[Senate Hearing 116-173]
[From the U.S. Government Publishing Office]





                                                        S. Hrg. 116-173
 
                      CERTAINTY IN GLOBAL MARKETS
                    FOR THE U.S. AGRICULTURE SECTOR

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

                                HEARING

                               before the

                       COMMITTEE ON AGRICULTURE,
                        NUTRITION, AND FORESTRY

                          UNITED STATES SENATE

                     ONE HUNDRED SIXTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             JUNE 13, 2019

                               __________

                       Printed for the use of the
           Committee on Agriculture, Nutrition, and Forestry
           
           
           
           
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           COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY


                     PAT ROBERTS, Kansas, Chairman
MITCH McCONNELL, Kentucky            DEBBIE STABENOW, Michigan
JOHN BOOZMAN, Arkansas               PATRICK J. LEAHY, Vermont
JOHN HOEVEN, North Dakota            SHERROD BROWN, Ohio
JONI ERNST, Iowa                     AMY KLOBUCHAR, Minnesota
CINDY HYDE-SMITH, Mississippi        MICHAEL BENNET, Colorado
MIKE BRAUN, Indiana                  KIRSTEN GILLIBRAND, New York
DAVID PERDUE, Georgia                ROBERT P. CASEY, Jr., Pennsylvania
CHARLES GRASSLEY, Iowa               TINA SMITH, Minnesota
JOHN THUNE, South Dakota             RICHARD DURBIN, Illinois
DEB FISCHER, Nebraska

             James A. Glueck, Jr., Majority Staff Director
                DaNita M. Murray, Majority Chief Counsel
                    Jessica L. Williams, Chief Clerk
               Joseph A. Shultz, Minority Staff Director
               Mary Beth Schultz, Minority Chief Counsel
               
                            C O N T E N T S

                              ----------                              

                        Thursday, June 13, 2019

                                                                   Page

Hearing:

Certainty in Global Markets for the U.S. Agriculture Sector......     1

                              ----------                              

                    STATEMENTS PRESENTED BY SENATORS

Roberts, Hon. Pat, U.S. Senator from the State of Kansas, 
  Chairman, Committee on Agriculture, Nutrition, and Forestry....     1
Stabenow, Hon. Debbie, U.S. Senator from the State of Michigan...     3

                               WITNESSES

Doud, Hon. Gregg, Chief Agricultural Negotiator, Office of the 
  United States Trade Representative, Washington, D.C............     5
McKinney, Hon. Ted, Under Secretary for Trade and Foreign 
  Agricultural Affairs, U.S. Department of Agriculture, 
  Washington, D.C................................................     7
Johansson, Robert, Ph.D., Chief Economist, Office of the Chief 
  Economist, U.S. Department of Agriculture, Washington, D.C.....     7
                              ----------                              

                                APPENDIX

Prepared Statements:
    Doud, Hon. Gregg.............................................    36
    McKinney, Hon. Ted...........................................    40

Document(s) Submitted for the Record:
Smith, Hon. Tina:
    Prepared Statement Submitted for the Record from Greg Fynboh.    46
    Prepared Statement Submitted for the Record from Janet Kubat.    47
    Prepared Statement Submitted for the Record from Marlin Fay..    48
    Cooperative Network, prepared statement for the Record.......    49
    The Minnesota State Cattlemen's Association, prepared 
      statement for the Record...................................    50
Leahy, Hon. Patrick J.:
    Prepared Statement Submitted for the Record from Patrick J. 
      Leahy......................................................    53

Question and Answer:
Doud, Hon. Gregg:
    Written response to questions from Hon. Pat Roberts..........    56
    Written response to questions from Hon. Debbie Stabenow......    59
    Written response to questions from Hon. John Boozman.........    59
    Written response to questions from Hon. Deb Fischer..........    60
    Written response to questions from Hon. Patrick J. Leahy.....    60
    Written response to questions from Hon. Michael Bennet.......    61
    Written response to questions from Hon. Richard J. Durbin....    62
Johansson, Robert:
    Written response to questions from Hon. Debbie Stabenow......    65
    Written response to questions from Hon. John Boozman.........    66
    Written response to questions from Hon. Patrick J. Leahy.....    67
    Written response to questions from Hon. Richard J. Durbin....    68
McKinney, Hon. Ted:
    Written response to questions from Hon. Pat Roberts..........    69
    Written response to questions from Hon. Debbie Stabenow......    71
    Written response to questions from Hon. John Boozman.........    76
    Written response to questions from Hon. Deb Fischer..........    77
    Written response to questions from Hon. Patrick J. Leahy.....    77
    Written response to questions from Hon. Michael Bennet.......    79
    Written response to questions from Hon. Tina Smith...........    80
    Written response to questions from Hon. Richard J. Durbin....    83


      CERTAINTY IN GLOBAL MARKETS FOR THE U.S. AGRICULTURE SECTOR

                              ----------                              


                        THURSDAY, JUNE 13, 2019

                                       U.S. Senate,
         Committee on Agriculture, Nutrition, and Forestry,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 9:33 a.m., in SR-
328A, Russell Senate Office Building, Hon. Pat Roberts, 
Chairman of the Committee, presiding.
    Present: Roberts, Boozman, Hoeven, Ernst, Hyde-Smith, 
Braun, Perdue, Grassley, Thune, Fischer, Stabenow, Brown, 
Klobuchar, Bennet, Casey, and Smith.

 STATEMENT OF HON. PAT ROBERTS, U.S. SENATOR FROM THE STATE OF 
KANSAS, CHAIRMAN, U.S. COMMITTEE ON AGRICULTURE, NUTRITION, AND 
                            FORESTRY

    Chairman Roberts. Good morning. I call this meeting of the 
Senate Committee on Agriculture, Nutrition, and Forestry to 
order.
    Ambassador Doud, Under Secretary McKinney, and Dr. 
Johansson, we are happy to have you all back again before the 
Committee to discuss the need for certainty in our global 
agriculture markets.
    International trade policies and their impacts on the 
United States' agricultural economy has been a topic of great 
interest over the last few years and more particularly the last 
few months.
    In fact, this is the second time in the last year that we 
are hearing about the efforts being made at the Office of the 
United States Trade Representative and the Department of 
Agriculture, efforts that I hope eventually will result in 
long-term, reliable markets for United States agriculture.
    A great deal has happened in the 9 months since you all 
last appeared before this Committee. Perhaps the most 
significant to our members, was the successful passage and 
enactment of the 2018 Farm Bill with the help of everybody 
here.
    Much like negotiations with international trading partners, 
the path to a final Farm Bill agreement was not easy. There 
were many challenges and differences to overcome, and the final 
bill had to bring together members of both the House and Senate 
who represented incredibly diverse populations and regions of 
agriculture.
    Ultimately, with the support of my partner, the Ranking 
Member, Senator Stabenow, and other members of this Committee, 
we persevered and accomplished a strong bill, with historic 
bipartisan support, a bill that provides certainty and 
predictability to farmers, ranchers, and growers across the 
country, including through strengthened and increased 
investment in our agricultural export programs.
    I know that the USTR and USDA have also been very busy 
since we were last together.
    The Administration has been moving the United States-
Mexico-Canada Agreement, or the USMCA, through the Trade 
Promotion Authority process. Recently, the Section 232 tariffs 
on Mexico and Canada were lifted, and producers look forward to 
Congress progressing with the consideration of USMCA.
    In addition, there have been positive outcomes for the 
United States at the World Trade Organization in the cases 
against China on trade-distorting price supports and tariff-
rate quotas for grains as well as the restoration of full 
access of United States beef into Japan.
    There are many good examples of the work you both have been 
doing on behalf of U.S. agriculture around the world, and the 
Committee looks forward to hearing about your continued efforts 
to eliminate trade barriers and grow market access for our 
products. We simply have to get that done.
    However, these positive steps cannot truly be felt by our 
producers until certainty and predictability is achieved in our 
global markets.
    Everyone around this table understands what our producers 
are facing back home. On top of the already low prices for 
their crops, fifth year in a row, producers are working through 
floods, tornados, and weather events too numerous to list, and 
of course, challenges of retaliatory tariffs.
    I was in the northeast part of Kansas, on a platform 
overlooking the Missouri. I have never seen the Missouri River 
from 8 to 11 miles wide. It looks like the Caspian Sea, 
although I have never seen the Caspian Sea, but that is what I 
think it probably looked like. Unbelievable.
    Fortunately, the Farm Bill is in place to ease some of the 
uncertainty felt in farm country. However, I continue to be 
very concerned about the overall impacts, like everybody on the 
Committee, on U.S. agriculture as a result of the use of 
tariffs as a policy tool.
    An agreement with the United States and China is a critical 
piece of that certainty. It is time for both countries to 
remain at the table and reach the best possible deal. Gregg, I 
know you have been working overtime on that. In fact, there is 
a great deal of potential around the world for U.S. 
agriculture.
    It appears from your testimonies that each agency is 
engaged on negotiations with Japan, so please share your 
outlook on achieving a strong and timely agricultural agreement 
there. There is much to gain from a strong agreement with 
Japan, where we currently face a significant disadvantage to 
TPP countries, such as Australia and Canada.
    It is time to look forward to the future. While an update 
of activities is certainly appropriate, today I hope to also 
hear about the future of U.S. agriculture trade policy. This 
includes not just restoring certainty to our markets that the 
U.S. either had through negotiated agreements or as a 
traditional, competitive supplier, but what will be done to 
improve access to those same markets and broaden them to 
others.
    The question is, what is being done today that will enable 
us to be a reliable supplier again around the world tomorrow? 
How can we continue to strengthen trading relationships that we 
have worked for, for years, to establish, while also building 
new opportunities around the world?
    Ambassador Doud, Under Secretary McKinney, and Dr. 
Johansson, thank you all for your work on behalf of United 
States agriculture. I look forward to your thoughts regarding 
not only what has been done, but what will be done on behalf of 
American agriculture.
    I recognize now the distinguished Senator from Michigan, 
Senator Stabenow, for her remarks.

STATEMENT OF HON. DEBBIE STABENOW, U.S. SENATOR FROM THE STATE 
                          OF MICHIGAN

    Senator Stabenow. Thank you, Mr. Chairman, for holding this 
really important hearing. Ambassador Doud, Under Secretary 
McKinney, Dr. Johansson, welcome back to the Committee. We 
appreciate your efforts and appreciate you being here today.
    It was, in fact, exactly one year ago that we sat around 
this table and passed our bipartisan Senate Farm Bill in order 
to provide certainty and predictability to our farmers and 
ranchers.
    However, today that certainty is being undermined by this 
Administration's chaotic and unpredictable trade agenda, 
despite your best efforts, and I would underscore that because 
I know each of you are working hard. The reality is we have 
chaos and unpredictability going on right now, and it is no 
secret that it is a very challenging time for American farmers.
    Low prices and poor market conditions continue to plague 
our agricultural economy. Extreme weather events, from tornados 
to bomb cyclones--we now even frequently have new words to 
define weather events because of the intensity of what is 
happening in the weather--are damaging crops and livestock. 
Unseasonably cool and rainy weather has made it next to 
impossible for farmers in Michigan and across the Midwest to 
get their seeds in the ground for the upcoming crop year. 
Facing great unknowns has always been part of life for farmers 
and ranchers. However, right now we are in uncharted territory.
    In the past, agriculture exports have been a bright spot 
for the economy, supporting more than 1 million American jobs, 
including over 22,000 jobs in Michigan.
    Unfortunately, the Administration's reckless approach to 
trade has taken a toll on our ability to export agricultural 
products.
    Michigan lost 230 dairy farms last year, the highest 
percentage of any State, in part because dairy products 
suddenly faced retaliatory tariffs in some of our most 
important export markets.
    Michigan's dry bean industry lost customers in European 
markets due to tariffs, while buyers in Mexico are looking for 
sellers elsewhere because they now view the United States as an 
unreliable supplier.
    Michigan's tart cherry industry simultaneously has dealt 
with unfair imports from Turkey and tariffs from China. 
Meanwhile, the Administration says our tart cherry growers have 
not suffered sufficient trade damage to qualify for help.
    In addition to the very real impacts we are seeing today, I 
am concerned there will also be long-lasting harm. Farmers have 
already spent nearly $1 billion of their own money through 
checkoffs over the past two decades to establish Chinese 
markets that are now gone, and may be impossible to rebuild.
    A short-term trade disruption can create a permanent loss 
in market share for American farmers. We know that happened 
during the Nixon Administration's ban on soybean exports, which 
Chairman Roberts witnessed firsthand as a congressional staffer 
just a couple of years ago.
    [Laughter.]
    Senator Stabenow. The USDA recently decided to announce a 
second round of trade assistance that, if anything, is adding 
to the confusion and uncertainty for farmers.
    While I understand the desire to help farmers weather the 
Administration's chaotic trade agenda, the proposed aid is 
creating more questions than answers.
    I have strong concerns that these payments will not be 
distributed in an equitable way between regions and crops.
    The timing of the announcement, combined with widespread 
prevented planting decisions, could make our farm economy even 
worse.
    Additionally, the Administration's actions are certainly an 
unprecedented use of the Commodity Credit Corporation funds, 
which are not guaranteed. That raises some questions with 
Congress.
    Also, it is outrageous that foreign companies are profiting 
from assistance that is supposed to be for our farmers. After a 
Brazilian company received millions in taxpayer dollars, we 
recently learned that aid has also gone to a Japanese company 
with a troubling criminal history of corruption and bribery.
    The USDA needs to immediately take action to prevent 
purchases from benefiting our foreign competitors. While I 
agree we need to hold countries accountable when they break the 
rules, this Administration's strategy on trade has been to 
throw everything against the wall and hope something sticks.
    Meanwhile, farmers, businesses, and consumers are being 
hurt. Ultimately, our farmers want trade, not aid. We all know 
that. They want to build markets, not burn bridges. They want a 
thoughtful strategy they can trust, not haphazard proposals 
announced by tweet. This uncertainty has gone on long enough.
    Ambassador Doud, Under Secretary McKinney, Dr. Johansson--
you were before the Committee to discuss this same topic 9 
months ago, and despite what I am sure are your best efforts, 
the situation has only gotten worse. So I look forward to your 
discussion today on how we can change course and give farmers 
the markets and the certainty that they deserve. Thank you, Mr. 
Chairman.
    Chairman Roberts. We want to welcome our panel of witnesses 
before the Committee this morning. Our first witness is 
Ambassador Gregg Doud, who serves as our Chief Agricultural 
Negotiator in the Office of the U.S. Trade Representative.
    Gregg was raised on a farm in Mankato, Kansas, and 
graduated from Kansas State University. From his time working 
to develop markets for the U.S. Wheat Associates and later the 
National Cattlemen's Beef Association, he certainly has an 
understanding of the importance of trade's impact on 
agriculture, and that goes without saying.
    Finally, he worked on another important issue, the Farm 
Bill, as a staffer on the Senate Agriculture Committee during 
my time as Ranking Member, when the person to my right was the 
Chairperson, obviously, and we passed a bill pretty quickly. It 
hit a brick wall over there in the House. That seems to be the 
case with a lot of things.
    With the Ambassador's experience on global agriculture 
trade--and I really want to emphasize that--I am really glad to 
have him representing the voices of U.S. farmers and ranchers 
in his current role at the USTR.
    So we welcome you back, Ambassador Doud. I look forward to 
your testimony. I do not know anybody that has been working any 
harder to restore markets and a reputation as a reliable 
supplier, more especially with the Chinese.
    Next, we have Under Secretary for Trade and Foreign 
Agricultural Affairs, Ted McKinney, who coordinates 
agricultural trade across the Department of Agriculture. Under 
Secretary McKinney formerly served as director of Indiana State 
Department of Agriculture, worked for 19 years with Dow Agro-
Sciences and 14 years with Elanco as director of Corporate 
Global Affairs.
    Under Secretary McKinney hails from Tipton, Indiana, and 
graduated from Purdue University in Agriculture Economics.
    Welcome back, Mr. Under Secretary. Good to have you here. I 
look forward to your testimony.
    Dr. Rob Johansson is here to answer questions. He is not a 
participating witness, but we thought we would have him come. I 
thank you for taking the time to do that, Doctor.
    He serves as the Chief Economist for the U.S. Department of 
Agriculture. As Chief Economist, Dr. Johansson is responsible 
for the Department's agriculture forecast and projections as 
well as advising the Secretary on the economic implications of 
alternative programs, regulations, and legislative proposals, 
probably has something to do with the mitigation payments as 
well.
    Dr. Johansson received his bachelor of arts in Economics 
from Northeastern University, his master of science and Ph.D. 
in Agriculture Economics from his home State's land grant at 
the University of Minnesota.
    Welcome, and thank you for being here today, Dr. Johansson.

   STATEMENT OF THE HONORABLE GREGG DOUD, CHIEF AGRICULTURAL 
 NEGOTIATOR, OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE, 
                        WASHINGTON, D.C.

    Mr. Doud. Chairman Roberts, Ranking Member Stabenow, and 
other distinguished Committee members, I want to thank you for 
the opportunity to testify today on President Trump's 
agricultural trade policy agenda. Ambassador Lighthizer and my 
colleagues at USTR and USDA have been working around the clock 
to address agricultural trade issues with our trading partners 
and increase export opportunities for our farmers, ranchers, 
workers, and agribusinesses. I look forward to highlighting our 
efforts in multiple areas.
    The United States is the world's largest exporter and 
importer of food and agricultural products. U.S. agriculture 
has posted an annual trade surplus for well over 50 years. 
Overall, U.S. farmers and ranchers export more than 20 percent 
of what they produce. In 2018, agricultural exports reached 
nearly $145 billion, an increase of 1.4 percent over 2017.
    Every day this Administration and the men and women at USTR 
and USDA work to expand export markets for American 
agriculture. Whether it is poultry and beef to North Africa, 
pork to South America, grains and horticulture to Asia, dairy 
to Chile, the list goes on and on.
    Let me focus my remarks, however, on major trade 
initiatives to this Administration. First, passage of the USMCA 
is an absolute necessity for U.S. agriculture. Since the 
implementation of the North American Free Trade Agreement in 
1994, our agricultural exports to Canada have increased 289 
percent and exports to Mexico 311 percent in agriculture, 
creating our first and second largest export markets in ag in 
2018, worth a combined $41 billion out of this $145 billion in 
total ag exports last year.
    In accordance with our TPA requirements, USMCA created new 
market access for U.S. dairy, poultry, and eggs into Canada, 
above and beyond existing access under both NAFTA and what was 
negotiated in the TPP. USMCA maintains duty-free access to 
Mexico, allowing U.S. producers to build upon the $19 billion 
in ag exports to Mexico in 2018.
    There are many other improvements of USMCA over NAFTA 
including provisions that address ag biotechnology, including 
new technology such as gene editing, procedural safeguards for 
recognition of new geographical indications, and Canada's 
commitment to ensure that British Columbia eliminates its 
discriminatory treatment of U.S. wine in grocery stores.
    The urgency to pass USMCA cannot be overstated for U.S. 
agriculture, due to the size of the Canadian and Mexican 
markets for U.S. ag exports.
    A tremendous amount of work has gone into negotiations with 
China since President Trump and President Xi met in Buenos 
Aires on November 30th. The Administration has negotiated in 
good faith since then, twice delaying the scheduled increase in 
tariff rates due to progress in the trade talks. However, 
because China backtracked on significant commitments it has 
made during the course of negotiations, including on 
agricultural issues, President Trump directed USTR Lighthizer 
to increase the rate of duty on $200 billion of Chinese imports 
from 10 to 25 percent on May 10th.
    The U.S.-China economic relationship is very important, and 
the Trump Administration is committed to reaching meaningful, 
fully enforceable commitments to resolve structural issues and 
improving trade between our two countries. I can say an 
important element of our negotiations has been to resolve a 
large number of unwarranted and longstanding trade barriers to 
U.S. ag exports.
    I hope that China will make real structural changes across 
the range of unfair policies and practices that yield actual, 
verifiable, and enforceable results. If we are able to have an 
acceptable agreement, President Trump expects substantial and 
immediate purchases of U.S. ag products as well as the removal 
of technical and regulatory barriers that impede such 
purchases.
    With respect to Japan, in 2018, the U.S. exported over $13 
billion in ag goods to Japan. The President, Ambassador 
Lighthizer, and I all understand the urgency to advance 
negotiations with Japan as soon as possible for U.S. 
agriculture.
    We have also published our negotiating objectives for trade 
agreements with the EU and UK upon its exit from the EU.
    The WTO provides multiple tools for the U.S. to build 
coalitions or act alone to aggressively counteract trade 
concerns that negatively impact U.S. production and jobs. We 
have major concerns that countries are failing to properly 
notify their agricultural domestic supports. We, therefore, 
have started submitting our own counter-notifications of other 
countries' excessive domestic support, and we are holding 
countries accountable for their excessive trade-distorting farm 
subsidies.
    We litigated on a major dispute to a WTO panel on China's 
excess farm supports for grains, and we won. A cornerstone of 
U.S. trade policy is to promote the adoption by our trading 
partners of transparent, predictable, and risk-appropriate 
regulatory methods that are based on science. We are working in 
the WTO, Codex, and with several like-minded countries to 
advance these objectives.
    Thank you. I look forward to working with the Committee to 
implement the President's trade policy agenda, and I am happy 
to answer any questions.

    [The prepared statement of Mr. Doud can be found on page 36 
in the appendix.]

    Chairman Roberts. We thank you, Ambassador. Under Secretary 
McKinney, please.

 STATEMENT OF THE HONORABLE TED McKINNEY, UNDER SECRETARY FOR 
     TRADE AND FOREIGN AGRICULTURAL AFFAIRS, UNITED STATES 
          DEPARTMENT OF AGRICULTURE, WASHINGTON, D.C.

ACCOMPANIED BY ROBERT JOHANSSON, Ph.D., CHIEF ECONOMIST, OFFICE OF THE 
            CHIEF ECONOMIST, UNITED STATES DEPARTMENT OF AGRICULTURE, 
            WASHINGTON, D.C.
    Mr. McKinney. Chairman Roberts, Ranking Member Stabenow, 
and distinguished members, thank you for the invitation to be 
here, and it is a pleasure to testify with my colleague, USTR 
Ambassador Gregg Doud. We welcome the opportunity to share any 
and all of the goings-on that we have at USDA with you.
    First, I want to thank you as well for your work in the 
2014 Farm Bill that created the opportunity for this position. 
I hope we are honoring the vision that you and so many others 
had. I think 350-or 400,000 miles might be one indication. More 
on that later.
    As Under Secretary, I fully support the Administration's 
strong commitment to our farmers and ranchers in providing them 
the opportunity to export across the globe under fair and 
reciprocal terms of trade. As we work to level that trade 
playing field, we are using programs you helped to create 
through the 2018 Farm Bill and those before it, partnering with 
ag trade associations, cooperatives, State regional trade 
groups, small- and medium-size businesses.
    Through these programs, we share the costs, help focus the 
marketing and promotional activities that build commercial 
export and markets for U.S. agriculture. In fact, the return on 
the taxpayer dollar is at minimum $28 to one in return, and we 
can give you more detail on that and proud to do so.
    A word about USMCA, it is clearly the top legislative 
priority for the Administration, as it is, I think, for all of 
U.S. agriculture.
    I noted yesterday or the day before yesterday that a letter 
came out from some near 1,000 agricultural farm, trade 
association groups that noted their support for USMCA, and I 
suspect you all have seen that. It was incredible.
    USMCA, as Gregg said, does allow for unprecedented market 
access for U.S. dairy farmers into Canada and eliminates 
discriminatory grading of U.S. wheat. There is a modernized 
chapter on SPS issues that could be the greatest benefit of 
that, brand-new language, first ever on biosciences and 
biotechnology, that I think can be used in other negotiations.
    Mexico has committed not to restrict market access for U.S. 
cheeses, very important, and we hope and we think there will be 
elimination of the discriminatory treatment of retail sales of 
U.S. wine and spirits in the province of British Columbia, and 
we encourage its passage.
    A bit about China. President Trump has taken tough, but we 
believe, necessary steps to confront China's unfair trade 
practices. There are challenges. We see that. We have lived it, 
but we are confident, and we hear from our U.S. farmers and 
ranchers that they are willing to take that pain to return on 
some gain in terms of long-term benefits.
    A bit about support of farmers, the Administration is 
committed to our farmers, and one example is President Trump's 
very quick direction to Secretary Perdue and he to us and my 
colleague, Rob Johansson here, to create a relief strategy to 
sustain this mitigation that allows agriculture producers some 
income while the Administration continues to work on free, 
fair, and reciprocal trade deals.
    ATP, or Agricultural Trade Promotion, too is a part of that 
now and is assisting now, and will assist exporters in 
maintaining and developing new export markets. I am happy to 
talk about that.
    My challenge. I embrace Secretary Perdue's charge to be 
agriculture's unapologetic advocate around the world, and I 
hope I am doing that. My most important role, though, is 
building personal relationships with foreign buyers, government 
officials, farmers, ranchers, here and abroad, and so many 
others that results in facilitating trust, understanding, and 
progress. I think we are making headway. I am happy to discuss 
that more if you wish.
    I just returned from an ag trade mission to Colombia last 
week. Thanks to you all and many others for the Colombia Free 
Trade Agreement, all is going well there. There are always 
issues we address, but it was a wonderful exchange, and we are 
seeing the returns from those kinds of deals.
    The Foreign Agricultural Service represents a group like 
none other across the world, and in collaboration with USTR, 
Commerce, and some others, we are working hard. I would add 
that ag trade missions, or ATMs like last week, are building 
exports. I am happy to address that more.
    A request of you, a very quick one, I encourage you to 
reach out or remind your State departments of ag that we have 
some terrific programs, these Agriculture trade missions and 
numerous food shows around the world. We facilitate those, and 
we have a great deal of interest from most of your States but 
not all of them. So to the degree you want to encourage them, 
we are always there.
    We have completed two agricultural trade missions, Taiwan 
and Colombia, and we have five more. That will be a record high 
in the history of the Foreign Agricultural Service--seven this 
year, six last year. 2016 and prior was three per year on an 
average. They do work.
    Ones we have planned for this year include Canada, Vietnam, 
Japan, Ghana, and Mexico, and that does not include the one-on-
ones that we will go to.
    So I want to thank you for what you have done on the Farm 
Bill and so many other programs that create and allow for 
programs like the Market Access Program, the Foreign Market 
Development Program, TASC, which by the way, a bit 
underutilized, and then EMP, also a bit underutilized, and we 
are working on that because they are fully operational and very 
helpful.
    You know the value of these programs to U.S. agriculture. 
Know that we are there with you.
    Mr. Chairman, this concludes my statement. Thank you very 
much.

    [The prepared statement of Mr. McKinney can be found on 
page 40 in the appendix.]

    Chairman Roberts. Thank you very much.
    Ambassador Doud, let us just start right off. USTR has been 
working hard--I know you have; you have been keeping me fully 
apprised--finalizing the USMCA for congressional approval. We 
must do this. I know that negotiations with Japan are under way 
as well.
    I think the worry that we have is that we are trailing 
behind our competitors now that the Comprehensive and 
Progressive Trans-Pacific Partnerships, CPTPP--wouldn't you 
know that we would add two more letters to TPP?--is inforced, 
as well as other agreements around the world with trading blocs 
like the European Union.
    So my question is, going forward, how will the USTR ensure 
the United States is on the proverbial level playing field with 
countries that have already forged strong agricultural 
agreements, most especially countries like Australia and 
Canada? Please.
    Mr. Doud. Mr. Chairman, thank you for your question.
    You are exactly right. The strategy is USMCA, China, Japan, 
and then we have got other places to go.
    With regard to USMCA, I think the best thing we can do at 
this point is to pass this agreement through Congress. It is a 
solid agreement. There is not anything in this agreement in 
agriculture or across the board, for that matter, that is not 
the same or better than it was before, and so we need to get 
that job done.
    Mr. Chairman, we have spent hours and hours and hours with 
China. It has truly been--my counterpart has said on many 
occasions, and there has been historic discussion.
    The way I have had that conversation with them is last 
year, you imported $124 billion in agricultural products. That 
compares to our 145. China's total imports are 124.
    In a good year, we have only done 20 of that, and I have 
made the point repeatedly that 20 out of 124, given our 
capacity to export agricultural products around the world, just 
is not going to get it done.
    You look down the list here. We have not sold them a pound 
of poultry since 2015. We were blocked in beef since 2003. They 
are importing now well over a billion dollars a month in beef, 
pork, and poultry. In the month of April, our share of that was 
$36 million, and that is not retaliatory tariffs. We just do 
not have access because of these structural and non-tariff 
trade barriers. These are the things that we have been talking 
about. With Japan, we are actively talking with them.
    Chairman Roberts. When I was in Beijing about 2 months ago, 
Senator Alexander had a CODEL talking about fentanyl and China 
trying to clean that up, but we were also talking about trade. 
I called you, and I said I was talking to your counterpart, the 
tall one, and then the shorter one who does agriculture. They 
are most familiar with you.
    They want to trade with us. That is what they indicated. 
They want to be trading with a reliable supplier that has the 
best quality of food in the world, and yet here we are in a 
situation that can be reconciled. From 2017 to 2018, the value 
of exports from the U.S. to China decreased, despite all your 
efforts, 53 percent, from $19.5 billion to $9.2 billion. For 
nearly a decade, China has consistently ranked either first or 
second in export destination for our ag products; however, in 
2018, they fell to fourth.
    I guess my question is--I do not guess. My question is, 
when negotiations with China conclude with a strong enforceable 
framework for agriculture, what is the future strategy to 
ensure that the U.S. is able to regain the market share that 
has been lost as a result of the current trade situation?
    Mr. Doud. Senator, the answer to that is we have to fix 
these structural issues, and the document that we have worked 
on--and we have argued over every sentence--is sizable.
    We also have to diversify our portfolio, and I have to tell 
you that we have one of the great public servants of all time 
in Sharon Bomer Lauritsen here, the folks at FAS. They have 
worked over time. We have got a list of over 30 places that we 
have expanded exports around the world.
    This is an all 24-hour-a-day effort to expand in every 
place that we can possibly find, including these conversations 
with Japan.
    Chairman Roberts. Under Secretary McKinney, as you well 
know, ag trade is critical to the U.S. farm sector, especially 
in today's farm economy.
    I would say to my colleagues, I ask for your deference 
here, just to ask at least one question of the Under Secretary. 
I know I am over time.
    It creates jobs for rural America, generates much needed 
demand for the crops that farmers produce. At the same time, 
the global marketplace is becoming more competitive. In light 
of today's trade environment, how will the USDA help position 
U.S. agriculture in a manner to retain current market share in 
traditional export markets as well as to increase market access 
to new and existing markets?
    Mr. McKinney. Sure. Thank you for your question, Mr. 
Chairman.
    Well, first, I would say that we are fully aligned with the 
three priorities that Ambassador Doud laid out. On any given 
negotiation--and USDA was involved in all 21, the trips to 
Beijing, them to here, and the digital videoconferences--and 
happy to provide at any one time in the room, we were two to 
one because we have the depth and glad, always glad, to support 
Team USTR. So getting those three right is our first priority, 
and I think we have lived up to that.
    The creation of this position was intended--and I hope we 
are fulfilling that--is to go open new markets; hence, the 
travel that we are undertaking, last week to Colombia. That has 
been my second or third trip there. So we are pursuing all 
these other markets so that we can develop new markets, 
diversify the portfolio over time.
    Now, to be sure, there are choppy waters right here where 
there is a gap. I do not want to deny that, but I hope we are 
setting the stage, we at Team USTR--USDA, with the support of 
USTR and others, so that we can look back in hopefully a few 
years and be glad that we have diversified the portfolio. That 
is what we are doing.
    Team USTR and our team separately set up a list of 
countries we wanted to go to. We are going through that list 
starting last year, and we want to sustain that.
    Chairman Roberts. Thank you for that. I know it may take a 
few years.
    What we worry about is 2019 has been tough. 2020 looks like 
it is going to be tough. I do not know how long this goes on. 
It would be seven years with low prices, and I understand that 
the previous bar was we had high prices. Some farmers are not 
going to make it. That is the rub of it.
    Senator Stabenow?
    Senator Stabenow. Thank you, Mr. Chairman. I agree with 
you, and I appreciate the reaching out.
    I was just on a bipartisan CODEL in both South Korea and in 
Vietnam and in meetings with the trade officials in Vietnam. 
There are certainly opportunities. They are actually opening 
markets to blueberries right now, which would include Michigan 
blueberries, which I was very glad to have conversations about.
    There is more to do, but as the Chairman is indicating, we 
are in a very, very difficult situation right now, and there 
needs to be economic certainty for farmers right now.
    Dr. Johansson, we will give you a moment to speak here. I 
want to ask you a question regarding the second round of trade 
payments because I am very concerned that they are not going to 
be fair or equitable to producers.
    It seems like there could be wide disparities between 
counties. So even farmers in neighboring counties that grow the 
same crop could receive wildly different levels of support.
    It also seems that a farm that experienced flooding would 
be disadvantaged relative to a neighbor who was able to plant--
since the program requires a crop to be planted.
    Most of all, I am concerned about the disparity between 
crops. You are no longer making payments based just on 
retaliatory tariffs. Can you clarify what specific problem USDA 
is trying to solve? Is it mitigation of trade damage, low 
prices, or both?
    Mr. Johansson. Senator Stabenow, those are really great 
questions. As you noted, producers are looking for certainty 
right now during a period of unprecedented uncertainty, for a 
number of reasons, some weather related, and of course, as we 
have heard, moving forward with a lot of potentially beneficial 
trade agreements, and trying to get those across the line, I 
think, will also provide certainty to our producers.
    Regarding the second round of Market Facilitation Program 
payments, I think we did put out a press release a couple days 
ago that did answer some of those questions, and of course, the 
rule is over at the Office of Management and Budget right now 
as part of the interagency process. So I am somewhat limited in 
how much details I can go in, but I will certainly try and 
provide an answer to some of your questions. Those that we do 
not answer, perhaps we can get back to you in writing on, once 
that we are a little bit more open to be able to provide those.
    I guess the main difference between last year's program and 
this year's program, I would characterize as the timing of the 
program. Last year's program, we were able to pay for actual 
production, and of course, producers that suffered losses last 
year were unhappy with that component of the program. We, of 
course, wanted to point toward crop insurance as the safety net 
for losses that were incurred last year.
    This year's program was being developed, and we wanted to 
make it clear to producers that they should not look at news 
media stories or look at what universities were saying and sort 
of hypothetical types of program payments that may come out and 
have that actually incentivize producers to change their 
planning decisions.
    So we have been very clear that the program is agnostic to 
the crop planted for the row crop component of the program, 
such that producers would not expect to receive. For example, 
last year's program payment for soybeans was larger than the 
other row crop payments, and so if a producer thought that this 
year, they may be incentivized to plant for soybeans, expecting 
to get a larger payment, we certainly did not want that to 
occur, particularly when we are sitting on record levels of 
soybean stocks right now in the countryside.
    So we wanted to make the program again not market 
distorting to the extent that we could, and that is why we have 
developed a county-level approach for providing payments. A 
producer in a county can receive the county rate multiplied by 
the acres planted of any of the eligible crops that are listed 
under the Market Facilitation Program portion of the row crop 
payment system.
    Now, of course, we have other payments for producers of 
some specialty crops. Last year's program, there was sweet 
cherries and almonds that were in the MFP component, and a lot 
of the other specialty crops were in the Food Purchase and 
Distribution Program. The Secretary asked us to look back at 
last year's program and to try and learn from that and to 
determine what worked and what did not work from last year's 
program, and one of the things that we felt appropriate was to 
move some of the specialty crop commodities, the tree nuts and 
some of the fruits, into the Market Facilitation Program 
component as opposed to the Food Purchase and Distribution 
Program, so----
    Senator Stabenow. I am going to jump in at this point, to 
ask about the Market Facilitation Program. Some row crops that 
have had price declines, as you mentioned, are now moving into 
the Market Facilitation Program and getting relief through that 
program.
    I just want to say that specialty crops like Michigan 
asparagus that have had a 20 percent price decline compared to 
last year due to trade challenges other than tariffs--may not 
even be eligible for trade mitigation purchases. I have great 
concerns about these disparities.
    As far as I am concerned, we passed a Farm Bill with a 
thoughtful commodity title, based on risk management, but now 
it seems to me the whole thing is being thrown up in the air by 
payments that have nothing to do with what we put together in a 
five-year Farm Bill, and these payments are not just for one 
year. It is now going on for a second year and second round of 
payments.
    I want to ask just one more quick question. I know I am out 
of time, Mr. Chairman, but it goes to the money behind this 
because I want to ask Under Secretary McKinney, who is one of 
the seven board members on the USDA Commodity Credit 
Corporation. The Commodity Credit Corporation is using $30 
billion of borrowing authority to pay for both rounds of trade 
mitigation assistance. However right now, the CCC has roughly 
only $7.7 billion left before it reaches the $30 billion cap. 
How are you going to pay for $16 billion in assistance? Are you 
assuming Congress is going to authorize the additional amount?
    Mr. McKinney. Well, the CCC has to get replenished, to your 
point, and we do have that amount.
    The view was, as we heard from so many people, certainly 
starting with the President and the Secretary, but also many of 
our constituents, there is help that is needed now. So we are 
going to take what we have and use that and of course, as we 
have to do every year or periodically, come back to Congress 
because that is the way that works.
    Senator Stabenow. Does that mean, Mr. Under Secretary, that 
you are going to commit $7.7 billion now and wait for the rest? 
Or you are going to commit $16 billion and hope we appropriate 
it?
    Mr. McKinney. Right now, that rule is at OMB, and we are 
working through that together. There is not an answer now, but 
we would not presume anything if you all have not authorized 
that, so let me be clear.
    Senator Stabenow. I would certainly say, looking at key 
appropriators right across from me, that it really was not 
within the USDA's purview to be obligating funds that have not 
been made available to USDA.
    Mr. McKinney. I do not think funds have been obligated yet 
that are not there. So we respect the role of the Congress, 
absolutely, ma'am.
    Senator Stabenow. Thank you, Mr. Chairman.
    Chairman Roberts. Senator Fischer?
    Senator Fischer. Thank you, Mr. Chairman.
    Ambassador Doud, I would like to followup a little bit with 
the Chairman's comments at the beginning of this hearing when 
he was speaking about China but also about Japan.
    As you know, I am a family rancher. I know firsthand that 
we have to continue to improve on the efficiency of our cattle, 
and we have seen ranchers as well as farmers that are adopting 
this cutting-edge technology in order to produce beef and our 
crops all across this country.
    The technology on beef includes growth hormones. We are 
looking at China, where they have basically an import tariff 
that is 47 percent on U.S. beef. There is a 12 percent base 
tariff. We are looking at the 25 percent retaliatory tariff, 10 
percent value-added tax. So the tariffs are bad enough, but 
then we see the Chinese not allowing our animals in their 
country because of their restrictive policies.
    You told the Chairman that we are talking to them. Can you 
tell us anything more positive than we are talking to the 
Chinese? How are we going to be able to address these non-
tariff barriers?
    Mr. Doud. Senator, thank you for your question. I will 
elaborate as best as I can, but these are obviously ongoing 
conversations.
    Senator Fischer. I understand that.
    Mr. Doud. First, let me start with Japan. We, all of us in 
the beef industry, know how important that Japanese beef market 
is. That is a topic that, quite frankly, Senator, keeps me up 
at night.
    What I want you to know is that Ambassador Lighthizer 
absolutely understands the importance of getting a trade deal 
in agriculture with Japan as soon as possible, and these 
conversations are occurring. They are ongoing, and that is all 
I can say about that.
    Senator Fischer. With the Japanese, it is a little 
different, though, on what we are looking at with the Chinese.
    Mr. Doud. That is right.
    Senator Fischer. Obviously, we have seen the Administration 
was able to get the lifting of the BSE restriction, and now we 
are just looking at the restrictive tariffs that are there with 
regards to the TPP. So it is a little different situation that 
we have.
    Mr. Doud. We are just trying to stay even with our 
competitors in Japan.
    Senator Fischer. Right.
    Mr. Doud. With regard to China, you are absolutely right. 
The way I describe it is after 15 years, because of their 
restrictions on traceability hormones racked up, I mean, we can 
get a thimble full of beef into China.
    Senator Fischer. Exactly.
    Mr. Doud. They bought $5 billion in beef last year--$5 
billion. We have had hours of conversations about this, 
Senator, with them. We can say that these conversations have 
occurred is all I can say at this point.
    Senator Fischer. You mentioned--and I appreciate that you 
are in negotiations, and that makes it difficult. When you say 
that we need to diversify our exports, that does not help a 
cattle rancher. That does not help a farmer whose livelihood is 
based on pork production. While farmers may be able to--
depending on where they are located be able to diversify crops, 
that is not always that easy either. So I hope you obviously 
will keep that in mind as you are working through these 
negotiations.
    Both you and Under Secretary McKinney have been in 
Nebraska. You have heard our producers and the concerns they 
have with this. So I know you will keep that in mind as you go 
forward on your negotiations.
    It was just a couple days ago that we saw the President 
sign an Executive Order on agricultural biotechnology, and you 
guys are now going to be tasked with creating a strategy that 
is going to address those unjustified really--the unjustified 
trade barriers that we have. Can you comment on how the 
Administration plans to address some of those issues in order 
that we can support the innovation that we see domestically 
continue to move forward when it comes to biotechnology?
    Mr. Doud. Let me take a quick stab and lead Ted into this.
    That conversation goes to USMCA, where for the first time 
we had a biotech component that--and what we are really trying 
to help people understand is gene editing, CRISPR technology, 
the new technology, and USDA and USTR working around the world 
to get countries where they need to be with regard to the use 
of technology in agriculture.
    Mr. McKinney. Thank you, Senator Fischer.
    I have covered biotechnology in all its forms on every 
single government-to-government visit I have had, and that 
includes industry. Ambassador Doud is right. USMCA's language 
is a great start; hence, the importance of that.
    We are also having those discussions completely one-off, 
and this gives us added impetus to make the statement we are 
working with like-minded countries, as we have in the past, but 
we have doubled-down on that.
    When Secretary Perdue was in Japan with the G20, he pulled 
together a group of five--Argentina, Brazil, Canada, Mexico, 
U.S.--the ministers of ag. They made a commitment to double-
down on this kind of thing. The world needs these technologies. 
We are going to address that. So it is really all-of-the-above 
strategy.
    We have yet to miss an opportunity where we have not 
covered that very topic, but you are right. USMCA is the best 
place to start. Thank you.
    Senator Fischer. Thank you. Thank you, Mr. Chairman.
    Chairman Roberts. Senator Smith?
    Senator Smith. Thank you, Mr. Chair.
    I want to first thank all of you for being here today, 
especially my fellow Minnesotan, Dr. Johansson.
    Senator Roberts, you started out by talking about the need 
for certainty, and, Ranking Member Stabenow, you talked about 
the challenges we have with the chaos and the unpredictability. 
Despite the best efforts, I truly believe of those of you on 
this panel.
    When we were planning on this Committee hearing, I asked 
Minnesotans to give me a sense of where they are on all of 
this. Of course, I talk to Minnesota farmers all the time, and 
I want to just read one letter that I got from Greg Fynboh. He 
said to me in part, ``I am not happy about the tariffs that 
have been implemented, especially this year because of weather 
conditions. I have been at a loss as to what I should plant or 
even if I should plant a crop so late in the spring into poor 
conditions. Not having a secure market complicates decision-
making in an already difficult situation. Should I bother 
adding to burdensome supplies and lose equity because of 
production cost over what the crop is worth? Should I take 
prevent plant, which barely covers land rent, and lose equity 
while fighting weeds all year?''
    One certainty of the current Administration's policy to 
destroy all markets through tariffs and tough talk is that 
farmers will lose money, time, and peace of mind. That has been 
my experience so far.
    Mr. Chair, I would like to ask permission to enter these 
letters into the record.
    Chairman Roberts. Without objection.
    Senator Smith. Thank you.

    [The following information can be found on pages 46-52 in 
the appendix.]

    Senator Smith. You know, I read that letter because my core 
value here is that we need fair trade policies that lift up 
American farmers and lift up American workers, and I completely 
agree that there have been unfair trade practices that have 
hurt American farmers and businesses and workers. So I am 
grateful for the work that you have been doing to try to break 
through some of that.
    The problem is--I mean, you must feel like you are working 
with one hand tied behind your back right now, and I am not 
going to--I cannot even imagine what it is like.
    Let me just ask one question. Last week, I was down in Rock 
County when there was this latest threat of tariffs on Mexico. 
That was removed in the nick of time, though I think it 
probably took months off the life of a lot of farmers who were 
trying to figure out how to--what they were going to do next.
    What can you tell us about this large quantities of 
agricultural products that the President said that he has 
gotten commitments on from Mexico?
    Mr. McKinney. Well, we are waiting to hear the specifics on 
that, but let me just say we at USDA have teed up, as we always 
have teed up, opportunities that we could use to fulfill that. 
Until we get some specifics on that, we are waiting.
    You should know we have a very good relationship with our 
friends at the Mexican Department of Ag. We have been in 
discussion----
    Senator Smith. I am sure you have.
    Mr. McKinney [continuing]. with them to lay those 
opportunities out.
    Senator Smith. I know that you do, and I appreciate what 
you said about the importance of good relationships, 
longstanding relationships that are at the root of good trade, 
which is why I am so disturbed about what is happening because 
the reliability of America as a trading partner is the 
challenge that we are dealing with here.
    I hope that there is an agreement on large quantities, but 
I will believe it when I see it.
    This raises something that I am personally very interested 
in. It has to do with the possibilities of expanding trade into 
Cuba. This is something that my colleague, the senior Senator 
from Minnesota, Senator Klobuchar, has worked on also with 
Senator Enzi.
    Cuba is a perfect trading partner for the United States in 
so many ways because what they are good at and what we are good 
at is a perfect match. We do not grow a lot of chocolate in the 
United States or in Minnesota, and they need our corn and 
beans. Yet again, just last week, the President re-upped 
additional barriers between the United States and Cuba.
    I went to Cuba when I was Lieutenant Governor to lead the 
exact kind of trade mission that you are working on, Under 
Secretary McKinney, to expand markets.
    So could you just tell me what--would you agree that the 
President's ban on additional connections between the United 
States and Cuba makes it even harder to build these 
relationships that we know are so important?
    Mr. McKinney. Well, thank you for the question.
    I would answer it this way. There is still agricultural 
product flowing to Cuba, notwithstanding----
    Senator Smith. It is so challenging. Right. I mean, there 
is, but there are so many barriers. There is no credit access. 
I mean, it is--you know this.
    Mr. McKinney. Well, there is no credit access to the U.S., 
but there is credit access through other areas, for example, 
Canadian banks. I checked even this morning, and there is still 
agricultural product flowing. Now, it may have slowed. We have 
not checked with everyone.
    I think the beauty of this is that you all created through 
the Farm Bill the opportunity to now use market access program 
funds to go there.
    We had already closed out MAP grants when the Farm Bill 
passed, but we are preparing, if that opportunity creates 
itself, to allow folks to do that. So we are aligned with you 
in that regard.
    Senator Smith. Would you not agree that this additional 
barrier is not helpful to the cause of expanding access to 
agricultural products in Cuba?
    Mr. McKinney. I am not going to say that because trade is 
still flowing, and so far as I know, it has not slowed. I am 
still checking on that.
    I think the larger issue, though, is we have--at one time, 
Venezuela was the number one export market in South America, 
and I hope that some of that conflation of what Cuba is doing 
with Venezuela might provide for an opportunity someday when 
the gates open to go back into Venezuela. I think there is a 
long-term play there, ma'am. Thank you.
    Senator Smith. Well, thank you.
    I am out of time. I appreciate the work that you are trying 
to do to open up markets and the work that you are doing, 
Ambassador Doud, to try to nail down these incredibly difficult 
negotiations, but I do feel so strongly that one hand does not 
know what the other hand is doing, or if it--I think one hand 
does not even know what it is doing itself.
    Thank you, Mr. Chair.
    Chairman Roberts. Thank you, Senator.
    Senator Braun?
    Senator Braun. Thank you, Mr. Chairman.
    Interesting to always listen to these discussions here. In 
the short time I have been here, they get politically charged 
quickly. I think of any of the members on this Committee, I am 
one of the few that is actually involved in farming, been 
involved in it for 40 years, as a poultry producer from the 
late 1970's to tree farmer and actively involved in row crop 
production.
    All I can tell you, as a farmer and as one that speaks to 
many every weekend when I go back, they are happy that someone 
is finally here taking on the key issues of restrictions to 
markets. This did not happen from 2016 to the present. This has 
accumulated over many, many years. When you look at the total 
amount of imports, for instance, that China takes and how small 
a share ours would be to them--and that is typically across the 
world where there are structural restrictions to agricultural 
products because everyone knows from the farming side that it 
is the most protected part of the economy across the world.
    So I want to applaud the Administration for finally 
addressing these issues, where, yes, it is going to incur some 
short-term pain in running a business.
    The other thing I have done over the years, I have never 
found where you are going to go in the right direction if you 
do not address issues for long-run betterment and you have got 
to entertain a little short-term pain. I think that is what we 
are going through.
    I think the problems facing agriculture go so far beyond 
tariffs. I think when you look at our agricultural capacity--
and we export so little--as being the agricultural engine of 
the world, that tells you all in a nutshell that, thank 
goodness, you are finally tackling issues to open up these 
markets.
    China is alluring because it is large. It has got so many 
people. I think one of you said that, basically, of the $145 
billion or so that they import, we get just 20- to $25 billion, 
somewhere in there. Is that correct?
    Mr. Doud. Senator, their imports last year were $124 
billion, and on a good year, we do about 20. Last year, I think 
we did about 9 of that.
    Senator Braun. Okay. So that has been the dynamic for 
years, and that tells you exactly what one country, which is 
going to be somewhere down the road, the biggest potential 
importer of everything with their population, if they keep 
growing as an economy. So, again, it points out that this is 
all laid on the doorstep.
    Before 2016--and anyone here, any politician, anybody 
involved with policy, I think shoulders the blame. Thank 
goodness, we are trying to rectify it.
    I think there might be another round of questions, which I 
am going to stick around for, but I want to throw this out 
there for you to think about.
    Acreage expansion, I think, has occurred more so over the 
last decade across the world than at any other time. 
Competition, which is the other variable that in any business--
my logistics business, distribution, farming--competition is 
important, and it looks like our competitors want the best of 
both worlds. They want us to buy from them, and they do not 
want to take any of our products.
    I want you to think about which countries, including the 
ones in Europe and others, that are the culprits that are the 
hardest to deal with.
    Then the other thing I want you to think about would be our 
own industry when it comes to--normally, when you are in a 
pickle like agriculture is, where you are struggling to sell 
what you produce, you do find new markets, and in anything, 
biotechnology was talked about earlier.
    Do we have more potential there--and I am going to start 
with this question--than raw commodity exports? In other words, 
do we need to enhance those markets so that we are not dealing 
with what everyone else around the world is going to try to 
start producing and selling themselves, which is corn and 
soybeans? Is our ticket to sell more of what we produce through 
the higher tech end of the biotech industry?
    Mr. Doud. Senator, I will try to answer that in 7 seconds. 
First of all, you should talk to Dr. Johansson about the 
strength of the U.S. dollar relative to other countries, 
particularly the Brazilian reals, and there are competitive 
factors there.
    We think about ethanol and meat and value-added 
opportunities around the world every single day, and the place 
in the world that gives us fits is, without question, the 
Europeans. They are actively fighting us every step of the way 
with regard to the use of technology.
    Senator Braun. Noted. Anyone else want to comment on that?
    Mr. Johansson. I think you brought up really good issues. 
We did see a lot of expansion of acreage globally, particularly 
in sort of the high-price years of about seven years ago that 
the Chairman referred to. Particularly, in South America, we 
saw a lot of expanded acreage in Brazil and Argentina, and they 
are actively competing with us right now.
    They are big adopters of tech as well, so that is a good 
thing. We are like-minded in that sense.
    As the Ambassador and, I am sure, the Under Secretary can 
highlight, we are continually facing a different level of 
standard from the Europeans who argue, I think, contrary to 
improving food security. They are actually depressing food 
security globally.
    Mr. McKinney. Senator, I want to respect your and the 
Chairman's time management. I will come back and answer that 
later, if you wish.
    Senator Braun. Thank you.
    Mr. McKinney. It is up to you two.
    Chairman Roberts. The Senator from Indiana is recognized 
for an additional 5 minutes.
    Senator Braun. Thank you, Chairman.
    Go ahead.
    Mr. McKinney. We are somewhere between 7 and 9 billion on 
the planet, 7.3, on our way to 9. Some say 10 by 2050. We have 
to use every single tool to address that, and we have for the 
last many, many decades.
    I think, by and large, technology around the world is still 
being adopted, but there are now headwinds--and I think 
Ambassador Doud said it very well--led by Europe with 
objections. So it is a constant battle that we have to face, 
and it is technologies of all sorts.
    We talk about biotechnology. It goes well beyond that, and 
you know many of those from your own experience in Indiana, but 
our goal is to continue to press for these kinds of 
technologies. The way we do this is through many fora.
    In early July, I will be in Geneva for the Codex 
Alimentarius meeting, where we talk about scientific standards 
for pesticides, biotech, food additives. The list goes on and 
on, and it is the world against Europe in many cases to fight 
to keep those very rigorous scientific-based standards rather 
than default to say a region of the world and their view of 
what science is or should be determined. That is just one.
    Team USTR has been majestic at working the WTO. We support 
them in a lot of that data analysis, and the list goes on. So I 
will not go through ad nauseum, but we have to use every single 
one of those. That is why the attention we are paying to 
international organizations--soon we will elect a new director-
general at the FAO. That is a very, very important election 
because they have strayed in a major way from even considering 
technology, just take it out in many cases. So these are the 
things we are trying to do around the world, sir.
    Senator Braun. Thank you.
    Team USTR, keep it up because I think what you are doing 
needed to be done a long time ago, and again, if we do not fix 
it now, it is just kicking it down the road. I think most 
farmers know that we need to go through some transformation and 
are happy that you are doing what you are doing.
    I want to finish up with this, and I said it the last time 
or two. When it comes to helping farmers, as one, the thing 
that I have noticed that has been very seldom talked about, but 
it is the high cost of production. It would be the high cost of 
variable inputs, and all I can say is from 1909 to 2013, when 
we had great incomes, it seemed like the cost of inputs 
mysteriously went up.
    We are now dealing with many huge corporations, where it 
used to be local suppliers, and I am really most worried in the 
long run, the fact that an acre of soybeans, an acre of corn is 
nearly doubled or tripled to put out the crop each year. That 
is the hardest piece of arithmetic that most of us farmers deal 
with.
    I want to address this to Secretary McKinney and then maybe 
a comment from Dr. Johansson. Where do you think the 
responsibility of the industry is to help farmers get through 
this tough stretch? Do you think it is doing enough to where 
everyone seems to be okay at the corporate level, and we buy 
all of our inputs now from larger entities? Do they have a 
responsibility to help farmers out rather than looking to 
government to do it?
    Mr. McKinney. Thanks for the question.
    I think we all have a role there, and you should know that 
we talk to the industries of all types a great deal. They make 
their way to here, and I think they usually make their way to 
USTR and elsewhere. So everybody has a responsibility.
    The best thing we can do and what we are trying to do is 
work on these non-tariff trade barriers to help them keep their 
costs low, so that they do not have to pass on costs, which is 
the norm, as you know in business.
    The time that Ambassador Doud and his team and my team 
spent on biotechnology with China--and frankly so many other 
countries as we make our way around the world--is simply 
enormous, and so we think that is the best way that we can do 
that because we are Government are not going to get involved in 
pricing and all the things that go with that. There is a 
respect for the business community out there.
    Senator Braun. Maybe jawboning, though?
    Mr. McKinney. Well, we have done that.
    Senator Braun. Yes.
    Mr. McKinney. That is what we are trying to do is try to 
get rid of these non-tariff trade barriers that cause such 
disruption in costs of all sorts. I think that is the simple 
answer.
    Senator Braun. Thank you. Doctor?
    Mr. Johansson. Great question. Of course, we look at IMPA 
costs going up every year. That is not universal. Of course, we 
have seen fuel prices come down since their high-water mark a 
couple years ago. So that is a benefit to producers. By and 
large, I think what we are more concerned about is making sure 
that we do have the ability for producers to get a good price 
for their crop, and that is continually linked to trade but 
also to lowering transportation costs. For example, we know 
that the Mississippi system right now is under a lot of siege 
from all the water that is coming through it, and that is 
slowing things down. That is going to add to cost. We have 
lowered cost on the rail side, so that is a benefit. It is 
something we are always looking at.
    Of course, on the input side from the chemicals and seed 
companies, there has been some consolidation. The economic 
literature points to different things regarding whether that 
lowers prices, on the one hand, but also reduces competition on 
the other. So it is something we are continually looking at.
    Senator Braun. I think everything and the kitchen sink 
because farmers are truly struggling. Thank you.
    Chairman Roberts. Senator Brown?
    Senator Brown. Thank you, Mr. Chairman.
    I cannot wait until I need that extra 5 minutes, one of 
these days.
    [Laughter.]
    Chairman Roberts. I hesitate----
    Senator Brown. Let us see. Senator Klobuchar and I have 
been on this Committee a combined quarter century, and I do not 
remember ever getting an extra 5 minutes----
    Senator Klobuchar. I do not think so.
    Senator Brown [continuing]. under Democrats. So maybe we do 
not have the relationship with the Chairman that Senator Braun 
has, but I am going to explore that.
    I have milked----
    Senator Klobuchar. Are you going to give the Chairman a 
second to respond?
    Senator Brown. No, never mind. All right. Let me--thank 
you, Mr. Chairman. I have used already 30 of my precious 
seconds.
    I cannot count the number of people I have heard----
    Chairman Roberts. You just took 30 seconds off your time.
    [Laughter.]
    Senator Brown. I cannot count the number of people I have 
heard saying how important it is that we have certainty in 
business and farming. We know agriculture, particularly, is an 
inherently risky business.
    We have seen farm income at 10-year lows, commodity prices 
declining. The Administration continues, as you know--you 
probably do not really want to say this, but continues to 
inject more uncertainty into American agriculture.
    The President tells farmers to trust him, yet every day 
farm bankruptcies increase. Another small dairy closes, a 
family farm is sold to an out-of-town investor.
    Ohio farmers are near the breaking point. I want to share 
just three or four lines from an article written by Tom Henry 
for the Toledo Blade, which is sort of the paper of record in 
much of rural northwest Ohio. As of June 2nd, only 33 percent 
of Ohio's corn acreage, 18 percent of the State's soybean 
acreage had been planted. By this time of year, at least 90 
percent of corn should have been planted, 79 percent of the 
soybean crop should have been planted. That is based on the 
most recent five-year coverage date. Farmers will tell you, as 
you know, Mr. Under Secretary, that years before this, they 
would go into the fields earlier, typically. So these numbers 
are worse than they have been over five years, which is worse 
than it used to be. Ohio was down 61 percent from its most 
recent five-year average for planting soybeans as of June 1st, 
and as farmers will tell you, even if their farms dry out 
enough to plant corn in another week or two, the growing season 
has been so compressed, that smaller yields are inevitable.
    One farmer who has been--who is in his 60's said, ``I have 
been farming 36 years. This is the first year I may not have 
one acre of corn.''
    So my questions are this. You can understand my concern 
with Secretary Perdue's announcement that Market Facilitation 
payments will not be applied to unplanted acres, as we have 
seen these problems get worse and worse with climate issues.
    USDA provided a list of crops that need to be planted. USDA 
has been unclear on whether these can be planted for cover or 
after the typical late planning period.
    From the number of inquiries my office gets from farmers 
sitting on their combines waiting for the water to subside, 
they want to know details. They are now forced to make 
decisions based on rumors and heightened uncertainty.
    My two questions are for Dr. Johansson, if you would answer 
these, and I will give them both to you, and then take your 
time.
    Will USDA provide flexibility for farmers to plant later 
than normal for cover and be eligible for MFP? Similarly, hay 
and forage is expected to be in short supply due to the wet 
weather, of course. Will Federal crop insurance provide 
flexibility to allow the earlier grazing or harvest of forage 
or hay from cover crops without penalty?
    Mr. Johansson. So one of the--I mentioned earlier to the 
Ranking Member's questions that we did not want to affect 
planting decisions with the new program, and, of course, 
complicating that is the situation you mentioned with regard to 
prevent plant. We are in a very late planted--late, delayed 
planting, and a cool wet spring is affecting much of the corn 
crop as well as other commodities across the United States. We 
are behind in wheat. We are behind in rice. We are behind in 
soybeans, of course, as well. All of that will contribute to a 
likely higher than normal prevent plant number.
    Of course, the crop insurance program does anticipate 
prevent plant, and there are a lot of conditions and a lot of 
provisions available to producers that are, unfortunately, 
faced with prevent plant for some of the producers in Ohio that 
you mentioned.
    So, again, as with last year's program, we wanted this 
year's program to not affect the safety net provided by crop 
insurance, and so there are the prevent plan rules, and 
eligibility requirements are remaining in place. I know we have 
been asked to look at the two components that you did talk 
about with respect to late plant and with respect to hay and 
grazing, and those are components of the program that we are 
continuing to evaluate of this period under which the rule is 
still undergoing changes at the Office of Management and 
Budget. So we will continue to look at that.
    I would point out also, as you know, the President signed 
the supplemental disaster bill, which also does call out 
prevent plant in it, and so there is an interaction as well 
with a program that may come out following that. That is again 
early in its development at the Department for the WHIP 2.0 
program that is authorized by everyone here for the disasters 
we saw in 2018, the hurricanes and wildfires from last year, 
but as well as the 2019 prevent plant issues for this year.
    So I do not have any hard and fast answers to your 
questions, but certainly willing, as I mentioned to the Ranking 
Member, that we can get back to you with answer.
    Senator Brown. We will be in touch on that. That is really, 
really important and particularly northwest Ohio agriculture.
    Mr. Chairman, I will just ask another question, but because 
of time, I will just ask Dr. Johansson to give us this one in 
writing too about Lake Erie.
    Because of the rain and the late planning and all the 
runoff that has happened, algae blooms are likely again a major 
problem come July, August, in the western basin of Lake Erie. 
This part of the lake is only 30 feet deep, as contrasted with 
Lake Superior that Senator Klobuchar and Senator Smith look at 
often, is 600 feet deep. So we know the vulnerability there.
    With the number of unplanted acres in the western basin, I 
wonder if USDA has considered utilizing conservation funds to 
fund cover crop plantings or increase buffers in places like 
Ohio. You can answer that in writing, if you want.
    Thank you, Mr. Chairman.
    Chairman Roberts. We thank you, Senator Brown, for asking 
that question that is on the mind of every member.
    Senator Ernst?
    Senator Ernst. Thank you, Mr. Chair, and I would just like 
to thank our witnesses for being here today as well. You have 
been great advocates for our farmers, and I really do 
appreciate that very, very much.
    Right now, they are just undergoing that perfect storm of 
circumstances, low commodity prices, lost access to farm 
markets due to trade disputes, and very, very wet--you can look 
at Nebraska. You can look at Iowa. Very, very wet conditions 
due to a set spring and the flooding issues that we have had.
    So this really is time for the Administration to bring 
together these trade deals. We would love to see them done 
soon. We want them done right, but we would love to see them 
done soon. Our farmers really do need a win.
    Ambassador Doud, if I could start with you, please, sir. 
First off, I believe that Iowa farmers stand behind the 
President. I have heard many of them just over the course of 
this past week, and they know when it comes to China, we need 
to hold them accountable for years of very, very bad behavior 
on the trade front.
    In fact, at the end of last year, I had one farmer that 
came up to me after a meeting, and he made the point. He 
understood why the President was doing this, but he said, ``I 
do not understand why we did not have a President that did not 
address this before this one.'' This has been going on for such 
a long time, and President Trump is finally standing up to the 
Chinese and their bad practices.
    That being said, the spread of African swine fever through 
China does have the potential to be a big opportunity for our 
exports to meet their additional demand as they are going 
through culling their herds.
    The problem is, with the ongoing trade dispute, China still 
has 50 percent retaliatory tariffs on our U.S. pork exports, 
and the additional duty has meant a loss of about $8 per hog or 
$1 billion per year to U.S. pig farmers. All of our Iowa 
farmers want those free markets. They do.
    What is the path forward with China, and when can Iowa 
farmers really expect some of the normalization in our markets?
    Mr. Doud. Senator, thank you for your question, and there 
is no question that this African swine fever issue is truly 
remarkable in terms of its global implications.
    I would just simply say that with regard to pork exports to 
China, our biggest hurdle is this structural issue of their ban 
on ractopamine, and it is something that has--internationally 
accepted. It has a maximum residue level internationally. 
Everybody in the world uses it, with the exception of--a couple 
of exceptions here and there, but China does not. We have spent 
hours talking about this.
    I would also point, just quickly make the point, in terms 
of certainty, the first thing we can do is pass USMCA, and then 
from there, we work on Japan and China and get these things 
done. In terms of historical issues, I would say that there has 
been work on China historically, and we have just recently won 
two of the biggest WTO cases in the history of agriculture 
against China.
    Senator Ernst. I appreciate that because I do think the 
USMCA needs to be done right away as well, and we just need to 
continue to encouraging our House Members to be supportive of 
that action. It is very, very important to the folks in Iowa 
that I talk to.
    So just very briefly, the USMCA, while we are on that, it 
would create huge economic growth and jobs across the United 
States in many of our industries, and it would secure a top 
market for all of our U.S. agricultural commodities.
    There are many achievements, I think, that are within the 
USMCA that do not get talked about. We talk about tariffs. We 
focus on tariffs, and certainly, for you, Under Secretary 
McKinney, if you would address some of the improvements that 
exist within the USMCA that we do not necessarily talk about, 
things like sanitary and phytosanitary standards and biotech. 
Can you speak on how those issues are being addressed in USMCA? 
Talk about some of the wins that we are not necessarily talking 
about.
    Mr. McKinney. Sure. We talk about dairy access, wheat 
equities across the borders, those things, more poultry access. 
I know how much poultry you have in your State. So, yes, those 
catch a lot of attention.
    I still think--and I have said very publicly many times--
that the rewrite of the sanitary, phytosanitary chapter may be 
the greatest gift out of USMCA. It is not quite a cut-and-paste 
into other trade agreements, but boy, it is a great starting 
point. That has been the soft underbelly. That is where we have 
not seen free, fair, and reciprocal trade over these many 
years. So I think that is perhaps the greatest gift.
    Right on its heels, I would talk about biosciences, the 
biotechnology chapter. That has been an enormous boon to 
productivity, quality improvement around the world, helping 
African farmers, cotton farmers in India, et cetera. So that is 
a new chapter that can also be used as a starting point in 
other negotiations.
    I still think, though, the biggest one, is the message that 
passage of USMCA will send to the world. If we do not get this 
done, we are in deep trouble in terms of other negotiations we 
seek to do because this is a good deal. We must deliver on 
this. Those are just two things, ma'am.
    Senator Ernst. Thank you. No, thank you very much. Thank 
you, Mr. Chair.
    Chairman Roberts. Senator Klobuchar?
    Senator Klobuchar. Thank you, Mr. Chairman.
    My State is the fourth largest ag-exporting State in the 
country, and I appreciate the work you have been doing during 
some difficult times.
    Many of us up here were relieved that the Administration 
did not end up imposing the five percent tariff on Mexico, as 
threatened, but the approach of using tariffs in response to 
non-trade issues is concerning and could open the floodgates to 
widespread use of tariffs to potentially settle all kinds of 
potential policy issues.
    Maybe one of you, Ambassador Doud or Under Secretary 
McKinney, could answer this. Where does the Administration draw 
the line on the use of tariffs for non-trade ends?
    Mr. Doud. Senator, I would just simply say that in my time 
in Washington, DC, I have never seen a President create more 
leverage out of thin air than this President has.
    Senator Klobuchar. Okay. Well, I think that what we learned 
later was that that agreement had been made a few months before 
the tweet went out, but we can leave that to the history books, 
I guess.
    My first question along the lines of your work that you are 
doing, which I appreciate, with the Market Facilitation Program 
would be this is good in that our farmers need the help, but 
one of the things I have heard from a number of them is that 
this goes on longer and longer as we try to get China to the 
point of an agreement is that a lot of countries that are 
buying soybeans now from other places are getting longer-term 
contracts with them. So it is going to be harder once there is 
an agreement for our people to get back in the market.
    I do not know if that is you, Dr. Johansson, or anyone that 
wants to answer that, if that is true, with your University of 
Minnesota degree.
    Mr. Johansson. I will comment on this, and I think the 
Under Secretary and the Ambassador may also want to add.
    Certainly, we know that, to a degree, trade is fungible. 
With soybeans, of course, we typically export to the Chinese 
during our season, and then the South Americans export during 
their season. It makes for a reliable trade for the Chinese, 
and they are having to renegotiate their contracts. They are 
looking at doing so right now.
    Of course, if we get a good trade deal in, we will go back 
to providing them with the good quality U.S. soybeans. We have 
a good transportation system to get them there through the 
Pacific Northwest as well as through the Gulf.
    Senator Klobuchar. So in order to meet the supplies, if 
they are going to other countries, they are just doing short-
term contracts right now or longer?
    Mr. Johansson. Well, I would imagine that they are likely 
entering into a number of contracts that are both short term 
and long term, and as we have seen with us and I am sure with 
other countries, they are willing to break those contracts 
pretty easily if they find a better price somewhere else.
    Senator Klobuchar. Market Facilitation Program. When will 
the payment rates on each commodity that is eligible be 
released?
    Mr. Johansson. So the rule right now is that at OMB, once 
it is done at OMB, we will put the rates out there and start 
sign-up as soon as we can. It takes a couple weeks to get 
through that process, and we are making adjustments as we 
discuss this with folks over there.
    Senator Klobuchar. As I think has been discussed before, 
some areas are hit harder, depending on where their soybeans 
are going. It hit Minnesota hard because about 60 percent of 
our State soybeans are shipped to the West Coast by rail. Will 
you be giving consideration to regional shipping disparities 
within each commodity for the second round of Market 
Facilitation payments?
    Mr. Johansson. That is a great question that you asked last 
year as well, and we will continue to look at basis effects.
    Right now, we have looked at the basis effects for the 
Upper Midwest and the Northern Plains and have seen a lot of 
those diminish. Of course, we would expect, depending on how 
negotiations go, that we may see some above-average basis 
impacts. As we head into the fall, we will continue to follow 
that, and of course, the Secretary is continuing to monitor 
progress on trade as well as other economic effects on 
producers that are affected by the current situation.
    Senator Klobuchar. Okay. So here is an opportunity right 
now. We know the threat of foreign animal disease and its 
potential impact on farmers can hurt us here or it can help us 
if it happens in another country, and of course, we would 
rather not have this happen at all because it eventually comes 
to our shores. I have worked hard with Senator Cornyn to 
include a vaccine bank in the last Farm Bill.
    An outbreak of African swing fever in China has 
significantly reduced their hog production, and some economists 
have noted that China may lose more pork than the U.S. 
produces.
    Dr. Johansson, do you believe that U.S. pork producers 
could expand their market in China if there was a negotiation 
with China and that would relieve from that country's 62 
percent import duty on pork products, it would help us?
    Mr. Johansson. Yes. I think there is a lot of uncertainty 
about how bad the ASF outbreak is in China right now. There has 
been widespread speculation that it is 20, 30, even greater 
percent of their herd is going to be affected and destroyed as 
a result.
    That will open opportunities for pork suppliers across the 
globe to get into that market in a larger extent. I think the 
U.S. hog producers will also benefit from seeing that with or 
without tariffs. We will either backfill what other countries 
are sending them, or we will get in there as well.
    Of course, with the tariff, we would be able to sell more 
pork products into China as well.
    Senator Klobuchar. Ambassador Doug, are turkeys included in 
the negotiations right now with China? We are number one for 
turkey in our State. Do not laugh.
    Mr. Doud. Senator, everything is on the table.
    Senator Klobuchar. Okay, good.
    Mr. Doud. We have had conversations with a multitude of 
commodities.
    Senator Klobuchar. Okay, very good.
    I will first just want to end, Mr. Chairman, so I can do 
the extra minute, just to thank Under Secretary McKinney. You 
recently led a trade delegation to Colombia, and I know Thom 
Petersen was there, our agriculture commissioner, and enjoyed 
the trip.
    Mr. McKinney. It was a very big group from Minnesota, and 
we enjoyed having him. I think they left with some 
opportunities in mind.
    I should add. You raised turkey. You should know that 
turkey has now found its way into India, of all places, and 
this is a result of the WTO case, and we are thrilled with 
that.
    Senator Klobuchar. All right. Thank you, all of you.
    Chairman Roberts. Well, Coop, you are up.
    Senator Thune. Almost high noon, Mr. Chairman. Thank you, 
and thanks for having this hearing.
    Let me just say to our panelists, thanks for being here, 
and thanks for the work you are doing, but remind all of you 
that our farmers and ranchers would much rather get a check 
from selling their products than they would from the Federal 
Government.
    My concern in all of this is that we are losing global 
market share, and that is why I think it is really important 
that we close some of these trade deals out.
    This hearing is designed to provide certainty to farmers 
and ranchers with a specific focus on trade, and when I travel 
in South Dakota, what farmers and ranchers ask me is when are 
these trade issues going to be resolved. So I am asking you, 
Can you give me and our farmers and ranchers a timeline 
regarding China? Mr. Doud?
    Mr. Doud. Senator, I understand those concerns, and believe 
me, they are talked about at USTR every single day.
    We circulate ag commodity prices in the building every 
single day of what is going on.
    I think in terms of the China discussion, I do not--no is 
the answer. We will have to see. The meeting, I believe--there 
will be a meeting that occurs between President Trump and 
President Xi here toward the end of the month, and I think that 
is our next line of demarcation here to see how this is going 
to go.
    Senator Thune. Can you give us any kind of timeline at all 
regarding Japan, the bilateral bill?
    Mr. Doud. Senator, I cannot. I can only tell you that the 
conversations with regard to agriculture and trade between the 
U.S. and Japan are ongoing as we speak.
    Senator Thune. Given the Administration's interest in 
negotiating bilateral trade deals instead of multilateral 
agreements like TPP, in addition to the two we have just 
discussed, can you share with us the status of any other trade 
agreements the Administration is pursuing?
    Mr. Doud. Well, in addition to USMCA, we have also 
through--the TPA process here on Capitol Hill indicated U.S. 
interest in negotiating with the European Union, the UK--and 
the UK. I do not know what the Brexit process is going to be, 
but obviously, the UK is something that we are taking keen 
interest in.
    The other part of the world that is of enormous interest is 
Africa, and we all know that there are other countries in the 
world that are taking an increase in that as well. I want to 
assure you, Senator, that USTR is interested in that part of 
the world as well.
    Senator Thune. Is there any, though--when you talk about 
discussions with the EU or the UK, is it anything more than 
that at this stage? I mean, are we talking about very 
embryonic-type discussions, or are we actually in a process of 
negotiation with any of these potential trading partners?
    Mr. Doud. Well, obviously, with the UK, we have got to wait 
and see what the Brexit timeline is.
    Senator Thune. Right. How about the EU?
    Mr. Doud. Well, with the EU, I will tell you, quite 
frankly, that they have been very frank in their interest in 
saying no agriculture, and our point has been very simple. 
There is no way to come to Congress and do a deal that does not 
include agriculture. So how are we going to rectify this?
    Senator Thune. Well, we support that position, but I think 
there is great potential, obviously, with China, great 
potential with Japan, and again, if the EU would drop some of 
their tariff and non-tariff barriers and really, seriously 
enter into negotiation on agriculture, that also would be a 
great market for American agriculture.
    I would just urge you to just understand the sense of 
urgency, I think, out there in farm country. These are really 
tough times, and not only now do we have all the trade issue, 
but we have got weather piled on top of that in addition to 
chronic year after year, year over year, low commodity prices 
and producers who are increasingly operating below the cost of 
production. It is a situation we cannot sustain and keep these 
farmers in business.
    In that vein, I just very quickly want to touch on the MFP 
program, and the June 10 USDA press release provided--and I 
quote--``If you choose to plan a cover crop with potential to 
be harvested because of this year's adverse weather conditions, 
you may qualify for a minimal amount of 2019 MFP assistance. 
You must still comply with your crop insurance requirements to 
remain eligible for any indemnities received,'' and that is end 
quote.
    I guess the question is, if you are eligible for a minimal 
amount of MFP assistance, why wouldn't USDA make a more 
equitable MFP payment to producers, comparable to the MFP 
payment that would be paid if that producer has been able to 
plant and harvest crop? Dr. Johansson?
    Mr. Johansson. So, as I mentioned earlier, we are trying to 
balance--trying not to incentivize market distortionary 
decisions. We want farmers to plant for their operation, for 
their--what works best for them, given the current prices we 
are seeing out there as well as the current economic conditions 
that they are seeing on their operation.
    Senator Thune. I get that. We are not talking about--we are 
telling people that already have them planted.
    Mr. Johansson. Right.
    As with last year, we are viewing the current situation 
with respect to prevent plant as something that, by and large, 
would be covered by the prevent plan conditions that are part 
of their normal crop insurance contract, and that while if 
producers do plant an eligible cover crop, they will receive a 
component of the MFP payment for that planting.
    By and large, their incentive payment will be coming from--
their recovery payment or their safety net will be coming from 
the prevent plant, not from MFP. The Market Facilitation 
Program is obviously designed to address trade issues and not 
designed to address weather issues.
    Again, as I pointed out earlier, there is also the disaster 
bill that we are looking at, the supplemental disaster that 
also calls up prevent plant, and so, again, that is another 
balancing act that we are undergoing right now in the 
Department.
    Senator Thune. You figured out how to spend the $3 billion 
in that yet, the supplemental?
    Mr. Johansson. The supplemental has, as you are aware, the 
prevent plant provisions that were added to that. They were 
added after the amount of the supplemental had already been 
determined. So, of course, as the Secretary has pointed out, 
there were the hurricanes and wildfires from 2018 that 
certainly are intended for being compensated to the extent that 
they affected producers in the Southeast in terms of the 
hurricanes and in California with respect to the wildfires. Of 
course, there is other disasters in there as well, volcanoes, 
included.
    Then, of course, we are looking at how this interacts with 
prevent plant and what additional flexibilities can be provided 
to producers as a component of that supplemental disaster bill.
    Senator Thune. All right. Be equitable. Thank you, Mr. 
Chairman.
    Chairman Roberts. Senator Hoeven?
    Senator Hoeven. Thank you, Mr. Chairman and Ranking Member 
both, for having the hearing. Thanks to all of you for being 
here.
    Also, Mr. Secretary, to you and the entire crew here as 
well as everybody at USDA and the Administration, thank you for 
moving forward on the MFP second round. I worked hard on that, 
as did others, and we appreciate the responsiveness on it.
    I thank the questions and comments by our--my distinguished 
colleague from South Dakota highlights the need for it in farm 
country. It is a tough time in farm country, so we are very 
appreciative of that.
    Dr. Johansson, we want to learn from round one and do a 
better job in round two, just like Senator Thune was talking 
about.
    One of the questions that Senator Klobuchar brought us is 
an important one. She termed it in terms of regional 
differences. I have talked about it in terms of basis, and as 
you know very well brought this up last go-around. Please 
comment on your effort to include that in this MFP. It is a 
very important issue.
    She talked about 60 percent of her soybeans going to China. 
In North Dakota, we sent $1.5 billion worth of soybeans to 
China on a regular year. It did not happen this year. So that 
tells you how there are regional disparities, which creates 
basis, which costs our farmers a lot of money.
    Mr. Johansson. Yes. The basis effects are certainly 
something we did note last year, and you had asked about it. We 
continued to follow that. I think that is going to be also 
another key pieces of information that the Secretary is going 
to consider as we move forward with the implementation of MFP.
    Of course, there are other key considerations as well. Some 
of that includes the progress we do make with China on reaching 
a deal, and of course, he has made it clear----
    Senator Hoeven. You mean in subsequent rounds, rounds two 
and three?
    Mr. Johansson. That is correct.
    Just as an example, of course, we do not include the tariff 
impacts that would have been occurring under the tariffs from 
Canada and Mexico. Those have been removed from our 
calculations since we have reached a deal on that component.
    Looking forward to the basis effects, we have looked at 
basis right now, and right now, things look within sort of the 
average for this time of year. Of course, the major basis 
effects that we are likely to see occur right at harvest in 
Northern Plains, for example, and we are going to continue to 
follow that to see if they do fall outside that range of sort 
of average basis that you would expect, given the size of the 
crop, and we will certainly keep that ability to adjust the 
program as we get more information in again.
    So we are very aware of this. We know that producers in 
those areas are susceptible to more, higher impacts from the 
basis component, depending on which crops they produced and 
where they are selling them to and where----
    Senator Hoeven. I know you are aware of it because I have 
been bringing it up, and I am not going to stop, so----
    Mr. Johansson. Yes. So I do not have an answer for you 
right now that I can give you, but it is certainly something we 
can look at and respond in written form.
    Senator Hoeven. Remember, Dr. Johansson, that these crops--
I mean, yes, this is market facilitation based on exports, but 
you have a lot of crops that move with those exports, even if 
they are not fully exported, canola moving with corn. That is 
an important factor too, as you look at that county average 
payment, so that you do not end up with some counties that do 
not just grow corn and soybeans that are in a hurt bag and you 
are not giving them the assistance.
    Mr. Johansson. Yes. We certainly are very aware of that, 
and we think that the program that we have designed will help 
offset some of those criticism that we got last year.
    Senator Hoeven. Good, good.
    I would like to turn to Secretary McKinney, Ambassador 
Doud. What are we doing, prior to the G20, with China on 
facilitating or negotiating with China, leading up to the G20 
on trade? You are heavily engaged, right?
    Mr. Doud. We are heavily engaged above my level, Senator. 
On the agricultural side of this equation, we have worked 
constantly for days on end to put together a very thick 
documents, and now, hopefully, this can be carried forward, and 
we can get a deal.
    Senator Hoeven. Can you get a deal with Japan? Can you get 
a trade deal with Japan?
    Mr. Doud. Senator----
    Senator Hoeven. Can you get it reasonably soon? If you 
could get a trade deal with Japan and we could pass the USMCA, 
it puts pressure on China, does it not? I mean, we have got to 
start getting some of these other agreements as a way to put 
pressure on China too.
    Obviously, a trade deal with Japan, there are huge 
economic--forests in the Pacific Rim, it would make a huge 
difference. So how are you doing there?
    Mr. Doud. Senator, that is exactly how you would draw it up 
on the chalkboard. How is that?
    [Laughter.]
    Senator Hoeven. Good. I know Secretary Perdue was over 
there. I think that is great. Good job on the 30 months for our 
livestock, for our cattle. Boy, I would think it would put 
some--I mean, it would be a real shot in the arm to get a deal 
with Japan.
    Go ahead and talk for a minute about how important it is we 
get USMCA across the floor. It has to start in the House. We 
would sure like to see it going. Why don't you talk about how 
important it is for our farmers.
    Mr. McKinney. Well, I think you said it very, very well. I 
think USMCA is the template for the rest of the world on a 
full-blown FTA, and so we must get that right, and so we are 
here to help you in whatever information you or the House needs 
to move that through. It is a good deal. It is well done.
    Senator Hoeven. Yes. I mean, it just seems to me you create 
momentum one step at a time. If we could move USMCA, if we 
could get something in August with Japan, I mean, it is a way 
to continue to put a real push on China with some of our 
allies, and so I am hopeful that we can do that.
    One final--with the indulgence of the Chair, one final 
question--or question or comment or thought for you, 
suggestion. To the extent that we can access those cover crops 
on PP acres prior to November 1st, it is a very cost-effective 
way for you all to help our livestock producers, so I hope you 
are looking at that.
    So go ahead, whoever wants to take that one.
    Mr. Johansson. Yes. We certainly have received that 
comment. Again, we are looking at flexibility in terms of that 
November 1st date in hay and graze as well as the potential 
ability to harvest, but again, we do not want to affect the PP 
provisions, per se, but we do have some flexibility that you 
have afforded us under the supplemental disaster. Certainly, we 
are also considering that on the MFP side as well, but right 
now----
    Senator Hoeven. Well, your openness to that helps make sure 
that people do make good decisions out there rather than trying 
to force something in the ground just to get a payment, so that 
is helpful, and we appreciate it.
    Again, I think it is a real cost-effective way to give the 
livestock guy some help, and obviously, they are a much smaller 
part of this overall trade assistance package.
    Mr. McKinney. Senator, I just wanted to add one thing. 
Clearly, we are all focused on the key countries that you and 
Ambassador Doud and so many have focused, but I beg of you not 
to forget these other countries.
    We had a very good ag trade mission in Colombia. Sales are 
growing there, Peru and so many other countries, where we 
have--or in some cases, we do not have ag trade missions.
    You have some peas, pulses, and lentils up your way, a lot 
of them.
    Senator Hoeven. Right a lot.
    Mr. McKinney. I had two members of your communities talk 
about the joy of having gone to Guatemala, of all places, last 
year, and that has recovered a lot of the sales that they lost 
rather dramatically in India.
    So we will sustain the focus on these major crops because 
they are the here and the now--or these major countries, but I 
just want to make sure you know we are making progress in a lot 
of these other countries.
    Senator Hoeven. Well, that is good because of what India is 
doing to block them out.
    I have got to say the EU is going to be a tough-to crack. 
We were over there for the 75th anniversary of D-Day at 
Normandy. I mean, you look at their small fields and all that, 
and the idea that they could go head to head with us if they 
did not have their restrictions in place, you realize it is a 
different world.
    At the end of the day, no one can compete with our farmers 
and ranchers if we get a fair shake, right?
    Thanks for your great work. We appreciate it.
    Chairman Roberts. The distinguished Ranking Member is 
recognized.
    Senator Stabenow. Thank you, Mr. Chairman.
    Ambassador Doud, you were talking about the WTO at various 
points. After the first round of $12 billion trade mitigation 
assistance was announced, our trading partners certainly took 
notice. In 2018, our country emphasized that it was one-time, 
short-term assistance that was not expected to have production 
effects because it was announced when commodities had already 
been planted or produced.
    Given the timing and size of the recently announced $16 
billion in new assistance, are you confident that we are still 
abiding by our WTO commitments? Is there any possibility we are 
creating future problems for our farmers and ranchers at the 
WTO?
    Mr. Doud. Senator, I thank you for your question, and it is 
an important one. The answer is that USTR and USDA have ongoing 
conversations about this, and at this point, Senator, I can 
assure you that USTR is confident that we will and are abiding 
by our WTO commitments.
    Senator Stabenow. That will be interesting to watch.
    Thank you.
    Chairman Roberts. I do want to thank you, all three, for 
your commitment. These are tough times, and these are tough 
jobs, but you have put your shoulder to the wheel and really 
work very hard to accomplish things at a difficult time. I 
mean, that is just where we are, which is most unfortunate.
    To my fellow members, we ask that any additional questions 
you may have for the record be submitted to the Committee clerk 
5 business days from today or by 5 p.m., next Thursday, June 
20th.
    The Committee is adjourned.
    [Whereupon, at 11:18 a.m., the Committee was adjourned.]

      
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                            A P P E N D I X

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                   DOCUMENTS SUBMITTED FOR THE RECORD

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                         QUESTIONS AND ANSWERS

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