[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
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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
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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
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Arizona Arizona: City of Phoenix Waste Characterization
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Arkansas State of Recycling in Arkansas
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37.7 KB)
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Characterization Study (PDF) (160 pp., 3.81 MB)
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(2005) (PDF) (216 pp., 4.45 MB)
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Characterization Study (2006) (PDF) (58 pp., 227
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9.3 MB)
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Indiana Indiana's new waste characterization study (2012)
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msw_characterizarion_study.pdf.
Iowa Iowa: Statewide Waste Characterization Study
(2017) (PDF) (118 pp., 1.5 MB)
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Kentucky: Louisville Solid Waste Study Report
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and Disposal Capacity Report Calendar Year
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Maryland Maryland Solid Waste Management and Diversion
Report--2017 (for 2016 Data) (PDF) (83 pp., 2.98
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Massachusetts Massachusetts: Waste Characterization Data
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https://www.mass.gov/files/documents/2016/08/oc/
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Recycling & Solid Waste Data for Massachusetts
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Michigan Michigan: Economic Impact Potential and
Characterization of Municipal Solid Waste in
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Minnesota Minnesota: City of Red Wing Solid Waste
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Minnesota: Perham Resource Recovery Facility:
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https://www.pca.state.mn.us/sites/default/files/
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https://www.pca.state.mn.us/sites/default/files/
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Minnesota Statewide Waste Characterization Study
(2013) (PDF) (59 pp., 1.66 Mb)
https://www.pca.state.mn.us/sites/default/files/
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Broader Information on the Minnesota MSW
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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/
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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/
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Nebraska Nebraska: State Waste Characterization Study
(2009) (PDF) (2175 pp., 6.41 MB)
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23e5e39594c064ee852564ae004fa010/
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Nevada State of Nevada Solid Waste Management Plan 2017
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Ohio Ohio: Economic Impact Potential of Recycling in
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Virginia Virginia Annual Recycling Summary Report 2017
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https://www.deq.virginia.gov/Portals/0/DEQ/Land/
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Washington: Statewide Waste Characterization
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Wyoming Wyoming Solid Waste Diversion Study, January 3,
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http://deq.wyoming.gov/media/attachments/Solid
%26 Hazardous Waste/Solid Waste/Studies %26
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------------------------------------------------------------------------
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[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,
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(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.
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[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.
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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.
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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.
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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]
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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.
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\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).
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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.
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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).
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\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.
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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.
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/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.
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