which allows them to ensure that animals and products from ASF affected
    areas are not exported to the U.S., which further protects U.S. animal
    health.
        USDA and the Department of Homeland Security's Science and
    Technology Directorate are collaborating on vaccine research and
    enhancing diagnostic technologies for ASF. In addition, USDA's
    Agricultural Research Service and APHIS formed a task force at the Plum
    Island Animal Disease Center to improve diagnostics and vaccines, so
    that pork producers can better protect their animals in the future.
    APHIS is also developing additional strategies to enhance diagnostic
    capabilities and enhance testing efficiencies.
        APHIS has also increased the number of National Animal Health
    Laboratory Network laboratories approved for ASF testing to 47, more
    than quadrupling U.S. laboratory capacity for this disease. In
    addition, by approving the pooling of samples, we have increased
    testing capacity for ASF to 200,000 animals in 24 hours.

        Question 2a. How is USDA working with the Department of Homeland
    Security and other government agencies to prevent the introduction of
    ASF including through imported products?
        Answer. The Department of Homeland Security's Customs and Border
    Protection (CBP) is an invaluable partner in preventing the
    introduction of invasive diseases, like ASF, into the United States.
    CBP, in coordination with APHIS, is tasked with inspecting travelers
    and cargo arriving into the United States and enforcing APHIS
    regulations at ports of entry. In response to concerns about the
    increased international reports of ASF, APHIS is working with CBP to
    ensure it focuses additional attention on passengers traveling from
    affected countries and enhances its inspections of cargo for illegal
    pork and pork products.
        In addition to the use of risk-based assessments, USDA-trained
    detector dogs are an essential tool for rooting out contraband pork
    products. Detector dog teams search for prohibited agricultural
    products at major U.S. ports of entry (airports and land border
    crossings), as well as mail and cargo facilities. APHIS is working with
    CBP to increase the number of beagle teams from 119 to 184, ensuring
    travelers who may be carrying agricultural products receive secondary
    inspection.
        APHIS also works closely with state animal health officials to
    encourage farms to follow strict on-farm biosecurity protocols and best
    practices, and coordinates with states on response plans should a
    detection ever occur in the U.S. Along with long-term ASF planning,
    APHIS works with state and Federal partners to identify and investigate
    incidents involving sick or dead feral swine to determine if they
    should be tested for ASF or other foreign animal diseases.

        Question 2b. What impacts do you expect this outbreak to continue
    to have on China's demand for soybeans as well as other animal
    proteins?
        Answer. The impact of African swine fever (ASF) has driven China's
    demand for imported meat to record highs this year. USDA forecasts that
    China's pork, beef and chicken meat imports will all reach records in
    2020 due to a more than 20 year low in pork production in China. U.S.
    pork exports to China have more than tripled this year while exports of
    U.S. beef and chicken meat have also made strong gains. China continues
    to rebuild its herd from ASF, and this is now driving a strong recovery
    in feed demand. USDA forecasts that China's soybean imports from the
    U.S. will rise 19 percent in marketing year 2019/20 and make further
    gains next year in large part due to anticipated rebuilding of the
    swine herd. China has also restricted imports of pork from Germany
    following its first confirmed case of ASF. Germany is the number three
    supplier of China's pork imports this year after Spain and the United
    States. This action will likely result in increased pork exports from
    other major suppliers, including the United States. In 2020, the United
    States successfully opened new markets in China for U.S. producers of
    Timothy hay, alfalfa hay pellets and cubes, and barley, all of which
    are used in animal feed.

        Question 2c. How are you working with partners in Canada and Mexico
    on a North American ASF prevention strategy?
        Answer. The U.S., Canada, and Mexico work collaboratively and share
    technical information in an open and transparent manner that supports
    the timely detection and control of swine diseases including ASF in
    North America. In August 2019, the Chief Veterinary Officer (CVO) for
    the United States, along with the CVOs for Canada and Mexico, dedicated
    a special session of the 18th North American Animal Health Committee
    Meeting to discussing ASF, the actions we are taking to prevent its
    spread to North America, and how to minimize the impact of this disease
    should it be introduced into the region.
        In addition to discussing ASF strategies at this meeting, the three
    countries established a Swine Health Working Group to address diseases
    of concern in North America, including ASF. This working group consists
    of government and private industry representatives and meets regularly.
        As USDA continues its productive transnational dialog[ue], we will
    explore all viable opportunities to keep North America ASF-free.

        Question 3. Chronic Wasting Disease threatens farmed and wild deer
    alike. How is USDA working with your counterparts at the Department of
    the Interior and other Federal agencies to get at a comprehensive plan
    to address this disease?
        Answer. The Fiscal Year 2020 agriculture appropriations bill gave
    APHIS an additional $5 million to coordinate chronic wasting disease
    (CWD) activities among state and Federal partners to address the
    disease. In May, APHIS and the Department of the Interior hosted a
    summit with key stakeholders, state departments of agriculture and
    natural resources, and Native American Tribal representatives to
    determine a set of coordinated priorities to help determine funding
    priorities. The summit focused on identifying CWD management priorities
    and knowledge gaps, as well as possible methods to implement prevention
    and control strategies, how to evaluate their efficacy, and the
    development of tools needed to do so. The agreed priorities were:

      A.  improving CWD management of affected farmed herds and free
                ranging endemic populations

      B.  improving CWD management of affected areas or premises

      [C].  conducting additional research on amplification assays

      [D].  conducting additional research on predictive genetics

      [E].  developing and/or delivering educational outreach materials or
                programs

        In July, APHIS announced the availability of funding for projects
    aligned with the priorities from this summit. APHIS solicited project
    proposals from states and tribal nations and evaluated them based upon
    these coordinated priorities. The proposals were reviewed by subject
    matter experts from APHIS, Agricultural Research Service, and U.S.
    Forest Service, as well as from agencies in the Department of the
    Interior. APHIS is in the process of awarding these cooperative
    agreements. The projects selected will build upon the connections USDA
    has with state and Federal partners as we work toward our shared goal
    of reducing the CWD's impact and spread.
        APHIS also participates in the Department of the Interior Task
    Force on CWD to discuss the status of current CWD projects, as well as
    further ways the two departments can collaborate on CWD control and
    research.

        Question 4. How is USDA incorporating the China Agreement
    commitments into its commodity forecast reports?
        Answer. Since February, publicly available information and data
    pertaining to the China Agreement has been reflected in USDA's World
    Agricultural Supply and Demand Estimates (WASDE) and related reports
    such as the Outlook for U.S. Agricultural Trade. USDA's trade forecasts
    continue to incorporate actual export sales and market conditions, and
    as part of a broader estimation of supply and demand for major
    commodities, these forecasts also reflect analysis of a wide range of
    economic and market variables in the United States in other countries.
    More details on how the China Agreement is incorporated into USDA's
    trade forecasts may be found in the 2020 U.S.-China Trade Agreement
    report: https://www.usda.gov/sites/default/files/documents/usda-trade-
    forecasts-us-china-agreement.pdf. [See Attachment 2].

        Question 5. The issue of establishing separate enterprise units for
    crops under the Federal Crop Insurance Program has emerged in several
    regions of the country. In North Dakota and Montana, producers have
    single enterprise units covering both Spring Wheat and Durum. Yet,
    those are two different crops with different loss ratios and growing
    histories. Combining them into one enterprise unit adversely affects
    the production history of one crop over another, which in turn lowers a
    producer's insurance guarantee and any indemnity that may occur. What
    is the status of RMA's efforts to review and set in motion the
    development of separate enterprise units for Spring Wheat and Durum?
        Answer. RMA is planning to implement changes to allow separate
    enterprise units for Spring and Durum wheat. RMA plans to have this
    change implemented as early as the 2022 crop year.
    Questions Submitted by Hon. David Scott, a Representative in Congress
            from Georgia
    1890s
        Question 1. Secretary Perdue, as you know 1890s Land-Grant
    Universities and Colleges produce some of the most qualified leaders
    and workers within the agriculture industry. These individuals not only
    diversify the workforce but also graduate leaders within science,
    technology, engineering, agriculture, and mathematic related fields. I
    myself am a graduate of Florida A&M University and recognize the
    economic importance of these institutions. However, several actions
    from the U.S. Department of Agriculture (USDA) have slowed the much-
    needed collaboration between USDA and the 1890s institutions.
        Without Congressional approval, USDA continued efforts to relocate
    essential USDA offices including the Economic Research Service (ERS)
    and the National Institute of Food and Agriculture (NIFA) to Kansas
    City, Missouri. This relocation would remove essential offices from the
    nation's capitol that helps inform key policy decisions related to the
    1890s. In fact, key NIFA and ERS employees have left their role at
    USDA, drastically slowing down assistance to 1890s in receiving grant
    awards or impactful assistance in the management of Federal grant
    programs.
        What are your plans to ensure NIFA and ERS are providing grant
    funds and other essential services to 1890s Land-Grant Universities and
    Colleges given your plans to relocate ERS and NIFA to Kansas City? Has
    USDA replaced the individuals who left their roles in NIFA and ERS?
        Answer. ERS produces and disseminates objective policy-relevant
    research, market outlook official statistics and data on agriculture,
    food, natural resources, and rural America. This work is accomplished
    through internal economists and research economists and also includes
    collaboration with stakeholders, including the 1890 land-grant
    universities. Since relocation to Kansas City in September 2019, the
    agency's essential work continues. The move allows the Agency the
    ability to identify new opportunities to engage with regional and
    national 1890 institutions.
        When NIFA relocated to Kansas City in September 2019, the agency
    retained essential staff associated with the 1890 programs to assist
    with providing grant funds and other essential services to the 1890
    Land-Grant Universities and Colleges. The retained 1890 program staff
    were able to launch two new Farm Bill programs, i.e., Scholarships for
    Students at 1890 Institutions and the Centers of Excellence at 1890
    Institutions; meet with visitors and/or provide services to the
    Universities; and help recruit and train new staff with experience and/
    or knowledge of the 1890s. NIFA has recruited new staff and assembled
    an 1890 program team in Kansas City with knowledge of and experience to
    serve the 1890 land-grant universities. NIFA is committed to continue
    to inform key policy decisions and provide excellence in customer
    service to the 1890 community.
        As of the end of August, NIFA has hired 124 new employees in Kansas
    City and plans to bring new employees on board every pay period. The
    Agency currently has 82 total recruitments in process including those
    in the pre-announcement phase, post-announcement phase and posted on
    USAJobs.gov.

        Question 2. Secretary Perdue, as you know, under the Obama
    Administration, a memorandum of understanding (MOU) was signed by USDA
    Secretary Thomas J. Vilsack, and the previous Chairman of the Council
    of 1890s Universities, Dr. Juliette B. Bell. This MOU was signed in May
    2015 and is set to expire in May 2020. The MOU set parameters for
    continued collaboration and coordination between the 1890s institutions
    and USDA so that these institutions, and the students they serve, can
    thrive. However, collaborative efforts between USDA and the 1890s have
    been minimal. In fact, one of the first convenings between USDA and the
    1890s was during my commemorative event, in June 2019, celebrating the
    passage of the 1890s Agriculture Scholarship Program passed into law
    via the Agriculture Improvement Act of 2018 (P.L. 115-334). In this
    meeting, the 1890s Council asked for continued collaboration between
    USDA and the institutions.
        Given that the MOU signed by the Obama Administration is set to
    expire in a few months, what are your plans to meet with the 1890s
    Council?

        Question 2a. Are there any efforts to update the MOU before it is
    set to expire? In these plans, are there plans to expand 1890s
    collaboration beyond NIFA? What are your efforts to create and sign a
    new MOU to continue and advance collaboration between 1890s
    institutions and USDA? To what extent have you reached out to the 1890s
    council to update and modernize the MOU?
        Answer 2-2a. USDA-National Institute of Food and Agriculture (NIFA)
    collaborates with the 1890 Universities to administer six base programs
    with approximately $190 Million in funding. These programs support
    internships, training, faculty exchange opportunities, mentoring,
    investments in facilities and equipment and other collaborative mission
    relevant activities. NIFA held several outreach activities to seek and
    utilize input from 1890s to develop the new 1890s Agriculture
    Scholarship Program and the 1890 Centers of Excellence Program. In
    addition, NIFA organized a listening session in June for the 1890s to
    provide feedback on collaboration with NIFA; and meets regularly with
    the 1890 Association of Research Directors and the 1890 Association of
    Extension Administrators. We also met with the 1890 Presidents at the
    November 2019 Association of Public and Land Grant Universities, and
    have for at least the last two years.
        On December 19, 2019, Secretary Sonny Perdue announced the
    reestablishment of the United States Department of Agriculture (USDA)--
    1890 Task Force partnership with the 1890 Council of Presidents. The
    Task Force serves as a principal working group for the Secretary and
    his or her designees to explore mutual beneficial and short and long
    term goals. On March 11, 2020, the 1890 Task Force Committee Members
    participated in a joint meeting with other minority serving
    institutions and USDA, discussing the needs, issues and assets of the
    1890 Institutions, the communities they serve and USDA programs and
    opportunities available to assist. USDA is committed to ensuring
    equitable partnerships and opportunities to maximize outcomes for the
    1890 Institutions and the communities they serve. The next meeting was
    tentatively scheduled for October. The Office of Partnerships and
    Public Engagement (OPPE) has been in constant communication with the
    1890 Task Force Leadership. Due to strain of COVID-19 on 1890
    Institutions of Higher Learning, as well as the Nation, the 1890 Task
    Force Leadership and OPPE agreed to reschedule the meeting at a later
    date. The date is to be determined, in collaboration with the 1890 Task
    Force Leadership.
    Rural Broadband
        Question 3. According to the Georgia Broadband initiative, in 2014,
    almost 1.6 million Georgians lacked access to broadband. While the
    state of Georgia has made great strides at the state level, under-
    served and rural communities still lack significant access to broadband
    services. I applaud your commitment to awarding up to $550 million to
    expand broadband infrastructure and services in rural America via the
    ReConnect program offered through USDA's Rural Utilities Services
    (RUS). It is essential that we provide these funds to the communities
    who need it the most and avoid duplicative efforts.
        Are you aware of any additional steps that RUS can take, such as
    coordinating more closely with other Federal agencies, like the Federal
    Communications Commission, that track broadband availability and also
    award broadband funding to avoid duplicative spending or overbuilding
    in places that already have broadband?
        Answer. The Agency uses all available information, along with our
    own independent assessment, to ensure our funding goes to the most
    rural unserved communities. We use the information submitted by
    applicants and existing service providers along with any other
    available resources, such as state maps of broadband service and
    information from the FCC and NTIA to independently validate whether
    broadband service is available at the household level. This validation
    often involves the Agency putting ``boots on the ground,'' sending
    staff or contractors out to assess the facilities in the area and talk
    with local residents, government agencies, and businesses to help
    confirm whether sufficient access to broadband service is available.
        Many states are also engaged with mapping of broadband access in
    their state, and we are working closely with those states to
    incorporate their information into our validation process. Similarly,
    we are working with the Department of Commerce to integrate the
    National Broadband Map that they have developed and continue to refine
    into our overall review process. We are also working with our partners
    at the FCC to provide updates on where our program dollars are going to
    avoid duplicative spending and overbuilding.
    EQIP
        Question 6. It is estimated that by 2050, the global demand for
    food will be 60 percent higher than it is today. To meet this daunting
    challenge, it is essential that growers have access to technologies
    that will help growers produce more with less, while preserving water
    and other natural resources. Our farm conservation programs are
    intended to help growers access these technologies.
        Cloud-based remote telemetry data systems for irrigation scheduling
    help growers maximize efficiency and increase productivity in a
    scalable and cost-effective manner. For example, in field trials Omaha-
    based Lindsay Corporation found that remote telemetry with cloud-based
    irrigation scheduling allowed growers to realize:

       A 3% increase in corn yield (driving profit of $25 per
            acre);

       A 17% reduction in water usage (saving more than 9.25
            million gallons on a 130 acre field);

       A $10/acre reduction in energy costs; and

       A 75% reduction in time spent going back and forth to the
            fields (another $5/acre saved).

        The 2018 Farm Bill states that USDA may provide EQIP payments for
    water conservation scheduling. The accompanying report goes on to state
    that USDA should recognize remote telemetry data systems for irrigation
    scheduling as a best management practice. I sincerely hope that NRCS'
    irrigation efficiency conservation practice standard is updated to
    incorporate this important water and energy saving tool.
        What is NRCS' timeframe for updating its conservation practice
    standards?
        Answer. On August 19, 2020 NRCS Conservation Practice Standard
    (CPS) Irrigation Water Management (Code 449) was updated to include the
    use of remote telemetry data systems with cloud-based irrigation
    scheduling capabilities as a best management practice.

        Question 6a. How does NRCS plan to educate states and growers about
    changes to its conservation practice standards and about the benefits
    of technology such as cloud-based remote telemetry data systems for
    irrigation scheduling?
        Answer. NRCS State offices have received notification on the update
    of our national standards and will be incorporating those changes into
    state level standards. NRCS provides training to field staff on
    standards updates as a normal operating procedure and is determined by
    typical field office workload needs. NRCS publishes standard updates on
    a national webpage and distributes press releases providing public
    notice of standard revisions. Field staff provide information to
    producers that they work with on available conservation practices to
    address resource concerns.

        Question 6b. Is NRCS working to incorporate water conservation
    scheduling payments for technology such as cloud-based irrigation
    scheduling tools into its EQIP regulations?
        Answer. NRCS currently offers financial assistance for the
    implementation and utilization of cloud-based irrigation scheduling
    tools as well as other technologies through the Environmental Quality
    Incentives Program (EQIP), Conservation Stewardship Program (CSP), and
    Agricultural Management Assistance (AMA) Farm Bill conservation
    programs.
    Questions Submitted by Hon. Jim Costa, a Representative in Congress
            from California
        Question 1. How are you evaluating the success of the trade
    assistance packages? What kind of analysis is being conducted to
    estimate the impacts of these programs in the short and long runs?
        Answer. The most recent ERS farm income release from September
    2020, lets us examine the effect of the Market Facilitation Programs on
    the farm sector, particularly, the impact on income and liquidity.
    Payments from the Market Facilitation Programs totaled $5.1 billion in
    2018, $14.2 billion in 2019, and $3.8 billion in 2020. Net farm income
    is estimated at $83.7 billion for 2019. Without MFP, net farm income in
    2019 would have been 17 percent lower. Looking at liquidity, producers'
    debt repayment capacity--(Interest Expenses)/(Net Farm Income +
    Interest Expenses)--was 19 percent in 2019, in the absence of MFP debt
    repayment capacity would have been 22 percent. Improving liquidity in
    one year can have an impact on solvency risk in future years.
        Farmers' exposure to debt is not forecasted to increase
    dramatically for 2020, in part due to Federal commodity support,
    including MFP. The agricultural sector's risk of insolvency, as
    measured by the debt-to-equity ratio, is forecasted for 2020 to be at
    its highest level since 2002, at 16.2 percent. However, this rate is
    low by historic standards, and the likelihood of loan default across
    the ag sector remains historically low. The debt service ratio--a
    measure of the producer's share of production used to cover current
    debt obligations, is projected to decrease in 2020, a consecutive
    decrease from the previous year, but the ratio is still close to the 10
    year average.
        Data on bank sector performance is lagging but is currently
    available to the end of quarter 1, 2020. According to the latest
    financial data from the Kansas City Fed, repayment rates for non-real
    estate farm loans in the first quarter of 2020 were largely unchanged
    over the previous quarter. The share of delinquent non-real estate farm
    loans at commercial banks at the end of Q1 2020 increased 15 percent
    over the previous quarter, to 1.68 percent. Delinquency rates at
    commercial banks have been increasing steadily since 2016 and the Q1
    rate was the highest since Q2 of 2011. For agricultural banks, the rate
    of non-performance on loans--nonaccruing loans or loans past due by 90
    days or more--generally held steady at the end of Q1 2020 relative to
    the previous quarter, but the share of such banks holding 2-5 percent
    of their loans as outstanding increased 22 percent in Q1 of 2020
    relative to the previous quarter.

        Question 2. It was reported that USDA was planning to detail some
    FAS staff to USTR for the purpose of helping review tariff exclusion
    requests. Did that occur and how did USDA compensate for the lost staff
    while trying to continue to promote U.S. ag products elsewhere?
        Answer. To support the Administration's initiative of creating a
    fair and equitable trading environment for Americans, USDA detailed
    three staff for roughly four months to USTR. These individuals assisted
    in reviewing tariff exclusion requests. Due to the short tenure of the
    detail, USDA was able to effectively manage workstreams by adjusting
    workflows, thereby ensuring that our mission of expanding U.S.
    agricultural exports was achieved.

        Question 3. Given the need to implement the Market Facilitation
    Program, what field staff has USDA added to ensure this program didn't
    exasperate existing workload challenges or delay other FSA work?
        Answer. FSA utilized temporary employees to assist with program
    delivery of MFP and other standing programs.

        Question 4. You announced that the initial 2018 round of trade
    assistance would provide up to $12 billion in support. How much money
    actually went out the door in that first round? The second version of
    trade in 2019 was supposed to provide up to $16 billion in support. To
    date, how much of that amount has actually gone out the door?
        Answer. The 2018 MFP payments administered by FSA as of March 5,
    2020, were $8,638,965,831.00 and the 2019 MFP payments were
    $14,368,831,387.51. As of September 25, 2020, the 2018 MFP payments
    were $8,649,570,031.00 and the 2019 MFP payments were
    $14,501,532,316.26.
        As part of the short-term trade mitigation package announced by
    USDA on August 27, 2018, the Foreign Agricultural Service (FAS) was
    given responsibility for administering the Agricultural Trade Promotion
    Program (ATP), one of three new USDA programs created to provide
    assistance to U.S. farmers in response to trade damage from unjustified
    retaliation by foreign nations. In the initial 2018 round of trade
    assistance, the ATP was provided with $200 million in funding. FAS
    allocated the entire $200 million to ATP program participants on
    January 24, 2019. In the second version of trade assistance in 2019,
    the ATP was provided with an additional $100 million in program
    funding. FAS allocated the entire $100 million in additional ATP
    funding to program participants on July 18, 2019.

        Question 5. What is the total amount of purchases that have been
    made through the Food Purchase and Distribution Program? How much more
    is planned? How are you working with recipient organizations to matches
    purchases with need while still having some impact with respect to
    trade damages?
        Answer. Food Purchase and Distribution Program/Trade Mitigation.
    During the past two fiscal years of USDA's trade mitigation purchase
    efforts, over $2.3 billion in agricultural products has been purchased
    and distributed to food banks nationwide. An analysis by the Office of
    the Chief Economists provided the list of commodity groups and target
    amounts to be purchased. As with any USDA commodity purchased for The
    Emergency Food Assistance Program (TEFAP), food bank operators have the
    ability to order as much of a particular commodity as is available.
    During the design process for the trade mitigation program, staff from
    the Agricultural Marketing Service and Food and Nutrition Service
    collaborated to ensure product form and packaging met the needs of food
    bank recipients. Trade mitigation purchases were complete as of the end
    of FY20 with deliveries extending to calendar year 2021.

        Question 6. Would you please outline how you see the National Agro
    and Biodefense Facility working with but not duplicating USDA's
    existing animal disease prevention functions? How are the missions
    distinct and how do we make sure one effort doesn't cannibalize
    resources from the others?
        Answer. NBAF will ultimately replace the existing Plum Island
    Animal Disease Center (PIADC) and all its essential functions.
    Furthermore, once NBAF becomes fully operational, it will provide
    several ``firsts'' for the U.S., including a maximum containment large
    animal Biosafety Level (BSL) 4 facility to study particularly dangerous
    zoonotic agents in large animals, and a Biologics Development Module
    (BDM) to enhance and expedite the transition from research to
    commercially viable countermeasures. This will place NBAF at the nexus
    of the biodefense and agro-defense domains and establish NBAF as a
    global leader among biocontainment laboratories.
        ARS is responsible for research at NBAF. Part of the ARS mission is
    to provide APHIS with the scientific information and tools needed to
    prevent and control a foreign animal disease outbreak in livestock.
    NBAF will not duplicate the existing USDA animal disease prevention
    functions but rather function as a critical component of our biodefense
    infrastructure, consistent with the President's National Biodefense
    Strategy.
        The research mission at NBAF will complement other ARS laboratories
    with a biodefense mission. For example, while NBAF focuses on foreign
    animal diseases of livestock, the National Poultry Research Center in
    Athens, Georgia, specializes on foreign animal diseases of poultry,
    such as highly pathogenic avian influenza and virulent Newcastle
    Disease. While NBAF will be able to research foreign animal diseases in
    small wildlife animal hosts such as bats, the National Animal Disease
    Center in Ames, Iowa, has unique high containment facilities that
    enables research on large wildlife animal species such as bison and
    elk, and focuses on primarily domestic diseases. Importantly, NBAF will
    fill important gaps in our existing biodefense research program and
    allow USDA for the first time to conduct research on especially
    dangerous biosafety level (BSL)-4 agents such as Nipah virus and
    Crimean-Congo Hemorrhagic Fever.

        Question 7. Food for Progress has two principal objectives: to
    improve agricultural productivity and to expand trade of agricultural
    products. Why do you propose to eliminate this program in the recent
    budget request given the current need to open new markets?
        Answer. The President's FY 2021 Budget proposes to eliminate the
    Food for Progress (FFPr) program because development expertise is
    concentrated in other agencies, most notably the U.S. Agency for
    International Development (USAID), which can administer development
    programs at a much lower cost than FFPr. The FFPr program provides for
    the donation of U.S. commodities to developing countries. U.S.
    agricultural commodities donated to recipient countries are sold in the
    local or third-country markets generally at a significant loss to U.S.
    taxpayers and the cash proceeds of those sales are used to fund
    programs that aim to improve agricultural productivity in the recipient
    county. International development programs are also better aligned with
    the USAID mission and expertise. The USAID mission highlights
    international development and humanitarian responses while the USDA
    mission highlights domestic agricultural production. In line with its
    mission, USAID seeks to use food aid to address humanitarian
    objectives.

        Question 8. Recently, USDA announced a recommitment to reducing
    food waste by 50% in line with the United Nations Sustainable
    Development goals.
        How did you established the baseline we are using to measure
    progress?
        Answer. To measure and describe progress against the goal, the
    following two different, but equally important, baselines were chosen
    for the 2030 Food Loss and Waste (FLW) reduction goal:

      i.  For food waste in the United States, EPA's ``Advancing
                Sustainable Materials Management: Facts and Figures''
                (https://www.epa.gov/facts-and-figures-about-materials-
                waste-and-recycling/advancing-sustainable-materials-
                management-0 [See Attachment 3]) provides an estimate of
                the amount of food going to landfills and combustion with
                energy recovery from residences, commercial establishments
                (e.g., grocery stores and restaurants), and institutional
                sources (e.g., school cafeterias). Pre-consumer food
                generated during the manufacturing and packaging of food
                products is not included in EPA's food waste estimates.
                Using the available data, 2010 was selected as a baseline
                at 218.9 pounds of food waste per person sent to landfills
                and combustion with energy recovery. The 2030 FLW reduction
                goal aims to reduce food waste going to landfills and
                combustion with energy recovery by 50 percent to 109.4
                pounds per person.

      ii.  For food loss in the United States, USDA's Economic Research
                Service (https://www.ers.usda.gov/publications/pub-details/
                ?pubid=43836 [See Attachment 4]) has estimated the amount
                of available food supply that went uneaten at the retail
                and consumer levels. In the baseline year of 2010, food
                loss was 31 percent of the food supply, equaling 133
                billion pounds and an estimated value of $161.6 billion.
                The 2030 FLW reduction goal aims to cut food loss at the
                retail and consumer level in half, by approximately 66
                billion pounds.

      iii.  Neither estimate provides a comprehensive evaluation of food
                loss and waste in the United States. However, reductions in
                both these estimates will provide evidence of progress in
                reducing food loss and waste and the serious environmental
                impacts associated with landfilling food. A variety of
                other data collection efforts across the country will help
                provide information on other segments of the supply chain.

        Question 8a. How do you intend to accomplish this goal? Will a more
    detailed plan for achieving this goal be discussed with stakeholders
    and/or published by the department? If yes, when?
        Answer. The goal will be accomplished by a multifaceted approach,
    as reflected in the Winning on Reducing Food Waste Initiative (https://
    www.usda.gov/foodlossandwaste/winning [See Attachment 5]) (the
    Initiative), a collaborative effort announced in a joint agency formal
    agreement signed in October 2018 by USDA, EPA, and FDA. Through the
    Initiative, the agencies affirm their shared commitment to reduce food
    loss and waste. They also agree to coordinate action to leverage
    government resources to reduce food loss and waste, including action to
    educate Americans on the impacts and importance of reducing food loss
    and waste. To achieve the vision for the Initiative, the agencies
    developed an Interagency strategy (https://www.usda.gov/sites/default/
    files/documents/interagency-strategy-on-reducing-food-waste.pdf [See
    Attachment 6]) to prioritize and coordinate their efforts with six
    priority actions areas to reduce food waste:

      iv.  Priority Area 1: Enhance Interagency Coordination

      v.  Priority Area 2: Increase Consumer Education and Outreach Efforts

      vi.  Priority Area 3: Improve Coordination and Guidance on Food Loss
                and Waste Measurement

      vii.  Priority Area 4: Clarify and Communicate Information on Food
                Safety, Food Date Labels, and Food Donations

      viii.  Priority Area 5: Collaborate with Private Industry to Reduce
                Food Loss and Waste Across the Supply Chain

      ix.  Priority Area 6: Encourage Food Waste Reduction by Federal
                Agencies in their Respective Facilities

        In developing that strategy, the agencies built on information from
    several sources, including, but not limited to:

      x.  (1) Managing for Results: Key Considerations for Implementing
                Interagency Collaborative Mechanisms (U.S. Government
                Accountability Office),

      xi.  (2) A Call to Action by Stakeholders: United States Food Loss
                and Waste Reduction Goal developed by EPA in consultation
                with USDA,

      xii.  (3) A Roadmap to Reduce U.S. Food Waste (Rethink Food Waste
                through Economics and Data (ReFED)), and

      xiii.  (4) Don't Waste, Donate: Enhancing Food Donations through
                Federal Policy (Harvard Food Law and Policy Clinic and
                Natural Resources Defense Council).

        Activities in these six priority action areas will help reach the
    2030 goal. In addition to the interagency collaborative effort, USDA,
    EPA and FDA each are spearheading their own activities to reduce food
    loss and waste. In February 2020, for example, USDA Secretary Perdue
    announced the Agricultural Innovation Agenda (https://www.usda.gov/
    sites/default/files/documents/agriculture-innovation-agenda-vision-
    statement.pdf [See Attachment 7]) (AIA), a department-wide effort to
    better align USDA's resources, programs, and research to provide
    farmers with the tools they need to be successful. The mission is to
    increase U.S. agricultural productivity to help meet future demand,
    while cutting the environmental footprint of U.S. agriculture in half,
    with specific goals on water quality, carbon sequestration, renewable
    energy, and reduction of food waste by 2050. The draft AIA report under
    development includes recommendations to further improve U.S. food loss
    and waste metrics. In March 2020, USDA hired a USDA Food Loss and Waste
    Liaison who is actively interacting with stakeholders and collaborating
    with Federal partners to reduce food waste.

        Question 8b. Do you expect to promulgate any new regulations or
    issue any formal guidance related to food waste reduction?
        Answer. There is no plan for new food waste regulation. Confusion
    over the meaning of dates applied to food products can result in
    consumers discarding wholesome food. Therefore, in April 2019, USDA
    issued a new fact sheet on date labeling (https://www.fsis.usda.gov/
    wps/portal/fsis/topics/food-safety-education/get-answers/food-safety-
    fact-sheets/food-labeling/food-product-dating/food-product-dating [See
    Attachment 8]) on food packages, which includes relevant labeling
    information and a recommendation encouraging food manufacturers and
    retailers that apply product dating to use the ``Best if Used By''
    phrase to convey quality dates.
        In addition, USDA posted FAQs on the Bill Emerson Good Samaritan
    Food Donation Act and is actively engaged in outreach to consumers and
    manufacturers to increase food donations.

        Question 8c. The 2018 Farm Bill established a new Food Loss and
    Waste Reduction Liaison to coordinate the Department's work on this
    subject. If reducing food waste is a priority for this Administration,
    why did the President's budget request include no funds for this
    position?
        Answer. USDA developed its budget request in coordination with the
    Office of Management and Budget. Reducing food waste is a priority for
    the Administration and we have looked for ways to balance that work and
    forward that agenda while operating within our means. Congress
    appropriated $400,000 in the FY 2020 appropriations for this purpose
    and we have established a fulltime Food Loss and Waste Reduction
    Liaison for FY 2020. We will continue to work through our budget
    process to do our best to support the multiple unfunded requests by
    Congress in the 2018 Farm Bill while balancing our resources to
    successfully meet our funded obligations.
    Submitted Question by Hon. Filemon Vela, a Representative in Congress
            from Texas
        Question. With so many rural communities still on the wrong side of
    the digital divide, it is important that broadband programs focus on
    unserved areas. I understand that the RUS ReConnect program uses a
    ``challenge process'' to get input on which areas are served to avoid
    spending funds on places that already have broadband. But, it has come
    to my attention that RUS doesn't release information about how
    challenges were resolved. Do you think that requiring RUS to make
    public how it resolved each challenge prior to awarding funding would
    improve program transparency?
        Answer. Because of the restriction in Section 701 of the RE Act,
    RUS cannot publicly release information submitted by existing service
    providers under a Public Notice Response (PNR). Notwithstanding that
    restriction, however, RUS has been responding directly to PNR
    submitters as to whether or not the information they submitted against
    a ReConnect application was accepted or not, with detailed reasons for
    its decision in the response.
    Submitted Question by Hon. TJ Cox, a Representative in Congress from
            California
        Question. In the 21st Congressional District of California we
    produce a substantial portion of the nation's pulses, such as garbanzo
    and black-eyed peas. Pulses are an amazingly healthy superfood and by
    increasing consumption of pulses our nation has the opportunity to
    improve health and to reduce the future costs of public healthcare. The
    American Pulse Association has $25 million (per year) authorized in the
    2018 Farm Bill by means of the Pulse Crop Health Initiative (PCHI),
    which should be fully appropriated. The funds are for research into the
    health and nutritional aspects of pulses and the funding will go
    directly to ARS. In terms of return on investment this may well be our
    greatest opportunity to improve the eating habits of Americans. Given
    the proceeding, would there be any reason why the USDA would not find
    it useful to fund the PCHI (Pulse Crop Health Initiative) at $25
    million per year? The pulse crop is a great story for America, and it
    needs to be fully supported.
        Answer. Pulses are a group of crops important to American
    agriculture, and increased dietary consumption of pulses could result
    in health benefits and substantial savings related to health care in
    the U.S. The Agriculture Research Service has many resources such
    breeding and processing expertise and the ability to conduct human
    feeding studies that can be leveraged in a collaborative approach. The
    current funding of the PCHI is supporting small clinical trials.
    Additional funding could allow for more robust trials that could
    provide information regarding pulse consumption.
    Submitted Questions by Hon. Angie Craig, a Representative in Congress
            from Minnesota
        Question 1. I appreciate the recognition in USDA's recent climate
    announcement that biofuels can play a significant role in reducing our
    greenhouse gas emissions. I recently led a letter to the House Select
    Committee on the Climate Crisis urging them to include biofuels in
    their upcoming recommendations. I encourage you to continue to push
    your colleagues in the Administration to administer the RFS according
    to Congressional intent--this will lead to greater carbon emission
    reductions. However, EPA's continued abuse on granting Small Refinery
    Exemptions makes it more difficult to reach these carbon reduction
    goals. Do you expect this Administration to cut back on the number of
    Small Refinery Exemptions they've been granting over the past few
    years?
        Answer. We agree that the use of renewable fuels have significant
    benefits in reducing greenhouse gases. USDA continues to work closely
    with EPA to ensure that the statutory provisions of EISA are reflected
    in the annual RFS regulations. The proposed rule for the 2021 Renewable
    Volumetric Obligations is currently under review. Additionally, we note
    the 10th Circuit's decision on Small Refinery Exemptions, and assure
    you that USDA is closely monitoring the application process for small
    refinery exemptions.

        Question 2. Is there an opportunity to extend ARC/PLC election to
    June 30th as was done in 2019? Are there any opportunities to extend
    general enrollment for CRP?
        Answer. We actively monitor program sign ups across the country and
    would utilize registers and potential extensions of deadlines to best
    serve the needs of our customers.

        Question 3. The President's budget included cuts to crop insurance.
    How can we look at cutting the subsidy to crop insurance there by
    increasing the cost of insurance to farmers at a time of financial
    stress in agriculture?
        Answer. The President's Budget strikes a proper balance of
    providing a strong risk management tool for farmers and ranchers in the
    form of crop insurance while also protecting taxpayer interest.

        Question 4. Many dairy farmers have expressed concern about the
    USDA's month cost of production figures. Do you feel this is an
    acceptable price for dairy farmers?
        Answer. The U.S. dairy industry actively trades dairy products in
    the world market and the dairy prices in the United States are a
    function of world supply and demand of dairy products. USDA supports
    the dairy industry with risk management programs like DMC, DRP, and
    other programs and will continue to do so. In implementing the DMC
    program, USDA adjusted the feed equation to better reflect the price of
    premium alfalfa hay for dairy producers.

        Question 5. Farmers have begun to express concern about data
    collection by privately owned companies. What is the Agency doing in
    partnership with other Federal agencies to protect farmer privacy from
    bad actors?
        Answer. FSA only provides information that would be released in a
    FOIA request. If the privately owned company/entity has an MOU/MOA with
    the agency and are deemed a cooperator by the agency, they would be
    bound by the Privacy Act System of Record Notice and Section 1619 of
    the 2008 Farm Bill.

        Question 6. Minnesota farm families often have one spouse who works
    off farm to bring home healthcare coverage. What is USDA doing through
    its new Rural Development leadership to increase access to rural
    healthcare?
        Answer. Access to health care is vital to rural America and is a
    critical component for a prosperous and vibrant rural economy. Rural
    Development can help ensure access to quality health care facilities
    and services by providing loans and grants through its Community
    Facilities, Distance Learning and Telemedicine, and Business and
    Industry programs.
        Last year, the Community Facilities programs invested more than
    $365 million in 80 rural health care facilities and improved health
    care access for over 1.4 million rural residents. These investments
    included critical access hospitals, rural health clinics, assisted and
    skilled living facilities, mental and behavior health, memory care, and
    vocational and medical rehabilitation facilities.
        USDA has hired a Rural Health Liaison, a provision included in the
    2018 Farm Bill, to help promote awareness about and availability of
    USDA resources to support healthy and drug free communities. Rural
    Development is also partnering with other Federal agencies to ensure
    that we connect rural communities to resources that enable better
    provision of rural health care services.

        Question 7. Farmers aren't the only ones feeling the pain of the
    farm economic downturn. What is your agency doing to protect the Main
    Streets that are suffering as a record number of farms file for
    bankruptcy?
        Answer. FSA continues to provide income support, risk management,
    credit, and disaster assistance programs to support farmers and
    ranchers throughout the country.

        Question 8. How will we hold China accountable for their
    commitments in the Phase One of the China deal?
        Answer. Agricultural commitments for both specific reforms of non-
    tariff measures and purchase commitments are fully enforceable under
    the agreement. The Administration has used the consultation mechanisms
    in the agreement and other bilateral engagement to press for full
    implementation. This helps explain the strong compliance record on non-
    tariff measures, including key outcomes like lifting the ban on U.S.
    poultry, lifting the ban on hormone treated beef, lifting the ban on
    beef from animals over thirty months of age, lifting the ban on poultry
    and bovine ingredients in pet food, lifting the ban on many fruits and
    vegetables (including potatoes, blueberries, Hass avocados, nectarines,
    barley, and hay) and registering dairy, formula, fish, meat, poultry,
    feed, pet food and other products and facilities to export to China.
    Engagement with China has also helped spur Chinese buyers to sign
    significant contracts for bulk commodities in the last several months,
    including soybeans and corn.
    Submitted Questions by Hon. Anthony Brindisi, a Representative in
            Congress from New York
        Question 1. I appreciate your efforts to quickly implement the
    Dairy Margin Coverage program last year. Dairy farmers in my district
    and around the country continue to face market challenges and it's
    important that they have a workable safety net. Section 1401 of the
    farm bill required you to submit a report to this Committee evaluating
    the extent to which the feed cost formula used in Dairy Margin Coverage
    is representative of actual national average costs. This report was due
    60 days after enactment of the farm bill but we haven't received it
    yet. It's important that the national estimate we are using for DMC is
    as accurate as it can be. When do you expect to submit this report to
    the Committee?
        Answer. The DMC report required by Section 1401 of the Farm Bill
    was submitted to the Chairman and Ranking Member on Agriculture,
    Forestry, and Nutrition of the U.S. Senate, as well as the Chairman and
    Ranking Member of the House Committee on Agriculture on July 6, 2020 by
    Secretary Perdue (See Attachment 9).

        Question 2. Thank you for meeting with me and other Members
    recently regarding the needs of hardwood producers. As we have
    discussed, hardwood lumber producers like Gutchess Lumber in my
    district, have not been able to access market facilitation payments
    that other commodities received. Of all the agriculture commodities
    that are exported to China every year, U.S. hardwood lumber is second
    only to soybeans by value. And yet hardwood producers were not part of
    USDA's relief package despite the fact that hardwood sawmills help
    anchor many rural communities with good paying jobs. Mr. Secretary, can
    you explain your methodology for determining the commodities that are
    eligible and ineligible for payments under the Market Facilitation
    Program?
        Answer. MFP provides support for marketing and inventory costs
    caused by disrupted markets resulting from the unfair retaliatory
    tariffs on raw agricultural commodities. I acknowledge that the
    hardwood lumber industry was also affected by these tariffs; however,
    the impacts were felt on processed hardwood lumber. USDA programs are
    intended to provide support at the farmgate on raw agricultural
    commodities and as a result hardwood lumber was not made eligible as a
    processed product.

        Question 3. As we both know, fluid milk consumption has been
    declining in recent years, and this is hurting our dairy farmers across
    the country and rural economies. One bright spot has been the rise in
    other dairy products like cheese and yogurt. I want to encourage more
    demand for these products, which help our dairy farmers. One way we can
    do that is through the National School Lunch Program and School
    Breakfast Program. However, USDA does not credit high-protein Greek
    yogurt appropriately and Greek yogurt is not given credit for the
    protein it contributes when compared to other protein food
    alternatives, which have less protein. The FY20 government funding bill
    report directed USDA to review its decision to maintain the flawed
    crediting standard for high-protein yogurt. Is the USDA currently
    reviewing and considering an update to its protein standards when it
    comes to high-protein yogurt?
        Answer. In the Child Nutrition Programs (CNP), crediting decisions
    are made based on overall nutrient profiles, not a single nutrient. For
    example, different varieties of meat (e.g., lean beef, turkey, legumes)
    are not evaluated separately based on their protein content. Yogurts'
    contribution is based on its limitations at providing niacin and iron
    which are important contributions of the Meat/Meat Alternate component.
        In December 2017, USDA solicited comments on the CNP crediting
    system through a Request for Information (RFI). USDA sought public
    input about specific foods, including yogurt, and asked for
    recommendations to make crediting more simple, fair, and transparent.
    The majority of commenters, including a variety of dairy and yogurt
    producers, associations, and federations, opposed nutrient-based menu
    planning, and opposed crediting high protein yogurt differently than
    other yogurts noting that it would overly complicate the meal pattern
    and protein is not a nutrient of concern.
        After considering public comments, USDA is continuing to credit
    high protein yogurts, such as Greek yogurt, using the same crediting
    method as we do for other types of yogurts. This approach is consistent
    with food-based menu planning and is easier for program operators to
    implement. Crediting high-protein yogurt the same way as other types of
    yogurt, means that the amount of yogurt served is the same for all
    types of yogurt. Operators do not have to remember different portion
    sizes based upon the protein content found on the nutrition facts
    panel. It is also notable that the FDA has only one standard of
    identity for all yogurt varieties. The current serving size for yogurt
    in the CNP is reasonable and adequate based on the age/grade of the
    child.
    Submitted Questions by Hon. Kim Schrier, a Representative in Congress
            from Washington
    Origin of Livestock
        Question 1. The Subcommittee on Biotechnology, Horticulture, and
    Research had two hearings last year focused on the organic industry.
    There was strong, bipartisan consensus that the National Organic
    Program should move forward with rulemaking to support the organic
    dairy sector, including on the Origin of Livestock final rule.
    Additionally, in October 2018, USDA's National Organic Standards Board
    issued a resolution for USDA to finalize this rule. This rule would
    correct a loophole in the USDA organic regulations by clarifying
    requirements for transitioning conventional dairy animals to organic
    production. When can we expect to see USDA issue a final rule
    concerning Origin of Livestock?
        Answer. While there is broad support for a final rule in the
    organic community, the topic involves a complex set of variables and
    legal questions. Public comments have also shown there are different
    perspectives and interdependencies between specific rule provisions. As
    AMS drafted the final rule, the specific legal questions and
    complexities became clearer, and the review of the final rule raised
    concerns that could jeopardize the agency's position.
        USDA has considered a number of options and we have decided to
    develop a second proposed rule for public comment. This would allow us
    to propose specific provisions that we believe, based on agency
    experience, would make the rule more enforceable, and which would also
    allow the public to provide input. This rulemaking continues to be one
    of our highest priorities and we plan to publish as expeditiously as
    possible.
    U.S. Mexico Agricultural Trade
        Question 2. Mr. Secretary, U.S. fresh potatoes have fought a long
    battle to gain full market access to Mexico. As you know, the Mexican
    potato industry has sued their own government to block that access and
    the resulting legal cases have made their way to their Supreme Court.
    The outcome of a negative ruling could have consequences beyond just
    potatoes and could impair U.S.-Mexico ag trade broadly. What measures
    is USDA taking to support potato access to Mexico and how else are you
    working independently and with USTR to ensure that Mexico fully
    implements their obligations under USMCA?
        Answer. Since my first day as Secretary of Agriculture, achieving
    full and unrestricted access for U.S. potatoes in Mexico has been among
    my top priorities. I have personally met with top-level Mexican
    officials many times to discuss resolving this issue, which could be
    resolved in Mexico's supreme court in the near future. This court case
    has my full attention, and USDA continues considering additional
    options to gain expanded Mexican market access for fresh potatoes.
        USDA, alongside our Federal partners at the Office of the U.S.
    Trade Representative (USTR), continues to engage with Mexico to ensure
    it meets the obligations set out in the USMCA. USDA has engaged with
    high level Mexican government officials to make our position clear.
    Rest assured that we will continue to support and stand with our
    farmers and ranchers as we work to promote free, fair, and reciprocal
    trade as a responsible global partner.
    Mid-Contract Management
        Question 3. Mr. Secretary, how are you interpreting Section 2207 of
    the farm bill regarding cost-share assistance for mid-contract
    management activities outside of grazing?
        Answer. FSA's determination is that cost-share is not allowed for
    mid-management activities.
    Submitted Questions by Hon. Jimmy Panetta, a Representative in Congress
            from California
        Question 1. On January 9th, Pam Miller, Administrator of USDA's
    Food and Nutrition Service, testified before the U.S. House Committee
    on Veterans Affairs, Subcommittee on Economic Opportunity. At the
    hearing, Ms. Miller noted that USDA did not seek to understand how many
    veterans would be impacted by the various proposed changes to SNAP
    related to time limits for ``Able-Bodied Adults Without Dependents''
    (ABAWDs), revising Broad-Based Categorical Eligibility, and state
    heating and cooling Standard Utility Allowances (SUAs).
        Why did you choose not to understand the impact of these proposed
    changes on the veteran population?

        Question 1a. Can you tell us today how many veterans will be kicked
    off SNAP as a result of USDA's proposed and finalized rule changes, and
    how USDA is coordinating with other agencies to ensure that those who
    wore our country's uniform do not suffer from hunger?
        Answer 1-1a. FNS programs, such as SNAP, are not targeted to
    veterans specifically, but can make nutritious food available to
    veterans and their families when they face tough times. In order to
    minimize burden on all Americans seeking food assistance, USDA has kept
    the information it gathers during the application process to only that
    which is required by law and regulation for SNAP eligibility. Veteran
    status is not a requirement for SNAP eligibility. As a result, USDA
    does not have data to determine impacts on households with veterans, as
    veteran status does not impact eligibility and therefore is not
    captured in the caseload data that was used to analyze the rule.
        FNS has a study underway, known as the Survey of SNAP and Work,
    which will gather employment data from a representative sample of
    nondisabled SNAP participants ages 18 to 69 in the 50 States and the
    District of Columbia. The survey includes a question regarding status
    as a veteran or active duty military member. When the study is
    completed, FNS will be able to provide a one-time statistic regarding
    the number of SNAP participants that are active duty military or
    veterans along with some basic demographic characteristics. We expect
    results in 2022.
        The 2014 Farm Bill created the Military/Veteran Agricultural
    Liaison (MVAL) role at USDA. The MVAL reports to the Director of the
    USDA Office of Partnership and Public Engagement (OPPE) and is not
    located within FNS. FNS collaborates with the MVAL to ensure USDA
    assists the Veteran's Administration in advising on SNAP policy and
    providing additional resources for veterans.
        FNS actively works with the Department's MVAL and staff from the
    Veterans Health Administration Homeless Programs Office at the
    Department of Veterans' Affairs (VA) to make sure appropriate reference
    and resource materials are available where and when needed. State
    agencies work closely with partner organizations in their outreach
    efforts, and some of these groups may, as appropriate, create materials
    and provide services to specific populations, including veterans, to
    help them understand and apply for SNAP benefits.
        FNS and VA's Nutrition and Food Services (https://
    www.nutrition.va.gov/) (NFS) are also working together to address
    Veterans' hunger and food insecurity. FNS collaborated with NFS to
    deliver a webinar on November 16, 2020, as continuing education for
    nurses and social workers working in the VA system. This webinar
    reviewed the basics of SNAP eligibility and provided specific
    information to screen veterans for food insecurity and provide
    application assistance for veterans interested in applying for SNAP.

        Question 2. We all know that veterans often face unique challenges
    in securing full-time work and may require more than 3 months to secure
    employment.
        Can you guarantee that there is a realistic and sustainable job
    and/or E&T slot available for every veteran who meets the ABAWD
    definition?

        Question 2a. How are you ensuring that states are providing E&T
    opportunities for all veterans?
        Answer 2-2a. Veterans receiving SNAP benefits may be eligible to
    participate in a State's SNAP E&T program. All States are required by
    the Food and Nutrition Act to operate a SNAP E&T program, which assist
    SNAP recipients in gaining skills, training, or experience that will
    increase their ability to obtain work. States are ultimately
    responsible for administering the program and have tremendous
    flexibility in what services they provide, what populations they serve,
    and with whom they partner. FNS provides direct technical assistance
    and oversight to State SNAP agencies to help them expand and improve
    SNAP E&T programs to meet the needs of the participants, the employers,
    and the community.
        USDA is committed to partnering with and empowering State agencies
    to best leverage their programs, and we have made it clear that
    expanding E&T is a priority for this Administration. USDA provides over
    $100 million each year for States to operate E&T, and if a State
    invests their own money--or includes outside funding from any non-
    Federal source--to expand and enhance their E&T programs, the Federal
    government will match those funds, dollar for dollar, without limit. In
    addition, FNS also allocates $20 million to States that pledge to
    provide a work or training opportunity to every able-bodied adult
    without dependents.
        FNS has also invested considerable resources in helping States
    expand their SNAP E&T programs through the SNAP to Skills project. SNAP
    to Skills has provided direct technical assistance to over 27 States;
    developed tools and resources such as operations handbooks, policy
    briefs, and webinars; and, hosted SNAP E&T Learning Academies and State
    Institutes for State agencies, their partners, and other stakeholders
    to increase capacity and expertise about SNAP E&T. In 2020, the SNAP to
    Skills project has focused on helping States recruit and engage more
    SNAP recipients in SNAP E&T programs, including veterans.
        Moreover, FNS is in the process of drafting a final rule
    implementing the employment and training provisions of the 2018 Farm
    Bill. The rules strengthens States accountability by requiring States
    to provide case management services and to ensure SNAP recipients are
    properly placed in an E&T component, and provides additional
    opportunities for SNAP recipients to meet their work requirements
    through participating in programs offered through the Department of
    Veteran's Affairs.

        Question 3. How is USDA addressing the SNAP participation gap among
    veterans?
        Answer. While FNS's 15 nutrition assistance programs are not
    targeted specifically to veterans, they are available and designed to
    provide benefits that veterans and their families may need,
    particularly when they face difficult economic circumstances.
        FNS reimburses State SNAP agencies for 50 percent of allowable
    administrative costs, including costs of approved outreach activities.
    In FY 2020, 46 State SNAP agencies have approved outreach plans. Plans
    may be statewide or target specific geographic locations or
    populations, such as veterans. Several States partner with Veterans
    Service Organizations (VSOs) to provide SNAP outreach services.

        Question 4. You have established a Military Veterans Agriculture
    Liaison at USDA.
        What exactly is this position, and/or the agency, doing to address
    the gap between food insecurity and SNAP enrollment among veterans?
        Answer. The 2014 Farm Bill created the Military/Veteran
    Agricultural Liaison (MVAL) role at USDA. The MVAL reports to the
    Director of the USDA Office of Partnership and Public Engagement (OPPE)
    and is not located within FNS. FNS collaborates with the MVAL to ensure
    USDA assists the Veteran's Administration in advising on SNAP policy
    and providing additional resources for veterans.
        The MVAL duties include:

       Providing information to returning veterans about beginning
            farmer training and agricultural vocational and rehabilitation
            programs, including assisting veterans in using Federal veteran
            educational benefits for purposes relating to beginning a
            farming or ranching career;

       Providing information to veterans about the availability and
            eligibility of requirements for participation in agricultural
            programs, with emphasis on beginning farmer and rancher
            programs;

       Serving as a resource for assisting veteran farmers and
            ranchers, and potential farmers and ranchers, in applying for
            participation in agricultural programs;

       Advocating on behalf of veterans in interactions with
            employees of the Department; and

       Consulting with and providing technical assistance to any
            Federal agency, including the Department of Defense, the
            Department of Veterans Affairs, the Small Business
            Administration, and the Department of Labor.

        The current MVAL is a permanent government employee with 23 years
    of Naval service. He has proactively established relationships with
    Federal agencies including the Department of Labor, Department of
    Defense, Department of Veterans Affairs, Small Business Administration,
    as well as the National Association of State Departments of
    Agriculture, and Workforce Agencies as well as many Veteran Service
    Organizations and the Farmer Veteran Coalition.
        FNS works with the Department of Veterans Affairs (VA) to
    communicate information on USDA nutrition assistance programs to be
    provided when to veterans they visit VA Hospitals or Clinics. USDA is
    working with VA on resources specifically designed for Veterans to help
    connect them with USDA nutrition programs when they visit VA hospitals
    or clinics, or otherwise engage with the VA health system.

        Question 4a. What are the ways USDA is addressing the stigma and
    shame that is unfortunately often associated with Federal nutrition
    assistance programs?
        Answer. SNAP outreach is the main effort to address misconceptions
    about SNAP. Through SNAP outreach efforts, States, often in partnership
    with community organizations, conduct activities to inform low-income
    households about SNAP availability and benefits, eligibility
    requirements, and application procedures. Outreach can also correct
    myths and misperceptions about SNAP. FNS reimburses State SNAP agencies
    for 50 percent of allowable administrative costs, including those for
    approved outreach activities. In FY 2020, 46 State SNAP agencies have
    approved outreach plans. Plans may be statewide or target specific
    geographic locations or populations, such as veterans. Several States
    partner with Veterans Service Organizations (VSOs) to provide SNAP
    outreach services. In addition to outreach, it is important to
    publicize the fact that benefits are now provided on SNAP EBT cards--
    which look like credit or debit cards--rather than actual food stamps
    that were issued previously, which has significantly reduced stigma
    surrounding SNAP over the years.

        Question 4b. What is USDA doing to clarify for veterans that SNAP
    is an entitlement program, so their participation would not prevent
    someone else from getting the help they need?
        Answer. SNAP Outreach activities and resources supports States in
    providing information about SNAP, supporting potentially eligible
    people, including veterans, in making an informed decision about
    whether or not to apply. State agencies set outreach goals and
    determine which services to provide in order to best address the needs
    identified by the State.
        We understand from discussions with VA staff, that the Veterans
    Health Administration (VHA) screens veterans during their VHA medical
    appointments and refers them to appropriate clinical resources, which
    can include information on SNAP when appropriate.
    Question Submitted by Hon. K. Michael Conaway, a Representative in
            Congress from Texas
        Question. It has come to our attention that there is a lot of
    confusion surrounding the implementation of the TAP assistance program
    reaching back to damage from Hurricane Irma in September 2017. The
    confusion involves the definition used for qualifying nursery crops for
    assistance specifically ``bush'' and ``ornamental.'' Producers were
    approved at the state and local level and then determined to be
    ineligible at the Federal level because they did not meet the
    definition of an eligible crop.
        Are nursery crops such as chrysanthemum, poinsettia, rose, fig,
    blackberry, hibiscus, and bougainvillea eligible for disaster
    assistance under the TAP program? If ineligible, provide the rationale
    why. In addition, a list of all eligible ornamentals and bushes under
    the TAP program is requested.
        Answer. Yes, these crops would be eligible either as a listed
    commodity or under ``nursery'' field or ``nursery'' container. The Farm
    Service Agency does not maintain a list of eligible trees, bushes, or
    vines under the Tree Assistance Program (TAP). TAP provides definitions
    of what is eligible, and County Committees are empowered to make an
    eligibility determination. The definitions for TAP can be found at 7
    CFR 1416.402, and in FSA handbook, 1-TAP, (Revision 4), Exhibit 2. With
    regards to a recent determination of ineligibility for chrysanthemums,
    the guidance was reversed at the national level on March 17, 2020, and
    subsequently communicated to the Florida FSA State office.
    Question Submitted by Hon. Roger W. Marshall, a Representative in
            Congress from Kansas
        Question. Last fall, several of my colleagues and I sent a letter
    requesting that you consider changes to the ReConnect program to make
    the application process less burdensome so that more broadband
    providers could participate. I know that some changes were made in
    round two, but I would encourage you to continue to look at this
    situation, particularly in regard to the scope of information that
    companies have to submit for areas outside of the proposed service
    area. For companies that have a regional or even nationwide footprint,
    this extraneous information makes the application process much more
    burdensome, without any added benefit, and could lead to well-qualified
    companies with long history of broadband deployment deciding that the
    application process is just too burdensome to be worthwhile.
        Is this something you can continue to work on for future rounds of
    ReConnect?
        Answer. Yes, we will continue to implement new ways to streamline
    and improve the overall application process for future rounds of
    ReConnect. Considerations like these will be incorporated in the Final
    Rule which the agency expects to publish in the Federal Register for
    public comment by the end of 2020.
    Question Submitted by Hon. Don Bacon, a Representative in Congress from
            Nebraska
        Question. Last week in a letter to the President, my Governor,
    along with four others, highlighted the importance of new
    biotechnologies, such as gene editing, for maintaining the security and
    stability of the rural economy and nation's food supply. To that end
    they called on the Administration to move all agricultural application
    of biotechnology in animals for food use under USDA to better foster
    development of this technology for the public good.
        Can you give us an update on Administration's thinking on this
    request? Will the Administration have a resolution on this in the next
    month or 2?
        Answer. USDA believes that leveraging biotechnology and the
    advantages it provides to our producers is key to revitalizing the
    rural economy. We understand the need to stay on top of scientific
    progress and the need for tools such as gene editing and appropriate,
    science-based regulation at the Federal level. We know that animal
    biotechnology holds promise as a solution to some of the most pressing
    problems facing livestock production. Accordingly, modernizing animal
    agricultural biotechnology oversight continues to be a priority for us.
    We are continuing high-level discussions with our Federal partners and
    hope to have a resolution soon that will help this technology thrive.
    Question Submitted by Hon. Neal P. Dunn, a Representative in Congress
            from Florida
        Question. Many organic farmers are faced with growing disease and
    environmental pressures, and yet all too often lack approved organic
    crop protection tools to meet their needs. Breeding disease resistant
    cultivars can help, but in recent years, diseases like downy mildew, as
    one example, have evolved faster than breeders can keep up. However,
    new tools such as gene editing can enable plant breeders to quickly and
    precisely make edits to a plant's genome in ways that mimics natural
    adaptation or through traditional breeding. This could help to activate
    disease resistance, limit the use of organic-approved pesticides,
    improve drought tolerance, among other benefits.
        Do you see certain sustainability-minded biotechnology applications
    such as these to potentially be consistent with the organic program?
        Answer. USDA supports an ongoing and open, constructive dialogue
    about how agricultural innovation and new technologies might play a
    role in the future of organic production. Genetic modifications,
    including gene editing, are considered excluded methods and are
    currently prohibited in organic agriculture under the USDA organic
    regulations. This issue is not currently on the regulatory agenda for
    rulemaking; however, the National Organic Standards Board regularly
    evaluates new technologies for potential inclusion in the organic
    standards. Public comments are an important part of this open and
    transparent evaluation process.
    Question Submitted by Hon. Dusty Johnson, a Representative in Congress
            from South Dakota
        Question. Saturated fats are found in nearly all food products,
    including olive oil, meat products, and dairy products. However, past
    dietary guidelines relied on older, epidemiological studies rather than
    newer systematic reviews and clinical trials. Recently, the Annals of
    Internal Medicine published a systematic review of the potential
    hazards surrounding red meat. The conclusion of the review found that
    there is not enough evidence to suggest that Americans change their
    consumption of red meat as a part of a healthy or balanced diet,
    representing a fairly significant shift from conventional wisdom. As
    recently as last month, a group of prominent researchers and doctors in
    the nutrition space, including three former Dietary Guidelines Advisory
    Committee Members, came together to discuss not only the changing
    scientific landscape surrounding saturated fats, but the process by
    which saturated fats studies have gone through in previous versions of
    the guidelines.
        Do you agree that any recommendation should have a basis in the
    preponderance of the best available science? Would you agree that
    evidence be examined even if it challenges preconceived notions about
    the benefits or hazards posed by any food or nutrient?
        Answer. To briefly answer both of your questions--yes. USDA and HHS
    update the Dietary Guidelines for Americans every five years based on
    the preponderance of scientific and medical knowledge, and with each
    process to develop the Dietary Guidelines the Departments ensure that
    all relevant nutrition evidence is examined and reviewed--independent
    of preconceived notions or even trending fad diets.
        The Nutrition Evidence Systematic Review (NESR) method, which has
    been used by the past few Dietary Guidelines Advisory Committees, is
    designed to identify and use all relevant evidence to draw
    conclusions--regardless of the outcomes or results it reported, and
    whether or not it supported or opposed prior advice. For each
    systematic review--before the scientific literature is searched and the
    evidence is reviewed--a protocol or a plan is established for a
    specific scientific question. This protocol describes how the Committee
    plans to conduct its review and sets the criteria for what studies
    would be considered. Developing this protocol up front before any
    articles are searched and any evidence is reviewed is critical to
    ensuring the process remains unbiased. The protocols for the 2020
    Dietary Guidelines Advisory Committee (the 2020 Committee) were posted
    online for the public to view and comment on, and the 2020 Committee
    considered these comments as they moved forward in examining the
    evidence.
        Specific to examining the evidence on saturated fat, the 2020
    Committee recently reviewed the scientific landscape. The 2020
    Committee was an independent group of nationally recognized nutrition
    experts, and they conducted a robust systematic review on dietary fats
    and the risk of cardiovascular disease by examining the evidence from
    2010 to 2019. It is important to note that the work of the 2020
    Committee builds upon the work on this topic from the 2015 Committee.
    The extensive review by the 2015 Committee on saturated fats included
    literature dating back to the 1960s. The 2020 Committee concluded that
    strong and consistent evidence from randomized controlled trials shows
    that replacing saturated fat with unsaturated fats, especially
    polyunsaturated fat, significantly reduces total and LDL-cholesterol in
    adults. LDL-cholesterol is a validated biomarker for cardiovascular
    disease. Additionally, the 2020 Committee found strong evidence
    demonstrating that replacing saturated fat with polyunsaturated fat in
    adults reduces the risk of coronary heart disease events and CVD
    mortality. The 2020 Committee also reviewed literature published
    between 1990 and 2019 on intake during childhood and found strong
    evidence for a link between diets lower in saturated fat and total and
    LDL-cholesterol. Therefore, the preponderance of evidence from the
    present dating back to the 1960s on saturated fat indicates that lower
    saturated fat intake leads to better health outcomes.
    Questions Submitted by Hon. James R. Baird, a Representative in
            Congress from Indiana
        Question 1. As you know, rural America is a diverse place. Some
    small towns and cities are doing well, while others have been
    struggling in recent years. Many constituents of mine in the more hard-
    hit towns have repeatedly asked ``What programs are there to help us?''
    As you know, the USDA has a myriad of rural economic development
    programs. It seems to me that many people just don't know what's
    available to help.
        What efforts are the USDA undertaking to inform and educate people
    about its rural development programs? What state and local groups do
    you work with to get the word out about these programs?
        Answer. Rural Development has 477 field offices across the country
    and our staff work with local leaders, lenders, and businesses to
    inform the community about our programs. A few ways our staff does this
    is by hosting and attending roundtables, providing technical assistance
    to prospective applicants, and updating our webpage to include current
    fact sheets, guidance documents, and notices. Communication with our
    customers and those who need assistance is a priority for Rural
    Development. For example, during the third quarter of 2020 RD hosted 32
    COVID-related webinars, 24 non-COVID webinars, and participated in
    webinars hosted by others in the Federal family, including HHS, HUD,
    and SBA. This outreach has helped us connect with nearly 3.5 million
    people.

        Question 2. The overall American economy has been kicked into high
    gear by the President's agenda. Unfortunately, due to low crop prices
    and rough weather, the ag economy has faced challenges. Many in my
    district have talked to me about the need for economic diversity where
    they live. Simply put, agriculture alone is not enough to sustain some
    of these communities anymore; more economic growth is needed to
    generate the economic diversity that will bring more sustainable
    economic growth.
        What has USDA been doing to ensure that rural communities can
    develop other robust industries alongside agriculture?
        Answer. The Rural Business Cooperative Service (RBCS) fosters a
    direct engagement with specific industries such as renewable energy,
    local and regional food, forestry, aquaculture, biofuels, biobased
    products and others to connect a variety of businesses to our programs.
    RBCS provides rural businesses and communities the necessary capital to
    expand and grow and has an extensive working relationship with the
    rural lender community, credit unions, community development financial
    institutions (CDFIs), and others lender associations to create an
    awareness of access to capital opportunities. Additionally, our
    Community Facilities program can be utilized by rural hospitals,
    schools, and adult and childcare centers which can help increase the
    competitiveness of rural communities in attracting and retaining
    businesses.
    Questions Submitted by Hon. Jim Hagedorn, a Representative in Congress
            from Minnesota
        Question 1. While this may be outside of USDA's purview, Minnesota
    dairy farmers have asked my office to get clarification on the use of
    the term ``dairy product'' when it is in fact a ``dairy imitation,''
    such as Almond Milk. Many Members of this Committee have urged the Food
    and Drug Administration to enforce existing ``dairy product standards
    of identity.'' Groups like the American Academy of Pediatrics have
    voiced concerns about nutritional levels of such products for children.
        Have you had any conversations with your counterparts at the FDA
    about this issue?
        Answer. USDA respectfully encourages the Congressman to direct
    questions related to this topic to the FDA.

        Question 2. Thank you for leading USDA's effort in preventing
    African Swine Fever (ASF) from reaching our country. APHIS, along with
    CBP at the Department of Homeland Security, have also done remarkable
    work in coordinating with state veterinarian officers, industry leaders
    and international partners. One concern I hear from the hog producers
    in my district is a lack of clarity on how to prevent the spread of ASF
    from infected premises.
        While we were pleased to see the March 6, 2020 announcement from
    USDA on APHIS's action plan in case of an ASF outbreak, can we get more
    information on how ``USDA will work proactively with industry and
    states to ensure producers have heard plans to deal with carcass
    disposal in line with regional and local requirements, supporting
    composting and burial in place as preferred options?'' Additionally,
    will these efforts require a cost-share agreement with the states?
        Answer. USDA's Animal and Plant Health Inspection Service (APHIS)
    has created a Carcass Management Dashboard that assists producers with
    planning for the proper disposal of carcasses safely and in
    coordination with state and local environmental officials. This online
    tool provides information on a range of disposal methods, as well as
    resources on coordinating with state and Federal agencies to ensure
    compliance with all applicable laws and regulations.
        APHIS is also evaluating several carcass-disposal projects
    submitted by states and other entities as part of the National Animal
    Disease Preparedness and Response Program. The program, which was
    created in the 2018 Farm Bill, allows APHIS to fund projects that
    advance animal health, and depopulation and disposal projects are at
    the top of our funding priorities. Last year, six projects were
    selected to train animal disease outbreak responders to perform
    depopulation, disposal, and infection, including a project to ``train
    the trainers'' on carcass management, which is a critical step toward
    nationwide preparedness. APHIS plans to announce the final FY 2020
    projects under this program by the end of the year.
        During previous outbreaks, such as highly pathogenic avian
    influenza in 2015, USDA paid for disposal of carcasses directly through
    contractors or reimbursed producers for the costs, and we anticipate a
    similar response for ASF.

        Question 2a. As a follow up, a potential ASF outbreak will require
    many boots on the ground, as well as virtual deployments, to coordinate
    testing. With a shortage of veterinarians in the U.S., have there been
    any conversations with state animal health boards and industry on how
    to speed up training or how to bring on additional staff?
        Answer. APHIS is not currently experiencing a shortage of
    veterinarians, with approximately 95% of positions filled. We are
    proactive in our hiring efforts to find the most talented employees to
    fill our workforce. In particular, we have a Veterinary Medical Officer
    Career Program to bring in entry-level and graduating veterinarians by
    offering training and a full-time position to successful applicants,
    and we have internship programs to introduce veterinary students to a
    career with APHIS while they are still completing their education and
    can lead to a permanent appointment. After the 2014-2015 outbreak of
    highly pathogenic avian influenza, APHIS requested additional funds to
    increase the number of personnel focused on animal health issues to
    help with potential outbreaks in the future. We appreciate Congress'
    willingness to fund those positions.
        In addition to seeking the most qualified veterinary candidates to
    directly work on our mission of promoting animal health, APHIS supports
    the National Veterinary Accreditation Program (NVAP), which authorizes
    private practitioners, as well as academic, corporate, military,
    research, and government veterinarians, to perform official regulatory
    functions and to work cooperatively with state animal health officials.
    NVAP develops training programs for Accredited Veterinarians and lay
    personnel on sample collection and submission and on recognizing
    diseases. These training opportunities are developed in conjunction
    with APHIS, state regulatory officials, and academia, with much support
    from the funding and programs provided by the farm bill and cooperative
    agreements with stakeholders. Collectively, NVAP is essential to
    ensuring the nation has a cadre of veterinarians responsible for animal
    health, disease prevention, and preparedness issues of the future.
        In the case of an animal disease emergency, APHIS also has the
    ability to add additional veterinarians to its workforce. For example,
    during the 2014-2015 HPAI outbreak APHIS utilized the National Animal
    Health Emergency Response Corps to supplement the agency's veterinary
    workforce. We also have an agreement with the Department of Defense, in
    which APHIS can request veterinarians from the Army Veterinary Corps
    for an emergency response to an animal disease outbreak. Furthermore,
    we are member to a multilateral agreement with Australia, Canada,
    Ireland, New Zealand, and the United Kingdom, where we can request
    another country to participate in an emergency response to an animal
    disease outbreak. APHIS continues to explore various strategies to
    engage the nation's veterinarians in preparation for a possible serious
    animal disease outbreak.

        Question 3. Regarding staff shortages at the local Farm Service
    Agency (FSA) offices, I agree that a robust economy and record low
    unemployment makes it harder to fill these positions.
        Has USDA discussed with the Office of Personal Management about
    streamlining hiring process?

        Question 3a. As follow-up, I understand the Agricultural Marketing
    Service has used direct hiring authorities to hire fruit graders during
    peak seasons. Is it possible for FSA to use this authority to hire
    staff during peak periods?
        Answer 3-3a. FSA utilized a variety of stream-lined processes for
    county office hiring and nearly every tool in our toolbox through FY
    2020. In December 2019, FSA obtained Office of Personnel Management
    direct hire authority for 75 permanent Farm Loan Program Technicians
    and 78 permanent Farm Loan Officer Trainees and filled all those
    positions on September 2, 2020. We brought back reemployed annuitants
    who have the knowledge and experience to get up to speed on program
    delivery quickly.

        Question 4. Thank you for your comments on February 20, 2020 on a
    possible MOU with the Food and Drug Administration regarding animal
    biotech regulations. It is no secret that many farmers, ranchers,
    producers and agribusinesses are frustrated with FDA's approach to this
    game changing technology. As the proud representative of a top pork
    producing district, capitalizing on new animal biotech technologies
    will show the world that the U.S. is the leader in agriculture
    innovations.
        While product safety is the number one priority, what is USDA doing
    to modernize safety protocols at ARS/ERS research labs, as well as
    APHIS regulations, in order to be ready for a possible MOU?
        Answer. USDA believes that spurring innovation is key to
    revitalizing the rural economy, and a thriving biotechnology industry
    is essential to those efforts. We understand the need to encourage
    scientific progress with tools like gene editing, as well as the
    importance of science-based regulation at the Federal level. Animal
    biotechnology holds promise as part of a solution to some of the most
    pressing problems facing livestock production. Accordingly, modernizing
    animal agricultural biotechnology oversight continues to be a priority
    for us. We are continuing high-level discussions with our Federal
    partners and hope to have a resolution soon that will help this
    technology thrive. As we continue to weigh our next steps with regards
    to a possible MOU with FDA, we will take all appropriate actions to
    ensure all of USDA is ready.
                                 [attachment 1]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Trade Damage Estimation for the 2019 Market Facilitation Program and
            Food Purchase and Distribution Program

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    U.S. Department of Agriculture, Office of the Chief Economist
    August 22, 2019
    Executive Summary
        This paper outlines the methodology USDA employed to estimate the
    level of gross trade damage caused by retaliatory tariffs to U.S.
    agricultural exports by commodity. Those estimates were used to
    determine the 2019 Market Facilitation Program (MFP) payment rates and
    the value of commodities to be targeted for purchase under the 2019
    Food Purchase and Distribution Program (FPDP). The paper also outlines
    the formulas employed to calculate MFP county rates for non-specialty
    crops, as well as national MFP rates for specialty crops, hogs, and
    milk. USDA announced details on those programs on July 25, 2019. For
    more details about the trade mitigation programs, visit https://
    www.farmers.gov/manage/mfp. Rulemaking and related documents, including
    the Cost Benefit Analysis (CBA), for trade mitigation programs can be
    found at https://www.regulations.gov/docket?D=CCC-2019-0003.
    Trade Damage Estimation for the 2019 Market Facilitation Program (MFP)
            and Purchase Targets for the Food Purchase and Distribution
            Program (FPDP)
        On May 23, 2019, the Secretary of Agriculture announced (https://
    www.usda.gov/media/press-releases/2019/05/23/usda-announces-support-
    farmers-impacted-unjustified-retaliation-and) that USDA would take
    several actions to assist farmers in response to continued retaliation
    and trade disruption. President Trump authorized USDA to provide up to
    $16 billion in programs, in line with the estimated impacts of
    retaliatory tariffs on U.S. agricultural producers and other trade
    disruptions. Further details of the 2019 trade mitigation program were
    announced (https://www.usda.gov/media/press-releases/2019/07/25/usda-
    announces-details-support-package-farmers) on July 25, 2019.
        In 2018, USDA developed an estimate of gross trade damages for U.S.
    commodities affected by retaliatory tariffs to establish commodity
    payment rates for the Market Facilitation Program (MFP) and purchase
    targets for the Food Purchase and Distribution Program (FPDP). On
    September 13, 2018, USDA provided a detailed accounting of how those
    gross damage estimates were calculated.\1\
    ---------------------------------------------------------------------------
        \1\ For details see: https://www.usda.gov/oce/trade/
    USDA_Trade_Methodology_Report.pdf.
    ---------------------------------------------------------------------------
        For the 2018 and the 2019 trade mitigation programs, USDA defined
    economic losses due to the trade actions in terms of gross trade
    damages. Gross trade damages were defined as the total amount of
    expected export sales lost to the retaliatory partner due to the
    additional tariffs. This metric provides one assessment of economic
    loss, and there are other forms of economic injury that could be
    measured. Gross trade damage contributes to the economic cost to the
    producer to adjust to the disrupted markets, manage surplus
    commodities, and expand and develop new markets, consistent with the
    design of the MFP. Further, export sale losses provide the most direct
    link to the retaliatory action(s) and is the single estimate that most
    comprehensively accounts for the full scale of trade impacts. In part
    due to these reasons, it is often employed in World Trade Organization
    (WTO) arbitrations assessing the level of nullification or impairment
    resulting from a measure found to be WTO-inconsistent and is the
    approach applied here.
        For the 2019 program, USDA employed the same methodology to
    estimate gross trade damages, using the same trade model (Global
    Simulation Analysis of Industry-Level Trade Policy) documented in 2018.
    That model simulates the expected reduction in U.S. exports to the
    retaliatory partner market. Gross trade damages are calculated as the
    difference in bilateral trade with the tariff and the baseline (without
    the tariff).
        As with the 2018 trade mitigation programs, the gross trade damage
    estimate is the basis for developing the 2019 MFP payment rates, which
    are detailed in this paper, as well as FPDP purchase targets. The 2019
    programs are designed to aid producers in the disposition of surplus
    commodities; to aid in the expansion of domestic markets; or to aid in
    the development of new and additional markets and uses. Those programs
    are intended for crops or commodities that are negatively impacted by
    trade actions of foreign governments. Specifically, the 2019 MFP
    payments may provide producers with an opportunity to adjust to delays
    in the marketing of their crops and to costs associated with
    reorienting their sales to new and additional markets.
    Changes in Retaliatory Tariffs
        The gross trade damage estimate for 2019 takes into account changes
    in retaliatory tariffs since the original damage estimate used for the
    2018 trade mitigation programs. There have been five changes to the
    retaliatory tariffs applied to U.S. agricultural products since the
    2018 damages were calculated:

      (a)  On September 24, 2018, China imposed additional tariffs ranging
                from 5 to 10 percent on U.S. goods, which were applied to
                $3 billion of agricultural products not previously impacted
                by China's retaliatory tariffs. Given the timing of China's
                action, these tariffs were not included in the trade damage
                analysis for the 2018 trade mitigation programs.

      (b)  On May 17, 2019, Mexico and Canada agreed to lift all
                retaliatory tariffs related to the U.S.-imposed Section 232
                steel and aluminum tariffs. These tariffs covered a broad
                range of agricultural and food products, including U.S.
                pork and dairy.

      (c)  On May 21, 2019, Turkey reduced retaliatory tariffs assessed on
                U.S. products by half in response to changes in U.S.-
                imposed Section 232 tariffs on steel and aluminum from
                Turkey. Turkey's retaliatory tariffs include some U.S. tree
                nuts and rice.

      (d)  On June 1, 2019, China increased retaliatory tariffs assessed on
                the U.S. on almost $2 billion of agricultural goods by an
                additional 5 to 15 percent. This new list includes many
                U.S. horticultural and specialty products.

      (e)  On June 16, 2019, India imposed retaliatory tariffs ranging from
                2 to 25 percent on U.S. apples, rice, almonds, chickpeas,
                and other commodities. India had announced retaliatory
                tariffs on U.S. goods in July 2018 but delayed
                implementation until June 2019.

        The model commodity coverage was expanded to include the broader
    range of U.S. agricultural products affected by retaliation, as well as
    the increase in (China) or implementation of (India) retaliatory
    tariffs. The model scenarios were also revised to remove the
    retaliatory tariffs that Canada and Mexico lifted, as well as the
    reduction in Turkey's tariffs.
    Base Year Changes Account for Long-Standing Distortionary Policies and
            Longer-Term Impacts
        For the 2018 trade mitigation programs, USDA employed 2017 trade
    data as the base year for projecting trade damages. 2017 was used as
    the 2018 programs' base year because it was the most recent full year
    of trade data available and reflected trade levels prior to the
    imposition of retaliatory tariffs starting in April 2018 for some
    agricultural products.\2\
    ---------------------------------------------------------------------------
        \2\ In April 2018, China was the first trading partner to impose
    retaliatory tariffs on U.S. agriculture in response to Section 232
    tariffs on aluminum and steel. Nearly all retaliatory tariffs--
    including those imposed by China in response to actions under Section
    301 and Section 232, as well as those imposed by the EU, Canada,
    Mexico, and Turkey in response to actions under Section 232, were in
    place by July 2018. India was the only country that announced but did
    not immediately apply retaliatory tariffs on U.S. agricultural products
    in 2018.
    ---------------------------------------------------------------------------
        For the 2019 trade mitigation programs, USDA employed a longer
    time-series to estimate gross trade damages, by surveying trends in
    U.S. bilateral trade over a 10 year period (2009-2018). For some of the
    commodities affected by tariffs, 2017 was not the most representative
    base year on which to conduct the trade damage analysis. The 10 year
    period for determining a basis for the evaluating the tariff allows
    estimates to account for other contributing variables, such as
    longstanding trade barriers imposed by China and other countries that
    have affected U.S. exports, as well as the longer-term impact of
    prolongedretaliatory tariffs.\3\
    ---------------------------------------------------------------------------
        \3\ To be clear, the model estimates the impact of the retaliatory
    tariff(s) on a given commodity.
    ---------------------------------------------------------------------------
        We included 2018 in this time-series, given that for some
    commodities, new market access had only just begun prior to the
    implementation of retaliatory tariffs. For example, in mid-2017, China
    and the United States agreed to improve market access for U.S. beef
    exports to China.\4\ U.S. beef exports began to increase in late 2017
    through the first half of 2018 before declining and leveling-off. U.S.
    beef had been banned from China since 2003, and prior to that ban, the
    United States was the country's largest beef supplier. Therefore, it is
    reasonable to expect that, but for the retaliatory tariffs that China
    imposed on U.S. beef in July 2018, U.S. beef exports to China would
    have continued to increase at a similar (if not higher) level as
    observed in the first half of 2018. Using 2017 as a base year does not
    fully capture the new market access opportunities for U.S. beef.
    ---------------------------------------------------------------------------
        \4\ On June 12, 2017, USDA announced that it had reached an
    agreement with Chinese officials on the final details of a protocol to
    allow the United States to begin exporting beef to China. See https://
    www.usda.gov/media/pressreleases/2017/06/12/us-china-finalize-details-
    send-us-beef-china.
    ---------------------------------------------------------------------------
        Other commodities have faced multi-year market access barriers into
    China and other countries that have implemented retaliatory tariffs. In
    recent years, unwarranted regulatory and trade-distorting measures have
    hindered U.S. corn exports to some of these markets, making the 2017
    base year less representative of U.S. export levels.\5\ Moreover,
    products made from corn, such as distillers dried grains and solubles
    (DDGS) and ethanol have been adversely impacted by China's earlier
    decisions to unilaterally increase tariffs (ethanol) and impose anti-
    dumping and countervailing duties (DDGS).\6\ Other products facing
    multi-year market access barriers include poultry, rice, and wheat.
    ---------------------------------------------------------------------------
        \5\ See the USTR Foreign Trade Barriers Reports and the USTR Trade
    Policy Agenda and Annual Reports for more details. The most recent
    reports can be accessed at https://ustr.gov/about-us/policy-offices/
    press-office/reports-and-publications/2019.
        \6\ Ibid.
    ---------------------------------------------------------------------------
    2019 MFP Payments and Payment Rates for Non-Specialty Crops
        Given the timing of the 2019 Market Facilitation Program (MFP)
    during the crop year, USDA developed a single rate per acre in each
    county for MFP-eligible non-specialty crops, which include select
    nonspecialty commodities both directly and indirectly affected by the
    trade dispute, in order to minimize potential distortions.
        Payments to each producer are limited to:

       2018 Farm Service Agency-certified planted acres;

       2018 Farm Service Agency-certified prevented from planting
            acres (of non-specialty crops); and

       2018 expiring Conservation Reserve Program acreage.

        The specific commodity rates that form the basis of the county rate
    are derived from the gross trade damage estimates. Commodity rates are
    set as the estimated trade damages divided by the average volume of
    production for 2015-17 reported by NASS.
        The county payment rates \7\ were based on historical fixed average
    area and yields as discussed below. The total potential payment amount
    for non-specialty crops is the eligible area multiplied by the
    nonspecialty county rate per acre. This total payment amount is subject
    to limitations further discussed under the ``Total MFP Payments''
    heading, beginning on page 7 of the report.
    ---------------------------------------------------------------------------
        \7\ See https://www.farmers.gov/manage/mfp for rates by county.

                       Non-specialty crops commodity rates
    ------------------------------------------------------------------------
       Non-specialty crops        Commodity Rate               Units
    ------------------------------------------------------------------------
             Soybeans                     $2.05                      BU
               Cotton                     $0.26                      LB
              Sorghum                     $1.69                      BU
                 Corn                     $0.14                      BU
                Wheat                     $0.41                      BU
                 Rice                     $0.63                     CWT
              Peanuts                     $0.01                      LB
                     Lentils              $3.99                     CWT
                 Peas                     $0.85                     CWT
          Alfalfa Hay                     $2.81                    TONS
          Dried Beans                     $8.22                     CWT
            Chickpeas                     $1.48                     CWT
    ------------------------------------------------------------------------

    Example of non-specialty crop county rate calculation
        County A has planted an average of 20,000 acres of corn, 10,000
    acres of soybeans, and 1,000 acres of barley. The historical average
    county yield is 180 bu/acre for corn, 60 bu/acre for soybeans, and 50
    bu/acre for barley. The commodity rates under the 2019 MFP for corn and
    soybeans are $0.14/bu and $2.05/bu, respectively. Since there are no
    retaliatory tariffs on U.S. barley, the payment rate for barley is
    $0.00/bu.
        County A's payment rate is calculated as follows:

              Step 1: For each crop in a county, multiply fixed historical
            acres, fixed historical yields, and the payment rate per unit
            for each eligible non-specialty MFP crop

           County A Corn Damage: 20,000 acres  180 bu/acre
                $0.14/bu = $504,000

           County A Soybeans Damage: 10,000 acres  60 bu/acre
                $2.05/bu =
                   $1,230,000

           County A Barley Damage: 1,000 acres  50 bu/acre
                $0.00/bu = $0

              Step 2: Sum all calculated values from Step 1

           $504,000 + $1,230,000 + $0 = $1,734,000 in total non-
                specialty crop damage

              Step 3: Sum the acres across all eligible non-specialty MFP
            crops

           20,000 + 10,000 + 1,000 = 31,000 acres

              Step 4: Calculate the county payment rate per acre by
            dividing the result of Step 2 by the result of Step 3

           $1,734,000/31,000 = $56/acre non-specialty crop county
                payment

        Acres reported to the Farm Service Agency between 2015-2018 are
    used to calculate the historical fixed acres for each crop within a
    county. The 2015-2017 historical fixed county yield is calculated using
    the following cascade:

      1.  RMA county yield,

      2.  NASS county yield, if the RMA county yield is unavailable,

      3.  RMA T-yield, if the both the RMA county yield and NASS county
                yield are unavailable,

      4.  NASS state yield, if (1)-(3) are unavailable, and

      5.  NASS national yield, if (1)-(4) are unavailable.
    Prevent Plant
        2019 planting was characterized by substantial rainfall and cool
    weather that delayed planting of crops across the United States.
    Producers prevented from planting a 2019 non-specialty crop, but who
    planted a CCC-approved cover crop, with the potential to be harvested,
    qualify for a $15 per acre payment.\8\
    ---------------------------------------------------------------------------
        \8\ https://www.usda.gov/media/press-releases/2019/07/25/usda-
    announces-details-support-package-farmers. USDA is not legally
    authorized to make Market Facilitation Program payments to producers
    for acreage that is not planted. However, cover crops planed with the
    purpose
    ---------------------------------------------------------------------------
    Cups and Caps
        The county payment rates per acre are cupped and capped at $15 per
    acre and $150 per acre, respectively.
    2019 MFP Payments and Payment Rates for Hogs and Milk
        Hogs: 2019 MFP payments for hog producers are based on live hog
    inventory on a day selected by the applicant between April 1, 2019 and
    May 15, 2019. Eligibility for 2019 MFP payments is again based upon
    independent ownership of the hogs; persons/legal entities that are
    contracted to grow hogs are not eligible for 2019 MFP.

        Calculate the per unit payment rate for hogs:

              Step 1: Calculate the gross trade damage estimate
              Step 2: Subtract the FPDP purchase amount from the gross
            trade damage estimate to calculate the portion not covered by
            FPDP
              Step 3: Divide the value from Step 2 by the number of hogs
            reported in the 2019 March inventory report to calculate the
            MFP payment rate per hog

        Milk: 2019 MFP payments for dairy producers are based on historical
    production, the same as what was reported for participation in the USDA
    Dairy Margin Coverage Program or its predecessor, the Margin Protection
    Program for Dairy. The ownership share for milk will be as reported to
    FSA for the aforementioned programs for dairy operations that were in
    business as of June 1, 2019. Dairy operations that were not in business
    as of June 1, 2019, are ineligible for MFP.

        Calculate the per unit payment rate for milk:

              Step 1: Calculate the gross trade damage estimate
              Step 2: Subtract the FPDP purchase amount from the gross
            trade damage estimate to calculate the portion not covered by
            FPDP
              Step 3: Divide the value from Step 2 by 2017 MPP production
            to get the MFP payment rate per cwt of milk

                             Hog and Milk MFP Rates
    ------------------------------------------------------------------------
                     Trade Damage      Units       Production     MFP rate
                       estimate   ------------------------------------------
                     minus FPDP2
                       targeted
        Product        purchase
                        amount         units       (in million     $/units
                   ---------------                   units)
                     (in million
                          $)
    ------------------------------------------------------------------------
            Hogs            $831           head             74           $11
           Dairy            $354            cwt          1,761         $0.20
    ------------------------------------------------------------------------

    2019 MFP Payments and Payment Rates for Specialty Crops
        Similar to the 2018 MFP, producers of an expanded list of specialty
    crops will be eligible for program payments. 2019 MFP payments for
    specialty crops are based on 2019 acres of fruit or nut bearing plants.
    For specialty fruits and ginseng, the payment rate is multiplied by the
    average yields listed on https://www.farmers.gov/manage/mfp.

        Calculate the payment rate for specialty tree nuts:

              Step 1: Calculate and sum all gross trade damage estimates
            for all specialty tree nuts
              Step 2: Sum bearing acres for all eligible tree nuts using
            NASS Census data for 2017
              Step 3: Divide total gross trade damages from Step 1 by total
            acres from Step 2 to get the national tree nut rate ($/acre)

        Calculate the payment rate for specialty fruits:

              Step 1: For each specialty fruit, calculate the gross trade
            damage estimate
              Step 2: Calculate total production of the fruit crop using
            2017 Census acreage and RMA yields
              Step 3: Divide the trade damage estimate from Step 1 by
            average production from Step 2 to get the per unit payment rate
            ($/lb)

        Calculate the payment rate for ginseng:

              Step 1: Calculate the gross trade damage estimate
              Step 2: Calculate estimated ginseng production using 2017
            Census data on ginseng acreage and USDA estimate of average
            yields using industry and academic sources
              Step 3: Divide the trade damage estimate from Step 1 by
            estimated production from Step 2 to get the per unit payment
            rate ($/lb)

                            Specialty Crop MFP Rates
    ------------------------------------------------------------------------
                                         Trade Damage
           Specialty Products            Estimate (in          MFP Rates
                                          million $)
    ------------------------------------------------------------------------
                    Tree Nuts *                  $318           $146/acre
         Sweet Cherries (fresh)                  $111            $0.17/lb
                 Grapes (fresh)                   $70            $0.03/lb
                    Cranberries                   $28            $0.03/lb
                        Ginseng                    $6            $2.85/lb
    ------------------------------------------------------------------------
    * Pistachios, almonds, walnuts, pecans, hazelnuts, and macadamia nuts.

    Total MFP Payments
        The total payments to producers are subject to payment limitations,
    AGI eligibility criteria, and adjustments to the payment structure.
        2019 MFP payments will be provided in up to 3 installments. The
    first payment will be guaranteed, and is the higher of 50 percent of
    the total calculated payment or $15 per acre. If CCC determines that a
    second payment is warranted, it will be up to 75 percent of the total
    calculated payment less the amount received in the first payment and
    the second payment period will begin in November 2019. If CCC
    determines that a final payment is warranted, it will be for the
    remaining amount of the total calculated payment, unless otherwise
    adjusted by CCC, and the last payment period will begin in January
    2020.
        For 2019 MFP payments, there will be 3 separate payment limitations
    for each person or legal entity: \9\
    ---------------------------------------------------------------------------
        \9\ This excludes a joint venture or general partnership, as
    defined and determined under 7 CFR part 1400.

    ---------------------------------------------------------------------------
      1.  $250,000 for eligible non-specialty crops;

      2.  $250,000 for eligible specialty crops; and

      3.  $250,000 for hogs and milk.

      4.  No person or legal entity can receive more than $500,000 under
                2019 MFP.

        Lastly, if the average adjusted gross income of a person or legal
    entity is greater than $900,000, the person or entity is not eligible
    to receive a MFP payment unless at least 75 percent of the adjusted
    gross income of the person or entity is derived from farming, ranching,
    or forestry related activities. The relevant years used to calculate
    average AGI are the 3 consecutive tax years immediately preceding the
    year before the payment year, which will be the crop year, or the
    marketing year for livestock or dairy. For example, for 2019 the
    relevant years to calculate AGI are the 2015, 2016 and 2017 tax years.
        For more information on the MFP program, please go to https://
    www.farmers.gov/manage/mfp. Rulemaking and related documents, including
    the Cost-Benefit Analysis (CBA), for trade mitigation programs can be
    found at https://www.regulations.gov/docket?D=CCC-2019-0003.
                                 [attachment 2]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Agricultural Provisions of The U.S.-China Economic and Trade Agreement
            and USDA Trade Forecasts

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    U.S. Department of Agriculture, Office of the Chief Economist
    February 6, 2020
    Executive Summary
        This paper provides an overview of the agricultural provisions of
    the U.S.-China Economic and Trade Agreement (Agreement) and discusses
    how those provisions will be reflected in upcoming USDA commodity trade
    forecasts. USDA publishes trade forecasts for U.S. and global commodity
    markets as part of the Department's broader commodity supply and demand
    estimates. Consistent with past practice, USDA supply and demand
    forecasts reflect trade and other policies in effect at the time of the
    release of the forecast. The Agreement was signed on January 15, 2020
    and will enter into force no later than February 14, 2020. The
    agricultural provisions of the Agreement include commitments by China
    to enact specific economic and regulatory reforms to facilitate
    agricultural trade, as well as commitments for China to purchase
    specific values of U.S. agricultural, food, and seafood products in
    calendar years (January-December) 2020 and 2021. The Agreement includes
    provisions that China will make such purchases on a commercial basis at
    market prices and that the purchases may reflect seasonal marketing
    patterns.
        Publicly available information and data pertaining to the Agreement
    will be reflected in USDA's World Agricultural Supply and Demand
    Estimates (WASDE) report beginning in February 2020 and will also be
    reflected in subsequent and related reports such as the Outlook for
    U.S. Agricultural Trade. It is important to note key differences
    between the scope of the Agreement and USDA forecasts. USDA forecasts
    only cover a subset of the commodities subject to the Agreement's
    purchase commitments, and those commitments are expressed in value
    terms on a calendar year basis. The WASDE forecasts report global trade
    volumes on a marketing year basis, but do not report bilateral trade
    (volumes or values) between individual countries.
        Moreover, while the Agreement may contain specific purchase
    commitments for individual commodities, the Office of the U.S. Trade
    Representative (USTR) has not released that information publicly, and
    it therefore plays no direct role in USDA's market analysis and
    forecasts. As actual export sales accrue over time and market
    conditions evolve, USDA's trade forecasts will be updated to reflect
    the timing and composition of China's purchases of U.S. agricultural
    products throughout the relevant marketing (or fiscal) year. However,
    USDA's trade forecasts are part of a broader estimation of supply and
    demand for major commodities, and therefore reflect analysis of a wide
    range of economic and market variables that affect prices, planting,
    yields, production, inventories, stocks, and use for specific
    commodities and sectors in the United States and in other countries.
    USDA Trade Forecasts
        USDA forecasts on a monthly, quarterly and yearly basis for U.S.
    and global commodity markets as part of the Department's broader
    commodity supply and demand estimates. The World Agricultural Supply
    and Demand Estimates (WASDE (https://www.usda.gov/oce/commodity/wasde/
    wasde0120.pdf)) report is published monthly and provides official USDA
    forecasts for U.S. and global supply and demand for major crops (wheat,
    rice, coarse grains, oilseeds, and cotton), U.S. and Mexican sugar
    supply and demand, and U.S. livestock, poultry, and dairy supply and
    demand.\1\ These forecasts are reported on a marketing year basis.\2\
    The trade forecasts are reported on a global basis, meaning that the
    WASDE reports total U.S. exports of a specific commodity to the world,
    or total Chinese imports of a specific commodity from the world. It
    does not report bilateral trade.
    ---------------------------------------------------------------------------
        \1\ The WASDE is one of USDA's Principal Federal Economic
    Indicators (https://www.whitehouse.gov/wp-content/uploads/2019/09/
    pfei_schedule_release_dates_2020.pdf).
        \2\ Marketing years vary by commodity and country, but generally
    reflect the 12 month period in which a commodity is produced and
    marketed. In the case of livestock, production occurs continuously, so
    estimates and forecasts are reported on a calendar year basis.
    ---------------------------------------------------------------------------
        Other USDA reports related to the WASDE include the Foreign
    Agricultural Service (FAS) World Agricultural Production reports, FAS
    World Markets and Trade reports, and the Economic Research Service
    (ERS) Situation and Outlook reports. The FAS World Markets and Trade
    reports and ERS Situation and Outlook reports cover a broader scope of
    commodities (e.g., citrus, tree nuts, fresh deciduous fruit) and are
    published monthly or semi-regularly.\3\
    ---------------------------------------------------------------------------
        \3\ The FAS World Agricultural Production Report is released the
    same day as the WASDE and is also a Principal Federal Economic
    Indicator. The FAS World Market and Trade reports are also published on
    the same day as the WASDE, while ERS Situation and Outlook reports are
    generally published a few days after. Some reports are published
    monthly (grains, oilseeds, sweeteners, and livestock), while others are
    semi-regular (tree nuts, fruits, vegetables, cotton). See https://
    apps.fas.usda.gov/psdonline/app/index.html#/app/downloads for a list of
    release dates for 2020 for FAS reports and https://www.ers.usda.gov/
    calendar/ for the publication schedule for ERS 2020 Situation and
    Outlook reports.
    ---------------------------------------------------------------------------
        The Outlook for U.S. Agricultural Trade (https://www.ers.usda.gov/
    publications/pub-details/?pubid=95473) provides quarterly USDA
    forecasts for agricultural trade (exports and imports) on a fiscal year
    (FY) basis (October 1 to September 30). Each quarterly report is based
    on the most recent WASDE report (February, May, August, November). This
    report includes forecasts for U.S. agricultural exports and imports by
    commodity on a value basis, and on volume terms for certain
    commodities. The report also includes forecasts for U.S. total
    agricultural exports to specific regions and countries, as well as
    total U.S. agricultural imports from primary suppliers, in value terms.
    This report does not provide specific bilateral commodity trade between
    the United States and its trading partners (e.g., U.S. soybean exports
    to China).
        The USDA Long-Term Agricultural Projections (https://www.usda.gov/
    oce/commodity/projections/index.htm) report is released annually,
    generally in February.\4\ These projections are a departmental
    consensus on a long-run representative scenario for the agricultural
    sector for the next decade. Projections cover production, trade, and
    aggregate indicators such as farm income. The October WASDE is the
    starting point for these long-term projections, which are also reported
    on a marketing year basis, while the long-term forecast for U.S.
    agricultural trade in value terms is on a fiscal year basis. As with
    the WASDE, the long-term agricultural trade projections are for global,
    not bilateral trade.
    ---------------------------------------------------------------------------
        \4\ Early release tables on U.S. commodity projections and
    assumptions on U.S. macroeconomic growth, global real GDP growth, and
    global population growth are generally made public in November in the
    year prior to the release of the full report.
    ---------------------------------------------------------------------------
        The USDA WASDE and long-term baseline trade forecasts are developed
    through an intradepartmental process that is chaired by the World
    Agricultural Outlook Board (WAOB), and reflects input from several USDA
    agencies, including FAS, ERS, National Agricultural Statistics Service
    (NASS), Agricultural Marketing Service (AMS), and the Farm Service
    Agency (FSA).\5\ ERS and FAS coordinate the U.S. Agricultural Trade
    Outlook, which is approved by the WAOB.
    ---------------------------------------------------------------------------
        \5\ The long-term baseline projection analysis also reflects input
    from the Office of the Chief Economist (OCE), the Office of Budget and
    Program Analysis (OBPA), the Risk Management Agency (RMA), the Natural
    Resources Conservation Service (NRCS), and the National Institute for
    Food and Agriculture (NIFA). ERS has the lead role in preparing the
    USDA long-term projections report.
    ---------------------------------------------------------------------------
    How USDA Trade Projections are Developed
        USDA agricultural trade analyses and forecasts are based on a range
    of trade data, market, and policy information including reporting by
    FAS overseas offices through the Global Agricultural Information
    Network (GAIN) reports on key commodities and policy developments for
    their country or region.\6\ U.S. trade data from the U.S. Census, as
    well as official trade data published by other countries, are also
    analyzed. FAS Export Sales Reporting (ESR) and other USDA trade-related
    data are also utilized.\7\ Trade forecasts contained in the WASDE and
    USDA's Production, Supply and Distribution Database (PSD) are part of
    the forecast of supply and demand for a specific commodity.\8\ Those
    commodity balances include separate estimates for supply (beginning
    stocks, imports, and production) and demand (domestic use, exports, and
    ending stocks). A wide range of market information and data inform
    these commodity supply and demand estimates. The Outlook for U.S.
    Agricultural Trade, which is based on the most recent WASDE, forecasts
    U.S. agricultural exports and imports but covers a broader range of
    commodities than WASDE and PSD (see table on p. 7 below for more detail
    on commodity coverage).
    ---------------------------------------------------------------------------
        \6\ See https://gain.fas.usda.gov/#/.
        \7\ See https://apps.fas.usda.gov/esrquery/ for Export Sales
    Reports. Other sources of data include inspections for export of
    certain grains and oilseeds that the Federal Grain Inspection Service
    publishes. See https://www.ams.usda.gov/resources/fgis-data-and-
    statistics.
        \8\ See https://apps.fas.usda.gov/psdonline/app/index.html#/app/
    home.
    ---------------------------------------------------------------------------
        The established practice for incorporating policy variables into
    USDA market forecasts is to include in the analysis all policies that
    are in place at the time the forecast. Further, until a formal end date
    is specified, the policy continues to be incorporated into the analysis
    throughout the time period covered by those forecasts. The long-term
    projections are based on specific assumptions about macroeconomic
    conditions, policy, weather, and international developments, with no
    domestic or external shocks to global agricultural markets. The
    projections contained in the forthcoming February 2020 long-term
    baseline report are based on analysis that was prepared during August
    through October 2019.
        On December 13, 2019, USTR announced that the United States and
    China had reached agreement on a trade deal, under which China
    committed to implement certain economic and structural reforms and make
    additional purchases of U.S. goods and services. That Agreement
    (https://ustr.gov/sites/default/files/files/agreements/
    phase%20one%20agreement/Economic_And_Trade_Agreement_Between_The_
    United_States_And_China_Text.pdf) was signed on January 15, 2020 and
    enters into force no later than 30 days after signature (February 14,
    2020).
        USTR released a series of fact sheets (https://ustr.gov/countries-
    regions/china-mongolia-taiwan/peoples-republic-china/phase-one-trade-
    agreement/fact-sheets) that summarize the Agreement. Key agricultural
    provisions include:

       Reforms to China's regulatory process for evaluating and
            authorizing certain products of agricultural biotechnology.

       Compliance with World Trade Organization (WTO) obligations
            on tariff-rate quotas (TRQs) for wheat, corn, and rice,
            including specific improvements to TRQ administration.

       Commitment that food safety regulations are science- and
            risk-based and only applied to the extent necessary to protect
            human life or health.

       Established timeframes for regulatory actions to facilitate
            trade for a broad range of products, including meat and
            poultry, dairy, seafood, fruits and vegetables, animal feed
            ingredients and pet foods.

       Stronger protection for intellectual property, including for
            agriculture, and a commitment to ensure that requests for
            geographical indication protection as part of international
            agreements do not undermine market access for U.S. exports to
            China.

        In addition, China committed to purchase and import, on average,
    $40 billion annually of U.S. food, agricultural, and seafood products,
    for a total of at least $80 billion over the next two years. The
    Agreement also provides that China will ``strive'' to import an
    additional $5 billion per year over the next two years. The Agreement
    recognizes that such purchases will be made at market prices based on
    commercial considerations, and that market conditions may determine the
    timing for which agricultural purchases are made in a given year.
        The purchase commitments cover the calendar years (January-
    December) for 2020 and 2021. For agricultural products identified in
    Annex 6.1 to the Agreement, which is reproduced at the end of this
    report, China committed to purchase and import:

       No less than $12.5 billion above the 2017 baseline amount in
            calendar year 2020 ($17.5 billion if the extra $5 billion is
            achieved), and

       No less than $19.5 billion above the 2017 baseline amount in
            calendar year 2021 ($24.5 billion if the extra $5 billion is
            achieved).

        The Agreement does not identify the 2017 baseline amount, nor does
    it expressly address China's existing retaliatory tariffs that are
    currently in place on U.S. exports. The United States and China will
    use official Chinese and U.S. trade data to determine whether the
    purchase commitments by China have been met. As of the date of
    publication, China had not publicly announced any actions to reduce or
    eliminate retaliatory tariffs on U.S. agricultural products to be
    purchased pursuant to the Agreement. In December 2019, the Chinese
    Finance Ministry announced that some Chinese companies would be
    permitted to import U.S. soybeans, pork, and other agricultural goods
    and the retaliatory tariff would be waived.\9\ To what extent the
    Chinese government will take similar actions for the 2020 and 2021
    purchases under the Agreement is not yet clear, but is being closely
    monitored.
    ---------------------------------------------------------------------------
        \9\ ``China reduces ag tariffs,'' DTN, December 6, 2019, accessed
    on January 22 at https://www.dtnpf.com/agriculture/web/ag/news/article/
    2019/12/06/chinese-officials-agree-waive-pork.
    ---------------------------------------------------------------------------
        Beyond December 2021, there are no specific purchase levels.
    However, the Agreement provides that the two sides ``project that the
    trajectory of increases'' in the commodities imported into China will
    continue in calendar years 2022 through 2025. The Agreement also
    provides that the United States and China shall specify increases in
    purchase for the subcategories listed in Annex 6.1 as appropriate. The
    agriculture subcategories listed in Annex 6.1 are: oilseeds, meat,
    cereals, cotton, other agricultural commodities, and seafood.\10\ The
    attachment to Annex 6.1 includes the Harmonized System (HS) trade codes
    for each subcategory and is reproduced at the end of this report.
    However, to date, USTR has not released any information publicly on
    specific purchase commitments for each subcategory.\11\
    ---------------------------------------------------------------------------
        \10\ According to footnote c to the table in Annex 6.1, other
    agricultural products ``[i]ncludes all other agricultural products,
    including alfalfa, citrus, dairy, dietary supplements, distilled
    spirits, dried distiller grains, essential oils, ethanol, fresh baby
    carrots, fruits and vegetables, ginseng, pet food, processed foods,
    tree nuts, and wine.'' Footnote d indicates that seafood includes
    lobster.
        \11\ The U.S. Trade Representative and senior USTR officials have
    stated that the Agreement includes specific commodity purchase
    commitments that will not be made public. See Ambassador Greg Doud's
    response to the second question in https://www.agweek.com/opinion/
    columns/4696669-ustrs-ag-negotiator-shares-more-trade-deal-china: ``It
    has to be an economic purchase, obviously, but this is a commitment
    overall in agriculture. Are there specific commitments for specific
    commodities within that? The answer is yes, but those numbers will not
    be made public.''
    ---------------------------------------------------------------------------
    How will the U.S.-China Economic and Trade Agreement be Incorporated
            into USDA Trade Forecasts?
        As previously explained, USDA commodity forecasts consider those
    trade actions which are in place or have had formal announcement of
    effective dates as of the time of publication. For the Agreement, the
    annual aggregate purchase levels in value terms, and which agricultural
    commodities are covered, is known for calendar years 2020 and 2021, and
    the Agreement states that China's purchases will be made at market
    prices based on commercial considerations, taking into account seasonal
    marketing patterns. What is not known is whether retaliatory tariffs
    will apply to those purchases or the timing of those purchases in a
    given calendar year. Moreover, commodity-specific commitments are not
    publicly available and are therefore not considered in the published
    forecasts.
        USDA trade forecasts prior to February 2020 do not reflect the
    specific provisions of the Agreement with China, since the details of
    the Agreement were not known until after the January WASDE was
    released. However, over past months, WASDE forecasts have routinely
    been updated to reflect trade and market conditions, including actual
    and anticipated sales to China. Beginning in February 2020, USDA trade
    projections for 2019/20 (and FY 2020) will fully consider all publicly
    available information on the Agreement, as well as any new market or
    policy developments that would affect those forecasts.\12\
    ---------------------------------------------------------------------------
        \12\ The long-term projections will not be revised prior to
    publication in February and will not reflect the Agreement.
    ---------------------------------------------------------------------------
        USDA releases an initial set of supply and demand forecasts for the
    upcoming crop year (e.g., 2020/21) at the annual USDA Agricultural
    Outlook Forum. These forecasts cover the major crop commodities and are
    based on several assumptions including ``normal'' weather, trend
    yields, and no change to agricultural and trade policies throughout the
    forecast period. The first official commodity supply and demand
    forecasts for the upcoming crop year are released with the May WASDE,
    which incorporates the latest market developments along with acreage
    forecasts based on the USDA/NASS Prospective Planting survey. Both the
    initial forecasts released in February and the official May WASDE 2020/
    21 forecasts will incorporate the Agreement into the underlying
    analysis, along with all other relevant market and policy variables. As
    more information and data become available regarding the timing, volume
    and content of China's commodity purchases, USDA commodity forecasts
    will be updated to reflect that new information.
        It is important to contrast the Agreement's agricultural purchase
    provisions with how USDA forecasts agricultural trade (see table
    below). First, the Agreement's definition of agricultural products in
    Annex 6.1 is much broader than the scope of commodities covered by the
    WASDE and PSD data. While the U.S. Agricultural Trade Outlook forecast
    covers more products than WASDE and PSD, the Agreement includes certain
    product groups, such as fish, seafood, spirits, biofuels, and tobacco
    products, which are not included in the USDA definition of agricultural
    products.\13\ Second, WASDE and PSD trade forecasts are reported on a
    volume basis (e.g., metric tons), while the U.S. agricultural trade
    outlook forecast is based on values, although volumes are included for
    some commodities.
    ---------------------------------------------------------------------------
        \13\ USDA defines distilled spirits, ethanol, biodiesel, forest
    products and fish products as ``agricultural-related'' products and are
    not included in the USDA FY trade forecast. The Agreement includes
    distilled spirits, ethanol, and fish products in the agricultural
    purchase category.
    ---------------------------------------------------------------------------
        Third, WASDE and PSD trade forecasts reflect global trade, that is,
    total U.S. soybean exports to all markets, not just to China (or total
    Chinese imports of soybeans from all suppliers). While U.S. soybean
    exports to China are a component of the U.S. soybean export forecast,
    the forecast must also account for U.S. soybean exports to other
    markets (or China's imports from other suppliers). Therefore, increased
    U.S. sales of any particular commodity to China is likely to shift
    global trade flows and lead to some rebalancing of markets, including
    the possibility of reduced sales to China of that commodity by other
    countries, and/or reduced U.S. exports of the commodity to non-China
    markets. These bilateral trade shifts are generally not visible in data
    reported in terms of global trade. The U.S. agricultural trade outlook
    includes U.S. bilateral export forecasts on a value basis, but only for
    the total value of agricultural commodities listed in the table below,
    which excludes certain products that are covered by the Agreement.
        Lastly, WASDE and PSD forecasts are on a marketing year basis,
    which is a 12 month period over which a crop is first harvested, and
    then sold prior to the next year's harvest (e.g., 2019/20).\14\ For
    example, the marketing year for U.S. soybeans is September to August,
    while the marketing year for U.S. cotton exports is August to July and
    for U.S. wheat is June to May. The U.S. agricultural trade forecast is
    on a fiscal year (October to September) basis. Given the seasonality of
    marketing patterns, which is recognized in the Agreement, China's
    purchases will likely be captured over multiple forecast years,
    depending on the commodity.
    ---------------------------------------------------------------------------
        \14\ Livestock, poultry, and dairy products are reported on a
    calendar year basis.

                                  Summary Table
    ------------------------------------------------------------------------
                                                                U.S.-China
                                                   U.S. Ag     Economic and
                         WASDE         PSD          Trade          Trade
                                                   Outlook       Agreement
    ------------------------------------------------------------------------
    Commodities/
     regions covered
                      U.S. and

                                   Same as
                                                Same as PSD
                                                              Same as USDA

    ------------------------------------------------------------------------
    Basis (volume or  Volume       Volume       Value for     Value
     value)                                      all
                                                 commodities
                                                 , volume
                                                 for certain
                                                 commodities
    ------------------------------------------------------------------------
    Global or         Global       Global       U.S. global   China's
     bilateral trade   trade        trade        trade by      imports of
                                                 commodity;    U.S.
                                                 U.S.          agricultural
                                                 bilateral     products
                                                 trade for
                                                 total
                                                 agricultura
                                                 l and food
                                                 products
    ------------------------------------------------------------------------
    Time frame/most   Marketing    Marketing    Fiscal year   2020 and 2021
     recent forecast   years        years        (FY 2020)     calendar
                       (2019/20)    (2019/20)                  years
    ------------------------------------------------------------------------
    Reporting         Monthly      Monthly for  Quarterly     Not applicable
     frequency                      some         (February,
                                    commoditie   May,
                                    s, semi-     August,
                                    regular      November)
                                    for others
    ------------------------------------------------------------------------

       Table: Attachment to Annex 6.2 of the U.S.-China Economic and Trade
                                    Agreement
    ------------------------------------------------------------------------

    ------------------------------------------------------------------------
                2.                               Agriculture
    ------------------------------------------------------------------------
    9                                             Oilseeds
                               ---------------------------------------------
                                     HS Code          Product Description
                               ---------------------------------------------
                                            1201   Soybeans, whether or not
                                                    broken
    ------------------------------------------------------------------------
    10                                              Meat
                               ---------------------------------------------
                                     HS Code          Product Description
                               ---------------------------------------------
                                            0201   Meat of bovine animals,
                                                    fresh or chilled
                                            0202   Meat of bovine animals,
                                                    frozen
                                            0203   Meat of swine, fresh,
                                                    chilled, or frozen
                                            0204   Meat of sheep or goats,
                                                    fresh, chilled or frozen
                                            0206   Edible offal of bovine
                                                    animals, swine, sheep,
                                                    goats, horses, asses,
                                                    mules or hinnies, fresh,
                                                    chilled or frozen
                                            0207   Meat and edible offal, of
                                                    the poultry of heading
                                                    0105, fresh, chilled or
                                                    frozen
                                            0208   Other meat and edible
                                                    meat offal, fresh,
                                                    chilled or frozen
                                            0209   Pig fat, free of lean
                                                    meat, and poultry fat,
                                                    not rendered or
                                                    otherwise extracted,
                                                    fresh, chilled, frozen,
                                                    salted, in brine, dried
                                                    or smoked
                                            0210   Meat and edible meat
                                                    offal, salted, in brine,
                                                    dried or smoked; edible
                                                    flours and meals of meat
                                                    or meat offal
                                            1601   Sausages and similar
                                                    products, of meat, meat
                                                    offal or blood; food
                                                    preparations based on
                                                    these products
                                            1602   Other prepared or
                                                    preserved meat, meat
                                                    offal or blood
                                            1603   Extracts and juices of
                                                    meat (not related to
                                                    fish or crustaceans,
                                                    molluscs or other
                                                    aquatic invertebrates)
    ------------------------------------------------------------------------
    11                                             Cereals
                               ---------------------------------------------
                                     HS Code          Product Description
                               ---------------------------------------------
                                            1001   Wheat and meslin
                                            1003   Barley
                                            1004   Oats
                                            1005   Corn (maize)
                                            1006   Rice
                                            1007   Grain sorghum
                                            1008   Buckwheat, millet and
                                                    canary seeds; other
                                                    cereals (including wild
                                                    rice)
                                            1101   Wheat or meslin flour
                                            1102   Cereal flours other than
                                                    of wheat or meslin
                                            1103   Cereal groats, meal and
                                                    pellets
                                            1104   Cereal grains, otherwise
                                                    worked (hulled, rolled
                                                    etc.), except rice
                                                    (heading 1006); germ of
                                                    cereals, whole, rolled,
                                                    flaked or ground
                                            1105   Flour, meal flakes,
                                                    granules and pellets of
                                                    potatoes
                                            1106   Flour and meal of dried
                                                    leguminous vegetables
                                                    (hd. 0713), of sago or
                                                    roots etc. (hd. 0714);
                                                    flour, meal and powder
                                                    of fruit and nuts etc.
                                                    (ch. 8)
                                            1107   Malt, whether or not
                                                    roasted
                                            1108   Starches; inulin
                                            1109   Wheat gluten, whether or
                                                    not dried
    ------------------------------------------------------------------------
    12                                             Cotton
                               ---------------------------------------------
                                     HS Code          Product Description
                               ---------------------------------------------
                                            5201   Cotton, not carded or
                                                    combed
                                            5202   Cotton waste (including
                                                    yarn waste and garnetted
                                                    stock)
                                            5203   Cotton, carded or combed
    ------------------------------------------------------------------------
    13                                 Other agricultural commodities
                               ---------------------------------------------
                                     HS Code          Product Description
                               ---------------------------------------------
                                            0101   Horses, asses, mules and
                                                    hinnies, live
                                            0102   Bovine animals, live
                                            0103   Swine, live
                                            0104   Sheep and goats, live
                                            0105   Poultry, live; chickens,
                                                    ducks, geese, turkeys
                                                    and guineas
                                            0106   Animals, live, nesoi
                                            0205   Meat of horses, asses,
                                                    mules or hinnies, fresh,
                                                    chilled or frozen
                                            0401   Milk and cream, not
                                                    concentrated nor
                                                    containing added
                                                    sweetening
                                            0402   Milk and cream,
                                                    concentrated or
                                                    containing added
                                                    sweetening
                                            0403   Buttermilk, curdled milk
                                                    and cream, yogurt,
                                                    kephir etc., whether or
                                                    not flavored etc. or
                                                    containing added fruit
                                                    or cocoa
                                            0404   Whey and other products
                                                    consisting of natural
                                                    milk constituents,
                                                    whether or not
                                                    concentrated or
                                                    sweetened, nesoi
                                            0405   Butter and other fats and
                                                    oils derived from milk
                                            0406   Cheese and curd
                                            0407   Birds' eggs, in shell,
                                                    fresh, preserved or
                                                    cooked
                                            0408   Birds' eggs, not in shell
                                                    and egg yolks, fresh,
                                                    dried, cooked by steam
                                                    etc., molded, frozen or
                                                    otherwise preserved,
                                                    sweetened or not
                                            0409   Honey, natural
                                            0410   Edible products of animal
                                                    origin, nesoi
                                            0501   Human hair, unworked,
                                                    whether or not washed or
                                                    scoured; waste of human
                                                    hair
                                            0502   Pigs', hogs' or boars'
                                                    bristles and hair;
                                                    badger and other
                                                    brushmaking hair; waste
                                                    of such bristles or hair
                               ---------------------------------------------
                                            0504   Animal guts, bladders and
                                                    stomachs (other than
                                                    fish), whole and pieces
                                                    thereof, fresh, chilled,
                                                    frozen, salted, in
                                                    brine, dried or smoked
                                            0505   Bird skins and other
                                                    feathered parts of
                                                    birds, feathers and
                                                    parts of feathers and
                                                    down, not further worked
                                                    than cleaned etc.
                                            0506   Bones and horn--cores,
                                                    unworked, defatted,
                                                    simply prepared (not cut
                                                    to shape), treated with
                                                    acid etc.; powder and
                                                    waste of these products
                                            0507   Ivory, tortoise--shell,
                                                    whalebone and whalebone
                                                    hair, horns, hooves,
                                                    claws etc., unworked or
                                                    simply prepared, not cut
                                                    to shape
                                            0510   Ambergris, castoreum,
                                                    civet and musk;
                                                    cantharides; bile;
                                                    glands and other animal
                                                    products for use in
                                                    pharmaceutical products,
                                                    fresh, frozen, etc.
                                            0601   Bulbs, tubers, tuberous
                                                    roots, corms etc.,
                                                    dormant, in growth or in
                                                    flower; chicory plants
                                                    and roots for planting
                                            0602   Live plants nesoi
                                                    (including their roots),
                                                    cuttings and slips;
                                                    mushroom spawn
                                            0603   Cut flowers and buds
                                                    suitable for bouquets or
                                                    ornamental purposes,
                                                    fresh, dried, dyed,
                                                    bleached, impregnated or
                                                    otherwise prepared
                                            0604   Foliage, branches,
                                                    grasses, mosses etc. (no
                                                    flowers or buds), for
                                                    bouquets or ornamental
                                                    purposes, fresh, dried,
                                                    dyed, bleached etc.
                                            0701   Potatoes (other than
                                                    sweet potatoes), fresh
                                                    or chilled
                                            0702   Tomatoes, fresh or
                                                    chilled
                                            0703   Onions, shallots, garlic,
                                                    leeks and other
                                                    alliaceous vegetables,
                                                    fresh or chilled
                                            0704   Cabbages, cauliflower,
                                                    kohlrabi, kale and
                                                    similar edible
                                                    brassicas, fresh or
                                                    chilled
                                            0705   Lettuce (lactuca sativa)
                                                    and chicory (cichorium
                                                    spp.), fresh or chilled
                                            0706   Carrots, turnips, salad
                                                    beets, salsify, radishes
                                                    and similar edible
                                                    roots, fresh or chilled
                                            0707   Cucumbers and gherkins,
                                                    fresh or chilled
                                            0708   Leguminous vegetables,
                                                    shelled or unshelled,
                                                    fresh or chilled
                                            0709   Vegetables nesoi, fresh
                                                    or chilled
                                            0710   Vegetables (uncooked or
                                                    cooked by steam or
                                                    boiling water), frozen
                                            0711   Vegetables provisionally
                                                    preserved (by sulfur
                                                    dioxide gas, in brine
                                                    etc.), but unsuitable in
                                                    that state for immediate
                                                    consumption
                                            0712   Vegetables, dried, whole,
                                                    cut, sliced, broken or
                                                    in powder, but not
                                                    further prepared
                                            0713   Leguminous vegetables,
                                                    dried shelled
                                            0714   Cassava (manioc),
                                                    arrowroot, salep,
                                                    jerusalem artichokes,
                                                    sweet potatoes and
                                                    similar roots etc. (high
                                                    starch etc. content),
                                                    fresh or dried; sago
                                                    pith
                                            0801   Coconuts, brazil nuts and
                                                    cashew nuts, fresh or
                                                    dried
                                            0802   Nuts nesoi, fresh or
                                                    dried
                                            0803   Bananas, including
                                                    plantains, fresh or
                                                    dried
                                            0804   Dates, figs, pineapples,
                                                    avocados, guavas,
                                                    mangoes and mangosteens,
                                                    fresh or dried
                               ---------------------------------------------
                                            0805   Citrus fruit, fresh or
                                                    dried
                                            0806   Grapes, fresh or dried
                                            0807   Melons (including
                                                    watermelons) and papayas
                                                    (papaws), fresh
                                            0808   Apples, pears and
                                                    quinces, fresh
                                            0809   Apricots, cherries,
                                                    peaches (including
                                                    nectarines), plums
                                                    (including prune plums)
                                                    and sloes, fresh
                                            0810   Fruit nesoi, fresh
                                            0811   Fruit and nuts (uncooked
                                                    or cooked by steam or
                                                    boiling water), whether
                                                    not sweetened, frozen
                                            0812   Fruit and nuts
                                                    provisionally preserved
                                                    (by sulfur dioxide gas,
                                                    in brine etc.), but
                                                    unsuitable in that state
                                                    for immediate
                                                    consumption
                                            0813   Fruit, dried, nesoi
                                                    (other than those of
                                                    headings 0801 to 0806);
                                                    mixtures of nuts or
                                                    dried fruits of this
                                                    chapter
                                            0814   Peel of citrus fruit or
                                                    melons (including
                                                    watermelons), fresh,
                                                    frozen, dried or
                                                    provisionally preserved
                                            0901   Coffee, whether or not
                                                    roasted or
                                                    decaffeinated; coffee
                                                    husks and skins; coffee
                                                    substitutes containing
                                                    coffee
                                            0902   Tea, whether or not
                                                    flavored
                                            0903   Mate
                                            0904   Pepper of the genus
                                                    piper; fruits of the
                                                    genus capsicum (peppers)
                                                    or of the genus pimenta,
                                                    dried, crushed or ground
                                            0905   Vanilla
                                            0906   Cinnamon and cinnamon--
                                                    tree flowers
                                            0907   Cloves (whole fruit,
                                                    cloves and stems)
                                            0908   Nutmeg, mace and
                                                    cardamons
                                            0909   Seeds of anise, badian,
                                                    fennel, coriander, cumin
                                                    or caraway; juniper
                                                    berries
                                            0910   Ginger, saffron, tumeric
                                                    (curcuma), thyme, bay
                                                    leaves, curry and other
                                                    spices
                                            1002   Rye
                                            1202   Peanuts (ground-nuts),
                                                    not roasted or otherwise
                                                    cooked, whether or not
                                                    shelled or broken
                                            1203   Copra
                                            1204   Flaxseed (linseed),
                                                    whether or not broken
                                            1205   Rape or colza seeds,
                                                    whether or not broken
                                            1206   Sunflower seeds, whether
                                                    or not broken
                                            1207   Oil seeds and oleaginous
                                                    fruits nesoi, whether or
                                                    not broken
                               ---------------------------------------------
                                            1208   Flours and meals of oil
                                                    seeds or oleaginous
                                                    fruits, other than those
                                                    of mustard
                                            1209   Seeds, fruit and spores,
                                                    of a kind used for
                                                    sowing
                                            1210   Hop cones, fresh or
                                                    dried, whether or not
                                                    ground, powdered or in
                                                    the form of pellets;
                                                    lupulin
                                            1211   Plants and parts of
                                                    plants (including seeds
                                                    and fruits), used in
                                                    perfumery, pharmacy, or
                                                    for insecticidal or
                                                    similar purposes, fresh
                                                    or dried
                                            1212   Locust beans, seaweeds
                                                    etc., sugar beet and
                                                    sugar cane; fruit stones
                                                    and kernels and other
                                                    vegetable products used
                                                    for human consumption,
                                                    nesoi
                                            1213   Cereal straw and husks,
                                                    unprepared, whether or
                                                    not chopped, ground,
                                                    pressed or in the form
                                                    of pellets
                                            1214   Rutabagas (swedes),
                                                    mangolds, hay, alfalfa
                                                    (lucerne), clover,
                                                    forage kale, lupines and
                                                    similar forage products,
                                                    whether or not in the
                                                    form of pellets
                                            1301   Lac; natural gums,
                                                    resins, gum--resins and
                                                    balsams
                                            1302   Vegetable saps and
                                                    extracts; pectic
                                                    substances, pectinates
                                                    and pectates; agar--agar
                                                    and other mucilages and
                                                    thickeners, derived from
                                                    vegetable products
                                            1401   Vegetable materials used
                                                    primarily for plaiting,
                                                    including bamboos,
                                                    rattans, reeds, rushes,
                                                    osier, raffia, processed
                                                    cereal straw and lime
                                                    bark
                                            1404   Vegetable products, nesoi
                                            1501   Pig fat (including lard)
                                                    and poultry fat, other
                                                    than of heading 0209 or
                                                    1503
                                            1502   Fats of bovine animals,
                                                    sheep or goats, other
                                                    than those of heading
                                                    1503
                                            1503   Lard stearin, lard oil,
                                                    oleostearin, oleo--oil
                                                    and tallow oil, not
                                                    emulsified or mixed or
                                                    otherwise prepared
                                            1505   Wool grease and fatty
                                                    substances derived
                                                    therefrom, including
                                                    lanolin
                                            1506   Animal fats and oils and
                                                    their fractions, nesoi,
                                                    whether or not refined,
                                                    but not chemically
                                                    modified
                                            1507   Soybean oil and its
                                                    fractions, whether or
                                                    not refined, but not
                                                    chemically modified
                                            1508   Peanut (ground-nut) oil
                                                    and its fractions,
                                                    whether or not refined,
                                                    but not chemically
                                                    modified
                                            1509   Olive oil and its
                                                    fractions, whether or
                                                    not refined, but not
                                                    chemically modified
                                            1510   Olive--residue oil and
                                                    blends of olive oil and
                                                    oil--residue oil, not
                                                    chemically modified
                                            1511   Palm oil and its
                                                    fractions, whether or
                                                    not refined, but not
                                                    chemically modified
                                            1512   Sunflower--seed,
                                                    safflower or cottonseed
                                                    oil, and their
                                                    fractions, whether or
                                                    not refined, but not
                                                    chemically modified
                                            1513   Coconut (copra), palm
                                                    kernel or babassu oil
                                                    and their fractions,
                                                    whether or not refined,
                                                    but not chemically
                                                    modified
                                            1514   Rapeseed, colza or
                                                    mustard oil and their
                                                    fractions, whether or
                                                    not refined, but not
                                                    chemically modified
                                            1515   Fixed vegetable fats and
                                                    oils (including jojoba
                                                    oil) and their
                                                    fractions, whether or
                                                    not refined, but not
                                                    chemically modified
                                            1516   Animal or vegetable fats
                                                    and oils and their
                                                    fractions, partly or
                                                    wholly hydrogenated
                                                    etc., whether or not
                                                    refined, but not further
                                                    prepared
                               ---------------------------------------------
                                            1517   Margarine; edible
                                                    mixtures or preparations
                                                    of animal or vegetable
                                                    fats or oils or of
                                                    fractions of different
                                                    specified fats and oils
                                            1518   Animal or vegetable fats,
                                                    oils and their
                                                    fractions, boiled,
                                                    oxidized, etc.; inedible
                                                    mixes or preparations of
                                                    animal or vegetable fats
                                                    and oils, nesoi
                                            1520   Glycerol (glycerine),
                                                    whether or not pure;
                                                    glycerol waters and
                                                    glycerol lyes
                                            1521   Vegetable waxes (other
                                                    than triglycerides),
                                                    beeswax, other insect
                                                    waxes and spermaceti,
                                                    whether or not refined
                                                    or colored
                                            1522   Degras; residues
                                                    resulting from the
                                                    treatment of fatty
                                                    substances or animal or
                                                    vegetable waxes
                                            1701   Cane or beet sugar and
                                                    chemically pure sucrose,
                                                    in solid form
                                            1702   Sugars nesoi, including
                                                    chemically pure lactose,
                                                    maltose, glucose and
                                                    fructose in solid form;
                                                    sugar syrups (plain);
                                                    artificial honey;
                                                    caramel
                                            1703   Molasses resulting from
                                                    the extraction or
                                                    refining of sugar
                                            1704   Sugar confectionary
                                                    (including white
                                                    chocolate), not
                                                    containing cocoa
                                            1801   Cocoa beans, whole or
                                                    broken, raw or roasted
                                            1802   Cocoa shells, husks,
                                                    skins and other cocoa
                                                    waste
                                            1803   Cocoa paste, whether or
                                                    not defatted
                                            1804   Cocoa butter, fat and oil
                                            1805   Cocoa powder, not
                                                    containing added sugar
                                                    or other sweetening
                                                    matter
                                            1806   Chocolate and other food
                                                    preparations containing
                                                    cocoa
                                            1901   Malt extract; food
                                                    preparations of flour,
                                                    meal etc. containing
                                                    under 40% cocoa nesoi;
                                                    food preparations of
                                                    milk etc. containing
                                                    under 50% cocoa nesoi
                                            1902   Pasta, whether or not
                                                    cooked or stuffed or
                                                    otherwise prepared,
                                                    including spaghetti,
                                                    lasagna, noodles etc.;
                                                    couscous, whether or not
                                                    prepared
                                            1903   Tapioca and substitutes
                                                    therefor prepared from
                                                    starch, in the form of
                                                    flakes, grains, pearls,
                                                    siftings or similar
                                                    forms
                                            1904   Prepared foods from
                                                    swelling or roasting
                                                    cereals or products;
                                                    cereals (excluding
                                                    corn), in grain form
                                                    flakes or worked grain
                                                    prepared nesoi
                                            1905   Bread, pastry, cakes,
                                                    biscuits and other
                                                    bakers' wares; communion
                                                    wafers, empty capsules
                                                    for medicine etc.,
                                                    sealing wafers, rice
                                                    paper etc.
                                            2001   Vegetables, fruit, nuts
                                                    and other edible parts
                                                    of plants, prepared or
                                                    preserved by vinegar or
                                                    acetic acid
                                            2002   Tomatoes prepared or
                                                    preserved otherwise than
                                                    by vinegar or acetic
                                                    acid
                                            2003   Mushrooms and truffles,
                                                    prepared or preserved
                                                    otherwise than by
                                                    vinegar or acetic acid
                                            2004   Vegetables, other than
                                                    tomatoes, mushrooms and
                                                    truffles, prepared or
                                                    preserved otherwise than
                                                    by vinegar or acetic
                                                    acid, frozen, excluding
                                                    products of 2006
                                            2005   Vegetables, other than
                                                    tomatoes, mushrooms and
                                                    truffles, prepared or
                                                    preserved otherwise than
                                                    by vinegar or acetic
                                                    acid, not frozen
                                                    excluding products of
                                                    2006
                                            2006   Vegetables, fruit, nuts,
                                                    fruit--peel and other
                                                    parts of plants
                                                    preserved by sugar
                                                    (drained, glace or
                                                    crystallized)
                               ---------------------------------------------
                                            2007   Jams, fruit jellies,
                                                    marmalades, fruit or nut
                                                    puree and fruit or nut
                                                    pastes, being cooked
                                                    preparations, whether or
                                                    not containing added
                                                    sweetening
                                            2008   Fruit, nuts and other
                                                    edible parts of plants,
                                                    otherwise prepared or
                                                    preserved, whether or
                                                    not containing added
                                                    sweetening or spirit,
                                                    nesoi
                                            2009   Fruit juices not
                                                    fortified with vitamins
                                                    or minerals (including
                                                    grape must) & vegetable
                                                    juices, unfermented &
                                                    not containing added
                                                    spirit, whether or not
                                                    containing added
                                                    sweetening
                                            2101   Extracts, essences and
                                                    concentrates of coffee,
                                                    tea or mate and
                                                    preparations thereof;
                                                    roasted chicory etc. and
                                                    its extracts, essences
                                                    and concentrates
                                            2102   Yeasts; other single-cell
                                                    micro-organisms, dead
                                                    (other than medicinal
                                                    vaccines of heading
                                                    3002); prepared baking
                                                    powders
                                            2103   Sauces and preparations
                                                    therefor; mixed
                                                    condiments and mixed
                                                    seasonings; mustard
                                                    flour and meal and
                                                    prepared mustard
                                            2104   Soups and broths and
                                                    preparations therefor;
                                                    homogenized composite
                                                    food preparations
                                            2105   Ice cream and other
                                                    edible ice, whether or
                                                    not containing cocoa
                                            2106   Food preparations not
                                                    elsewhere specified or
                                                    included
                                            2203   Beer made from malt
                                            2204   Wine of fresh grapes,
                                                    including fortified
                                                    wines; grape must other
                                                    than that of heading
                                                    2009
                                            2205   Vermouth and other wine
                                                    of fresh grapes flavored
                                                    with plants or aromatic
                                                    substances
                                            2206   Other fermented beverages
                                                    (for example, cider,
                                                    perry, mead, sake);
                                                    mixtures of fermented
                                                    beverages and mixtures
                                                    of fermented beverages
                                                    and non-alcoholic
                                                    beverages, not elsewhere
                                                    specified or included
                                            2207   Undenatured ethyl alcohol
                                                    of an alcoholic strength
                                                    by volume of 80 percent
                                                    vol. or higher; ethyl
                                                    alcohol and other
                                                    spirits, denatured, of
                                                    any strength
                                            2208   Undenatured ethyl alcohol
                                                    of an alcoholic strength
                                                    by volume of less than
                                                    80 percent vol.;
                                                    spirits, liqueurs and
                                                    other spirituous
                                                    beverages
                                            2209   Vinegar and substitutes
                                                    for vinegar obtained
                                                    from acetic acid
                                            2301   Flours, meals and
                                                    pellets, of meat or meat
                                                    offal, of fish or of
                                                    crustaceans, mollusks or
                                                    other aquatic
                                                    invertebrates, unfit for
                                                    human consumption;
                                                    greaves (cracklings)
                                            2302   Bran, sharps and other
                                                    residues (in pellets or
                                                    not), derived from the
                                                    sifting, milling or
                                                    other working of cereals
                                                    or leguminous plants
                                            2303   Residues of starch
                                                    manufacture and other
                                                    residues and waste of
                                                    sugar manufacture,
                                                    brewing or distilling
                                                    dregs and waste, whether
                                                    or not in pellets
                                            2304   Soybean oilcake and other
                                                    solid residues resulting
                                                    from the extraction of
                                                    soy bean oil, whether or
                                                    not ground or in the
                                                    form of pellets
                                            2305   Peanut (ground-nut)
                                                    oilcake and other solid
                                                    residues resulting from
                                                    the extraction of peanut
                                                    (ground-nut) oil,
                                                    whether or not ground or
                                                    in pellets
                                            2306   Oilcake and other solid
                                                    residues (in pellets or
                                                    not), resulting from the
                                                    extraction of vegetable
                                                    fats or oils (except
                                                    from soybeans or
                                                    peanuts), nesoi
                                            2307   Wine lees; argol
                                            2308   Vegetable materials and
                                                    waste, vegetable
                                                    residues and by-products
                                                    (in pellets or not),
                                                    used in animal feeding,
                                                    nesoi
                                            2309   Preparations of a kind
                                                    used in animal feeding
                                            2401   Tobacco, unmanufactured
                                                    (whether or not threshed
                                                    or similarly processed);
                                                    tobacco refuse
                               ---------------------------------------------
                                            2402   Cigars, cheroots,
                                                    cigarillos and
                                                    cigarettes, of tobacco
                                                    or of tobacco
                                                    substitutes
                                            2403   Tobacco and tobacco
                                                    substitute manufactures,
                                                    nesoi; homogenized or
                                                    reconstituted tobacco;
                                                    tobacco extracts and
                                                    essences
                                   290543/290544   Acyclic alcohols and
                                                    their halogenated,
                                                    sulfonated, nitrated or
                                                    nitrosated derivatives
                                            3301   Essential oils,
                                                    concentrates and
                                                    absolutes; resinoid;
                                                    extracted oleoresins;
                                                    concentrations of
                                                    essential oils and
                                                    terpenic byproducts;
                                                    aqueous solutions etc.
                                                    of essential oil
                                            3302   Mixtures of odoriferous
                                                    substances and mixtures
                                                    (including alcoholic
                                                    solutions) with a basis
                                                    of one or more of these
                                                    substances, of a kind
                                                    used as raw materials in
                                                    industry; other
                                                    preparations based on
                                                    odoriferous substances,
                                                    of a kind used for the
                                                    manufacture of beverages
                                            3501   Casein, caseinates and
                                                    other casein
                                                    derivatives; casein
                                                    glues
                                            3502   Albumins (including
                                                    concentrates with two or
                                                    more whey proteins,
                                                    containing by weight
                                                    more than 80% whey
                                                    proteins calculated on
                                                    dry matter), albuminates
                                                    & other albumin
                                                    derivatives
                                            3503   Gelatin (including
                                                    gelatin in rectangular
                                                    or square sheets) and
                                                    gelatin derivatives;
                                                    isinglass; other glue of
                                                    animal origin (except
                                                    casein glue) nesoi
                                            3504   Peptones and derivatives;
                                                    other proteins and
                                                    derivatives, nesoi; hide
                                                    powder, chromed or not
                                            3505   Dextrins and other
                                                    modified starches; glues
                                                    based on starches, or on
                                                    dextrins or other
                                                    modified starches
                                          380910   Finishing agents, dye
                                                    carriers and other
                                                    preparations (dressings,
                                                    mordants etc.) used in
                                                    the textile, paper,
                                                    leather or like
                                                    industries, nesoi
                                            4101   Raw hides and skins of
                                                    bovine or equine animals
                                                    (fresh or preserved, but
                                                    not tanned or further
                                                    prepared), whether or
                                                    not dehaired or split
                                            4102   Raw skins of sheep or
                                                    lambs, other than
                                                    astrakhan, broadtail,
                                                    caracul or similar skins
                                                    (fresh or preserved, but
                                                    not tanned or further
                                                    prepared)
                                            4103   Raw hides and skins nesoi
                                                    (fresh or preserved, but
                                                    not tanned or further
                                                    prepared), whether or
                                                    not dehaired or split
                                            4301   Raw furskins nesoi (other
                                                    than raw hides and skins
                                                    usually used for
                                                    leather), including
                                                    heads, tails and pieces
                                                    or cuttings suitable for
                                                    furriers' use
                                            5001   Silkworm cocoons suitable
                                                    for reeling
                                            5002   Raw silk (not thrown)
                                            5003   Silk waste (including
                                                    cocoons unsuitable for
                                                    reeling, yarn waste and
                                                    garnetted stock)
                                            5101   Wool, not carded or
                                                    combed
                                            5102   Fine or coarse animal
                                                    hair, not carded or
                                                    combed
                                            5103   Waste of wool or of fine
                                                    or coarse animal hair,
                                                    including yarn waste but
                                                    excluding garnetted
                                                    stock
                                            5301   Flax, raw or processed
                                                    but not spun; flax tow
                                                    and waste (including
                                                    yarn waste and garnetted
                                                    stock)
                                            5302   True hemp (cannabis
                                                    sativa l.), raw or
                                                    processed but not spun;
                                                    tow and waste of true
                                                    hemp (including yarn
                                                    waste and garnetted
                                                    stock)
    ------------------------------------------------------------------------
    14                                             Seafood
                               ---------------------------------------------
                                     HS Code          Product Description
                               ---------------------------------------------
                                            0301   Live fish
                                            0302   Fish, fresh or chilled,
                                                    excluding fish fillets
                                                    and other fish meat of
                                                    heading 0304
                               ---------------------------------------------
                                            0303   Fish, frozen, excluding
                                                    fish fillets and other
                                                    fish meat of heading
                                                    0304
                                            0304   Fish fillets and other
                                                    fish meat (whether or
                                                    not minced), fresh,
                                                    chilled or frozen
                                            0305   Fish, dried, salted or in
                                                    brine; smoked fish,
                                                    whether or not cooked
                                                    before or during the
                                                    smoking process; flours,
                                                    meals and pellets of
                                                    fish, fit for human
                                                    consumption
                                            0306   Crustaceans, whether in
                                                    shell or not, live,
                                                    fresh, chilled, frozen,
                                                    dried, salted or in
                                                    brine; smoked
                                                    crustaceans, whether in
                                                    shell or not, whether or
                                                    not cooked before or
                                                    during the smoking
                                                    process; crustaceans, in
                                                    shell, cooked by
                                                    steaming or by boiling
                                                    in water, whether or not
                                                    chilled, frozen, dried,
                                                    salted or in brine;
                                                    flours, meals and
                                                    pellets of crustaceans,
                                                    fit for human
                                                    consumption
                                            0307   Molluscs, whether in
                                                    shell or not, live,
                                                    fresh, chilled, frozen,
                                                    dried, salted or in
                                                    brine; smoked molluscs,
                                                    whether in shell or not,
                                                    whether or not cooked
                                                    before or during the
                                                    smoking process; flours,
                                                    meals and pellets of
                                                    molluscs, fit for human
                                                    consumption
                                            0308   Aquatic invertebrates
                                                    other than crustaceans
                                                    and molluscs, live,
                                                    fresh, chilled, frozen,
                                                    dried, salted or in
                                                    brine;smoked aquatic
                                                    invertebrates other than
                                                    crustaceans and
                                                    molluscs, whether or not
                                                    cooked before or during
                                                    the smoking process;
                                                    flours, meals and
                                                    pellets of aquatic
                                                    invertebrates other than
                                                    crustaceans and
                                                    molluscs, fit for human
                                                    consumption
                                            1604   Prepared or preserved
                                                    fish; caviar and caviar
                                                    substitutes prepared
                                                    from fish eggs
                                            1605   Crustaceans, molluscs and
                                                    other aquatic
                                                    invertebrates, prepared
                                                    or preserved
    ------------------------------------------------------------------------

                                 [attachment 3]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Advancing Sustainable Materials Management: Facts and Figures
    [Accessed December 11, 2020]
    National Key Facts and Figures in the United States
        Each year, EPA produces a report called Advancing Sustainable
    Materials Management: Fact Sheet, formerly called Municipal Solid Waste
    in the United States: Facts and Figures. It includes information on
    municipal solid waste (MSW) generation, recycling, combustion with
    energy recovery and landfilling. The fact sheet also includes
    information on Construction and Demolition Debris generation, which is
    outside of the scope of MSW.

       Read the Advancing Sustainable Materials Management: Fact
            Sheet * \1\
    ---------------------------------------------------------------------------
        * Editor's note: Hyperlinks are set as footnotes. Hyperlinked pdfs,
    that are still extant, are retained in Committee file.
        \1\ https://www.epa.gov/facts-and-figures-about-materials-waste-
    and-recycling/advancing-sustainable-materials-management.
    ---------------------------------------------------------------------------
    U.S. State and Local Waste and Materials Characterization Reports
        EPA maintains a list of state and local waste characterization
    studies; reports are not available for all states. You can search for
    your state in the table below.
        For additions, changes or updates, please send new reports to
    ORCRMeasurement@epa.gov. Most reports exit EPA's website The following
    links exit the site EXIT \2\
    ---------------------------------------------------------------------------
        \2\ https://www.epa.gov/home/exit-epa.

    ------------------------------------------------------------------------
            State                               Reports
    ------------------------------------------------------------------------
                 Alabama   Alabama: Economic Impact of Recycling in Alabama
                            and Opportunities for Growth (2012) (PDF) (16
                            pp., 309 K)
                             http://www.adem.state.al.us/programs/land/
                           landforms/
                           CompleteEconomicsOfRecyclingAlabamaReport.pdf.
                  Alaska   Alaska: Fairbanks North Star Borough Recycling
                            Plan & Analysis, June 12, 2015 (16 pp., 1.1 MB)
                             http://www.fnsb.us/Boards/Documents/
                           PDCFinalRecyclingReport.pdf.
                 Arizona   Arizona: City of Phoenix Waste Characterization
                            Study (2015) (196 pp., 9.5 MB)
                             https://www.phoenix.gov/publicworkssite/
                           Documents/WasteCharacterizationStudyCombined2014-
                           15.pdf.
                Arkansas   State of Recycling in Arkansas
                             https://www.adeq.state.ar.us/poa/recycling/
                           state.aspx.
              California   Cal Recycle Waste Characterization Studies
                            Listing
                             https://www2.calrecycle.ca.gov/
                           WasteCharacterization/Study.
                Colorado   2018 Colorado Waste Composition Study (5 pp.,
                            37.7 KB)
                             https://environmentalrecords.colorado.gov/
                           HPRMWebDrawerHM/RecordView/453419.
                           Colorado: Boulder County Waste Composition Study
                            (2019) (PDF) (62 pp., 3.8 MB)
                             https://assets.bouldercounty.org/wp-content/
                           uploads/2020/04/boulder-county-final-waste-
                           composition-study-2019.pdf.
                           Colorado: Larimer County 2016 Waste Composition
                            and Characterization Analysis (PDF) (58 pp., 6.0
                            MB)
                             https://www.larimer.org/sites/default/files/
                           uploads/2017/wastesort.pdf.
             Connecticut   Connecticut: 2015 Statewide Waste
                            Characterization Study (PDF) (160 pp., 3.81 MB)
                             https://portal.ct.gov/-/media/DEEP/
                           waste_management_and_disposal/
                           Solid_Waste_Management_Plan/
                           CMMSFinal2015MSWCharacterizationStudypdf.pdf?la=e
                           n.
                Delaware   Delaware Solid Waste Authority Statewide Waste
                            Characterization Study, FY 2016 (PDF) (68 pp.,
                            1.45 MB)
                             https://dswa.com/wp-content/uploads/2017/02/
                           Final-Report-DSWA-Waste-Characterization-FY-2016-
                           January-2017.pdf.
    District of Columbia   Washington, DC Public Reports on Recycling
                             https://zerowaste.dc.gov/page/reports-1.
                 Florida   Florida Solid Waste and Recycling Annual
                            Reporting
                             https://floridadep.gov/waste/waste-reduction/
                           content/recycling.
                 Georgia   Georgia Statewide Waste Characterization Study
                            (2005) (PDF) (216 pp., 4.45 MB)
                             https://epd.georgia.gov/sites/epd.georgia.gov/
                           files/related_files/site_page/MSW_Study.pdf.
                  Hawaii   Hawaii: City and County of Honolulu Waste
                            Characterization Study (2006) (PDF) (58 pp., 227
                            K)
                             http://www.opala.org/pdfs/solid_waste/2006
                           Final Waste Characterization Report.pdf.
                   Idaho   No Report Available
                Illinois   Illinois: Chicago Department of Environment Waste
                            Characterization Study (2010) (PDF) (340 pp.,
                            3.21 MB)
                             https://www.cityofchicago.org/content/dam/city/
                           depts/doe/general/RecyclingAndWasteMgmt_PDFs/
                           WasteAndDiversionStudy/
                           WasteCharacterizationReport.pdf.
                           Illinois: Commodity/Waste Generation and
                            Characterization Study (2015) (PDF) (323 pp.,
                            9.3 MB)
                             http://www.illinoisrecycles.org/wp-content/
                           uploads/2014/10/2015-Waste-Characterization-
                           Update-FINAL.pdf.
                 Indiana   Indiana's new waste characterization study (2012)
                            (PDF) (165 pp., 5.78 MB)
                             http://www.in.gov/idem/recycle/files/
                           msw_characterizarion_study.pdf.
                    Iowa   Iowa: Statewide Waste Characterization Study
                            (2017) (PDF) (118 pp., 1.5 MB)
                             http://www.iowadnr.gov/Portals/idnr/uploads/
                           waste/wastecharacterization2017.pdf.
                  Kansas   Kansas: 2016 State Solid Waste Management Plan
                            (PDF) (40 pp., 2.0 MB)
                             https://www.kdheks.gov/waste/
                           reportspublications/stateplan16.pdf.
                Kentucky   Kentucky: Division of Waste Management Fiscal
                            Year 2018 Annual Report (64 pp., 4.1 MB)
                             https://eec.ky.gov/Environmental-Protection/
                           Waste/Annual Reports/DWM Annual Report for
                           2018.pdf.
                           Kentucky: Louisville Solid Waste Study Report
                            January 2018
                             https://louisvilleky.gov/government/public-
                           works/solid-waste-study-report-january-2018.
                        LouNo Report Available
                   Maine   Maine: Residential Waste Characterization Study
                            (2011) (PDF) (30 pp., 463 K)
                             https://umaine.edu/wp-content/uploads/sites/2/
                           2017/04/2011-Maine-Residential-Waste-
                           Characterization-Study.pdf.
                           Maine Solid Waste Generation and Disposal
                            Capacity Report: Calendar Year 2014 (32 pp., 483
                            K)
                             https://www1.maine.gov/dep/ftp/Juniper-Ridge/
                           additional_documents/Maine Solid Waste Generation
                           and Disposal Capacity Report Calendar Year
                           2014.pdf.
                Maryland   Maryland Solid Waste Management and Diversion
                            Report--2017 (for 2016 Data) (PDF) (83 pp., 2.98
                            MB)
                             https://mde.maryland.gov/programs/LAND/
                           SolidWaste/Documents/MSWMR %2717.pdf.
           Massachusetts   Massachusetts: Waste Characterization Data
                            Summary (2011)
                             https://www.mass.gov/files/documents/2016/08/oc/
                           wcsmater.pdf.
                           Recycling & Solid Waste Data for Massachusetts
                            Cities & Towns
                             https://www.mass.gov/lists/recycling-solid-
                           waste-data-for-massachusetts-cities-towns.
                Michigan   Michigan: Economic Impact Potential and
                            Characterization of Municipal Solid Waste in
                            Michigan (202 pp., 3.9 MB)
                             https://www.michigan.gov/documents/deq/480236-
                           14_WMSBF_waste_characterization_report_521920_P7.
                           PDF.
               Minnesota   Minnesota: City of Red Wing Solid Waste
                            Composition Study: Solid Waste Boiler Facility
                            (2009) (PDF) (61 pp., 5.32 MB)
                             https://www.pca.state.mn.us/sites/default/files/
                           wastesort-redwing2009.pdf.
                           Minnesota: Perham Resource Recovery Facility:
                            Solid Waste Composition Study (2012) (PDF) (62
                            pp., 4.5 Mv)
                             https://www.pca.state.mn.us/sites/default/files/
                           wastesort-perham2012.pdf.
                           Minnesota: Solid Waste Composition Study: Covanta
                            Hennepin Energy Resource Company (2012) (PDF)
                            (27 pp., 685 Kb Mb)
                             https://www.pca.state.mn.us/sites/default/files/
                           wastesort-hennepin2012.pdf.
                           Minnesota Statewide Waste Characterization Study
                            (2013) (PDF) (59 pp., 1.66 Mb)
                             https://www.pca.state.mn.us/sites/default/files/
                           w-sw1-60.pdf.
                           Broader Information on the Minnesota MSW
                            Composition Study
                             https://www.pca.state.mn.us/waste/minnesota-msw-
                           composition-study.
             Mississippi   Mississippi: Status Report on Solid Waste
                            Management Facilities and Activities (2017)
                            (PDF) (66 pp., 13.8 MB)
                             https://www.mdeq.ms.gov/wp-content/uploads/2019/
                           01/2017-Status-Report-Final.pdf.
                Missouri   Missouri: 2016-2017 Waste Composition Study
                             http://dnr.mo.gov/env/swmp/specialprojects.htm.
                 Montana   Montana: 2018 Integrated Waste Management Plan
                            (37 pp., 942 K)
                             https://deq.mt.gov/Portals/112/Land/Recycle/
                           Documents/pdf/IWMPFinal2018.pdf?ver=2019-10-30-
                           091908-783×tamp=1572449157973.
                           Montana: Recycling Statistics
                             http://deq.mt.gov/Land/recycle/
                           recycling_statistics_page.
                Nebraska   Nebraska: State Waste Characterization Study
                            (2009) (PDF) (2175 pp., 6.41 MB)
                             http://www.deq.state.ne.us/Publica.nsf/
                           23e5e39594c064ee852564ae004fa010/
                           e3b876e52f86f1a6862575cP900733cca/$FILE/Waste
                           Study Portfolio.pdf.
                  Nevada   State of Nevada Solid Waste Management Plan 2017
                            (50 pp., 953 K)
                             https://ndep.nv.gov/uploads/land-waste-solid-
                           swmp-docs/swmp2017-final-8-17.pdf.
           New Hampshire   Biennial Solid Waste Report, October 2019 (23
                            pp., 509 K)
                             https://www.des.nh.gov/organization/
                           commissioner/pip/publications/documents/r-wmd-19-
                           02.pdf.
              New Jersey   No Report Available
              New Mexico   Solid Waste Management Plan (2015) (34 pp., 1.5
                            MB)
                             https://www.env.nm.gov/wp-content/uploads/sites/
                           24/2018/04/SolidWasteManagementPlan.pdf.
                New York   State Solid Waste Management Plan (2010)
                             https://www.dec.ny.gov/chemical/41831.html.
                           New York: NYC Residential, School, and NYCHA
                            Waste Characterization Study (PDF) (68 pp., 11.1
                            MB)
                             https://dsny.cityofnewyork.us/wp-content/
                           uploads/2018/04/2017-Waste-Characterization-
                           Study.pdf.
          North Carolina   North Carolina: Solid Waste Management Annual
                            Reports
                             https://deq.nc.gov/about/divisions/waste-
                           management/sw/data/annual-reports.
                           North Carolina: Orange County Waste Sort Data
                             http://www.co.orange.nc.us/1146/Waste-Sort-
                           Data.
                           North Carolina: Orange County Waste Composition
                            Study (2017)
                             http://www.co.orange.nc.us/DocumentCenter/View/
                           2826/2017-Orange-County-Waste-Characterization-
                           Study-Final-Report-PDF.
            North Dakota   No Report Available
                    Ohio   Ohio: Economic Impact Potential of Recycling in
                            Ohio, 2019 (76 pp., 4.3 MB)
                             https://www.epa.state.oh.us/Portals/41/OMM/Ohio-
                           Waste-Characterization-Recycling-Economics-
                           Report.pdf?ver=2019-08-29-123006-543.
                           Ohio: Hamilton County Waste Composition Study,
                            2018
                             http://www.hamiltoncountyrecycles.org/UserFiles/
                           Servers/Server_3788196/File/EnvironmentalServices/
                           SolidWaste/About/
                           Hamilton%20County%20WCS%202018%20Final%20Report.p
                           df.
                           Ohio Waste Characterization Study (2004) (PDF)
                            (319 pp., 1.64 MB)
                             https://epa.ohio.gov/Portals/41/recycling/
                           OhioWasteCharacterizationStudy.pdf.
                Oklahoma   Oklahoma: Annual Solid Waste Tonnage Report
                            (2019) (2 pp., 93 K)
                             https://www.deq.ok.gov/wp-content/uploads/land-
                           division/2015-19_Annual_Tonnage_Reported.pdf.
                  Oregon   Oregon: Recycling Characterization and
                            Composition Study 2016/2017
                             https://www.oregon.gov/deq/mm/Pages/Waste-
                           Composition-Study.aspx.
            Pennsylvania   Pennsylvania: 2016 County Recycled Materials
                            Report (PDF) (17 pp., 816 K)
                             http://files.dep.state.pa.us/Waste/Recycling/
                           RecyclingPortalFiles/Documents/
                           2016_Recycling_Report.pdf.
                           Pennsylvania: Statewide Waste Composition Study
                            (2003) (PDF) (175 pp., 2.81 MB)
                             http://files.dep.state.pa.us/Waste/Recycling/
                           RecyclingPortalFiles/Documents/
                           wastecompositionstudy.pdf.
            Rhode Island   Rhode Island Solid Waste Characterization Study
                            (PDF) (58 pp., 2.05 MB)
                             https://www.rirrc.org/sites/default/files/2017-
                           02/Waste Characterization Study 2015.pdf.
          South Carolina   South Carolina Solid Waste Management 2019 Report
                            (PDF) (102 pp., 4.72 MB)
                             https://scdhec.gov/sites/default/files/media/
                           document/2019 SC Solid Waste Management Annual
                           Report OR-1988_4.pdf.
                           The Economic Impact of the Recycling Industry in
                            South Carolina (PDF) (12 pp., 1.13 MB)
                             https://scdhec.gov/sites/default/files/Library/
                           CR-011380.pdf.
            South Dakota   State of South Dakota Recycling/Diversion Report
                            2011 (17 pp., 673 K)
                             https://denr.sd.gov/des/wm/recycle/documents/
                           StateofSouthDakotaRecyclingReport2011.pdf.
               Tennessee   Tennessee: Waste Characterization Study (2008)
                             https://www.epa.gov/smm/study-characterizing-
                           waste-tennessee.
                           Tennessee: Analysis of Tennessee's Household
                            Generated Waste (2015) (23 pp., 1.0 MB)
                             https://www.serdc.org/resources/TN-SF-Waste-
                           Study.pdf.
                   Texas   Annual Summary of Municipal Solid Waste
                            Management in Texas
                             https://www.tceq.texas.gov/permitting/
                           waste_permits/waste_planning/wp_swasteplan.html.
                    Utah   No Report Available
                 Vermont   Vermont Waste Characterization (2018) (PDF) (53
                            pp., 1.31 MB)
                             https://dec.vermont.gov/sites/dec/files/wmp/
                           SolidWaste/Documents/2018-VT-Waste-
                           Characterization.pdf.
                           Vermont: Waste Composition Study (2013) (PDF) (44
                            pp., 1.47 MB)
                             http://dec.vermont.gov/sites/dec/files/wmp/
                           SolidWaste/Documents/
                           finalreportvermontwastecomposition 13may2013.pdf.
                Virginia   Virginia Annual Recycling Summary Report 2017
                            (PDF) (10 pp., 546 K)
                             https://www.deq.virginia.gov/Portals/0/DEQ/Land/
                           RecyclingPrograms/CY2017RecycleRateReport.pdf.
              Washington   Washington Seattle Waste Composition Studies
                             http://www.seattle.gov/utilities/documents/
                           reports/solid-waste-reports/composition-studies.
                           Washington: Statewide Waste Characterization
                            Study (2015-2016) (PDF) (157 pp., 2.3 MB)
                             https://fortress.wa.gov/ecy/publications/
                           documents/1607032.pdf.
                           Washington: Statewide Waste Characterization
                            Study (2015-2016) (PDF) (157 pp., 2.3 MB)
                             https://fortress.wa.gov/ecy/publications/
                           documents/1607032.pdf.
                           Washington: Thurston County Waste Composition
                            Study (2013-2014) (PDF) (145 pp., 1.4 MB)
                             https://www.co.thurston.wa.us/solidwaste/
                           regulations/docs/ThurstonCountyWasteComp2014.pdf.
                           Washington: Seattle Public Utilities Waste
                            Composition Studies
                             https://www.seattle.gov/utilities/documents/
                           reports/solid-waste-reports/composition-studies.
                           Washington: King County Resident[i]al Curbside
                            Characterization, October 2018 (PDF) (89 pp.,
                            1.3 MB)
                             https://kingcounty.gov//media/depts/dnrp/solid-
                           waste/about/documents/waste-characterization-
                           study-2018.ashx?la=en.
           West Virginia   West Virginia Solid Waste Management Plan 2019
                            (PDF) (212 pp., 5.43 MB)
                             http://www.state.wv.us/swmb/State Plans/2019
                           Complete State Plan.pdf.
               Wisconsin   Wisconsin: State-wide Waste Characterization
                            Study (2009) (PDF) (112 pp., 220 MB About PDF)
                             http://dnr.wi.gov/topic/Recycling/documents/
                           WI_WCS_Final_Report_June-30-2010.pdf.
                           Wisconsin: Statewide Waste Characterization Study
                            (2003) (PDF) (114 pp., 738 K About PDF)
                             http://dnr.wi.gov/topic/Recycling/documents/
                           wrws-finalrpt.pdf.
                           Wisconsin: Waste Characterization and Management
                            Study Update (2002) (PDF) (47 pp., 182 K)
                             http://dnr.wi.gov/files/PDF/pubs/wa/WA418.pdf.
                 Wyoming   Wyoming Solid Waste Diversion Study, January 3,
                            2013 (179 pp., 4.3 MB)
                             http://deq.wyoming.gov/media/attachments/Solid
                           %26 Hazardous Waste/Solid Waste/Studies %26
                           Assessments/SHWD_Solid-Waste--Recycling-Wyoming-
                           Diversion-Study_2013-0128.pdf.
    International Reports  Canada--Metro Vancouver 2015 Waste Composition
                            Monitoring Program (PDF) (71 pp., 8.2 MB)
                             http://www.metrovancouver.org/services/solid-
                           waste/SolidWastePublications/
                           2015_Waste_Composition_Report.pdf.
    ------------------------------------------------------------------------

        Contact Us (https://www.epa.gov/facts-and-figures-about-materials-
    waste-and-recycling/forms/contact-us-about-facts-and-figures-about) to
    ask a question, provide feedback, or report a problem.
                                 [attachment 4]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Economic Research Service
    Economic Information Bulletin
    Number 121
    February 2014
    The Estimated Amount, Value, and Calories of Postharvest Food Losses at
            the Retail and Consumer Levels in the United States

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

              Cover image: Shutterstock.
              Use of commercial and trade names does not imply approval or
            constitute endorsement by USDA.

    Jean C. Buzby, Hodan F. Wells, and Jeffrey Hyman

        Access this report online: www.ers.usda.gov/publications/eib-
    economic-information-bulletin/eib-xxx.aspx.
        Download the charts contained in this report:

       Go to the report's index page www.ers.usda.gov/publications/
            eib-economic-information-bulletin/eib121.aspx

       Click on the bulleted item ``Download eib121.zip''

       Open the chart you want, then save it to your computer

        Recommended citation format for this publication: Buzby, Jean C.,
    Hodan F. Wells, and Jeffrey Hyman. The Estimated Amount, Value, and
    Calories of Postharvest Food Losses at the Retail and Consumer Levels
    in the United States, EIB-121, U.S. Department of Agriculture, Economic
    Research Service, February2014.

              The U.S. Department of Agriculture (USDA) prohibits
            discrimination in all its programs and activities on the basis
            of race, color, national origin, age, disability, and, where
            applicable, sex, marital status, familial status, parental
            status, religion, sexual orientation, genetic information,
            political beliefs, reprisal, or because all or a part of an
            individual's income is derived from any public assistance
            program. (Not all prohibited bases apply to all programs.)
            Persons with disabilities who require alternative means for
            communication of program information (Braille, large print,
            audiotape, etc.) should contact USDA's TARGET Center at (202)
            720-2600 (voice and TDD).
              To file a complaint of discrimination write to USDA,
            Director, Office of Civil Rights, 1400 Independence Avenue,
            S.W., Washington, D.C. 20250-9410 or call (800) 795-3272
            (voice) or (202) 720-6382 (TDD). USDA is an equal opportunity
            provider and employer.
    Abstract
        This report provides the latest estimates by USDA's Economic
    Research Service (ERS) on the amount and value of food loss in the
    United States. These estimates are for more than 200 individual foods
    using ERS's Loss-Adjusted Food Availability data. In 2010, an estimated
    31 percent or 133 billion pounds of the 430 billion pounds of food
    produced was not available for human consumption at the retail and
    consumer levels. This amount of loss totaled an estimated $161.6
    billion, as purchased at retail prices. For the first time, ERS
    estimates of the calories associated with food loss are presented in
    this report. An estimated 141 trillion calories per year, or 1,249
    calories per capita per day, in the food supply in 2010 went uneaten.
    The top three food groups in terms of share of total value of food loss
    are meat, poultry, and fish (30 percent); vegetables (19 percent); and
    dairy products (17 percent). The report also provides a brief
    discussion of the economic issues behind postharvest food loss.
        Keywords: Food consumption, food loss, food recovery, food waste,
    foodservice, recycling, plate waste, processing.
    Acknowledgments
        The authors gratefully acknowledge Kevin Hall (National Institutes
    of Health), Ephraim Leibtag (ERS), Hayden Stewart (ERS), Jay Variyam
    (ERS), and Gregory Ziegler (Pennsylvania State University) for their
    reviews of the report. Thanks also to ERS editor Dale Simms and
    designer Cynthia A. Ray.
    Contents
        Summary
        Background
        Economics of Food Loss
        Data and Methods
        Results
        Amount
        Value
        Calories
        Discussion
        Appendix: The ERS Loss-Adjusted Food Availability Data and Methods
    for Estimatingthe Amount and Value of Postharvest Food Loss
        References
    Errata
        On June 27, 2014, Tables 2, 3, and 5 were updated to correct some
    incorrect values. The errors did not affect summary totals in the
    tables or report findings.
    A report summary from the Economic Research Service *
    ---------------------------------------------------------------------------
        * Find the full report at www.ers.usda.gov/publications/
    eibeconomic-informationbulletin/EIB-121.aspx.
        ERS is a primary source of economic research and analysis from the
    U.S. Department of Agriculture, providing timely information on
    economic and policy issues related to agriculture, food, the
    environment, and rural America.
    ---------------------------------------------------------------------------
    February 2014
    What Is the Issue?
        ``Food loss'' represents the amount of edible food, postharvest,
    that is available for human consumption but is not consumed for any
    reason; it includes cooking loss and natural shrinkage (e.g., moisture
    loss); loss from mold, pests, or inadequate climate control; and plate
    waste. ``Food waste'' is a component of food loss and occurs when an
    edible item goes unconsumed, such as food discarded by retailers due to
    undesirable color or blemishes and plate waste discarded by consumers.
    Food loss (particularly the food waste component) is becoming an
    increasingly important topic both domestically and internationally.
    Better estimates of the amount and value of food loss, including food
    waste, could help serve as quantitative baselines for policymakers and
    the food industry to set targets and develop initiatives, legislation,
    or policies to minimize food waste, conserve resources, and improve
    human nutrition. Reducing food loss would likely reduce food prices in
    the United States and the rest of the world, though the effects depend
    on the nature of supply, including import and export considerations.
    What Did the Study Find?
        In the United States, 31 percent--or 133 billion pounds--of the 430
    billion pounds of the available food supply at the retail and consumer
    levels in 2010 went uneaten. Retail-level losses represented 10 percent
    (43 billion pounds) and consumer-level losses 21 percent (90 billion
    pounds) of the available food supply. (Losses on the farm and between
    the farm and retailer were not estimated due to data limitations for
    some of the food groups.)
        The estimated total value of food loss at the retail and consumer
    levels in the United States was $161.6 billion in 2010. The top three
    food groups in terms of share of total value of food loss were meat,
    poultry, and fish (30 percent, $48 billion); vegetables (19 percent,
    $30 billion); and dairy products (17 percent, $27 billion). The total
    amount of food loss represents 387 billion calories (technically, we
    mean Calorie or kcal hereafter) of food not available for human
    consumption per day in 2010, or 1,249 out of 3,796 calories available
    per American per day. Recovery costs, food safety considerations, and
    other factors would reduce the amount of food that could actually be
    recovered for human consumption.
        The study also reviewed the literature and found that food loss is
    economically efficient in some cases. There is a practical limit to how
    much food loss the United States or any other country could
    realistically prevent, reduce, or recover for human consumption given:
    (1) technical factors (e.g., the perishable nature of most foods, food
    safety, storage, and temperature considerations); (2) temporal and
    spatial factors (e.g., the time needed to deliver food to a new
    destination, and the dispersion of food loss among millions of
    households, food processing plants, and foodservice locations); (3)
    individual consumers' tastes, preferences, and food habits (e.g.,
    throwing out milk left over in a bowl of cereal); and (4) economic
    factors (e.g., costs to recover and redirect uneaten food to another
    use).
    How Was the Study Conducted?
        This report uses data from ERS's Loss-Adjusted Food Availability
    (LAFA) data series. This data series is ERS's core Food Availability
    data series, adjusted for spoilage, plate waste, and other food losses
    and converted to daily per capita amounts, calories, and food pattern
    equivalents (previously called servings and MyPyramid equivalents).
    Here, the LAFA data series' underlying loss assumptions are used to
    estimate food loss at the retail and consumer levels. The LAFA data
    series is considered to be preliminary because ERS continues to improve
    the underlying loss assumptions and the documentation of the data
    series. In August 2012, new estimates for consumer-level loss were
    incorporated into the data series. Therefore, the relative contribution
    of the different food groups out of total food loss has changed from
    previous ERS publications on food loss. The analysis is an
    extrapolation from the data as of September 2012 and is not based on an
    equilibrium model. For each food group covered here, we calculated the
    amount, value, and representative calories of food loss at the retail
    and consumer levels in the United States in 2010. The value estimates
    are based on retail prices.
    Background
        In 1977, a Report to Congress by the General Accounting Office
    (GAO) titled ``Food Waste: An Opportunity To Improve Resource Use''
    (GAO, 1977) discussed the U.S. Department of Agriculture's activities
    related to food loss in the United States, warning that:

              ``The United States can no longer be lulled by past
            agricultural surpluses and must consider a future that may
            contain a world shortage of food. In an environment of plenty,
            the United States has not historically been concerned with food
            losses. Although some attention has been focused on the subject
            in the agricultural research community, in many instances,
            plentiful food and low prices did not justify the economic
            expenditure necessary to reduce loss. In an era of potential
            scarcity, however, it may be necessary to re-examine the
            present position on losses.'' (p. 1) \1\
    ---------------------------------------------------------------------------
        \1\ The 1977 report also concluded that ``at present, loss
    represents a large misallocation of resources. For 1974, about 66
    million acres of land and 9 million tons of fertilizer were used to
    produce food ultimately lost. In energy, about 461 million equivalent
    barrels of oil were used to produce food ultimately lost'' (GAO, 1977).
    This amount of loss represents about 23 percent of all food produced
    for direct human consumption in 1974.

        Today, there is a renewed interest in the issues related to food
    loss, both domestically and internationally. For example, USDA and the
    U.S. Environmental Protection Agency (EPA) launched the U.S. Food Waste
    Challenge on June 4, 2013, and the United Nations' Environment
    Programme's (UNEP) World Environment Day's major theme in June 2013 was
    food waste. Some findings from the 1977 GAO report are still relevant
    today, given the resources used in the production of uneaten food, the
    negative externalities associated with food loss (e.g., pollution
    created during food production), and the growing pressures on the
    global food supply (see box, ``Three Reasons for a Growing Interest in
    Food Loss''). Therefore, it may become increasingly important to
    estimate the amount and value of food loss, including food waste, as a
    quantitative baseline for policymakers and the food industry to set
    targets and develop initiatives, legislation, or policies to minimize
    food waste, conserve resources, and improve human nutrition (Buzby and
    Hyman, 2012).
        ``Food loss'' represents the amount of edible food, postharvest,
    that is available for human consumption but is not consumed for any
    reason. It includes cooking loss and natural shrinkage (e.g., moisture
    loss); loss from mold, pests, or inadequate climate control; plate
    waste; and other causes.\2\ ``Food waste'' is a component of food loss
    and occurs when an edible item goes unconsumed, such as food discarded
    by retailers due to blemishes or plate waste discarded by consumers.
    This report calculates the amount and value of food loss in the United
    States. It does not calculate the amount and value of food waste or the
    other subcomponents of food loss. Data are unavailable on the portion
    of food loss that is food waste. The estimates of food loss provided
    here have had the inedible portions removed (e.g., bones, peach pits,
    and asparagus stalks). For example, the food loss estimates for meat,
    poultry, and fish provided are in boneless weight.
    ---------------------------------------------------------------------------
        \2\ The term ``postharvest food loss'' simply refers to food loss
    after the food is harvested. Definitions of food waste and food loss
    vary worldwide (e.g., inedible portions are included in some food waste
    definitions).
    ---------------------------------------------------------------------------
      Three Reasons for a Growing Interest in Food Loss
      (1) Food loss means a loss of money and other resources
              Food loss represents significant amounts of money and other
            resources invested in food production, including land, fresh
            water, labor, energy, agricultural chemicals (e.g., fertilizer,
            pesticides), and other inputs to produce food that does not
            ultimately meet its intended purpose of feeding people (Buzby,
            et al., 2011). For example, Webber (2012) estimates that food
            waste represents 2.5 percent of U.S. energy consumption per
            year, and Hall, et al. (2009) estimate that the production of
            this wasted food required the expenditure of around 300 million
            barrels of oil and over 25 percent of the total freshwater
            consumed by agriculture in the United States. A more detailed
            understanding of the resource implications of food loss in the
            United States, including estimates of the land used to produce
            wasted food, is not available.
              According to the U.S. Environmental Protection Agency (EPA),
            food waste accounted for 34 million tons (almost 14 percent)
            out of the 250 million tons of municipal solid waste in the
            United States in 2010 as measured before recycling (EPA, 2011)
            (see figure). Less than 3 percent of this food waste was
            recovered and recycled, with the remainder going to landfills
            or incinerators (EPA, 2011). In 2010, food waste cost roughly
            $1.3 billion to landfill (Schwab, 2013). After recycling some
            materials, such as paper and paperboard, food waste was the
            single largest amount of municipal solid waste categorized by
            EPA in 2010, with 21 percent of the total (see figure).

      Total municipal solid waste generation by material before (250 million
               tons) and after recycling (161 million tons), 2010

              Before recycling                     After recycling

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

              Source: EPA, as of September 17, 2012: http://www.epa.gov/
            wastes/conserve/materials/organics/food/fd-basic.htm.
      (2) Food loss means that negative externalities were created
            throughout the supply chain
              Negative externalities can arise throughout the entire food
            supply chain from the food's production to the disposal of any
            uneaten food. Negative externalities are transaction costs that
            spill over from an action (e.g., food production or disposal)
            that can adversely affect society and the environment and that
            are not incorporated in market prices (e.g., the price of
            food). In general, food that is produced, regardless of whether
            it is consumed or wasted, contributes to pressure on the
            availability of fresh water and other natural resources
            (Lundqvist, et al., 2008), including land needed for
            urbanization, forests, and protected areas, some of which is
            necessary for biodiversity and wildlife. Some of these
            pressures on water, land, and other resources are not fully
            internalized in prices (e.g., value of wildlife diversity in
            land prices). A few examples of these externalities include:
            (1) greenhouse gas emissions from cattle production (Lundqvist
            et al., 2008); (2) air pollution caused by farm machinery and
            trucks that transport food; (3) water pollution and damage to
            marine and freshwater fisheries from agricultural chemical and
            nutrient runoff during crop and livestock production (Aillery,
            et al., 2005; Ribaudo, et al., 2011); and (4) soil erosion,
            salinization, and nutrient depletion that arise from
            unsustainable production and irrigation practices (Hansen and
            Ribaudo, 2008; Sullivan, et al., 2004).
              Additionally, incinerating food waste creates emissions that
            harm the environment and landfilling food waste generates
            methane gas when food waste decomposes anaerobically. Methane
            is 21 times more powerful in accelerating global warming than
            carbon dioxide (EPA, 2011). Landfills account for 34 percent of
            all human-related methane emissions in the United States (EPA,
            2011). In addition to methane, landfills produce leachate (a
            mixture of liquid waste, organic degradation byproducts, and
            rainwater), which may contaminate groundwater if the landfills
            are not properly maintained. These negative consequences are
            offset to some extent when energy is generated from
            incinerating or landfilling food (e.g., tapping the methane
            gas).
      (3) The world population is growing, so more food will be needed to
            feed people
              Reducing food waste will become an increasingly important
            strategy in the future to help feed a growing human population.
            It would help by increasing the amount of food available for
            consumption (particularly food for subsistence households in
            developing countries) and by lowering prices. The United
            Nations predicts that the world population will reach 9.3
            billion by 2050 (United Nations, 2011), and this will require a
            70-percent increase in food production, net of crops used for
            biofuels (FAO, 2009). Currently, according to an ERS report,
            the number of food-insecure people reached 802 million in 2012
            (Rosen et al., 2012). Low incomes have an important role in
            this level of food insecurity. Although most of this population
            growth will occur in developing countries, developed countries
            like the United States also face issues of hunger and food
            insecurity.
              In 2012, 49 million people lived in food-insecure households
            in the United States (Coleman-Jensen, et al., 2013) out of a
            total population of over 305 million. Food insecurity is when
            the food intake of one or more household members is reduced and
            eating patterns are disrupted at times during the year because
            the household lacks money and other resources for food. Food-
            insecure households accounted for 14.5 percent of U.S.
            households: 9.2 percent had low food security and 5.7 percent
            had very low food security (see figure).

        Some food loss is inevitable because food is inherently perishable
    and some food needs to be discarded to ensure food safety. For example,
    some unsold or uneaten food at restaurants, supermarkets, or in homes
    is not suitable for consumption. Some losses--like the discard of moldy
    fruit from the produce shelf at the supermarket and the condemnation of
    diseased animals at the slaughtering house--are necessary to ensure the
    safety and wholesomeness of the food supply. Such foods are not
    recoverable for human use. Likewise at restaurants, plate scraps not
    taken home by patrons are appropriately discarded out of health
    considerations. Legal liability and strict food safety rules, such as
    those in the wake of the mad cow disease scare, inhibit food recovery
    and redistribution in some cases. Discarding unsafe food and food
    suspected of being unsafe reduces the individual and societal costs of
    foodborne illness and, in some cases, the potential legal liability.
        Many causes of food loss can occur across the entire food supply
    chain in developed countries (see box, ``Causes of Food Loss and Waste
    at the Farm, Farm-to-Retail, Retail, and Consumer Levels''). The share
    of total food loss due to each of these causes is unknown.
        This report estimates the amount, value, and calories of food loss
    at the retail and consumer levels in the United States, both in total
    and per capita by major food group.\3\ No adjustments are made for
    changes in the demographic makeup of the population. Given the recent
    and growing interest in food loss and waste domestically, up-to-date
    estimates on the magnitude of food loss in the United States are
    timely. This report updates and extends previous ERS publications on
    food loss in several important ways:
    ---------------------------------------------------------------------------
        \3\ Here, this report uses the term ``calories'' to represent
    ``Calories'' (i.e., with capital ``C'') or kilocalories because
    ``calories'' is the commonly used spelling in the media and informal
    publications, Wikipedia provides more information on this distinction
    (http://en.wikipedia.org/wiki/Calorie).

      1.  The report updates previous ERS estimates of the amount and value
                of food loss for foods at the retail and consumer levels in
                the United States in 2010 using data as of September 2012.
                Previous ERS food loss estimates for 2008 are available in
                Buzby and Hyman (2012) (amount and value for all
                commodities), Buzby, et al. (2011) (value provided only for
                fruits and vegetables), and Hodges, et al. (2010) (amount
    ---------------------------------------------------------------------------
                estimates in tonnes).

      2.  The estimates in this report incorporate new consumer-level loss
                assumptions, which were introduced into the Loss-Adjusted
                Food Availability (LAFA) data series in August 2012 (see
                documentation: http://www.ers.usda.gov/data-products/food-
                availability-(per-capita)-data-system/loss-adjusted-food-
                availability-documentation.aspx) and which were not used in
                the aforementioned studies.

      3.  This report discusses the economics of food loss in greater depth
                than in previous ERS reports.

      4.  This report provides ERS's first estimates of the amount of food
                loss in terms of calories.

      5.  The LAFA data series is part of the Food Availability Data
                System, which now faces important data challenges in terms
                of temporarily suspended or unavailable data for some
                commodities (ERS, 2011). This means that the 2010 estimates
                provided in this report may be the last complete year for
                some time whereby all commodities and food groups are
                represented in the FADS. This emphasizes the importance of
                providing the 2010 food loss estimates with detailed
                information and documentation about the estimates. This
                documentation will change as new data and information are
                included in the FADS and if there is a change in the
                methodology of how the food loss estimates are calculated.

      Causes of Food Loss and Waste at the Farm, Farm-to-Retail, Retail, and
                                 Consumer Levels
        (Farm Level (not measured in this report)

         Consumption or damage by insects, rodents, birds, or
         microbes (e.g., molds, bacteria),a and damage by unfavorable or
         extreme weather (e.g., droughts, floods, hurricanes, and freezes).

         Diminishing returns when harvesting additional increments
         of production and other factors leading to leaving some edible
         crops unharvested.

         Overplanting or overpreparing due to difficulty predicting
         number of buyers/customers.

        Farm-to-Retail Level (not measured in this report)

         Rejection of some products for human consumption due to
         industry or government food safety regulations or standards (e.g.,
         livestock condemned at slaughter for food safety reasons).

         Byproducts from food processing landfilled or incinerated
         (i.e., not diverted to other food uses such as for ingredients in
         mixed foods).

         Outgrading of blemished, misshapen, or wrong-sized foods
         due to minimum quality standards by buyers, which are the result of
         consumer demand for high-quality, cosmetically appealing, and
         convenient foods.

         Spillage and damage, such as by equipment malfunction
         (e.g., faulty cold or cool storage) or inefficiencies during
         harvesting, drying, milling, transporting, or processing.

        Retail Level

         Dented cans and damaged packaging. Inappropriate packaging
         that damages produce.b

         Unpurchased holiday foods.

         Spillages, abrasion, bruising, excessive trimming,
         excessive or insufficient heat, inadequate storage, technical
         malfunction.a

         Overstocking or overpreparing due to difficulty predicting
         number of customers.

         Culling blemished, misshapen, or wrong-sized foods in an
         attempt to meet consumer demand.

        Consumer Level

         Spillages, abrasion, bruising, excessive trimming,
         excessive or insufficient heat, inadequate storage, technical
         malfunction.a

         Sprouting of grains and tubers, biological aging in fruit.a

         Consumers becoming confused over ``use-by'' and ``best
         before'' dates so that food is discarded while still safe to eat.b

         Lack of knowledge about preparation and appropriate portion
         sizes. For example, lack of consumer knowledge of when a papaya is
         ripe, how to prepare it, and how to use it as an ingredient are
         reasons for high papaya loss.c

         Industry or government standards may cause some products to
         be rejected for human consumption (e.g., plate waste can't be re-
         used at restaurants).

         Psychological tastes, attitudes, and preferences leading to
         plate waste/scrapings (e.g., human aversion, such as ``I don't eat
         that,'' or refusal to eat a food for religious reasons).a Consumer
         demand for high cosmetic standards.

         Seasonal factors: more food is wasted in summer.d

         Uneaten or leftover holiday foods.

    Sources:
    a Zeigler and Floros (2011).
    b Parfitt, et al. (2010).
    c Buzby, et al. (2009).
    f Gallo (1980)
    The remainder was constructed by the authors, 2012. A previous version
      of this table was published in Buzby and Hyman (2012). Some of these
      examples of causes may occur at more than one level (e.g., spillage).

        Although ERS adjusts for farm-to-retail level losses for some of
    the included commodities (e.g., canned fruit and vegetables), ERS does
    not provide summary estimates of food loss at the farm-to-retail levels
    because of the lack of comparable data for each individual food in the
    LAFA data series.
        The food loss estimates provided in this report at the retail and
    consumer levels are greater than the amounts of food that could be
    recovered and diverted to feed people. As previously mentioned, some
    uneaten food cannot be efficiently and effectively diverted due to the
    perishability of most foods, high transportation and distribution
    costs, and other challenges, such as the need to ensure food safety.
        On the other hand, the per capita estimates of the total amount of
    food available for consumption (i.e., the primary reason why this data
    series was created) using data from the LAFA data series are high,\4\
    suggesting that underlying food loss assumptions and resulting food
    loss estimates for all included commodities and food groups presented
    here are, on average, understated. In 2010, the estimated calories
    available per capita per day was 2,547, which is high, even given the
    current obesity epidemic.\5\ If a person with caloric needs of 2,100
    calories per day actually consumed 2,547 calories per day, he/she would
    gain an implausible and unsustainable amount of weight per year or over
    a lifetime. In other words, if the underlying food loss assumptions
    were higher, then more food (i.e., associated with the loss) would be
    subtracted from the unadjusted amounts of food available for
    consumption and the estimated loss-adjusted amount of calories per
    capita per day would be lower than the current estimate of 2,547
    calories per day and thus more realistic.
    ---------------------------------------------------------------------------
        \4\ The primary purpose of the LAFA data series is to estimate
    consumed amounts of food from the amount of food available in the U.S.
    food supply. This differs from approaches, such as the National Health
    and Nutrition Examination Survey (NHANES), that are based on 24 hour
    recalls and tend to be underestimates of actual consumption. The extent
    of underestimation is well documented (especially for calories) using
    doubly labeled water methods. The LAFA estimates of per capita
    availability are well above NHANES estimates, suggesting that the
    underlying food loss assumptions in the data series and the ERS food
    loss estimates provided here are conservative. The LAFA estimates are
    also higher than the energy requirements of many cohorts of the
    population as determined by the Institute of Medicine (IOM, 2005). This
    also suggests that the ERS food loss estimates are conservative.
        \5\ This 2,547 calories per capita per day is calculated from 3,796
    total calories minus 1,249 calories of food loss (see Table 6).
    ---------------------------------------------------------------------------
    Economics of Food Loss
        There is a practical limit to how much food loss the United States
    could realistically prevent, reduce, or recover for human consumption
    given:

      1.  technical factors (e.g., the perishable nature of most foods;
                food safety, storage, and temperature considerations);

      2.  temporal and spatial factors (e.g., the time needed to deliver
                food to a new destination, and the dispersion of food loss
                among millions of U.S. households, food processing plants,
                and foodservice locations);

      3.  individual consumers' tastes, preferences, and food habits (e.g.,
                a child's distaste for bread crusts, the habit of throwing
                out milk left over in a bowl of cereal); and

      4.  economic factors (e.g., cost and other resource constraints, such
                as to recover and redirect uneaten food to another use).
                These economic factors are often entwined with the
                technical, temporal, and spatial factors.

        Therefore, it is unrealistic to think that the United States or any
    other country will ever entirely eliminate food waste. GAO's 1977
    Report to Congress (p. 44) considers the question of whether losses are
    economically justifiable:

              ``From a business standpoint, the value of food product saved
            for human use should be equal to, or greater than, the cost of
            saving it. To the extent that the costs exceed value, good
            business judgment dictates that the loss is an acceptable cost.
            In the course of preparing this report, no material has been
            found that would indicate that opportunities were knowingly
            overlooked by business owners to conserve food at an acceptable
            cost. The profit motive should dictate against such loss. The
            slowness of technology transfer, however, can serve to impede
            the implementation of loss-reducing techniques. It is,
            therefore, possible that opportunities to make loss physically
            and economically preventable are not being utilized. In sum, at
            this point, losses that have been identified are, for the most
            part, economically justifiable.''

        There really are two separate challenges in reducing food loss and
    its environmental and other impacts: (1) how to reduce the amount of
    uneaten food in the first place (prevention), and (2) what to do with
    uneaten food once it is generated (disposal). As the first challenge is
    met more fully, the second becomes less of an issue. The impact on food
    prices and markets of a reduction in food loss depends on if the loss
    was prevented in the first place or if what would be counted here as
    ``food loss'' is diverted to other economic uses. If uneaten food is
    simply diverted to other economic uses beyond human consumption (e.g.,
    animal feed or energy generation) so that domestic demand for food and
    domestic food production remains roughly the same, then there won't be
    downward pressure on food prices and the agriculture and food
    industry's business will remain roughly unchanged.
        However, if food loss is prevented or reduced to the extent that
    less food is needed to feed people (i.e., the demand for food
    decreases), then this would likely reduce food prices in the United
    States and the rest of the world. However the effects on food prices
    will depend on the relevant supply and demand elasticities (i.e.,
    economic measures of the responsiveness of supply and demand to a
    change in its price). For example, if more food is exported to offset
    the effect on food markets from domestic reductions in food loss, then
    food prices may not decrease as much as without the boost in exports.
    If the domestic demand for food decreases, then the demand for inputs
    like land, labor, and capital may decline as well. If per capita food
    loss is significantly reduced by increased food consumption by people
    already consuming above their energy needs, then the costs associated
    with increased obesity may grow. It is important to note that the value
    of food loss estimated in this report is for one snapshot in time and
    would change as retail prices change in response to supply and demand
    factors.
        All of the loss assumptions used in the LAFA data series are
    currently available on the ERS website, and some of this commodity-
    specific information may be helpful when analyzing food loss for a
    particular commodity at the retail or consumer level (ERS, 2012a).
    Additional types of economic costs could be included in a benefit-cost
    analysis of a specific loss-reducing initiative. These costs could
    include the costs of disposing of unused food, the cost and value of
    food going to a lower value use (e.g., animal feed), and the lost
    opportunity cost of resources wasted. Data are largely unavailable on
    exactly where, why, and how food losses and waste occur and the
    economic incentives to reduce these losses.
        In some cases, the amount and value estimates in this report are
    likely too aggregated to provide helpful measures of the economic
    incentives for a specific food company to reduce food loss. A food
    company would need more tailored estimates to help inform its decision
    to reduce food loss, particularly if the decision involves multi-
    ingredient foods or commodities not covered in the LAFA data series
    (e.g., LAFA provides data on commodities and whole foods such as eggs,
    beef, and fresh spinach). For example, a food company may weigh the
    costs of switching to more expensive packaging for fresh meat against
    the benefits of having that packaging extend the shelf life of the
    meat. In short, companies will adopt a loss-reducing practice if it is
    economically justifiable, that is, if the benefits outweigh the costs.
    This cost-benefit analysis may include consideration of consumer
    goodwill toward a firm, such as when a sandwich shop donates uneaten
    yet wholesome food to a community feeding organization at the end of
    each day.
        More specific food loss estimates could help policymakers in
    designing food-loss-reducing regulations. Publicizing where and how
    much food goes uneaten and the value of this loss may help inform
    policymakers about the issue and help increase the efficiency of the
    farm-to-fork food system and food recovery efforts to feed the growing
    human population. Other policy issues related to food loss include
    sustainability, the impact on international trade, and government
    funding of research and development for loss-reducing technologies
    (e.g., for food, food packaging, and food system practices).
        Losses at the consumer level occur for many reasons, such as
    different tastes and preferences or consumers buying more than they
    need (see box, ``Causes of Food Loss and Waste at the Farm, Farm-to-
    Retail, Retail, and Consumer Levels''). For many Americans, food
    purchases are a small component of all household spending, weakening
    incentives to reduce food loss on monetary grounds alone. The average
    American spent 11.2 percent of disposable income on food in 2010.\6\
    Consumer food loss is widespread, so mitigating it will be challenging.
    There are an estimated 119 million households (U.S. civilian
    population), over a half a million dining establishments (i.e.,
    fullservice restaurants, fast-food outlets), and numerous other places
    where people eat (e.g., schools, institutions, and prisons) across the
    United States.
    ---------------------------------------------------------------------------
        \6\ In 2010, the average American spent $4,016 on food (both for
    at-home and away-from-home consumption) (ERS, 2012b) out of an average
    disposable income of $36,016 in 2010 (BLS, 2012).
    ---------------------------------------------------------------------------
        This range of food loss combined with economies of scale suggest
    that large, industry-led initiatives or government-led policies, such
    as information campaigns and additional changes in Federal laws, may
    have the greatest potential to reduce food loss in the next decade. One
    example of a large initiative to reduce food waste is the Waste
    Resources Action Programme (WRAP). WRAP estimates that between 2007 and
    2012, household food waste in the United Kingdom decreased 15 percent
    despite a 4-percent increase in the number of households (Goodwin,
    2013). This is presumably due in part to its campaign to raise
    awareness of the issue by consumers, businesses, and local authorities
    (e.g., Love Food Hate Waste launched in 2007).\7\ There have been other
    major campaigns launched to raise public awareness of food waste and to
    promote reduction, such as the Food Wise Hong Kong Campaign launched in
    December 2012. In the United States, there have been several laws
    (e.g., Bill Emerson Good Samaritan Food Donation Act, Internal Revenue
    Code 170(e)(3), and the U.S. Federal Food Donation Act of 2008) that
    have encouraged food donation by providing liability protection to
    donors or tax incentives, though the full impact on food loss or food
    waste has not been measured.\8\
    ---------------------------------------------------------------------------
        \7\ For more information on WRAP, see Quested and Parry (2011) and
    www.wrap.org.uk.
        \8\ See http://www.usda.gov/oce/foodwaste/resources/donations.htm
    for more information.
    ---------------------------------------------------------------------------
        Currently, there is a growing list of participants in the U.S. Food
    Waste Challenge undertaking activities to reduce, recover, or recycle
    food waste, and these participants include six USDA agencies, major
    food companies, smaller private firms, universities and colleges,
    sports teams, and entertainment resorts, among others.\9\ Even a
    modest, yet economically feasible, decrease in food loss from small
    loss-reducing initiatives or newly adopted processing, packaging, and
    storage technologies could lessen the environmental impacts of food
    waste generation and disposal. And if wholesome food is recovered for
    human consumption in this process, it could reduce food insecurity by
    supplementing existing food assistance efforts and could potentially
    provide tax savings to farms, food retailers, and foodservice
    establishments that donate food. However, no single intervention would
    be a panacea and, as previously mentioned, food loss will never be
    entirely eliminated. Substantial inroads in reducing food loss would
    likely require a combination of approaches. Prior to the adoption of
    new initiatives, policies, or laws to reduce food loss, both the costs
    and benefits should be considered. For example, while redirecting
    edible and wholesome food to food banks takes advantage of food already
    available for consumption, food safety and transportation challenges
    and costs need to be considered.
    ---------------------------------------------------------------------------
        \9\ See http://www.usda.gov/oce/foodwaste/participants.htm for
    details.
    ---------------------------------------------------------------------------
        In the end, economic incentives and consumer behavior will be
    paramount in reducing food loss, and these efforts must coexist with
    obtaining an acceptable return on investment by food industry members;
    protecting the environment and worker safety; and fulfilling consumer
    demand for food safety, quality, variety, and affordability.
    Data and Methods
        ERS's Loss-Adjusted Food Availability (LAFA) data are derived from
    ERS per capita Food Availability data adjusted to remove the inedible
    portions (e.g., bones, pits, and peels) and to account for food
    spoilage, plate waste, and other losses (e.g., cooking loss). The
    primary purpose of the LAFA data is to more closely estimate actual per
    capita intake. In addition to providing the estimated amount of pounds
    per capita ingested per year and per day, the data series also provides
    estimates of the loss-adjusted number of calories consumed daily (per
    capita) and daily food pattern equivalents (previously called servings
    and MyPyramid equivalents). Here, we use the underlying food loss
    assumptions in the LAFA data series as of September 2012 to estimate
    food loss for 2010 at the retail and consumer levels, both per capita
    and in total for the United States. The series currently covers more
    than 200 agricultural commodities from 1970 to the most recent year of
    data. The data for individual commodities are aggregated into food
    groups to facilitate comparison with Federal dietary
    recommendations.\10\
    ---------------------------------------------------------------------------
        \10\ Currently, the series is calibrated for comparison against the
    2005 Dietary Guidelines for Americans, but ERS has plans to update the
    LAFA data with the 2010 Dietary Guidelines for Americans.
    ---------------------------------------------------------------------------
        The appendix discusses the construction of the LAFA data series,
    provides a list of commodities covered (see appendix box, ``Commodity
    Coverage in the 2010 Loss-Adjusted Food Availability Data,'' p. 26),
    and discusses some of the limitations of the data. The appendix also
    provides detail on the steps that we followed for estimating the
    amount, value (i.e., using 2010 retail prices), and calories of food
    loss in the United States. This data series is considered to be
    preliminary because ERS continues to improve the underlying food loss
    assumptions and documentation (for details, see http://
    www.ers.usda.gov/data-products/food-availability-(per-capita)-data-
    system/loss-adjusted-food-availability-documentation.aspx). The LAFA
    data can be accessed on the ERS website through Excel spreadsheets that
    provide all of the current loss assumptions and a largely consistent
    structure for the data series (i.e., the sequence of steps by which the
    different types of losses are removed from the system) (ERS, 2012a).
    Results
        The results from our analysis of ERS' Loss-Adjusted Food
    Availability data pertain to the amount, value, and calories of food
    loss at the retail and consumer levels in the United States in 2010.
    Each subsection includes two tables (one for total and one for per
    capita estimates) and a figure that divides the total food loss
    estimate into shares by food group.
    Amount
        ERS estimates that 31 percent or 133 billion pounds of the 430
    billion pounds of the edible and available food supply at the retail
    and consumer levels in the United States in 2010 went uneaten (table
    1). Retail-level losses represented 10 percent (43 billion pounds) and
    consumer-level losses 21 percent (90 billion pounds) of the available
    food supply. Losses on the farm and between the farm and retailer were
    not estimated due to data limitations for some of the food groups. Had
    these losses been included, total postharvest loss in the United States
    would be over 31 percent of the food supply. For example, for fresh
    produce alone, an estimated 12 percent goes uneaten in developed
    countries from production to retail sites, with a range from 2 to 23
    percent for individual commodities (Kader, 2005).
        Our estimates are based on the current loss assumptions in the LAFA
    data series, which include retail-level loss estimates from Buzby et
    al. (2009). That study--comparing supplier shipment data with point-of-
    sale data from six large supermarket retailers--found that annual
    supermarket losses for 2005 and 2006 averaged 11.4 percent for fresh
    fruit, 9.7 percent for fresh vegetables, and 4.5 percent for fresh
    meat, poultry, and seafood. ERS is currently in the process of
    obtaining 2011 and 2012 retail-level food loss estimates for these
    commodities.\11\ The loss assumptions for all other foods in the data
    series at the retail level have not been updated (i.e., added fats and
    oils, added sugars and sweeteners, grains, dairy products, and
    processed fruit and vegetables (frozen, canned, dried, and juice).\12\
    ---------------------------------------------------------------------------
        \11\ Some data users have suggested that the total retail-level
    loss estimates of 10 percent and 43 billion pounds are high given
    modern packaging, cold-chain, and inventory tracking technologies and
    other business practices that are commonly used by retailers.
        \12\ The LAFA data series is based on individual commodities/foods,
    not processed products. The added fats and oils group includes foods
    that are typically added to other foods when eaten and do not include
    the naturally occurring fats in meat and dairy products, for example.
    Similarly, added sugars and syrups are caloric foods added to foods
    during processing or preparation. Added sugars and sweeteners do not
    include naturally occurring sugars, such as those found in milk and
    fruit. Non-caloric sweeteners are not included in the LAFA data series.
    ---------------------------------------------------------------------------
        New (2010) estimates of consumer-level loss for most commodities
    (Muth, et al., 2011) were incorporated into the LAFA data series in
    August 2012 (see ERS (2012a) for details).\13\ This is the primary
    reason why the shares of loss by food group differ from other recent
    ERS publications, particularly the drop in share for the meat, poultry,
    and fish group (Buzby and Hyman, 2012; Buzby, et al., 2011).
    ---------------------------------------------------------------------------
        \13\ RTI International used a numerical estimation method to
    calculate consumer-level food loss estimates using Nielsen Homescan
    data and National Health and Nutrition Examination Survey (NHANES)
    data. ERS then analyzed how the LAFA per capita data would change if
    the proposed RTI estimates of consumer-level food loss were
    incorporated into the data series (Muth, et al., 2011).
    ---------------------------------------------------------------------------
        When the 133 billion pounds of food loss at the retail and consumer
    levels in 2010 is broken down by food group, the top three food groups
    in terms of loss are: (1) dairy products (25 billion pounds or 19
    percent); (2) vegetables (25 billion pounds or 19 percent); and (3)
    grain products (18.5 billion pounds or 14 percent) (fig. 1).

                                                  Table 1: Estimated total food loss in the United States, 2010
    --------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                     Losses from food supply b
                                     -----------------------------------------------------------------------------------------------------------------------
                Commodity              Food  Supply a             Retail level                     Consumer level           Total retail and  consumer level
                                     -----------------------------------------------------------------------------------------------------------------------
                                       Billion pounds    Billion pounds      Percent       Billion pounds      Percent       Billion pounds      Percent
    --------------------------------------------------------------------------------------------------------------------------------------------------------
                   Grain products               60.4              7.2               12             11.3               19             18.5               31
                            Fruit               64.3              6.0                9             12.5               19             18.4               29
      Fresh.........................            37.6              4.4               12              9.5               25             13.9               37
      Processed.....................            26.7              1.6                6              2.9               11              4.5               17
                       Vegetables               83.9              7.0                8             18.2               22             25.2               30
      Fresh.........................            53.5              5.2               10             12.8               24             18.0               34
      Processed.....................            30.4              1.8                6              5.3               18              7.1               24
                   Dairy products               83.0              9.3               11             16.2               20             25.4               31
      Fluid milk....................            53.8              6.5               12             10.5               20             17.0               32
      Other dairy products..........            29.1              2.8               10              5.7               19              8.5               29
          Meat, poultry, and fish               58.4              2.7                5             12.7               22             15.3               26
      Meat..........................            31.6              1.4                4              7.2               23              8.6               27
      Poultry.......................            22.0              0.9                4              3.9               18              4.8               22
      Fish and seafood..............             4.8              0.4                8              1.5               31              1.9               39
                             Eggs                9.8              0.7                7              2.1               21              2.8               28
            Tree nuts and peanuts                3.5              0.2                6              0.3                9              0.5               15
       Added sugar and sweeteners               40.8              4.5               11             12.3               30             16.7               41
              Added fats and oils               26.0              5.4               21              4.5               17              9.9               38
                                     -----------------------------------------------------------------------------------------------------------------------
        Total.......................           430.0             43.0               10             89.9               21            132.9               31
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    a Food supply at the retail level, which is the foundation for the retail- and consumer-level loss stages in the loss-adjusted data series.
    b Totals may not add due to rounding.
    Per capita losses at the retail and consumer levels for each commodity (not shown) were estimated by multiplying the quantity of that commodity
      available for consumption by the appropriate loss assumption. Individual loss estimates were then multiplied by the U.S. population and summed up into
      their respective food groups and retail or consumer levels.
    Source: ERS (2012a) and the U.S. population on July 1, 2010 (309.75 million).

    Figure 1: Estimated total amount of food loss in the United States by
            food group, 2010

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

              Source: ERS (2012a).

        In 2010, the average amount of food loss per American was 429
    pounds, of which 139 pounds at the retail level and 290 pounds at the
    consumer level went uneaten (table 2). At the consumer level, 59 pounds
    of vegetables, 52 pounds of dairy products, and 41 pounds of meat,
    poultry, and fish per capita from the food supply in 2010 went uneaten.
    Value
        The total value of food loss at the retail and consumer levels was
    an estimated $161.6 billion in 2010 (table 3). The two food groups with
    the highest value of losses were meat, poultry, and fish ($48.5
    billion) and vegetables ($30 billion). These estimates are based on the
    value of foods as purchased at retail prices. The calculations are
    described more fully in the appendix.
        When the total value of food loss at the consumer level in 2010 is
    broken down by food group, the meat, poultry, and fish group comprises
    almost a third (30 percent) of the total (fig. 2), a much greater share
    than by weight (12 percent in figure 1) because foods in this group
    tend to cost more per pound than many other foods.

                                          Table 2: Estimated per capita amount of food loss in the United States, 2010
    --------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                     Losses from food supply b
                                     -----------------------------------------------------------------------------------------------------------------------
                Commodity              Food  Supply a             Retail level                     Consumer level           Total retail and  consumer level
                                     -----------------------------------------------------------------------------------------------------------------------
                                           Pounds            Pounds          Percent           Pounds          Percent           Pounds          Percent
    --------------------------------------------------------------------------------------------------------------------------------------------------------
                   Grain products                195               23               12               36               19               60               31
                            Fruit                208               19                9               40               19               59               29
      Fresh.........................             121               14               12               31               25               45               37
      Processed.....................              86                5                6                9               11               15               17
                       Vegetables                271               23                8               59               22               81               30
      Fresh.........................             173               17               10               41               24               58               34
      Processed.....................              98                6                6               17               18               23               24
                   Dairy products                268               30               11               52               20               82               31
      Fluid milk....................             174               21               12               34               20               55               32
      Other dairy products..........              94                9               10               18               19               27               29
          Meat, poultry, and fish                189                9                5               41               22               49               26
      Meat..........................             102                5                4               23               23               28               27
      Poultry.......................              71                3                4               13               18               15               22
      Fish and seafood..............              16                1                8                5               31                6               39
                             Eggs                 32                2                7                7               21                9               28
            Tree nuts and peanuts                 11                1                6                1                9                2               15
       Added sugar and sweeteners                132               14               11               40               30               54               41
              Added fats and oils                 84               18               21               15               17               32               38
                                     -----------------------------------------------------------------------------------------------------------------------
        Total.......................           1,388              139               10              290               21              429               31
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    a Food supply at the retail level, which is the foundation for the retail- and consumer-level loss stages in the loss-adjusted data series.
    b Totals may not add due to rounding.
    Per capita losses at the retail and consumer levels for each commodity (not shown) were estimated by multiplying the quantity of that commodity
      available for consumption by the appropriate loss assumption. Individual loss estimates were then multiplied by the U.S. population and summed up into
      their respective food groups and retail or consumer levels.
    Source: ERS (2012a) and the U.S. population on July 1, 2010 (309.75 million).

                            Table 3: Estimated total value of food loss at the retail and consumer levels in the United States, 2010
    --------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                     Losses from food supply b
                                     -----------------------------------------------------------------------------------------------------------------------
                                       Food  Supply a             Retail level                     Consumer level           Total retail and  consumer level
                Commodity            -----------------------------------------------------------------------------------------------------------------------
                                                            Billion                           Billion                           Billion
                                      Billion  dollars      dollars          Percent          dollars          Percent          dollars          Percent
    --------------------------------------------------------------------------------------------------------------------------------------------------------
                   Grain products               36.1              4.3               12              6.9               19             11.2               31
                            Fruit               62.2              5.8                9             14.1               23             19.8               32
      Fresh.........................            37.1              4.2               11             10.4               28             14.7               40
      Processed.....................            25.0              1.5                6              3.7               15              5.2               21
                       Vegetables              108.7              9.6                9             20.4               19             30.0               28
      Fresh.........................            62.1              6.9               11             13.2               21             20.1               32
      Processed.....................            46.6              2.8                6              7.2               15             10.0               21
                   Dairy products               91.5              8.3                9             18.6               20             27.0               29
      Fluid milk....................            20.0              2.4               12              4.0               20              6.4               32
      Other dairy products..........            71.5              5.9                8             14.6               20             20.5               29
          Meat, poultry, and fish              181.9              8.8                5             39.7               22             48.5               27
      Meat..........................            83.4              3.8                5             19.3               23             23.2               28
      Poultry.......................            73.6              2.9                4             12.5               17             15.4               21
      Fish and seafood..............            24.8              2.1                8              7.9               32              9.9               40
                             Eggs               10.9              0.8                7              2.3               21              3.1               28
            Tree nuts and peanuts               12.1              0.7                6              1.3               11              2.1               17
       Added sugar and sweeteners               16.4              1.8               11              4.8               29              6.6               40
              Added fats and oils               34.2              6.6               19              6.8               20             13.4               39
                                     -----------------------------------------------------------------------------------------------------------------------
        Total.......................           554.0             46.7                8            114.9               21            161.6               29
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    a Food supply at the retail level, which is the foundation for the retail- and consumer-level loss stages in the loss-adjusted data series.
    b Totals may not add due to rounding.
    Per capita losses at the retail and consumer levels for each commodity (not shown) were estimated by multiplying the quantity of that commodity
      available for consumption by the appropriate loss assumption. Individual loss estimates were then multiplied by the U.S. population and summed up into
      their respective food groups and retail or consumer levels.
    Source: ERS (2012a) and the U.S. population on July 1, 2010 (309.75 million).

    Figure 2: Estimated total value of food loss in the United States by
            food group, 2010

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

              Source: ERS (2012a).

        Per capita, food loss in 2010 totaled $522 per year at retail
    prices: $151 per year at the retail level and $371 at the consumer
    level (table 4). The latter amounts to 9.2 percent of the average
    dollar value spent on food per consumer in 2010 ($4,016) (ERS, 2012b)
    and 1 percent of the average disposable income ($36,016) (BLS, 2012).
    The yearly total of 290 pounds (table 2) of food loss per capita in
    2010 at the consumer level, at an estimated retail price of $371,
    translates into 0.8 pound or roughly $1 per day. This is slightly lower
    than the $390 of food loss per capita in 2008 estimated in Buzby and
    Hyman (2012), largely because new consumer-level food loss estimates
    were adopted in the LAFA system in August 2012. At the consumer level,
    three food groups made up 68 percent of the total food loss: meat,
    poultry, and fish ($128/year per capita); vegetables ($66/year); and
    dairy products ($60/year).
        For comparison, another recently published study that used the same
    LAFA data but different assumptions and retail prices estimated that
    the economic and climate change impacts of food loss for 134
    commodities in the United States cost $198 billion in 2009 (Venkat,
    2012). This translates into $400 per person.

                          Table 4: Estimated per capita value of food loss at the retail and consumer levels in the United States, 2010
    --------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                     Losses from food supply b
                                     -----------------------------------------------------------------------------------------------------------------------
                Commodity              Food  Supply a             Retail level                     Consumer level           Total retail and  consumer level
                                     -----------------------------------------------------------------------------------------------------------------------
                                           Dollars          Dollars          Percent          Dollars          Percent          Dollars          Percent
    --------------------------------------------------------------------------------------------------------------------------------------------------------
                   Grain products                117               14               12               22               19               36               31
                            Fruit                201               19                9               45               23               64               32
      Fresh.........................             120               14               11               34               28               47               40
      Processed.....................              81                5                6               12               15               17               21
                       Vegetables                351               31                9               66               19               97               28
      Fresh.........................             201               22               11               43               21               65               32
      Processed.....................             150                9                6               23               15               32               21
                   Dairy products                295               27                9               60               20               87               29
      Fluid milk....................              65                8               12               13               20               21               32
      Other dairy products..........             231               19                8               47               20               66               29
          Meat, poultry, and fish                587               28                5              128               22              157               27
      Meat..........................             269               12                5               62               23               75               28
      Poultry.......................             238                9                4               40               17               50               21
      Fish and seafood..............              80                7                8               25               32               32               40
                             Eggs                 35                2                7                8               21               10               28
            Tree nuts and peanuts                 39                2                6                4               11                7               17
       Added sugar and sweeteners                 53                6               11               15               29               21               40
              Added fats and oils                111               21               19               22               20               43               39
                                     -----------------------------------------------------------------------------------------------------------------------
        Total.......................           1,788              151                8              371               21              522               29
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    a Food supply at the retail level, which is the foundation for the retail- and consumer-level loss stages in the loss-adjusted data series.
    b Totals may not add due to rounding.
    Per capita losses at the retail and consumer levels for each commodity (not shown) were estimated by multiplying the quantity of that commodity
      available for consumption by the appropriate loss assumption. Individual loss estimates were then multiplied by the U.S. population and summed up into
      their respective food groups and retail or consumer levels.
    Source: ERS (2012a) and the U.S. population on July 1, 2010 (309.75 million).

    Calories
        This report provides ERS's first estimates of the number of
    calories of food loss at the retail and consumer levels in the United
    States to help put the magnitude of this food loss into perspective. In
    total, out of the entire U.S. food supply in 2010, an estimated 387
    billion calories of food were available each day but were not consumed
    for any reason (table 5). This amount of food loss translates into 141
    trillion calories per year. Of course, many factors would affect
    whether these foods could be diverted to feed people in real life, such
    as food safety considerations and storage and transportation costs.
    Additionally, this food loss estimate is based on calories alone and
    does not address the more complex nutritional needs of individual
    people, such as for specific vitamins and minerals.
        Interestingly, the food group shares of total calories that went
    uneaten (fig. 3) are noticeably different than the shares for the
    amount (fig. 1) or value (fig. 2) of food loss. In particular, the
    shares for added fats and oils, added sugars and sweeteners, and grains
    are much higher for the calories figure, reflecting these foods'
    caloric density per pound.
        Daily food loss for the average American totaled 1,249 calories
    (out of 3,796 calories available per capita per day), of which 460
    calories occurred at the retail level and 789 calories occurred at the
    consumer level (table 6). At the consumer level, the average daily food
    loss per American included 187 calories of added sugar and sweeteners,
    166 calories of grain products, and 154 calories of added fats and
    oils. In comparison, Kevin Hall and others at the National Institutes
    of Health used data from the Food and Agriculture Organization's (FAO)
    food balance sheets and a mathematical model of human energy
    expenditure to calculate the energy content of food waste in the United
    States. Hall, et al. (2009) estimated that food waste, on average, is
    equivalent to 1,400 calories per person per day or 150 trillion total
    calories per year versus ERS's estimate of 1,249 calories per person
    per day and 141 trillion total calories per year.

                           Table 5: Estimated total calories of food loss at the retail and consumer levels in the United States, 2010
    --------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                     Losses from food supply b
                                     -----------------------------------------------------------------------------------------------------------------------
                                       Food  Supply a             Retail level                     Consumer level           Total retail and  consumer level
                Commodity            -----------------------------------------------------------------------------------------------------------------------
                                           Billion          Billion                           Billion                           Billion
                                          calories          calories         Percent          calories         Percent          calories         Percent
    --------------------------------------------------------------------------------------------------------------------------------------------------------
                   Grain products              273.0             32.8               12             51.3               19             84.1               31
                            Fruit               37.1              3.1                8              8.8               24             11.9               32
      Fresh.........................            19.4              2.1               11              6.5               33              8.5               44
      Processed.....................            17.7              1.1                6              2.3               13              3.4               19
                       Vegetables               52.6              3.8                7             10.1               19             13.9               26
      Fresh.........................            22.4              2.0                9              6.7               30              8.7               39
      Processed.....................            30.2              1.8                6              3.4               11              5.2               17
                   Dairy products              113.7             10.5                9             23.4               21             33.9               30
      Fluid milk....................            33.7              4.0               12              6.8               20             10.8               32
      Other dairy products..........            80.0              6.5                8             16.6               21             23.0               29
          Meat, poultry, and fish              183.1              8.1                4             38.9               21             47.0               26
      Meat..........................           113.7              5.1                4             25.7               23             30.8               27
      Poultry.......................            62.2              2.4                4             10.9               18             13.3               21
      Fish and seafood..............             7.2              0.6                8              2.2               31              2.8               39
                             Eggs               15.5              1.1                7              4.0               26              5.1               33
            Tree nuts and peanuts               25.8              1.5                6              2.3                9              3.8               15
       Added sugar and sweeteners              193.0             21.2               11             58.0               30             79.3               41
              Added fats and oils              282.1             60.2               21             47.8               17            108.0               38
                                     -----------------------------------------------------------------------------------------------------------------------
        Total.......................         1,175.8            142.3               12            244.5               21            386.9               33
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    a Food supply at the retail level, which is the foundation for the retail- and consumer-level loss stages in the loss-adjusted data series.
    b Totals may not add due to rounding.
    Per capita losses at the retail and consumer levels for each commodity (not shown) were estimated by multiplying the quantity of that commodity
      available for consumption by the appropriate loss assumption. Individual loss estimates were then multiplied by the U.S. population and summed up into
      their respective food groups and retail or consumer levels.
    Source: ERS (2012a) and the U.S. population on July 1, 2010 (309.75 million).

    Figure 3: Estimated total number of calories of food loss in the United
            States per day by food group, 2010

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

              Source: ERS (2012a).

                     Table 6: Estimated daily per capita calories of food loss at the retail and consumer levels in the United States, 2010
    --------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                     Losses from food supply b
                                     -----------------------------------------------------------------------------------------------------------------------
                Commodity              Food  Supply a             Retail level                     Consumer level           Total retail and  consumer level
                                     -----------------------------------------------------------------------------------------------------------------------
                                          Calories          Calories         Percent          Calories         Percent          Calories         Percent
    --------------------------------------------------------------------------------------------------------------------------------------------------------
                   Grain products                881              106               12              166               19              271               31
                            Fruit                120               10                8               28               24               38               32
      Fresh.........................              63                7               11               21               33               28               44
      Processed.....................              57                3                6                7               13               11               19
                       Vegetables                170               12                7               33               19               45               26
      Fresh.........................              72                6                9               22               30               28               39
      Processed.....................              97                6                6               11               11               17               17
                   Dairy products                367               34                9               75               21              109               30
      Fluid milk....................             109               13               12               22               20               35               32
      Other dairy products..........             258               21                8               53               21               74               29
          Meat, poultry, and fish                591               26                4              126               21              152               26
      Meat..........................             367               16                4               83               23               99               27
      Poultry.......................             201                8                4               35               18               43               21
      Fish and seafood..............              23                2                8                7               31                9               39
                             Eggs                 50                3                7               13               26               16               33
            Tree nuts and peanuts                 83                5                6                7                9               12               15
       Added sugar and sweeteners                623               69               11              187               30              256               41
              Added fats and oils                911              194               21              154               17              349               38
                                     -----------------------------------------------------------------------------------------------------------------------
        Total.......................           3,796              460               12              789               21            1,249               33
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    a Food supply at the retail level, which is the foundation for the retail- and consumer-level loss stages in the loss-adjusted data series.
    b Totals may not add due to rounding.
    Per capita losses at the retail and consumer levels for each commodity (not shown) were estimated by multiplying the quantity of that commodity
      available for consumption by the appropriate loss assumption. Individual loss estimates were then multiplied by the U.S. population and summed up into
      their respective food groups and retail or consumer levels.
    Source: ERS (2012a) and the U.S. population on July 1, 2010 (309.75 million).

    Discussion
        In 2010, an estimated 133 billion pounds of food at the retail and
    consumer levels in the United States went uneaten, and this amount is
    valued at $161.6 billion using retail prices. This amount of food loss
    translates into 141 trillion calories in 2010. These estimates suggest
    that annual food loss in the United States is substantial.
        As with any research with quantitative values, the resulting
    estimates produced here may be low or high. ERS food loss estimates
    could be low for various reasons. Many foods are not included in the
    system (e.g., soybeans, soy milk, and coconut milk) and so losses for
    these foods are not counted. Additionally, the LAFA data series
    suggests that the average American consumed 2,547 calories per day in
    2010, which is high even considering the prevalence of obesity in the
    United States, implying that the estimated food loss is low or that
    there are other issues. The LAFA estimates are also higher than the
    energy requirements of most age cohorts as determined by the Institute
    of Medicine ((IOM), 2005), further suggesting that the ERS food loss
    estimates are conservative. Hall, et al. (2009) suggest that the loss
    estimates from the LAFA estimate are low and/or that the assumptions of
    a roughly constant proportion of food waste are becoming progressively
    worse over time (p. 3).\14\ Hall, et al. (2009), however, do not offer
    suggestions on how to obtain better estimates of food loss, and the
    study predates the incorporation of new consumer-level loss estimates
    from Muth, et al. (2011) into the LAFA data series in August 2012.
    Also, the estimated $161.6 billion of food loss was calculated using
    retail prices. Had we used foodservice prices (which are typically
    higher), then the estimated value of food loss would have been higher.
    ---------------------------------------------------------------------------
        \14\ Hall, et al. (2009) write that ``food waste has progressively
    increased from about 30 percent of the available food supply in 1974 to
    almost 40 percent in recent years'' using the Food and Agriculture
    Organization's balance sheets. By contrast, what they call the `USDA'
    food waste estimate (calculated by subtracting the USDA food
    availability data adjusted for spoilage and wastage from the FAO food
    supply data) is an approximately constant proportion of the total food
    supply. They conclude that ``while the USDA estimate of food waste was
    within 5 percent of our calculation in 1974, it was 25 percent too low
    in 2003.''
    ---------------------------------------------------------------------------
        There are several reasons why the ERS food loss estimates could be
    high. Some of the individual loss estimates may be high, particularly
    at the retail level. The ERS food loss estimates assume that food loss
    has no residual value or economic use. But in reality, there may be a
    residual use if the food loss is diverted to another economic use, such
    as for animal feed or to create energy.\15\ That is, by redirecting
    food for use as energy inputs, for example, less food or other inputs
    would need to be purchased from other sources for these purposes. In
    essence, if data had been available on the amount of food diverted to
    lower value uses and on the economic value of these uses, then the ERS
    estimate of the total amount of food loss could have been adjusted
    downwards. However, data limitations preclude these refinements. The
    U.S. Environmental Protection Agency (EPA) has developed a food waste
    hierarchy of preferred uses for available food that goes unconsumed by
    people (see box, ``EPA's Food Recovery Hierarchy''). It is possible
    that some of the factors that might cause the estimates to be high or
    low could cancel each other out.
    ---------------------------------------------------------------------------
        \15\ As an aside, these uses of the food waste may harm the
    environment less than landfilling or incinerating the food waste. Here,
    the creation of energy using food waste does not include corn used for
    ethanol, which was already removed as a direct industrial use of corn
    in the supply and disappearance (i.e., use) balance sheets.
    ---------------------------------------------------------------------------
        There is a practical limit to how much food loss the United States
    can prevent or reduce given technical and spatial factors; consumers'
    tastes, preferences, and food habits; and economic factors. Therefore,
    the amount of food loss that could be prevented or reduced will be less
    than the ERS food loss estimates. Nevertheless, these updated estimates
    are a unique contribution to the literature and are useful in providing
    perspective to the issue of food loss in the United States.
      EPA's Food Recovery Hierarchy
              The U.S. Environmental Protection Agency (EPA) endorses its
            food recovery hierarchy, where the ideal situation would be to
            reduce the production of food waste at the source. When food
            waste is generated, the first preference is to recover
            wholesome food from all points in the food production,
            marketing, and consumption chain to feed people who are food-
            insecure. Providing food for livestock, zoo animals, and pets
            would be the second best option, followed by recycling food and
            food waste for industrial purposes. These three options would
            help conserve resources and reduce food waste disposal costs.
            For example, the feasibility of anaerobic digesters that use
            feedstock, food and agricultural waste, and wastewater plant
            biosolids to produce biogas fuel and other valuable outputs
            (e.g., compost material) is being explored in developed
            countries.
      Food recovery hierarchy

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

              Source: http://www.epa.gov/osw/conserve/materials/organics/
            food/fd-gener.htm#food-hier.

              Composting food to improve soil fertility is a relatively
            low-priority option, and its use is not widespread in the
            United States. However, some cities, counties, and State
            agencies are investigating the benefits of curbside collection
            of residential food waste (e.g., in bins or compostable kitchen
            bags) to compost with collected yard trimmings. According to
            the EPA (2009), there were around 3,510 community composting
            programs in operation in the United States in 2008, so
            expanding these to incorporate food waste might be a viable
            option. The last resort should be using landfills and
            incinerators to dispose of food waste because of the negative
            impacts on the environment. These impacts are partly offset if
            energy is created during incineration and landfilling (e.g.,
            tapping the methane gas).
    Appendix--The ERS Loss-Adjusted Food Availability Data and Calculation
            Details for the Amount and Value of Food Loss
        Since 2005, the updated Food Availability (Per Capita) Data system
    has had three separate but related data series that each look
    differently at the food available for consumption in the United States.
    The first series, the Food Availability data, is the foundation for the
    other two series: (1) the Nutrient Availability data \16\ and (2) the
    Loss-Adjusted Food Availability (LAFA) data (formerly called the Food
    Guide Pyramid Servings data). This loss-adjusted series is the
    foundation of this report and is essentially the Food Availability data
    adjusted for food spoilage and other losses to more closely approximate
    actual per capita intake (http://www.ers.usda.gov/data-products/food-
    availability-(per-capita)-data-system/loss-adjusted-food-availability-
    documentation.aspx). The primary purpose of the LAFA data is to
    estimate daily per capita food intake and present this information in
    two forms: the number of calories consumed daily and the number of food
    pattern equivalents consumed daily.\17\ Here, we use the embedded food
    loss assumptions to estimate food loss at the retail and consumer
    levels for 2010 using the LAFA data as of September 2012.
    ---------------------------------------------------------------------------
        \16\ This nutrient series is compiled by USDA's Center for
    Nutrition Policy and Promotion (CNPP) in what it calls the Nutrient
    Content of the U.S. Food Supply and is outside the scope of this
    report.
        \17\ These food pattern equivalents were formerly called the Food
    Guide Pyramid serving the 2005 Dietary Guidelines for Americans and its
    supporting MyPyramid Plan Food Guidance System.
    ---------------------------------------------------------------------------
    Construction of the Core Food Availability Data
        In essence, the Food Availability data measure the use of basic
    commodities--such as wheat, beef, and shell eggs--produced at the farm
    level or an early stage of processing and available for human
    consumption. They do not measure food use of highly processed foods--
    such as bakery products, frozen dinners, and soups--in their finished
    form. Ingredients of highly processed foods, however, are included as
    components of less processed foods such as sugar, flour, fresh
    vegetables, and meat.
        The Food Availability data series is based on records of annual
    commodity flows from production to end uses. This involves the
    development of supply and disappearance (i.e., ``supply and use'')
    balance sheets for each major commodity from which human foods are
    produced. In general, the total annual available supply of each
    commodity consists of the sum of production, imports, and beginning
    stocks. These three components are either directly measured or
    estimated by government agencies using sampling and statistical
    methods. From this total supply, exports, ending stocks, and total
    measurable nonfood uses are subtracted. For most commodity categories,
    measurable nonfood uses are farm inputs (feed and seed) and industrial
    uses. In a few cases, supplies for human food use are measured directly
    and one of the other use components becomes the residual. This is the
    case for wheat, in which flour production is measurable and available
    from manufacturers' reports on flour milling and, therefore, use for
    livestock feed becomes the residual.
        Per capita food availability is calculated by dividing the annual
    total food supply for a specific year by the U.S. total resident
    population plus Armed Forces overseas for that same year. Yearly
    population estimates are from the U.S. Census Bureau. For commodities
    not shipped overseas in substantial amounts, such as fluid milk and
    cream, ERS uses the resident population as the base. No adjustments are
    made for changes in the demographic makeup of the population.
    Construction of the Loss-Adjusted Food Availability Data
        The current ERS per capita Food Availability data were converted
    into daily per capita food pattern equivalents comparable to those
    identified in Federal dietary recommendations using a multistage
    process. Each commodity was assigned to one of five major food groups
    (fruit, vegetables, meat, dairy, and grains) or to one of two
    additional groups for discretionary added fats and oils and added
    sugar/sweeteners. The core Food Availability data were adjusted for
    spoilage and other losses by subtracting estimated losses from the
    ``primary'' weight reported in the data series to create the Loss-
    Adjusted Food Availability data series. Depending on the commodity,
    loss was estimated at up to three different stages in the marketing
    system (i.e., farm-to-retail, retail, and consumer). ERS calculates
    summary estimates of food loss for each commodity in the Loss-Adjusted
    Food Availability data series at the retail and consumer levels.
    Although the data system also takes into account food losses between
    the farm and retailer, ERS cannot calculate summary estimates of food
    loss between the farm and retailer because of data limitations for some
    of the food groups. Onfarm or pre-harvest losses, such as from hail
    damage on a field crop, are not included in the system. Inedible
    portions of all foods--seeds, pits, and inedible peels--were also
    subtracted from the data, and thus the loss-adjusted food availability
    estimates and the food loss estimates do not include inedible parts.
    For example, estimates for meat, poultry, and fish are provided as
    boneless weight. The data were converted from pounds per capita per
    year to grams (or ounces) per capita per day to be comparable with
    Federal dietary recommendations.
    Estimation Details for this Report
        Given the recent and growing interest in food loss and waste
    domestically (e.g., U.S. Food Waste Challenge), up-to-date estimates on
    the magnitude of food loss in the United States are timely. This report
    updates the ERS loss estimates to 2010 and extends previous ERS
    estimates and publications on food loss in several important ways, such
    as incorporating new consumer-level loss assumptions and providing
    calorie estimates for the first time.
        We used prices consumers would have paid, on average, for foods if
    bought at retail. In total, we compiled estimates of the amount and
    value of food loss for more than 200 individual foods in the Loss-
    Adjusted Food Availability (LAFA) data and then aggregated these values
    to estimate the total value of food loss at both the retail and
    consumer levels in the United States in 2010 and the value by food
    group. The analytical method for calculating the amount, value, and
    calories of food loss for each commodity in the LAFA data consisted of
    five key steps.
        First, we identified the individual commodities in the LAFA data
    for our analysis by each food group. In particular, we identified 62
    fresh and processed fruit, 67 fresh and processed vegetables, and 86
    other individual foods in the LAFA data for our analysis (see Appendix
    Box). The LAFA data can be accessed online through Excel spreadsheets
    that provide all of the current loss assumptions and the structure of
    the calculations for each food in the data series. More information on
    the LAFA data is summarized on the ERS website (ERS, 2011).
        Second, we estimated national average retail prices in 2010 using
    Nielsen Homescan data for each individual commodity in the LAFA data
    series consumed at home in 2010. This method for determining average
    prices was used in previous research (e.g., Reed, et al. (2004),
    Stewart, et al. (2011), Buzby, et al. (2011), and Buzby and Hyman
    (2012)). Members of the Homescan consumer panel in 60,648 households
    reported the foods they purchased, the quantities they bought, and the
    prices they paid. The data include purchases at retail outlets--such as
    supercenters, grocery stores, farmers' markets, mass merchandisers, and
    drugstores--but not at restaurants or other foodservice outlets. This
    means that foods consumed away from home are not included in our
    estimated prices. Nielsen further provides projection factors that
    allow data users to estimate what all households across the United
    States paid for foods and the quantities they bought.
      Commodity Coverage in the 2010 Loss-Adjusted Food Availability Data
              The ``Dairy'' spreadsheet has 34 commodities--Plain whole
            milk, Plain 2-percent milk, Plain 1-percent milk, Skim milk,
            Whole flavored milk, Low-fat flavored milk, Buttermilk,
            Refrigerated yogurt, Cheddar cheese, Other American cheese,
            Provolone cheese, Romano cheese, Parmesan cheese, Mozzarella
            cheese, Ricotta cheese, Other Italian cheese, Swiss cheese,
            Brick cheese, Muenster cheese, Blue cheese, Other miscellaneous
            cheese, Regular cottage cheese, Low-fat cottage cheese, Regular
            ice cream, Low-fat ice cream (ice milk), Frozen yogurt and
            other miscellaneous frozen products, Evaporated and condensed
            canned whole milk, Evaporated and condensed bulk whole milk,
            Evaporated and condensed bulk and canned skim milk, Dry whole
            milk, Nonfat dry milk, Dry buttermilk, Dairy share of half-and-
            half, and Dairy share of eggnog.
              The ``Fats'' spreadsheet has 15 commodities--Added fats and
            oils, Butter, Margarine, Lard, Edible beef tallow, Shortening,
            Salad and cooking oils, Other edible fats and oils, Dairy fats,
            Fat share of half and half, Light cream, Heavy cream, Sour
            cream, Cream cheese, and Fat share of eggnog.
              The ``Fruit'' spreadsheet has 62 commodities--Fresh oranges,
            Fresh tangerines, Fresh grapefruit, Fresh lemons, Fresh limes,
            Fresh apples, Fresh apricots, Fresh avocados, Fresh bananas,
            Fresh blueberries, Fresh cantaloupe, Fresh cherries, Fresh
            cranberries, Fresh grapes, Fresh honeydew, Fresh kiwifruit,
            Fresh mangoes, Fresh papaya, Fresh peaches, Fresh pears, Fresh
            pineapple, Fresh plums, Fresh strawberries, Fresh watermelon,
            Canned apples and applesauce, Canned apricots, Canned sweet
            cherries, Canned tart cherries, Canned peaches, Canned pears,
            Canned pineapple, Canned plums, Canned olives, Frozen
            blackberries, Frozen blueberries, Frozen raspberries, Frozen
            strawberries, Other frozen berries, Frozen apples, Frozen
            apricots, Frozen sweet cherries, Frozen tart cherries, Frozen
            peaches, Frozen plums and prunes, Other frozen fruit, Dried
            apples, Dried apricots, Dried dates, Dried figs, Dried peaches,
            Dried pears, Dried plums, Raisins, Grapefruit juice, Lemon
            juice, Lime juice, Orange juice, Apple juice, Cranberry juice,
            Grape juice, Pineapple juice, and Prune juice.
              The ``Grain'' spreadsheet has 9 commodities--White and whole
            wheat flour, Durum flour, Rice, Rye flour, Corn flour and meal,
            Corn hominy and grits, Corn starch, Barley products, and Oat
            products.
              The ``Meat'' spreadsheet has 24 commodities--Beef, Veal,
            Pork, Lamb, Chicken, Turkey, Fresh and frozen fish, Fresh and
            frozen shellfish, Canned salmon, Canned sardines, Canned tuna,
            Canned shellfish, Other canned fish, Cured fish, Eggs, Peanuts,
            Almonds, Hazelnuts (filberts), Pecans, Walnuts, Macadamia nuts,
            Pistachio nuts, Other tree nuts, and Coconut.
              The ``Sugar'' spreadsheet has 6 commodities--Cane and beet
            sugar, High fructose corn sweetener, Glucose, Dextrose, Honey,
            and Edible syrups.
              The ``Vegetable'' spreadsheet has 67 commodities--Fresh
            artichokes, Fresh asparagus, Fresh bell peppers, Fresh
            broccoli, Fresh Brussels sprouts, Fresh cabbage, Fresh carrots,
            Fresh cauliflower, Fresh celery, Fresh collard greens, Fresh
            sweet corn, Fresh cucumbers, Fresh eggplant, Fresh escarole and
            endive, Fresh garlic, Fresh kale, Fresh head lettuce, Fresh
            Romaine and leaf lettuce, Fresh lima beans, Fresh mushrooms,
            Fresh mustard greens, Fresh okra, Fresh onions, Fresh potatoes,
            Fresh pumpkin, Fresh radishes, Fresh snap beans, Fresh spinach,
            Fresh squash, Fresh sweet potatoes, Fresh tomatoes, Fresh
            turnip greens, Canned asparagus, Canned snap beans, Canned
            cabbage (sauerkraut), Canned carrots, Canned sweet corn, Canned
            cucumbers (pickles), Canned green peas, Canned mushrooms,
            Canned chile peppers, Canned potatoes, Canned tomatoes, Other
            canned vegetables, Frozen asparagus, Frozen snap beans, Frozen
            broccoli, Frozen carrots, Frozen cauliflower, Frozen sweet
            corn, Frozen green peas, Frozen lima beans, Frozen potatoes,
            Frozen spinach, Miscellaneous frozen vegetables, Dehydrated
            onions, Dehydrated potatoes, Potato chips and shoestring
            potatoes, Dry peas and lentils, Dry edible beans, Dry black
            beans, Dry great northern beans, Dry lima beans, Dry navy
            beans, Dry pinto beans, Dry red kidney beans, and Other dry
            beans.
              Total: 215 commodity categories.* Some of these categories,
            such as ``other frozen fruit,'' include more than one commodity
            so there are more than 215 commodities in total represented in
            the Food Availability Data System.
    ---------------------------------------------------------------------------
        * Two commodities (eggnog; half-and-half) were split into a dairy
    share and a fat share. To avoid double counting, we reduce the sum
    (217) of the above groups to 215.
        Source: Computed by Jeanine Bentley, ERS, August 6, 2012.

        Third, as a validation step, when our estimates fell outside of the
    expected range, we examined the data more closely to determine if there
    had been computational errors or outliers. Additionally, it is likely
    that some households made mistakes when reporting information to
    Nielsen or, because the recording process is time-consuming, failed to
    report some purchases. However, validation studies confirm the
    suitability of Homescan data. For example, Einav, et al. (2008) found
    that errors in the Homescan data are of the same order of magnitude as
    reporting errors in major government-collected data sets. Moreover,
    their findings suggest that errors in Homescan data are unlikely to
    affect estimates of average prices paid by all households.
        Fourth, we multiplied the estimated price by the annual amount of
    food loss for each individual food in the LAFA data series at the
    retail and consumer levels. The amounts of loss for each type of
    commodity were calculated by multiplying per capita quantities
    available at each level by the corresponding food loss assumptions and
    by the U.S. population on July 1, 2010 (309.75 million). We then
    estimated the total value of losses by summing individual valuations
    over each commodity group in the LAFA data series.
        Fifth, we estimated the number of calories representing food loss
    in 2010 for each commodity in the LAFA data series. One strength of
    this data series is that it estimates the calories available for each
    commodity in a given year. Using this information with the retail- and
    consumer-level loss estimates, we were able to estimate the number of
    calories from the food supply at both levels that went uneaten.
        We basically followed the same steps as used in Buzby and Hyman
    (2012) and Buzby, et al. (2011), with a few exceptions:

      1.  For five fresh vegetables, we used specific consumer price
                indexes (CPIs) to inflate the 2006 Nielsen fresh vegetable
                prices to 2010 prices [2006 was the most recent year
                available]. In particular, we used the lettuce CPI for
                fresh romaine and leaf lettuce. For fresh broccoli, sweet
                corn, cucumbers, and spinach, we used the CPI for ``other
                fresh vegetables,'' which is for fresh vegetables other
                than for potatoes, lettuce, and tomatoes. In the earlier
                two articles, we inflated the 2006 fresh prices with the
                CPI value for all fresh vegetables from the U.S. Bureau of
                Labor Statistics (BLS).

      2.  For fresh apricots, there were enough observations of fresh
                apricots in the 2010 Nielsen Homescan data that there was
                no need to adjust from an earlier price as in Buzby, et al.
                (2011).

      3.  For veal, Buzby and Hyman (2012) used fresh veal only from 2008
                Nielsen data to estimate the 2008 price for veal. In this
                report, we used both fresh and frozen veal together.
    Limitations of the Data
        As with the basic Food Availability data, the Loss-Adjusted Food
    Availability data series does not measure actual consumption or the
    quantities ingested. This is because neither series is based on direct
    observations of individual intake. Therefore, data are not available by
    socioeconomic, demographic, and geographic (State, regional, or city)
    breakdowns, and in most cases, it is not known if such data exist.
    Detailed documentation is available on ERS's website (ERS, 2012a).
        The limited ability of researchers to measure food loss accurately
    suggests that actual loss rates may differ from the assumptions used in
    this data series. In general, the underlying estimates of farm-to-
    retail (not measured in this report), retail, and consumer-level food
    losses used in the Loss-Adjusted Food Availability data series may be
    understated or overstated due to limitations in the underlying
    published studies. Food loss, particularly at the consumer level, is by
    nature difficult to measure accurately. Participants in household
    surveys on food waste tend to be highly ``reactive''--changing their
    behavior during the survey period instead of acknowledging how much
    food they typically discard--or misstating their true levels of product
    discard (Gallo, 1980). Studies that observe food loss by inspecting
    landfill garbage are also prone to errors. Such studies are not
    nationally representative and may not account for food fed to pets and
    other animals, put in garbage disposals, or composted at home (Gallo,
    1980). Plate waste studies, such as for schoolchildren at lunchtime
    (Buzby and Guthrie, 2002), often target only a slice of the total U.S.
    population, and the findings cannot be easily or reliably extrapolated
    to other demographic categories.
        Food loss for individual commodities, in particular, may vary over
    time. There are good reasons why food loss for a particular commodity
    could increase or decrease. On the one hand, new food technologies and
    food production/processing practices may reduce food losses over time
    (e.g., improvements in the preservation of bread, nanotechnologies in
    food packaging to reduce spoilage) (Buzby, 2010). On the other hand,
    food loss for a particular commodity could increase, such as from
    greater trimming of food to cut down on fats. However, the ERS data
    currently do not capture most of these changes in food loss because for
    most commodity- and food-loss-level pairings, the same loss assumption
    is applied throughout the span of the data in the LAFA data series
    (e.g., the retail-level loss estimate for fresh apples is the same 8.6
    percent over 1970-2011). The exception is that the retail-level loss
    estimates for beef account for greater trimming of fat over time.
        Additionally, ERS's LAFA data series uses well-documented data for
    inedible loss assumptions, but these amounts are not consistently
    applied to the data series in the same step or level. In particular,
    the data series removes the inedible share for fresh fruits, fresh
    vegetables, and eggs at the consumer level while the inedible shares
    for meat, poultry, and fish are removed at the primary-to-retail level,
    so that these estimates in the LAFA data series are presented in
    boneless weight.\18\ What this means, in effect, is that for fresh
    fruits, fresh vegetables, and eggs, the inedible share is included at
    the retail weight but then subtracted prior to the consumer weight.
    ---------------------------------------------------------------------------
        \18\ In the ERS Food Availability Data system, the weight at the
    primary distribution level is dictated for each commodity by the
    structure of the marketing system and data availability. In most cases,
    the primary weight is the farm weight. For meat and poultry, the
    primary weight is the carcass weight, which is then converted to a
    boneless weight when accounting for farm-to-retail losses.
    ---------------------------------------------------------------------------
        Despite the limitations, both the per capita Food Availability data
    and the per capita Loss-Adjusted Food Availability data are useful for
    economic analyses because they serve as indirect measures of trends in
    food consumption and food loss. In other words, both data series
    provide an indication of whether Americans, on average, are consuming
    more or less of various foods over time. As we have seen in this
    report, the Loss-Adjusted Food Availability series also provides
    estimates of food loss by commodity, by food group, and in total.
    References

        Aillery, M., N. Gollehon, R. Johansson, J. Kaplan, N. Key, and M.
     Ribaudo. 2005. Managing Manure to Improve Air and Water Quality,
     Economic Research Service, U.S. Department of Agriculture, Economic
     Research Report No. 9 (Sept.). www.ers.usda.gov/publications/err-
     economic-research-report/err9.aspx.
        Bureau of Labor Statistics (BLS). 2012. Table 4.10 Personal income,
     1990, 2000, 2010, and projected 2020. Washington, D.C.
        Buzby, J.C. 2010. ``Nanotechnology for Food Applications: More
     Questions than Answers,'' The Journal of Consumer Affairs, 44, 528-545.
     http://onlinelibrary.wiley.com/doi/10.1111/j.1745-6606.2010.01182.x/
     full, accessed November 12, 2013.
        Buzby, J.C., and J.F. Guthrie. 2002. ``Plate Waste in School
     Nutrition Programs: Final Report to Congress.'' E-FAN-02-009, Economic
     Research Service, U.S. Department of Agriculture. http://
     webarchives.cdlib.org/sw1s17tt5t/http://ers.usda.gov/Publications/
     efan02009/.
        Buzby, J.C., and J. Hyman. 2012. ``Total and Per Capita Value of
     Food Loss in the United States.'' Food Policy, 37, 561-570. http://
     www.sciencedirect.com/science/article/pii/S0306919212000693, accessed
     November 12, 2013.
        Buzby, J.C., J. Hyman, H. Stewart, and H.F. Wells. 2011. ``The Value
     of Retail- and Consumer-Level Fruit and Vegetable Losses in the United
     States,'' The Journal of Consumer Affairs Fall, 492-515. http://
     onlinelibrary.wiley.com/doi/10.1111/j.1745-6606.2011.01214.x/abstract,
     accessed November 12, 2013.
        Buzby, J.C., H.F. Wells, B. Axtman, and J. Mickey. 2009. Supermarket
     Loss Estimates for Fresh Fruit, Vegetables, Meat, Poultry, and Seafood
     and Their Use in the ERS Loss-Adjusted Food Availability Data. EIB-44,
     March, Economic Research Service, U.S. Department of Agriculture. http:/
     /www.ers.usda.gov/media/183501/eib44.pdf.
        Coleman-Jensen, A., M. Nord, and A. Singh. 2013. Household Food
     Security in the United States in 2012. ERR-155, Economic Research
     Service, U.S. Department of Agriculture. http://www.ers.usda.gov/
     publications/err-economic-research-report/err155.aspx.
        Einav, L., E. Leibtag, and A. Nevo. 2008. On the Accuracy of Nielsen
     Homescan Data. ERR-69.Economic Research Service, U.S. Department of
     Agriculture. http://www.ers.usda.gov/publications/err-economic-research-
     report/err69.aspx, accessed November 12, 2013.
        Environmental Protection Agency (EPA). 2009. ``Municipal Solid Waste
     Generation, Recycling, and Disposal in the United States: Facts and
     Figures for 2008.'' Washington, D.C.
        Environmental Protection Agency (EPA). 2011. ``Basic Information
     about Food Waste.'' Washington, D.C.
        Economic Research Service (ERS). 1989. Major Statistical Series of
     the U.S. Department of Agriculture: Consumption and Utilization of
     Agricultural Products, U.S. Department of Agriculture.
        Economic Research Service (ERS). 2011. Loss-Adjusted Food
     Availability Documentation, U.S. Dept. of Agriculture. http://
     www.ers.usda.gov/data-products/food-availability-(per-capita)-data-
     system/loss-adjusted-food-availability-documentation.aspx.
        Economic Research Service (ERS). 2012a. Loss-Adjusted Food
     Availability Data in the Food Availability (Per Capita) Data System.
     U.S. Department of Agriculture. http://www.ers.usda.gov/data-products/
     food-availability-(per-capita)-data-system.aspx.
        Economic Research Service (ERS). 2012b. ``Table 13--Per Capita Food
     Expenditures.'' http://www.ers.usda.gov/data-products/food-
     expenditures.aspx#26636.
        Food and Agriculture Organization (FAO). 2009. How to Feed the World
     in 2050. United Nations, Rome.
        Gallo, A.E. 1980. ``Consumer Food Waste in the United States,''
     National Food Review, Economic Research Service, U.S. Department of
     Agriculture.
        General Accounting Office (GAO). 1977. Food Waste: An Opportunity to
     Improve Resource Use. Comptroller General of the United States,
     Washington, D.C.
        Hansen, L., and M. Ribaudo. 2008. Economic Measures of Soil
     Conservation Benefits: Regional Values for Policy Assessment, Economic
     Research Service, U.S. Department of Agriculture, Technical Bulletin
     No. 1922 (Sept.). www.ers.usda.gov/publications/tb-technical-bulletin/
     tb1922.aspx.
        Goodwin, L. 2013. ``Inquiry into the EU's Contribution to Food Waste
     Prevention by the House of Lords European Union Committee (Sub-
     Committee D): Supplementary Memorandum by WRAP (the Waste & Resources
     Action Programme).'' Oxon, United Kingdom.
        Hall, K.D., J. Guo, M. Dore, and C.C. Chow. 2009. ``The Progressive
     Increase of Food Waste in America and its Environmental Impact.'' PLoS
     ONE, 4, 6.
        Hodges, R.J., J.C. Buzby, and B. Bennett. 2010. ``Postharvest Losses
     and Waste in Developed and Developing Countries: Opportunities to
     Improve Resource Use,'' Journal of Agricultural Science, 1-9. Vol. 149,
     Supplement S1 (Nov.): 37-45. doi: 10.1017/S0021859610000936. http://
     journals.cambridge.org/action/
     displayAbstract?fromPage=online&aid=8030717, accessed November 12,
     2013.
        Institutes of Medicine (IOM). 2005. Dietary Reference Intakes for
     Energy, Carbohydrate, Fiber, Fat, Fatty Acids, Cholesterol, Protein,
     and Amino Acids. The National Academies Press, Washington, D.C.
        Kader, A.A. 2005. ``Increasing Food Availability by Reducing
     Postharvest Losses of Fresh Produce,'' Acta Horticulturae 682: 2169-
     2176.
        Kantor, L.S. 1998. A Dietary Assessment of the U.S. Food Supply:
     Comparing Per Capita Food Consumption with Food Guide Pyramid Serving
     Recommendations. Economic Research Service, U.S. Department of
     Agriculture. http://webarchives.cdlib.org/sw12j6951w/http://
     www.ers.usda.gov/Publications/AER772/.
        Kantor, L.S., K. Lipton, A. Manchester, and V. Oliveira. 1997.
     ``Estimating and Addressing America's Food Losses,'' FoodReview,
     Economic Research Service (ERS), U.S. Dept. of Agriculture.
        Lundqvist, J., C. de Fraiture, and D. Molden. 2008. ``Saving Water:
     From Field to Fork-Curbing Losses and Wastage in the Food Chain.''
     Stockholm International Water Institute (SIWI) Policy Brief. Stockholm,
     Sweden.
        Muth, M.K., S.A. Karns, S.J. Nielsen, J.C. Buzby, and H.F. Wells.
     2011. ``Consumer-Level Food Loss Estimates and Their Use in the ERS
     Loss-Adjusted Food Availability Data.'' Economic Research Service, U.S.
     Department of Agriculture. Technical Bulletin No. (TB-1927), Jan. http:/
     /www.ers.usda.gov/publications/tb-technical-bulletin/tb1927.aspx,
     accessed November 12, 2013.
        Parfitt, J.P., M. Barthel, and S. Macnaughton. 2010. ``Food Waste
     within Food Supply Chains: Quantification and Potential for Change to
     2050.'' Philosophical Transactions of the Royal Society Biological
     Sciences, 365, 3065-3081.
        Quested, T., and A. Parry. 2011. ``New Estimates for Household Food
     and Drink Waste in the UK.'' Oxon, Waste & Resources Action Programme
     (WRAP).
        Reed, J., E. Frazao, and R. Itskowitz. 2004. How Much Do Americans
     Pay for Fruits and Vegetables? Economic Research Service, U.S.
     Department of Agriculture, Agricultural Information Bulletin No. 790
     (July).
        Ribaudo, M., Jorge Delgado, L. Hansen, M. Livingston, R. Mosheim,
     and J. Williamson. 2011. Nitrogen in Agricultural Systems: Implications
     for Conservation Policy, Economic Research Service, U.S. Department of
     Agriculture, Economic Research Report No. 127 (Sept.) www.ers.usda.gov/
     publications/err-economic-research-report/err127.aspx.
        Rosen, S., B. Meade, S. Shapouri, A. D'Souza, and N. Rada. 2012.
     International Food Security Assessment, 2012-12. Economic Research
     Service (ERS), U.S. Department of Agriculture.
        Schwab, J. 2013, Environmental Protection Agency. Personnel
     communication with J. Buzby, Washington, DC.
        Stewart, H., J. Hyman, J. Buzby, E. Frazao, and A. Carlson. 2011.
     How Much do Fruits and Vegetables Cost? Economic Research Service, U.S.
     Department of Agriculture. Economic Information Bulletin No. 71 (Feb.),
     http://www.ers.usda.gov/publications/eib-economic-information-bulletin/
     eib71.aspx.
        Sullivan, P., D. Hellerstein, L. Hansen, R. Johansson, S. Koenig, R.
     Lubowski, W. McBride, D. McGranahan, M. Roberts, S. Vogel, and S.
     Bucholtz. 2004. The Conservation Reserve Program: Economic Implications
     for Rural America. Economic Research Service, U.S. Department of
     Agriculture, Agricultural Economic Report No. 834 (Oct.),
     www.ers.usda.gov/publications/aer-agricultural-economic-report/
     aer834.aspx.
        United Nations (UN). 2011. World Population Prospects, the 2010
     Revision. Department of Economic and Social Affairs, P.D., Population
     Estimates and Projections Section, ed., Rome, United Nations.
        Venkat, K. 2012. ``The Climate Change and Economic Impacts of Food
     Waste in the United States,'' International Journal on Food System
     Dynamics, 2, 431-446.
        Webber, M.E. 2012. ``More Food, Less Energy,'' Scientific American,
     pp. 74-79.
        Ziegler, G., and J.D. Floros. 2011. ``A Future Perspective to
     Mitigate Food Losses: The Role of Food Science and Technology,'' IFT
     2011 Annual Meeting & Food Expo (New Orleans, LA).

                                 [attachment 5]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Winning on Reducing Food Waste
    The initiative
        The Winning on Reducing Food Waste Initiative (the Initiative) is a
    collaborative effort announced in a joint agency formal agreement
    (https://www.usda.gov/sites/default/files/documents/usda-fda-epa-
    formal-agreement.pdf) (PDF, 579 KB) signed in October 2018 by the U.S.
    Department of Agriculture (USDA), the U.S. Environmental Protection
    Agency (EPA), and the U.S. Food and Drug Administration (FDA).
        Through the Initiative, the agencies affirm their shared commitment
    to reduce food loss and waste. They also agree to coordinate action to
    leverage government resources to reduce food loss and waste, including
    action to educate Americans on the impacts and importance of reducing
    food loss and waste.
        Individually and collectively, these agencies contribute to the
    Initiative, encourage long-term reductions and work toward the goal of
    reducing food loss and waste in the United States. These actions
    include research, community investments, education and outreach,
    voluntary programs, public-private partnerships, tool development,
    technical assistance, event participation, and policy discussion.
    FY 2019-2020 Federal Interagency Strategy
        To achieve the vision for the Initiative, the agencies developed a
    strategy to prioritize and coordinate their efforts. In development of
    this strategy, the agencies built on information from several sources,
    including, but not limited to:

       Managing for Results: Key Considerations for Implementing
            Interagency Collaborative Mechanisms (https://www.gao.gov/
            products/GAO-12-1022) (U.S. Government Accountability Office).
            This report highlights two key elements for successful
            collaboration: (1) clarity of roles and responsibilities and
            (2) written guidance and agreements.

       A Call to Action by Stakeholders: United States Food Loss
            and Waste Reduction Goal (https://www.epa.gov/sustainable-
            management-food/call-action-stakeholders-united-states-food-
            loss-waste-2030-reduction) developed by the EPA in consultation
            with USDA. The key activities identified by stakeholders in
            this report include: seek prevention strategies and use the
            Food Recovery Hierarchy; increase public awareness; improve the
            data; forge new partnerships and expand the existing ones;
            clarify date labels and food safety; and build food loss and
            waste infrastructure.

       A Roadmap to Reduce U.S. Food Waste by 20 Percent (https://
            www.refed.com/downloads/ReFED_Report_2016.pdf) (PDF, 12 MB)
            (Rethink Food Waste through Economics and Data (ReFED)). The
            report finds that the most cost-effective solutions are: (1)
            standardized date labeling and (2) consumer education
            campaigns.

       Don't Waste, Donate: Enhancing Food Donations through
            Federal Policy (https://www.nrdc.org/sites/default/files/dont-
            waste-donate-report.pdf) (PDF, 3 MB) (Harvard Food Law and
            Policy Clinic and Natural Resources Defense Council).
            Recommendations in this report include: (1) enhance liability
            protections for food donations; (2) standardize and clarify
            expiration date labels; and (3) publish food safety guidance
            for food donations.

        The strategy prioritizes six action areas:

              Priority Area 1: Enhance Interagency Coordination

              Improving interagency coordination will enable USDA, EPA and
            FDA to use government resources more efficiently and
            effectively. An interagency, collaborative mechanism will be
            established to reduce programmatic redundancies and leverage
            complimentary activities.

              Priority Area 2: Increase Consumer Education and Outreach
            Efforts

              Households are a major source of food loss and waste in the
            United States. Most consumers are unaware of the consequences
            of food loss and waste. A coordinated consumer education effort
            by USDA, EPA and FDA, in conjunction with public, private or
            nonprofit partners, has the potential to raise awareness,
            motivate consumers to take action and accelerate progress to
            reduce food loss and waste.

              Priority Area 3: Improve Coordination and Guidance on Food
            Loss and Waste Measurement

              Enhanced coordination and voluntary guidance regarding
            measurement of food loss and waste will reduce confusion and
            help establish clearer goals and strategies. Improved and
            coordinated methodologies can identify missed opportunities and
            better communicate progress.

              Priority Area 4: Clarify and Communicate Information on Food
            Safety, Food Date Labels, and Food Donations

              Confusion about food safety guidelines, date labels and food
            donation results in food loss and waste at retailers and in
            homes across the country. Establishing and communicating
            clearer, coordinated voluntary guidance on food date labels and
            liability protection around food donation could help increase
            food recovery and lead to reductions in food waste and food
            insecurity.

              Priority Area 5: Collaborate with Private Industry to Reduce
            Food Loss and Waste Across the Supply Chain

              The food industry, including processors, manufacturers,
            distributors, retailers and foodservice establishments, has an
            important role in reducing food loss and waste. Showcasing and
            building partnerships through efforts such as the USDA/EPA U.S.
            Food Loss and Waste 2030 Champions, as well as connecting
            stakeholders with food waste reduction technologies, will help
            stimulate further efforts throughout the food supply chain.

              Priority Area 6: Encourage Food Waste Reduction by Federal
            Agencies in their Respective Facilities

              Federal facilities operate food service venues, including
            cafeterias and concessions, and manage events. Encouraging the
            reduction of food loss and waste at these facilities and events
            will demonstrate Federal leadership and implementation of the
            administration's priorities.

        Winning on Reducing Food Waste FY 2019-2020 Federal Interagency
    Strategy (https://www.usda.gov/sites/default/files/documents/
    interagency-strategy-on-reducing-food-waste.pdf) (PDF, 364 KB)
    Federal Interagency Strategy--inventory of initiative actions
        USDA, EPA and FDA, in conjunction with public, private and
    nonprofit partners, have an ongoing inventory of actions (https://
    www.usda.gov/sites/default/files/documents/usda-epa-fda-agency-
    inventory-priority-areas.pdf) (PDF, 337 KB) in response to the
    initiative's six priority areas.
                                 [attachment 6]
    Winnning on Reducing Food Waste--FY 2019-2020 Federal Interagency
            Strategy
    April 2019
    EPA 530-F-19-1004

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Overview

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
              [A family shopping.]

        In the United States, 30-40 percent of all available food goes
    uneaten through loss or waste. Food is the single largest type of waste
    in our daily trash. The Federal Government has a role to play in
    reducing food loss and waste because food loss and waste adversely
    impacts food security, the economy, our communities and the
    environment.
        As a result, in October 2018, the U.S. Department of Agriculture
    (USDA), the U.S. Environmental Protection Agency (EPA) and the U.S.
    Food and Drug Administration (FDA) launched the Winning on Reducing
    Food Waste Initiative (the Initiative).
        As part of the Initiative, the agencies affirm their shared
    commitment to work towards the national goal of reducing food loss and
    waste by 50 percent by 2030. The agencies agree to coordinate food loss
    and waste actions such as: education and outreach, research, community
    investments, voluntary programs, public-private partnerships, tool
    development, technical assistance, event participation and policy
    discussion on the impacts and importance of reducing food loss and
    waste.
        To achieve the vision for the Initiative, the agencies developed a
    strategy to prioritize and coordinate their efforts. In development of
    this strategy, the agencies built on information from several sources,
    including, but not limited to:

       Managing for Results: Key Considerations for Implementing
            Interagency Collaborative Mechanisms (https://www.gao.gov/
            products/GAO-12-1022) (U.S. Government Accountability Office).
            This report highlights two key elements for successful
            collaboration: (1)clarity of roles and responsibilities and (2)
            written guidance and agreements.

       A Call to Action by Stakeholders: United States Food Loss
            and Waste Reduction Goal (https://www.epa.gov/sustainable-
            management-food/call-action-stakeholders-united-states-food-
            loss-waste-2030-reduction) developed by EPA inconsultation with
            USDA. The key activities identified by stakeholders in this
            report include: (1) seek preventionstrategies and use the Food
            Recovery Hierarchy; (2) increase public awareness; (3) improve
            the data; (4) forge newpartnerships and expand the existing
            ones; (5) clarify date labels and food safety; and (6) build
            food loss and wasteinfrastructure.

       A Roadmap to Reduce U.S. Food Waste (https://www.refed.com/
            downloads/ReFED_Report_2016.pdf) (Rethink Food Waste through
            Economics and Data (ReFED)). The report findsthat the most
            cost-effective solutions are: (1) standardized date labeling
            and (2) consumer education campaigns.

       Don't Waste, Donate: Enhancing Food Donations through
            Federal Policy (https://www.nrdc.org/sites/default/files/dont-
            waste-donate-report.pdf) (Harvard Food Law and Policy Clinic
            andNatural Resources Defense Council). Recommendations in this
            report include: (1) enhance liability protections for food
            donations; (2) standardize and clarify expiration date labels;
            and (3) publish food safety guidance for food donations.
    The Strategy Prioritizes Six Action Areas:

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                      Priority Area 1: Enhance Interagency Coordination

                      Improving interagency coordination will enable USDA,
                    EPA and FDA to use government resources more
                    efficiently and effectively. An interagency,
                    collaborative mechanism will be established to reduce
                    programmatic redundancies and leverage complementary
                    activities.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                        Priority Area 2: Increase Consumer Education and
                    Outreach Efforts

                      Households are a major source of food loss and waste
                    in the United States. Most consumers are unaware of the
                    consequences of food loss and waste. A coordinated
                    consumer education effort by USDA, EPA and FDA, in
                    conjunction with public, private, or nonprofit
                    partners, has the potential to raise awareness,
                    motivate consumers to take action and accelerate
                    progress to reduce food loss and waste.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                        Priority Area 3: Improve Coordination and Guidance
                    on Food Loss and Waste Measurement

                      Enhanced coordination and voluntary guidance
                    regarding measurement of food loss and waste will
                    reduce confusion and help establish clearer goals and
                    strategies. Improved and coordinated methodologies can
                    identify missed opportunities and better communicate
                    progress.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                        Priority Area 4: Clarify and Communicate
                    Information on Food Safety, Food Date Labels, and Food
                    Donations

                      Confusion about food safety guidelines, date labels,
                    and food donation results in food loss and waste at
                    retailers and in homes across the country. Establishing
                    and communicating clearer, coordinated voluntary
                    guidance on food date labels and liability protection
                    around food donation could help increase food recovery
                    and lead to reductions in food waste and food
                    insecurity.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                        Priority Area 5: Collaborate with Private Industry
                    to Reduce
                     Food Loss and Waste Across the Supply Chain

                      The food industry, including processors,
                    manufacturers, distributors, retailers and food service
                    establishments, has an important role in reducing food
                    loss and waste. Showcasing and building partnerships
                    through efforts such as the USDA/EPA U.S. Food Loss and
                    Waste 2030 Champions, as well as connecting
                    stakeholders with food waste reduction technologies,
                    will help stimulate further efforts throughout the food
                    supply chain.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                        Priority Area 6: Encourage Food Waste Reduction by
                    Federal
                     Agencies in their Respective Facilities

                      Federal facilities operate food service venues,
                    including cafeterias and concessions, and manage
                    events. Encouraging the reduction of food loss and
                    waste at these facilities and events will demonstrate
                    Federal leadership and implementation of the
                    administration's priorities.
                                 [attachment 7]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Agriculture Innovation as a Solution for Farmers, Consumers, and the
            Environment
    February 2020

        American agriculture is environmentally sound, economically viable,
    and consumer focused, and its success is due to the United States'
    open-arms approach to innovation. The Agriculture Innovation Agenda
    (AIA) is the United States Department of Agriculture's (USDA)
    commitment to the continued success of American farmers, ranchers,
    producers, and foresters in the face of future challenges. It is a
    department-wide effort to align USDA's resources, programs, and
    research to provide farmers with the tools they need and to position
    American Agriculture as a leader in the effort to meet the food, fiber,
    fuel, feed, and climate demands of the future. We will also continue
    working to modernize our regulatory framework so America's producers
    will have the benefit of modern technologies, such as biotechnology,
    necessary to meet these challenges. USDA will stimulate innovation so
    that American agriculture can achieve the goal of increasing U.S.
    agricultural production by 40 percent while cutting the environmental
    footprint of U.S. agriculture in half by 2050.

        To help achieve this goal, USDA commits to:

        I. Create a comprehensive U.S. agriculture innovation strategy to
    align public and private research efforts:

       Bold and transformative innovation is needed to meet future
            demands. We will seek input from the agricultural community on
            what innovative technologies and practices are needed to meet
            these demands. We will use that input to seek alignment between
            the research goals of the scientific and innovation communities
            with the demand for tangible and relevant outcomes.

       Over the next year, USDA will:

         Utilize innovation breakthrough opportunities derived
                from the 2019 National Academies ofScience report, Science
                Breakthroughs to Advance Food and Agricultural Research by
                2030, toform the basis for a forthcoming USDA Request for
                Information (RFI) on the most importantinnovation
                opportunities to be addressed in the near and long-term.
                The focus will be on transformational innova tion
                opportunities defining the next era of agriculture
                productivity and environmental conservation. We encourage
                stakeholders to provide input on how these exciting science
                and technology developments hold potential for agriculture
                in the future. USDA will offer technical assistance for
                workshops to gather this feedback.

         Using input provided, identify common themes across
                the agriculture customer base to inform research and
                innovation efforts in the Department, the broader public-
                sector, and the private sector.

        II. Integrate the latest innovative conservation technologies and
    practices into USDA programs:

        There have been dramatic advances in efficiency and conservation
    performance over the past two decades. USDA can assist farmers in
    accessing and adopting new technologies and practices to help producers
    meet productivity and environmental goals. To accomplish this, the
    Department will focus on USDA program delivery to encourage rapid
    adoption of cutting-edge technologies and practices. USDA will also
    champion commercialization of innovative technologies in the private
    sector

       Over the next year, USDA will:

         Improve internal coordination in order to facilitate
                transmission of best approaches among USDA research and
                program agencies and identify, customize, and fast-track
                the best emerging innovative technologies to integrate and
                deliver to our customers through USDA programs.

         Develop standardized OneUSDA processes, including a
                ``fast pass'' process for immediate in-take and integration
                of proven technologies.

         Work with existing regional outreach networks and
                other partnerships to identify innovation opportunities in
                order to rapidly integrate the latest technologies into our
                programs and understand how those technologies can best
                serve our customers.

         Solicit and encourage development of the best ``ready-
                to-go'' innovative technology from the private sector.

        III. Improve USDA Data Collection and Reporting:

        USDA currently collects a wealth of data on commodity production,
    but information on how our food is produced and the conservation
    practices being employed is harder to come by. USDA intends to increase
    our understanding of the adoption of conservation practices and improve
    the timeliness and access to conservation information, delivering a
    powerful new tool to measure and track progress. Through improved
    reporting and access to conservation data, USDA and the public will be
    able to understand and monitor conservation and productivity trends and
    progress. Access to this information will also serve as a catalyst for
    innovation and improved conservation decision-making.

       Over the next year, USDA will:

         Review the array of data we're collecting on
                conservation practices, and make improvements to
                conservation reporting systems to identify:

             The most useful data for tracking progress towards
                goals;

             Gaps in the data that USDA currently collects that
                prevent large-scale
                    trend analysis in production and conservation adoption
                trends;

             Improvements in data collection and reporting;

             Trends in production and conservation adoption;

             The effects of conservation on natural resources; and

             The most useful data for tracking food loss and waste.

         USDA will recommend improvements to conservation
                reporting systems which will be regularly updated,
                leveraging data from existing USDA surveys. This new
                reporting will contain timely and detailed trend data on
                agricultural conservation adoption, as well as production,
                to track progress toward meeting our goals.

       Hold Ourselves Accountable with Benchmarks: USDA has
            outlined benchmarks to hold us accountable as we stimulate
            innovation so that American agriculture can achieve the goal of
            increasing U.S. agricultural production by 40 percent while
            cutting the environmental footprint of U.S. agriculture in half
            by 2050. This will be an on-going effort toward meeting the
            demands of the future.

       Agricultural productivity: Increase agricultural production
            by 40 percent by 2050 to do our part to meet estimated future
            demand.

       Forest Management: Build landscape resiliency by investing
            in active forest management and forest restoration through
            increased Shared Stewardship Agreements with States.

       Food loss and waste: Advance our work toward the United
            States' goal to reduce food loss and waste by 50 percent in the
            United States by the year 2030, from the 2010 baseline.

       Carbon Sequestration and Greenhouse Gas: Enhance carbon
            sequestration through soil health and forestry, leverage the
            agricultural sector's renewable energy benefits for the
            economy, and capitalize on innovative technologies and
            practices to achieve a net reduction of the agricultural
            sector's current carbon footprint by 2050 without regulatory
            overreach.

         Multiple pathways exist to achieve this goal,
                including promoting innovation and new technologies and
                practices to improve fertilizer and manure management,
                capturing biogas, improving livestock production
                efficiency, conserving sensitive and marginal lands to
                enhance carbon sinks, reforestation and responsible forest
                management to prevent wildfire, maximizing the benefits of
                renewable energy through improved efficiency and carbon
                capture, and encouraging soil health practices such as no-
                till to sequester carbon.

       Water Quality: Reduce nutrient loss by 30 percent nationally
            by 2050.

         Address the areas with the greatest needs.

         Support existing watershed goals.

       Renewable Energy: Support renewable fuels, including
            ethanol, biodiesel, and biomass.

         Increase biofuel feedstock production and biofuel
                production efficiency and competitiveness to achieve
                market-driven blend rates of E15 in 2030 and E30 in 2050.
                Achieve market-driven demand for biomass and biodiesel.

                                 [attachment 8]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Food Product Dating
              ``Best if Used By'' is a type of date you might find on a
            meat, poultry, or egg product label. Are dates required on
            these food products? Does it mean the product will be unsafe to
            use after that date? Here is some background information
            answering these and other questions about product dating.
    What is Food Product Dating?
        Two types of product dating may be shown on a product label. ``Open
    Dating'' is a calendar date applied to a food product by the
    manufacturer or retailer. The calendar date provides consumers with
    information on the estimated period of time for which the product will
    be of best quality and to help the store determine how long to display
    the product for sale. ``Closed Dating'' is a code that consists of a
    series of letters and/or numbers applied by manufacturers to identify
    the date and time of production.
    Does Federal Law Require Food Product Dating?
        Except for infant formula, product dating is not required by
    Federal regulations.\1\
    ---------------------------------------------------------------------------
        \1\ The U.S. Food and Drug Administration requires a ``use by''
    date on infant formula. The U.S. Department of Agriculture (USDA) does
    not require quality or food safety date labels for products under its
    purview. However, the USDA does require a ``pack date'' for poultry
    products and thermally processed, commercially sterile products to help
    identify product lots and facilitate trace-back activities in the event
    of an outbreak of foodborne illness (see 9 CFR 381.126 and 431.2(e),
    respectively).
    ---------------------------------------------------------------------------
        For meat, poultry, and egg products under the jurisdiction of the
    Food Safety and Inspection Service (FSIS), dates may be voluntarily
    applied provided they are labeled in a manner that is truthful and not
    misleading and in compliance with FSIS regulations.\2\ To comply, a
    calendar date must express both the month and day of the month. In the
    case of shelf-stable and frozen products, the year must also be
    displayed. Additionally, immediately adjacent to the date must be a
    phrase explaining the meaning of that date such as ``Best if Used By.''
    ---------------------------------------------------------------------------
        \2\ 9 CFR 317.8, 381.129, and 590.411.
    ---------------------------------------------------------------------------
    Are Dates for Food Safety or Food Quality?
        Manufacturers provide dating to help consumers and retailers decide
    when food is of best quality. Except for infant formula, dates are not
    an indicator of the product's safety and are not required by Federal
    law.
    How do Manufacturers Determine Quality Dates?
        Factors including the length of time and the temperature at which a
    food is held during distribution and offered for sale, the
    characteristics of the food, and the type of packaging will affect how
    long a product will be of optimum quality. Manufacturers and retailers
    will consider these factors when determining the date for which the
    product will be of best quality.
        For example, sausage formulated with certain ingredients used to
    preserve the quality of the product or fresh beef packaged in a
    modified atmosphere packaging system that helps ensure that the product
    will stay fresh for as long as possible. These products will typically
    maintain product quality for a longer period of time because of how the
    products are formulated or packaged.
        The quality of perishable products may deteriorate after the date
    passes; however, such products should still be safe if handled
    properly. Consumers must evaluate the quality of the product prior to
    its consumption to determine if the product shows signs of spoilage.
    What Types of Food are Dated?
        Open dating is found on most foods including meat, poultry, egg and
    dairy products. ``Closed or coded dates'' are a series of letters and/
    or numbers and typically appear on shelf-stable products such as cans
    and boxes of food.
    What Date-Labeling Phrases are Used?
        There are no uniform or universally accepted descriptions used on
    food labels for open dating in the United States. As a result, there
    are a wide variety of phrases used on labels to describe quality dates.
        Examples of commonly used phrases include:

       A ``Best if Used By/Before'' date indicates when a product
            will be of best flavor or quality. It is not a purchase or
            safety date.

       A ``Sell-By'' date tells the store how long to display the
            product for sale for inventory management. It is not a safety
            date.

       A ``Use-By'' date is the last date recommended for the use
            of the product while at peak quality. It is not a safety date
            except for when used on infant formula as described below.

       A ``Freeze-By'' date indicates when a product should be
            frozen to maintain peak quality. It is not a purchase or safety
            date.
    What Date-Labeling Phrase does FSIS Recommend?
        USDA estimates that 30 percent of the food supply is lost or wasted
    at the retail and consumer levels.\3\ One source of food waste arises
    from consumers or retailers throwing away wholesome food because of
    confusion about the meaning of dates displayed on the label. To reduce
    consumer confusion and wasted food, FSIS recommends that food
    manufacturers and retailers that apply product dating use a ``Best if
    Used By'' date. Research shows that this phrase conveys to consumers
    that the product will be of best quality if used by the calendar date
    shown. Foods not exhibiting signs of spoilage should be wholesome and
    may be sold, purchased, donated and consumed beyond the labeled ``Best
    if Used By'' date.
    ---------------------------------------------------------------------------
        \3\ http://www.usda.gov/oce/foodwaste/sources.htm.
    ---------------------------------------------------------------------------
    Are Foods Safe to Eat After the Date Passes?
        With an exception of infant formula (described below), if the date
    passes during home storage, a product should still be safe and
    wholesome if handled properly until the time spoilage is evident (Chill
    Refrigerate Promptly (https://www.foodsafety.gov/keep/basics/chill/
    index.html)). Spoiled foods will develop an off odor, flavor or texture
    due to naturally occurring spoilage bacteria. If a food has developed
    such spoilage characteristics, it should not be eaten.
        Microorganisms such as molds, yeasts, and bacteria can multiply and
    cause food to spoil. Viruses are not capable of growing in food and do
    not cause spoilage. There are two types of bacteria that can be found
    on food: pathogenic bacteria, which cause foodborne illness, and
    spoilage bacteria, which do not cause illness but do cause foods to
    deteriorate and develop unpleasant characteristics such as an
    undesirable taste or odor making the food not wholesome. When spoilage
    bacteria have nutrients (food), moisture, time, and favorable
    temperatures, these conditions will allow the bacteria to grow rapidly
    and affect the quality of the food. Food spoilage can occur much faster
    if food is not stored or handled properly. A change in the color of
    meat or poultry is not an indicator of spoilage (The Color of Meat and
    Poultry).
    What are the Requirements for Dating Infant Formula?
        Federal regulations require a ``Use-By'' date on the product label
    of infant formula under inspection of the U.S. Food and Drug
    Administration (FDA). Consumption by this date ensures the formula
    contains not less than the quantity of each nutrient as described on
    the label. Formula must maintain an acceptable quality to pass through
    an ordinary bottle nipple.
        The ``Use-By'' date is selected by the manufacturer, packer or
    distributor of the product on the basis of product analysis throughout
    its shelf life, tests, or other information. It is also based on the
    conditions of handling, storage, preparation, and use printed on the
    label. Do not buy or use baby formula after its ``Use-By'' date.
    What Do Can Codes Mean?
        Can codes are a type of closed dating which enable the tracking of
    product in interstate commerce. These codes also enable manufacturers
    to rotate their stock and locate their products in the event of a
    recall.
        Can codes appear as a series of letters and/or numbers and refer to
    the date the product was canned. The codes are not meant for the
    consumer to interpret as a ``Best if Used By'' date.
        Cans must exhibit a code or the date of canning. Cans may also
    display ``open'' or calendar dates. Usually these are ``Best if Used
    By'' dates for peak quality. Discard cans that are dented, rusted, or
    swollen. High-acid canned foods (e.g., tomatoes and fruits) will keep
    their best quality for 12 to 18 months. Whereas, low-acid canned foods
    (e.g., meats and vegetables) will keep for two to five years.
    Additional information on food canning and the handling of canned foods
    may be found at Shelf-Stable Food Safety (http://www.fsis.usda.gov/wps/
    portal/fsis/topics/food-safety-education/get-answers/food-safety-fact-
    sheets/safe-food-handling/shelf-stable-food-safety/ct_index).
    Can Food be Donated After the Date Passes?
        Yes. The quality of perishable products may deteriorate after the
    date passes but the products should still be wholesome if not
    exhibiting signs of spoilage. Food banks, other charitable
    organizations, and consumers should evaluate the quality of the product
    prior to its distribution and consumption to determine whether there
    are noticeable changes in wholesomeness (Food Donation Safety Tips
    (http://www.fda.gov/Food/ResourcesForYou/Consumers/ucm197835.htm)).
    What do the Dates on Egg Cartons Mean?
        Use of either a ``Sell-By'' or ``Expiration'' (EXP) date is not a
    Federal regulation, but may be required, as defined by the egg laws in
    the state where the eggs are marketed. Some state egg laws do not allow
    the use of a ``sell-by'' date.
        Many eggs reach stores only a few days after the hen lays them. Egg
    cartons with the USDA grade shield on them must display the ``pack
    date'' (the day that the eggs were washed, graded, and placed in the
    carton). This number is a three-digit code that represents the
    consecutive day of the year starting with January 1 as 001 and ending
    with December 31 as 365. When a ``sell-by'' date appears on a carton
    bearing the USDA grade shield, the code date may not exceed 30 days
    from the date of pack.
        After purchasing eggs, it is recommended to refrigerate them in
    their original carton and place them in the coldest part of the
    refrigerator, not in the door due to loss of coolness from repeated
    opening of the door.
    Why are there Bar Codes on Food Packages?
        A Universal Product Code (UPC) is a type of barcode that appears on
    packages as black lines of varying widths above a series of numbers.
    They are not required by regulation, but manufacturers print them on
    most product labels because scanners at supermarkets can ``read'' them
    quickly to record the price at checkout. UPC codes are also used by
    stores and manufacturers for inventory purposes and marketing
    information. When read by a computer, a UPC can reveal such specific
    information as the manufacturer's name, product name, size of product
    and price. The numbers are not used to identify recalled products.
        A Stock Keeping Unit (SKU) code is a number assigned to a product
    by a company or retailer for stock-keeping purposes and internal
    operations. A particular product may have different SKUs if sold by
    different companies or retailers.
    How does Date Labeling Impact Food Waste?
        Confusion over the meaning of dates applied to food products can
    result in consumers discarding wholesome food.
        In an effort to reduce food waste, it is important that consumers
    understand that the dates applied to food are for quality and not for
    safety. Food products are safe to consume past the date on the label,
    and regardless of the date, consumers should evaluate the quality of
    the food product prior to its consumption.
    Where can I find Information on the Proper Handling of Food?
        If foods are mishandled, before or after the date on the package,
    bacteria, including pathogenic bacteria that can cause foodborne
    illness, can quickly multiply. For example, if cold chicken salad is
    taken to a picnic and left out at temperatures higher than 40 F (4.4
    C) for more than two hours (one hour if temperatures are
    90 F (32.2 C) or higher), the product should not be consumed. Other
    examples of potential mishandling are meat and poultry products that
    have been defrosted improperly or handled by people who don't practice
    good sanitation. Make sure to follow the handling and preparation
    instructions on the label to ensure top quality and safety. Additional
    information on safe food handling practices in the home can be found at
    Check Your Steps: Food Safe Families (http://www.fsis.usda.gov/wps/
    portal/fsis/topics/food-safety-education/teach-others/fsis-educational-
    campaigns/check-your-steps) and The Big Thaw (http://www.fsis.usda.gov/
    wps/portal/fsis/topics/food-safety-education/get-answers/food-safety-
    fact-sheets/safe-food-handling/the-big-thaw-safe-defrosting-methods-
    for-consumers/CT_Index).
    Food Safety Questions?

    Call the USDA Meat & Poultry Hotline toll-free at 1-888-MPHotline (1-888-
                                    674-6854)
    The Hotline is open year-round and can be reached from 10 a.m. to 6 p.m.
                      (Eastern Time) Monday through Friday.
                     E-mail questions to MPHotline@usda.gov.
      Consumers with food safety questions can also ``Ask Karen'', the FSIS
                             virtual representative.
                         Available 24/7 at AskKaren.gov.

                                 [attachment 9]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    July 6, 2020

      Hon. Collin C. Peterson,
      Chairman,
      Committee on Agriculture,
      U.S. House of Representatives,
      Washington, D.C.

        Dear Mr. Chairman:

        Sections 1401 (a) and (b) of the Agriculture Improvement Act of
    2018 provide that the U.S. Department of Agriculture (USDA) shall
    report on: (a) whether the average feed cost used by a dairy operation
    to produce a hundredweight of milk (as calculated by USDA monthly) is
    representative of actual dairy feed costs; and (b) the costs incurred
    by dairy operations in the use of corn silage as feed and the
    difference between the feed cost of corn silage and the feed cost of
    corn. As required by the statute, the enclosed report provides these
    analyses.
        If you have questions, please have a member of your staff contact
    the Office of Congressional Relations at (202) 720-7095. A similar
    letter is being sent to Ranking Member K. Michael Conaway.
                Sincerely,

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Sonny Perdue,
    Secretary.
                                   enclosure
    Agriculture Improvement Act of 2018_Dairy Margin Coverage Section 1401
            (a) and (b) Report to Congress
    June 17, 2020
    U.S. Department of Agriculture
    Table of Contents
        Executive Summary
        Background
        Sec. 1401(a): Does the DMC calculated average cost of feed reflect
    actual dairy feed costs?

              Comparison of Alternative Dairy Feed Cost Estimates with the
            Statutory Formula-Based Estimate Published by FSA
              University and State Department of Agriculture Budgets
              Additional Perspective on Dairy Feed Costs

        Sec. 1401(b): What are the costs incurred by dairy operations for
    use of corn silage for feed and what is the difference between the feed
    costs of corn silage and corn?

              No Formal Market or Prices Exist for Corn Silage
              Additional Corn Silage Background
              The Difference Between Feed Costs of Corn and Corn Silage
              Examining the ``Homegrown'' Component of Silage Costs

        References
        Appendix--Statutory Language from the Agriculture Improvement Act
    of 2018
        Tables

              Table 1: Comparison of Alternative Dairy Feed Cost Estimates
            with the Statutory Formula-Based Estimate Published by FSA
              Table 2: University Extension and State Estimates of Dairy
            Feed Costs
              Table 3: Feed Cost of Corn Silage and Corn as Estimated by
            USDA's ARMS
              Appendix: Component-Based Tabulation ARMS Estimates of Dairy
            Feed Costs, Measured in Dollars per Hundredweight of Milk
            Produced

        Figures

              Figure 1: Feed Cost Shares and Dairy Margin in Dollars per
            Hundredweight of Milk as Calculated Monthly by USDA for DMC
            (and formerly, MPP-Dairy)
              Figure 2: U.S. Production of Corn Silage vs. Alfalfa Hay
              Figure 3: Feed Prices of Main Dairy Cost Factors
    Executive Summary
        Section 1401 of the Agriculture Improvement Act of 2018 requires
    that the U.S. Department of Agriculture (USDA) evaluate: (1) whether
    the rate used in the Dairy Margin Coverage (DMC) program to represent
    an average dairy operation's costs to produce a hundredweight of milk
    (as calculated by USDA monthly) is representative of actual dairy feed
    costs; (2) the costs incurred by dairy operations in the use of corn
    silage as feed; and (3) the difference between the feed cost of corn
    silage and the feed cost of corn. Key findings include:
        For (1):

              USDA's Economic Research Service (ERS) publishes national
            U.S. Milk Production Costs and Returns Estimates based on dairy
            producer responses to questions asked in USDA's Agricultural
            Resource Management Survey (ARMS). For 2016, the base year used
            in this report, the ERS published estimate indicates a national
            average feed cost of $9.35 per hundredweight of milk produced.
            As an alternative, a feed component-specific tabulation of
            responses to questions in the ARMS was developed. This feed-
            component specific tabulation provides a cost estimate of $9.20
            per hundredweight for 2016.
              The average monthly feed cost calculated for the DMC program
            using the required statutory formula was $8.04 per
            hundredweight for calendar 2016. This rate was calculated as
            the simple average of the monthly prices of feed components
            published by USDA's Farm Service Agency (FSA) on the DMC
            webpage for calendar 2016.
              A 95-percent confidence interval around the published ERS
            estimate for 2016 provides a range of $8.97 to $9.73 per
            hundredweight; the 95-percent confidence interval for the
            component-specific ARMS result is similar, at $8.83 to $9.58
            per hundredweight. The value generated from the statutory
            formula, $8.04 per hundredweight, does not fall within either
            of these 95-percent confidence interval ranges.
              Although not directly comparable to the ARMS data, twelve
            illustrative university and State Department of Agriculture
            budgets are also provided in the report. They are often
            prepared using a panel of producers, aim to be representative
            (but may skew toward producers who are better managers and more
            likely to participate in such panels), and are intended for
            producer use as a guide for planning and decision-making. They
            are also often used by bankers to benchmark individual
            producer's cash flow. Unlike the ARMS estimates, they are
            typically neither statistically based nor do they reflect the
            United States as a whole and are thus are not sufficient for
            influencing national policymaking.

        For (2) and (3):

       The corn silage market is regional and thinly traded and any
            prices that are available are not representative nationally.
            The vast majority of corn silage is fed on the farm where it is
            grown or on nearby operations. Unlike corn, it is a bulky
            product that is not amenable to long-distance transport.

       The difference between the feed cost of corn silage (which
            is valued as a source of forage and energy) and the feed cost
            of corn are a function of corn prices and alfalfa availability.
            Alfalfa production and use in rations has fallen for some time,
            while corn silage use has increased.

       In the current economic environment, when market prices of
            corn are low, the relative costs of using homegrown silage in
            the dairy ration are higher compared with operations that
            purchase feed. This was not always the case: when market prices
            were much higher (such as from 2008-13), operations using
            homegrown corn and silage had a relative cost advantage.
    Background
        The Agriculture Improvement Act of 2018 (the 2018 Farm Bill)
    authorized the Dairy Margin Coverage (DMC) program, a voluntary risk
    management program for dairy producers. DMC replaces the Margin
    Protection Program for Dairy (MPP-Dairy), which was authorized by the
    Agricultural Act of 2014 (the 2014 Farm Bill). DMC offers protection to
    dairy producers when the difference between the national all-milk price
    and the national average statutory formula-driven feed cost (the
    margin) falls below a certain dollar amount coverage level selected by
    the producer.\1\ Individual producer margins may be above or below the
    statutory formula-driven margin.
    ---------------------------------------------------------------------------
        \1\ For details on the program and how it operates, see: https://
    www.fsa.usda.gov/news-room/fact-sheets/index (scroll to the dairy
    section for the DMC Fact Sheet).
    ---------------------------------------------------------------------------
        Section 1401 of the 2018 Farm Bill DMC requires that USDA evaluate:
    (1) whether the rate used in the Dairy Margin Coverage (DMC) program to
    represent an average dairy operation's costs to produce a hundredweight
    of milk (as calculated by USDA monthly) is representative of actual
    dairy feed costs; (2) the costs incurred by dairy operations in the use
    of corn silage as feed; and (3) the difference between the feed cost of
    corn silage and the feed cost of corn.\2\ This report addresses these
    issues.
    ---------------------------------------------------------------------------
        \2\ See Appendix for the statutory language.
    ---------------------------------------------------------------------------
    Sec. 1401(a): Does the DMC calculated average cost of feed reflect
            actual dairy feed costs?
        Every month, USDA uses a formula specified in the 2014 Farm Bill to
    calculate the average cost of feed used by a dairy operation to produce
    a hundredweight of milk for use in implementing the Farm Service Agency
    (FSA) dairy program (currently, DMC). This statutory formula was
    developed with input from the National Milk Producers Federation (NMPF)
    in conjunction with prominent animal scientists and dairy nutritionists
    (National Milk Producers Federation, 2010; Ishler, 2014). While the
    rations that dairy farmers feed cows vary across the United States
    depending on the availability and type of feed, the statutory formula
    includes only corn, alfalfa hay, and soybean meal. These feeds are the
    traditional mainstays of dairy rations, providing the main essential
    nutrients.
        The statutory formula USDA uses to calculate the feed costs
    associated with producing a hundredweight (one hundred pounds) of milk
    monthly is:

      (Eqn. 1) 1.0728*Corn Price ($/bu.) + 0.0137*Alfalfa Hay Price ($/ton)
        + 0.00735*Soybean Meal Price ($/ton)

    rounded to the nearest cent. In developing this fixed-coefficient
    ration, Congress used a formula originally designed to reflect the feed
    costs on a 1,000-cow milking operation producing 56.39 pounds of milk
    per cow daily (National Milk Producers Federation, 2010; Ishler, 2014;
    Newton and Hutjens, 2015).\3\ Newton and Hutjens (2015) also note that
    Congress considered the cost of the program when determining the
    formula set forth in the 2014 Farm Bill to calculate feed costs for the
    Dairy Margin Protection Program (the precursor program to DMC).
    ---------------------------------------------------------------------------
        \3\ For 2019, U.S. milk production averaged 64.1 pounds per cow per
    day. Technological advancements and better management practices have
    improved the yield per cow steadily since 2015. However, the 64.1
    pounds per day represents an average across all herd sizes with yields
    lower for smaller farms. Much of the increase in overall productivity
    is due to technological and management improvements and not greater
    feed use.
    ---------------------------------------------------------------------------
        The feed components and the coefficients of the formula were not
    changed in the 2018 Farm Bill with the introduction of DMC. However,
    USDA made one change in the calculation since 2014. That change
    occurred in July 2019 when the price used for the ``alfalfa hay''
    component switched from using a single alfalfa hay price to using a 50/
    50 split between the alfalfa hay price and a ``premium and supreme
    alfalfa hay price.'' This change to the price of alfalfa hay was made
    to reflect higher-quality roughage use. The ``premium and supreme
    alfalfa hay'' price is calculated monthly by USDA's National
    Agricultural Statistics Service based on survey data for the top five
    milk producing States, as measured by volume of milk produced during
    the previous month.\4\
    ---------------------------------------------------------------------------
        \4\ The May 2020 Agricultural Prices report can be found at https:/
    /downloads.usda.library.cornell.edu/usda-esmis/files/c821gj76b/
    jm2159057/qv33sh51q/agpr
    0520.pdf. The premium and supreme alfalfa hay data are found on p. 16.
    ---------------------------------------------------------------------------
        USDA calculates the DMC feed cost monthly using corn and alfalfa
    prices obtained from USDA's National Agricultural Statistics Service
    (NASS) and the soybean meal price obtained from USDA's Agricultural
    Marketing Service (AMS); the data and resulting margin are posted on
    the Farm Service Agency website.\5\
    ---------------------------------------------------------------------------
        \5\ Calculated feed costs, the all-milk price, and the DMC margin
    can be found at: https://www.fsa.usda.gov/programs-and-services/dairy-
    margin-coverage-program/index.
    ---------------------------------------------------------------------------
    Comparison of Alternative Dairy Feed Cost Estimates with the Statutory
            Formula-Based Rate Published by FSA
        To assess whether the statutory rate used in the DMC program (as
    shown in Eqn. 1) is representative of ``actual'' dairy feed costs, this
    report uses estimates of ``actual'' dairy feed costs produced by USDA's
    Economic Research Service (ERS) using the Agricultural Resource
    Management Survey (ARMS). ARMS is USDA's primary source of information
    on the production practices, resource use, and economic well-being of
    America's farms and ranches and is used to calculate average feed cost
    per hundredweight of milk. ARMS is a multi-frame, stratified producer
    survey, and each year, farms in one or more commodity specializations
    are over-sampled in order to produce cost and returns estimates. ARMS
    data are the only source currently available by which to estimate
    nationally representative feed cost components.\6\
    ---------------------------------------------------------------------------
        \6\ Note that feed use in USDA ``balance sheets'' (and reflected in
    USDA's monthly World Agricultural Supply and Demand Estimates) is a
    residual reflecting the difference between total availability and other
    measured use categories (such as official U.S. data on exports). There
    are no government surveys capturing feed use or costs in aggregate or
    by animal type other than the ARMS.
    ---------------------------------------------------------------------------
        ARMS estimates reflect a detailed breakout of costs, while the
    statutory formula shown in Eqn. 1 represents the costs associated with
    the main categories of feed and serves as a practical policy indicator.
    The commodity-focused ARMS components are conducted every 5 years, with
    the most recent survey for dairy reflecting 2016 data.\7\
    ---------------------------------------------------------------------------
        \7\ For the 2016 ARMS Dairy Questionnaire, visit: https://
    www.ers.usda.gov/webdocs/DataFiles/52816/
    W%5E2016%5EDairy%5EPhase3%20Questionnaire%5EQ%5ECOP_FOH.pdf?v
    =8074.4.
    ---------------------------------------------------------------------------
        Two different ARMS-related estimates are compared to the results
    using the statutory-based formula. Both estimates were produced using
    methods consistent with normal ERS practice for working with ARMS data
    and are commonly recognized as statistically valid for the purpose of
    estimating nationally representative dairy costs. The estimates used
    are:

       Published ERS estimate from the U.S. Milk Production Costs
            and Returns Estimates (available at https://www.ers.usda.gov/
            data-products/commodity-costs-and-returns.aspx). This data
            series is the official Federal source for estimates of national
            commodity-specific costs and returns and is published annually
            for a wide variety of agricultural commodities. This report
            uses the official dairy cost estimate for 2016. It was
            developed using the dairy version of the 2016 ARMS
            questionnaire that asked producers: (1) how much was spent for
            purchased feed for livestock and poultry, following up with (2)
            how much of the purchased feed cost was specifically for the
            dairy enterprise. Homegrown harvested and grazed feed expenses
            were also included. The 2016 survey contained 1,526 dairy
            observations.

       Component-specific tabulation of ARMS estimates--This
            estimate was created specifically for this report in order to
            provide a nationally-representative estimate of the average
            cost of corn, alfalfa hay, protein supplements (of which
            soybean meal is a major component),\8\ and other components
            used for dairy feed. This estimate used detailed feed use
            questions, by component purchased or harvested, that appear
            later in the ARMS and provides a different cost perspective for
            comparison with the statutory rate used in the DMC program.
            Some respondents did not answer questions about individual
            purchased feed components and those observations were dropped.
            Then, the observations were re-weighted to reflect both
            purchased and home-grown feed and encompass individual feed
            components--hay (alfalfa) and straw; corn silage; corn and
            other grains; protein supplements; and distillers or brewers'
            grain. This tabulation uses 1,079 of the total 1,526 milk cost
            and returns observations in the 2016 survey. See Appendix table
            for details.
    ---------------------------------------------------------------------------
        \8\ The ARMS dairy survey does not explicitly list soybean meal as
    a feed type but captures this feed component is in the ``protein
    supplements'' category.

        These estimates are compared against the statutory rate calculated
    using the formula shown in Eqn. 1 and published on the FSA website at
    https://www.fsa.usda.gov/programs-and-services/dairy-margin-coverage-
    program/index in the ``Final Feed Costs'' column. The ``Final Feed
    Costs'' entries for each month of the year were summed for each
    calendar year and divided by twelve to obtain the average annual feed
    cost.
        As shown in Table 1, the statutory formula rates posted by FSA are
    consistently lower than the ARMS-based estimates. A 95-percent
    confidence interval around the published ERS estimate for 2016 provides
    a range of $8.97 to $9.73 per hundredweight; the range for the
    component-specific ARMS result is similar, at $8.83 to $9.58 per
    hundredweight. The $8.04 per hundredweight, using the statutory
    formula, does not fall within either of these 95-percent confidence
    interval ranges.

      Table 1: Comparison of Alternative Dairy Feed Cost Estimates with the
                Statutory Formula-Based Estimate Published by FSA
    ------------------------------------------------------------------------
                          2016  $/         2017 \1\  $/       2018 \1\  $/
                       hundredweight      hundredweight      hundredweight
    ------------------------------------------------------------------------
    Published ERS                 9.35               9.25               9.92
     U.S. Milk
     Costs and
     Returns
     Estimates
    Unpublished ERS               9.20               9.10               9.76
     component-
     specific ARMS
     estimates
    (3) Statutory                 8.04               7.92               8.64
     formula rate
     published by
     FSA (shown in
     Eqn. 1)
    ------------------------------------------------------------------------
    \1\ NASS Agricultural Prices indexes for feed concentrates and hay and
      forage are used to extrapolate feed cost estimates for 2017 and 2018.
      See https://www.ers.usda.gov/data-products/milk-cost-of-production-
      estimates.aspx.

    University and State Department of Agriculture Budgets
        Although not directly comparable to the ARMS data, twelve
    illustrative university and State Department of Agriculture budgets are
    provided in Table 2.\9\ They are prepared by university extension
    economists and the California State Department of Food and Agriculture
    and are regional by nature. These budgets are often prepared using a
    panel of producers, aim to be representative (but may skew toward
    producers who are better managers and more likely to participate in
    such panels), and are intended for producer use as a guide for planning
    and decision-making. They are also often used by bankers to benchmark
    individual producer's cash flow. Unlike the ARMS estimates, they are
    typically neither statistically based nor do they reflect the United
    States as a whole and are thus are not sufficient for influencing
    national policymaking.
    ---------------------------------------------------------------------------
        \9\ These example budgets were selected to illustrate the variation
    in cost estimates available from State and university sources.
    ---------------------------------------------------------------------------
    Additional Perspective on Dairy Feed Costs
        Figure 1 shows the monthly corn, alfalfa, and soybean meal costs as
    used to calculate the DMC (and earlier, the MPP-Dairy) margin (the
    difference between the monthly all-milk price and the calculated feed
    cost). For 2016-2019, total feed costs were in the $7.50-$9.00 range
    for many months, although they were slightly higher in 2019. (In 2019,
    the alfalfa hay category was modified to add premium and supreme hay.)
    Large variations in the DMC margin--as shown by the yellow line--are
    exclusively due to volatility in the all-milk price.
        While dairy diets can differ by region and herd size, all diets use
    forage, grain, and protein as major feed components, along with salt
    and minerals. For example, a 2016 USDA study found that 92.0 percent of
    all U.S. dairy operations fed lactating or dry cows alfalfa hay/
    haylage; 89.4 percent fed corn silage; 76.9 percent fed soybeans
    (whole, meal, or hulls); and 90.3 percent fed corn (whole, meal,
    cracked or flaked) (USDA/APHIS). Similarly, Linn, et al. (2018) and
    Dairy-Cattle.extension.org (2019) indicate that alfalfa hay is the main
    source of forage, corn is the dominant grain for dairy cows, and
    soybean meal is a major source of protein.
        As the dairy sector is growing increasingly sophisticated, so too
    are the management practices used. The 2016 USDA/APHIS study indicates
    that about 70 percent of small and medium operators fed all of their
    lactating cows the same ration, while over half of large operations
    tailored their feed ration based on the stage of lactation. The use of
    an independent nutritionist to balance rations increased as herd size
    increased, as did the likelihood of the operation feeding cottonseed,
    wet brewers/distillers grains, canola, wheat, straw, or blood meal.
    Smaller operations were more likely to feed clover, soybeans, or oats.
    Overall, 20 percent of lactating cows and 34 percent of dry cows had
    some pasture access--which was considerably more common on small
    operations.
        Regardless of the size or location of the operation, dairy
    producers shift product use within the forage, grain, and protein
    categories to achieve nutrient equivalence at least cost. Because they
    are nutritionally equivalent, the prices of like products in each
    category are closely related to the prices of alfalfa hay, corn, and
    soybean meal. For example, some farmers might not have access to
    alfalfa hay and, as a result, feed their cows substitutes such as corn
    silage or other haylage grown on their farms. Corn silage is a partial
    substitute for alfalfa hay and is an important source of energy; in
    practice, its economic value is typically expressed relative to corn
    used for grain.

                Table 2: University Extension and State Estimates of Dairy Feed Costs (cost/cwt of milk)
    ----------------------------------------------------------------------------------------------------------------

    ----------------------------------------------------------------------------------------------------------------
    Measure                                    Univ. of Idaho    Univ. of Idaho    Univ. of Idaho       Univ. of
                                                2,500 Cow \1\    120 Jersey Cow     5,000 Cow \3\      Minnesota 223
                                                                       \2\                              Cow Farm \4\
    ----------------------------------------------------------------------------------------------------------------
    Year                                                  2012              2014              2014              2018
    ----------------------------------------------------------------------------------------------------------------
      Alfalfa Hay                                         2.28              2.51              2.09              0.70
      Other Hay and Straw                                 0.71              0.46              0.55              0.54
      All Silage and/or Haylage                           1.33              1.30              1.55              1.27
      Grain Feed                                          1.75               N/A              1.86              0.91
    Protein Supplement                                     N/A               N/A               N/A              2.86
    Other Feed Inputs                                     3.37              5.58              3.17              1.92
                                             -----------------------------------------------------------------------
        Total Feed Cost/Cwt                               9.44              9.85              9.22              8.20
    ----------------------------------------------------------------------------------------------------------------
    Measure                                    Iowa St. Univ.    Iowa St. Univ.    CDFA 2,000 Cows   CDFA 2,000 Cows
                                              120 Cow Farm \4\   120 Jersey Cows         \5\               \5\
                                                                       \4\
    ----------------------------------------------------------------------------------------------------------------
    Year                                                  2016              2016              2016              2017
    ----------------------------------------------------------------------------------------------------------------
      Alfalfa Hay                                          N/A               N/A              1.26              1.14
      Other Hay and Straw                                 2.29              2.84              0.18              0.16
      All Silage and/or Haylage                           1.93              2.46              1.89              1.61
      Grain Feed                                          1.33              1.36              1.24              1.28
    Protein Supplement                                    0.44              0.38              3.45              3.43
    Other Feed Inputs                                     1.56              1.77              1.00              1.03
                                             -----------------------------------------------------------------------
        Total Feed Cost/Cwt                               7.55              8.80              9.01              8.65
    ----------------------------------------------------------------------------------------------------------------
    Measure                                   Cornell NY State  Cornell NY State  Cornell NY State  Cornell NY State
                                              775 avg. herd\6\    811 avg. herd     853 avg. herd     901 avg. herd
                                                                       \6\               \6\               \6\
    ----------------------------------------------------------------------------------------------------------------
    Year                                                  2014              2015              2016              2017
    ----------------------------------------------------------------------------------------------------------------
    Dairy Grain and Concentrate                           7.04              6.42              5.57              5.54
    Dairy Roughage                                        0.40              0.35              0.38              0.38
    Other Feed Inputs                                     1.63              1.54              1.33              1.28
                                             -----------------------------------------------------------------------
      Total Feed Cost/Cwt                                 9.07              8.31              7.28              7.20
    ----------------------------------------------------------------------------------------------------------------
    \1\ Economic costs are used in the University of Idaho costs and returns estimates. All resources are valued
      based on market price or opportunity cost. The 365-day 3.5% fat-corrected milk for the year is 23,376 lb. per
      cow, which is the state average for 2012. Published September 6, 2013.
    \2\ 365-day 3.5% fat-corrected milk for the year is 24,127 lb. per cow, which is the state average for 2014.
      Published May 2015.
    \3\ The 365-day 4.7% fat-corrected milk for the year is 19,404 lb. per cow, which is the state average for 2012.
      Published July 6, 2015.
    \4\ Dairy feed cost estimates from University of Minnesota and Iowa State University are largely variable costs.
      University of Minnesota data were published in 2019; Iowa State data were published in 2016.
    \5\ The dairy feed cost estimates from the California Department of Food and Agriculture (CDFA) are available
      for the north and south valleys, which together account for about 90 percent of California dairy production.
      Dairy budget cost estimates from CDFA are largely variable costs. These data were published in 2017 and 2018,
      respectively.
    \6\ The Cornell University dairy feed cost estimates are based on the data from the same 128 farms that have
      participated in the Dairy Farm Business Summary and Analysis Project in New York State. These numbers do not
      represent the average for all dairy farms across New York and are from farms that are generally considered
      above average dairy farms in New York. All Cornell data were published in January 2018.

    Figure 1: Feed Cost Shares and Dairy Margin in Dollars per
            Hundredweight of Milk as Calculated Monthly by USDA for DMC
            (and formerly, MPP-Dairy)

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

              Source: U.S. Department of Agriculture, Farm Service Agency
            and ARMS.
              Notes:

           The DMC margin is the difference between the all-milk
                price and calculated
                  feed cost.

           MPP-Dairy was replaced by DMC in January 2019.

           MPP-Dairy used paired-month milk margin as calculated by
                taking the
                  simple average of the milk margins that were calculated
                for the individual
                  months in the pairing. The paired months were specified
                in the 2014 Farm
                  Bill and were January-February, March-April, May-June,
                etc. The DMC
                  program uses individual month's milk margin, rather than
                paired-months.

           The alfalfa hay price for all months in calendar 2019 is
                adjusted for the
                  50/50 split between alfalfa and premium/supreme alfalfa
                in calculating the
                  alfalfa hay cost.

           Based on published ERS Milk Production Costs and Returns
                Estimates, the
                  total feed cost for calendar years 2016, 2017 and 2018
                were $9.35, $9.25,
                  and $9.92 per hundredweight, respectively, as indicated
                by the horizontal
                  blue lines.
    Sec. 1401(b): What are the costs incurred by dairy operations for use
            of corn silage for feed and what is the difference between the
            feed costs of corn silage and corn?
        Over the last several years, corn silage has become much more
    important in dairy feeds as production has increased (Figure 2). In
    contrast, production of alfalfa hay has been trending down in most
    significant alfalfa producing States, including California, the largest
    milk producing State. Between 2000 and 2019, national production of
    corn silage has risen by nearly 31 million tons, or by 30 percent. Over
    the same period, national production of alfalfa hay has declined nearly
    27 million tons, or by 33 percent.
    Figure 2: U.S. Production of Corn Silage vs. Alfalfa Hay

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

              Source: U.S. Department of Agriculture, National Agricultural
            Statistics Service, QuickStats.

        A 2016 USDA/APHIS survey found that 89 percent of operations fed at
    least some corn silage in 2014. Corn silage is an important source of
    forage and supplies more energy than hay, plus it also provides a
    portion of the nutritional equivalence of corn in the dairy ration.
    Most corn silage is used for dairy feed, although it can also go to
    beef cattle such as calves or cows that require large amounts of
    energy. USDA provides production estimates for corn silage and alfalfa
    hay, but it does not estimate disappearance or consumption.
        Much attention regarding the substitution of corn silage for
    alfalfa in dairy production has focused on California because of its
    status as the largest milk producer and traditionally the largest
    alfalfa-producing State. Its alfalfa production has trended down in
    part due to declining availability of irrigation water and its output
    has slipped below other States, including Montana and Idaho. In
    contrast, California corn silage production has been increasing--as is
    the situation for the United States as a whole. California ranks second
    only to Wisconsin currently in silage production and first surpassed
    New York, Pennsylvania, and Minnesota in silage output during the
    1990s.
        Corn silage is a critical dairy feed and is valued as a source of
    forage and energy. It is neither a perfect substitute for alfalfa nor
    for corn, but a very common part of balanced rations that reflect a
    recommended nutritional balance delivered at the least cost. In many
    cases where alfalfa use in rations has fallen, corn silage has
    increased, but increased use of silage is usually accompanied by
    increased use of other hay or roughage sources as well.
    No Formal Market or Prices Exist for Corn Silage
        The vast majority of corn silage is fed on the farm where it is
    grown or on nearby operations. It is a bulky product that is not
    amenable to long-distance transport. Thus, the corn silage market is
    regional and thinly traded and any prices that are available are not
    representative nationally. Alfalfa, in contrast, can be baled,
    pelletized, or otherwise processed and a considerable volume is shipped
    between States or exported overseas. As a result of these well-
    developed markets, prices for alfalfa are widely available and
    reported. For corn silage, there are no similar market prices, leading
    to the dilemma of how to value it or evaluate its costs. USDA's
    National Agricultural Statistics Service does not collect farm price
    data for corn silage nor does USDA's Agricultural Marketing Service
    report cash prices for silage as they each do for alfalfa hay. Most
    corn grower-dairyman silage contracts are based upon prices determined
    at some point during the growing season using Chicago Mercantile
    Exchange corn futures contracts (Lauer, 2019).
    Additional Corn Silage Background
        Production costs for silage tend to be higher than for corn due to
    higher fertility needs since virtually the entire above-ground plant is
    cut and chopped in the production of corn silage, leaving fields
    essentially bare, with no stover remaining. Some additional costs may
    be incurred in the ensiling process and in storage; generally,
    management needs are greater in the production of corn silage than in
    producing corn for grain. Some producers may use inoculants to
    facilitate fermentation. Production of silage can have both indirect
    costs and benefits. One of the indirect costs is its lack of
    transportability due to its bulk and high moisture content; as a
    result, silage must be fed where produced or within a very short
    distance. One of the indirect benefits of silage is less weather risk
    as the crop has more flexible harvest dates and does not have to dry
    down in the field like corn for grain. Silage also has much lower field
    loss compared to hay.
        Adjustments to the ration when feeding more corn silage and
    reducing alfalfa hay mainly involve the increased use of protein
    supplements (usually soybean meal) because alfalfa hay has more
    protein. Non-protein nitrogen (NPN) additives such as urea may also be
    used to increase the crude protein content of corn silage. Some rations
    may substitute barley or by-product feedstuffs for corn to raise the
    protein content. In addition, some additional limestone may be added as
    a buffer to adjust the pH level.
        Variability in corn silage quality may also be an issue. The
    digestibility of neutral detergent fiber (NDF) and starch in corn
    silage is highly variable depending upon crop (individual hybrid)
    genetics, as well as environmental and management factors. Variation in
    concentration and digestibility of NDF and starch in corn silage
    provides management challenges in order to maximize energy intake and
    milk production (Allen). Some processing practices, such as dry rolling
    or steam rolling, grinding, and flaking can enhance the value of the
    silage. Generally, producers achieve nutrient equivalence at least cost
    through the guidance of a nutritionist or the use of computer software
    aimed at targeting least-cost feed formulations.
        Because little silage is traded, no data are available to evaluate
    quality premiums or discounts. Much of the value of silage is inferred
    from local or regional markets for competing feed sources. As indicated
    elsewhere in this report, corn silage has steadily grown as a dairy
    feed over the last two decades while alfalfa has declined somewhat. One
    explanation is that producers have successfully used silage because it
    is cost effective. Dairy producers in the Northeast have long favored
    silage in part due to difficulties associated with producing high
    quality alfalfa in that area, especially compared with western regions.
    However, with dwindling water supplies for irrigated alfalfa, western
    dairy producers have also been increasing use of silage.
    The Difference Between Feed Costs of Corn and Corn Silage
        The standard approach in valuing corn silage is to base it off some
    factor relative to corn. As a result, any formal incorporation of
    silage value in the DMC calculations would not add much price
    information as its value would simply move with corn. A common rule of
    thumb is that one ton of silage in the field is worth 8 times the price
    of corn grain per bushel; for corn already ensiled, it is worth 10
    times the price of corn grain. These are far from strict factors,
    however, with values reflecting local conditions related to quality and
    availability of both corn grain and silage, complicating any efforts to
    develop a nationally representative average.\10\
    ---------------------------------------------------------------------------
        \10\ Cornell University has estimated the value of silage with a
    model that uses the price of alfalfa in addition to corn grain, all
    based on local markets in New York. Results for 3 years valued corn
    silage at 10 to 15 times the price of the corn, on the high end of the
    silage-to-corn ratio used by most extension sources.
    ---------------------------------------------------------------------------
        The quality dimension is an important component of pricing silage
    when transactions occur, such as in western dairy areas with large
    herds where much of the corn silage is purchased. While formal price
    information based on quality characteristics for alfalfa exists, that
    is not the case for corn silage.\11\ Silage prices vary by quality
    factors such as moisture content, total digestible nutrients, or
    neutral detergent fiber , but these factors are not standardized;
    instead they are negotiated between buyer and seller.
    ---------------------------------------------------------------------------
        \11\ USDA's Agricultural Marketing Service offers an explicit
    quality value scale for alfalfa hay, including Supreme, Premium, Good,
    Fair, and Utility. These categories are specifically defined based on
    identifiable characteristics of growth stage, stem and leaf quality,
    color, damage, and presence of contaminants like mold and weeds. See
    https://www.ams.usda.gov/sites/default/files/media/
    HayQualityGuidelines.pdf.
    ---------------------------------------------------------------------------
    Examining the ``Homegrown'' Component of Silage Costs
        Because market prices for corn have fallen to low levels in recent
    years, milk producers who purchase grain have seen a reduction in costs
    (Figure 3). The average price of corn between 2014 and 2018 was $3.53
    per bushel compared with $5.26 per bushel between 2009 and 2013. This
    has lowered their dairy production costs substantially.
    Figure 3: Feed Prices of Main Dairy Cost Factors

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

              Sources: U.S. Department of Agriculture, National
            Agricultural Statistics Service, QuickStats (for corn and
            alfalfa hay). U.S. Department of Agriculture, Agricultural
            Marketing Service, Central Illinois Soybean Processor Report
            (for soybean meal).

        The cost of production for corn silage tends to be higher than the
    cost of production for grain. The magnitude of the difference varies,
    reflecting different estimates by location, assumptions about input
    use, and rotational practices such as whether corn is grown after corn
    or after soybeans. For example, crop budgets prepared for several
    states in recent years indicated that corn silage variable costs ranged
    from about 17 percent to as much as 40 percent higher than variable
    costs for corn grain.
        The USDA ARMS survey provides some evidence that costs of purchased
    feeds have recently been steady while costs for homegrown feeds have
    increased. The ARMS questionnaire asks explicitly for expenditures on
    corn silage and corn grain by ``homegrown'' and ``purchased''
    categories. According to the 2016 ARMS, the total expenditure on corn
    silage (purchased and homegrown) was $1.38 (0.99 + 0.39) per
    hundredweight of milk (Table 3). Over 70 percent of that was
    expenditure on homegrown corn silage, confirming that most of the corn
    silage fed to dairy herds is grown onsite or locally. The expenditure
    on corn, based on ARMS 2016 data, was $0.68 (0.37 + 0.31) per
    hundredweight of milk, roughly equally split between purchased and
    homegrown corn.

     Table 3: Feed Cost of Corn Silage and Corn as Estimated by USDA's ARMS
    ------------------------------------------------------------------------

    ------------------------------------------------------------------------
    Measure                    Dollars per Hundredweight of Milk Produced
    ------------------------------------------------------------------------
                                  2016 \1\         2017 \2\             2018
    ------------------------------------------------------------------------
    Homegrown Corn Silage             0.99              N/A              N/A
    Homegrown Corn                    0.37              N/A              N/A
    Homegrown Corn and                1.36             1.40             1.61
     Corn Silage
    Purchased Corn Silage             0.39              N/A              N/A
    Purchased Corn                    0.31              N/A              N/A
    Purchased Corn and                0.70             0.67             0.70
     Corn Silage
    ------------------------------------------------------------------------
    \1\ The data for calendar year 2016 is based on the ARMS dairy component
      survey.
    \2\ For 2017 and 2018, ERS's Milk Production Costs and Returns Estimates
      are used to extrapolate 2016 ARMS data.

        Note that the feed costs presented in Table 3 are the estimated
    average costs incurred for corn and corn silage across all U.S. dairy
    producers based upon the 2016 ARMS dairy survey. Most producers either
    purchased or harvested corn, but few did both. This is also true for
    corn silage. Further, some producers did not report feeding corn or
    corn silage. Since the estimated average costs presented in Table 3
    represent all U.S. dairy farms, farms with zero-cost for these feed
    components are included in the averages.
        As in the prior section, the 2016 ARMS data were extrapolated to
    2017 and 2018 consistent with ERS's Milk Production Costs and Returns
    Estimates. The costs associated with homegrown feed were extrapolated
    using ERS' Milk Production Costs and Returns Estimates index for
    homegrown feed, while the costs for purchased feed were extrapolated
    using ERS's Milk Production Costs and Returns Estimates index for
    purchased feed. To estimate the change in costs from 2016 to 2017 and
    2018 in their Milk Production Costs and Returns Estimates, ERS uses the
    forage feed price index for homegrown feed and the feed grain price
    index for purchased feed, which are published by NASS.
        On average across ARMS respondents in 2016, the cost of homegrown
    corn silage was $0.99 per hundredweight of milk while $0.39 per
    hundredweight of milk was spent to purchase corn silage. Table 3 shows
    that costs for homegrown feed increased significantly from 2016 to
    2018, while expenditures on purchased feed were essentially flat.
        The cost increases associated with homegrown feed affected dairy
    producers differently depending on the shares of the commodities
    purchased. Dairies that predominantly purchased feed between 2016 and
    2018 did not see expenditures increase. In contrast, dairies that
    relied predominantly on homegrown feed saw their costs increase
    significantly. According to ERS's Milk Production Costs and Returns
    Estimates, the expenditure on homegrown feed increased by about 18
    percent from 2016 to 2018, while the expenditure on purchased feed
    remained unchanged.
        In the current economic environment, when market prices of corn are
    low, the relative costs for homegrown corn and silage are higher
    compared with operations that purchase feed. Conversely, 6 or 7 years
    ago, when market prices were much higher, the operations using
    homegrown corn and silage had a relative cost advantage.
    References

        Allen, Mike. Maximizing Digestible Intake of Corn Silage-Based
     Diets: Part 1 and Part 2.
        Michigan State University Extension. September 15, 2011.
        California Department of Food and Agriculture. Dairy Cost of
     Production. https://www.cdfa.ca.gov/dairy/dairycop_annual.html.
        Iowa State University Extension and Outreach. Dairy Budgets. https://
     www.extension.iastate.edu/dairyteam/content/iowa-dairy-budgets.
        Ishler, Virginia A. Getting a Handle on the Farm Bill and the Dairy
     Margin Protection Program. Pennsylvania State University Extension.
     September 3, 2014. https://extension.psu.edu/getting-a-handle-on-the-
     farm-bill-and-the-dairy-margin-protection-program.
        Jones, Coleen M., Jud Heinrichs, Virginia A. Ishler, and Gregory W.
     Roth. From Harvest to Feed: Understanding Silage Management.
     Pennsylvania State University Extension, September 4, 2017.
        Jones, Dave, 2019. Keep Rations Simple, Optimize Efficiency. https://
     www.agriking.com/keep-rations-simple/.
        Karszes, Jason. 2018. Six Year Trend Analysis New York State Dairy
     Farms Selected Financial and Production Factors. Cornell University.
     https://ecommons.cornell.edu/handle/1813/66947.
        Lauer, Joe. 2019. Adjusting Corn Silage Contracts for the 2019
     Season. http://corn.agronomy.wisc.edu/AA/pdfs/A133.pdf.
        Linn, James, Michael Hutjens, Donald Otterby, W. Terry Howard, and
     Lee Kilmer. 2018. Formulating Dairy Cow Rations. https://
     extension.umn.edu/dairy-nutrition/formulating-dairy-cow-rations#protein-
     and-non-protein-nitrogen-1680462.
        National Milk Producers Federation. Foundation for the Future: A New
     Direction for U.S. Dairy Policy. June 2010. https://www.nmpf.org/wp-
     content/uploads//file/Foundation-for-the-Future-061010.pdf.
        Newton, J. and M. Hutjens. ``One Safety Net, Two USDA Measures of
     Dairy Feed Costs.'' Farmdoc daily (5):99, Department of Agricultural
     and Consumer Economics, University of Illinois at Urbana-Champaign, May
     29, 2015. https://farmdocdaily.illinois.edu/2015/05/one-safety-net-two-
     usda-measures-dairy-feed-cost.html.
        Pennsylvania State University. DAIREXNET 2019. Managing Nutrition
     for Optimal Milk Components. https://dairy-cattle.extension.org/
     managing-nutrition-for-optimal-milk-components/.
        University of Idaho. Dairy Budgets. https://www.uidaho.edu/cals/
     idaho-agbiz/livestock-budgets.
        U.S. Department of Agriculture, Agricultural Marketing Service,
     Central Illinois Soybean Processor Report. Various issues.
        U.S. Department of Agriculture, Agricultural Marketing Service.
     Livestock, Poultry, and Grain Market News. Hay Quality Designation
     Guidelines. https://www.ams.usda.gov/sites/default/files/media/
     HayQualityGuidelines.pdf.
        U.S. Department of Agriculture, Animal and Plant Health Inspection
     Service. National Animal Health Monitoring System. Dairy 2014: Dairy
     Cattle Management Practices in the United States, 2014. February 2016.
     Report 1. https://www.aphis.usda.gov/aphis/ourfocus/animalhealth/
     monitoring-andsurveillance/nahms/nahms_dairy_studies.
        U.S. Department of Agriculture, Economic Research Service. Milk
     Production Costs and Returns Estimates. https://www.ers.usda.gov/data-
     products/milk-cost-of-production-estimates.aspx.
        U.S. Department of Agriculture, Farm Service Agency. Dairy Margin
     Coverage Fact Sheet. https://www.fsa.usda.gov/news-room/fact-sheets/
     index (scroll to the dairy section for the DMC Fact Sheet).
        U.S. Department of Agriculture, National Agricultural Statistics
     Service. Agricultural Prices. https://usda.library.cornell.edu/concern/
     publications/c821gj76b.
        U.S. Department of Agriculture, National Agricultural Statistics
     Service. QuickStats. https://quickstats.nass.usda.gov/.
        University of Minnesota. Livestock Enterprise Analysis, 2018. https:/
     /finbin.umn.edu/Output/354230.pdf. Accessed December 2019

    Appendix--Statutory Language from the Agriculture Improvement Act of
            2018
      Subtitle D--Dairy Margin Coverage and Other Dairy Related Provisions
    Sec. 1401. Dairy Margin Coverage.
        (a) Review of Data Used in Calculation of Average Feed Cost.--Not
    later than 60 days after the date of the enactment of this Act, the
    Secretary shall submit to the Committee on Agriculture of the House of
    Representatives and the Committee on Agriculture, Nutrition, and
    Forestry of the Senate a report evaluating the extent to which the
    average cost of feed used by a dairy operation to produce a
    hundredweight of milk calculated by the Secretary as required by
    section 1402(a) of the Agricultural Act of 2014 (7 U.S.C. 9052(a)) is
    representative of actual dairy feed costs.
        (b) Corn Silage Report.--Not later than 1 year after the date of
    the enactment of this Act, the Secretary shall submit to the Committee
    on Agriculture of the House of Representatives and the Committee on
    Agriculture, Nutrition, and Forestry of the Senate a report detailing
    the costs incurred by dairy operations in the use of corn silage as
    feed, and the difference between the feed cost of corn silage and the
    feed cost of corn.

     Appendix Table: Component-Based Tabulation ARMS Estimates of Dairy Feed
          Costs, Measured in Dollars per Hundredweight of Milk Produced
    ------------------------------------------------------------------------
                                                            Dairy Feed Costs
                                                               (National)
    ------------------------------------------------------------------------
    Measure                                                   Dollars per
                                                            Hundredweight of
                                                             Milk Produced
    ------------------------------------------------------------------------
    Year                                                            2016 \1\
    ------------------------------------------------------------------------
    Commercial/Custom Feed Mix                                          2.08
    Alfalfa Hay                                                         1.26
    Other Hay and Straw                                                 0.32
    Corn Silage                                                         1.37
    Other Silage and/or Haylage                                         0.42
    Corn                                                                0.68
    Other Grain                                                         0.61
    Distillers or Brewers Grain                                         0.22
    Protein Supplements \2\                                             0.54
    Other Feed Inputs                                                   1.70
                                                          ------------------
      Special Tabulation Total Feed Cost/Cwt of Milk from               9.20
       the ARMS
                                                          ------------------
    Average Number of Cows Milked                                        237
    Number of Observations                                             1,079
    Pounds of Milk Produced per Cow                                   21,463
    ------------------------------------------------------------------------
    \1\ The data are based on the ARMS dairy component survey. The feed
      costs in ARMS are largely indicative of variable costs.
    \2\ The ARMS dairy survey does not explicitly list soybean meal as a
      feed type but captures this feed component in the ``protein
      supplements'' category. USDA/APHIS, Linn, et al. (2018), and Dairy-
      Cattle.extension.org site (2019) indicate that soybean meal is a major
      source of protein nationally for dairy cows.

                                      [all]